Kadant Inc

Good day. Thank you for standing by. Welcome to CADEN's third quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Michael McKinney, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Thank you, Livia. Good morning, everyone, and welcome to CADEN's third quarter 2024 earnings call. With me on the call today is Jeff Powell, our President and Chief Executive Officer. Before we begin, let me read our safe harbor statement. Various remarks that we may make today about CADEN's future plans and expectations, financial and operating results and prospects, are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements as a result of various important factors, including those outlined at the beginning of our slide presentation and those discussed under the heading Risk Factors in our annual report on Form 10-K for the fiscal year ended December 30, 2023, and subsequent filings with the Securities and Exchange Commission. In addition, any forward-looking statements we make during this webcast represent our views and estimates only as of today. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views or estimates During this webcast, we'll refer to some non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is contained in our third quarter earnings press release and the slides presented on the webcast and discussed in the conference call, which are available in the investor section of our website at www.caden.com. Finally, I wanted to note that when we refer to GAAP earnings per share, or EPS, and adjusted EPS on this call, we're referring to each of these measures as calculated on a diluted basis. With that, I'll turn the call over to Jeff Powell, who will give you an update on Cadence Business and future prospects. Following Jeff's remarks, I'll give an overview of our financial results for the quarter, and we will then have a Q&A session. Jeff?

Thanks, Mike. Hello, everyone. Thank you for joining us this morning to review our third quarter results and discuss our outlook for the remainder of the year. Before beginning our Q3 review, I wanted to share with you that we are hosting an investor day to take place on December 12th in New York City. At this event, we will present our new five-year financial targets and outline our growth initiatives in each of our three operating segments. Mike will provide more details on this during his remarks. Now let's turn to our third quarter highlights. The third quarter was another record-setting performance benefiting from excellent execution across our operating segments and record aftermarket parts revenue. This led to record-adjusted EBITDA, record-adjusted EBITDA margin, and record-adjusted EPS in the third quarter. As you know, our aftermarket parts business is one of our core strategic development areas, and it is encouraging to see this part of our business continues to thrive. Overall, market demand was stronger in the Americas, while demand in Europe and Asia reflected the sluggish economies in those regions. As has been the case throughout 2024, our operations teams around the world delivered exceptional value to our customers. I want to thank them for their outstanding work and the results they generated, not only in the third quarter, but throughout the year. Turning next to slide six, I'd like to review our Q3 financial performance. Our Q3 performance was excellent with a number of financial records achieved. Revenue was up 11% compared to the third quarter of 2023 to $272 million and benefited from record aftermarket parts business and contributions from our acquisitions. Solid execution contributed to our record-adjusted EBITDA of $63 million and a record-adjusted EBITDA margin of 23.3%. Cash flow from operations and free cash flow were outstanding in the third quarter at $52 million and $48 million, respectively. demonstrating the strength of our business model. Bookings increased 15 percent compared to the same period last year due to our acquisitions and strong activity in North America. I'll review the performance of our operating segments next, beginning with our flow control segment. Robust market demand for our aftermarket parts led to strong revenue performance in our flow control segment in the third quarter, up 7 percent compared to the same period last year. Bookings were 89 million, up 7%, led by strong demand for aftermarket parts, which made up 78% of new order activity. Excellent execution in both commercial and operational areas of the business led to record-adjusted EBITDA and an adjusted EBITDA margin of 29.4%. Many end markets in our flow control segment remain strong, and we continue to see good levels of project activity, particularly in the Americas. Project activity in Europe and Asia has moderated and reflects the strong and persistent economic headwinds in those regions. In our industrial processing segment, revenue increased 17% to $111 million, led by record aftermarket parts business, which made up 67% of our total revenue in Q3. Bookings also benefited from strong parts demand in this segment and were up 27% compared to the same period last year. Adjusted EBITDA was up 41%, and our adjusted EBITDA margin was a record, 28.7%. Capital project activity is strengthening, and we believe the long-term growth drivers of our end markets remain strong. In our material handling segment, our revenue and bookings benefited from our latest acquisitions. We experienced high demand for our aftermarket parts, and capital project bookings in our high-performance Beller product line were strong in the third quarter. Revenue was up 7% to $63 million, led by solid demand for our bulk material handling products, while bookings were up 10% compared to the same period last year. Adjusted EBITDA margin declined by 210 basis points compared to Q3 of last year, largely due to product mix and lower revenue volume in some of our businesses in this segment. While we expect demand to stabilize in the near term, we continue to see a high-level activity in the aggregate material handling sector, particularly in North America. As we look ahead to the remainder of 2024 in the full year, we expect to deliver record financial results again. We are seeing a lot of activity around capital projects, and this is expected to be a meaningful contributor to our Q4 new order activity, though the timing of these projects can be uncertain and could shift due to macroeconomic uncertainty or other factors. I will now pass the call over to Mike for his review of the Q3 financial performance.