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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2023 
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number  001-34362

Columbus McKinnon Corporation
(Exact name of registrant as specified in its charter)
New York16-0547600
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
13320 Ballantyne Corporate Place, Suite DCharlotteNC28277
(Address of principal executive offices)(Zip code)
(716)689-5400
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareCMCONasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  : Yes     No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No

The number of shares of common stock outstanding as of January 29, 2024 was: 28,755,978 shares.



FORM 10-Q INDEX
COLUMBUS McKINNON CORPORATION
For the quarterly period ended December 31, 2023
  Page #
Part I. Financial Information 
   
Item 1.Condensed Consolidated Financial Statements (Unaudited). 
   
 
Condensed consolidated balance sheets - December 31, 2023 and March 31, 2023
   
 
Condensed consolidated statements of operations - Three and nine months ended December 31, 2023 and December 31, 2022
   
 
Condensed consolidated statements of comprehensive income (loss) - Three and nine months ended December 31, 2023 and December 31, 2022
   
Condensed consolidated statements of shareholders' equity - Three and nine months ended December 31, 2023 and December 31, 2022
   
 
Condensed consolidated statements of cash flows - Nine months ended December 31, 2023 and December 31, 2022
   
 
   
Item 2.
   
Item 3.
   
Item 4.
   
Part II. Other Information 
   
Item 1.
   
Item 1A.
   
Item 2.
   
Item 3.
   
Item 4.
   
Item 5.
   
Item 6.
2



Part I.    Financial Information
Item 1.    Condensed Consolidated Financial Statements (Unaudited).
COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

 December 31,
2023
March 31,
2023
(unaudited)
ASSETS:(In thousands)
Current assets:
Cash and cash equivalents$102,945 $133,176 
Trade accounts receivable, less allowance for doubtful accounts ($3,955 and $3,620, respectively)
173,411 151,451 
Inventories204,396 179,359 
Prepaid expenses and other35,660 32,254 
Total current assets516,412 496,240 
Property, plant, and equipment, net102,729 94,360 
Goodwill728,427 644,629 
Other intangibles, net396,317 362,537 
Marketable securities12,388 10,368 
Deferred taxes on income1,990 2,035 
Other assets99,047 88,286 
Total assets$1,857,310 $1,698,455 
LIABILITIES AND SHAREHOLDERS' EQUITY:  
Current liabilities:  
Trade accounts payable$76,151 $76,736 
Accrued liabilities142,518 124,317 
Current portion of long-term debt and finance lease obligations50,652 40,604 
Total current liabilities269,321 241,657 
Term loan, AR securitization facility and finance lease obligations499,388 430,988 
Other non current liabilities210,164 192,013 
Total liabilities978,873 864,658 
Shareholders' equity:  
Voting common stock; 50,000,000 shares authorized; 28,755,651
 and 28,611,721 shares issued and outstanding
288 286 
Treasury stock(1,001)(1,001)
Additional paid in capital522,587 515,797 
Retained earnings387,550 356,758 
Accumulated other comprehensive loss(30,987)(38,043)
Total shareholders' equity878,437 833,797 
Total liabilities and shareholders' equity$1,857,310 $1,698,455 

See accompanying notes.
3


COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

 Three Months EndedNine Months Ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
 (In thousands, except per share data)
Net sales254,143 230,370 748,036 682,397 
Cost of products sold160,246 148,326 467,513 431,516 
Gross profit93,897 82,044 280,523 250,881 
Selling expenses26,552 25,424 78,400 77,197 
General and administrative expenses26,255 25,143 79,407 68,441 
Research and development expenses6,692 4,839 19,134 15,429 
Amortization of intangibles7,486 6,459 21,871 19,442 
 66,985 61,865 198,812 180,509 
Income from operations26,912 20,179 81,711 70,372 
Interest and debt expense9,952 7,303 28,788 20,274 
Investment (income) loss(758)(574)(1,212)168 
Foreign currency exchange (gain) loss(1,155)(3,359)1,074 (1,152)
Other (income) expense, net5,234 79 5,840 (1,999)
Income (loss) before income tax expense (benefit)13,639 16,730 47,221 53,081 
Income tax expense (benefit)3,911 4,701 12,405 18,547 
Net income (loss)$9,728 $12,029 $34,816 $34,534 
Average basic shares outstanding28,744 28,626 28,711 28,597 
Average diluted shares outstanding28,991 28,778 28,979 28,767 
Basic income (loss) per share:$0.34 $0.42 $1.21 $1.21 
Diluted income (loss) per share:$0.34 $0.42 $1.20 $1.20 
Dividends declared per common share$0.07 $0.07 $0.14 $0.14 
    
 
See accompanying notes.
4


COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

 Three Months EndedNine Months Ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
 (In thousands)(In thousands)
Net income (loss)$9,728 $12,029 $34,816 34,534 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments13,339 12,272 6,557 (7,210)
Change in derivatives qualifying as hedges, net of taxes of $1,350, $(595), $1,260 ,$(2,833)
(4,206)1,962 (3,930)9,337 
Change in pension liability and postretirement obligation, net of taxes of $(1,511), $73, $(1,489), $(26)
4,595 (230)4,429 82 
Total other comprehensive income (loss) 13,728 14,004 7,056 2,209 
Comprehensive income (loss)$23,456 $26,033 $41,872 $36,743 



See accompanying notes.
5


COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)

(In thousands, except share data)
 
Common
Stock
($0.01 par value)
Treasury StockAdditional
 Paid-in
Capital
Retained
Earnings
Accumulated
Other
 Comprehensive
 Loss
Total
Shareholders’
Equity
Balance at March 31, 2023
$286 $(1,001)$515,797 $356,758 $(38,043)$833,797 
Net income (loss)— — — 9,275 — 9,275 
Change in foreign currency translation adjustment— — — — 2,901 2,901 
Change in derivatives qualifying as hedges, net of tax of $(176)
— — — — 541 541 
Change in pension liability and postretirement obligations, net of tax of $(5)
— — — — 42 42 
Stock options exercised,8,485 shares
— — 225 — — 225 
Stock compensation expense— — 1,981 — — 1,981 
Restricted stock units released, 87,496 shares, net of shares withheld for minimum statutory tax obligation
1 — (1,806)— — (1,805)
Balance at June 30, 2023$287 $(1,001)$516,197 $366,033 $(34,559)$846,957 
Net income (loss)— — — 15,813 — 15,813 
Dividends declared— — — (2,012)— (2,012)
Change in foreign currency translation adjustment— — — — (9,683)(9,683)
Change in derivatives qualifying as hedges, net of tax of $86
— — — — (265)(265)
Change in pension liability and postretirement obligations, net of tax of $27
— — — — (208)(208)
Stock compensation - directors— — 587 — — 587 
Stock options exercised, 9,556 shares
— — 265 — — 265 
Stock compensation expense— — 2,696 — — 2,696 
Restricted stock units released, 19,653 shares, net of shares withheld for minimum statutory tax obligation
— — (152)— — (152)
Balance at September 30, 2023$287 $(1,001)$519,593 $379,834 $(44,715)$853,998 
Net income— — — 9,728 — 9,728 
Dividends declared— — — (2,012)— (2,012)
Change in foreign currency translation adjustment— — — — 13,339 13,339 
Change in derivatives qualifying as hedges, net of tax of $1,350
— — — — (4,206)(4,206)
Change in pension liability and postretirement obligations, net of tax of $(1,511)
— — — — 4,595 4,595 
Stock compensation - directors— — 293 — — 293 
Stock options exercised, 2,900 shares
— — 66 — — 66 
Stock compensation expense— — 2,916 — — 2,916 
Restricted stock units released, 15,840 shares, net of shares withheld for minimum statutory tax obligation
1 — (281)— — (280)
Balance at December 31, 2023$288 $(1,001)$522,587 $387,550 $(30,987)$878,437 


See accompanying notes.

6


COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)

(In thousands, except share data)
 
Common
Stock
($0.01 par value)
Treasury StockAdditional
 Paid-in
Capital
Retained
Earnings
Accumulated
Other
 Comprehensive
 Loss
Total
Shareholders’
Equity
Balance at March 31, 2022
$285 $ $506,074 $316,343 $(49,899)$772,803 
Net income (loss)— — — 8,391 — 8,391 
Change in foreign currency translation adjustment— — — — (8,701)(8,701)
Change in derivatives qualifying as hedges, net of tax of $(812)
— — — — 2,689 2,689 
Change in pension liability and postretirement obligations, net of tax of $(49)
— — — — 146 146 
Stock options exercised, 18,907 shares
— — 415 — — 415 
Stock compensation expense— — 751 — — 751 
Restricted stock units released, 52,276 shares, net of shares withheld for minimum statutory tax obligation
1 — (1,314)— — (1,313)
Balance at June 30, 2022$286 $ $505,926 $324,734 $(55,765)$775,181 
Net income (loss)— — — 14,114 — 14,114 
Dividends declared— — — (2,004)— (2,004)
Change in foreign currency translation adjustment— — — — (10,781)(10,781)
Change in derivatives qualifying as hedges, net of tax of $(1,509)
— — — — 4,686 4,686 
Change in pension liability and postretirement obligations, net of tax of $(56)
— — — — 166 166 
Stock compensation - directors— — 537 — — 537 
Stock options exercised, 9,531 shares
— — 206 — — 206 
Stock compensation expense— — 2,341 — — 2,341 
Restricted stock units released, 31,313 shares, net of shares withheld for minimum statutory tax obligation
— — (62)— — (62)
Balance at September 30, 2022$286 $ $508,948 $336,844 $(61,694)$784,384 
Net income (loss)— — — 12,029 — 12,029 
Dividends declared— — — (2,005)— (2,005)
Change in foreign currency translation adjustment— — — — 12,272 12,272 
Change in derivatives qualifying as hedges, net of tax of $(595)
— — — — 1,962 1,962 
Change in pension liability and postretirement obligations, net of tax of $73
— — — — (230)(230)
Stock compensation - directors— — 316 — — 316 
Stock options exercised, 3,258 shares
— — 83 — — 83 
Stock compensation expense— — 3,094 — — 3,094 
Treasury Stock Purchase, 31,085 shares
— (1001)— — — (1,001)
Restricted stock units released, 6,798 shares, net of shares withheld for minimum statutory tax obligation
— — (23)— — (23)
Balance at December 31, 2022$286 $(1,001)$512,418 $346,868 $(47,690)$810,881 


See accompanying notes.

7


COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Nine Months Ended
December 31,
2023
December 31,
2022
OPERATING ACTIVITIES:(In thousands)
Net income (loss)34,816 34,534 
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:  
Depreciation and amortization34,052 31,380 
Deferred income taxes and related valuation allowance(6,495)(783)
Net loss (gain) on sale of real estate, investments and other(967)347 
Non-cash pension settlement (See Note 10)4,599  
Stock-based compensation8,473 7,039 
Amortization of deferred financing costs1,728 1,291 
Loss (gain) on hedging instruments1,193 (598)
Gain on sale of building (232)
Loss on retirement of fixed asset 175 
Non-cash lease expense7,080 5,814 
Changes in operating assets and liabilities, net of effects of business acquisitions: 
Trade accounts receivable(14,911)(1,401)
Inventories(17,764)(31,701)
Prepaid expenses and other(2,897)4,905 
Other assets(859)(232)
Trade accounts payable(1,387)(18,756)
Accrued liabilities(7,236)(7,498)
Non-current liabilities(10,834)(7,382)
Net cash provided by (used for) operating activities28,591 16,902 
INVESTING ACTIVITIES:  
Proceeds from sales of marketable securities1,101 2,650 
Purchases of marketable securities(2,731)(3,121)
Capital expenditures(16,334)(9,511)
Proceeds from sale of building, net of transaction costs  373 
Dividend received from equity method investment 144 313 
Purchase of businesses, net of cash acquired (See Note 2)(108,145)(1,616)
Net cash provided by (used for) investing activities(125,965)(10,912)
FINANCING ACTIVITIES:  
Proceeds from the issuance of common stock556 704 
Purchases of treasury stock (1,001)
Repayment of debt(40,447)(30,402)
Proceeds from issuance of long-term debt120,000  
Fees paid for borrowings on long-term debt(2,859) 
Cash inflows from hedging activities18,088 18,422 
Cash outflows from hedging activities(19,303)(17,958)
Payment of dividends(6,027)(6,006)
Other(2,237)(1,398)
Net cash provided by (used for) financing activities67,771 (37,639)
Effect of exchange rate changes on cash(628)(2,221)
Net change in cash and cash equivalents(30,231)(33,870)
Cash, cash equivalents, and restricted cash at beginning of year133,426 115,640 
Cash, cash equivalents, and restricted cash at end of period$103,195 $81,770 
Supplementary cash flow data:  
Interest paid$25,332 $18,883 
Income taxes paid, net of refunds$21,561 $18,486 
Property, plant and equipment purchases included in trade accounts payable$135 $199 
Restricted cash presented in Other assets$250 $250 
See accompanying notes.
8


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
December 31, 2023

1.    Description of Business

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of Columbus McKinnon Corporation ("the Company") at December 31, 2023, the results of its operations for the three and nine months ended December 31, 2023 and December 31, 2022, and cash flows for the nine months ended December 31, 2023 and December 31, 2022, have been included. Results for the period ended December 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2024. The balance sheet at March 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Columbus McKinnon Corporation Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (the “2023 10-K”).

The Company is a leading worldwide designer, manufacturer, and marketer of intelligent motion solutions that efficiently and ergonomically move, lift, position, and secure materials. Key products include hoists, crane components, precision conveyor systems, accumulation tables, 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.

The Company’s products are sold globally, principally to third party distributors and crane builders through diverse distribution channels, and to a lesser extent directly to end-users and integrators. During the nine months ended December 31, 2023, sales to customers in the United States were approximately 56% of total net sales.
2.    Acquisitions & Disposals
 
On May 31, 2023, the Company completed its acquisition of montratec GmbH ("montratec") for $115,721,000 including $7,576,000 in cash acquired, a $540,000 working capital settlement, and a contingent payment that becomes payable if a certain EBITDA level for the twelve-month period December 31, 2023 is achieved as set forth in the purchase agreement for montratec. As of December 31, 2023, the Company has estimated this contingent liability to be $18,355,000, a decrease of $6,738,000 from the June 30, 2023 quarter due to a refinement in the estimates used to value the liability at May 31, 2023. This liability has been established in the opening balance sheet for montratec. The Company initially financed the acquisition by borrowing $117,000,000 on its New Revolving Credit Facility, but later repaid the New Revolving Credit Facility by borrowing an additional $120,000,000. Utilizing the Accordion feature under the Company's existing Term Loan B, the Company borrowed $75,000,000 and another $45,000,000 was borrowed through a new credit agreement secured by its U.S. accounts receivable balances. Refer to Note 9 for additional details on the Company's debt agreements.

montratec is a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes. montratec product offerings complement the Company's previous acquisitions of both Dorner Mfg. Corp. ("Dorner") and Garvey Corporation ("Garvey"), and furthers the Company's shift to intelligent motion and serves as a platform to expand capabilities in advanced, higher technology automation solutions. As the Company determined that the acquisition is not material to its existing operations, certain disclosures, including pro forma financial information, have not been included. montratec results have been included in the Company's results of operations from the acquisition date and the Company incurred $113,000 and $3,208,000 of acquisition and deal related costs classified as part of General and administrative expenses in the three and nine months ended December 31, 2023.

The purchase price has been preliminarily allocated to the assets acquired and liabilities assumed as of the date of acquisition. The excess consideration of $78,943,000 has been recorded as goodwill, a decrease of $6,414,000 from the amount preliminarily allocated to goodwill as of June 30, 2023 due to decreases of $6,738,000 for the Contingent liability, $577,000 related to a refinement in the calculation of deferred taxes within Other non current liabilities, and an increase of $108,000 in other assets as a result of refinements in estimates to calculate the right of use lease assets. Offsetting these were increases to goodwill as the result of the working capital settlement of $540,000, $260,000 relating to adjustments to working capital, and $209,000 within Property, plant, and equipment, net related to refined estimates for lease-related assets. The identifiable intangible assets acquired include customer relationships valued at $33,471,000, a tradename valued at $2,915,000, and technology valued at $16,196,000. The weighted average life of the acquired identifiable intangible assets subject to
9


amortization was estimated at 14 years at the time of acquisition. Of the $78,943,000 goodwill recorded from the acquisition, $7,531,000 is deductible for tax purposes.

The preliminary assignment of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):
Cash$7,576 
Working capital4,896 
Property, plant, and equipment, net2,157 
Intangible assets52,581 
Contingent liability (see above)
(18,355)
Other assets5,704 
Other non current liabilities(17,781)
Goodwill78,943 
Total$115,721 

3.    Revenue & Receivables

Revenue Recognition:

Performance obligations

The Company has contracts with customers for standard products and custom engineered products and determines when and how to recognize revenue for each performance obligation based on the nature and type of contract.

Revenue from contracts with customers for standard products is recognized when legal title and significant risk and rewards has transferred to the customer, which is generally at the time of shipment. This is the point in time when control is deemed to transfer to the customer. The Company sells standard products to customers utilizing purchase orders. Payment terms for these types of contracts generally require payment within 30 to 60 days. Each standard product is deemed to be a single performance obligation and the amount of revenue recognized is based on the negotiated price. The transaction price for standard products is based on the price reflected in each purchase order. Sales incentives are offered to customers who purchase standard products and include offers such as volume-based discounts, rebates for priority customers, and discounts for early cash payments. These sales incentives are accounted for as variable consideration included in the transaction price. Accordingly, the Company reduces revenue for these incentives in the period which the sale occurs and is based on the most likely amount method for estimating the amount of consideration the Company expects to receive. These sales incentive estimates are updated each reporting period as additional information becomes available.

The Company also sells custom engineered products and services, which are contracts that are typically completed within one quarter but can extend beyond one year in duration. For custom engineered products, the transaction price is based upon the price stated in the contract. Variable consideration has not been identified as a significant component of transaction price for custom engineered products and services. The Company generally recognizes revenue for custom engineered products upon satisfaction of its performance obligation under the contract which typically coincides with project completion which is when the products and services are controlled by the customer. Control is typically achieved at the later of when legal title and significant risk and rewards have transferred to the customer or the customer has accepted the asset. These contracts often require either up front or installment payments. These types of contracts are generally accounted for as one performance obligation as the products and services are not separately identifiable. The promised services (such as inspection, commissioning, and installation) are essential in order for the delivered product to operate as intended on the customer’s site and the services are therefore highly interrelated with product functionality.

For most custom engineered products contracts, the Company determined that while there is no alternative use for the custom engineered products, the Company does not have an enforceable right to payment (which must include a reasonable profit margin) for performance completed to date in order to meet the over time revenue recognition criteria. Therefore, revenue is recognized at a point in time (when the contract is complete). For custom engineered products contracts that contain an enforceable right to payment (including reasonable profit margin) the Company satisfies the performance obligation over time and recognizes revenue based on the extent of progress towards completion of the performance obligation. The cost-to-cost measure of progress is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of work performed and transfer of control to the customers. Under the cost-to-cost measure of
10


progress, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recognized proportionally as costs are incurred.

Sales and other taxes collected with revenue are excluded from revenue. Shipping and handling costs incurred prior to shipment are considered activities required to fulfill the Company’s promise to transfer goods, and do not qualify as a separate performance obligation. Additionally, the Company offers standard warranties which are typically 12 months in duration for standard products and 24 to 36 months for custom engineered products. These types of warranties are included in the purchase price of the product and are deemed to be assurance-type warranties which are not accounted for as a separate performance obligation. Other performance obligations included in a contract (such as drawings, owner’s manuals, and training services) are immaterial in the context of the contract and are not recognized as a separate performance obligation.

For additional information on the Company’s revenue recognition policy refer to the consolidated financial statements included in the 2023 10-K.

Reconciliation of contract balances

The Company records a contract liability when cash is received prior to recording revenue. Some standard contracts require a down payment while most custom engineered contracts require installment payments. Installment payments for the custom engineered contracts typically require a portion due at inception while the remaining payments are due upon completion of certain performance milestones. For both types of contracts, these contract liabilities, referred to as customer advances, are recorded at the time payment is received and are included in Accrued liabilities on the Condensed Consolidated Balance Sheets. When the related performance obligation is satisfied and revenue is recognized, the contract liability is released into income.

The following table illustrates the balance and related activity for customer advances in the nine months ended December 31, 2023 and December 31, 2022 (in thousands):

Customer advances (contract liabilities)December 31, 2023December 31, 2022
March 31, beginning balance$27,003 $22,453 
Additional customer advances received69,188 56,902 
Revenue recognized from customer advances included in beginning of period(27,003)(22,453)
Other revenue recognized from customer advances(47,055)(34,302)
Customer advances recorded from acquisitions3,866  
Other (1)284 (418)
December 31, ending balance$26,283 $22,182 
        
    (1) Other includes the impact of foreign currency translation

Revenue was recognized prior to the right to invoice the customer which resulted in a contract asset balance in the amount of $1,500,000 and $2,944,000 as of December 31, 2023 and March 31, 2023, respectively. Contract assets are included in Prepaid expenses and other assets on the Condensed Consolidated Balance Sheets.

Remaining Performance Obligations

As of December 31, 2023, the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) was approximately $11,307,000. We expect to recognize approximately 52% of these sales over the next twelve months.

Disaggregated revenue

In accordance with FASB ASC Topic 606, the Company is required to disaggregate revenue into categories that depict how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows.
11


The following table illustrates the disaggregation of revenue by product grouping for the three and nine months ended December 31, 2023 and December 31, 2022 (in thousands):

Three Months EndedNine Months Ended
Net Sales by Product GroupingDecember 31, 2023December 31, 2022December 31, 2023December 31, 2022
Industrial Products$83,033 $77,423 $253,925 $240,366 
Crane Solutions103,775 97,541 303,746 266,959 
Engineered Products22,710 21,535 70,895 61,309 
Precision Conveyor Products44,588 33,837 119,379 113,646 
All other37 34 91 117 
Total$254,143 $230,370 $748,036 $682,397 

Industrial products include: manual chain hoists, electrical chain hoists, rigging/clamps, industrial winches, hooks, shackles, and other forged attachments. Crane solutions products include: wire rope hoists, drives and controls, crane kits and components, and workstations. Engineered products include: linear and mechanical actuators, lifting tables, rail projects, and actuation systems. Precision conveyor products include: low profile, flexible chain, large scale, sanitary and vertical elevation conveyor systems, pallet system conveyors, accumulation systems, asynchronous conveyors as well as other high-precision conveyance systems. The All other product grouping includes miscellaneous revenue.

Practical expedients

Incremental costs to obtain a contract incurred by the Company primarily relate to sales commissions for contracts with a duration of one year or less. Therefore, these costs are expensed as incurred and are recorded in Selling expenses on the Condensed Consolidated Statements of Operations.

Unsatisfied performance obligations for contracts with an expected length of one year or less are not disclosed. Further, revenue from contracts with customers do not include a significant financing component as payment is generally expected within one year from when the performance obligation is controlled by the customer.

Accounts Receivable:

Under Accounting Standard Update ("ASU") 2016-13, the Company is required to remeasure expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. In addition to these factors, the Company establishes an allowance for doubtful accounts based upon the credit risk of specific customers, historical trends, and other factors. Accounts receivable are charged against the allowance for doubtful accounts once all collection efforts have been exhausted. Due to the short-term nature of such accounts receivable, the estimated amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances.

The following table illustrates the balance and related activity for the allowance for doubtful accounts that is deducted from accounts receivable to present the net amount expected to be collected in the nine months ended December 31, 2023 and December 31, 2022 (in thousands):

Allowance for doubtful accountsDecember 31, 2023December 31, 2022
March 31, beginning balance$3,620 $5,717 
Bad debt expense2,727 726 
Less uncollectible accounts written off, net of recoveries(2,490)(996)
Allowance recorded from acquisitions64  
Other (1)34 (134)
December 31, ending balance$3,955 $5,313 
(1) Other includes the impact of foreign currency translation


12


4.    Fair Value Measurements

FASB ASC Topic 820 “Fair Value Measurements and Disclosures” establishes the standards for reporting financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value on a recurring basis (at least annually). Under these standards, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the "exit price") in an orderly transaction between market participants at the measurement date.

ASC 820-10-35-37 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the valuation techniques that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is separated into three levels based on the reliability of inputs as follows:

Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly, involving some degree of judgment.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

The availability of observable inputs can vary and is affected by a wide variety of factors, including the type of asset/liability, whether the asset/liability is established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, assumptions are required to reflect those that market participants would use in pricing the asset or liability at the measurement date.

The Company uses quoted market prices when valuing its marketable securities and, consequently, the fair value is based on Level 1 inputs. These marketable securities consist of equity and fixed income securities. The Company primarily uses readily observable market data in conjunction with internally developed discounted cash flow valuation models when valuing its derivative portfolio and, consequently, the fair value of the Company’s derivatives is based on Level 2 inputs. The carrying amount of the Company's pension-related annuity contract is recorded at net asset value of the contract and, consequently, its fair value is based on Level 2 inputs and is included in Other assets on the Condensed Consolidated Balance Sheets. The carrying value of the Company’s Term Loan approximates fair value based on current market interest rates for debt instruments of similar credit standing and, consequently, their fair values are based on Level 2 inputs.

13


The following table provides information regarding financial assets and liabilities measured or disclosed at fair value (in thousands):
 Fair value measurements at reporting date using
 December 31,Quoted prices in active markets for identical assetsSignificant other observable inputsSignificant unobservable inputs
Description2023(Level 1)(Level 2)(Level 3)
Assets/(Liabilities) measured at fair value:
Marketable securities$12,388 $12,388 $ $ 
Annuity contract1,409  1,409  
Derivative Assets (Liabilities):
 Foreign exchange contracts(100) (100) 
 Interest rate swap 6,198  6,198  
 Cross currency swap (4,506) (4,506) 
Disclosed at fair value:   
Term Loan B$(500,048)$ $(500,048)$ 
AR securitization facility$(45,000)$ $(45,000)$ 

 Fair value measurements at reporting date using
 March 31,Quoted prices in active markets for identical assetsSignificant other observable inputsSignificant unobservable inputs
Description2023(Level 1)(Level 2)(Level 3)
Assets/(Liabilities) measured at fair value:
Marketable securities$10,368 $10,368 $ $ 
Annuity contract1,612  1,612  
Derivative assets (liabilities):
 Foreign exchange contracts97  97  
 Interest rate swap 10,475  10,475  
 Cross currency swap (2,102) (2,102) 
Disclosed at fair value:    
Term loan B$(460,825)$ $(460,825)$ 

The Company does not have any non-financial assets and liabilities that are recognized at fair value on a recurring basis. At December 31, 2023, the Term Loan B has been recorded at carrying value, which approximates fair value. In fiscal 2024, the Company also borrowed an additional $45,000,000 under a new credit agreement secured by the Company's U.S. accounts receivable balances (the "AR Securitization Facility"). The AR Securitization Facility has been recorded at carrying value which approximates fair value. Refer to Note 9 for additional information regarding the Company's long-term debt.

Market gains, interest, and dividend income on marketable securities are recorded in Investment (income) loss on the Condensed Consolidated Statements of Operations.  Changes in the fair value of derivatives are recorded in foreign currency exchange (gain) loss or other comprehensive income (loss), to the extent that the derivative qualifies as a hedge under the provisions of FASB ASC Topic 815. Interest and dividend income on marketable securities are measured based upon amounts earned on their respective declaration dates.

Assets and liabilities preliminarily recorded at fair value on a non-recurring basis during the nine months ended December 31, 2023 include assets and liabilities acquired in connection with the acquisition of montratec described in Note 2. The estimated fair values allocated to the assets acquired and liabilities assumed relied upon fair value measurements based primarily on Level 3 inputs. The valuation techniques used to allocate fair values to working capital items; property, plant, and equipment, and
14


identifiable intangible assets included the cost approach, market approach, and other income approaches. For identifiable intangible assets these techniques included the multi-period excess earnings approach, the relief from royalty approach, and other income approaches. The closed-form option price approach was used to calculate the contingent consideration. The valuation techniques relied on a number of inputs which included the cost and condition of property, plant, and equipment and forecasted net sales and income.

Significant valuation inputs included an attrition rate of 10.0% for customer relationships, an estimated royalty rate of 5.0% for technology, a royalty rate of 1.0% for trademark and trade names, an asset volatility rate of 27% for the contingent consideration, and a weighted average cost of capital of 12.5%.

Refer to the 2023 10-K for a full description of the assets and liabilities measured on a non-recurring basis that are included in the Company's March 31, 2023 balance sheet.

5.    Inventories

Inventories consisted of the following (in thousands):
December 31,
2023
March 31,
2023
At cost - FIFO basis:
Raw materials$167,833 $142,490 
Work-in-process26,788 26,323 
Finished goods41,449 39,714 
Total at cost FIFO basis236,070 208,527 
LIFO cost less than FIFO cost(31,674)(29,168)
Net inventories$204,396 $179,359 

The acquisition of montratec contributed $4,083,000 to the increase in inventory since March 31, 2023.

An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond management's control, estimated interim results are subject to change in the final year-end LIFO inventory valuation.

6.    Marketable Securities and Other Investments

In accordance with ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) are measured at fair value through earnings. The Company's marketable securities are recorded at their fair value, with unrealized changes in market value realized within Investment (income) loss on the Condensed Consolidated Statements of Operations. The impact on earnings for unrealized gains and losses were gains of $660,000 and $362,000 in the three months ended December 31, 2023 and December 31, 2022, respectively and a gain of $390,000 and a loss of $558,000 in the nine months ended December 31, 2023 and December 31, 2022, respectively.

Consistent with prior periods, the estimated fair value is based on quoted market prices at the balance sheet dates. The cost of securities sold is based on the specific identification method. Interest and dividend income are included in Investment (income) loss in the Condensed Consolidated Statements of Operations.

Marketable securities are carried as long-term assets since they are held for the settlement of the Company’s general and product liability insurance claims filed through CM Insurance Company, Inc. ("CMIC"), a wholly owned captive insurance subsidiary. The marketable securities are not available for general working capital purposes.

Net realized gains related to sales of marketable securities were not material in the three and nine months ended December 31, 2023 and December 31, 2022, respectively.

The Company owns a 49% ownership interest in Eastern Morris Cranes Company Limited ("EMC"), a limited liability company organized and existing under the laws and regulations of the Kingdom of Saudi Arabia. The Company's ownership represents an equity investment in a strategic customer of STAHL serving the Kingdom of Saudi Arabia. The investment's
15


carrying value is presented in Other assets in the Condensed Consolidated Balance Sheets in the amount of $3,132,000 and $2,752,000 as of December 31, 2023 and March 31, 2023, respectively, and has been accounted for as an equity method investment. The investment value increased for the Company's ownership percentage of income earned by EMC in the amount of $5,000 and $142,000 in the three months ended December 31, 2023 and December 31, 2022, respectively, and increased by $589,000 and $209,000 in the nine months ended December 31, 2023 and December 31, 2022, respectively, recorded in Investment (income) loss on the Condensed Consolidated Statements of Operations. Further, in the nine months ended December 31, 2023 and December 31, 2022, EMC distributed cash dividends which the Company received 49% of pursuant to its ownership interest. The investment value was decreased for the Company's share of EMC's cash dividend in the amount of $247,000 and $313,000 in the nine months ended December 31, 2023 and December 31, 2022, respectively, as they were determined to be a return of the Company's investment. Dividends are included in investing activities on the Condensed Consolidated Statements of Cash Flows in the amount of $144,000 and $313,000 in the nine months ended December 31, 2023 and December 31, 2022, respectively, as the distribution received exceeded cumulative equity in earnings, under the cumulative earnings approach. The remaining balance of the dividend for the nine months ended December 31, 2023, is included in cash flows from operations. The December 31, 2023 and March 31, 2023 trade accounts receivable balance due from EMC are $8,105,000 and $5,083,000, respectively, and are comprised of amounts due for the sale of goods and services in the ordinary course of business.

7.    Goodwill and Intangible Assets

Goodwill and indefinite lived trademarks are not amortized but are tested for impairment at least annually, in accordance with the provisions of ASC Topic 350-20-35-1. Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. The fair value of a reporting unit is determined using a discounted cash flow methodology. The Company’s reporting units are determined based upon whether discrete financial information is available and reviewed regularly, whether those units constitute a business, and the extent of economic similarities between those reporting units for purposes of aggregation.  The Company’s reporting units identified under ASC Topic 350-20-35-33 are at the component level, or one level below the operating segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting - Disclosure.” The Company has three reporting units as of December 31, 2023 and March 31, 2023. The Duff-Norton reporting unit (which designs, manufactures and sources mechanical and electromechanical actuators and rotary unions) had goodwill of $9,699,000 at December 31, 2023 and March 31, 2023. The Rest of Products reporting unit (representing the hoist, chain, forgings, digital power, motion control, manufacturing, and distribution businesses) had goodwill of $308,693,000 and $306,988,000 at December 31, 2023 and March 31, 2023, respectively. The Precision Conveyance reporting unit (which represents high-precision conveying systems) had goodwill of $410,035,000 and $327,942,000 at December 31, 2023 and March 31, 2023, respectively. The goodwill associated with the fiscal 2024 acquisition of montratec, as described in Note 2, is included in the Precision Conveyance reporting unit. The Company has recorded adjustments to goodwill related to montratec during the quarter ended September 30, 2023. Refer to Note 2 for additional details related to these adjustments.

Refer to the 2023 10-K for information regarding our annual goodwill and indefinite lived trademark impairment evaluation. Future impairment indicators, such as declines in forecasted cash flows, may cause impairment charges. Impairment charges could be based on such factors as the Company’s stock price, forecasted cash flows, assumptions used, control premiums or other variables. There were no such indicators during the three and nine months ended December 31, 2023.

A summary of changes in goodwill during the nine months ended December 31, 2023 is as follows (in thousands):
Balance at April 1, 2023$644,629 
Acquisition of montratec (Refer to Note 2)78,943 
Currency translation4,855 
Balance at December 31, 2023728,427 
Goodwill is recognized net of accumulated impairment losses of $113,174,000 as of December 31, 2023 and March 31, 2023, respectively.

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Identifiable intangible assets acquired in a business combination are amortized over their estimated useful lives. Identifiable intangible assets are summarized as follows (in thousands):

 December 31, 2023March 31, 2023
 Gross Carrying
Amount
Accumulated
Amortization
NetGross Carrying
Amount
Accumulated
Amortization
Net
Trademark$22,576 $(7,582)$14,994 $19,478 $(6,315)$13,163 
Indefinite lived trademark46,672 — 46,672 46,338 — 46,338 
Customer relationships359,264 (104,850)254,414 322,658 (88,685)233,973 
Acquired technology112,894 (33,342)79,552 96,291 (27,945)68,346 
Other3,801 (3,116)685 3,585 (2,868)717 
Total$545,207 $(148,890)$396,317 $488,350 $(125,813)$362,537 

The Company’s intangible assets that are considered to have finite lives are amortized. The weighted-average amortization periods are 13 years for trademarks, 17 years for customer relationships, 15 years for acquired technology, 5 years for other, and 16 years in total. Trademarks with a carrying value of $46,672,000 as of December 31, 2023 have an indefinite useful life and are therefore not being amortized.

Total amortization expense was $7,486,000 and $6,459,000 for the three months ended December 31, 2023 and 2022, respectively. Total amortization expense was $21,871,000 and $19,442,000 for the nine months ended December 31, 2023 and 2022, respectively. The increase in amortization expense is the result of the montratec acquisition and related intangible assets acquired. Based on the current amount of identifiable intangible assets and current exchange rates, the estimated annual amortization expense for each of the succeeding five years is expected to be approximately $30,000,000.

8.    Derivative Instruments

The Company uses derivative instruments to manage selected foreign currency and interest rate exposures. The Company does not use derivative instruments for speculative trading purposes. All derivative instruments must be recorded on the balance sheet at fair value. For derivatives designated as cash flow hedges, changes in the fair value of the derivative is recorded as accumulated other comprehensive loss, or “AOCL,” and is reclassified to earnings when the underlying transaction has an impact on earnings. For foreign currency derivatives not designated as cash flow hedges, all changes in market value are recorded as a foreign currency exchange loss (gain) in the Company’s Consolidated Statements of Operations. The cash flow effects of derivatives are reported within net cash (used for) provided by operating activities on the Condensed Consolidated Statements of Cash Flows.

The Company is exposed to credit losses in the event of non-performance by the counterparties on its financial instruments. The counterparties have investment grade credit ratings. The Company anticipates that these counterparties will be able to fully satisfy their obligations under the contracts.

The Company's agreements with its counterparties contain provisions pursuant to which the Company could be declared in default of its derivative obligations. As of December 31, 2023, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of December 31, 2023, it could have been required to settle its obligations under these agreements at amounts which approximate the December 31, 2023 fair values reflected in the table below. During the three and nine months ended December 31, 2023, the Company was not in default of any of its derivative obligations.

As of December 31, 2023, the Company had no derivatives designated as net investments or fair value hedges in accordance with FASB ASC Topic 815, “Derivatives and Hedging.”

The Company has a cross currency swap agreement that is designated as a cash flow hedge to hedge changes in the value of an intercompany loan to a foreign subsidiary due to changes in foreign exchange rates. This intercompany loan is related to the acquisition of Stahl Cranesystems GmbH ("STAHL"). As of December 31, 2023, the notional amount of this derivative is $99,378,000, and this contract matures on March 31, 2028. From its December 31, 2023 balance of AOCL, the Company expects to reclassify approximately $211,000 out of AOCL, and into foreign currency exchange loss (gain), during the next 12 months based on the contractual payments due under this intercompany loan.

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The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases denominated in foreign currencies. As of December 31, 2023, the notional amount of those derivatives was $4,591,000, and all contracts mature by September 30, 2024. From its December 31, 2023 balance of AOCL, the Company expects to reclassify approximately $68,000 out of AOCL during the next 12 months based on the expected payments for the goods purchased.

The Company's policy is to maintain a capital structure that is comprised of 50-70% of fixed rate long-term debt and 30-50% of variable rate long-term debt. The Company has two outstanding interest rate swap agreements in which the Company receives interest at a variable rate and pays interest at a fixed rate. The most recent interest rate swap agreement was entered into in fiscal year 2024 as a result of the additional debt from the montratec acquisition. The Company modified its historical interest rate swaps from LIBOR to SOFR in the first quarter of fiscal 2024. This modification had no impact on the Company's hedge accounting and hedge designation. These interest rate swap agreements are designated as cash flow hedges to hedge changes in interest expense due to changes in the variable interest rate of the Company's variable interest debt. The amortizing interest rate swaps mature by April 30, 2028 and had a total notional amount of $353,224,000 as of December 31, 2023. The effective portion of the changes in fair values of the interest rate swaps is reported in AOCL and will be reclassified to interest expense over the life of the swap agreements. From its December 31, 2023 balance of AOCL, the Company expects to reclassify approximately $5,638,000 of AOCL into interest and debt expense, during the next 12 months.

The following is the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three months ended December 31, 2023 and 2022 (in thousands):

Derivatives Designated as Cash Flow HedgesType of InstrumentAmount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on DerivativesLocation of Gain or (Loss) Recognized in Income on DerivativesAmount of Gain or (Loss) Reclassified from AOCL into Income
December 31, 2023Foreign exchange contracts$(31)Cost of products sold$(22)
December 31, 2023Interest rate swaps(1,958)Interest expense2,566 
December 31, 2023Cross currency swaps(2,921)Foreign currency exchange (gain) loss(3,248)
December 31, 2022Foreign exchange contracts137 Cost of products sold(64)
December 31, 2022Interest rate swap1,018 Interest expense1,170 
December 31, 2022Cross currency swaps(6,004)Foreign currency exchange (gain) loss(7,916)

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The following is the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the nine months ended December 31, 2023 and 2022 (in thousands):


Derivatives Designated as Cash Flow HedgesType of InstrumentAmount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on DerivativesLocation of Gain or (Loss) Recognized in Income on DerivativesAmount of Gain or (Loss) Reclassified from AOCL into Income
December 31, 2023Foreign exchange contracts$(211)Cost of products sold$(75)
December 31, 2023Interest rate swaps4,131 Interest expense7,424 
December 31, 2023Cross currency swaps(1,701)Foreign currency exchange (gain) loss(1,200)
December 31, 2022Foreign exchange contracts89 Cost of products sold(153)
December 31, 2022Interest rate swap7,423 Interest expense488 
December 31, 2022Cross currency swaps5,623 Foreign currency exchange (gain) loss3,464 

The following is information relative to the Company’s derivative instruments in the Condensed Consolidated Balance Sheets (in thousands):
  Fair Value of Asset (Liability)
Derivatives Designated as Hedging InstrumentsBalance Sheet LocationDecember 31, 2023March 31, 2023
Foreign exchange contractsPrepaid expenses and other$22 $ 
Foreign exchange contractsOther Asset 136 
Foreign exchange contractsAccrued liabilities(122)(39)
Interest rate swapPrepaid expenses and other7,501 7,644 
Interest rate swapOther assets433 3,218 
Interest rate swapAccrued liabilities (387)
Interest rate swapOther non current liabilities(1,736) 
Cross currency swapPrepaid expenses and other 168 
Cross currency swapAccrued liabilities(284) 
Cross currency swapOther non current liabilities(4,222)(2,270)
9.    Debt

During fiscal 2024, the Company amended its New Revolving Credit Facility increasing the size of the New Revolving Credit Facility by $75,000,000 to a total of $175,000,000. The Company borrowed against the expanded New Revolving Credit Facility in May of fiscal 2024 to initially fund the montratec acquisition as described in Note 2. The Company subsequently borrowed additional funds in accordance with the Accordion feature under its existing Term Loan B facility to increase the principal amount of the Term Loan B facility by $75,000,000. The Company also borrowed an additional $45,000,000 under a new credit agreement secured by the Company's U.S. accounts receivable balances (the "AR Securitization Facility"). The total U.S. accounts receivable balances which secure the AR Securitization Facility total $72,736,000 as of December 31, 2023. The Company used the proceeds from the $75,000,000 Accordion borrowing and the $45,000,000 AR Securitization Facility to fully repay borrowings on the New Revolving Credit Facility prior to June 30, 2023.

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The key terms of the new AR Securitization Facility are as follows:

The AR Securitization Facility Agreement provides for revolving loans to be made up to a maximum principal amount of $55,000,000 of which $45,000,000 was drawn as of December 31, 2023.
The AR Securitization Facility borrowings bear interest at a floating rate equal to a one-month secured overnight funding rate (SOFR) plus 10 basis points of credit spread adjustment, plus 110 basis points.
The AR Securitization Facility borrowings are secured by the Company's U.S. accounts receivables totaling $72,736,000 at December 31, 2023.
The AR Securitization Facility Agreement contains customary events of default (referred to as “Amortization Events.”)
Amounts drawn under the AR Securitization Facility may remain outstanding until the maturity date of the AR Securitization Facility on June 19, 2026. Prior to the maturity date, the Company is only required to repay principal to the extent necessary to maintain borrowing base compliance, unless an Amortization Event occurs.

As of December 31, 2023, there have been no Amortization Events triggered in the AR Securitization Facility. The Company has both the ability and intent to have the AR Securitization Facility remain outstanding for the next 12-months. As such, the Company has classified the full $45,000,000 outstanding borrowings under the AR Securitization Facility as long-term debt at December 31, 2023.

In addition to the above, the Company amended the variable interest component of its Term Loan B and New Revolving Credit Facility to transition from LIBOR to SOFR.

The outstanding principal balance of the Term Loan B facility was $497,560,000 as of December 31, 2023, which includes $75,000,000 in principal balance from the Accordion exercised in the first quarter of fiscal 2024 as described above. The Company made $40,000,000 in principal payments on the Term Loan B facility during the nine months ended December 31, 2023 of which $4,585,000 was required. The Company is obligated to make $6,113,000 of principal payments on the Term Loan B facility over the next 12 months plus applicable Excess Cash Flow ("ECF") payments, if required, however, plans to pay down approximately $50,000,000 in principal payments in total during such 12 month period. This amount has been recorded within the current portion of long-term debt on the Company's Condensed Consolidated Balance Sheet with the remaining balance recorded as long-term debt. Refer to the 2023 10-K for further details on the Company's Term Loan B facility.

There were no outstanding borrowings and $15,740,000 in outstanding letters of credit issued against the New Revolving Credit Facility as of December 31, 2023.  The outstanding letters of credit as of December 31, 2023 consisted of $171,000 in commercial letters of credit and $15,569,000 of standby letters of credit.

The gross balance of deferred financing costs on the Term Loan B facility was $7,845,000, which includes $2,414,000 from the Accordion exercises, as of December 31, 2023 and $6,323,000, which includes $892,000 from the Accordion exercise, as of March 31, 2023. The accumulated amortization balances were $2,663,000 and $1,815,000 as of December 31, 2023 and March 31, 2023, respectively. The gross balance of deferred financing costs associated with the AR Securitization Facility was $536,000 with an accumulated amortization balance of $104,000 as of December 31, 2023.

The gross balance of deferred financing costs associated with the New Revolving Credit Facility is $4,828,000 as of December 31, 2023 and $4,027,000 as of March 31, 2023, respectively, which are included in Other assets on the Condensed Consolidated Balance Sheet. The $801,000 increase in Fiscal 2024 relates to fees paid to increase the size of the New Revolving Credit Facility to $175,000,000 as described above. The accumulated amortization balances were $2,385,000 and $1,611,000 as of December 31, 2023 and March 31, 2023, respectively.

The Company has a finance lease for a manufacturing facility in Hartland, WI under a 23-year lease agreement which terminates in 2035. The outstanding balance on the finance lease obligation is $13,093,000 as of December 31, 2023 of which $652,000 has been recorded within the Current portion of long-term debt and the remaining balance recorded within the Term loan, AR securitization facility and finance lease obligations on the Company's Condensed Consolidated Balance Sheet. See Note 15 for further details.

Unsecured and uncommitted lines of credit are available to meet short-term working capital needs for certain of our subsidiaries operating outside of the U.S. The lines of credit are available on an offering basis, meaning that transactions under the line of credit will be on such terms and conditions, including interest rate, maturity, representations, covenants and events of default, as mutually agreed between our subsidiaries and the local bank at the time of each specific transaction. As of December 31, 2023, unsecured credit lines totaled approximately $2,428,000, of which nothing was drawn. In addition, unsecured lines of
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$13,541,000 were available for bank guarantees issued in the normal course of business of which $10,758,000 was utilized as of December 31, 2023.

Refer to the Company’s consolidated financial statements included in its 2023 10-K for further information on its debt arrangements.

10.    Net Periodic Benefit Cost

The following table sets forth the components of net periodic pension cost for the Company’s defined benefit pension plans (in thousands):
 Three Months EndedNine Months Ended
 December 31, 2023December 31, 2022December 31, 2023December 31, 2022
Service costs$136 $199 $389 $536 
Interest cost3,419 2,848 10,351 8,537 
Expected return on plan assets(2,867)(2,709)(8,759)(8,130)
Net amortization62 192 266 607 
Settlement$4,639 $ $4,720 $ 
Net periodic pension (benefit) cost$5,389 $530 $6,967 $1,550 

Components of the net benefit costs other than the service cost component are recorded in Other (income) expense, net on the Condensed Consolidated Statements of Operations. Service costs are recorded as part of Income from operations.

During the three months ended December 31, 2023, certain employees in one of the Company's U.S. pension plans accepted an offer to settle their pension obligation with a lump sum payment. These lump sum settlements are one of the steps the Company is taking to terminate the plan by transferring the liabilities to a third-party. As a result, the Company recorded a settlement charge in the amount $4,599,000 which was recorded in Other (income) expense, net on the Condensed Consolidated Statements of Operations. The Company expects to complete the plan termination during fiscal year 2025, at which point the Company will record another settlement charge.

The Company currently plans to contribute approximately $6,908,000 to its pension plans in fiscal 2024.
 
For additional information on the Company’s defined benefit pension and postretirement benefit plans, refer to the consolidated
financial statements included in the 2023 10-K.


11.    Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands):
 Three Months Ended
Nine Months Ended
 December 31, 2023December 31, 2022December 31, 2023December 31, 2022
Numerator for basic and diluted earnings per share:
Net income (loss)$9,728 $12,029 $34,816 $34,534 
Denominators: 
Weighted-average common stock outstanding – denominator for basic EPS28,744 28,626 28,711 28,597 
Effect of dilutive employee stock options and other share-based awards247 152 268 170 
Adjusted weighted-average common stock outstanding and assumed conversions – denominator for diluted EPS28,991 28,778 28,979 28,767 

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Stock options with respect to 824,000 and 744,000 common shares for the three and nine months ended December 31, 2023, respectively, and 715,000 for both the three and nine months ended December 31, 2022, were not included in the computation of diluted income per share because they were antidilutive. For the three and nine months ended December 31, 2023 and December 31, 2022 contingently issuable common shares of 165,000 and 179,000, respectively, were excluded because a performance condition had not yet been met.

The Company grants share based compensation to eligible participants under the 2016 Long Term Incentive Plan, as Amended and Restated in June 2019 ("2016 LTIP").  The total number of shares of common stock with respect to which awards may be granted under the 2016 LTIP were increased by 2,500,000 as a result of the June 2019 amendment and restatement. Shares not previously authorized for issuance under any of the prior stock plans and any shares not issued or subject to outstanding awards under the prior stock plans are still available for issuance.

During fiscal 2024, the Company determined that the performance condition on its fiscal 2022 performance shares would not be fully met. The Company has adjusted its stock-based compensation expense accordingly in fiscal 2024.

During fiscal 2023, the Company repurchased 31,000 shares of its common stock at an aggregate cost of $1,001,000 in accordance with the Company's previously adopted share repurchase program. The value of the shares purchased are reflected as Treasury stock on the Company's Condensed Consolidated Balance Sheet as of March 31, 2023. There were no such purchases in fiscal 2024.

During the first nine months of fiscal 2024, there were 21,000 shares of stock issued upon the exercise of stock options that were issued under the Company’s 2016 LTIP. During the fiscal year ended March 31, 2023, 133,000 shares of restricted stock units vested and were issued.

On January 22, 2024, the Company's Board of Directors declared a dividend of $0.07 per common share. The dividend will be paid on February 20, 2024 to shareholders of record on February 9, 2024. The dividend payment is expected to be approximately $2,015,000.

Refer to the Company’s consolidated financial statements included in its 2023 10-K for further information on its earnings per share and stock plans.

12.    Loss Contingencies

From time to time, the Company is named a defendant in legal actions arising out of the normal course of business. The Company is not a party to any pending legal proceeding other than ordinary, routine litigation incidental to our business. The Company does not believe that any of its pending litigation will have a material impact on its business.

Accrued general and product liability costs are actuarially estimated reserves based on amounts determined from loss reports, individual cases filed with the Company, and an amount for losses incurred but not reported. The aggregate amounts of reserves were $19,350,000 (gross of estimated insurance recoveries of $7,496,000) as of December 31, 2023, of which $14,750,000 is included in Other non current liabilities and $4,600,000 in Accrued liabilities. The liability for accrued general and product liability costs are funded by investments in marketable securities (see Note 6).

The following table provides a reconciliation of the beginning and ending balances for accrued general and product liability (in thousands):

December 31, 2023March 31, 2023
Accrued general and product liability, beginning of period$21,103 $22,575 
Estimated insurance recoveries(773)(889)
Add provision for claims1,251 3,025 
Deduct payments for claims(2,231)(3,608)
Accrued general and product liability, end of period$19,350 $21,103 
Estimated insurance recoveries(7,496)(8,272)
Net accrued general and product liability, end of period$11,854 $