CMCO — Q1 2026 Financial Report Analysis

Columbus McKinnon, the hoist, crane and lifting-equipment maker, more than doubled its sales in the quarter ended June 30, 2026, to $531.5 million (+125%), almost entirely because it now owns Kito Crosby, a rival it bought on February 3, 2026. Underneath the deal, the original business grew a healthy 12.7%. But the purchase also loaded the company with debt and one-off accounting charges, so it posted a net loss of $88.7 million, or $2.05 per share, versus a $1.9 million loss a year earlier. This is the company's fiscal 2027 first quarter (its fiscal year ends March 31); we file it as Q1 2026 by the calendar quarter it covers.

At a glance

• 12.7% growth in the original business. Stripping out the acquisition and a business it was forced to sell, "Legacy CMCO" sales rose from $201.1 million to $226.7 million, from higher volumes (+8.0%), price increases (+3.5%) and currency (+1.2%). Demand is real, not just bought.
• Orders of $568.1 million, up 120%, a book-to-bill of 1.1x. Book-to-bill compares new orders to sales shipped; above 1.0 means the order book is growing, which supports the next few quarters.
• $47.6 million of interest in one quarter, up from $8.7 million. That alone is more than five times last year's interest bill and is the main reason a business earning $111.5 million of adjusted EBITDA still lost money.

The numbers

Operating margin is the share of sales left after running the business, before interest and tax. Adjusted EBITDA is the company's own measure of earnings before interest, tax, depreciation and amortization, also excluding deal and restructuring costs; it is not a GAAP figure.

Takeaway: The combined company is generating real operating profit (21.0% adjusted EBITDA margin, with the legacy business growing double digits), but more than 40% of that is spoken for by interest. Whether this deal works for common shareholders now depends less on demand and more on how fast debt comes down from 4.9x earnings.

Where the growth came from

Of the $295.5 million sales increase, Kito Crosby contributed $304.8 million. Offsetting that, Columbus McKinnon lost $34.8 million of sales from its U.S. power chain hoist and chain manufacturing operations, which regulators required it to sell as a condition of the acquisition (the sale closed March 4, 2026). The remaining $25.6 million is the original business growing: $16.1 million from higher volume, $7.1 million from pricing and $2.4 million from currency. Management says growth came "across all regions" and cites "robust U.S. short-cycle demand", meaning quick-turn orders for standard products rather than large engineered projects. U.S. sales were 55% of the total, down from 57%, because Kito Crosby brings a larger non-U.S. footprint.

What the headline numbers hide

The GAAP loss is mostly deal accounting, not a bad business. When a company buys another, it must revalue the target's inventory up to market value; as that inventory is sold, the markup flows through cost of goods as an expense even though no extra cash goes out. That "inventory step-up" charge was $55.2 million this quarter, and it is the whole reason GAAP gross margin fell to 27.5% while adjusted gross margin rose to 38.1%. On top of that sat $34.8 million of amortization of acquired intangibles (up from $7.6 million) and $15.3 million of integration costs. Together the company excluded $108.4 million of pre-tax items (before a tax normalization adjustment) to reach adjusted net income of $30.5 million.

Interest is a permanent cost, not a one-off. The $47.6 million of interest "is related to borrowings to finance the Kito Crosby Acquisition," per the 10-Q, and management's guidance assumes $185–190 million for the full year. Total debt stands at $2.38 billion against $98.4 million of cash.

An odd tax line made the loss worse. The company booked $21.0 million of tax expense on a $67.4 million pre-tax loss. The 10-Q explains it has stopped recognizing future tax benefits from its interest-expense carryforwards because it is in a "three-year cumulative loss position," and it expects this to unfavorably impact the full-year tax rate by "approximately 40% to 50%". Big interest costs are not fully tax-deductible right away, so the debt hurts twice.

Adjusted EPS growth trails adjusted profit growth because of the preferred stock. The deal was partly funded by $800 million of convertible preferred shares sold to private-equity firm CD&R, which would own about 43% of the company if converted. Adjusted net income rose 114%, but adjusted EPS rose only 22% because the company counts those preferred shares as if converted (50.4 million adjusted shares vs. 28.8 million a year ago). The preferred also carries a 7% dividend currently paid in additional shares rather than cash: $14.2 million was added to the preferred balance this quarter, which slowly increases CD&R's claim. GAAP EPS of −$2.05 reflects only the common shareholders' $58.9 million share of the loss, with $29.8 million allocated to the preferred holders.

Part of the margin jump won't repeat. Management attributes the margin expansion partly to "benefits to material costs that were specific to the quarter." The raised full-year guidance (below) implies adjusted EBITDA margin of roughly 19% for the remaining nine months, below Q1's 21.0%, which is consistent with that one-off fading.

Cash conversion was decent once you adjust for the step-up. Operating cash flow was $25.6 million against the $88.7 million net loss, helped by $53.2 million of non-cash depreciation and amortization; the large inventory decrease ($47.7 million) is mostly the non-cash step-up passing through. Excluding the step-up, working capital used $6.4 million. Free cash flow (operating cash minus $5.7 million of capital spending) was $20.0 million, or $32.4 million before $12.5 million of acquisition-related payments. The company repaid $18.4 million of debt.

Leverage is high and measured generously. Net debt is 4.9x "Credit Agreement" EBITDA, down from 5.1x at March 31. That EBITDA figure ($460.9 million) includes a full year of Kito Crosby and assumes all planned cost synergies are already achieved, so on actual results the ratio is higher. For context, the prior fiscal year also included a $200 million goodwill write-down in the Precision Conveyance unit, triggered by the fall in the company's share price.

Outlook

Management raised its fiscal 2027 (year to March 31, 2027) guidance:

The CFO tied the raise to Q1 orders, backlog-based sales phasing, updated exchange rates and "additional confidence in cost synergy realization." Our read: the sales range looks achievable, since Q1 annualized is already about $2.13 billion and orders ran ahead of shipments. The EBITDA range is conservative relative to Q1's pace, which looks like management not extrapolating the one-off material-cost benefit. The swing factor for shareholders is the balance sheet: with roughly $185–190 million of annual interest and preferred dividends compounding in kind, each turn of leverage reduction matters more than another point of margin. Watch in the fiscal Q2 report (quarter ending September 30, 2026; last year's equivalent was filed October 30) whether the net leverage ratio keeps falling, whether the step-up charge has run off, and whether legacy growth holds near double digits as price increases annualize.