Core Insights - Columbus McKinnon Corporation reported a net sales decrease of $3.8 million, or 1.6%, for the first quarter of fiscal year 2026 compared to the prior year, with net sales totaling $235.9 million [2][4] - The company experienced a net loss of $1.9 million, reflecting a net loss margin of (0.8%), which includes $8.1 million in acquisition-related expenses and $4.2 million in tariff impacts [4][5] - The backlog increased by 23% year-over-year to $360.1 million, indicating a healthy demand environment with a book-to-bill ratio of 1.1x [4][26] Financial Performance - Net sales for Q1 FY26 were $235.9 million, down from $239.7 million in Q1 FY25, with U.S. sales slightly declining by 0.7% and non-U.S. sales decreasing by 2.7% [2][4] - Gross profit fell to $77.2 million, a decrease of 13.3% from $89.0 million in the prior year, resulting in a gross margin of 32.7% [3][4] - Adjusted EBITDA for the quarter was $30.8 million, down 17.9% from $37.5 million in the previous year, with an adjusted EBITDA margin of 13.0% [5][39] Operational Highlights - The company anticipates a net tariff impact of approximately $10 million in the first half of fiscal 2026, consistent with prior guidance [1][4] - Columbus McKinnon is progressing towards the acquisition of Kito Crosby, expecting benefits from scale, improved solutions, and realization of synergies [1][4] - Capital allocation priorities include paying down debt while maintaining consistent dividend payments, with a focus on advancing the Intelligent Motion strategy [6][8] Guidance and Outlook - The company reaffirms its fiscal year 2026 guidance, expecting net sales and adjusted EPS to be flat to slightly up, while factoring in approximately $35 million of interest expense and $30 million of amortization [7][8] - The guidance does not account for the pending Kito Crosby acquisition and reflects the current understanding of the volatile tariff policy environment [7][8]

Financial Data and Key Metrics Changes - Columbus McKinnon reported fiscal year 2025 net sales of $963 million, down 4% year over year on a constant currency basis, reflecting lower volume due to short cycle order softness [15] - In the fourth quarter, sales were $246.9 million, a decrease of 5% from the prior year on a constant currency basis, primarily due to a 9% decrease in short cycle sales [15] - Gross profit for the quarter was $79.8 million, down $14.5 million year over year, impacted by factory closure costs and lower sales volume [16] - Adjusted earnings per diluted share decreased by $0.15 versus the prior year, driven by lower volume and unfavorable mix [17] Business Line Data and Key Metrics Changes - Short cycle orders were flat on a constant currency basis in the quarter, but there was an improved comparison trend from the third quarter [6] - Precision conveyance orders grew by 19% year over year, indicating strong demand in this segment [36] - Backlog increased by 15% year over year to $322.5 million, reflecting strength in project-related orders, particularly in precision conveyance [15] Market Data and Key Metrics Changes - The company noted strength in vertical end markets such as battery production, life sciences, e-commerce, food and beverage, and aerospace [8] - Demand in industries impacted by tariffs, such as steel and heavy equipment, is expected to stabilize over time [8] - The company anticipates that macroeconomic uncertainty will continue to affect short cycle orders, which are sensitive to channel dynamics [7] Company Strategy and Development Direction - Columbus McKinnon is focused on operational execution, customer experience, and cost management while navigating an evolving macro environment [58] - The pending acquisition of Keto Crosby is expected to scale the business, expand customer capabilities, and enhance financial results [11] - The company aims to achieve tariff cost neutrality by the second half of fiscal 2026 and margin neutrality over time [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about order momentum and backlog as they enter fiscal 2026, despite ongoing macroeconomic uncertainties [58] - The company expects continued volatility related to evolving US policy landscape, impacting sales and margins in the first half of the year [9] - Management is encouraged by early order performance and quotation activity, indicating a healthy demand funnel [9] Other Important Information - The company paid down $60 million of debt in fiscal 2025, prioritizing debt repayment moving forward [18] - Adjusted EBITDA for the fourth quarter was $36.1 million, with an adjusted EBITDA margin of 14.6% [18] - The company expects a $40 million EBITDA impact from unmitigated tariff exposure in fiscal 2026 [19] Q&A Session Summary Question: What is the tariff rate embedded for China and EU for the $0.20 to $0.30 headwind in the first half of the year? - Management indicated a 14.5% tariff on China and 10% on EU tariffs are currently factored into the guidance [26] Question: Can you discuss the near-term outlook for short cycle orders? - Management noted that short cycle sales improved in the latter portion of Q4, with growth in order demand observed [28] Question: How much of the tariff impact is expected to come from pricing versus cost reductions? - Management stated that the demand environment remains uncertain, with pricing and surcharges expected to offset some tariff impacts, but volume reductions may occur due to price increases [33] Question: Can you elaborate on the strength in precision conveyance orders? - Management reported robust demand in precision conveyance, particularly from Montrotech and Dorner businesses, with strong performance in various end markets [36] Question: How will the tariff impacts carry over into the second half of the year? - Management expects to manage tariff impacts through pricing adjustments and surcharges, with a goal to cover tariff increases by the second half of the year [45]