Kadant Inc

Good day and thank you for standing by. Welcome to the Q1 2026 CADEN Earnings Conference Call. At this time, all participants are in 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'll need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michael McKinney, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Therese. Good morning, everyone, and welcome to Cadence First Quarter 2026 Earnings Call. With me on the call today is Jeff Paul, 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 January 3rd, 2026 and some 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 will 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 most directly comparable GAAP measures is contained in our first 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 cadent.com. Finally, I wanted to note that when we refer to GAAP 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 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 our Q&A session. Jeff?

Thanks, Mike. Hello, everyone. Thank you for joining us this morning to review our first quarter results and discuss our business outlook for 2026. The first quarter was a strong start to the year, highlighted by robust demand and solid earnings growth. We delivered strong profitability while continuing to see healthy demand in our aftermarket business and improving capital business. Despite the high level of uncertainty fueled by global trade challenges and the ongoing conflict in the Middle East, our first quarter exceeded expectations across most financial metrics. Record bookings and record aftermarket parts revenue, along with solid execution in our operations, drove healthy gross margin performance across our businesses. This, combined with lower than expected operating costs, led to exceeding our earnings expectations in the first quarter. We continue to refine our 80-20 performance system, which also contributed to our results despite economic headwinds and tough competition in our core markets. Turning now to our first quarter financial performance in slide six, I'd like to highlight a few metrics that I believe are central to our growth story. Double-digit organic growth combined with our recent acquisitions delivered exceptional bookings growth of 25 percent in the first quarter compared to the same period last year. New order activity was strongest in North America and Asia, with all regions seeing healthy demand growth compared to last year. Revenue was up 18%, with aftermarket parts revenue a record $209 million, representing 74% of our total revenue. The first quarter of the year is often a strong quarter in terms of parts bookings and revenue, as our customers prepare for annual maintenance shutdowns. This strong demand is supported by our large installed base. Adjusted EBITDA increased 19 percent to $57 million, representing 20.2 percent of revenue. Finally, our adjusted EPS at $2.84 benefited from better-than-expected gross margin performance, lower-than-expected operating expenses, and excellent execution discipline. Overall, the quarter reflected a balanced picture of increasing commercial momentum in bookings, solid profitability and cash flow, and a revenue mix that strongly favored aftermarket parts. Next, I'd like to discuss the performance of each of our three operating segments, beginning with our flow control segment. The flow control segment ran strong demand in the first quarter, led by our North American businesses. Bookings increased 12% to a record $112 million, led by robust capital order activity and record aftermarket parts demand. Q1 revenue increased 7% to $99 million, with aftermarket parts revenue making up 77% of total Q1 revenue. This revenue performance is expected to remain stable as the year progresses and benefit from increased capital shipments in the second half of the year. Adjusted EBITDA increased 5% compared to the same period last year, and our adjusted EBITDA margin was 27.8%. While EBITDA margin was down modestly compared to last year, we expect to gain some operating leverage as the year progresses. Next, I'll discuss our industrial processing segment on slide eight. Strong demand for aftermarket parts and improved capital project order activity combined with contributions from our recent acquisitions led to record bookings of $145 million in the first quarter. Importantly, organic bookings were up 23%, reflecting improving underlying demand for our products and technologies as we started the year. Revenue increased 37% to a record $123 million due to contributions from our recent acquisitions, which included Clyde Industries and Mabini. The integration of these companies into our industrial processing segment is progressing well, and we are pleased with the results delivered by both of these companies during the short time they have been part of the cadence. Adjusted EBITDA margin remained healthy at 24% of revenue. Overall, our first quarter performance in this segment was solid, with second half of the year looking to be stronger than the first. In our material handling segment, we achieved steady year-over-year growth in both revenue and bookings, consistent with our expectations. Revenue increased 5% to $60 million, while new order activity was up modestly to $65 million. While business activity remained stable, we are seeing an environment defined by capital equipment timing volatility. An unfavorable product mix led to downward pressure on gross margin, which contributed in part to a lower EBITDA margin. As we move into the second quarter, our backlog is strong, and we're encouraged by the fundamentals of our end markets, which include aggregate mining, waste management, and recycling. We've entered 2026 with a good start to the year in terms of record bookings and solid revenue performance, further supporting our confidence in the periods ahead. We are seeing an improving capital equipment market, although the timing of these projects is more uncertain than normal due to the ongoing geopolitical conflicts. We will continue to focus on strengthening our operations using our 80-20 business performance system and other internal initiatives, including increasing investments in automation to provide increased value for our customers. Finally, last week, we closed on the previously announced acquisition of Volstalpina Bowler Profile, now called Cadent Profile, a manufacturer of customized rolled products, rolled profiles, and industrial knives. In the short term, due to a portion of the sales of Cadent Profile being intercompany, this acquisition will have a dilutive effect on our adjusted EPS until the products currently held in inventory by other Cadent businesses are sold to a third-party customer. Mike will discuss this in more details in his remarks. Looking forward, we expect the newest addition to Cadent to be accretive to our earnings growth, and we are looking forward to integrating this business into the Cadent family. With that, I'd like to turn the call over to Mike.