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Material handling equipment manufacturer Columbus McKinnon (NASDAQGS:CMCO) fell short of analysts' expectations in Q2 CY2024, with revenue up 1.8% year on year to $239.7 million. Its non-GAAP profit of $0.62 per share was flat year on year.
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Columbus McKinnon (CMCO) Q2 CY2024 Highlights:
- Revenue: $239.7 million vs analyst estimates of $241.3 million (small miss)
- Adj. EBITDA: $37.5 million vs analyst estimates of $36.8 million (1.9% beat)
- EPS (non-GAAP): $0.62 vs analyst estimates of $0.61 (1.9% beat)
- Full year guidance reaffirmed for revenue and EPS growth
- Gross Margin (GAAP): 37.1%, in line with the same quarter last year
- Free Cash Flow was -$15.39 million, down from $30.1 million in the previous quarter
- Market Capitalization: $1.13 billion
With 19 different brands across the globe, Columbus McKinnon (NASDAQGS:CMCO) offers material handling equipment for the construction, manufacturing, and transportation industries.
General Industrial MachineryAutomation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand for general industrial machinery companies. Those who innovate and create digitized solutions can spur sales and speed up replacement cycles, but all general industrial machinery companies are still at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.
Sales GrowthA company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones tend to grow for years. Unfortunately, Columbus McKinnon's 3.3% annualized revenue growth over the last five years was sluggish. This shows it failed to expand in any major way and is a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Columbus McKinnon's annualized revenue growth of 5.6% over the last two years is above its five-year trend, but we were still disappointed by the results.
This quarter, Columbus McKinnon's revenue grew 1.8% year on year to $239.7 million, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 3% over the next 12 months, an acceleration from this quarter.
Operating MarginColumbus McKinnon has done a decent job managing its expenses over the last five years. The company has produced an average operating margin of 9.3%, higher than the broader industrials sector.
Analyzing the trend in its profitability, Columbus McKinnon's annual operating margin rose by 1.7 percentage points over the last five years, showing its efficiency has improved.
In Q2, Columbus McKinnon generated an operating profit margin of 8.8%, in line with the same quarter last year. This indicates the company's cost structure has recently been stable.
EPSAnalyzing long-term revenue trends tells us about a company's historical growth, but the long-term change in its earnings per share (EPS) points to the profitability of that growth–for example, a company could inflate its sales through excessive spending on advertising and promotions.
Columbus McKinnon's flat EPS over the last five years was below its 3.3% annualized revenue growth. However, its operating margin actually expanded during this timeframe, telling us non-fundamental factors affected its ultimate earnings.
We can take a deeper look into Columbus McKinnon's earnings to better understand the drivers of its performance. A five-year view shows Columbus McKinnon has diluted its shareholders, growing its share count by 22.5%. This dilution overshadowed its increased operating efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don't tell us as much about a company's fundamentals.
Like with revenue, we also analyze EPS over a shorter period to see if we are missing a change in the business. Unfortunately for Columbus McKinnon, things didn't get any better over the last two years as its EPS didn't budge. We hope its earnings can grow in the coming years.
In Q2, Columbus McKinnon reported EPS at $0.62, in line with the same quarter last year. This print beat analysts' estimates by 1.9%. Over the next 12 months, Wall Street expects Columbus McKinnon to grow its earnings. Analysts are projecting its EPS of $2.86 in the last year to climb by 11.7% to $3.20.
Key Takeaways from Columbus McKinnon's Q2 Results Columbus McKinnon seems to be on track. Adjusted EBITDA and EPS both beat and the company reaffirmed full year guidance. The stock remained flat at $39.26 immediately following the results.
