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CM

COLUMBUS MCKINNON CORP (CMCO)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 delivered modest top-line and adjusted EPS beats versus consensus, while tariffs and mix drove margin compression; net sales were $235.9M (+2.2% vs consensus) and Adjusted EPS $0.50 (+7% vs consensus) . Consensus EPS $0.467* and revenue $230.9M*.
  • Orders grew 2% to $258.6M; backlog rose 23% YoY to a record $360.1M with book-to-bill 1.10x, underscoring demand health amid tariff volatility .
  • Gross margin fell 440 bps YoY to 32.7% (adjusted 34.3%); operating margin was 2.3% (adjusted 7.8%), reflecting ~$4.2M tariff impact, lower volume, and unfavorable mix .
  • FY26 guidance reaffirmed: net sales and Adjusted EPS “flat to slightly up”; tariff headwind to Adjusted EPS of $0.20–$0.30 in H1; assumptions include ~$35M interest, ~$30M amortization, 25% tax rate, ~29.0M diluted shares .
  • Catalysts: achieving tariff cost neutrality by H2 FY26 (company targeting profit neutrality by Oct 1), additional U.S. price increases effective July 10, and closing the Kito Crosby acquisition late 2025 with pro forma 23% Adjusted EBITDA margin and deleveraging plan .

What Went Well and What Went Wrong

  • What Went Well
    • Record backlog and resilient demand: “book-to-bill ratio of 1.1x in the first quarter and a 23% increase in our backlog year-over-year” .
    • Order strength in targeted verticals (battery, e‑commerce, defense, rail, oil & gas) and EMEA project orders; company emphasized “healthy order funnel with strong quotation activity” .
    • Cost control: Adjusted RSG&A down $3.1M YoY to $54.8M (23.2% of sales), offsetting volume/mix pressure, supporting adjusted margins and EPS slightly ahead of internal expectations .
  • What Went Wrong
    • Tariff impact and mix pressure: ~$4.2M tariff hit drove ~180 bps gross margin erosion; lower automation shipments and higher volume in lower-margin rail/hoists worsened mix .
    • Profitability compressed: Gross margin 32.7% (−440 bps YoY); Adjusted Gross Margin 34.3% (−370 bps); Adjusted Operating Margin 7.8% (−290 bps); Adjusted EBITDA Margin 13.0% (−260 bps) .
    • Free cash flow seasonal/unique items: FCF of −$21.4M due to working capital seasonality, $4.1M acquisition cash payments, ~$3.1M higher cash taxes (Hurricane Helene timing), ~$3.0M tariff payments .

Financial Results

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue ($USD Millions)$234.1 $246.9 $235.9
GAAP EPS ($)$0.14 $(0.09) $(0.07)
Adjusted EPS ($)$0.56 $0.60 $0.50
MarginsQ3 FY25Q4 FY25Q1 FY26
Gross Margin (%)35.1% 32.3% 32.7%
Adjusted Gross Margin (%)36.8% 35.2% 34.3%
Operating Margin (%)7.6% 2.0% 2.3%
Adjusted Operating Margin (%)10.9% 9.8% 7.8%
Net Income Margin (%)1.7% (1.1%) (0.8%)
Adjusted EBITDA Margin (%)16.1% 14.6% 13.0%
Geography (Sales)Q1 FY25Q1 FY26
U.S. Sales ($USD Millions)$136.3 $135.3
Non-U.S. Sales ($USD Millions)$103.4 $100.6
% U.S. of total57% 57%
% Non-U.S. of total43% 43%
KPIsQ3 FY25Q4 FY25Q1 FY26
Orders ($USD Millions)——$258.6
Book-to-Bill (x)——1.10x
Backlog ($USD Millions)$296.5 $322.5 $360.1
Long-term backlog (% of total)56.0% 59.0% 62.0%
DSO (days)61.0 61.0 69.5
Inventory days121.7 107.4 125.9
FCF ($USD Millions)$6.2 $29.5 $(21.4)
CFO ($USD Millions)$11.4 $35.6 $(18.2)
Actual vs Consensus (S&P Global)Q1 FY26
Revenue ($USD Millions)Actual: $235.9 vs Consensus: $230.9*
Adjusted EPS ($)Actual: $0.50 vs Consensus: $0.467*
Adjusted EBITDA ($USD Millions)Actual: $30.8 vs Consensus: $31.1*

Values marked with * were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net salesFY26Flat to slightly up Flat to slightly up Maintained
Adjusted EPSFY26Flat to slightly up Flat to slightly up Maintained
Tariff headwind to Adjusted EPSH1 FY26$0.20–$0.30 headwind $0.20–$0.30 headwind; profit neutrality targeted by Oct 1 Maintained; timing clarified
Interest expenseFY26~$35M ~$35M Maintained
AmortizationFY26~$30M ~$30M Maintained
Effective tax rateFY26~25% ~25% Maintained
Diluted average sharesFY26~29.0M ~29.0M Maintained
Dividend per shareQ1 FY26—$0.07 declared Confirmed

Earnings Call Themes & Trends

TopicQ3 FY25 (Prior-2)Q4 FY25 (Prior-1)Q1 FY26 (Current)Trend
Tariffs/macroEmerging headwind; modeling China 25%, EU 10%; mitigation via price/supply chain Expect ~$40M unmitigated EBITDA exposure; H2 tariff cost neutrality target; $0.20–$0.30 EPS headwind H1 ~$4.2M tariff hit in Q1; ~$10M H1 impact; profit neutrality by Oct 1; margin neutrality targeted FY27 Headwind persisting near term; mitigation progressing
Pricing & surchargesPlans to pass-through input costs; 80/20 simplification continues Mitigation actions lag backlog repricing Additional U.S. price increase effective July 10; surcharges implemented Firming
Demand & backlogOrders down 4% short-cycle; precision conveyance +16%; backlog healthy Orders +2%; backlog +15% YoY; short-cycle soft Orders +2%; backlog +23% YoY; book-to-bill 1.10x; strong quotation activity Improving
Mix & marginsMix hurt margins (automation/linear motion down; rail/hoists up); FX unfavorable Volume/mix and factory consolidation/start-up costs compressed margins ~180 bps gross margin impact from tariffs; lower automation shipments; rail/hoists mix Still pressured
Monterrey MX plantRamp-up impacting margin Consolidation benefits ahead; $3M savings going forward Start-up costs included in Q1; business realignment ongoing Transitioning
Kito Crosby dealAnnounced; pro forma 23% Adj. EBITDA margin; 8x post-synergy multiple; leverage ~4.8x at close Progressing; 13/14 approvals; closing targeted late 2025 Second DOJ request; closing still targeted late 2025; permanent financing before close; leverage ~5x at close Advancing

Management Commentary

  • CEO: “The first quarter largely played out as expected as we delivered sustained order growth in an environment where global tariff policies pressured near-term results.”
  • CEO: “We continue to progress towards the closing of the Kito Crosby acquisition… benefits of scale, improved solutions, the realization of synergies and strong free cash flow.”
  • CFO: “Adjusted RSG&A was down $3.1M… adjusted operating income of $18.5M and Adjusted EBITDA of $30.8M… Adjusted EPS… decreased $0.12 versus the prior year, almost entirely due to an unfavorable $0.11 tariff related impact.”
  • CEO on margins: “We saw 180 bps of erosion at the gross margin line tied to tariffs… lower volume of higher margin products (automation; linear motion from Monterrey) and higher volume of lower margin rail and hoist products.”

Q&A Highlights

  • Gross margin cadence: Management expects margins to expand through the year after H1 tariff headwinds; Q4 typically strongest on factory absorption .
  • Book-to-bill composition: Orders up ~2% with ~1% price contribution; increase largely volume, particularly long-term project backlog .
  • Backlog conversion: 70–80% of $360.1M backlog actionable in FY26; remainder largely FY27, notably in rail .
  • Capex and cash flow: FY26 Capex ~$20–$25M; FCF timing to be influenced by deal costs and tariff payments; working capital expected to improve .
  • Q2 revenue progression: Anticipate positive progression from Q1 to Q2; price increases to benefit in coming quarters .
  • Tariff mitigation timing: Profit neutrality targeted by Oct 1; continued monitoring and agile pricing/surcharges as policies evolve .

Estimates Context

  • Q1 FY26 results vs S&P Global consensus: Revenue $235.9M vs $230.9M*; Adjusted EPS $0.50 vs $0.467*; Adjusted EBITDA $30.8M vs $31.1M* (roughly in line). Values marked with * were retrieved from S&P Global.
  • Implication: Modest top-line and EPS beats despite tariff-driven margin compression; consensus likely to adjust for tariff cost neutrality timing and trajectory of adjusted margins in H2/FY27 .

Key Takeaways for Investors

  • Backlog and orders support revenue visibility; long-term backlog at 62% of total (expected to ship beyond 3 months) provides cushion against short-cycle volatility .
  • Tariff headwinds are material but transitory in company plan; cost neutrality targeted by Oct 1 and margin neutrality by FY27 as price actions and supply chain modifications catch up .
  • Mix shift and lower automation shipments pressured margins; watch for H2 recovery as Monterrey ramp benefits and project deliveries improve mix .
  • Cost discipline evident: Adjusted RSG&A reduced by 90 bps as % of sales; ongoing footprint consolidation should aid operating leverage .
  • FY26 guidance maintained; near-term catalysts include price increases (effective July 10), backlog conversion, and tariff surcharge pass-through on backlog .
  • Kito Crosby acquisition progress remains a medium-term thesis driver (scale, 23% pro forma Adjusted EBITDA margin, synergy plan, rapid deleveraging); closing targeted late 2025 .
  • Dividend intact ($0.07/sh); balance sheet focus on deleveraging; FCF seasonality and deal costs will influence near-term cash metrics .