CMCO to Buy Dorner Manufacturing

Columbus McKinnon Corporation (CMCO), a manufacturer of intelligent motion solutions, products, technologies and services for material handling, has announced that the company has executed a definitive agreement to acquire Dorner Manufacturing Corporation, an automation solutions company providing unique, patented technologies in the design, application, manufacturing and integration of high-precision conveying systems, from global private markets firm EQT.

David J. Wilson, President and CEO of Columbus McKinnon, commented, “The acquisition of Dorner provides a catalyst for growth in extremely attractive markets and begins the process of reimagining the future of Columbus McKinnon. Dorner advances our strategy to broaden expertise in intelligent motion solutions for material handling, provides access to high-growth secular markets and strengthens our earnings power. Their deep technical expertise and experienced management team are an excellent complement to our global organization. In addition, their offerings provide a critical link to industrial automation, complementing our leadership position in material handling. We believe that the acquisition of Dorner is a defining move that advances our Blueprint for Growth 2.0 strategy and enables multiple opportunities for future growth.”

Growth Catalyst

Dorner creates a growth catalyst for Columbus McKinnon and provides diversification into attractive end-markets. A market leader in the nearly $5 billion global specialty conveyor market, Dorner has a proven track record of growth achieving 12% compound annual growth rate over the last five years and outpacing industry growth rates of approximately 6% to 8%.

Compelling Strategic Rationale

• Markets served by Dorner have strong secular tailwinds driven by supply chain automation and the acceleration of e-commerce adoption across consumer and industrial markets
• Dorner is a leading supplier to the stable growth life sciences, food processing and consumer packaged goods markets and high growth industrial automation and e-commerce sectors
• Dorner has a significant and growing high margin after-market business for patented, branded components

Strong Financial Profile

Expected fiscal 2021 revenue of approximately $125 million (fiscal year ends September 30, 2021)

• Five-year compounded annual revenue growth rate of approximately 12%
• High margin profile with accretive gross and Adjusted EBITDA margins1
• Strong cash generation capabilities with low capital expenditure requirements

Expanding and Reimagining Columbus McKinnon’s Core with a Platform for Expansion

• Expands Columbus McKinnon’s product offering through a broad range of highly engineered, precision conveying solutions
• Accelerates the Company’s shift to intelligent motion and serves as a platform to expand capabilities in advanced, higher technology automation solutions
• Attractive complementary adjacencies including sortation and asynchronous conveyance
• Columbus McKinnon’s global presence will support Dorner’s geographic expansion

Transaction and Closing Details

The cash transaction valued at $485 million is expected to close early in the company’s first quarter of fiscal 2022, subject to typical closing conditions and regulatory requirements.

• Purchase price represents 15.5x fiscal 2021 expected Adjusted EBITDA1 or approximately 13.5x after year-two synergies
• Nearly $5 million in expected annual cost synergies to be achieved over next two years
• J.P. Morgan Chase Bank, N.A. is administrative agent on Columbus McKinnon’s existing credit facilities and has provided committed underwritten debt financing in support of the transaction
• Permanent financing plan anticipates a mix of debt and equity2, targeting a net leverage ratio in the near-term of less than 4.0x Adjusted EBITDA1 with expectations of reducing the net leverage ratio below the Company’s targeted 2.0x net debt to Adjusted EBITDA1 within two years.

Gregory P. Rustowicz, Chief Financial Officer of Columbus McKinnon, noted, “We have consistently demonstrated our ability to quickly de-lever our balance sheet following acquisitions. We believe that our strong cash generation supplemented with Dorner’s financial performance supports our funding plan. The initial financing structure provides flexibility for timely execution of the transaction. We expect to put in place a permanent financing structure after closing with new debt and equity which provides a permanent capital structure that is flexible and low cost. We expect the acquisition to be accretive in the first year.”

Columbus McKinnon is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions, products, technologies, systems and services that efficiently and ergonomically move, lift, position and secure materials. Key products include hoists, actuators, rigging tools, light rail workstations and digital power and motion control systems. The Company is focused on commercial and industrial applications that require the safety and quality provided by its superior design and engineering know-how.

About Dorner

Founded in 1966 in Hartland, Wisconsin, Dorner is a leader in high-precision, specialty conveyor systems that enhance productivity, quality, reliability, speed, uptime, and end user profitability. Dorner offers a broad product offering across both modular standard and highly engineered custom conveyor solutions. With nearly 400 employees, Dorner has deep engineering and technical expertise with facilities in North America, Europe, and Asia.