CMCO

• Overall Quarterly Performance

  • The quarter marked the first full period of operation as a combined company after the Keto Crosby acquisition, with strong performance across orders, sales, profitability and cash flow that exceeded internal expectations.
  • Pro forma sales grew 10% across all platforms, with broad-based strength in targeted end markets including defense, infrastructure, energy, e-commerce data centers, shipbuilding, electrification, pharma, automation and general industrial in North America; increased activity was also seen in oil and gas partially tied to Middle East conflict dynamics.
  • Weakness was concentrated in EMEA, where soft general industrial demand and macro/geopolitical uncertainty persist, while automotive demand has been spotty globally.
  • The company delivered positive Q1 free cash flow for the first time in six years (against a typical seasonal Q1 cash outflow), allowing for debt reduction, the company's top capital allocation priority.

• Integration and Synergy Progress

  • Meaningful integration progress has been made aligning teams, processes and systems, with the combined organization operating effectively as one unit early in the process.
  • The company is on track to outperform its 2027 annual synergy target, and maintains confidence it will achieve and potentially exceed its long-term target of $70 million in net annual run rate cost synergies.
  • First-year cost synergies are weighted toward SG&A, from organizational realignment, elimination of redundant roles and third-party spend, and contract harmonization; meaningful future cost of goods sold synergies are also expected.
  • Early revenue synergy wins have been achieved, with long-term revenue synergies expected to become a meaningful organic growth tailwind as integration of sales processes and technology advances.

• Commercial and Operational Execution

  • While input costs remain elevated, the supply chain has remained resilient, and the company has implemented effective pricing actions to offset inflationary pressure, with consistent long-term pricing discipline.
  • Channel inventory has returned to near-normal levels, remaining slightly below historical averages. New pricing actions taken across the combined business are expected to ramp up in the second half of fiscal 2027.
  • Market share gains are being achieved in targeted segments, supported by the combined scaled platform and commercial initiatives.

• Management raised its full fiscal 2027 guidance following the strong Q1 start, with the revised outlook incorporating unfavorable foreign exchange headwinds and continued EMEA demand headwinds.
• New fiscal 2027 guidance is: net sales of $2.09 billion to $2.15 billion, adjusted EBITDA of $405 million to $420 million, and adjusted EPS of $1.90 to $2.10 per share.
• The Q1 one-time material cost benefits are not expected to repeat for the remainder of the year.
• Q2 fiscal 2027 is expected to be the low point for the full year in both sales and adjusted EBITDA, due to backlog phasing and EMEA softness.
• Margins are expected to improve sequentially through the second half of fiscal 2027, driven by synergy realization, operational efficiencies, and the ramp of recently implemented pricing actions.
• The company reconfirmed its deleveraging target of reaching a net leverage ratio below 4.0x by the end of fiscal 2028.

Consolidated net sales for Q1 fiscal 2027 were $531.5 million, a 125% increase year-over-year, driven by the Keto Crosby acquisition, volume, pricing and favorable currency translation, partially offset by the divestiture of the legacy U.S. power chain hoist and chain operations. On a pro forma basis (adjusted for the acquisition and divestiture for comparability), total sales grew 10% year-over-year. By region: the Americas delivered the strongest sales growth, with gains in both volume and pricing; EMEA achieved sales growth from backlog execution and temporary shipping lane access in the Middle East at quarter end; APAC delivered broad-based order and sales growth. By business portfolio: the legacy Keto Crosby portfolio grew sales in the high single-digits, while the legacy Columbus McKinnon portfolio grew sales in the low double-digits. By order type: pro forma project-related sales increased 12%, and short-cycle sales increased 9% with benefits from both pricing and volume. Total orders were $568.1 million, up 120% year-over-year; pro forma orders grew 9% broadly, with growth in the Americas and APAC and a year-over-year decline in EMEA. Sequential backlog grew 4% with a book-to-bill ratio of 1.1. GAAP gross profit was $146.3 million, up 89% year-over-year, with a GAAP gross margin of 27.5%; adjusted gross margin (excluding acquisition-related costs) was 38.1%, up 380 basis points year-over-year. GAAP SG&A expenses were $128.6 million, up $64.5 million year-over-year; adjusted RSG&A (excluding one-time acquisition costs) as a percentage of sales declined 220 basis points to 21.1% due to acquisition scale benefits and synergy realization. Adjusted EBITDA was $111.5 million, up 242% year-over-year, with an adjusted EBITDA margin of 21.0%, up 720 basis points year-over-year. Adjusted EPS was $0.61, up $0.11 year-over-year. Free cash flow (excluding deal costs) was $32.4 million, up $49.7 million year-over-year, with $18.4 million of debt repaid in the quarter.

• Ongoing macroeconomic and geopolitical uncertainty in EMEA has led to soft demand and year-over-year order declines, creating margin pressure from unabsorbed overhead in the region.
• Input costs remain elevated amid ongoing macroeconomic and supply chain volatility.
• Uncertainty around geopolitical stability, particularly in the Middle East, creates near-term demand and supply chain unpredictability.
• Foreign exchange movements create a material headwind to full year sales and margins, relative to prior guidance assumptions.
• Full realization of integration synergies and revenue synergies is a multi-year process with results dependent on successful execution of integration plans.

Q: Management was asked to quantify the impact of Q1 one-time cost benefits, explain drivers of the guidance raise, and outline gross margin cadence for the rest of the year. / A: Around 200 basis points of the 300 basis points pro forma year-over-year adjusted EBITDA margin expansion came from Q1-specific benefits including unanticipated tariff refunds, with the remaining 100 basis points from core business margin improvement. The guidance raise reflects stronger than expected underlying demand, temporary shipping access to the Middle East that pulled forward sales, early visibility into synergy benefits hitting the P&L, and the unanticipated Q1 cost benefits. Q2 will be the full year margin low point, with sequential margin expansion through the second half driven by synergies and new pricing actions.

Q: An analyst asked for color on synergy realization in the quarter and whether synergy targets are being increased. / A: Early synergy initiatives, particularly SG&A-focused steps including organizational realignment and third-party cost reduction, delivered measurable P&L benefits in Q1. Management is encouraged by early progress and expects to potentially outpace original multi-year synergy plans, but did not raise formal targets in this guidance update. COGS-related synergies will ramp later in the year and in future periods, while most early benefits are concentrated in SG&A, consistent with original planning.

Q: An analyst asked what drove the stronger Q1 working capital and free cash flow performance, and reconfirmed the deleveraging timeline. / A: Improved Q1 working capital was driven primarily by better inventory efficiency, slightly lighter than expected CapEx, and cash inflow from the one-time tariff refunds. DSO and DPO improvements are still in progress and expected to deliver further benefits later. Management reconfirmed the prior target of reaching a net leverage ratio below 4.0x by the end of fiscal 2028, and remains confident in hitting this target.

Q: An analyst asked why the full year guided adjusted EBITDA margin is lower than the 21% Q1 margin despite expected second half margin improvement. / A: The lower full year implied margin reflects an approximate 30 basis point ongoing FX headwind relative to prior guidance, softening demand in EMEA that will create margin pressure in Q2 from deleveraging and unabsorbed overhead. Management built in a cautious outlook and expects potential upside to the guided margin as synergies and pricing benefits materialize in the back half of the year.