Columbus McKinnon Navigates Tariff Headwinds with Strong Backlog and Strategic Acquisitions in Sight

Columbus McKinnon Corporation (CMCO) has laid out a cautiously optimistic roadmap for fiscal 2026, projecting net sales and adjusted earnings per share (EPS) to remain “flat to slightly up” amid ongoing tariff pressures and supply chain turbulence. While near-term headwinds persist, the company's robust backlog, surging precision conveyance segment, and pending Kito Crosby acquisition position it as a compelling long-term play in industrial automation and infrastructure.

The backbone of this outlook is a $322.5 million backlog, up 15% from fiscal 2025, fueled by record orders of $1.0 billion. Growth in project-related business (8%) and precision conveyance (19%)—segments tied to global infrastructure spending and automation trends—signals enduring demand for Columbus McKinnon's high-margin solutions. A staggering 59% of the backlog represents orders expected to ship beyond three months, offering visibility into sustained momentum.

Tariff Mitigation: A Play for Time
The company's fiscal 2026 guidance accounts for near-term tariff-related volatility, particularly in the first half. Delayed price increases and surcharges have created a temporary drag, but Columbus McKinnon is aggressively adjusting supply chains and pricing to achieve tariff cost neutrality by mid-2026. This proactive stance contrasts with peers still grappling with margin erosion, positioning the company to capitalize on pent-up demand once these headwinds subside.

The Kito Crosby Catalyst
While the $1.1 billion acquisition of Kito Crosby remains pending regulatory clearance, its strategic value cannot be overstated. The deal will expand Columbus McKinnon's geographic reach, bolster its motion control portfolio, and accelerate its Intelligent Motion strategy, which aims to integrate automation and data-driven solutions. Once closed (expected late 2025), Kito Crosby's complementary products and European presence could unlock $30 million in annual synergies, turbocharging adjusted EPS growth beyond the current flat-to-up guidance.

Financial Resilience and Capital Priorities
Despite a projected $35 million in interest expenses and $30 million in amortization, Columbus McKinnon's focus on debt reduction and dividend preservation (currently yielding ~2.1%) underscores financial discipline. Free cash flow will eventually fuel expansion of the Intelligent Motion platform, targeting sectors like on-shoring, labor scarcity-driven automation, and global infrastructure projects.

Why Buy Now?
The stock trades at ~10x forward adjusted EPS, a discount to peers like Dover Corp. (DOV) and Parker-Hannifin (PH), despite its superior backlog visibility and strategic clarity. Near-term tariff pressures are already priced in, while the Kito Crosby deal and Intelligent Motion execution present asymmetric upside.

Final Take:
Columbus McKinnon's fiscal 2026 guidance is less a glass-half-empty story and more a strategic pivot toward long-term dominance. With a fortress-like backlog, a transformative acquisition on deck, and a clear path to tariff neutrality, CMCO is primed to outperform once macro tailwinds align. Buy the dip.

Risks: Regulatory delays for Kito Crosby, prolonged tariff disputes, supply chain bottlenecks.