Kadant Inc

Okay, thank you for standing by. Welcome to CADEN's third quarter 2025 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 1-1 on your telephone. You will then hear an automated 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. This is Michael McKinney, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Olivia. Good morning, everyone, and welcome to CADEN's third quarter 2025 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 28, 2024, 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 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 CAIG.com. Finally, I wanted to note that when we refer to gap earnings per share, or EPS, and adjusted EPS on this call, we are 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'll 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. I'll begin with the third quarter highlights. We had solid earnings performance in the third quarter and benefited from record aftermarket parts revenue. 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 new business continue to thrive. This is especially true in volatile times like now, where economic headwinds are strong and global trade tensions remain high. Overall, market demand for capital equipment continued to be sluggish, though we are seeing increasing activity early in the fourth quarter. As has been the case throughout 2025, our operations teams around the world delivered exceptional value for our customers. I want to thank them for their outstanding effort and the results they generated during these challenging times. Turning next to slide six, I'd like to review our Q3 financial statements. Q3 revenue and earnings performance continued to improve sequentially in Q1 and Q2 despite softness in our capital business. Revenue was flat compared to the prior year period at $272 million and benefited from record aftermarket parts business, which was up 6 percent compared to the third quarter of last year. Solid execution contributed to an adjusted EBITDA of $58 million and an adjusted EBITDA margin of 21.4 percent. Cash flow from operations and free cash flow in the third quarter was 47 million and 44 million respectively, demonstrating the continued strength of our business models. Bookings were relatively flat compared to the same period last year due entirely to a sustained weakness in capital project orders, which has been in a lull since 2023. While capital project activity and quoting remains high, the timing of these capital projects continues to get pushed out. That said, we do see greater optimism in our sales teams with respect to capital orders moving forward in the near term. Next, I'd like to review the performance of our operating segments, beginning with our flow control segment. Good performance in aftermarket parts revenue could not offset reduced capital shipments in the third quarter, leading to a 3% decline in Q3 revenue compared to last year. Encouragingly, new order activity was up 5% with aftermarket capital demand, both contributing to this increase to $94 million. Adjusted EBITDA of $26 million was down 10% compared to the record EBITDA performance in the third quarter of last year. Factory automation and general industrial end markets continue to show strength, particularly in the Americas, while capital project activity in Europe and Asia reflects the persistent economic headwinds in those regions. In our industrial processing segment, revenue decreased 4 percent to $106 million. The revenue decline was entirely due to reduced capital shipments, as aftermarket parts revenue was a record, $81 million, and represents 76 percent of total Q3 revenue. Solid demand for aftermarket parts was not enough to offset the decline in capital bookings, leading to a 5 percent decrease in bookings compared to the same period last year. The outlook for capital bookings in the near term remains positive, and we are well positioned to win those new orders when they are released. Adjusted EBITDA margin in the third quarter was 25.4 percent, down 330 basis points compared to the record margin set in Q3 of last year. I should note that our third quarter results do not include any contribution from our recently announced acquisition of Clyde Industries, as that acquisition was completed after the third quarter closed. The acquisition will be included in our fourth quarter results. We look forward to reporting on the integration in the next call. In our material handling segment, we benefited from excellent commercial and operational execution in third quarter. Revenue was up 11 percent to a record 70 million, with solid increases from both product lines. This record revenue performance was led by capital shipments, up 18 percent compared to the same period last year. Bookings declined 4 percent compared to the third quarter of last year, due largely to softer demand for aftermarket parts for our bulk material handling equipment during the quarter. Adjusted EBITDA margin increased 290 basis points to a record 23.3 percent compared to Q3 of last year. While we expect demand to stabilize in the near term, we continue to see good level of activity in the aggregate sector, particularly in North America. As we look ahead to the remainder of 2025, we expect aftermarket demand to remain healthy and business activity to improve. 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. So 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 our Q3 financial performance. Mike? Thank you, Jeff.

I'll start with some key financial metrics from our third quarter. Our third quarter revenue of $271.6 million included record after-market parts revenue of $188.4 million. Gross margin was 45.2 percent in the third quarter of 25, up 50 basis points compared to 44.7 percent in the third quarter of 24. our parts and consumable revenue increased to 69 percent of revenue in the third quarter of 25, compared to 65 percent in the prior year. Gross margin included amortization expense associated with acquired profit and inventory of 0.5 million and 1.2 million in the third quarter of 25 and 24, respectively. Excluding this negative impact in both periods, gross margin was up 10 basis points over the third quarter of 24. For the first nine months of 25, gross margin increased 120 basis points over the corresponding prior year period and 70 basis points after excluding the impact of acquired profit and inventory in both periods. This demonstrates our ability to maintain our gross margin profile despite various cost pressures, including the recent tariff challenges. SG&A expenses as a percentage of revenue increased to 27.9% in the third quarter of 25 compared to 25.4% in the prior year period. SG&A expenses

Ladies and gentlemen, please stand by. Your conference call will resume momentarily. Olivia? Speakers, you're back on.

Yes, can you hear us now? Yes, you may resume.

Well, I think we'll start from the beginning of my comments and I'll say that. OK, Olivia. Olivia. OK. Hi folks, apparently we had audio problem in the audio dropped during my comments. This is Mike McKinney, CFO, so I am going to start my comments from the beginning again. I'll start with some key financial metrics from our third quarter. Our third quarter revenue of $271.6 million included record after-market parts revenue of $188.4 million. Gross margin was 45.2% in the third quarter of 25, up 50 basis points compared to 44.7% in the third quarter of 24. Our parts and consumables revenue increased to 69% of revenue in the third quarter of 25, compared to 65% in the prior year. Gross margin included amortization expense associated with acquired profit and inventory of 0.5 million and 1.2 million in the third quarter of 25 and 24 respectively. Excluding this negative impact in both periods, gross margin was up 10 basis points over the third quarter of 24. For the first nine months of 25, gross margin increased 120 basis points over the corresponding prior year period and 70 basis points after excluding the impact of acquired profit and inventory in both periods. This demonstrates our ability to maintain our gross margin profile despite various cost pressures, including the recent tariff challenges. SG&A expenses as a percentage of revenue increased to 27.9% in the third quarter of 25, compared to 25.4% in the prior year period. SG&A expenses were $75.8 million in the third quarter of 25, increasing $6.8 million compared to $69 million in the third quarter of 24. This includes $1.2 million from unfavorable foreign currency translation, $1.3 million in acquisition-related costs, and $0.8 million from our recent acquisition. The remaining increase is primarily associated with incremental compensation-related costs. Our GAAP EPS decreased 12% to $2.35 in the third quarter, and our adjusted EPS decreased 9% to $2.59 in the third quarter of 25, compared to a record $2.84 in the third quarter of 24. The third quarter 25 adjusted EPS exceeded the high end of our guidance range by 36 cents due to higher than expected aftermarket parts revenue at our industrial processing segment. In addition, all of our segments had higher than expected gross margins due to the mix of aftermarket parts in the period. Our effective tax rate of 29.5% in the third quarter was higher than the anticipated rate primarily due to the shift in geographic distribution of earnings expected for the year and an increase in non-deductible acquisition costs. Our adjusted EBITDA has increased each quarter in 25 with strong performance in the third quarter from our material handling segment. However, overall, our third quarter 25 adjusted EBITDA and adjusted EBITDA margin were comparatively lower and the record performance we achieved in the third quarter of 24. Turning to our cash flows, we had strong operating and free cash flow in the third quarter of 25 at $47.3 million and $44.1 million respectively. On a year-to-date basis, both metrics are ahead of last year with free cash flow up 13% over last year. Non-operating uses of cash in the third quarter of 25 included $16.5 million for the acquisition of Babini, not a cash acquired, $3.2 million for capital expenditures, $4 million for a dividend on our common stock, and $2.4 million for debt issuance costs. Let me turn next to our EPS results for the quarter. Our adjusted EPS decreased 25 cents from $2.84 in the third quarter of 24 to $2.59 in the third quarter of 25. This included decreases of 32 cents due to higher operating expenses, 17 cents due to lower revenue, 5 cents due to a higher tax rate, and 1 cent due to higher non-controlling interest. These decreases were partially offset by 15 cents in lower interest expense, 10 cents due to a higher gross margin percentage, and 5 cents from the operating results of our recent acquisition, excluding associated borrowing costs. Collectively, including all the categories I just mentioned, was a favorable foreign currency translation effect of 3 cents in the third quarter 25 compared to the third quarter last year due to the weakening of the US dollar against certain currencies. Now I'll review our liquidity metrics on slide 15. We renewed our revolving credit facility at the end of the third quarter increasing our borrowing capacity from $400 million to $750 million, and extending the maturity date to September 2030. This will help support the acquisition strategy we outlined in our most recent five-year plan. Our net debt, that is debt less cash, decreased $20.6 million, or 14% sequentially, to $131.1 million. Our cash balance grew to $126.9 million due to an increase in cash held in anticipation of our fourth quarter acquisition of Clyde Industries. Our leverage ratio, calculated in accordance with our credit agreement, increased to .94 compared to .86 at the end of the second quarter of 25. At the end of the third quarter of 25, we had $502 million of committed borrowing capacity, which was lowered to $332 million following our acquisition of Clyde at the beginning of the fourth quarter. Our cash conversion days, which we calculated by taking days in receivables plus days in inventory and subtracting days in accounts payable, increased to 131 at the end of the third quarter, 25, compared to 129 in the prior year quarter. Working capital as a percentage of revenue increased to 18% in the third quarter of 25 compared to 17.7% in the third quarter, in the second quarter of 25. Now turning to our guidance for the fourth quarter and full year 25. In early July, we completed the acquisition of Dubini for 16.5 million net of cash acquired. And after the end of the third quarter, we acquired Clyde Industries for approximately $175 million, subject to customary closing adjustments. Both of these acquisitions were funded primarily through borrowings under our revolving credit facility. We have revised our guidance to include the operating results and associated borrowing costs from these two acquisitions. We are continuing to monitor the impact of tariff changes and pursue opportunities to reduce the impact of these costs by finding alternative suppliers through cost sharing and in some cases making investments to change our manufacturing capabilities and manufacture components at different cadence facilities. Capital bookings were below our expectations for the third quarter. Weak market conditions in the pulp and paper industry resulted in lower demand for our capital equipment products in our industrial processing and flow control segments. The larger impact by far was in our industrial processing segment where certain market conditions have resulted in a lengthening in quote-to-order times, with the majority of these pending orders moving into the fourth quarter or early 2026. This has negatively impacted our 2025 guidance, as we will not receive the associated revenue and earnings related to these orders until 2026. We are increasing our full-year revenue guidance range to $1.36 billion to $1.46 billion from $1.2 billion to $1.4 billion. The revenue guidance increase includes the net effect of incremental revenue from our recent acquisitions and lower forecasted organic revenue in our flow control and industrial processing segments as a result of the lower than anticipated capital bookings in the third quarter. We are maintaining our adjusted EPS guidance of $9.05 to $9.25 for 2025. adjusted EPS guidance excludes 51 cents of acquisition-related costs and 2 cents of other costs. Our 25 guidance includes a 3-cent negative effect from foreign currency translation compared to our prior guidance. Future actions by the central banks may impact the U.S. dollar and other currencies, which could have an impact on our guidance. Both GAAP and adjusted EPS guidance are calculated using our initial estimates of purchase accounting adjustments, which are subject to change as we review and finalize the valuation work for our 2025 acquisitions. Our revenue guidance for the fourth quarter of 2025 is $270 to $280 million, and our adjusted EPS guidance is $2.05 to $2.25, which excludes $0.14 of acquisition-related costs. We anticipate gross margins for 25 will be 45.1 to 45.4%. This includes a 20 basis point negative impact from 2.1 million of amortization expense associated with acquired profit and inventory. We anticipate fourth quarter gross margin will be approximately 44 to 44.5%. We expect SG&A for 25 will be approximately 28.7 to 29% of revenue. This includes one-time acquisition-related costs of $4.8 million. We now anticipate net interest expense of approximately $14.4 million for 2025. We expect our tax rate for the fourth quarter will be approximately 27% to 27.5%. I hope these guidance comments are helpful, and I'll now turn the call back over to our operator for our Q&A session. Livia?

Thank you. Ladies and gentlemen, 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 while we compile the Q&A roster. Now, first question coming from the line of Gary Prestopino with Barrington Research. Your line is now open.

Hi. Good morning, Jeff and Mike. How are you?

Good. Thanks, Gary.

Just as I usually ask here, Mike, do you have on the segment basis the percentage of aftermarket parts revenue for this quarter versus last quarter or last year at this time?

Yeah, I can walk through that, Gary. For flow control, current quarter, 74%. Prior year quarter, 70%. For industrial processing, 76% this quarter. Comparing quarter, 67%. And for material handling, this quarter, 52%. Comparing quarter, 55%. And then, as we stated, on an overall basis, 69% for this quarter compared to 65% last year. Okay.

Thank you. That's very helpful.

And then...

I'm a little bit fuzzy on what you're talking about, or you're talking about that orders are being pushed back into 2026 for capital bookings, particularly in the industrial processing, but then you expect stronger capital equipment demand in the fourth quarter. So maybe could you kind of square what's going on there, and then I'd have another follow-up after that.

Gary, so we have several projects that are in the late stages that we expect to book. And so the question becomes, you know, we've got essentially, you know, whatever, you know, the rest of this quarter to get these things booked. And in some cases, it requires down payments. In some cases, it requires letters of credit to be established. So there's some administrative things that go on after we receive the official, you know, contractor order. And so the question is, you know, will we be able to get all of those administrative things taken care of this year and get those actually booked? We have fairly stringent booking requirements concerning down payments and letters of credit and bank credits and things like that. And some of those are out of our control. When you're talking about foreign orders in, say, northern Africa or somewhere, you know, it can take quite a while to get some of that administrative work from the banks done. you know, signed, signed off on. So we there's some several large orders out there. And just the question of whether we'll go book in this quarter, or those are those trip into the beginning of next year. But we're encouraged by the activity level we're seeing, and the opportunities that we're seeing now on the on the capital side, and particularly on the industrial processing business.

Okay, and then just just, you know, in terms of you know, the challenges that your sales force has been having in terms of just, you know, the worldwide, the tariffs issues and things like that. Is that more or less in the rear view mirror, in your opinion, in, you know, the future capital equipment needs across all three segments have, you know, the clients come to realize that this is going to be the case for a while and we need to order new capital equipment because we're running our old hard

Well, I think it's, it's certainly better than it was earlier in the year, but it's not settled. I mean, just, you know, this week, uh, you know, Trump got upset with CAD over a commercial they ran and they're going to put another 10% tariff on them. Um, you know, he's meeting with China, I think today to try to hammer out a deal there and maybe reduce some of the tariffs. So I would say there's still a level of uncertainty and volatility, uh, that's going on. Uh, it's less, you know, I would say, um, you know, it's less chaotic than it was six months ago. but it's still not, you know, settled. And I think, as you said, some people are starting to realize, okay, this is the new environment we're living in, and we've got to move forward with our business. And that's why we, you know, we think we're seeing some activity level. But it's not where it needs to be. You know, it's not, you know, we really need to get this sorted out and kind of everybody agree on what, you know, what it's going to be so we can all work accordingly. So it's improving, but it's not where, you know, it needs to be yet. Okay, thank you very much.

Thank you. Our next question coming from the line-off, Ross Berenbeck with William Blair. Your line is open.

Hey, good morning, guys. Morning, Ross. Maybe just sticking on the order disruption, can you maybe help us think through kind of, you know, sizing the range of outcomes for the fourth quarter and maybe also thinking through, like, is this, you know, Gary's point, brownfield, greenfield? What's kind of the near-term driver?

I'll answer the latter part first. So some of the opportunities are brownfields, you know, their existing plants with upgrades. And then in the developing world, as is often the case, there'll be greenfields. There'll be, you know, kind of new opportunities in the developing world. So it's kind of both.

Okay.

As far as the range, we really don't kind of give bookings range, so I'm not sure what you want to say there, Mike.

All right. I think we kind of lost you there for a second, but it looked like one of your peers called out, you know, maybe some disruption for several quarters, presumably because of tariffs. I mean, those are larger, you know, greenfield orders, so you're not really seeing that level of impact or potential impact going into 2026.

I think the impact we see from tariffs is, you know, just... the uncertainty it creates so our customers are more cautious and move more slowly as they try to better understand what the environment looks like going forward. So I would say it has impacted the timing on a lot of our projects. But the projects that we're tracking, I don't think we've seen any of them that we think are going to go away or be extended for years. I mean, I think the ones we're tracking that we have kind of built in our business strategy around we think will occur over the next short period of time.

Okay, that's really helpful. One more question, I'll hop back in queue. Can you just give us a sense of factory utilization rates globally and how we should think about the parts in the small world next year?

As we've said all year long, we had another record parts quarter. Our parts are overperforming relative to the operating rates, and that's because the equipment is getting quite old And it's just taking a lot more parts to keep it running. So the operating rates, you know, it kind of depends on the business you're looking at, whether you're talking about the wood processing side or the paper side. But, you know, in the U.S., operating rates are higher than the rest of the world. I would say they're higher here, maybe in the kind of in the wood sides, maybe in the low 80s. I'm sorry, in the paper side and low 80s. The wood side, it's a little less clear. Those they can kind of curtail very quickly. And so it's a little harder to keep track of those. But they're certainly running at a reduced operating rate and taking, you know, downtime. China, I would say, still in the 60s percent operating rates, and Europe is in kind of the 70s. So it really hasn't changed much throughout the year.

You know, it's... Yeah, thanks, Jeff. That's very helpful. I'll hop back into the queue, guys.

Thank you. Our next question coming from the line of Curt Yunger with DA Davidson, Eli Smallman.

Great, thanks, and good morning, everyone. I just wanted to stick on the capital equipment side and understanding, you know, we're not going to kind of guide to a Q4 bookings number. You know, if we were to look at the Q3 performance, kind of low $60 million in capital equipment bookings, you know, the last two years have kind of been in the low 70s. I guess my question is, when we think about these larger fiber processing orders that you seem to have visibility to, but maybe kind of still pushed out, like, are those sufficient to really pick things up relative to maybe what we've seen versus the last two years? Or is it just kind of helping get back to that baseline relative to the week Q3? How would you kind of frame that for us?

I think it would be, you know, it would be a step change for us. It would be, you know, very, very helpful. These are projects that will, you know, be processed over a number of quarters, and we'll be able to recognize revenue on a percent complete basis, so as they get processed over, say, three or four quarters. I did, you know, on the, you know, we usually kind of stay away from trying to forecast bookings, but I can give you a little color on what we're looking at by the segments. If I look at capital activity and flow control compared to the prior year period, so fourth quarter of 24, we're looking for capital activity to be up 3% or 4%, so somewhat modestly in flow control. And in material handling, I'd say kind of same boat, up about 3% to 5%. And interestingly there, I want to clarify, that isn't on the capital side. That's in parts and consumables, whereas flow control is on the capital side. But going to the, I think the big wild card is really in industrial processing. On the capital side there, wood is limited. you know, looking to be up, say, three or four percent, but the big difference maker is, as we've been discussing, in fiber processing. So, it could be up significantly compared to, frankly, many periods. There are a number of really nice projects that we're hoping will come in, I'd say, over the next quarter to three quarters. So, first half of 26 to the fourth quarter of 25, but that's really the big wild card for us. There's a number of good projects there. They haven't gone away. We feel we're well positioned and we're just waiting for the order to be finally booked.

Got it. Okay, that's super helpful. Thanks, Mike. And maybe bigger picture, you know, the multi-year targets of 3% to 5% kind of organic top-line growth. Do we need a more broad-based recovery, you know, expanding past just some of those fiber processing orders, or would those be kind of sufficient to help you get back into that range from what you can see?

I would say we do need a more broad-based to really get back to that.

For particular housing, you know, we need to see the housing environment in Peru, because as you know, that drives a lot of the economy and it drives a lot of our, you know, our businesses. So pickup and housing, I think, is quite important, not only to, you know, to us, but to the general economy.

Right. Okay. That makes sense. And then switching over to parts and consumables, that's obviously been a nice, consistent performer here. how should we think about price versus volume kind of contributions so far this year? And then as we just kind of look across the backdrop, you know, a lot of closures in the pulp and paper space, probably more to come on the wood processing side. Does that give you any concerns about, you know, potential deceleration there even, or is kind of that older age of installed base still supporting pretty healthy demand?

Yeah, I would say that on the part, a lot of those closures, of course, you've got to kind of look at the details of those. They may not be, if it's a pulp plant, of course, as you know, we, until the recent acquisition of Clyde, which mainly focuses on the new mega plants, we've, you know, we've not had a lot of business on that. So when they announced closures of some of these mills that are virgin mills, you know, that has less of an impact. It's not zero, but it has less of an impact on us. But, you know, I think we tend to look at the global market, you know, and the global production, global demand is continuing to grow, you know, somewhere between one and a half and two and a half percent, depending on where you're at around the world right now. And so because we, you know, we operate pretty much in every mill in the world, what you're seeing is you're seeing the shifting of the, you know, the production to meet that demand growth. And, you know, we work very hard to make sure we're there so that we kind of, if something shuts down in Georgia and something, you know, opens up in Turkey or Algeria, we're there to capture that. And so we think that for the most part, as long as global demand continues to grow, our parts business, which is a function of operating rates and total production demand, will be OK.

OK. OK. That makes sense. And Mike, as we think about the Q4 revenue guide, can you just put a final point, I guess, around how much contribution you expect from Clyde and Babini and then, you know, the overall kind of organic growth assumption in there?

Yeah, so for, it's a good question, Kurt. For Clyde and Babini, I'd say, You know, we're anticipating revenue in the $23 to $25 million for those combined. I actually, on mine, I'm kind of to the lower side of that, to the $23. But a couple comments I want to make on that. You know, you'll be able to see, you heard in our comments, but you saw in our press release, Babini had a very good third quarter. They shipped $5.9 million. You saw in the graphic, the chart we put up, that's five cents without interest costs. But a note of clarification there, their third quarter tends to be their strongest third quarter. And of course, we've just brought them into the fold and haven't been able to, we are working on, but it'll take us a little time to get them reoriented towards a parts and consumable business and capturing that flow. I think the management team there is very excited about doing that and changing their business model, not being as focused on capital equipment. But for capital equipment in the fourth quarter, it's quite weak. Frankly, it's quite a weak quarter for them. On the Bobini front, or excuse me, on the Clyde front, we had said their revenues were about $92 million. So if you divided that by four, you'd say $23 million, and they actually would have been pretty close to that. But they pulled a capital order into their third quarter, so they're going to be a little under that $23 million because they shipped an order a little bit earlier. It was scheduled for the fourth quarter. I think they would have come in pretty spot on on the $23, but they're a little lighter than they would normally be. So that's some color on the top line. And what was your, what else? So I'll stick to, you know, you can see, you saw for the third quarter, the five cents, if we allocated the interest to that, that would be four cents for Babini. And interestingly enough, with their weaker top line fourth quarter, with interest allocated, they'll be dilutive $0.04 in the fourth quarter. So they'll be for the year break-even, but in the fourth quarter dilutive $0.04 on our adjusted EPS. For Clyde, we have them right now at being dilutive of $0.02 with the interest charge in there. Excluding the interest charge, they'd be accrete of $0.13. So You know, if I took then both of those, Babini, Clyde, you know, with interest allocated to them, they're actually a dilutive $0.06 in the fourth quarter for us.

Got it. Okay, perfect. And then just last from me, on kind of run rate SG&A, if we were to back out some of the one-time acquisition costs and whatnot, is a good kind of go-forward quarterly number in the $80 million range? even a little bit above that?

Well, I want to be working through the valuation. So we just have markers in currently. I think we'll run a little bit lower than that, but you're not far off the mark there. But I think it'll run just modestly lower than that. So maybe it's somewhere between the 78 to 80. Okay. Perfect.

Thank you for the color. Appreciate it. You're welcome.

Thank you. And as someone to ask a question, please press star 1-1. Our next question coming from the line of Edward Butterway with Boston Partners. Your line is now open.

Hi, Mike and Jeff. Thanks for taking these questions. I just had one here. When you talk about delayed bookings, what's the sort of quantum of official orders that you've received and that are just waiting for administrative purposes to include relative to just conversations that are being had that are kind of still up in the air? Could you provide any color around that?

Yeah, I mean, we really, because we don't kind of give, you know, bookings and they haven't officially been booked, I can't give you a number. I can just tell you that, you know, we're in discussions, you know, the final discussions on some of these larger projects. And I said, in some cases, you know, we might have some of the paperwork, but we're waiting for down payments where we can officially book it, or we're waiting for a letter of credit. So, I mean, in some cases, they're very far along. So we feel, you know, quite confident about them, but they just haven't met our bookings you know, requirements so that we can actually book it and disclose it. You know, we just, as I said, we stay pretty disciplined on that and make sure that we check all the boxes before we actually call it a booking.

No worries. Thanks for that, Tyler. And then just one thing, I might have missed it earlier. In terms of price and consumables performance, how much of this was driven by price versus volume this quarter?

I'd lean more towards the volume side of it.

Okay, cool. Thank you. Yep.

Thank you. Our next question coming from the line of Ross Barenplek with William Blair. Your line is now open.

Hey, thanks for taking the follow-up here. A couple questions. Can you help me pinpoint what the backlog was? I'm around, like, 260, and also on the equipment side, I know there's some moving parts.

Yeah, Ross. We ended the third quarter of backlog at 273, and capital in that's about 60%, so about $163 million.

Okay. And then is there any margin differential within that backlog versus the run rate for the year?

No. I think it's fairly consistent.

Okay. And then now that you've had some time with Clyde, what should we expect for that back wall contribution going into the fourth quarter? I know you said it was fairly strong, $92 million in revenue. I mean, where should that be shaking out as we think about modeling orders?

I have that here somewhere, Ross. I think it's a little over $30 million. So use $30 million as a marker.

Okay. And then... Is it all primarily, it's not book and ship, there's about 25 that's equivalent, but, you know, scales similar to orders for Clyde on a quarterly basis? Is that kind of the assumption?

Sorry, Ross. What was that? What's the, I didn't catch that.

When we include Clyde, are the orders going to be similar to what we should expect on the top line for revenue contribution? Kind of a one for one? Everything goes through the order book.

Yeah, everything's going to go through the order book is a certainty. Everything will be through the order book. 75% of their business is parts and consumables. What I can't give you right now, because we're acclimating ourselves to the business, is exactly that turn cycle.

Okay. And then just one last one on the margins. Can you give us a sense for Clyde where the DNA, SG&A, R&D, gross margins all you know, shipped out after you finished your accounting?

Well, I can talk to the margin profile. And, you know, one thing I'd say is broadly it fits very well in the industrial processing segment. So what you see from metrics and industrial processing, this will fit really well both on the gross margin and even a margin front.

Okay. So just Nothing really to do there. Pretty similar to the existing marketing markets.

Yeah, it fits very nicely in that segment.

All right. Fantastic, guys. Thank you.

You're welcome.

Thank you. And again, as a reminder, to ask a question, please press star 11 on your touchtone telephone. We'll give it a moment.

Again, the star 11.

Our next question coming from the lineup, Edward Budway with Boston Partners. Your line is now open.

Edward, please check your mute button.

Your line is now open.

Hey, guys. So just one more thing from me. Just regarding the client acquisition, I wasn't able to see this in the release, but how much cash do you acquire with that business?

You know, we always do it. We do all our things net of cash because we're just going to, at the end of the day, the only cash that's going to be left is operating cash. You know, I can do it off from the top of my head, but to be quite honest, it's somewhat irrelevant because we'll sweep it and just pay down debt and just have operating cash there.

Okay, cool. Thank you.

Thank you. And I'm showing no further questions at this time. I will now turn the call back over to Mr. Jeff Powell for any closing remarks.

Thanks, Olivia. Before we wrap up the call today, I just wanted to leave you with a few takeaways. The second half of 2025 is expected to show solid improvement compared to the first half across a wide range of metrics, despite the turmoil in global trade policies and other societal challenges that we're currently facing. As we look ahead to the fourth quarter of 2025, we expect demand for capital equipment to improve and strong aftermarket parts of quarter activity. We've made solid progress this year in our efforts to drive operational improvements, which includes our 80-20 performance enhancement program and other initiatives to maximize value despite the continuing challenging macroeconomic environment in various regions of the world. And lastly, we look forward to updating you next quarter on the integration of Clyde Industries and our other recent acquisitions. Thanks for joining today, and we wish you the best for the rest of the day.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.