Executive Summary

Q3 FY25 was softer than planned: net sales fell 7.9% YoY to $234.1M, adjusted EBITDA margin held at 16.1%, and adjusted EPS was $0.56; management cited weaker short‑cycle demand late in the quarter, European softness, and FX headwinds as key drivers .
Full‑year FY25 guidance was cut: revenue now “mid‑single digit decrease” YoY (from flat to low‑single digit growth) and adjusted EPS now “low‑teens decrease” (from mid‑single digit growth); capex trimmed to $18–$22M (from $20–$25M) and year‑end net leverage now ~3.0x (from ~2.3x) .
Strategic catalyst: CMCO announced a definitive deal to combine with Kito Crosby (all‑cash, ~$2.7B EV, ~8x TTM post‑synergy EBITDA) targeting ~$70M net cost synergies by year 3 and a pro forma 23% adjusted EBITDA margin; pro forma revenue ~$2.1B and deleveraging to ~3.0x within two years post‑close .
Management emphasized cost controls and footprint simplification (additional factory consolidations; Monterrey ramp) to protect margins while navigating macro and policy uncertainty; backlog remains healthy at $296.5M with long‑term mix at 56% .

What Went Well and What Went Wrong

What Went Well

Adjusted margin resilience: Adjusted gross margin of 36.8% and adjusted EBITDA margin of 16.1% held roughly flat YoY (-40 bps and -20 bps, respectively) despite a ~8% revenue decline, reflecting pricing and cost actions .
Strategic execution: Initiated consolidation of two additional factories under the 80/20 simplification plan; Monterrey, MX ramp progressing, with sequential adjusted gross margin up ~50 bps in Q3 .
Growth pockets: Orders strength in precision conveyance (+16%) and linear motion (+8%) offsets broader short‑cycle weakness; project-related backlog +3% YoY .

What Went Wrong

Demand deterioration and mix: Short‑cycle orders fell 6%, driving total orders down 4% YoY; lower volume and mix reduced gross profit by $9.9M vs prior year .
One‑time headwinds: Prior‑year favorable product liability accrual created a $2.0M YoY gross profit headwind; customs duty judgment in Mexico ($1.5M) and a $1.3M bad debt reserve also hit Q3 results .
FX headwinds: Unfavorable FX reduced adjusted EPS by ~$0.11 YoY (and ~$0.08 intra‑quarter), contributing to adjusted EPS of $0.56 vs $0.74 last year .

Financial Results

Quarterly performance (sequential view)

Metric	Q1 FY25	Q2 FY25	Q3 FY25
Revenue ($M)	$239.7	$242.3	$234.1
GAAP EPS	$0.30	$(0.52)	$0.14
Adjusted EPS	$0.62	$0.70	$0.56
Gross Margin	37.1%	30.9%	35.1%
Adjusted Gross Margin	38.0%	36.3%	36.8%
Adjusted EBITDA ($M)	$37.5	$39.2	$37.8
Adjusted EBITDA Margin	15.6%	16.2%	16.1%

Year-over-year compare (Q3 FY25 vs Q3 FY24)

Metric	Q3 FY24	Q3 FY25	YoY
Revenue ($M)	$254.1	$234.1	(7.9%)
GAAP EPS	$0.34	$0.14	(58.8%)
Adjusted EPS	$0.74	$0.56	(24.3%)
Gross Margin	36.9%	35.1%	-180 bps
Adjusted Gross Margin	37.2%	36.8%	-40 bps
Adjusted EBITDA ($M)	$41.3	$37.8	(8.6%)
Adjusted EBITDA Margin	16.3%	16.1%	-20 bps

Geographic mix (Q3 FY25 vs Q3 FY24)

Region	Q3 FY24 Sales ($M)	Q3 FY25 Sales ($M)	Mix Q3 FY24	Mix Q3 FY25
U.S.	$138.5	$129.5	55%	55%
Non‑U.S.	$115.6	$104.6	45%	45%

KPIs and balance sheet

KPI	Q1 FY25	Q2 FY25	Q3 FY25
Backlog ($M)	$292.8	$317.6	$296.5
FCF ($M)	$(15.4)	$4.0	$6.2
DSO (days)	63.3	64.1	61.0
Days’ Inventory	121.7	110.6	121.7
Net Leverage Ratio (credit agr.)	2.57x (TTM as of Q1)	2.71x (TTM as of Q2)	3.00x (TTM as of Q3)
Debt repayment (in‑period)	$20M	$10M	$15M

Notes: Q3 drivers included lower volume/mix, prior‑year product liability accrual benefit rolling off ($2.0M), Monterrey start‑up and consolidation costs, and FX .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net sales growth	FY25	Flat to low‑single digit growth YoY	Mid‑single digit decrease YoY	Lowered
Adjusted EPS	FY25	Mid‑single digit growth YoY	Low‑teens decrease YoY	Lowered
Capital Expenditures	FY25	$20–$25M	$18–$22M	Lowered
Net Leverage Ratio	FY25 year‑end	~2.3x	~3.0x	Higher
Interest expense (assumption)	FY25	~$32M	~$32M	Maintained
Amortization (assumption)	FY25	~$30M	~$30M	Maintained
Tax rate (assumption)	FY25	~25%	~25%	Maintained
Diluted shares (assumption)	FY25	~29.0M	~29.0M	Maintained
Dividend	Ongoing	$0.07 per share declared (Q3)	$0.07 per share declared (Q3)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q‑2 and Q‑1)	Current Period (Q3 FY25)	Trend
Demand/Orders	Q2: Orders +16%, book‑to‑bill 1.08x; hurricane, Monterrey ramp and project timing hurt revenue . Q1: Sales +2%, backlog +4% QoQ; margin expansion .	Orders -4% YoY, driven by short‑cycle (-6%); project funnel healthy but longer conversion; precision conveyance +16%, linear motion +8% .	Softening short‑cycle; project resilience
Tariffs/Policy	Noted guidance sensitivity to macro; no acute tariff focus in Q1/Q2 releases .	Policy uncertainty (tariffs) delayed U.S. decisions; Europe weak; worst‑case tariff exposure <5% of sales plus 3% potential retaliation; pass‑through history to protect margins .	Increased focus and quantified exposure
Footprint/Monterrey	Q1: Initiated next phase of factory consolidation (Monterrey) . Q2: Significant factory closure/start‑up costs; still pursuing 80/20 .	Consolidating two additional factories; Monterrey start‑up costs continued; ~$3M benefit expected from recent consolidations .	Execution continuing; benefits starting
FX	Not emphasized earlier.	FX cut adjusted EPS by ~$0.11 YoY and ~$0.08 intra‑quarter .	Newly adverse
Product liability/One‑offs	Q2: Hurricane Helene, consolidation, pension settlement .	Prior‑year product liability benefit created $2.0M YoY headwind; customs duty $1.5M; bad debt reserve $1.3M .	Transitory headwinds
Leverage/FCF	Q1: Expected $60M FY25 debt repayment; NLR ~2.0x plan . Q2: NLR ~2.71x TTM .	NLR 3.0x; expect end‑FY25 ~3x due to covenant cap accounting; FCF $6.2M in Q3; TTM FCF conversion inflated by noncash items .	Higher leverage near‑term
Strategic M&A	N/A	Announced acquisition of Kito Crosby: ~$2.7B EV, ~$70M synergies (yr 3), post‑synergy ~8x EBITDA, pro forma adjusted EBITDA margin 23%; delever to ~3.0x by year 2 .	Major strategic step

Management Commentary

“The second half of our third quarter saw a slowing of industry demand… lower than expected short‑cycle demand… The strengthening of the U.S. dollar negatively impacted earnings per share by $0.11 versus the prior year” — David J. Wilson, CEO .
“We are consolidating 2 smaller precision conveyance factories… expect to cease operations at the discontinued locations in the first quarter of fiscal ’26” — David J. Wilson .
“Adjusted EPS of $0.56 on $234 million in sales, including an $0.08 impact of unfavorable foreign exchange movements in the quarter” — David J. Wilson .
“We delivered third quarter net sales of $234.1 million… adjusted operating income of $25.6 million… adjusted EBITDA margin of 16.1%” — Greg Rustowicz, CFO .
“We have entered into an agreement to combine Kito Crosby with Columbus McKinnon… expected to deliver ~$70 million of annualized net cost synergies by end of year 3… pro forma adjusted EBITDA margin of 23%” — David J. Wilson .

Q&A Highlights

Synergy prioritization: Initial focus on supply chain/purchasing, operational efficiencies, duplicative structure, and overlapping third‑party expenses; revenue synergies exist but not modeled .
Margin/portfolio: Kito Crosby has resilient consumables exposure supporting strong margins; average ASPs low but mission‑critical safety drives replacement demand .
Leverage comfort: Management expects >$200M annual FCF and EBITDA growth to drive deleveraging roughly a turn per year post‑close; anticipated rate below 8% on financing .
Tariffs/regulatory: Worst‑case tariff exposure estimated at ~$10–$20M for CMCO pre pass‑through; Kito exposure “significantly less”; antitrust risk assessed as low, most overlap in power chain hoists .
Footprint and Mexico: Consolidation plans continue despite tariff noise; some product lines shift to Mexico and others to U.S.; savings still compelling .

Estimates Context

S&P Global/Capital IQ consensus for revenue and EPS for the latest and forward quarters was unavailable at the time of analysis due to data access limits. As a result, we cannot quantify beats/misses vs Street for Q3 FY25 or update forward estimate diffs at this time. Values from S&P Global could not be retrieved; please note unavailability.

Key Takeaways for Investors

Near‑term reset: Guidance cut on top‑line and adjusted EPS reflects late‑quarter demand softness, EU macro headwinds, and FX; expect Q4 to remain pressured as short‑cycle demand normalizes .
Margin defense credible: Adjusted EBITDA margin held ~16% amid volume decline; pricing, 80/20/footprint actions, and Monterrey ramp should underpin margins through the downshift .
Quality of backlog and project funnel: Precision conveyance/linear motion strength and healthy project funnel support medium‑term recovery as order conversion improves .
Transitory drags: Product liability accrual comp, Mexico duty judgment, bad debt reserve, and FX were notable one‑offs; these should fade, aiding EPS normalization as volumes recover .
Strategic catalyst: Kito Crosby combination materially upgrades scale, mix resilience, margins, and FCF; execution on ~$70M net cost synergies and deleveraging path are key stock drivers over 12–24 months .
Watch policy/tariffs: CMCO quantified manageable exposure and has pass‑through history; any clarity on policy and European macro stabilization are upside catalysts .
Capital allocation: Expect focus on deleveraging near‑term (to ~3.0x by two years post‑close) with dividend maintained; longer‑term optionality to reinvest in secular automation/nearshoring themes .

Appendix: Additional Detail

YoY revenue bridge Q3 FY25: Price +$2.3M; volume -$21.3M; FX -$1.0M .
YoY gross profit bridge Q3 FY25: Price/mfg +$3.9M; product liability -$2.0M; Monterrey start‑up -$2.6M; consolidation -$0.5M; volume/mix -$9.9M .
Backlog and long‑term mix: $296.5M backlog; long‑term backlog 56% of total .
Free cash flow: $6.2M in Q3; quarterly cadence reflects inventory timing, footprint costs, and unbilled revenue effects .

Sources: CMCO Q3 FY25 press release and 8‑K including full financial tables ; Q3 FY25 earnings press release (PR Newswire) ; Q3 FY25 earnings call transcript ; Kito Crosby transaction press release ; Q2 FY25 press release for prior‑quarter comps and prior guidance ; Q1 FY25 press release for trend context .

COLUMBUS MCKINNON CORP (CMCO)·Q3 2025 Earnings Summary