Columbus McKinnon Corporation (NASDAQ: CMCO) Q4 2025 Earnings Call | 05/28/2025

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Columbus McKinnon Corporation (CMCO) reported its financial results for the fourth quarter and full fiscal year ended March 31, 2025, highlighting record orders and a strategic shift in their business mix. Despite a challenging macroeconomic environment and policy uncertainties, the company is well-positioned for future growth, supported by a robust backlog and ongoing strategic initiatives.

Fiscal Year 2025 and Q4 2025 Highlights:

Record Orders: Fiscal 2025 saw a 4% increase in orders year-over-year on a constant currency basis, driven by 8% growth in project-related orders and particular strength in precision conveyance. Order momentum remained strong in Q4, also up 4% on a constant currency basis.
Net Sales: In line with guidance, net sales were down 4% on a constant currency basis for fiscal 2025 due to the longer cycle of project-related business and slower conversion of short-cycle orders. Q4 sales were $246.9 million, down 5% year-over-year on a constant currency basis.
Backlog Growth: CMCO's backlog increased by 15% to $322.5 million, primarily due to the higher mix of longer-cycle project business, positioning the company well for fiscal 2026.
Profitability:
- Q4 GAAP Gross Margin: 32.3% (adjusted 35.2%), impacted by factory closure costs and lower volume/unfavorable mix.
- Q4 Adjusted Operating Income: $24.1 million, with an adjusted operating margin of 9.8%.
- Q4 Adjusted EBITDA: $36.1 million, with a 14.6% margin.
- Q4 Adjusted EPS: $0.60, a decrease of $0.15 year-over-year due to lower volume and unfavorable mix, partially offset by lower SG&A and price increases.
Free Cash Flow: Generated $29.5 million in Q4, contributing to $24.2 million for the full fiscal year.
Debt Reduction: Paid down $60 million of debt in fiscal 2025, with a net leverage ratio of 3.1 times.

Strategic Initiatives and Market Focus:

CMCO is actively managing costs, optimizing its supply chain, and advancing its strategic plan.

Operational Execution: Improved safety (TRIR of 0.54), customer lead times, on-time delivery, and customer experience (10-point NPS improvement in EMEA).
Demand Funnel: Continues to see encouraging demand with strong quotation activity, particularly in vertical markets where they hold a leadership position, such as battery production, life sciences, e-commerce, food & beverage, and aerospace. Potential early benefits are also observed from industries impacted by tariffs (e.g., steel, heavy equipment) and Department of Defense orders.
Tariff Impact: CMCO anticipates tariffs will be a headwind to margin and adjusted EPS in the first half of fiscal 2026, expecting a $0.20 to $0.30 adjusted EPS headwind due to a 45% tariff on China and 10% on the EU. The company aims for gross profit dollar neutrality on tariffs by the second half of fiscal 2026, and margin neutrality in fiscal 2027, through supply chain adjustments, surcharges, and pricing increases.
Kito Crosby Acquisition: The pending acquisition of Kito Crosby remains a significant focus. CMCO expects the deal to close by the end of the calendar year, scale its business, expand customer capabilities, enable synergies, and accelerate its intelligent motion strategy. 13 out of 14 regulatory and financial approvals have been received, with the Hart-Scott-Rodino Act filing being the last outstanding item.

Fiscal Year 2026 Guidance (Excluding Kito Crosby Impact):

Net Sales Growth: Flat to slightly up year-over-year.
Adjusted EPS Growth: Flat to slightly up year-over-year.
This guidance factors in an increase in interest expense to $35 million due to expiring interest rate hedges and a $0.20 to $0.30 adjusted EPS headwind from tariffs in the first half of the year.

About this video

Columbus McKinnon Corporation (NASDAQ: CMCO) reported its Q4 2025 results on May 28, 2025, reflecting a mixed performance in the face of challenging market conditions and tariff headwinds. Net sales for the quarter were $246.9 million, a 7% year-over-year decline, attributed to short-cycle demand softness in the U.S. and Europe, project timing, and unfavorable foreign exchange rates. U.S. sales fell 10.1% to $139.4 million, while non-U.S. sales declined 2.7% to $107.5 million. Gross profit for the quarter was $79.8 million, with a gross margin of 32.3%, down from 35.5% in the prior year, primarily due to higher costs related to factory consolidation and the start-up of the Monterrey, Mexico facility. Despite the revenue decline, Columbus McKinnon achieved record quarterly orders of $264.3 million, up 2% year-over-year, and ended the quarter with a backlog of $322.5 million, a 15% increase from the prior year, indicating strong underlying demand and a book-to-bill ratio of 1.07x. Adjusted gross margin for Q4 was 35.2%, while adjusted operating income stood at $24.1 million, with an adjusted operating margin of 9.8%. Adjusted earnings per share (EPS) for the quarter was $0.60, slightly above analyst expectations, though down $0.15 year-over-year. Adjusted EBITDA for the quarter was $36.1 million, representing a margin of 14.6%. The company reported a net loss of $2.7 million for Q4, largely due to $8.5 million in costs related to the pending Kito Crosby acquisition, $3.8 million in factory consolidation expenses, and $2.4 million in Monterrey start-up costs. For the full fiscal year 2025, net sales totaled $963 million, a 4% decline on a constant currency basis, while record orders reached $1.0 billion, up 3% year-over-year, driven by 8% growth in project-related business and 19% growth in precision conveyance. The company ended the year with a net loss of $5.1 million, reflecting non-cash pension settlement costs, factory consolidation, Monterrey start-up expenses, and acquisition-related costs. Adjusted EBITDA for the year was $150.5 million, with an adjusted EBITDA margin of 15.6%. Columbus McKinnon repaid $60.7 million in debt during FY25, maintaining a strong liquidity position. Strategically, the company is focused on mitigating tariff impacts—estimated to affect EBITDA by $40 million—through surcharges, price increases, and supply chain realignment. The pending acquisition of Kito Crosby, expected to close by the end of 2025, is projected to more than double the company’s size and drive adjusted EBITDA margin expansion to 23% over time. Management remains optimistic, citing a strong backlog, continued order growth, and resilience in navigating volatile environments as key drivers for fiscal 2026. Outlook: FY2026: Net sales expected to be flat to slightly up; adjusted EPS projected to remain flat to slightly up, with a $0.20–$0.30 EPS headwind in the first half from tariffs, but cost neutrality targeted in the second half. Focus on integration of Kito Crosby, margin improvement, and supply chain adjustments to offset tariff and cost pressures. Continued investment in strategic growth, manufacturing capabilities, and operational efficiency. About Inside Ticker: For more expert analysis and real-time updates on Columbus McKinnon Corporation (NASDAQ: CMCO) and other market movers, follow Inside Ticker and visit InsideTicker.com for in-depth reports, financial insights, and the latest news on leading companies. #ColumbusMcKinnon #CMCO #EarningsCall #Q42025 #IndustrialEquipment #RecordOrders #TariffImpact #KitoCrosby #StockMarket #InsideTicker

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