Kadant Inc

Good day. Thank you for standing by. Welcome to Caden's third quarter 2024 earnings conference call. At this time, all participants on the 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 1-1 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 10K 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 change. During this webcast, we'll refer to some non-GET financial measures. These non-GAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAP financial measures to the most directly comparable GAP measures is contained in our third quarter earnings press release in the slides presented on the webcast and discussed in the conference call, which are available in the investor section of our website at .cadent.com. Finally, I wanted to note that when we refer to GAP 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. We'll give you an update on Cadent's 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 12 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 strengths of our business model. Bookings increased 15% 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% 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%. Minion 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 bill or 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're 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. Mike.

Thank you, Jeff. I'll start with our third quarter performance. Revenue was 271.6 million, up 11% compared to the third quarter 23, including a 12% increase from acquisitions. Gross margin was .7% in the third quarter 24, up 140 basis points compared to .3% in the third quarter 23. This increase was principally due to higher margins achieved on capital projects. Another contributing factor was a higher percentage of parts and consumable revenue, which increased to 65% of revenue in the third quarter of 24, compared to 61% in the prior year. The third quarter gross margins of .7% included a 50 basis point negative impact from the amortization of acquired profit and inventory. Excluding this impact, gross margins were up 190 basis points over the third quarter of 23. This continues our strong gross margin performance over the quarterly results achieved in 23. SG&A expenses as a percentage of revenue increased to .4% in the third quarter of 24, compared to .7% in the prior year period, primarily due to our acquisitions, which included non-recurring acquisition-related costs. SG&A expenses were 69 million in the third quarter of 24, increasing 11.1 million compared to 57.9 million in the third quarter 23. This included an increase of 9.7 million from our acquisitions and 1.2 million in acquisition-related costs. Our gap EPS increased 2% to $2.68 in the third quarter, compared to $2.63 in the third quarter 23, principally due to higher revenue and gross margins. Our adjusted EPS was a record $2.84 in the third quarter of 24, up 6% compared to $2.69 in the third quarter 23. Third quarter of 24 adjusted EPS exceeded the high end of our guidance range by 36 cents due to higher revenue than forecasted, especially at our industrial processing segment. We also had higher than expected gross margin. We had another quarter with record adjusted EBITDA results. Third quarter adjusted EBITDA was a record 63.3 million, increasing 20% compared to the third quarter 23, due to record performance in our industrial processing and flow control segments. As a percentage of revenue, adjusted EBITDA was a record .3% compared to .6% in the third quarter 23. This included a record adjusted EBITDA margin of .7% in our industrial processing segment. Our adjusted EBITDA has increased each quarter in 24 with strong contributions from our industrial processing and flow control segments. Our adjusted EBITDA margin of .3% in the third quarter 24 represents the first quarter we have exceeded 23%. Turning to our cash flows, we had strong cash flows in the third quarter 24, increasing 87% sequentially. Compared to the third quarter 23, operating cash flow increased 12% to 52.5 million. Free cash flow is up 27% to 48.3 million in the third quarter 24, compared to 38.1 million in the third quarter 23. We paid 10.4 million for acquisitions funded by borrowings and paid down debt by 32 million in the quarter. Our other non-operating uses of cash in the third quarter 24 included 4.2 million for capital expenditures and 3.8 million for a dividend on our common stock. Let me turn next to our EPS results for the quarter. In the third quarter 24, GAP EPS was $2.68 and after adding back 15 cents of acquisition-related costs, adjusted EPS was $2.84. In the third quarter 23, GAP EPS was $2.63 and after adding back 3 cents of relocation costs and 3 cents of restructuring and impairment costs, our adjusted EPS was $2.69. As shown in the chart, the increase of 15 cents in adjusted EPS in the third quarter 24 compared to the third quarter 23, included increases of 32 cents due to a higher gross margin percentage and 21 cents from the operating results of our acquisitions, excluding the associated borrowing costs. These increases were partially offset by 22 cents due to higher interest expense, eight cents due to lower revenue, four cents due to a higher tax rate, three cents due to higher operating expenses and one cent due to higher weighted average shares outstanding. The operating results, excluding acquisition-related costs from our acquisitions, contributed 21 cents to our third quarter results. Recent acquisitions are included in each operating segment and the integration process is going well. Collectively included in all the categories I just mentioned was an unfavorable foreign currency translation effect of three cents in the third quarter 24 compared to the third quarter of last year due to the strengthening of the US dollar against certain currencies. Looking at our liquidity metrics on slide 15, our cash conversion days, which we calculate by taking days and receivables plus days in inventory and subtracting days in accounts payable, decreased to 129 at the end of the third quarter 24 compared to 138 in the prior year quarter. Working capital as a percentage of revenue increased to .2% in the third quarter 24 compared to .4% in the third quarter 23 due to the lack of a full year of revenue in the calculation for our recent acquisitions. Our net debt, that is debt-less cash, decreased 33.4 million or 12% sequentially to 236.7 million. Our leverage ratio, calculated in accordance with our credit agreement, decreased to 1.13 compared to 1.22 at the end of the second quarter 24. At the end of the third quarter 24, we had 85 million of committed borrowing capacity and an additional 200 million of uncommitted borrowing capacity under our revolving credit facility. In addition, our strong balance sheet and low leverage ratio would allow us to access additional sources of capital if needed. Now turning to our guidance for the fourth quarter and full year 24. We've had a strong financial performance to date in the fourth quarter, we expect a sequential increase in industrial demand for our capital equipment. However, the majority of these projects will not ship until 25. Lower gross margins due to the mix of projects in the period will contribute to comparatively lower earnings for the fourth quarter. I should note here that the timing of capital shipments can shift by quarter, creating both upside opportunity and downside risk with our fourth quarter expectations. We are narrowing our full year revenue guidance range to 1 billion 47 million to 1 billion 55 million from 1 billion 45 million to 1 billion 65 million. We are raising our adjusted EPS guidance and now expect $9.93 to $10.13 up from $9.80 to $10.05 for 24, which excludes 68 cents of acquisition related costs. We expect gap EPS of $9.25 to $9.45 revised from our previous guidance of $9.20 to $9.45, which included acquisition related costs of 60 cents. Our 2024 guidance includes a 17 cent negative effect from foreign currency translation compared to the guidance given at the beginning of the year. Future actions by the central banks may impact the US dollar and other currencies, which could have an impact on our guidance. Both gap and adjusted EPS guidance are calculated using our initial estimates of purchase counting adjustments, which are subject to change as we review and analyze and finalize the valuation work for our 24 acquisitions. Our revenue guidance for the fourth quarter of 24 is 252 to 260 million, and our adjusted EPS guidance is $1.90 to $2.10, which excludes five cents of amortization expense associated with acquired profit and inventory and four cents related to acquired backlog. We currently anticipate gross margins for 24 will be 44 to 44.5%. This includes a 40 basis point negative impact from 4.8 million of amortization expense associated with acquired profit and inventory. We anticipate fourth quarter gross margin will be in the low to mid 43% range, primarily due to the mix of projects. We expect SG&A for 24 will be approximately .7% of revenue. This includes a 50 basis point negative impact from one time acquisition related costs of 5.4 million. We now expect net interest expense of approximately 18.5 million for 24, and we expect our tax rate for the fourth quarter will be approximately 27.5 to 28%. I hope these guidance comments are helpful. And finally, as Jeff mentioned, we'll be hosting an investor day on December 12th at the Lott New York Palace Hotel in New York City. This event is a great opportunity for attendees to hear from leaders in each of our major product lines, and they will discuss market trends and growth opportunities, and you will be able to view product demonstrations. We'll provide an update on our strategic growth initiatives, including acquisitions and our 80-20 program. We'll also update you on cadence performance against the financial goals we set at our last investor day in 2019, and outline our new five-year financial goals. We look forward to seeing you there. I'll now turn the call back over to the operator for our questions, Liv.

Thank you. Ladies and gentlemen, if you wish to ask a question at this time, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1-1 again. Please stand by, we'll be compiled again in a roster. And our first question coming from the line of Gary Presapino with Barrington, Ilana Soppen.

Good morning, Jeff and Mike. Couple of questions. Go ahead, Gary. First of all, for the various divisions, flow control, industrial, material handling, can you give us the percentage of aftermarket parts that were in the prior year's Q3? Just want to get an idea of how they've grown.

Yeah, let's see. So, of course, this is all in. So for flow control, this year, now you're talking revenue, Gary?

Yes,

yes. Revenue, the parts were 70% versus 68% in the comparing quarter last year. In industrial processing, it was 67% compared to 60% last year. And in material handling, it was 55% compared to 53% last year. Okay,

thank you. And then, could you, just as you're looking at the fourth quarter, could you just maybe very quickly go over some of the puts and takes that you're seeing out there as regards to the three segments?

Well, I'll just address that very broadly. You know, I'd say for the fourth quarter, I'd say we're being conservative in case some capital shipments are delayed into 25. In talking to the people in the field, there was a little bit of a concern that some customers may ask for a project to get shipped in the first quarter 25 versus fourth quarter. So, I wanted to be conservative in that regard. And I'd also say, on the parts and consumables front, you know, we've had a very good -to-date performance and the fourth quarter can be a little bit of a wild card. It can be a bit challenging to peg. This is nothing unusual. This is kind of standard fourth quarter stuff for us. So, there's a little bit of uncertainty as to whether customers will continue buying as they have through the year or even sometimes buying extra. So, if they've used their maintenance budgets, maybe a little softer in the fourth quarter. And if they have extra in their maintenance budgets, we may get a little uplift. So, a little bit of a kind of mixed bag on that one.

Okay, but just going through my notes, it seems like just what I jotted down for each segment that the capital project activity is gonna be pretty good in the US and North America, but still kind of sluggish in Europe and Asia. Is that kind of a correct assumption? Yes, that's correct. Okay, and just lastly, how does the pipeline look for any future acquisitions

at this point? So, I think we've mentioned through most of the year that our corporate development group has been quite busy. I would say there's been very strong activity, certainly relative to the last few years. And that hasn't really slowed down. And I think what the bankers are telling us is that next year is gonna be even stronger. So, it's a pretty active market out there right now. The challenge for us is always the same. First, finding something that's a good strategic fit that meets the attributes we're looking for, and then being able to get it at what we think is a reasonable price. And that ultimately is the big challenge is that getting at what we think is a fair price. But it's a pretty robust market out there right now. A lot of activity. Thank you. Thank you.

Thank you. And our next question coming from the line of Kurt Dinger with DA Davidson, Yolana Selfin.

Great, thanks and good morning, everyone. Hi Kurt. It sounds like you do expect a pickup in capital equipment bookings in Q4. Wondering if you could maybe just directionally talk about kind of the magnitude that you're anticipating, as well as whether there's any kind of seasonal factors in there, or if you think that might represent, I don't wanna be too dramatic, but an inflection and something that could sustain going into next year.

Yeah, I don't think we expect to see a step change. We think things are strengthening. As we talk to our customers, they're saying that they think things are going to to really start to improve the second half of next year. And then into 26, they expect 26 to be pretty strong. But it's going to be a slow climb here, I think the next few quarters. So we're talking about, we expect an increase, but it's not going to be a significant increase. It's gonna be an incremental increase, and it should continue to build as people start to get comfortable. I think a little bit of it would depend on what the Fed does, the next couple meetings they have. And frankly, I think everybody's right now sitting on their hands a little bit, waiting to see the outcome of the election in the US. China is putting together another stimulus package to try to get things growing there. And then Europe, it depends on, of course, which country you're looking at. But they're hopefully bottoming out, they're gonna start to make some investments. We've seen this before when investments kind of get quiet, and it can't last forever, because the equipment just continues to wear out. And that's why our parts and consumable business has been so strong, record rates, is because they're running equipment longer than they traditionally would. And so at some point, they're gonna have to start making investments. And what we're hearing from the marketplaces is they're gonna start strengthening, and they're really expecting the back half of next year to really start to see a market improvement.

Got it, okay, I appreciate that. And I think it's pretty clear geographically kind of where the pockets of strength and weakness are, I guess, from an end market perspective, what areas of the portfolio stand out in terms of where you see particularly compelling kind of capital opportunities going into next year?

The market that has continued to surprise us with its strength has been the OSB market, the OAN strand board market. In fact, we just booked another new mail order today this morning, about an hour before the call started. So it's one of these situations where it just continues to push through around the world, and we're pretty strong globally. Of course, our installed base in China continues to increase as does in North America and Europe. So that's probably the strongest. I would say packaging, certainly in the parts and consumable side, it's held up quite well. So we've been quite pleased with that. Capital has been slower, for sure. And then we have other smaller markets that are doing well. The metals market, defense, frankly, we've got increasing exposure to the defense market, and that's growing. So there's a lot of kind of what we'll call industrial markets that are starting to show some renewed strength.

Okay, got it. And Mike, I know we talked about a little bit last quarter, but capital equipment sales kind of continue out, pace bookings by a pretty wide margin. Is that just the work down of kind of the backlog? And is that something that you would still expect will normalize as we move into next year, or how long could that dynamic kind of persist for in your mind?

It's just as we discussed, Kurt, that certainly happened here in the third. We may get a little bit of that again in the fourth. And then I'd say as we go into 25, it should be relatively normalized. We'll kind of work through the access we had.

Okay, perfect. And then just lastly on the gross margin front, obviously very strong performance. Again, this quarter, mix is one element, but the margins on the capital side seems like it's been kind of the biggest upside surprise. How sustainable is that? And what would you kind of attribute that to in terms of what's driven the upside there?

Well, it's a great question. I would say there's a component of that, Kurt, to be quite frank on it, can be mix, the mix of the capital project. So when we take very large capital projects, that will oftentimes create a little pressure on the gross margin performance, but you get better operating leverage. So you get a payoff at the end. So I think the projects that are shipping now, I'd say are not the large capital projects. And I would say we've picked up a little bit from commodity prices coming down. And I think, frankly, the 80-20 exercise has been helpful in terms of what we're achieving on the margin front. So I think there's been, as is almost always the case, it's never one particular factor, it's several things, but I'm very happy with the gross margin performance this year. We've outperformed 23 every quarter this year. And frankly, we've outperformed our own forecasting expectations every quarter.

Okay, I appreciate all the color. I'll turn it over. Thank you.

Thank you. And as a reminder, to ask a question, please press star 1-1 and wait for your name to be announced. Our next question coming from the line of Ross Berrendlich with William Blair. Heal and is open.

Hey, good morning, guys. Morning, Ross. Can you help us out with the backlog in the quarter? I know there's been some M&A in fact here in the first half of the year. Make sure we're on the same page.

Yeah, as we stand right now, Ross, it's at 285.

Okay. And then, I mean, get the sense here too, that that kind of 250 threshold for the fourth quarter on orders might come in a little lower than that, just depending on timing. And then maybe second half of next year, we kind of stabilize and book the bill stabilizes.

Yeah, yeah. I mean, it's, you know, I'm always careful not to go too far on my forecasting on the bookings front, but that those aren't bad markers. You know, certainly we're anticipating sequential increase, but to your point, let's say using the 250 number, you know, we would, depending on, you know, with the guidance range at 252 to 260, that would imply, you know, as I mentioned to Kurt a moment, a little, you know, a little more consumption of the backlog.

Okay. I mean, you got to give yourself more credit. You're a better forecasters than you let on. Looking at the capital equipment orders in 67 million in the third quarter, give us a sense of price and volume and if there's any impact from steel past the room.

I don't, you know, I don't think there was anything special in terms of, you know, what transpired in the third quarter, frankly.

Yeah, well, it kind of sounded like maybe demand was picking up because she'll come in. So maybe there's a little bit of price, but volume was, you know, so pretty consistent. Nothing to read into there.

Yeah, I think so. I think, you know, prices, as you know, with capital equipment, you kind of collect your, the current input cost when you bid these projects. And so they tend not to get too far out of whack with the actual commodity prices, you know, that we're experiencing.

All right. And then maybe just the mix of kind of greenfield activity that you're seeing in the order book, there's kind of the maintenance cycle and where we're at today.

Yeah, I think, you know, as you would expect, an awful lot of the capital is replacements and repairs, you know, with fewer greenfields. Of course, the majority of greenfields are happening in the developing world with Asia being the largest market there. And it's been quieter. And we certainly are still booking greenfield projects there, but it's certainly not as strong as it had been. You know, the one exception is we are seeing some, you know, some kind of greenfields opportunities on the wood side. So that's, you know, that's, I mentioned earlier, the OSB market tends to be probably the market that has endured the best during this time. I would say the industrial markets globally, you know, have been pretty slow. I mean, this has been a, you know, the North American economy has continued to grow, but it's been an awful lot on the service side. And when you look at capital equipment and durable goods, it's, you know, it's been, takes strip cars out. It's been, you know, it's been sluggish. And so, you know, we are actually quite pleased that we've held up as well as we have. And as I said, the wood side, probably OSB in particular, has probably endured the best of all those markets.

Yeah, I mean, it's kind of curious to hear you say that, you know, the PNC had been strong around packaging, but I had previously gotten the sense that, you know, the OCC capital equipment was also doing fairly well and signs of inflection.

Yeah, I don't know that, I don't know. We're not ready to declare victory yet that we've, you know, we've got back to kind of robust demand. It's held up okay, you know, and the parts consumables have been very good. You know, I think I mentioned the last call. One of the things we've benefited from is that the percent of paper and packaging being made from recycled fiber, you know, is at 44% this year. And to give you a sense of that, in 2000, it was 25%. So, you know, it has grown, the percentage of paper and packaging being made from recycled fiber continues to grow and is at a record level. And of course, as you know, that's our focus is on the recycled side. So we clearly have benefited and that's why you see the parts consumables being high, continuing to grow is because, you know, more and more of the paper packaging being produced is coming from recycled fiber. And so, you know, and that, I suspect that will probably continue. There's a, you know, there's a pretty decent price, you know, price difference between recycled fiber and virgin pulp. And most of the new capacity, you know, that's come online, in fact, almost all of it has been recycled fiber. So they're taking some old pulp production offline and bringing on recycled fiber capacity. And so we'll continue to benefit from that.

That's very helpful. Maybe just one more thing about PNC, any updates on the kind of utilization rates by region? Seems like maybe Europe was characterized as decelerating. It looked like APAC was searching for a bottom previously. And again, you know, Yeah, I mean, it's,

America's, North America's held up reasonably well. I would say Asia is still slow. China is still in their kind of mid 60s, you know, maybe higher 60s now, depending on which region you're looking at. It varies a little bit in Europe, but Europe's kind of in the 70s and 80s, again, depending on which area you're looking at. So North America's clearly held up the best, you know, and it's not a big surprise if you just look at GDP growth, you know, paper, you know, is pretty closely correlated, packaging's closely correlated GDP growth. So America's done well and it's held up the best. They've done a better job, I think in rationalizing production, you know, with mergers and acquisitions. And so they've been able to keep their operating rates up higher than Europe and certainly higher than Asia.

All right, so presumably it sounds like no news for next year on TMC.

You know, I think our customers are packaging customers and paper customers are telling us they expect to see things strengthen next year. And they're really hoping the back half, the second half of the year is going to be much stronger. And then they're all getting ready for 26, which they seem to think is gonna be a pretty robust year. So they'll start to make investments next year to get ready for that.

All right, well, thanks for the time,

guys.

Thank you. And we have a follow up question from Kurt Yengel with DA Devison, you're on the cell phone.

Great, thanks. Just two quick ones. First, it looked like FX was maybe a million dollar headwind or so in Q3, is that right, Mike? And how are you thinking about, or I guess assuming, an impact in terms of Q4?

Yeah, you're right, Kurt. Rounded, it's a million. So it was unfavorable, a million. And you know, right now with the rates we're using, we're actually anticipating Q4 to be favorable.

Got it, okay, perfect. And then, you know, you've grown that, call it industrial bucket in terms of the sales mix the last several years. Can you maybe just update us on kind of the biggest components within there at this stage and how that piece is maybe trending relative to some of the traditional forest products and markets?

Yeah, I mean, I think, you know, the flow controls where we have the most opportunities and we serve the broadest range of markets there. And after packaging, I think food, metals and defense are the next three big ones. There's a lot of them, you know, there's others, there's alternative energy, you know, things like that that have grown, but, you know, I think those are the big markets there. On the material handling side, I would say that our Beller business has continued to do quite well, you know, as more and more of the world is separating and trying to recapture and recycle materials so that it continues to grow globally. And then on the bulk material handling side, of course, you've got the, in America in particular, which is where we're strong, you've got the infrastructure bill, you've got the Chips Act. So those are big drivers for those markets.

Got it, and just to sneak one more, and maybe I should know the answer to this, but do you guys have any specific exposure within box plants? Obviously a lot at the mill level, but just curious what kind of you're selling in there?

Yeah, Bellers, I mean, at any box plant, you know, they've got a lot of packaging that they got to handle and, you know, waste package, dispose of. And so, you know, that's a big market for us is selling Bellers into them.

Got it, makes sense. Okay, appreciate the color, thank you.

Thank you. And as I'm reminded to ask a question, please press star 11. We'll give it a moment. I'm showing no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. Jeff Powell for any closing remarks.

Thanks, Olivia. So before wrapping up today, I just wanna leave you with a few takeaways. 2024, as we just said, shaping up to be an excellent year across a wide range of metrics. We made good progress this year in our efforts to accelerate revenue growth and boost our profitability, despite the challenging macroeconomic environment in various regions of the world. And as always, we expect to deliver excellent cashflow and optimize the allocation of capital to maximize the value for our shareholders. With that, I wanna thank you for joining the call today. And I hope we see you all at New York Industrial Day. Thank you.

Please, I'm Jelminda Duffenbach, conference for today. Thank you for your participation and you may now disconnect.