Columbus McKinnon Corporation

morning and welcome to Columbus McKinnon's full year and fourth quarter fiscal 2025 earnings conference call. My name is Joanna 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 Christy Moser, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you and welcome everyone to our call. On today's call, we'll be covering both our full year and fourth quarter fiscal 2025 financial and operational results. On the call with me today are David Wilson, our President and Chief Executive Officer, and Greg Rustowitz, our Chief Financial Officer. In a moment, Greg and David will walk through our financial and operating performance for the quarter and year. The earnings release and presentation to supplement today's call are available for download on our investor relations website at investors.cmco.com. But before we begin our remarks, please let me remind you that we have our safe harbor statement on slide two. 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 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. With that, let me turn the call over to David.

Thank you, Christy, and good morning, everyone. Let me start by reviewing the fiscal year. I will also give some color on guidance, insights into tariff impacts, and an update on the pending Keto Crosby acquisition before I hand it over to Greg to discuss our fourth quarter results and guidance in more detail. In fiscal 25, we delivered record orders which increased 4% versus prior year on a constant currency basis, driven by 8% growth in project-related orders and particular strength in precision conveyance. Order momentum remained strong in our fourth quarter, also up 4% on a constant currency basis, again driven by growth in project-related orders and strengthened precision conveyance. While short cycle orders were flat on a constant currency basis in the quarter, we saw an improved comparison trend from the third quarter. Net sales were in line with our guidance, down 4% on a constant currency basis in fiscal 25. This was due largely to timing of backlog, given the higher mix of longer cycle project-related business, as we gained traction on our commercial initiatives and offset slower conversion of short cycle orders. Short cycle has been impacted by near-term policy uncertainty and channel consolidation that has led to channel inventory reductions. This mix shift also accounts for a 15% increase in our backlog, which positions us well as we enter fiscal 26. I would like to take a moment to thank our 3,500 Columbus McKinnon team members, many of whom are listening today, for their hard work, dedication, and relentless execution throughout what was a dynamic and challenging Fiscal 25. Your efforts have improved our position as we enter Fiscal 26. Given these efforts, we have improved our operational execution in areas like safety, where we achieved a top-tier TRIR of 0.54. Customer lead times and on-time delivery in important pockets of our business. And customer experience, where in our European, Middle East, and Africa businesses, we improved our net promoter score by 10 points. And we are taking these principles and strategies across to our other geographies. We continue to see an encouraging funnel of demand with strong quotation activity across our end markets. Short cycle orders remain more sensitive to channel dynamics, however, driven by policy uncertainty in the evolving macroeconomic environment. Over time, we anticipate this demand will stabilize and that attractive opportunities from industry megatrends like nearshoring, scarcity of labor, and infrastructure investments will emerge. Order activity through mid-May remains encouraging, with orders up year-over-year and continued overperformance in precision conveyance. While macro uncertainty remains, we continue to see strength in vertical end markets where we've been building a leadership position like battery production, life sciences, e-commerce, food and beverage, and aerospace. Additionally, we are seeing potential early benefits from industries heavily impacted by tariffs to maximize productivity in their existing U.S. facilities like steel and heavy equipment. We're also seeing strength in orders related to the Department of Defense. Let me now take a moment to address the guidance we issued this morning. Our guidance reflects a macro environment that remains uncertain with continued volatility related to the evolving U.S. policy landscape. While we're encouraged by early order performance, quotation activity and the health of our demand funnel, We expect that our current project versus short cycle mix dynamics will continue to impact first quarter sales and margin, and that our strong backlog and margin expansion initiatives will benefit us more in the latter part of the year. With respect to tariff impacts, it is our intention to fully mitigate the cost implications over time, as we implement a robust mitigation plan that Greg will discuss shortly. In summary, we are making adjustments to our supply chain and implementing select pricing increases and surcharges, while evaluating additional mitigation strategies. We expect tariffs to be a headwind to margin and adjusted EPS in the first half of the year and are targeting the achievement of tariff cost neutrality by the second half of fiscal 2026. It is also our goal to realize margin neutrality over time, but that will likely occur in fiscal 2027. It is also important to note that our guidance for fiscal 26 does not contemplate the impact of our pending acquisition of Keto Crosby. We continue to be excited by the potential of this acquisition, which we expect to scale our business, expand customer capabilities, enable synergies, and over time accelerate our intelligent motion strategy. Through this complementary combination, we will be better positioned to deliver a superior customer value proposition through an expanded product offering across a broader set of geographies. generating enhanced financial results and long-term value for our shareholders. We continue to anticipate a deal closing by the end of the calendar year. While the exact timing remains uncertain, we are constructively engaged in addressing all regulatory requirements and preparing for the marketing and closing of permanent financing for the acquisition while advancing integration planning and readiness. To date, we've received 13 of the 14 regulatory and financial approvals required to close the deal. The last outstanding approval is related to the Hart-Scott-Rodino Act filing. We continue to make progress towards completing the proposed acquisition and are working collaboratively with the Department of Justice on the approval process. Additionally, we are taking full advantage of this valuable time to advance integration planning and to enhance our day one readiness to enable accelerated synergy realization. Within the business, we remain focused on what we can control while navigating what remains an evolving macro environment. Our priorities remain operating effectively, managing the business with agility, and executing our strategic plan. As you would imagine, we are diligently managing costs and implementing mitigation strategies to offset the impact of tariffs. We are remaining flexible to capitalize on upside opportunities, and we continue to advance our strategic plan, including our 80-20 initiatives. I will now turn the call over to Greg to take you through the details of our fourth quarter financial results and fiscal 26 guidance.