Columbus McKinnon's second-quarter profits rose by 13 percent as the Amherst material handling equipment maker benefitted from the late July sale of its money-losing Danish conveyor business.
While the sale of its Univeyor business eliminated a persistent source of losses for the company, Columbus McKinnon's earnings of 55 cents per share fell 6 cents short of analyst targets.
The company's profit margins were squeezed by "an incredible spike" in specialty steel and other commodity costs that hit during September, although many of those increases have since receded to early summer levels, said Timothy T. Tevens, Columbus McKinnon's president and chief executive officer.
Columbus McKinnon also was stung by a delay in sales caused when Hurricane Ike temporarily shut down some oil and natural gas drilling rigs and refineries along the Gulf of Mexico. Together, the higher costs and hurricane-related delays reduced Columbus McKinnon's earnings by 5 cents per share.
Tevens also warned that orders have slowed this month as its customers sit tight amid the growing economic uncertainty, although he said it was too early to say that a lasting downturn had begun.
"We're fairly optimistic, yet cautious," he said.
In response, Tevens said Columbus McKinnon has been taking "aggressive measures" to reduce its own costs and reduce the potential impact that a recession would have on its profits.
With about 40 percent of its sales from international markets following its acquisition of Pfaff-silberblau earlier this month, Tevens said the company's sales base is more diverse than ever before. The company, with debt making up only about 31 percent of its total capitalization, also is less leveraged than in the past, freeing up more of its cash for its operations.
Columbus McKinnon's stock fell by 8 percent, or $1.16, to $13.27 on Friday.
Columbus McKinnon's profits rose to $10.6 million, or 55 cents per share, from $9.5 million, or 49 cents per share, a year earlier, when profits were depressed by $1.4 million because of the costs of redeeming some debt early. Excluding those costs, profits rose by 3 percent.
The company's income from continuing operations grew by 7 percent to $10.5 million.
Sales rose 7 percent to $155 million from $145 million, with price increases that the company imposed on hoist products in August accounting for the bulk of the increase. International sales, which accounted for a third of Columbus McKinnon's second-quarter revenues before the Pfaff acquisition, rose 11 percent to $50.3 million.
Shipments that were delayed because of Hurricane Ike trimmed Columbus McKinnon's profits by about 2 cents per share during the quarter that ended in September, although those sales were simply pushed into October. The spike in steel, freight and utility costs trimmed earnings by about 3 cents per share.