Core Viewpoint - Three stocks have been added to the Zacks Rank 5 (Strong Sell) List, indicating a negative outlook for these companies based on recent earnings estimate revisions Group 1: Company-Specific Insights - Avantor, Inc. (AVTR) provides mission-critical products and services for life sciences industries, with a 9% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Columbus McKinnon Corporation (CMCO) is a scientific and technical instruments company, experiencing a 26% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - The Kraft Heinz Company (KHC) operates in the food and beverages sector, with a 10.3% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2]

Core Insights - The Heartland Small Cap Value Strategy achieved a return of 2.98% in Q4 2025, underperforming the Russell 2000® Value Index, which returned 3.26% [2] Performance Summary - The performance of the Heartland Small Cap Value Strategy in Q4 2025 was a gain of 2.98% [2] - The Russell 2000® Value Index outperformed the strategy with a return of 3.26% during the same period [2]

Core Viewpoint - Columbus McKinnon Corporation (CMCO) shares are perceived to be overvalued following a significant $2.7 billion acquisition of Kito Crosby planned for early 2025 [1]. Group 1: Company Overview - Columbus McKinnon Corporation is involved in a large and debt-heavy acquisition, indicating a strategic move to expand its market presence [1]. Group 2: Market Context - The acquisition of Kito Crosby is expected to impact CMCO's financial structure significantly, raising concerns about the sustainability of its stock performance post-deal [1].

Core Viewpoint - Columbus McKinnon (CMCO) has made a significant strategic move by acquiring Kito Crosby to expand its market presence [1] Group 1: Acquisition Details - The acquisition of Kito Crosby represents a "go big or go home" strategy aimed at enhancing Columbus McKinnon's footprint in the industry [1]

Group 1 - The article does not provide any relevant content regarding the company or industry [1]

Core Insights - Columbus McKinnon reported strong fiscal Q3 results with double-digit year-over-year growth in sales, orders, adjusted EPS, and backlog, indicating robust operational performance and market demand [1][5][6] Financial Performance - Net sales reached $258.7 million, a 10.5% increase from the previous year, driven by higher volume, pricing, and favorable currency translation [1][5] - Orders increased by 11% to $247 million, with notable growth in the U.S. (up 15%) and modest growth in EMEA (up 3%) [6][14] - Adjusted EBITDA was approximately $39.8 million, reflecting a margin of 15.4%, with GAAP income per diluted share at $0.21, up $0.07 year-over-year [7][10] Strategic Initiatives - The company closed the acquisition of Kito Crosby, which is viewed as a transformational move, and is now focusing on integration and synergy capture [2][3][6] - Columbus McKinnon has set a target for $70 million in net run-rate cost synergies, with a realization cadence of 20% in year one, 60% in year two, and 100% in year three [1][6] Financing and Debt Management - A significant financing package was completed, including a $1.65 billion Term Loan B and $900 million in senior notes, with plans to use approximately $160 million from divestiture proceeds for debt repayment [4][19] - The company aims to reduce net leverage to below 4x by FY2028, prioritizing deleveraging as a key capital allocation strategy [4][13] Market Outlook and Demand - U.S. demand is expected to remain stable, supported by lower interest rates and favorable tax legislation, while EMEA is anticipated to experience choppiness in demand [14][15] - Management highlighted strength in various end markets, including general industrial, automation, and construction, while noting slower demand in certain sectors like energy and utilities [15] Guidance and Future Plans - Due to the acquisition and divestiture uncertainties, the company has withdrawn its standalone FY2026 guidance and plans to provide FY2027 guidance in May 2026 [16] - The combined company is expected to double its revenue base and enhance its position as a global provider of intelligent motion solutions for material handling [17]

Financial Data and Key Metrics Changes - Columbus McKinnon reported net sales of $258.7 million, an increase of 10.5% year-over-year, driven by higher volume, pricing, and favorable currency translation [10] - Adjusted EBITDA was $40 million, with an adjusted EBITDA margin of 15.4%, flat compared to the prior quarter [6][12] - Adjusted EPS improved 11% from the prior year to $0.62, reflecting higher net income from increased sales volume and pricing [6][13] Business Line Data and Key Metrics Changes - Short cycle sales increased by 13%, with strong performance in the U.S. benefiting from both pricing and volume growth [10] - Project-related sales increased by 8% as backlog was converted to revenue globally [10] - Gross profit rose to $89.2 million, an increase of 8.6% year-over-year, despite negative tariff-related impacts [11] Market Data and Key Metrics Changes - Orders in the U.S. grew by 15%, driven by strength in lifting, automation, and precision conveyance [8] - EMEA orders grew by 3%, although this was largely influenced by favorable foreign exchange rates [8][24] - The backlog increased by 15% year-over-year to $342 million, reflecting growth across all platforms [9] Company Strategy and Development Direction - The company closed the Kito Crosby acquisition, which is expected to be transformative and enhance the value proposition for customers [4][65] - Columbus McKinnon aims to achieve $70 million in net run rate cost synergies from the acquisition, with 20% expected in year one and full realization by year three [21][66] - The primary capital allocation priority will be debt repayment, with expectations to reduce the net leverage ratio to below 4x by the end of fiscal 2028 [15][67] Management's Comments on Operating Environment and Future Outlook - Management noted stabilization in U.S. short cycle order activity and a healthy global funnel of opportunities [5][8] - The company expects U.S. demand to remain strong due to lower interest rates and favorable tax legislation, while EMEA may experience continued challenges [8][24] - Management expressed confidence in achieving tariff cost neutrality by the end of the fiscal year and margin neutrality in fiscal 2027 [7][41] Other Important Information - The company withdrew its prior standalone guidance for fiscal year 2026 due to the recent acquisition and pending divestiture [16] - Significant transaction-related expenses and early integration costs are anticipated to impact GAAP earnings per share in the fourth quarter [16] Q&A Session Summary Question: Can you discuss the seasonality in the Kito Crosby business compared to the core business? - Management indicated that both Columbus McKinnon and Kito Crosby typically see their strongest quarters in the fourth quarter, aligning with seasonal trends [20] Question: What is the expected timing for realizing the $70 million in cost-related synergies? - Management expects to realize approximately 20% of the synergies in year one, increasing to 60% in year two, and 100% in year three [21] Question: How are both businesses trending relative to initial assumptions made during the acquisition? - Management provided pro forma guidance indicating revenue expectations between $2 billion and $2.1 billion, with EBITDA in the $440 million-$460 million range, factoring in synergies [31] Question: Were there any material pull-ins or pushouts in the quarter? - Management stated that there were no material pull-ins or pushouts affecting the quarter [57] Question: How much of the strength in orders is from the U.S. chain hoist business, which is set to be divested? - Management noted that the chain hoist orders did not materially influence the overall order numbers for the quarter [58] Question: Are underlying trends stronger compared to previous guidance? - Management affirmed robust trends in the U.S. market, while noting continued softness in Europe, but overall execution remains strong with a significant backlog [60]

Financial Data and Key Metrics Changes - Columbus McKinnon reported net sales of $258.7 million, an increase of 10.5% year-over-year, driven by higher volume, pricing, and favorable currency translation [10] - Adjusted EBITDA was $40 million, with an adjusted EBITDA margin of 15.4%, flat compared to the prior quarter [6][12] - Adjusted EPS improved 11% from the prior year to $0.62, reflecting higher net income from increased sales volume and pricing [6][13] Business Line Data and Key Metrics Changes - Orders increased by 11% to $247 million, with the U.S. growing 15% and EMEA growing 3% [7][8] - Short cycle sales increased by 13%, while project-related sales rose by 8% as backlog was converted to revenue [10] - Gross profit increased by $7.1 million, or 8.6%, year-over-year, with a GAAP gross margin of 34.5% [11] Market Data and Key Metrics Changes - U.S. demand remains healthy, driven by lower interest rates and favorable CapEx deduction rules [8] - EMEA continues to experience a weaker economic landscape, leading to slower order conversion [8][9] - The backlog is strong, up 15% year-over-year to $342 million, indicating healthy future demand [9] Company Strategy and Development Direction - The company closed the Kito Crosby acquisition, which is expected to enhance operational capabilities and customer value [4] - Columbus McKinnon plans to focus on debt repayment as a primary capital allocation priority following the acquisition [15] - The company aims to achieve $70 million in net run rate cost synergies from the acquisition, with a structured realization plan over three years [21][69] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving tariff cost neutrality by the end of the fiscal year and margin neutrality in fiscal 2027 [7][49] - The company anticipates continued robust demand in the U.S. while acknowledging challenges in the European market [36][62] - Management highlighted a strong backlog and healthy demand funnel, indicating optimism for future performance [9][36] Other Important Information - The company withdrew its prior standalone guidance for fiscal year 2026 due to the acquisition and divestiture timing [16] - Significant transaction-related expenses and early integration costs are expected to impact GAAP earnings per share in the fourth quarter [16] Q&A Session Summary Question: Can you discuss the seasonality in the Kito Crosby business compared to the core business? - Management noted that both businesses typically see their strongest quarters in the fourth quarter, aligning with seasonal trends [20] Question: What is the expected timing for realizing the $70 million in cost-related synergies? - Management expects to realize approximately 20% of the synergies in year one, 60% in year two, and 100% in year three [21] Question: How are both businesses trending relative to initial assumptions made during the acquisition announcement? - Management indicated that the combined businesses are performing well, with Kito Crosby's revenue and EBITDA trending positively compared to initial estimates [37] Question: What is the confidence level in achieving tariff margin neutrality by fiscal 2027? - Management expressed confidence in achieving cost neutrality by the end of the fiscal year and margin neutrality in the following year [49] Question: Did the company experience any material pull-ins or pushouts in the quarter? - Management confirmed that there were no material pull-ins or pushouts affecting the quarter's performance [60] Question: How much of the strength in orders is attributed to the U.S. chain hoist business, which is set to be divested? - Management stated that the chain hoist business did not materially influence the order numbers for the quarter [61] Question: Are the underlying trends stronger compared to previous guidance? - Management acknowledged robust trends in the U.S. market but noted ongoing softness in Europe, indicating a mixed outlook [62]

Financial Data and Key Metrics Changes - Columbus McKinnon reported net sales of $258.7 million, an increase of 10.5% year-over-year, driven by higher volume, pricing, and favorable currency translation [9] - Adjusted EBITDA was $40 million, with an adjusted EBITDA margin of 15.4%, flat compared to the prior quarter [5][11] - Adjusted EPS improved 11% from the prior year to $0.62, reflecting higher net income from increased sales volume and pricing [5][12] - Free cash flow for the quarter was $16.5 million, supported by higher earnings and favorable working capital [12] Business Line Data and Key Metrics Changes - Short cycle sales increased by 13%, with strong performance in the U.S. benefiting from both pricing and volume growth [9] - Project-related sales increased by 8% as backlog was converted to revenue globally [9] - Gross profit increased by $7.1 million, or 8.6%, year-over-year, with a GAAP gross margin of 34.5% [10] Market Data and Key Metrics Changes - Orders in the U.S. grew by 15%, driven by strength in lifting, automation, and precision conveyance [7] - EMEA orders grew by 3%, although this was largely influenced by favorable foreign exchange rates [7][24] - The backlog increased by 15% year-over-year to $342 million, reflecting growth across all platforms [8] Company Strategy and Development Direction - The company closed the Kito Crosby acquisition, which is expected to enhance its value proposition and operational excellence [4] - Columbus McKinnon plans to focus on vertical end markets with tailwinds, such as metal processing, government and defense, and heavy equipment [8] - The company aims to achieve $70 million in net run rate cost synergies from the Kito Crosby acquisition, with 20% expected in year one [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving tariff cost neutrality by the end of the fiscal year and margin neutrality in fiscal 2027 [6][46] - The U.S. market is expected to remain healthy, supported by lower interest rates and favorable tax legislation [7] - Management acknowledged challenges in the EMEA region, anticipating continued slower decision-making and demand [24] Other Important Information - The company withdrew its prior standalone guidance for fiscal year 2026 due to the recent acquisition and pending divestiture [16] - Significant transaction-related expenses and early integration costs are expected to impact GAAP earnings per share in the fourth quarter [16] Q&A Session Summary Question: Can you discuss the seasonality in the Kito Crosby business compared to the core business? - Columbus McKinnon expects Kito Crosby to have a similar seasonal pattern, with both businesses seeing stronger performance in their respective fourth quarters [20] Question: Can you provide a deeper dive into major end markets and geographic performance? - Management noted strength in general industrial space, automation, e-commerce, construction, aerospace, and government, while demand in Europe remains slower than anticipated [23][24] Question: How did the strength in orders relate to the U.S. chain hoist business, which is being divested? - There was no material impact from the chain hoist orders on the overall order numbers, indicating typical performance relative to prior periods [56]

Financial Performance - Net sales for the three months ended December 31, 2025, were $258.655 million, an increase of 10.5% compared to $234.138 million for the same period in 2024[15] - Gross profit for the nine months ended December 31, 2025, was $256.539 million, up from $245.870 million in 2024, reflecting a growth of 4.4%[15] - Net income for the three months ended December 31, 2025, was $5.998 million, compared to $3.960 million in 2024, representing a year-over-year increase of 51.5%[16] - Basic income per share for the three months ended December 31, 2025, was $0.21, up from $0.14 in the same period last year, marking a 50% increase[15] - Comprehensive income for the nine months ended December 31, 2025, was $37.799 million, compared to a loss of $1.660 million in 2024, showing a significant turnaround[16] - Net income for the nine months ended December 31, 2025, was $8,695,000, compared to a net loss of $2,454,000 for the same period in 2024, representing a significant turnaround[22] Assets and Liabilities - Total assets as of December 31, 2025, were $1.762 billion, compared to $1.739 billion as of March 31, 2025, indicating a growth of 1.3%[13] - Total liabilities decreased to $839.669 million as of December 31, 2025, from $856.693 million as of March 31, 2025, a reduction of 2%[13] - The total shareholders' equity as of December 31, 2025, is $922,851,000, reflecting an increase from $882,095,000 as of March 31, 2025[18] - Cash and cash equivalents decreased to $35.484 million as of December 31, 2025, from $53.683 million as of March 31, 2025, a decline of 33.9%[13] Dividends and Shareholder Returns - The company declared dividends of $0.07 per common share for both the three months ended December 31, 2025, and 2024, maintaining consistency[15] - Dividends declared for the quarter ending September 30, 2025, amount to $2,011,000, slightly down from $2,015,000 in the previous quarter[18] Research and Development - Research and development expenses for the nine months ended December 31, 2025, were $14.044 million, down from $17.593 million in 2024, a decrease of 20.5%[15] Cash Flow and Investments - Cash provided by operating activities increased to $20,595,000 for the nine months ended December 31, 2025, up from $10,000,000 in the prior year[22] - The company reported a net cash used in investing activities of $(6,830,000) for the nine months ended December 31, 2025, compared to $(14,222,000) in the prior year[22] - The company completed the acquisition of Kito Crosby Limited for $2,700,000,000, which is expected to enhance its scale and geographic reach in the lifting solutions market[27] Customer and Revenue Insights - Total revenue from U.S. customers accounted for approximately 57% of total net sales during the three and nine months ended December 31, 2025[26] - Revenue recognized from customer advances for the nine months ended December 31, 2025, included $51,004,000, compared to $14,989,000 for the same period in 2024, indicating a significant increase[45] - The company’s total revenue for the nine months ended December 31, 2025, was $755,622,000, compared to $716,138,000 in 2024, indicating an overall increase of approximately 5.5%[47] Inventory and Performance Obligations - As of December 31, 2025, net inventories totaled $222,377,000, an increase from $198,598,000 as of March 31, 2025, reflecting a growth of approximately 11.9%[62] - The aggregate amount of unsatisfied performance obligations as of December 31, 2025, was approximately $37,538,000, with an expectation to recognize about 30% of this amount in the next twelve months[46] Tax and Compliance - The Company recorded an income tax expense of $1,781,000 for the three months ended December 31, 2025, compared to $1,929,000 for the same period in 2024, reflecting a decrease in tax expense[140] - The effective tax rate for the nine months ended December 31, 2025, is estimated to be approximately 15%, influenced by a favorable 16% impact from the New German Tax Law[142] Legal and Environmental Matters - The Company is engaged in litigation with Monsanto regarding indemnification claims, with ongoing legal defenses in place[131] - The District Court ruled that Travelers is obligated to defend the Company in its litigation against Monsanto, affirming coverage under existing insurance policies[133] Other Comprehensive Income - The ending balance of Accumulated Other Comprehensive Income (Loss) as of December 31, 2025, is $8,003,000, reflecting a change from a beginning balance of $(21,101,000) for the nine months ended[145] - For the three months ended December 31, 2025, the net current period other comprehensive income (loss) is $1,136,000, compared to a beginning balance of $6,867,000[145] Debt and Financing - The outstanding principal balance of Term Loan B was $426,316,000 as of December 31, 2025, with $11,244,000 in principal payments made during the nine months ended December 31, 2025[87] - The company plans to pay down approximately $50,000,000 in debt payments over the next 12 months, including principal payments on Term Loan B and payments on its AR Securitization Facility[87] Shareholder Equity and Stock Options - The company increased the number of authorized shares from 51,000,000 to 101,000,000, allowing for future equity issuances[110] - Stock options for 1,566,000 common shares were excluded from diluted EPS calculations for the three months ended December 31, 2025, due to being antidilutive[102]