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CM

COLUMBUS MCKINNON CORP (CMCO)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 delivered $246.889M net sales (-7.0% y/y) and Adjusted EPS $0.60, beating Wall Street EPS consensus by ~$0.02, while revenue missed modestly; mix and short-cycle softness, FX, and manufacturing consolidation weighed on margins .
  • Orders and backlog were strong: Q4 orders $264.3M (+2% y/y) with book-to-bill 1.07x, and backlog rose to $322.5M (+15% y/y), positioning FY26 well for project execution .
  • FY26 guidance: net sales and Adjusted EPS “flat to slightly up,” with tariff headwinds expected to reduce H1 FY26 Adjusted EPS by $0.20–$0.30; assumptions include ~$35M interest expense, ~$30M amortization, ~25% tax rate, and ~29.0M diluted shares .
  • Management expects tariff cost neutrality by H2 FY26 and margin neutrality by FY27, citing mitigation via surcharges, pricing, supply chain realignment and productivity; pending Kito Crosby deal targeted to close late CY25 and viewed as strategic scale and synergy driver .
  • Narrative catalysts: tariff mitigation pace and backlog conversion into higher-margin precision conveyance and automation, plus DOJ/HSR approval timing for Kito Crosby and integration planning progress .

What Went Well and What Went Wrong

What Went Well

  • Backlog and orders resilience: Q4 orders $264.3M and backlog $322.5M (+15% y/y) with project-related orders and precision conveyance strength; book-to-bill 1.07x .
  • Cost control offset some volume/mix pressure: Adjusted RSG&A down y/y; Q4 Adjusted Operating Income of $24.1M despite lower volumes and mix, aided by pricing and lower RSG&A .
  • Strategic momentum: Management reaffirmed FY26 outlook and emphasized tariff mitigation and strong demand funnel; CEO: “We enter fiscal 2026 with a strong backlog and continued order growth as our commercial initiatives gain traction” .

What Went Wrong

  • Margin compression from mix and operations: Q4 gross margin fell to 32.3% (Adj: 35.2%) due to lower volume/mix, factory consolidation, Monterrey start-up costs, and FX .
  • Short-cycle softness and FX: Net sales down 7% y/y with short-cycle demand weak (U.S. down 10.1%), and a negative 2% FX impact; Q4 sales bridge shows volume and FX headwinds .
  • Non-cash and unique costs: GAAP EPS was -$0.09, impacted by acquisition-related, consolidation/start-up, and other charges; FY25 included a large non-cash pension settlement charge .

Financial Results

MetricQ4 FY24Q3 FY25Q4 FY25
Net Sales ($USD Millions)$265.504 $234.138 $246.889
GAAP Diluted EPS ($)$0.41 $0.14 $(0.09)
Adjusted EPS ($)$0.75 $0.56 $0.60
Gross Margin (%)35.5% 35.1% 32.3%
Adjusted Gross Margin (%)36.6% 36.8% 35.2%
Adjusted Operating Margin (%)11.7% 10.9% 9.8%
Adjusted EBITDA ($USD Millions)$42.977 $37.776 $36.069
Adjusted EBITDA Margin (%)16.2% 16.1% 14.6%

Segment/Geography breakdown (Sales):

GeographyQ4 FY24Q4 FY25
U.S. Sales ($USD Millions)$155.0 $139.4
% of Total58% 56%
Non-U.S. Sales ($USD Millions)$110.5 $107.5
% of Total42% 44%

KPIs and Orders:

KPIQ4 FY24Q4 FY25
Orders ($USD Millions)$258.1 $264.3
Book-to-Bill (x)0.97x 1.07x
Backlog ($USD Millions)$280.8 $322.5
Long-term Backlog (>$3 months) ($USD Millions)$144.6 $190.3
Free Cash Flow ($USD Millions)$30.128 $29.468
Net Leverage (Credit Agreement)2.4x 3.1x

Estimate comparison (Q4 FY25):

MetricConsensusActualSurprise
Revenue ($USD Millions)$250.050M*$246.889M -$3.161M (-1.3%)*
Primary EPS ($)$0.580*$0.60 +$0.02*

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY26Flat to slightly up Flat to slightly up (reaffirmed) Maintained
Adjusted EPSFY26Flat to slightly up; H1 tariff headwind $0.20–$0.30 per share Flat to slightly up; H1 tariff headwind $0.20–$0.30 per share (reaffirmed) Maintained
Interest ExpenseFY26~$35M assumption ~$35M assumption (reaffirmed) Maintained
AmortizationFY26~$30M assumption ~$30M assumption (reaffirmed) Maintained
Effective Tax RateFY26~25% ~25% (reaffirmed) Maintained
Diluted Average SharesFY26~29.0M ~29.0M (reaffirmed) Maintained
Dividend (Declared)Q4 FY25$0.14 per share —N/A

Management noted FY26 guidance excludes impact from pending Kito Crosby acquisition .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY25, Q3 FY25)Current Period (Q4 FY25)Trend
Tariffs/MacroQ2: Hurricane Helene disrupted shipments; macro/geopolitical uncertainty; tariff risk discussed . Q3: Policy uncertainty slowed short-cycle; FX headwinds .Unmitigated tariff EBITDA impact ~$40M; H1 FY26 EPS headwind $0.20–$0.30; cost neutrality targeted H2 FY26; margin neutrality in FY27 .Persistent headwind short term; mitigation actions accelerating.
Supply chain/footprintQ2: Monterrey ramp; consolidation driving 200 bps long-term gross margin benefit . Q3: Two additional factories consolidating; execution ongoing .Q4: Factory consolidation and Monterrey start-up costs pressured margin; RSG&A adjusted down y/y .Near-term margin drag; long-term margin expansion thesis intact.
Precision conveyance/product performanceQ2: Orders +42%; PowerCo multi-site “9-figure” opportunity . Q3: Strength continues (+16% precision conveyance orders) .Q4: Orders strong; sales conversion lagged; expected ramp through FY26 .Strong demand; timing/lumpiness in conversion.
Regional trendsQ2: EU softness; defense/ag strength . Q3: EMEA orders +1%; Americas -5%; FX hit EPS .Q4: U.S. -10.1% y/y; non-U.S. -2.7% y/y; FX -$4.2M .U.S. short-cycle weakness; EMEA project phasing.
Regulatory/legal (Kito Crosby)Q3: Transaction announced; strategic rationale .Q4: 13/14 approvals secured; HSR DOJ engagement ongoing; target close late CY25 .Advancing approvals; integration planning underway.
R&D/technologyQ2: Battery-powered hoist with Milwaukee Tool; AI-enabled intralogistics positioning .Q4: Continued automation tailwinds; precision conveyance highlighted .Innovation supports project wins.

Management Commentary

  • CEO: “We enter fiscal 2026 with a strong backlog and continued order growth as our commercial initiatives gain traction… anticipate tailwinds from industry megatrends like on-shoring, scarcity of labor and global infrastructure investments” .
  • CFO on tariffs: “Our unmitigated tariff exposure would have an EBITDA impact of approximately $40 million… we anticipate achieving gross profit dollar neutrality on tariffs by the second half of fiscal 2026, with actions underway to achieve margin neutrality in fiscal 2027” .
  • CEO on Kito Crosby: “We continue to anticipate a deal closing by the end of the calendar year… prepared for permanent financing… advancing integration planning and readiness” .
  • CFO on Q4 operations: “Adjusted EPS decreased $0.15 versus the prior year, driven by lower volume and unfavorable mix, partially offset by lower RSG&A, price increases and lower interest expense” .

Q&A Highlights

  • Tariff rates embedded in guidance: ~145% for China and 10% for EU; H1 FY26 EPS headwind of $0.20–$0.30 with surcharges/pricing/supply chain actions to mitigate .
  • Mix/margins: Precision conveyance orders strong but sales conversion lagged, creating absorption drag; expected ramp through FY26; lower-margin rail/hoist mix and Monterrey ramp impacted margins .
  • Surcharge implementation and backlog: Surcharges can be applied to backlog with notification windows; ~$10M EBITDA headwind expected in H1 FY26, more in Q1 than Q2 .
  • E-commerce demand and precision conveyance timing: Growing funnel and multi-order wins; backlog includes short-cycle book-and-ship and project work (some back-end loaded); ~20% of total backlog extends beyond FY26 .
  • Short-cycle trend: Improved vs Q3; sensitivity to channel destocking and policy uncertainty persists .

Estimates Context

  • Q4 FY25 Actual vs Consensus: Adjusted EPS $0.60 vs $0.58*, a modest beat; Revenue $246.889M vs $250.050M*, a small miss .
  • Outlook implications: Street may trim near-term revenue/margin forecasts given tariff headwinds and conversion timing, while maintaining FY26 EPS near “flat to slightly up” if mitigation actions track and backlog converts to higher-margin precision conveyance .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Backlog-driven visibility: Q4 orders and backlog strength (book-to-bill 1.07x; backlog +15% y/y) supports FY26 revenue stability even as short-cycle stays choppy .
  • Tariff mitigation is the swing factor: Watch H1 FY26 EPS headwind ($0.20–$0.30) and the pace/acceptance of surcharges and price increases; neutrality targeted by H2 FY26 .
  • Margin recovery hinges on mix and footprint: As Monterrey ramps and project mix shifts back to higher-margin precision conveyance/automation, Adjusted gross and operating margins should recover; near-term absorption drag remains .
  • Strategic M&A catalyst: Kito Crosby closing late CY25 would add scale and synergies; track HSR/DOJ process and integration readiness milestones .
  • Short-term trading lens: Into H1 FY26, expect headline risk around tariffs and margins; strength in orders/backlog and incremental mitigation updates may be stock catalysts around quarterly prints .
  • Medium-term thesis: Automation, reshoring, and infrastructure tailwinds plus intelligent motion portfolio (precision conveyance) support multi-year growth and margin expansion; internal 80/20 initiatives and cost actions provide structural support .
  • Balance sheet: Debt paydown priority maintained; net leverage at 3.1x (credit agreement) with plan to continue deleveraging in FY26 .