Columbus McKinnon Corp

We increased our position in Columbus McKinnon (CMCO), which designs, manufactures, and distributes materials handling products and systems used in various industrial applications. Despite reporting slower-than-expected Q3 results due to U.S. policy uncertainty, we see a compelling risk/reward profile at current prices. Management is targeting mid-20% EBITDA margins upon integration of a $2.7 billion acquisition, up from 15.5% in FY25 pre-acquisition. We believe CMCO can rerate closer to its industrial peers trading at an average of 12x EV/EBITDA, supported by aggressive insider buying post-selloff.

We believe Columbus McKinnon offers investors a compelling risk/reward case and a strong catalyst as it seeks to reduce leverage and improve the growth and margin profile of the consolidated business. Management, which has been aggressively purchasing the stock in the open market during the recent sell-off, is targeting mid-20% EBITDA margins upon integration. That’s up from an estimated 15.5% in FY25 pre-acquisition. Our current target price target of $54 would imply a valuation of 10.5 times Enterprise Value to EBITDA. Upon execution of the acquisition, however, we believe CMCO should be treated similarly to its industrial peers trading at an average of 12x EV/EBITDA.

Columbus McKinnon engages in the design, manufacture and marketing of material handling products and systems. The company came under pressure following the announcement of its intent to acquire Kito Crosby, a global provider of lifting solutions and securement. Investor concern about the size and financing of the deal contributed to the weakness. We continue to maintain a position, for now, as we continue to evaluate the risk/reward potential associated with the deal.