Columbus McKinnon Navigates Mixed Earnings Call

Columbus Mckinnon ((CMCO)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for Columbus McKinnon reflected a mixed sentiment. While the company celebrated strong order growth and a robust backlog, challenges such as a year-over-year decline in sales, tariff impacts, and gross margin contraction were also highlighted. These mixed signals suggest a company navigating both opportunities and obstacles in its current market environment.

Record Orders in Fiscal Year 2025

Columbus McKinnon reported record orders in fiscal year 2025, marking a 4% increase compared to the previous year on a constant currency basis. This growth was primarily driven by an 8% increase in project-related orders and notable strength in precision conveyance, underscoring the company’s strategic focus on expanding its project pipeline.

Strong Backlog Growth

The company saw a significant 15% increase in its backlog, reaching $322.5 million. This positions Columbus McKinnon well for fiscal 2026, providing a buffer against potential market fluctuations and supporting future revenue streams.

Improved Safety Metrics

In a positive development, Columbus McKinnon improved its Total Recordable Incident Rate (TRIR) to a top-tier level of 0.54. This achievement highlights the company’s commitment to maintaining high safety standards across its operations.

Enhanced Customer Experience

The company also made strides in enhancing customer experience, as evidenced by a 10-point increase in its net promoter score within its European, Middle East, and Africa businesses. This improvement reflects a stronger customer satisfaction and loyalty in these regions.

Operational Execution and Cost Management

Despite facing geopolitical and trade policy uncertainties, Columbus McKinnon remains focused on operational execution and cost management. These efforts are crucial in navigating the current economic landscape and maintaining financial stability.

Pending Kito Crosby Acquisition

The pending acquisition of Kito Crosby is expected to scale Columbus McKinnon’s business, expand customer capabilities, and accelerate its intelligent motion strategy. This strategic move is anticipated to enhance the company’s market position and drive future growth.

Net Sales Decline

Fiscal 2025 saw a 4% decline in net sales year-over-year on a constant currency basis, primarily due to the timing of backlog and short-cycle order softness. This decline highlights the challenges the company faces in maintaining its sales momentum.

Impact of Tariffs

Tariffs continue to pose a significant challenge, expected to impact margins and adjusted EPS in the first half of fiscal 2026. Columbus McKinnon is working towards achieving cost neutrality by the second half of the year through strategic price increases and supply chain adjustments.

Lower Short-Cycle Sales

The fourth quarter saw a 9% decrease in short-cycle sales, attributed to a weak order pattern in fiscal Q3. This decline underscores the volatility and sensitivity of short-cycle orders to market conditions.

Gross Margin Contraction

The company experienced a contraction in adjusted gross margin by 140 basis points year-over-year, driven by lower volume and an unfavorable mix. This contraction highlights the ongoing challenges in optimizing product mix and managing costs.

Increased RSG&A Expenses

RSG&A expenses rose by $6.1 million, including $11 million in deal-related costs from the pending Kito Crosby acquisition. This increase reflects the financial impact of strategic investments aimed at future growth.

Forward-Looking Guidance

Looking ahead to fiscal 2026, Columbus McKinnon anticipates a challenging macroeconomic environment with continued tariff volatility. The company expects net sales and adjusted EPS to be flat to slightly up year-over-year, with efforts to mitigate approximately $40 million in tariff impacts through price increases, surcharges, and supply chain adjustments. The pending Kito Crosby acquisition is expected to close by the end of the calendar year, further enhancing the company’s growth prospects.

In summary, Columbus McKinnon’s earnings call presented a mixed sentiment, with strong order growth and a robust backlog juxtaposed against challenges such as declining sales and tariff impacts. The company’s strategic focus on operational execution, customer experience, and strategic acquisitions positions it well for future growth, despite the current economic headwinds.