Columbus McKinnon's Strategic Position Amid Tariffs and Industry Tailwinds: A Buy for Infrastructure and Supply Chain Plays

The manufacturing sector faces a crossroads: tariffs, supply chain volatility, and shifting global demand are testing companies' mettle. Yet within this turbulence, Columbus McKinnon (CMCO) emerges as a standout. Despite near-term headwinds, the company's record orders, robust backlog, and strategic moves—most notably the pending Kito Crosby acquisition—position it as a prime play for investors betting on infrastructure spending and supply chain resilience. Let's dissect why CMCO is primed for a rebound.

Resilience Through Operational Adjustments

Columbus McKinnon's fiscal 2025 results underscore its ability to navigate a challenging environment. Despite a net loss of $5.1 million—a figure skewed by $61.6 million in non-cash and one-time expenses—the company delivered $1.0 billion in record orders, up 3% year-over-year. Even with foreign exchange headwinds (a 1% drag on orders), growth in project-related business (+8%) and precision conveyance (+19%) signaled underlying demand strength.

The company's response to tariffs has been proactive. By implementing price increases, supply chain reconfigurations, and surcharges, it has mitigated costs. While fiscal 2026's first-half results may lag due to timing lags, management expects tariff cost neutrality by year-end—a critical turning point.

The Kito Crosby Acquisition: A Catalyst for Growth

The $350 million acquisition of Kito Crosby, pending regulatory approval, is a masterstroke. This move scales CMCO's presence in the European market, strengthens its automation and precision conveyance portfolios, and accelerates its Intelligent Motion strategy—a focus on integrated, data-driven material handling solutions. Kito Crosby's expertise in hydraulics and automation complements CMCO's existing offerings, creating cross-selling opportunities.

Crucially, the deal is expected to close in late 2025, with synergies likely to materialize in 2026. Even without including Kito Crosby in its fiscal 2026 guidance (flat-to-up net sales and EPS), CMCO's standalone performance suggests a compelling base case.

Backlog Strength and Fiscal 2026 Outlook

CMCO enters fiscal 2026 with a $322.5 million backlog, up 15% year-over-year—a clear signal of future sales momentum. Management's confidence in flattish-to-positive sales growth, despite lingering tariff pressures, is underpinned by long-term tailwinds:

1. Global Infrastructure Spending: Governments are prioritizing public works, driving demand for material handling equipment.
2. Labor Scarcity and Automation: Companies are increasingly adopting automation to offset labor shortages, a trend CMCO's precision conveyance and robotics solutions are uniquely positioned to serve.
3. Supply Chain On-Shoring: U.S. manufacturing's resurgence, supported by policies like the Inflation Reduction Act, aligns with CMCO's U.S. production footprint and its new Monterrey, MX facility (now ramping up post-startup costs).

Risks? Yes, but Manageable

• Tariff Volatility: While CMCO has mitigated costs, further tariff escalations could strain margins.
• Regulatory Clearance: The Kito Crosby deal faces antitrust scrutiny, though management is engaged with regulators.

Yet these risks are offset by CMCO's diversified end markets, strong backlog, and a balance sheet that prioritizes deleveraging (debt reduced by $60.7 million in 2025) without sacrificing dividends.

Conclusion: CMCO is a Buy for the Next Infrastructure Cycle

Columbus McKinnon is a company with its finger on the pulse of two seismic trends: the global shift toward infrastructure modernization and the imperative to automate and streamline supply chains. Its fiscal 2025 results, while challenged by one-time costs and tariffs, reveal a business with operational discipline and strategic brilliance.

With a robust backlog, a game-changing acquisition on the horizon, and a market-neutral tariff outlook by late 2026, CMCO is a compelling buy. Investors seeking exposure to the infrastructure boom and supply chain resilience should act now—before the Kito Crosby deal closes and the tailwinds truly take flight.

Action: Consider adding CMCO to your portfolio ahead of fiscal 2026 earnings, targeting entry points below its 52-week high. This is a stock poised to leverage both cyclical recovery and secular trends.