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Why is the stock of Columbus McKinnon Corporation (CMCO) dripping down in premarket?

Columbus McKinnon Corporation (CMCO) a leading designer and marketer of intelligent power control systems for material handling products, confirmed that the company has commenced an underwritten public offering of its common stock worth $150M, subject to certain conditions.  The Company is expected to offer the underwriters an option to purchase up to an additional $22.5 million of the Company’s common stock for a time period of 30 days.

At last check-in premarket trading, shares of Columbus McKinnon Corporation (CMCO) were down -6.39% at $50.52.CMCO’s stock closed the last session at $53.97, increasing 0.65% or $0.35.The price range of the company’s shares was between $53.07 and $54.38. The stock price has added 32.77% over the last three months and has gained 40.40 percent so far this year.

Now what

CMCO is expected to use the net proceeds from the public offering to pay back some of the outstanding borrowings under its first-lien term facility. Several renowned investment firms such as J.P. Morgan, Wells Fargo Securities, and PNC Capital Markets LLC are acting as additional book-running managers for the offering.

Columbus McKinnon Corporation has also recently announced estimated unaudited financial results for the fourth quarter and fiscal year 2021, which was completed in March 31, 2021. In accordance to the company’s analysis, fourth-quarter revenue will generate between $184 million to $187 million, which is a substantial increase from the previously announced $175 million to $180 million. Fiscal 2021 revenue is expected to be within the range of $647 million to $651 million.

In accordance to the information available, CMCO estimates that orders received during the quarter will generate between $208M and $209M in comparison to orders worth $168.7M in the third quarter of fiscal 2021 and orders of $197.3M in the fourth quarter of fiscal 2020.

Columbus McKinnon Corporation has also estimated that backlog will be within the ball park figure of 171 million and $172 million as of March 31, 2021, which is a 13% increase at the midpoint in comparison to $152.4 million in the trailing third quarter of fiscal 2021 and an increment of 31% at the midpoint from a backlog of $131.0 million at the end of fiscal 2020.

Conclusion

Columbus McKinnonCorporation has shown a steady increase in estimated revenue and orders received for its fourth quarter, with a strong financial report compared to the previous quarters. However, the commencement of an underwritten public offering of its common stock worth 150M has reduced investor interest for the company, with CMCO stock declining adjacent to the news.

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