COLUMBUS MCKINNON CORP

Previous wording

Our revenue base is geographically diverse with approximately 44% of net sales derived from customers outside the U.S. for the nine months ended December 31, 2024. We believe this diversity balances the impact of changes that occur in local economies, as well as benefits the Company by providing access to growing emerging markets. We monitor both U.S. and Eurozone Industrial Capacity Utilization statistics as well as the ISM Production Index as indicators of anticipated demand for our products. In addition, we continue to monitor the potential impact of other global and U.S. trends including, industrial production, trade tariffs, raw material cost inflation, interest rates, foreign currency exchange rates, and activity of end-user markets around the globe.

Current wording

Our revenue base is geographically diverse with approximately 43% of net sales derived from customers outside the U.S. for the three months ended June 30, 2025. We believe this diversity balances the impact of changes that occur in local economies, as well as benefits the Company by providing access to growing emerging markets. We monitor both U.S. and Eurozone Industrial Capacity Utilization statistics as well as the ISM Production Index as indicators of anticipated demand for our products. In addition, we continue to monitor the potential impact of other global and U.S. trends including, industrial production, trade tariffs, raw material cost inflation, interest rates, foreign currency exchange rates, and activity of end-user markets around the globe.

Previous wording

From a strategic perspective, we are investing in new products as we focus on our greatest opportunities for growth. We maintain a strong North American market share with significant leading market positions in hoists, lifting and sling chain, forged attachments, actuators, precision conveyors and digital power and motion control systems for the material handling industry. We seek to maintain and enhance our market share by focusing our sales and marketing activities toward select North American and global market sectors including general industrial, energy, automotive, heavy OEM, entertainment, construction and infrastructure, life sciences food and beverage, e-commerce and battery production.

Current wording

From a strategic perspective, we are investing in new products and channels as we focus on our greatest opportunities for growth. We have leading market positions in hoists, lifting and sling chain, forged attachments, actuators, precision conveyors and digital power and motion control systems for the material handling industry. We are focusing our sales and marketing activities toward select North American and global market sectors including general industrial, energy, automotive, heavy OEM, entertainment, construction and infrastructure, life sciences food and beverage, e-commerce and consumer products.

Previous wording

In fiscal 2024, the Company acquired montratec GmbH ("montratec"), a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes. montratec product offerings compliment the previous acquisitions of both Dorner and Garvey, and these acquisitions are collectively expected to accelerate the Company’s shift into a provider of intelligent motion solutions and serve as a platform to expand capabilities in advanced, higher technology automation solutions.

Current wording

In fiscal 2024, the Company completed its acquisition of montratec GmbH ("montratec"), a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes. montratec product offerings compliment the previous acquisitions of both Dorner and Garvey, and these acquisitions are collectively expected to accelerate the Company’s shift to intelligent motion solutions and serve as a platform to expand capabilities in advanced, higher technology automation solutions.

Previous wording

Our principal raw materials and components purchases were approximately $396 million in fiscal 2024 (or 62% of Cost of product sold) and include steel, consisting of rod, wire, bar, structural, and other forms of steel; electric motors; bearings; gear reducers; castings; steel and aluminum enclosures and wire harnesses; electro-mechanical components; and standard variable drives and controls. These commodities are all available from multiple sources. We purchase most of these raw materials and components from a limited number of strategic and preferred suppliers under agreements which are negotiated on a Company-wide basis through our global purchasing group. While we are still experiencing some availability issues for select raw materials and components, we are working with our supply base to prioritize shipments and improve availability of key components.

Current wording

Our principal raw materials and components purchases were approximately $375 million in fiscal 2025 (or 59% of Cost of product sold) and include steel, consisting of rod, wire, bar, structural, and other forms of steel; electric motors; bearings; gear reducers; castings; steel and aluminum enclosures and wire harnesses; electro-mechanical components; and standard variable drives and controls. These commodities are all available from multiple sources. We purchase most of these raw materials and components from a limited number of strategic and preferred suppliers under agreements which are negotiated on a company-wide basis through our global purchasing group. Currently, as a result of global inflation and tariffs, we are experiencing higher raw material costs and availability issues for select raw materials and components. To date, we have raised prices to our customers to cover these increased raw material costs and are working with our supply base to prioritize shipments and improve availability of key components.

Previous wording

Net sales in the three months ended December 31, 2024 were $234,138,000, a decrease of $20,005,000 or 7.9% from the three months ended December 31, 2023 net sales of $254,143,000. Net sales were positively impacted by $2,333,000 due to price increases, offset by $21,295,000 of unfavorable sales volume. Foreign currency translation unfavorably impacted sales by $1,043,000 for the three months ended December 31, 2024.

Current wording

Net sales in the three months ended June 30, 2025 were $235,920,000, a decrease of $3,806,000 or 1.6% from the three months ended June 30, 2024 net sales of $239,726,000. Net sales were positively impacted by $2,443,000 due to price increases, offset by $9,375,000 of unfavorable sales volume. Foreign currency translation favorably impacted sales by $3,126,000 for the three months ended June 30, 2025.

Previous wording

Gross profit in the three months ended December 31, 2024 was $82,097,000, a decrease of $11,800,000 or 12.6% from the three months ended December 31, 2023 gross profit of $93,897,000. Gross profit margin was 35.1% in the fiscal 2025 third quarter compared to 36.9% in the fiscal 2024 third quarter. The decrease in gross profit was due to start-up costs totaling $2,603,000 related to the Monterrey, Mexico facility, $9,863,000 of lower gross profit due to lower sales volumes, and $1,999,000 due to higher product liability expenses. In addition, we incurred costs of $556,000 related to factory and warehouse consolidation activities and $376,000 of net business realignment costs. These were offset by $3,937,000 of price increases net of material inflation and other manufacturing costs changes. The translation of foreign currencies had an unfavorable impact on gross profit of $340,000 during in the three months ended December 31, 2024.

Current wording

Gross profit in the three months ended June 30, 2025 was $77,222,000, a decrease of $11,808,000 or 13.3% from the three months ended June 30, 2024 gross profit of $89,030,000. Gross profit margin was 32.7% in the fiscal 2026 first quarter compared to 37.1% in the fiscal 2025 first quarter. Lower sales volume and unfavorable mix reduced gross profit by $5,437,000. In addition, gross profit was reduced $993,000 by net business realignment costs, $425,000 by factory consolidation activities, and $276,000 due to an increase in start-up costs related to the Monterrey, Mexico facility. Material inflation and other manufacturing cost changes net of price increases further contributed to a reduction in gross profit of $5,709,000. The translation of foreign currencies had an favorable impact on gross profit of $1,032,000 during the three months ended June 30, 2025.

Previous wording

Selling expenses were $27,348,000 and $26,552,000, or 11.7% and 10.4% of net sales, in the fiscal 2025 and 2024 third quarters, respectively. The increase in selling expenses is primarily due to an increase in employee related costs of $728,000. Foreign currency translation had a $95,000 favorable impact on selling expenses in the three months ended December 31, 2024.

Current wording

Selling expenses were $28,531,000 and $27,770,000, or 12.1% and 11.6% of net sales, in the fiscal 2026 and 2025 first quarters, respectively. Foreign currency translation had a $607,000 unfavorable impact on selling expenses in the three months ended June 30, 2025.

Previous wording

General and administrative expenses were $24,233,000 and $26,255,000, or 10.3% of net sales, in both the three months ended December 31, 2024 and 2023, respectively. General and administrative expenses decreased due to lower incentive-based compensation of $2,178,000 and stock based compensation of $660,000 compared to the prior year. This was offset by $1,299,000 of expense to record a reserve against an accounts receivable balance for a customer who declared bankruptcy in January of 2025. Foreign currency translation had a favorable impact of $442,000 on general and administrative expenses in the three months ended December 31, 2024.

Current wording

General and administrative expenses were $30,743,000 and $26,447,000, or 13.0% and 11.0% of net sales, in both the three months ended June 30, 2025 and June 30, 2024, respectively. General and administrative expenses increased $8,103,000 as a result of Kito Acquisition related expenses offset by lower employee salary and benefit costs of $2,900,000. Foreign currency translation had a unfavorable impact of $189,000 on general and administrative expenses in the three months ended June 30, 2025.

Previous wording

Research and development expenses were $5,325,000 and $6,692,000, or 2.3% of net sales, in both the fiscal 2025 and 2024 third quarters.

Current wording

Research and development expenses were $4,821,000 and $6,166,000, or 2.0% and 2.6% of net sales, in both the fiscal 2026 and 2025 first quarter, respectively. The reduction in researching and development expenses is primarily related to reduced labor and benefit costs.

Previous wording

Amortization of intangibles was $7,501,000 and $7,486,000 in the fiscal 2025 and 2024 third quarters, respectively, with the fluctuations related to foreign currency during the respective periods.

Current wording

Amortization of intangibles was $7,635,000 and $7,500,000 in the fiscal 2026 and 2025 first quarters, respectively, with the fluctuations related to foreign currency during the respective periods.

Previous wording

Investment income was $54,000 in the third quarter ended December 31, 2024 compared to $758,000 in the third quarter ended and December 31, 2023. Investment income relates to the mark-to-market adjustments on the marketable securities held in the Company’s wholly owned captive insurance subsidiary and the Company's equity method investment in EMC, described in Note 6 of the financial statements.

Current wording

Investment income was $1,049,000 in the third quarter ended June 30, 2025 compared to $209,000 in the first quarter ended and June 30, 2024. Investment income relates to the mark-to-market adjustments on the marketable securities held in the Company’s wholly owned captive insurance subsidiary and the Company's equity method investment in EMC, described in Note 6 of the financial statements.

Previous wording

Income tax as a percentage of the pre-tax loss was 33% and income tax as a percentage of the pre-tax income was 29% in the third quarters ended December 31, 2024 and December 31, 2023, respectively. Typically, these percentages vary from the U.S. statutory rate of 21% primarily due to varying statutory tax rates at the Company's foreign subsidiaries, and the jurisdictional mix of income for these subsidiaries.

Current wording

Income tax expense as a percentage of the pre-tax loss was 16% and income tax as a percentage of the pre-tax income was 28% in the first quarters ended June 30, 2025 and June 30, 2024, respectively. Typically, these percentages vary from the U.S. statutory rate of 21% primarily due to varying statutory tax rates at the Company's foreign subsidiaries, and the jurisdictional mix of income for these subsidiaries. During the three months ended June 30, 2025, the impact of equity compensation increased income tax expense.

Previous wording

Cash, cash equivalents, and restricted cash totaled $41,474,000 at December 31, 2024, a decrease of $72,902,000 from the March 31, 2024 balance of $114,376,000.

Current wording

Cash, cash equivalents, and restricted cash totaled $28,972,000 at June 30, 2025, a decrease of $24,961,000 from the March 31, 2025 balance of $53,933,000.

Previous wording

Net cash provided by operating activities was $10,000,000 for the nine months ended December 31, 2024 compared to $28,591,000 for the nine months ended December 31, 2023. Net loss of $2,454,000 along with non-cash adjustments of $63,698,000 contributed to cash provided by operations. The non-cash adjustments included $36,230,000 of depreciation and amortization, $23,634,000 related to the settlement of one of the Company's pension plans, $7,657,000 of non-cash lease expense, $6,677,000 of stock-based compensation, and $3,268,000 related to the impairment of Charlotte Manufacturing Operation's lease. Changes in working capital reduced cash from operations by $46,505,000 as a result of an increase of $18,894,000 in inventories, an increase in prepaid expenses and other current assets of $14,565,000, a decrease in accrued expenses of $15,240,000, and a decrease of $8,061,000 in trade payables, offset by a decrease in trade accounts receivable of $10,255,000. The increase in inventories relates to purchases required for expected future customer demand. Cash provided by operations also included a decrease of $5,225,000 in other non-current liabilities primarily due to lease payments for the nine months ended December 31, 2024.

Current wording

Net cash used for operating activities was $18,153,000 for the three months ended June 30, 2025 compared to $10,758,000 for the three months ended June 30, 2024. Net loss of $1,898,000 offset by non-cash adjustments of $12,103,000 contributed to cash inflows from operations. The non-cash adjustments included $12,266,000 of depreciation and amortization, $4,669,000 of a deferred tax benefit, $2,412,000 of non-cash lease expense, and $1,842,000 of stock-based compensation. These inflows were offset by changes in working capital which reduced cash from operations by $26,703,000 as a result of an increase of $9,661,000 in inventories, an increase in prepaid expenses and other current assets of $3,015,000, a decrease of $8,203,000 in trade payables, and an increase in trade accounts receivable of $8,726,000, offset by an increase in accrued expenses of $2,902,000. The increase in inventories relates to purchases made in advance of future tariffs. Cash used for operations also included a decrease of $2,413,000 in other non-current liabilities primarily due to lease payments for the three months ended June 30, 2025.

Previous wording

Net cash used for investing activities was $14,222,000 for the nine months ended December 31, 2024 compared to $125,965,000 for the nine months ended December 31, 2023. The use of cash for the nine months ended December 31, 2024 primarily consisted of $15,266,000 in capital expenditures. In the nine months ended December 31, 2023, the most significant use of cash in the period related to the Company's purchase of montratec for $108,145,000.

Current wording

Net cash used for investing activities was $3,217,000 for the three months ended June 30, 2025 compared to $4,041,000 for the three months ended June 30, 2024. The use of cash for the three months ended June 30, 2025 primarily consisted of $3,202,000 in capital expenditures.

Previous wording

Net cash used for financing activities was $69,499,000 for the nine months ended December 31, 2024 and net cash provided by financing activities was $67,771,000 for the nine months ended December 31, 2023. The most significant uses of cash were for $45,495,000 in debt repayments, $9,945,000 of shares repurchased as treasury stock during the year, a $6,711,000 payment to the former owners of montratec for the contingent consideration agreement (refer to Note 2 for additional information) and $6,039,000 in dividend payments. Cash flows from hedging activities related to the Company's cross currency swap are classified as financing activities in the Statement of Cash Flows which resulted in a net cash inflow of $393,000 during the nine months ended December 31, 2024. In the nine months ended December 31, 2023, the significant source of cash was $120,000,000 in gross proceeds from the issuance of long-term debt, which was used to fund the montratec acquisition (refer to Note 2 for additional information).

Current wording

Net cash used for financing activities was $977,000 and $30,583,000 for the three months ended June 30, 2025 and June 30, 2024, respectively. The most significant use of cash in fiscal 2026 was for $2,003,000 in dividend payments. Cash flows from hedging activities related to the Company's cross currency swap are classified as financing activities in the Statement of Cash Flows which resulted in a net cash outflow of $443,000 during the three months ended June 30, 2025. These outflows were offset by additional borrowing on debt of $2,225,000.

Previous wording

We believe that our cash on hand, cash flows, and borrowing capacity under our Amended and Restated Revolving Credit Facility will be sufficient to fund our ongoing operations and debt obligations, and capital expenditures for at least the next twelve months. This belief is dependent upon successful execution of our current business plan and effective working capital utilization. No material restrictions exist in accessing cash held by our non-U.S. subsidiaries. We expect to meet our funding needs with cash provided by our U.S. operations, as well as by repatriating non-U.S. cash. We do not expect to incur significant incremental U.S. taxes as we repatriate funds. As of December 31, 2024, $38,017,000 of cash and cash equivalents were held by foreign subsidiaries.

Current wording

We believe that our cash on hand, cash flows, and borrowing capacity under our Amended and Restated Revolving Credit Facility will be sufficient to fund our ongoing operations and debt obligations, and capital expenditures for at least the next twelve months. This belief is dependent upon successful execution of our current business plan and effective working capital utilization. No material restrictions exist in accessing cash held by our non-U.S. subsidiaries. We expect to meet our funding needs with cash provided by our U.S. operations, as well as by repatriating non-U.S. cash. We do not expect to incur significant incremental U.S. taxes as we repatriate funds. As of June 30, 2025, $26,517,000 of cash and cash equivalents were held by foreign subsidiaries.

Previous wording

In addition to keeping our current equipment and plants properly maintained, we are committed to replacing, enhancing and upgrading our property, plant and equipment to support new product development, improve productivity and customer responsiveness, reduce production costs, increase flexibility to respond effectively to market fluctuations and changes, meet environmental requirements, enhance safety and promote ergonomically correct work stations. Consolidated capital expenditures for the nine months ended December 31, 2024 and December 31, 2023 were $15,266,000 and $16,334,000, respectively. We expect capital expenditure spending in fiscal 2025 to range from $18,000,000 to $22,000,000.

Current wording

In addition to keeping our current equipment and plants properly maintained, we are committed to replacing, enhancing and upgrading our property, plant and equipment to support new product development, improve productivity and customer responsiveness, reduce production costs, increase flexibility to respond effectively to market fluctuations and changes, meet environmental requirements, enhance safety and promote ergonomically correct work stations. Consolidated capital expenditures for the three months ended June 30, 2025 and June 30, 2024 were $3,202,000 and $4,629,000, respectively. We expect capital expenditure spending in fiscal 2026 to range from $20,000,000 to $25,000,000.

Previous wording

Our costs are affected by inflation in the U.S. economy and, to a lesser extent, in non-U.S. economies including those of Europe, Canada, Mexico, South America, and Asia-Pacific. We do not believe that general inflation has had a material effect on our results of operations over the periods presented despite rising inflation due to our ability to pass on rising costs through price increases. In the past we have experienced higher raw material, freight, and logistics costs as a result of the COVID-19 pandemic, which we have been able to recover with pricing actions. In the future, we may not be able to pass on similar cost increases to our customers.

Current wording

Our costs are affected by inflation in the U.S. economy and, to a lesser extent, in non-U.S. economies including those of Europe, Canada, Mexico, South America, and Asia-Pacific. We do not believe that general inflation has had a material effect on our results of operations over the periods presented despite rising inflation due to our ability to pass on rising costs through price increases. We are currently experiencing higher raw material costs as a result of tariffs, which we expect to recover with pricing actions. In the future, we may not be able to pass on these cost increases to our customers.

Previous wording

We test goodwill at the reporting unit level, which is one level below our operating segment. We identify our reporting units by assessing whether the components of our operating segment constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components. We also aggregate components that have similar economic characteristics into single reporting units (for example, similar products and / or services, similar long-term financial results, product processes, classes of customers, etc.). We have three reporting units: the Linear Motion Products reporting unit, the Rest of Products reporting unit, and the Precision Conveyance reporting unit, which have goodwill totaling $9,699,000, $297,709,000, and $393,142,000, respectively, as of December 31, 2024.

Current wording

We test goodwill at the reporting unit level, which is one level below our operating segment. We identify our reporting units by assessing whether the components of our operating segment constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components. We also aggregate components that have similar economic characteristics into single reporting units (for example, similar products and / or services, similar long-term financial results, product processes, classes of customers, etc.). We have three reporting units: the Linear Motion Products reporting unit, the Rest of Products reporting unit, and the Precision Conveyance reporting unit, which have goodwill totaling $9,699,000, $320,697,000, and $402,017,000, respectively, as of June 30, 2025.

Previous wording

We currently do not believe that it is more likely than not that the fair value of any of our reporting units is less than its applicable carrying value. Additionally, we currently do not believe that we have any significant impairment indicators or that any of our reporting units with goodwill are at risk of failing Step One of the goodwill impairment test. However, if the projected long-term revenue growth rates, profit margins, or terminal growth rates are significantly lower, and/or the estimated weighted-average cost of capital is higher, future testing may indicate impairment of one or more of the Company’s reporting units and, as a result, the related goodwill may be impaired.

Current wording

We currently do not believe that it is more likely than not that the fair value of any of our reporting units is less than its applicable carrying value. Additionally, we currently do not believe that we have any significant impairment indicators. However, if the projected long-term revenue growth rates, profit margins, or terminal growth rates are significantly lower, and/or the estimated weighted-average cost of capital is higher, future testing may indicate impairment of one or more of the Company’s reporting units and, as a result, the related goodwill may be impaired.

Previous wording

Refer to our 2024 10-K for additional information regarding our annual goodwill impairment process.

Current wording

Refer to our 2025 Form 10-K for additional information regarding our annual goodwill impairment process.