Earnings call transcript: Columbus McKinnon beats Q2 2026 forecasts with strong EPS and revenue

Columbus McKinnon Corporation reported its second-quarter fiscal 2026 earnings, surpassing analysts’ expectations with an EPS of $0.62 against the forecasted $0.53, marking a 16.98% surprise. Revenue reached $261 million, exceeding the anticipated $240.63 million. Following these results, the stock saw a significant pre-market surge, climbing 17.87% to $16.81.

Key Takeaways

• Columbus McKinnon reported an EPS of $0.62, beating forecasts by 16.98%.
• Revenue increased 8% year-over-year to $261 million, surpassing expectations.
• The stock price surged 17.87% in pre-market trading.
• The company continues to focus on innovation and market expansion.
• Strong performance noted in aerospace, energy, and defense sectors.

Company Performance

Columbus McKinnon demonstrated robust performance in Q2 2026, with net sales growing by 8% year-over-year. The company attributed its success to strong demand in sectors such as aerospace, energy, and defense. This growth aligns with the company’s strategic focus on expanding its market presence and product offerings.

Financial Highlights

• Revenue: $261 million, an 8% increase year-over-year.
• Earnings per share: $0.62, up $0.12 sequentially.
• Gross profit: $90.2 million, a 21% increase year-over-year.
• Adjusted gross margin: 35.3%.
• Adjusted operating margin: 9.7%.
• Free cash flow: $15.1 million.

Earnings vs. Forecast

Columbus McKinnon exceeded expectations with a reported EPS of $0.62, compared to the forecasted $0.53, resulting in a 16.98% surprise. Revenue also surpassed forecasts, coming in at $261 million against the expected $240.63 million. This marks a significant beat compared to previous quarters, reflecting the company’s strategic initiatives and market strength.

Market Reaction

The stock price of Columbus McKinnon surged 17.87% in pre-market trading, reaching $16.81. This increase follows the company’s strong earnings report and surpassing of market expectations. The stock’s movement places it well above its 52-week low of $11.78, demonstrating investor confidence in the company’s future prospects.

Outlook & Guidance

Columbus McKinnon reaffirmed its full-year guidance, projecting low to mid-single-digit growth in net sales. The company anticipates achieving tariff cost neutrality by the end of fiscal 2026 and expects the Kito Crosby acquisition to close by fiscal year-end, with projected post-acquisition sales of $2 billion.

Executive Commentary

CEO David Wilson stated, "We delivered a solid Q2 with 8% sales growth." CFO Greg Rustowicz expressed enthusiasm about the pending acquisition, stating, "We remain enthusiastic about the pending acquisition and our ability to achieve our stated long-term objectives." These comments reflect the company’s positive outlook and strategic focus.

Risks and Challenges

• Economic instability in EMEA and APAC regions could impact growth.
• Tariff impacts, although mitigated, remain a concern.
• Supply chain disruptions may pose operational challenges.
• Market competition requires continuous innovation and efficiency.
• Potential delays in the Kito Crosby acquisition could affect financial projections.

Q&A

During the earnings call, analysts inquired about the pull-forward of Q3 revenues into Q2 and the strategies for tariff mitigation. The company addressed these concerns, highlighting its robust U.S. market performance and the progress on the Kito Crosby acquisition.

Columbus McKinnon’s strong Q2 performance and strategic focus on innovation and market expansion have positioned it well for future growth, as reflected in the positive market reaction.

Full transcript - Columbus McKinnon Corporation (CMCO) Q2 2026:

Ludy, Conference Operator: Good morning and welcome to Columbus McKinnon’s second quarter fiscal 2026 earnings conference call. My name is Ludy and I will be your conference operator today. As a reminder, this call is being recorded. I would now like to turn the conference over to Kristine Moser, Vice President of Investor Relations and Treasurer. Please go ahead.

Kristine Moser, Vice President of Investor Relations and Treasurer, Columbus McKinnon: Thank you and welcome everyone to our call. On today’s call we will be covering our second quarter fiscal 2026 financial and operational results. On the call with me today are David Wilson, our President and Chief Executive Officer, and Greg Rustowicz, our Chief Financial Officer. In a moment, Greg and David will walk you through our financial and operating performance for the quarter. The earnings release and presentation to supplement today’s call are available for download on our investor relations website at investors.cmco.com. Before we begin our remarks, please let me remind you that we have our Safe Harbor statement on slide 2. During the course of this call, management may make forward-looking statements in regards to our current plans, beliefs, and expectations.

These statements are not guarantees for future performance and are subject to a number of risks and uncertainties and other factors that can cause actual results and events to differ materially from the results and events contemplated by these forward-looking statements. I’d also like to remind you that management will refer to certain non-GAAP financial measures. You can find the reconciliations of the most directly comparable GAAP financial measures on the company’s investor relations website and in its filings with the Securities and Exchange Commission. Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today’s prepared remarks will be followed by a question and answer session. We respectfully ask that you limit yourself to one question and one follow-up question. With that, I’ll turn the call over to David.

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Thank you, Kristine, and good morning, everyone. Our team delivered results in the second quarter that were ahead of expectations as we capitalized on record backlog and saw stabilization in U.S. short cycle order activity. We also made meaningful progress on our operational improvement, tariff mitigation, and integration preparedness initiatives. I would like to thank our entire Columbus McKinnon team for their dedication and continued focus on performance and execution. Net sales increased 8% year over year to $261 million with growth across all product platforms as short cycle demand stabilized and we accelerated deliveries from Q3 to meet evolving customer delivery requirements. Sales were up broadly, and we delivered volume growth in both the U.S. and EMEA, our two largest regions. Adjusted EPS improved $0.12 sequentially to $0.62 in the second quarter, reflecting higher sales, margin expansion, and continued cost management.

Margins improved sequentially, driven by improved absorption on higher volumes and the early translation of tariff mitigation actions. As expected, year over year adjusted margins were down due to tariff and sales mix impacts in addition to an incentive compensation accrual release in the prior year. Last quarter, we estimated the net tariff impact in Q1 was approximately $4.2 million. As price increases begin to replace tariff surcharges, it is becoming more difficult to calculate net tariff specific impacts. Nonetheless, we estimate that our Q2 net tariff impact moderated slightly from Q1 levels. Despite the constantly evolving tariff landscape, we continue to expect tariffs to be a net $10 million headwind to operating profit in the fiscal year. Given latest developments, however, we now expect this impact to spill over into this quarter, and we are now targeting the achievement of tariff cost neutrality by the end of fiscal 2026.

We still expect to achieve margin neutrality in fiscal 2027. Orders were $254 million, down 3% year over year as the prior year benefited from three significant project orders totaling over $20 million within our precision conveyor systems and light rail workstations businesses. While our pipeline of quotation activity remains healthy, the weaker economic landscape in EMEA and APAC is resulting in slower conversion for project orders. In the U.S. we saw order growth of 11% with strong performance in both project related and short cycle categories, reflecting a strengthening demand environment, the stabilization of U.S. short cycle volumes, and the implementation of price increases to offset tariffs. Over time, we expect lower interest rates and megatrends including reshoring, automation, and scarcity of labor to drive incremental demand.

We are capitalizing on our leadership positions in end markets with notable tailwinds such as aerospace, energy, rail and transportation, metals, heavy equipment, and defense. We also remain focused on the vertical end markets benefiting from secular growth trends where we have been building a leadership position, such as battery production, e-commerce, life sciences, and food and beverage. Our backlog is a healthy $352 million, up $34 million or 11% versus the prior year, with increases in all platforms as we’ve continued to execute on our commercial initiatives. Strong execution to meet evolving customer delivery requirements resulted in the accelerated conversion of Q3 backlog into Q2 shipments. As a result, current quarter backlog came down 4% year over year, which is expected to impact Q3 sales volume.

While we remain laser focused on the performance of our core business, we continue to advance integration preparedness for the pending acquisition of Kito Crosby. We have established an Integration Management Office, or IMO, that is executive led and reports into me, as well as a board subcommittee that will provide governance and oversight related to integration initiatives and our performance versus planning. The IMO will be comprised of dedicated executive and cross functional leaders from both companies to ensure the realization of our combined company integration and synergy objectives. This will enable core business leaders and teams to focus on ongoing business activity, operational performance, and improving customer experience. We remain enthusiastic about the strategic combination of our companies, which will scale the business, enable synergies, expand customer capabilities, and accelerate our intelligent motion strategy over time.

Following integration, we’ll be over $2 billion in sales, delivering top tier industrial margins and strong cash flow performance that enables reinvestment in our business. After deleveraging, our team continues to prepare for the closing of the acquisition as quickly as the regulatory process will allow, and we now expect the transaction to close by the end of our current fiscal year. I will now turn the call over to Greg to review the details of our second quarter financial results and full year guidance.

Greg Rustowicz, Chief Financial Officer, Columbus McKinnon: Thank you, David, and good morning, everyone. As David shared, Columbus McKinnon delivered strong results in the second quarter even as we navigated ever-changing tariff policies in a volatile macroeconomic environment. We delivered the second highest quarter for sales in our history of $261 million, up 8% from the prior year. Driven by higher volume, pricing, and a favorable currency translation, we drove sales growth across all platforms, led by our lifting and linear motion platforms. We saw pricing accelerate in the quarter and expect previously announced price increases to ramp over the next few quarters as we continue to work through our backlog. Short cycle sales increased 7% as we benefited from higher U.S. short cycle orders as the market stabilized after the uncertainty caused by tariffs. Project-related sales increased 8% as we converted backlog to revenue on some larger projects in our U.S. precision conveyance and rail businesses.

Gross profit of $90.2 million increased by $15.4 million, or 21%, versus the prior year on a GAAP basis, driven by the benefit of higher sales as well as a significant year-over-year reduction of $11.1 million in factory consolidation and new factory startup costs. On a GAAP basis, our gross margin was 34.5%, and on an adjusted basis, our gross margin was 35.3%. Adjusted gross margin contracted 100 basis points year over year due to the previously discussed impact of tariffs, while SG&A expenses increased $13.9 million to $70.3 million on a GAAP basis. This included $9.9 million in acquisition-related costs incurred for the pending Kito Crosby transaction and $1.1 million in business realignment costs.

Excluding these items, adjusted SG&A was up by $5.8 million to $59.2 million on higher sales volume, an incentive compensation accrual release in the prior year, as well as the impact of foreign currency translation, which was $1.1 million of the increase. As a percentage of sales, adjusted SG&A increased 60 basis points to 22.7%. However, normalizing for the change in incentive compensation costs, adjusted SG&A would have improved as a percentage of sales. As a result, we generated operating income of $12.2 million in the quarter on a GAAP basis and adjusted operating income of $25.2 million. Adjusted operating margin was 9.7% in the quarter. This resulted in adjusted EBITDA of $37.4 million in Q2 with an adjusted EBITDA margin of 14.3%. GAAP income per diluted share for the quarter was $0.16, and adjusted earnings per share was $0.62.

Adjusted earnings per share decreased $0.08 versus the prior year, driven by the impact of tariffs. Free cash flow in the quarter was $15.1 million, reflecting growth in earnings and working capital improvement even as we paid $2.5 million of acquisition-related deal costs. Finally, we are updating our full year guidance for fiscal 2026. We are increasing our expectations for net sales and now expect growth of low to mid single digits for the year, up from the previous guidance of flat to slightly up year over year. We are also reaffirming our adjusted EPS guidance of flat to slightly up year over year. As a reminder, our fiscal third quarter is our seasonal low for both sales and margins given fewer work days due.

David Wilson, President and Chief Executive Officer, Columbus McKinnon: To the holiday season.

Greg Rustowicz, Chief Financial Officer, Columbus McKinnon: Our guidance assumes approximately $10 million of tariff-related cost impacts to the business in fiscal 2026. Fiscal Q3 will see residual cost impacts due to the timing of tariff recovery initiatives and recent changes increasing Section 232 tariffs. We expect to be profit dollar neutral on tariffs by the end of fiscal 2026 as we implement our mitigation strategies. As a reminder, our guidance does not include the impact of the pending Kito Crosby acquisition. We remain enthusiastic about the pending acquisition and our ability to achieve our stated long-term objectives including synergy realization and deleveraging. While we continue to navigate a volatile macroeconomic environment, we remain focused on our controllables including operational execution, cost control, and driving our commercial initiatives. Operator, we are now ready to take questions.

Ludy, Conference Operator: Thank you, and ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star followed by the number one on your telephone keypad. If you’re using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star followed by the number two. With that, our first question comes from the line of Matt Somerville with DA Davidson. Please go ahead.

Thanks. A couple of questions. You obviously ported the sales goodness you saw in the quarter through the guide for the remainder of the year, but you didn’t do the same for earnings. Can you talk about the pluses and minuses that didn’t allow that sales goodness to flow through? Maybe the answer is the magnitude of pull forward it sounds like you may have had into the quarter. If that be the case, can you help us understand and quantify that? I have a follow up.

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Sure, yeah. Matt, good morning. You kind of hit the nail on the head. We had revenues that were pulled forward from Q3 into Q2. As you know, Q3 tends to be a seasonally low quarter and Q4 a seasonally high quarter. Typically, first half, second half tends to approximate one another in terms of top line. We do have the tariff total of $10 million that we talked about as a net impact to the year still being the amount that we anticipate for the year, and a portion of that, probably a few million dollars, translating into Q3. The combination of the pull forward, the tariff impact in Q3, and the roughly 20% increase in second half versus first half EPS is why we didn’t raise the EPS guide on the slightly higher revenue.

While we anticipate that we continue to make progress throughout the year and certainly we’re laser focused on doing so, realizing those improvements and making that progress, we thought it was prudent to de-risk the second half of the year with the beat in the first half and focus on executing to deliver on the full year guide.

Greg Rustowicz, Chief Financial Officer, Columbus McKinnon: Matt, this is Greg. There’s also another factor to it as well, and that’s foreign currency translation. We’re certainly benefiting on the top line from a foreign currency translation. It was roughly $8 million year to date, and it’ll be probably a similar number in the second half of the year. The margin on a foreign currency change is essentially your operating margin times the change in sales. It’s going to have less of an impact on the overall bottom line.

Got it. There are definitely some moving parts there. I want to understand, you know, 34.3% was a gross margin in Q1, 35.3% I believe is what it was in Q2 on an adjusted basis, realizing seasonal factors, realizing timing of how pricing is rolling through and tariff mitigation. There are a lot of moving parts in the back half of the year. Is there a way that you guys can help us kind of triangulate on what the margin sort of cadence looks like from here through year end? Thank you.

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Yeah, sure. I’m happy, you know, we’ll obviously be able to catch up offline and clarify any questions. I do want to say that in the second half of the year, if you think about margin performance and you think about our full year guide, the year over year gross margin impact, if you compare prior year to this year, would be approximated by the tariff impact of $10 million. $10 million on a billion dollars is roughly 100 basis points of margin erosion from a year over year perspective. There’s a little bit of a mix impact in there as well. Given the fact that we are ramping our Linear Motion factory in Mexico, that provides very high, you know, higher margin product into the mix.

Also, as we ramp our mantra tech volumes, those are providing higher volumes, same in automation, but we are also managing through a heavy backlog of lower margin crane related solutions that we are providing. The combination of those factors, it’s a mix impact as well as the headwind associated with the full year tariff impact that results in the gross margin outlook that we have for the business.

Greg Rustowicz, Chief Financial Officer, Columbus McKinnon: Matt, I’d like to also point out, as you know, that our third fiscal third quarter is typically our seasonally slowest. There are fewer work days. The holidays impact that around the world and we typically see margins flat to slightly down in the third quarter because of that, as there’s less absorption in our factories.

Got it. Thanks, guys.

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Thanks, Matt.

Ludy, Conference Operator: Your next question comes from the line of Jon Tanwanteng with CJS Securities. Please go ahead.

Hi, this is Willem for John. Can you talk to the sustainability of the improved short order activity in the U.S.?

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Sure. We were pleased to see that activity come back. As we were forecasting, we knew that we had some disruption in our fourth and first quarter. As you know, I think our channel partners leaned on their inventory and the kind of unsettled trade relations scenarios played out. We did see the rebound happen in this quarter. It was robust, and we were pleased with that. We do anticipate that will continue as we advance through the third and fourth quarters. We don’t see any reason at this point that would go in a wrong direction. We do have some seasonal issues impacting that in the fourth quarter with a lot of customers having year ends that are measured in December. They may manage inventory in a way that manages that down towards the end of the year.

If you look at the second half, first half scenarios, I think that we’d see reasonable and continued level of demand for short cycle through the balance of the year.

Thank you. Can you add some color around the project backlog and pipeline and conversion rate trends both in the legacy business and the precision business?

Yeah, I mean, really encouraged by the funnel of opportunities that we have. We have record level funnels in most categories of products. We’re in very active and engaged conversations with multiple customers about, you know, pretty interesting and significant opportunities. Those decisions around letting or, you know, making decisions around awarding those contracts have taken a little bit longer than we would have anticipated entering our second quarter. The timing of those projects being awarded is something that plays out over time. We’re encouraged by the project backlog that we have, as you could see that in the $352 million or $351 million worth of backlog that we have at the end of the quarter. We’re even more encouraged by what we see in the funnel and how those projects are playing out.

Right now we are seeing conversion rates, notably in Europe, given, you know, some of the deteriorating macro forecast there taking a little bit longer to close, if you look at it geographically than those in the Americas. We remain encouraged about what lies ahead.

Thank you very much.

Absolutely. Thank you, Juan.

Ludy, Conference Operator: Your next question comes from the line of Steve Ferazani with Sidoti. Please go ahead.

Steve Ferazani, Analyst, Sidoti: Good morning, David. Morning, Greg. Appreciate the detail on the call. Did want to ask about the timing of the Kito Crosby closing. Sounds like you now think it’s going to be three months later. You’ve pushed it off before. I think all you had was HSR to clear. Any reason to be concerned here? Any thoughts on the delay?

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Right, yeah, no reason to be concerned. We’ve substantially complied with the DOJ’s second request, and we’re working towards closing. We’re trying to do so as expeditiously as possible. We’ve made progress from a financing, integration, planning, and regulatory standpoint. As you know, we’ve secured fully committed financing and completed the syndication of the bridge facility, including the $500 million revolver. We’ll pursue permanent financing as we advance toward closing. We’re taking full advantage of the time that we have between now and close to make sure that we’re preparing for day one readiness. We’ve established a full-time dedicated integration management office.

We’ve established a governance structure with our board around oversight, and we’re working with a group of external resources to make sure that we’re wrapping the expertise around this that is necessary to allow for us to accelerate delivery of synergies and delever rapidly post close, but also to make sure that we have good business continuity and we don’t disrupt the core business and enable the resources that are focusing there to remain as focused there as can be possible during this transition. Nothing to be worried about there, just working through the process and anticipate a closing by the end of our fiscal year.

Steve Ferazani, Analyst, Sidoti: Fantastic. Thanks for the detail there. I’m going to kind of combine a couple of my follow up, a couple of different questions, but they do link. Strong cash flow this quarter. Typically, second half is much stronger than first half on the reversal on working capital. Just want to think about, one, how you’re thinking about CapEx and cash flow for this year based on your earnings guidance, and two, given that you’re pushing out the deal close—not you aren’t, but the deal closed by a quarter—and you’ve had the strong cash flow, are you changing where you think your leverage will be post close?

Greg Rustowicz, Chief Financial Officer, Columbus McKinnon: Let me start off with the first piece of it, which is where we expect CapEx, and that’ll be in the 10Q that gets filed this evening. We’re expecting, with where we sit today, roughly $15 to $20 million of CapEx for the full year. We are quite pleased with the progress we’ve made from a cash flow perspective and from a leverage perspective. We’re talking about big numbers here from a financing perspective. Even though we expect to drive substantial free cash flow in the second half of the year, we’re comfortable that, with what we’ve said earlier, it’s going to be in the high fours roughly when we close, but clearly that can move, you know, a tenth of a point.

Steve Ferazani, Analyst, Sidoti: Okay, thanks David. Thanks Greg.

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Absolutely. Thank you, Steve.

Ludy, Conference Operator: Your next question comes from the line of James Kirby with JPMorgan. Please go ahead.

James Kirby, Analyst, JPMorgan: Hey, good morning guys. Most of my guidance questions have already been asked, just following up on some of the questions on the U.S. Obviously, really strong quarter with orders and sales up double digits. You mentioned some industries in the pre-remarks, David, aerospace, energy. I wanted to dig deeper there. Are there any subsectors you’re seeing particular strength or weakness in the U.S., and how are we looking into September and October here?

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Yeah, James, we’re seeing robust demand across most end markets as we look at the U.S. Certainly heavy equipment, steel, you know, playing a significant role in driving demand. Aerospace is strong, the Department of Defense is strong, and even automotive is, you know, picking up, I think as there’s a little bit of rebalancing in terms of ICE engine versus E vehicle as well as, you know, tariff impacted production plans. We provide solutions into that space that are picking up as well. You know, feeling good about the level of demand that we’re seeing here and anticipate that as we go forward. The tailwinds around labor scarcity, the need for improved production or productivity, automation, as well as some of the trade related impacts, will play a benefit, play a role in helping drive demand in the U.S.

James Kirby, Analyst, JPMorgan: Okay, that’s helpful. Maybe for our second question, maybe a high level one on what you’re seeing in lifting in North America and especially as it relates to the competitive environment. You know, just broadly speaking, I assume peers are doing the same thing as you guys are doing with price surcharges. Maybe if you just speak high level on the dynamic in the U.S. in the lifting space.

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Yeah, certainly, we are obviously focused on executing our strategy and we have been disciplined about improving customer experience, improving our operational performance to meet customer expectations. We continue to make progress there and we’ll continue to do so through the balance of our year. As we head into combining with Kito Crosby, the competitive landscape is one where our competitors are disciplined and they tend to follow a similar path to the path that we’re following. We try to be leaders in the space, but obviously we compete against good companies and they’re taking similar actions as you had indicated, relative to tariff mitigation plans, relative to making sure that we’re looking at our supply chains, we’re looking at tariff codes, we’re looking at the opportunities to rebalance production where we can.

I think that we’re in a position where we’re clearly focused on doing what we can to execute well, earn more of our customers’ business and grow our share in the space. We continue to remain focused on that as we head into the balance of the year.

James Kirby, Analyst, JPMorgan: Got it. Thanks, David.

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Thank you, James.

Ludy, Conference Operator: Thank you. That concludes the question and answer session of today’s call. I will now turn it over to David for final remarks.

David Wilson, President and Chief Executive Officer, Columbus McKinnon: Great. Thank you, Ludy. Thank you to all for joining us today. In summary, we delivered a solid Q2 with 8% sales growth. As we execute on record backlog, our tariff mitigation actions are beginning to take effect, and we are confident in our ability to offset impacts over time. Our performance gives us the confidence to increase our full year revenue outlook and reiterate guidance for adjusted EPS. Our demand pipeline remains healthy, and we are focused on executing our commercial and operational initiatives to deliver results for our customers. That focus, combined with effective cost management and strong cash flow generation, positions us to deliver shareholder value over time.

We also continue to make progress towards the closing of the Kito Crosby acquisition and remain enthusiastic about the value this strategic combination will unlock for all stakeholders as we more than double revenue, deliver top tier industrial margins, and generate strong cash flow enabling rapid deleveraging. Thanks for investing your time with us today. As always, please reach out to Kristine with any questions.

Steve Ferazani, Analyst, Sidoti: Thank you, thank you.

Ludy, Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.

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