Columbus McKinnon Corporation Q3 FY2026 earnings call

• Closed the Kito Crosby acquisition and expect to close divestiture of U.S. power chain hoist and chain operations by end of the quarter. - Delivered double-digit growth in sales, orders, EPS, and backlog year-over-year. Adjusted EBITDA was $40 million with a 15.4% margin. Adjusted EPS was $0.62, up 11% year-over-year. - Made progress on operational improvement, tariff mitigation, and integration preparedness. Tariffs are expected to be cost neutral by year-end, and margin neutrality is targeted for fiscal 2027. - Orders were up 11% to $247 million, with U.S. growing 15% and EMEA up 3% despite a weaker economic landscape. Backlog remained healthy, and the pipeline of opportunities was encouraging.

Net sales were $258.7 million, up 10.5% from the prior year driven by higher volume, pricing, and favorable currency translation. Strength was seen in lifting, linear motion, and automation. North America showed stabilization of demand, while EMEA had modest organic growth. Short-cycle sales increased 13%, and project-related sales grew 8%. Adjusted EBITDA was $40 million with an adjusted EBITDA margin of 15.4%. Adjusted EPS improved 11% to $0.62. Backlog was $342 million, up 15% year-over-year.

• With the Kito Crosby acquisition closed, prior stand-alone guidance for fiscal 2026 is withdrawn. Fiscal 2027 guidance will be provided in May 2026 when reporting Q4 2026. - Transaction-related expenses, purchase accounting adjustments, and early integration costs are expected in Q4 2026, which will be dilutive to GAAP EPS for Q4 and the full fiscal year 2026. - Significant transaction and deal-related costs in Q4 will negatively impact free cash flow. - Aim to reduce net leverage ratio to below 4x by the end of fiscal 2028 using significant free cash flow.

• Uncertainty in estimating tariff costs as vendor price increases replace tariff-specific surcharges. - Slower order conversion in EMEA due to a challenging demand environment. - Challenges in integrating Kito Crosby and timing of the divestiture. - Transaction-related expenses and their impact on earnings and free cash flow.

Q: Can you remind us a bit on the seasonality in the Kito Crosby business kind of compare and contrast versus that of the core business? And also talk about the timing in which this $70 million in cost-related synergies is realized?

A: David Wilson said Kito Crosby's strongest quarter is similar to Columbus McKinnon's, with their strongest in fiscal fourth quarter (December year-end). Synergies: ~20% in year 1, 60% in year 2, 100% in year 3.

Q: Congrats on closing on the acquisition. I guess just on -- I know you aren't giving forward quarter or even next fiscal year guidance here. But just, I guess, based on the original assumptions embedded in the deal when it was announced a year ago, how are both businesses trending?

A: David Wilson mentioned pro forma fiscal 2026 guidance range was $2B-$2.1B revenue, $440M-$460M EBITDA. Kito Crosby's 12/31 results ranged sales $1.140B-$1.150B, adjusted EBITDA $273M-$283M.

Q: Just wanted to touch on the margins and tariff offsets a little bit. I'm trying to figure out the margin squeeze year-over-year this quarter. How much of that is from tariffs and how much of that is from mix?

A: David Wilson said mix was the biggest impact, followed by tariffs. Mix issue with more lifting equipment vs parts, lower revenue from precision conveyance product timing, rail shipments affecting margin.

Q: Congrats on closing the deal. My first one is, did you benefit or were you impacted by any pull-ins or pushouts in the quarter?

A: David Wilson said nothing material was a factor in this quarter.

Q: Could you talk about how much of the strength in the quarter and the orders that you're seeing is from the U.S. chain hoist business just because that's going to be divested in the near future?

A: David Wilson said there was nothing material in the chain hoist orders that influenced the order number in the third quarter.

Q: I mean you did a bit better in the quarter. It looks like Kito is doing well as well, but you did pull the guidance, I understand due to timing, but it seems like the underlying trends are stronger compared to when you last guided. Is that fair to say?

A: David Wilson said business in U.S. is robust, confident in performance; Europe has softness, but overall trends are strong with a strong backlog.