Columbus McKinnon NASDAQ: CMCO reported a first-quarter fiscal 2027 performance that management said exceeded expectations, aided by its first full quarter operating after the acquisition of Kito Crosby and the divestiture of its legacy U.S. Power Chain hoist and chain operations.
President and Chief Executive Officer David Wilson said pro forma sales rose 10% year over year, with broad-based growth across the company’s platforms. Demand was strongest in the Americas and Asia-Pacific, while Europe, the Middle East and Africa remained softer amid geopolitical and macroeconomic uncertainty.
The company raised its fiscal 2027 outlook for sales, adjusted EBITDA and adjusted earnings per share, citing the strong first-quarter performance, improving visibility into integration benefits and favorable demand in several markets.
Sales and Orders Increased Following Kito Crosby Deal
First-quarter orders totaled $568.1 million, up 120% from the prior-year period, primarily reflecting the Kito Crosby acquisition. On a pro forma basis, adjusting for both the acquisition and divestiture, orders increased approximately 9%.
Net sales rose 125% to $531.5 million. Pro forma sales increased 10%, supported by volume, pricing and favorable currency translation. The legacy Columbus McKinnon portfolio delivered low-teens sales growth, while the legacy Kito Crosby portfolio grew at a high-single-digit rate, according to Chief Financial Officer John Linker.
Backlog increased 4% sequentially, with a first-quarter book-to-bill ratio of 1.1. Pro forma project-related sales rose 12%, while short-cycle sales increased 9%.
Wilson said the company is seeing particular strength in defense, infrastructure, energy, e-commerce, data centers, shipbuilding, electrification, pharmaceutical, automation and North American general industrial markets. The company also cited increased oil-and-gas activity, some of which it said is related to the conflict in the Middle East.
Automotive demand has been uneven, while certain general industrial markets in EMEA continue to be soft. Linker said EMEA orders declined year over year, partly due to geopolitical and economic uncertainty and a difficult comparison with the prior year’s strong rail orders.
Margins Benefited From Pricing, Volume and One-Time Items
Gross profit increased 89% to $146.3 million. GAAP gross margin was 27.5%, while adjusted gross margin was 38.1%, an improvement of 380 basis points from the prior-year period after excluding inventory step-up expense and acquisition integration costs.
Adjusted EBITDA rose 242% to $111.5 million, producing a 21.0% margin, up 720 basis points from the prior year on an as-reported basis. Management said adjusted EBITDA margins expanded by approximately 300 basis points on a pro forma basis.
However, Linker said about 200 basis points of that pro forma expansion was related to benefits specific to the quarter, including late-quarter IEEPA tariff refunds and other material-cost and reserve items. Excluding those benefits, he said the core business expanded EBITDA margin by about 100 basis points.
The company continues to face elevated input costs but said it has implemented pricing actions to offset inflation. Linker said additional pricing actions have been taken in multiple regions and are expected to provide greater benefits in the second half of the fiscal year. Wilson said the company expects pricing to contribute roughly 1% to 2% for the full year.
On a GAAP basis, Columbus McKinnon recorded a net loss of $88.4 million, or $2.05 per share. The company attributed the loss primarily to $55.2 million of non-cash inventory step-up amortization, interest expense and integration costs. Adjusted net income was $30.5 million, or $0.61 per share, compared with adjusted EPS of $0.50 a year earlier.
Cash Flow Supported Debt Reduction
Free cash flow excluding deal costs was $32.4 million, an improvement of $49.7 million from the prior-year quarter. The company said this marked its first positive first-quarter free cash flow in six years, compared with what it described as a historically seasonal cash outflow.
Management cited higher operating profit, inventory-related working-capital improvements, lower-than-expected capital expenditures and certain material-cost benefits. The company paid down $18.4 million of debt during the quarter, reducing its credit agreement net leverage ratio by 0.2 times to 4.9 times.
Linker said debt reduction remains the company’s primary capital-allocation priority. Columbus McKinnon reported total liquidity of $567.1 million, including $98.4 million in cash and equivalents and $468.7 million of revolver availability. Management reaffirmed its expectation to reduce leverage below 4 times by fiscal 2028.
Guidance Raised as Integration Advances
Columbus McKinnon increased its fiscal 2027 guidance to:
- Net sales of $2.09 billion to $2.15 billion;
- Adjusted EBITDA of $405 million to $420 million; and
- Adjusted EPS of $1.90 to $2.10.
The outlook incorporates unfavorable foreign-exchange movements and continuing near-term EMEA headwinds. Linker said foreign exchange represents an estimated 30-basis-point margin headwind in each remaining quarter relative to the company’s previous outlook.
Management expects the second quarter to be the fiscal year’s low point for sales and adjusted EBITDA, reflecting backlog timing, project-order phasing and expected EMEA sales softness. It expects margins to improve sequentially during the second half as pricing, operational efficiencies and cost synergies build.
Wilson said first-year cost synergies from the Kito Crosby combination are expected to be weighted toward selling, general and administrative expenses through organizational changes, elimination of redundancies, third-party spending reductions and contract harmonization. The company continues to target $70 million in net annual run-rate cost synergies over time and said early progress could position it to outperform its plans, though it did not raise synergy guidance.
The company said certain delayed Precision Conveyance projects did not ship during the first quarter and remain in backlog, with potential to contribute later in fiscal 2027 or the following year.
About Columbus McKinnon (NASDAQ:CMCO)
Columbus McKinnon Corporation is a global designer, manufacturer and marketer of material handling systems and solutions. The company's product portfolio spans electric and manual hoists, motorized and manual chain and wire rope hoists, end-of-arm tooling, rigging hardware, trolleys and controls. Through its brands, Columbus McKinnon serves customers across a wide range of end markets including manufacturing, warehousing, construction, and energy, providing equipment for lifting, positioning and flow control applications.
With a focus on safety and productivity, Columbus McKinnon integrates advanced technologies such as automation controls, digital load monitoring and Internet-of-Things connectivity into its hoist and crane systems.
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