Q3 2026 Columbus McKinnon Corp Earnings Call

February 9, 2026

Speaker #1: Good afternoon and welcome to Columbus McKinnon's third quarter fiscal 2026 earnings conference call. My name is Constantine, and I will be your conference operator today.

Operator: Good afternoon and welcome to Columbus McKinnon's Q3 fiscal 2026 earnings conference call. My name is Constantine, and I will be your conference operator today. As a reminder, this call is being recorded, and I would now like to turn the conference over to Kristine Moser, Vice President of Investor Relations and Treasurer.

Speaker #1: As a reminder, this call is being recorded, and I would now like to turn the conference over to Kristine Moser, Vice President of Investor Relations.

Speaker #1: Treasurer. Thank you and

Kristine Moser: Thank you, and welcome everyone to our call. On today's call, we will be covering our Q3 fiscal 2026 financial and operational results. On the call with me today are David Wilson, our President and Chief Executive Officer, and Greg Rustowicz, our Chief Financial Officer. In a moment, David and Greg will walk you through our financial and operational performance for the quarter. The earnings release and presentation to supplement today's call are available for download on our Investor Relations website at investors.cmco.com. Before we begin our remarks, please let me remind you that we have our Safe Harbor Statement on slide 2. During the course of this call, management may make forward-looking statements in regards to our current plans, beliefs, and expectations.

Speaker #2: Welcome, everyone, to our call. On today's call, we will be covering our third quarter fiscal 2026 financial and operational results. On the call with me today are David Wilson, the President and Chief Executive Officer, and Greg Rustowicz, our Chief Financial Officer.

Q3 2026 Columbus McKinnon Corp Earnings Call

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Columbus McKinnon

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Q3 2026 Columbus McKinnon Corp Earnings Call

CMCO

Monday, February 9th, 2026 at 10:00 PM

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Speaker #2: In a moment, David and Greg will walk you through our financial and operational performance for the quarter. The earnings release and presentation to supplement today's call are available for download on our Investor Relations website at investors.cmco.com.

Speaker #2: Before we begin our remarks, please let me remind you that we have our Safe Harbor statement on slide 2. During the course of this call, management may make forward-looking statements in regard to our current plans, beliefs, and expectations.

Speaker #2: These statements are not guarantees of future performance and are subject to a number of risks, uncertainties, and other factors that can cause actual results and events to differ materially from the results and events contemplated by these forward-looking statements.

Kristine Moser: These statements are not guarantees of future performance and are subject to a number of risks, uncertainties, and other factors that can cause actual results and events to differ materially from the results and events contemplated by these forward-looking statements. I'd also like to remind you that management may refer to certain non-GAAP financial measures. You can find reconciliations of the most directly comparable GAAP financial measures on the company's Investor Relations website and in its filings with the Securities and Exchange Commission. Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by a question-and-answer session. We respectfully ask that you limit yourself to one question and one follow-up question. With that, I'll turn the call over to David.

Speaker #2: I'd also like to remind you that management may refer to certain non-GAAP financial measures. You can find reconciliations of the most directly comparable GAAP financial measures on the company's Investor Relations website and in its filings with the Securities and Exchange Commission.

Speaker #2: Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by a question-and-answer session.

Speaker #2: We respectfully ask that you limit yourself to one question and one follow-up question. With that, I'll turn the call over to

Speaker #2: We respectfully ask that you limit yourself to one question and one follow-up question. With that, I'll turn the call over to David. Thank you.

David Wilson: Thank you, Kristine, and good afternoon, everyone. Last week, we were very pleased to announce that we closed the Kito Crosby acquisition. We've been working diligently over the past few quarters towards closing this transformational acquisition and are excited to now get to work on delivering the benefits associated with bringing these two innovative companies with industry-leading technical expertise, customer-centric cultures, and a shared vision for operational excellence together. We are welcoming the Kito Crosby team to Columbus McKinnon as we combine the best of our collective talent and capabilities to deliver an enhanced value proposition for our customers. Additionally, we expect to close the previously announced divestiture of our US Power chain hoist and chain operations by the end of this quarter. This will be the final step in aligning the combined company towards our next phase of growth. Let me now shift to our quarterly results.

Speaker #3: You, Kristine, and good afternoon, everyone. Last week, we were very pleased to announce that we closed the Keto Crosby acquisition. We've been working diligently over the past few quarters towards closing this transformational acquisition and are excited to now get to work on delivering the benefits associated with bringing these two innovative companies with industry-leading technical expertise, customer-centric cultures, and a shared vision for operational excellence together.

Speaker #3: We are welcoming the Keto Crosby team to Columbus McKinnon as we combine the best of our collective talent and capabilities to deliver an enhanced value proposition for our customers.

Speaker #3: Additionally, we expect to close the previously announced divestiture of our U.S. power chain hoist and chain operations by the end of this quarter. This will be the final step in aligning the combined company toward our next phase of growth.

Speaker #3: Let me now shift to our quarterly results. As part of our permanent financing, which was recently completed at attractive interest rates, we pre-announced key metrics for the third quarter and are happy to share that we came in at the high end of those ranges and delivered double-digit growth.

David Wilson: As part of our permanent financing, which was recently completed at attractive interest rates, we pre-announced key metrics for the Q3 and are happy to share that we came in at the high end of those ranges. We delivered double-digit growth in sales, orders, EPS, and backlog year over year as we saw continued stabilization in U.S. short-cycle order activity and capitalized on our strong project backlog. We continue to see an attractive global funnel of opportunities, and our backlog remains at healthy levels, positioning us well for the future. Adjusted EBITDA was $40 million, with an adjusted EBITDA margin of 15.4%. This margin was flat to the prior quarter as our tariff mitigation actions offset normal seasonality. Adjusted EPS improved 11% from the prior year to $0.62. Additionally, we made meaningful progress on operational improvement, tariff mitigation, and integration preparedness initiatives.

Speaker #3: We saw sales, orders, EPS, and backlog grow year-over-year as we saw continued stabilization in U.S. short-cycle order activity and capitalized on our strong project backlog. We continue to see an attractive global funnel of opportunities, and our backlog remains at healthy levels, positioning us well for the future.

Speaker #3: Adjusted EBITDA was $40 million, with an adjusted EBITDA margin of 15.4%. This margin was flat to the prior quarter, as our tariff mitigation actions offset normal seasonality.

Speaker #3: Adjusted EPS improved 11% from the prior year to $62. Additionally, we made meaningful progress on operational improvement, tariff mitigation, and integration preparedness initiatives. While it's becoming increasingly difficult to estimate tariff costs as vendor price increases begin to replace tariff-specific surcharges, we believe that we came in slightly ahead of our $10 million net tariff impact in the first three quarters of fiscal 2026.

David Wilson: While it's becoming increasingly difficult to estimate tariff costs as vendor price increases begin to replace tariff-specific surcharges, we believe that we came in slightly ahead of our $10 million net tariff impact in the first three quarters of fiscal 2026. We continue to expect that we will achieve tariff cost neutrality by the end of the year and margin neutrality in fiscal 2027. I'd like to thank the entire Columbus McKinnon team for their unwavering commitment to our customers and strong execution in the quarter. The team successfully managed through a complex set of strategic objectives and an evolving market landscape while delivering ahead of our initial expectations for the quarter. Orders were up 11% to $247 million. The US grew 15% driven by strength in lifting, automation, and precision conveyance, and EMEA grew 3% despite the continuation of a weaker economic landscape that is causing slower order conversion.

Speaker #3: We continue to expect that we will achieve tariff cost neutrality by the end of the year and margin neutrality in fiscal 2027. I'd like to thank the entire Columbus McKinnon team for their unwavering commitment to our customers and strong execution in the quarter.

Speaker #3: The team successfully managed through a complex set of strategic objectives and an evolving market landscape, while delivering ahead of our initial expectations for the quarter.

Speaker #3: Orders were up 11% to $247 million. The U.S. grew 15%, driven by strength in lifting, automation, and precision conveyance. EMEA grew 3%, despite the continuation of a weaker economic landscape that has caused slower order conversion.

Speaker #3: Globally, growth was balanced across both short-cycle and project orders, reflecting stabilization of short-cycle demand; traction on our commercial initiatives; and implementation of tariff-related price increases.

David Wilson: Globally, growth was balanced across both short-cycle and project orders, reflecting stabilization of short-cycle demand, traction on our commercial initiatives, and implementation of tariff-related price increases. Our pipeline of quotation activity remains encouraging, and we continue to see a strong funnel of new business opportunities. We expect US demand to remain healthy, driven by lower interest rates, favorable CapEx deduction rules as part of the new tax legislation, and benefits from onshoring, all of which will serve as tailwinds for our business. As mentioned previously, in EMEA, we expect choppiness to persist given the forecast for a challenging demand environment in the near term. While the pipeline for new business continues to build, order conversion is expected to continue to be slower than typical.

Speaker #3: Our pipeline of quotation activity remains encouraging, and we continue to see a strong funnel of new business opportunities. We expect U.S. demand to remain healthy, driven by lower interest rates, favorable CapEx deduction rules as part of the new tax legislation, and benefits from onshoring, all of which will serve as tailwinds for our business.

Speaker #3: As mentioned previously, in EMEA, we expect choppiness to persist given the forecast for a challenging demand environment in the near term. While the pipeline for new business continues to build, order conversion is expected to continue to be slower than typical.

Speaker #3: We are focusing our efforts on vertical end markets with tailwinds like metal processing, government and defense, and heavy equipment, as well as end markets where we've been building a leadership position like battery production, e-commerce, food and beverage, and aerospace.

David Wilson: We are focusing our efforts on vertical end markets with tailwinds like metal processing, government and defense, and heavy equipment, as well as end markets where we've been building a leadership position like battery production, e-commerce, food and beverage, and aerospace. Our backlog is strong, up 15% versus the prior year to $342 million, with an increase across all platforms in both our short-cycle and project businesses as we've continued to deliver on our commercial initiatives and capitalize on US market stabilization. I'll now turn the call over to Greg to share the details of our Q3 financial results. Thank you, David. As David shared, Columbus McKinnon delivered strong results in Q3 with double-digit growth in sales, orders, backlog, and adjusted EPS. We delivered net sales of $258.7 million, up 10.5% from the prior year, driven by higher volume, pricing, and favorable currency translation.

Speaker #3: Our backlog is strong, up 15% versus the prior year to $342 million, with an increase across all platforms in both our short-cycle and project businesses, as we've continued to deliver on our commercial initiatives and capitalize on U.S.

Speaker #3: Market stabilization. I'll now turn the call over to Greg to share the details of our third-quarter financial results.

Greg Rustowicz: Thank you, David. As David shared, Columbus McKinnon delivered strong results in Q3 with double-digit growth in sales, orders, backlog, and adjusted EPS. We delivered net sales of $258.7 million, up 10.5% from the prior year, driven by higher volume, pricing, and favorable currency translation.

Speaker #4: Thank you, David. As David shared, Columbus McKinnon delivered strong results in the third quarter, with double-digit growth in sales, orders, backlog, and adjusted EPS.

Speaker #4: We delivered net sales of $258.7 million, up 10.5% from the prior year, driven by higher volume, pricing, and favorable currency translation. We saw particular strength in lifting, leading our motion, and automation.

David Wilson: We saw particular strength in lifting, linear motion, and automation. Growth was strongest in North America, driven by stabilization of demand in the U.S., and we saw modest organic growth in EMEA against a weaker economic backdrop. Pricing impacts continued to accelerate, and we expect pricing to continue to ramp over the next several quarters as we work through our backlog. Short-cycle sales increased 13%, without performance in the U.S. benefiting from both pricing and volume growth. Project-related sales increased 8% as we converted backlog to revenue globally. Gross profit of $89.2 million increased $7.1 million, or 8.6%, versus the prior year on a GAAP basis, reflecting higher sales volume, price increases, and favorable FX rates. We also had lower factory consolidation and startup costs in the quarter compared to a year ago, which was partially offset by negative tariff-related impacts.

Greg Rustowicz: We saw particular strength in lifting, linear motion, and automation. Growth was strongest in North America, driven by stabilization of demand in the U.S., and we saw modest organic growth in EMEA against a weaker economic backdrop. Pricing impacts continued to accelerate, and we expect pricing to continue to ramp over the next several quarters as we work through our backlog. Short-cycle sales increased 13%, without performance in the U.S. benefiting from both pricing and volume growth. Project-related sales increased 8% as we converted backlog to revenue globally. Gross profit of $89.2 million increased $7.1 million, or 8.6%, versus the prior year on a GAAP basis, reflecting higher sales volume, price increases, and favorable FX rates. We also had lower factory consolidation and startup costs in the quarter compared to a year ago, which was partially offset by negative tariff-related impacts.

Speaker #4: Growth was strongest in North America, driven by stabilization of demand in the U.S., and we saw modest organic growth in EMEA against a weaker economic backdrop.

Speaker #4: Pricing impacts continued to accelerate, and we expect pricing to continue to ramp over the next several quarters as we work through our backlog. Short-cycle sales increased 13%, without performance in the U.S.

Speaker #4: Benefiting from both pricing and volume growth. Project-related sales increased 8%, as we converted backlog to revenue globally. Gross profit of $89.2 million increased $7.1 million, or 8.6%, versus the prior year on a GAAP basis, reflecting higher sales volume, price increases, and favorable FX rates.

Speaker #4: We also had lower factory consolidation and startup costs in the quarter, compared to a year ago, which was partially offset by negative tariff-related impacts.

Speaker #4: On a GAAP basis, our gross margin was 34.5%, and on an adjusted basis, our gross margin was 35.1%. Adjusted gross margin contracted 170 basis points year-over-year due to unfavorable product mix and the impact of tariffs.

David Wilson: On a GAAP basis, our gross margin was 34.5%, and on an adjusted basis, our gross margin was 35.1%. Adjusted gross margin contracted 170 basis points year-over-year due to unfavorable product mix and the impact of tariffs. Product mix this quarter was unfavorably impacted by the timing of sales for our higher margin precision conveyance platform, as well as a less favorable product mix in our US lifting business. We also had more rail project shipments globally, and less linear motion sales, which negatively affected margins. SG&A expenses this quarter included $6.3 million of acquisition-related costs for the Kito Crosby transaction, as well as our pending divestiture. Excluding these items, adjusted SG&A, as a percent of sales, was unchanged from the prior year, even with the lapping of a favorable incentive compensation accrual release.

Greg Rustowicz: On a GAAP basis, our gross margin was 34.5%, and on an adjusted basis, our gross margin was 35.1%. Adjusted gross margin contracted 170 basis points year-over-year due to unfavorable product mix and the impact of tariffs. Product mix this quarter was unfavorably impacted by the timing of sales for our higher margin precision conveyance platform, as well as a less favorable product mix in our US lifting business. We also had more rail project shipments globally, and less linear motion sales, which negatively affected margins. SG&A expenses this quarter included $6.3 million of acquisition-related costs for the Kito Crosby transaction, as well as our pending divestiture. Excluding these items, adjusted SG&A, as a percent of sales, was unchanged from the prior year, even with the lapping of a favorable incentive compensation accrual release.

Speaker #4: Product mix this quarter was unfavorably impacted by the timing of sales for our higher-margin Precision Conveyance platform, as well as a less favorable product mix in our U.S.

Speaker #4: Lifting business. We also had more rail project shipments globally, and less linear motion sales, which negatively affected margins. RSG&A expenses this quarter included $6.3 million of acquisition-related costs for the Kito Crosby transaction, as well as our pending RSG&A as a percent of divestiture.

Speaker #4: Excluding these items, adjusted sales was unchanged from the prior year, even with the lapping of a favorable incentive compensation accrual release. As a result, we generated operating income of $16.2 million in the quarter on a GAAP basis, and adjusted operating income of $24.5 million.

David Wilson: As a result, we generated operating income of $16.2 million in the quarter on a GAAP basis and adjusted operating income of $24.5 million. Adjusted operating margin was 9.5% in the quarter. This resulted in adjusted EBITDA of $39.8 million in the Q3, with an adjusted EBITDA margin of 15.4%. Please note the calculation of adjusted EBITDA and margin now includes an add-back for stock compensation expense to be more consistent with our credit agreement definition. GAAP income per diluted share for the quarter was $0.21, up $0.07, or 50% from the prior year. Adjusted earnings per share was $0.62, up $0.06, or 11% year-over-year due to higher net income resulting from higher sales volume and pricing, as well as lower foreign exchange losses in the current year compared to the prior year.

Greg Rustowicz: As a result, we generated operating income of $16.2 million in the quarter on a GAAP basis and adjusted operating income of $24.5 million. Adjusted operating margin was 9.5% in the quarter. This resulted in adjusted EBITDA of $39.8 million in the Q3, with an adjusted EBITDA margin of 15.4%. Please note the calculation of adjusted EBITDA and margin now includes an add-back for stock compensation expense to be more consistent with our credit agreement definition. GAAP income per diluted share for the quarter was $0.21, up $0.07, or 50% from the prior year. Adjusted earnings per share was $0.62, up $0.06, or 11% year-over-year due to higher net income resulting from higher sales volume and pricing, as well as lower foreign exchange losses in the current year compared to the prior year.

Speaker #4: Adjusted operating margin was 9.5% in the quarter. This resulted in adjusted EBITDA of $39.8 million in the third quarter, with an adjusted EBITDA margin of 15.4%.

Speaker #4: Please note, the calculation of adjusted EBITDA and margin now includes an add-back for stock compensation expense, to be more consistent with our credit agreement definition.

Speaker #4: Gap income per diluted share for the quarter was $0.21, up $0.07, or 50%, from the prior year. Adjusted earnings per share was $0.62, up $0.06, or 11% year-over-year, due to higher net income resulting from higher sales volume and pricing, as well as lower foreign exchange losses in the current year compared to the prior year.

Speaker #4: Free cash flow in the quarter was $16.5 million, reflecting higher earnings, favorable working capital, increases in customer deposits, and lower cash taxes. This was partially offset by $6.7 million of transaction-related cash payments.

David Wilson: Free cash flow in the quarter was $16.5 million, reflecting higher earnings, favorable working capital, increases in customer deposits, and lower cash taxes, partially offset by $6.7 million of transaction-related cash payments. As David previously mentioned, we're pleased to have announced the closing of the Kito Crosby acquisition. Now that we've closed the transaction, we have begun integration activities, including executing against our $70 million net run-rate cost synergy target. In connection with the acquisition, we completed our permanent financing to fund the transaction, which included a new $1.65 billion term loan B based on three months SOFR plus 350 basis points, which was funded at 99% of face value, $900 million of senior secured notes with a coupon of 7.8% funded at par, $800 million of perpetual convertible preferred stock, along with a new $500 million revolving credit facility, which significantly increases the company's liquidity.

Greg Rustowicz: Free cash flow in the quarter was $16.5 million, reflecting higher earnings, favorable working capital, increases in customer deposits, and lower cash taxes, partially offset by $6.7 million of transaction-related cash payments. As David previously mentioned, we're pleased to have announced the closing of the Kito Crosby acquisition. Now that we've closed the transaction, we have begun integration activities, including executing against our $70 million net run-rate cost synergy target. In connection with the acquisition, we completed our permanent financing to fund the transaction, which included a new $1.65 billion term loan B based on three months SOFR plus 350 basis points, which was funded at 99% of face value, $900 million of senior secured notes with a coupon of 7.8% funded at par, $800 million of perpetual convertible preferred stock, along with a new $500 million revolving credit facility, which significantly increases the company's liquidity.

Speaker #4: As David previously mentioned, we're pleased to have announced the closing of the Keto Crosby acquisition. Now that we've closed the transaction, we have begun integration activities, including executing against our $70 million net run rate cost synergy target.

Speaker #4: In connection with the acquisition, we completed our permanent financing to fund the transaction, which included a new $1.65 billion term loan B based on three-month SOFR plus 350 basis points, which was funded at 99% of face value.

Speaker #4: $900 million of senior secured notes, with a coupon of 7.8%, funded at par; $800 million of perpetual convertible preferred stock, along with a new $500 million revolving credit facility, which significantly increases the company's liquidity.

Speaker #4: We are pleased that our financing rates came in below our initial estimate of approximately 8%, accelerating our ability to pay down debt and delever the balance sheet.

David Wilson: We are pleased that our financing rates came in below our initial estimate of approximately 8%, accelerating our ability to pay down debt and delever the balance sheet. Additionally, we increased the amount of our Term loan B in the capital structure, which is prepayable without penalty. With significant cash flow generation expected, we have the flexibility to pay down debt ahead of scheduled amortization, which will further reduce interest expense. Additionally, we intend to use the proceeds of our pending divestiture of our US Power chain hoist and chain operations, net of taxes and transaction fees, of approximately $160 million to pay down the Term loan B. We expect that transaction to close later this quarter. Going forward, the company's primary capital allocation priority will be debt repayment.

Greg Rustowicz: We are pleased that our financing rates came in below our initial estimate of approximately 8%, accelerating our ability to pay down debt and delever the balance sheet. Additionally, we increased the amount of our Term loan B in the capital structure, which is prepayable without penalty. With significant cash flow generation expected, we have the flexibility to pay down debt ahead of scheduled amortization, which will further reduce interest expense. Additionally, we intend to use the proceeds of our pending divestiture of our US Power chain hoist and chain operations, net of taxes and transaction fees, of approximately $160 million to pay down the Term loan B. We expect that transaction to close later this quarter. Going forward, the company's primary capital allocation priority will be debt repayment.

Speaker #4: Additionally, we increased the amount of our Term Loan B in the capital structure, which is prepayable without penalty. With significant cash flow generation expected, we have the flexibility to pay down debt ahead of scheduled amortization, which will further reduce interest expense.

Speaker #4: Additionally, we intend to use the proceeds of our pending divestiture of our U.S. power chain hoist and chain operations, net of taxes and transaction fees, of approximately $160 million to pay down the term loan B.

Speaker #4: We expect that transaction to close later this quarter. Going forward, the company's primary capital allocation priority will be debt repayment. We expect that our significant combined free cash flow will enable us to reduce our net leverage ratio to below four times by the end of fiscal 2028.

David Wilson: We expect that our significant combined free cash flow will enable us to reduce our net leverage ratio to below 4x by the end of fiscal 2028. Given the recently completed acquisition of Kito Crosby and the uncertainty around the timing of our pending divestiture, we are withdrawing our prior Columbus McKinnon standalone guidance for fiscal year 2026. As usual, we will provide guidance for fiscal 2027 on our earnings conference call in May 2026 when we report our fiscal year 2026 Q4 results. Certain transaction-related expenses, purchase accounting adjustments, and early integration costs are expected to be recorded in the fiscal Q4 of 2026. The impact of these costs, along with higher interest expense, is expected to be dilutive to GAAP earnings per share in the fourth quarter and for the full fiscal year of 2026.

Greg Rustowicz: We expect that our significant combined free cash flow will enable us to reduce our net leverage ratio to below 4x by the end of fiscal 2028. Given the recently completed acquisition of Kito Crosby and the uncertainty around the timing of our pending divestiture, we are withdrawing our prior Columbus McKinnon standalone guidance for fiscal year 2026. As usual, we will provide guidance for fiscal 2027 on our earnings conference call in May 2026 when we report our fiscal year 2026 Q4 results. Certain transaction-related expenses, purchase accounting adjustments, and early integration costs are expected to be recorded in the fiscal Q4 of 2026. The impact of these costs, along with higher interest expense, is expected to be dilutive to GAAP earnings per share in the fourth quarter and for the full fiscal year of 2026.

Speaker #4: Given the recently completed acquisition of Keto Crosby, and the uncertainty around the timing of our pending divestiture, we are withdrawing our prior Columbus McKinnon standalone guidance for fiscal year 2026.

Speaker #4: As usual, we will provide guidance for fiscal '27 on our earnings conference call in May 2026, when we report our fiscal year '26 fourth quarter results.

Speaker #4: Certain transaction-related expenses, purchase accounting adjustments, and early integration costs are expected to be recorded in the fiscal fourth quarter of 2026. The impact of these costs, along with higher interest expense, is expected to be dilutive to GAAP earnings per share in the fourth quarter and for the full fiscal year of 2026.

Speaker #4: We also expect significant transaction and other deal-related costs in the quarter, which will negatively impact free cash flow, both of which have been anticipated.

David Wilson: We also expect significant transaction and other deal-related costs in the quarter, which will negatively impact free cash flow, both of which have been anticipated. We are enthusiastic about the recently completed acquisition of Kito Crosby and our ability to achieve our stated long-term objectives. Our operational and commercial teams remain focused on business continuity and delivering on our operational and customer service initiatives. In addition, our integration management office has a dedicated team of cross-functional leaders to advance our progress on cost synergy realization and drive revenue synergy upside. While the acquisition closing process has gone on almost a year, we have used our time wisely to advance our integration and synergy plans. I want to add that we are excited to welcome the Kito Crosby team to the Columbus McKinnon family, and going forward, we are one team with a common shared vision of the future.

Greg Rustowicz: We also expect significant transaction and other deal-related costs in the quarter, which will negatively impact free cash flow, both of which have been anticipated. We are enthusiastic about the recently completed acquisition of Kito Crosby and our ability to achieve our stated long-term objectives. Our operational and commercial teams remain focused on business continuity and delivering on our operational and customer service initiatives. In addition, our integration management office has a dedicated team of cross-functional leaders to advance our progress on cost synergy realization and drive revenue synergy upside. While the acquisition closing process has gone on almost a year, we have used our time wisely to advance our integration and synergy plans. I want to add that we are excited to welcome the Kito Crosby team to the Columbus McKinnon family, and going forward, we are one team with a common shared vision of the future.

Speaker #4: We are enthusiastic about the recently completed acquisition of Keto Crosby and our ability to achieve our stated long-term objectives. Our operational and commercial teams remain focused on business continuity and delivering on our operational and customer service initiatives.

Speaker #4: In addition, our integration management office has a dedicated team of cross-functional leaders to advance our progress on cost synergy realization and drive revenue synergy upside.

Speaker #4: While the acquisition closing process has gone on almost a year, we have used our time wisely to advance our integration and synergy plans. I want to add that we are excited to welcome the Keto Crosby team to the Columbus McKinnon family, and going forward, we are one team with a common, shared vision of the future.

Speaker #4: Operator, we are now ready to take

David Wilson: Operator, we are now ready to take questions.

Greg Rustowicz: Operator, we are now ready to take questions.

Speaker #4: Questions. Ladies and gentlemen, we will now

Operator: Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press 2 followed by the number 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. If you would like to withdraw from the polling process, please press 2 followed by the number 2. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your first question comes from the line of Matt Somerville from D.A. Davidson. Please go ahead.

Speaker #5: We will now begin the question-and-answer session. If you have any questions, please press star followed by the number 1 on your touch-tone phone. You will hear a prompt that your hand has been raised.

Speaker #5: If you would like to withdraw from the polling process, please press star followed by the number 2. If you are using a speakerphone, please make sure to lift your handset before pressing any keys.

Speaker #5: Your first question comes from the line of Matt Somerville from D.A. Davidson. Please go ahead.

Speaker #6: Thanks. A couple of questions. First, can you remind us a bit on the seasonality in the Keto Crosby business, kind of compare and contrast versus that of the core business?

Matthew Summerville: Thanks. A couple of questions. First, can you remind us a bit on the seasonality in the Kito Crosby business, kind of compare and contrast versus that of the core business, and also talk about the timing in which this $70 million in cost-related synergies is realized, meaning how much is sort of in year one versus year two versus year three? Any kind of help you can give there, and then I will follow up.

Speaker #6: And also, talk about the timing in which this $70 million in cost-related synergies is realized—meaning, how much is sort of in year one versus year two versus year three.

Speaker #6: Any kind of help you can give there, and then I have a

Speaker #6: follow-up.

David Wilson: Sure. Thanks, Matt. So as you know, Columbus McKinnon, as a standalone business, has its strongest quarter in the fiscal fourth quarter, which is the quarter that we're in ending in March. Kito Crosby's year-end is a December year-end, and they also typically have their strongest quarter seasonally in the fourth quarter for them, so our fiscal third quarter. And then nothing beyond typical trends in the industry that would be driving normal activity in the business, which in our business, as we compete in the same markets, we tend to see a first half that's more or less equivalent to the second half and a bit of a stronger second quarter and a stronger fourth quarter. So I think we expect to see something similar with their business profile.

Speaker #7: Thanks, Matt. So, as you know, Columbus McKinnon, as a Sure standalone business, has its strongest quarter in the fiscal fourth quarter, which is the quarter that we’re in, ending in March.

Speaker #7: Keto Crosby's year-end is a December year-end, and they also typically have their strongest quarter seasonally in the fourth quarter for them—so, our fiscal third quarter.

Speaker #7: And then nothing beyond typical trends in the industry that would be driving normal activity in the business, which, in our business, as we compete in the same markets, we tend to see a first half that's more or less equivalent to the second half.

Speaker #7: And a bit of a stronger second quarter, and a stronger fourth quarter. So I think we expect to see something similar with their business, $70 million profile.

Speaker #7: And then, from a synergies perspective, we expect roughly 20% in year one, and that number going up to 60% realized in year two.

David Wilson: Then from a $70 million of synergies perspective, we expect roughly 20% in year one, and that number going up to 60% realized in year two, and then the full 100% of the $70 million realized in year three.

Speaker #7: And then the full 100% of the $70 million realized in year three.

Speaker #6: Got it. And then, as you kind of think about it, I would assume the EBITDA cadence for Keto would follow a similar pattern. So if I’m mistaken on that, please correct me.

Matthew Summerville: Got it. And then as you kind of think about, I would assume the EBITDA cadence for Kito would follow a similar pattern. So if I'm mistaken on that, please correct me. But then I was hoping you could do kind of a deeper dive, kind of around the horn, if you will, on your major end markets in addition to what you said in your prepared remarks. So a bit of a deeper dive, if you will, there and maybe add a little bit of geographic color as you do it. Thank you.

Speaker #6: But then I was hoping you could do kind of a deeper dive—kind of 'around the horn,' if you will—on your major end markets, in addition to what you said in your prepared remarks.

Speaker #6: So, a bit of a deeper dive, if you will, there, and maybe add a little bit of geographic color as you do it. Thank you.

Speaker #6: You. Well, Matt, the first part of your

David Wilson: Well, Matt, the first part of your question, you would expect that Kito Crosby is going to be in the 22% to 23% EBITDA margin range with the sales level that they have. So nothing unusual from that perspective.

Speaker #7: Question, you would expect that Keto Crosby is going to be in the 22 to 23 percent EBITDA margin range with the sales level that they have.

Speaker #7: So, nothing unusual from that perspective.

Speaker #4: Yeah. And then, Mark, I'm sorry. As it relates to markets, we benefit from broad-based exposure to many end markets, as does Kito Crosby. In this past quarter, we're seeing general industrial space strength and investment in automation.

Greg Rustowicz: Yeah. And then, Mark, I'm sorry. As it relates to markets, we benefit from broad-based exposure to many end markets, as does Kito Crosby. In this past quarter, we're seeing general industrial space strength and investment in automation. We saw a lot of demand in the automation space. We also saw a really nice demand profile for e-commerce orders, and we're seeing those start to come back. Bright spots also included construction, aerospace, and government, heavy machinery, and food and beverage. And then some pockets of slower demand included general stocking distributors who managed inventory into the year-end, as well as energy and utilities, although this is impacted by project timing, and we expect that to improve. As it relates to geographic demand, orders in the US were up 15%, and orders in Europe were up 3%. But much of that was FX-driven.

Speaker #4: We saw a lot of demand in the automation space. We also saw a really nice demand profile for e-commerce orders, and we're seeing those start to come back.

Speaker #4: Bright Spots also included construction, aerospace, and government. Heavy machinery and food and beverage. And then some pockets have slower demand, included general stocking distributors who managed inventory into the as energy and utilities, although this is impacted by project timing, and we expect that to improve.

Speaker #4: As it relates to geographic demand, orders in the U.S. were up 15%, and orders in Europe were up 3%. But much of that was FX-driven.

Speaker #4: And so we saw demand in Europe continue to be slower than anticipated. And as we provided comments in the prepared remarks, we anticipate that that slower decision-making is going to continue into the coming—

Greg Rustowicz: And so we saw demand in Europe continue to be slower than anticipated. And as we provided comments in the prepared remarks, we anticipate that that slower decision-making is going to continue into the coming quarter.

Speaker #4: quarter. Got it.

Matthew Summerville: Got it. Thank you, David. Thank you, Greg.

Speaker #6: Thank you, David. Thank you,

Speaker #6: Thank you, David. Thank you, Greg. You're welcome.

Greg Rustowicz: You're welcome. Thanks, Matt.

Speaker #4: Thanks,

Speaker #4: Matt. My next

Operator: My next question is from the line of James Kirby from J.P. Morgan. Please go ahead.

Speaker #5: Question is from the line of James Kirby from JPMorgan. Please go ahead.

Speaker #4: Hey, good afternoon, guys, and congrats on closing on the acquisition. I guess just on—I know you aren't giving forward-quarter or even next fiscal year guidance here.

Jonathan Tanwanteng: Hey, good afternoon, guys, and congrats on closing on the acquisition. I guess just on, I know you aren't giving forward quarter or even next fiscal year guidance here, but just, I guess based on the original assumptions embedded in the deal when it was announced a year ago, how are both businesses trending? And I hope you can comment on that now that the deal is closed relative to your initial assumptions.

James Kirby: Hey, good afternoon, guys, and congrats on closing on the acquisition. I guess just on, I know you aren't giving forward quarter or even next fiscal year guidance here, but just, I guess based on the original assumptions embedded in the deal when it was announced a year ago, how are both businesses trending? And I hope you can comment on that now that the deal is closed relative to your initial assumptions.

Speaker #4: But just, I guess, based on the original assumptions embedded in the deal when it was announced a year ago, how are both businesses as closed relative to your initial assumptions?

Greg Rustowicz: Sure. And what I would say is that we provided in our 14 January press release when we announced the divestiture a pro forma fiscal year '26 guidance range, assuming that we would own Kito Crosby for the full year, as well as that we divested the chain and electric chain hoist business at the beginning of the year. So kind of a pure pro forma view inclusive of $70 million worth of net run-rate synergies. And in that set of assumptions, we were running somewhere between $2 billion and roughly $2.1 billion in terms of revenue. And then we had EBITDA that was in the $440 to 460 million range in the combined business. Now, you'd have to get to a base business without the synergies. You'd want to back off $70 million from that on the assumed benefit over the three years.

Speaker #7: That we provided, in our January 14th press release when we announced the divestiture, a pro forma fiscal year '26 guidance range assuming that we would own Keto Crosby for the full year, as well as that we divested the chain and electric chain hoist business at the beginning of the year.

Speaker #7: So, kind of a pure pro forma view, inclusive of $70 million worth of net run-rate synergies. And in that set of assumptions, we were running somewhere between $2 billion and roughly $2.1 billion.

Speaker #7: We had, in terms of revenue, and then we had EBITDA that was in the $440 to $460 million range, in the combined business. Now, you'd have to get to a base business without the synergies.

Speaker #7: You'd want to back off $70 million from that, on the assumed benefit over the three years. And then we could add back in the 20% for year one if you were thinking about the business from a go-forward basis.

Greg Rustowicz: And then we could add back in the 20% for year one if you were thinking about the business from a go-forward basis. And that would be the TTM performance from 31 March backwards from a range perspective. I hope that helps, James.

Speaker #7: And that would be the TTM performance from March 31st backwards, from a range perspective. I hope that helps, James.

Speaker #5: Gotcha. It does. I was speaking more in terms of the macro background, and I'll weave that into my second question here. But obviously, a really strong start to the calendar year.

Jonathan Tanwanteng: Gotcha. It does. I was speaking more in terms of the macro background. And I'll weave that into my second question here, but obviously, a really strong start to the calendar year. ISM data was strong. Short-cycle was up 13% last quarter or the quarter you just reported. And maybe just following on Matt's question, is that sustainable, or do you think that is somewhat of a recovery from a slowdown last year? And maybe just adding more color into the sectors driving that forward order pipeline.

James Kirby: Gotcha. It does. I was speaking more in terms of the macro background. And I'll weave that into my second question here, but obviously, a really strong start to the calendar year. ISM data was strong. Short-cycle was up 13% last quarter or the quarter you just reported. And maybe just following on Matt's question, is that sustainable, or do you think that is somewhat of a recovery from a slowdown last year? And maybe just adding more color into the sectors driving that forward order pipeline.

Speaker #5: ISM data was strong. Short cycle is up 13%. Last quarter, or the quarter you just reported, is that—and maybe just following on Matt's question—is that sustainable, or do you think that is somewhat of a recovery from a slowdown last year?

Speaker #5: And maybe turning more color into the sectors driving that forward order pipeline.

Speaker #7: Yeah, so short cycle business is robust. We did see a 10% year-over-year increase in short cycle orders last quarter. And seasonally, it's sequentially down, typically, versus the second quarter as stocking distributors take some inventory out of the channel.

Greg Rustowicz: Yeah. So short cycle business is robust. We did see a 10% year-over-year increase in short cycle orders last quarter. And seasonally, it's sequentially down, typically, versus Q2 as stocking distributors take some inventory out of the channel. But as we head into Q1 of this year, we do see orders up slightly over prior year in the period to date through January. And so continue to anticipate that the short cycle demand remains robust, notably in the United States. And we feel good about the demand funnel. Our funnel is quite healthy. And that is a reference to global activity and inclusive of EMEA, where decisions are a little bit slower given the overall view of large economies there, notably the IFO index for Germany as a leading indicator that we're looking at.

Speaker #7: But as we head into the first quarter of this year, we do see orders up slightly over the prior year in the period to date through January.

Speaker #7: And so, we continue to anticipate that the short-cycle demand remains robust, notably in the United States. And we feel good about the demand funnel.

Speaker #7: Our funnel is quite healthy, and that is a reference to global activity, and inclusive of EMEA, where decisions are a little bit slower, given the overall view of large economies there— notably the IFO Index for Germany, as a leading indicator that we're looking at.

Speaker #7: But as you said, we see good trends in the U.S., and we're encouraged by that demand profile and would see that continuing for our business at least into the first half of this year.

Greg Rustowicz: But as you said, we see good trends in the US, and we're encouraged by that demand profile and would see that continuing for our business at least into the first half of this year.

Speaker #4: And James, just to follow up and circle back on the beginning part of your question. So we did pre-announce ranges for Keto Crosby's $1,231 results a year ago.

David Wilson: James, just to follow up on circle back on the beginning part of your question. So we did pre-announce ranges for Kito Crosby's 12/31 results. A year ago, when we announced the deal, we were pointing to about $1.1 billion in revenue and $263 million of Adjusted EBITDA. And with the 8-K we put out on 14 January, we ranged their sales at between $1.14 billion and $1.15 billion, so up probably 3% to 4%, and Adjusted EBITDA between $273 million and $283 million, so up nicely.

Speaker #4: And we announced the deal. We were pointing to about $1.1 billion in revenue and $263 million of adjusted EBITDA. And with the 8K we put out on January 14th, we ranged their sales at between a billion and $140 million and a billion and $150 million, so up.

Speaker #4: Probably three to EBITDA between $273 and $283 million, so up.

Speaker #4: nicely. Thanks,

Speaker #5: Got it. I appreciate the color.

Jonathan Tanwanteng: Got it. I appreciate the color, guys.

James Kirby: Got it. I appreciate the color, guys.

Speaker #5: guys.

Greg Rustowicz: Thanks, James.

Speaker #4: James.

Speaker #5: My next question comes from the line of Steve Ferrazzani from Sidoti. Please go ahead.

Operator: My next question comes from the line of Steve Ferrazzani from Sidoti. Please go ahead.

Speaker #5: ahead. Good evening, everyone.

James Kirby: Good evening, everyone. Just wanted to touch on the margins and tariff offsets a little bit. I'm trying to figure out the margin squeeze year-over-year this quarter, how much of that's from tariffs and how much of that is from mix. I think you pointed to some more rail, lower margin rail deliveries this quarter, and then what levers you need to pull that remain to get you to tariff margin neutrality in fiscal 2027, your confidence to get there.

Steve Ferrazzani: Good evening, everyone. Just wanted to touch on the margins and tariff offsets a little bit. I'm trying to figure out the margin squeeze year-over-year this quarter, how much of that's from tariffs and how much of that is from mix. I think you pointed to some more rail, lower margin rail deliveries this quarter, and then what levers you need to pull that remain to get you to tariff margin neutrality in fiscal 2027, your confidence to get there.

Speaker #8: Just wanted to touch on the margins and tariff offsets a little bit. I'm trying to figure out the margin squeeze year over year this quarter—how much of that's from tariffs, and how much of that is from mix. I think you pointed to some more lower margin rail deliveries this quarter.

Speaker #8: And then, what levers do you need to pull, the remaining, to get you to tariff margin neutrality in fiscal '27, and your confidence to get there?

Speaker #8: there.

Speaker #4: Yeah. Thanks,

Greg Rustowicz: Yeah. Thanks, Steve. And I would say just at a high level, the biggest impact was mix, followed by tariffs. And really, we had a mix issue as it related to more unit sales in lifting equipment versus part sales. And that obviously bodes well for future aftermarket opportunities with bigger installed base, but that consumed a bunch of our capacity in the quarter and reduced the opportunity to produce and sell parts. We also had a lower revenue number for precision conveyance product, and that was just based on the timing and delivery. Orders in that business in the US are up considerably, and we have a significant backlog still related to the PowerCo orders that we received previously from Montratec. But based on phasing, delivery in the quarter was lower on a relative basis, and therefore, those two factors really led to a reduction in margins.

Speaker #4: Steve. And I would say, just at a high level, the biggest impacts were backed with mix, followed by tariffs. And really, we had a mix issue as it related to more unit sales in lifting equipment versus part sales.

Speaker #4: And that obviously bodes well for the future. Aftermarket opportunities with a bigger installed base, but that consumed a bunch of our capacity in the quarter and reduced the opportunity to produce and sell parts.

Speaker #4: We also had a lower revenue number for the precision conveyance product, and that was just based on the timing and delivery. Orders in that business in the U.S. are up considerably.

Speaker #4: And we have a significant backlog still related to the PowerCo orders that we received previously from Entratech. But based on phasing, delivery in the quarter was lower on a relative basis.

Speaker #4: And therefore, those two factors really led to a reduction in margins. As you know, rail shipments do have an impact on overall margin, and the mix of rail versus actuation or screw jack sales into the OEM space—where the machine builders market is a mixed challenge for us—is something that we're navigating as the markets in Europe are still growing or picking back up in the wake of a slowdown for machine building.

Greg Rustowicz: As you know, rail shipments do have an impact on overall margin, and the mix of rail versus actuation or screwjack sales into the OEM space or the machine builders market is a mixed challenge for us that we're navigating as the markets in Europe are still growing or picking back up in the wake of a slowdown for machine building activity.

Speaker #4: activity. And then on

Operator: And then on your confidence level of.

Speaker #8: Your confidence level—yeah, the confidence level and ability to get to margin neutrality. Is it in terms of tariffs?

James Kirby: Yeah, the confidence level and ability to get to margin neutrality in terms of tariffs.

Steve Ferrazzani: Yeah, the confidence level and ability to get to margin neutrality in terms of tariffs.

Speaker #4: Yeah, absolutely. We still anticipate that as we exit this year, we're at margin neutrality relative to the tariff impacts. And that is cost neutrality, I should say.

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Q3 2026 Columbus McKinnon Corp Earnings Call

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