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.