Release Date: May 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Columbus McKinnon Corp (CMCO, Financial) delivered record orders in fiscal '25, with a 4% increase versus the prior year on a constant currency basis.
- The company saw strong growth in project-related orders, particularly in precision conveyance, which was up 19% year over year.
- Backlog increased by 15% to $322.5 million, positioning the company well for fiscal '26.
- Operational execution improved, with a top-tier TRIR of 0.54 and a 10-point improvement in net promoter score in the EMEA region.
- The pending acquisition of Keto Crosby is expected to scale the business, expand customer capabilities, and accelerate the intelligent motion strategy.
Negative Points
- Net sales were down 4% year over year on a constant currency basis, reflecting lower volume due to short cycle order softness.
- Gross profit decreased by $14.5 million due to lower sales volume, mix, and factory closure costs.
- Tariffs are expected to be a headwind, with a $0.20 to $0.30 impact on adjusted EPS in the first half of fiscal 2026.
- The company faces macroeconomic uncertainty and volatility related to the evolving US policy landscape.
- Short cycle orders remain sensitive to channel dynamics, impacted by policy uncertainty and channel consolidation.
Q & A Highlights
Q: What is the tariff rate embedded for China and the EU, and how might the Keto Crosby acquisition impact tariff mitigation?
A: David Wilson, President and CEO, explained that the tariff rates considered are 145% for China and 10% for the EU. The company is advancing integration planning for Keto Crosby, which could potentially help mitigate tariff impacts quicker or more effectively than currently guided.
Q: How has the short cycle order trend been through April and early June, and what is expected for Keto Crosby?
A: David Wilson noted that short cycle sales improved in the latter part of Q4, showing a flat year-over-year performance, which was a significant improvement from Q3. While he couldn't comment on Keto Crosby's results, similar activity levels are anticipated.
Q: Can you elaborate on the tariff situation and the expected mitigation measures?
A: David Wilson stated that the company expects a $40 million tariff headwind, with mitigation through surcharges, pricing, and supply chain management. The guidance assumes flat to slightly up revenue, with potential volume reductions due to price increases.
Q: What is driving the strength in precision conveyance orders, and how are margins in this area?
A: David Wilson highlighted robust demand in precision conveyance, with a 19% year-over-year order growth. This demand is driven by sectors like battery production, life sciences, and e-commerce, with contributions from Mantra Tech and Dorner businesses.
Q: Why was the mix negative to margin despite strong precision conveyance orders?
A: David Wilson explained that while orders were strong, sales were down, impacting margins due to lower volume and mix. The company expects improvements in fiscal '26 as volume ramps up, particularly in precision conveyance and North American linear motion businesses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
