Columbus McKinnon (NASDAQ:CMCO) management told investors it delivered third-quarter fiscal 2026 results at the high end of the ranges it had previously pre-announced while also closing what CEO David Wilson called the “transformational” acquisition of Kito Crosby. Executives said the company is now shifting from deal-close activities to integration work, synergy capture, and debt repayment.
Acquisition close and divestiture timing
Wilson said Columbus McKinnon closed the Kito Crosby acquisition last week and is now beginning integration activities. The company is also expecting to close its previously announced divestiture of its U.S. power chain hoist and chain operations by the end of the current quarter, which Wilson described as the “final step” in aligning the combined company for its next growth phase.
Quarterly performance: double-digit growth and stable EBITDA margin
For the fiscal third quarter, management reported double-digit year-over-year growth in sales, orders, adjusted EPS, and backlog. Rustowicz said net sales were $258.7 million, up 10.5% from the prior year, driven by higher volume, pricing, and favorable currency translation. He cited particular strength in lifting, linear motion, and automation, with growth strongest in North America and modest organic growth in EMEA “against a weaker economic backdrop.”
Orders increased 11% to $247 million, with the U.S. up 15% and EMEA up 3%, though Wilson noted that much of the European increase was foreign-exchange driven and that demand there remained slower than anticipated. He said global growth was balanced across short-cycle and project orders, reflecting short-cycle stabilization, commercial traction, and tariff-related price increases.
Adjusted EBITDA was about $40 million (reported as $39.8 million), with an adjusted EBITDA margin of 15.4%. Wilson said the margin was flat sequentially as tariff mitigation offset normal seasonality. Rustowicz added that the company’s adjusted EBITDA definition now includes an add-back for stock compensation expense to align with its credit agreement definition.
On earnings, GAAP income per diluted share was $0.21, up $0.07 year-over-year, while adjusted EPS was $0.62, up 11%. Rustowicz attributed the adjusted EPS improvement to higher net income from volume and pricing and lower foreign exchange losses than the prior year.
Backlog rose 15% year-over-year to $342 million, which Wilson said reflected increases across all platforms in both short-cycle and project businesses.
Margins: mix pressure and tariffs
Gross profit was $89.2 million, up 8.6% year-over-year on a GAAP basis, supported by higher volume, price increases, favorable FX, and lower factory consolidation and startup costs, partially offset by tariff impacts. GAAP gross margin was 34.5%, and adjusted gross margin was 35.1%.
Adjusted gross margin contracted 170 basis points year-over-year. Rustowicz said the contraction was due to unfavorable product mix and tariffs. Management elaborated that mix was the biggest factor, followed by tariffs, citing timing of higher-margin precision conveyance shipments, a less favorable product mix in U.S. lifting, more rail project shipments globally, and less linear motion sales.
On tariffs, Wilson said it has become “increasingly difficult” to estimate tariff costs as vendor price increases replace tariff-specific surcharges. Still, management believes the company came in slightly ahead of its $10 million net tariff impact estimate for the first three quarters of fiscal 2026. Wilson reiterated expectations to reach tariff cost neutrality by year-end and margin neutrality in fiscal 2027.
Cash flow, financing, and deleveraging priorities
Free cash flow was $16.5 million, reflecting higher earnings, favorable working capital, increased customer deposits, and lower cash taxes, partially offset by $6.7 million of transaction-related cash payments.
Rustowicz detailed permanent financing completed in connection with the acquisition, including:
- $1.65 billion Term Loan B priced at three-month SOFR plus 350 basis points, funded at 99% of face value
- $900 million senior secured notes with a 7 1/8 coupon, funded at par
- $800 million perpetual convertible preferred stock
- $500 million revolving credit facility, which he said significantly increases liquidity
Management said financing rates came in below its initial estimate of roughly 8%, which it said should accelerate debt paydown and deleveraging. Rustowicz added that the company intends to use proceeds from the pending divestiture—net of taxes and transaction fees of approximately $160 million—to pay down the Term Loan B, and he described debt repayment as the company’s primary capital allocation priority. The company expects to reduce net leverage to below 4x by the end of fiscal 2028.
Demand commentary and guidance withdrawal
Wilson said U.S. demand has stabilized, and he expects it to remain healthy, pointing to lower interest rates, favorable capital expenditure deduction rules in new tax legislation, and onshoring benefits as tailwinds. In EMEA, he expects choppiness to persist, with slower order conversion than typical despite a building pipeline.
In the Q&A, management highlighted end-market strength in general industrial and automation, e-commerce, construction, aerospace and government, heavy machinery, and food and beverage. They cited slower demand pockets including stocking distributors managing inventory into year-end, as well as energy and utilities, which management said is affected by project timing and is expected to improve.
Due to the acquisition closing and uncertainty around the divestiture timing, Rustowicz said the company is withdrawing prior standalone fiscal 2026 guidance and will provide fiscal 2027 guidance on its May 2026 earnings call. He also said transaction-related expenses, purchase accounting adjustments, early integration costs, and higher interest expense are expected to be dilutive to GAAP EPS in the fourth quarter and for the full fiscal year 2026, and that significant deal-related costs are expected to negatively impact free cash flow.
In closing remarks, Wilson said the combined company is expected to “double” its revenue base and become a scaled global provider of intelligent motion solutions for material handling, with an emphasis on integration execution, synergy delivery, and rapid deleveraging.
About Columbus McKinnon (NASDAQ:CMCO)
Columbus McKinnon Corporation is a global designer, manufacturer and marketer of material handling systems and solutions. The company’s product portfolio spans electric and manual hoists, motorized and manual chain and wire rope hoists, end-of-arm tooling, rigging hardware, trolleys and controls. Through its brands, Columbus McKinnon serves customers across a wide range of end markets including manufacturing, warehousing, construction, and energy, providing equipment for lifting, positioning and flow control applications.
With a focus on safety and productivity, Columbus McKinnon integrates advanced technologies such as automation controls, digital load monitoring and Internet-of-Things connectivity into its hoist and crane systems.
