Kadant Inc

Good day and thank you for standing by. Welcome to the Q3 2026 Cadent 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 will need to press star 11 on your telephone. You will 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 McKenney, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Stephen. Good morning, everyone, and welcome to Cadence Third Quarter 2026 Earnings Call. With me on the call today is Jeff Powell, our Chief Executive Officer. Before we begin, let me read our safe harbor statement. Various remarks that we may make today about Cadence 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 adding risk factors in our annual report on Form 10-K for the fiscal year ended January 3rd, 2026, 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 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 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 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 Caden's business and future prospects. Following Jeff's remarks, we will 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. We had an excellent financial performance in the third quarter across a broad range of key metrics. We achieved record revenue and were particularly pleased with record aftermarket parts revenue in Q3, continuing the record-setting pace from both Q1 and Q2 of this year. As you know, our aftermarket business is a core strategic growth area, and it's encouraging to see this continue to thrive. Market demand for capital equipment strengthened, so political uncertainty and economic headwinds continue to impact the timing of large projects. We are winning new capital projects, but the quote to order cycle continues to be extended. As has been the case throughout 2026, our operation teams around the world delivered exceptional value for our customers and shareholders. I want to thank them for their outstanding efforts and the results they produced in third quarter, as well as their commitment to our operational excellence demonstrated throughout the year. Turning next to slide six, I would like to review our Q3 financial performance. Q3 revenue and earnings performance continue to improve sequentially. I am pleased to report record adjusted EPS performance. Bookings in the third quarter increased 23% to the same period last year with growth across all three of our operating segments. Revenue was up 15% to a record $313 million and benefited from outstanding aftermarket parts business and record first half bookings. Our focus on internal cost control and solid execution contributed to increased operating leverage with record adjusted EBITDA of $72 million and an adjusted EBITDA margin of nearly 23%. We are thrilled to achieve these results in less than ideal market conditions. Adjusted EPS was also a record at $3.64 in the third quarter. And finally, cash flow from operations and free cash flow in the third quarter were records at $63 million and $58 million respectively. demonstrating the continued strength of our business model. Next, I'd like to review the performance of our operating segments, beginning with our flow control segment. Record aftermarket parts revenue and solid capital equipment shipments drove an 8% year-over-year increase in Q3 revenue. Growth was led by our fluid handling product line, supported by healthy demand from the energy, defense, and packaging markets. Encouragingly, our newer activity was up more than 7% largely due to the growth in our aftermarket business. Adjusted EBITDA of 31 million was a record, and up 22% compared to the same period last year, leading to a record EBITDA margin of 30.7%. Factory automation, defense, and energy markets continue to show strength, particularly in the Americas, while industrial activity in Europe and Asia reflects the persistent economic headwinds in those regions. As we look ahead to the remainder of 2026, we expect stable demand in our flow control segment. The segment continues to benefit from diversified market exposure with improving investment sentiment in North America and Asia, helping to offset some of the softness in Europe. Our industrial processing segment again delivered excellent quarterly results despite challenges in the global capital equipment market. Strong competitive positioning, recent acquisitions, and 12% organic Bookings Growth drove new orders to $123 million. Revenue increased to $143 million with strong contribution from both aftermarket parts and capital equipment shipments. Operational leverage in our recent acquisitions contributed to our improved margin performance in this segment. Adjusted EBITDA was $37 million and represented 26.1% of revenue in the third quarter. Looking ahead, we believe our aftermarket demand will remain stable and that our capital business will see an uptick in order activity. Our capital project pipeline remains healthy, and we expect orders will move forward as economic confidence strengthens. In our material and handling segment, we benefited from strong commercial execution in the third quarter. Our bookings were up 13% to $67 million, led by exceptional aftermarket demand for bulk material and handling equipment. Revenue was down 4% compared to the record third quarter performance of last year. This decline was due entirely to lower capital shipments compared to the same period last year. while the lower revenue volume with the lower revenue volume adjusted EBITDA margin decreased to 22.1% compared to the record performance of Q3 in last year. We expect demand to be stable in the near term and project activity to remain healthy, particularly in infrastructure spending and the build out and data centers. For the remainder of 2026, we expect demand to remain stable with potential upside from capital projects. There remains a lot of activity around new capital projects, and this could become a meaningful contributor, though the timing of these projects can be uncertain and could shift to 2027. Before I turn the call over to Mike for a closer look at our third quarter performance, I'd like to briefly address my upcoming transition to executive chairman and Michael Colwell's appointment as CEO. I've had the privilege of leading what I believe is an exceptional company, not just one with great products and innovative technologies, but a company whose people come to work every day determined to make a real difference for our customers, communities, and all Cadent stakeholders. Over the past 48 years, I've been a part of some great businesses. None, however, compare to Cadent. It comes down to the special qualities that make Cadent unique. I believe our culture of integrity, commitment, accountability, and entrepreneurism allows us to serve our customers better, creating lasting value for the shareholders. When Michael takes over at the beginning of the year, I will remain actively engaged in supporting the leadership team and its growth initiatives. I want to thank the employees and shareholders for the opportunity to be part of Cadence's legacy, and I'm confident that Cadence's best years are still ahead. I'll now pass the call over to Mike for his review of our Q3 financial performance. Mike.