Columbus McKinnon(US:CMCO)2025-10-30 15:00Financial Data and Key Metrics Changes - Net sales increased by 8% year over year to $261 million, driven by growth across all product platforms and stabilization in U.S. short cycle order activity [4][11] - Adjusted EPS improved by $0.12 sequentially to $0.62, reflecting higher sales, margin expansion, and continued cost management [4][12] - Gross profit increased by $15.4 million, or 21%, year over year, with a gross margin of 34.5% on a GAAP basis and 35.3% on an adjusted basis [12][14] - Free cash flow for the quarter was $15.1 million, reflecting growth in earnings and working capital improvement [14] Business Line Data and Key Metrics Changes - Short cycle sales increased by 7%, benefiting from higher U.S. short cycle orders as the market stabilized [11] - Project-related sales increased by 8%, converting backlog to revenue on larger projects in U.S. precision conveyance and rail businesses [11] - Orders were $254 million, down 3% year over year, impacted by the prior year benefiting from significant project orders [6] Market Data and Key Metrics Changes - The backlog was $352 million, up $34 million or 11% versus the prior year, with increases in all platforms [8] - U.S. order growth was 11%, reflecting a strengthening demand environment and stabilization of U.S. short cycle volumes [6][8] - Weaker economic landscape in EMEA and APAC resulted in slower conversion for project orders [6] Company Strategy and Development Direction - The company is focused on capitalizing on leadership positions in end markets with notable tailwinds such as aerospace, energy, and defense [8] - Integration preparedness for the pending acquisition of Kito Crosby is a priority, with an established Integration Management Office to ensure successful integration [9][10] - The company anticipates achieving margin neutrality in fiscal 2027 and aims for tariff cost neutrality by the end of fiscal 2026 [5][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to offset tariff impacts over time and highlighted a healthy demand pipeline [49] - The company remains focused on operational execution, cost control, and driving commercial initiatives despite a volatile macroeconomic environment [17][49] - Management noted that the third fiscal quarter is typically the seasonally slowest, impacting sales and margins [27] Other Important Information - The company updated its full-year guidance for fiscal 2026, expecting net sales growth of low to mid-single digits [14][15] - Tariff-related cost impacts are expected to be approximately $10 million for the fiscal year, with residual impacts in fiscal Q3 [17] Q&A Session Summary Question: Why was the earnings guidance not raised despite strong sales? - Management indicated that revenues were pulled forward from Q3 into Q2, and the anticipated tariff impact in Q3 influenced the decision to maintain EPS guidance [20][21] Question: Can you discuss the sustainability of improved short order activity in the U.S.? - Management expressed optimism about continued demand for short cycle orders, noting robust activity and a healthy funnel of opportunities [29][30] Question: What is the status of the Kito Crosby acquisition? - Management confirmed substantial compliance with regulatory requests and anticipates closing the acquisition by the end of the fiscal year [33][34] Question: How is cash flow and CapEx expected to trend this year? - Management expects CapEx to be in the range of $15 to $20 million for the full year and anticipates strong cash flow in the second half [35][36] Question: What are the dynamics in the U.S. lifting space? - Management noted robust demand across most end markets, with competitors also implementing price surcharges and focusing on operational performance [42][43]