KADANT INC — Call Transcript 2026

Good day, and thank you for standing by. Welcome to the Kadant to Acquire a voestalpine BÖHLER Profil 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael McKenney, Executive Vice President and Chief Financial Officer. Please go ahead. Thank you, Shannon. Good morning, everyone. Welcome to Kadant's conference call to discuss its proposed acquisition of voestalpine BÖHLER Profil. 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 Kadant's future plans and expectations, including the expected benefits of the proposed acquisition of voestalpine BÖHLER Profil, 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 28th, 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. With that, I'll turn the call over to Jeff Powell, who'll discuss the acquisition. Following our remarks, we will have a Q&A session. Jeff? Thanks, Mike. Good morning, and thank you for joining us today. We announced last week that we've entered into an agreement to acquire voestalpine BÖHLER Profil. Today, we'd like to share some details on the transaction and the company. The company is located in Bruckbach, Austria, and is over 150 years old. They manufacture high-quality precision components that go into technically challenging applications, and they possess unique expertise in patented processes as well as a history of innovation. Revenue for their fiscal year 2025 was EUR 51.5 million. They produce near-net-shaped products that reduce the amount of downstream machining and processing, thereby lowering the total cost of production. Kadant has sourced components from BÖHLER for more than 30 years, including knives for our wood processing businesses. They also manufacture components that go into turbine engines and a broad range of industrial applications. Böhler has been at the top of our acquisition target list for more than 10 years. As I mentioned, we have worked with them for 30 years, and they have been instrumental in helping us develop products and components for our wood processing businesses. They have an excellent management team that we have worked with and know very well. 100% of their business is parts and consumables, and that is, as most of you know, a key strategic focus for Kadant. Böhler will continue to operate in their current location as a standalone division and will be part of our industrial processing reporting segment. The business will go forward as Kadant Profil GmbH & Co. KG. With that, Mike will give you more details on the financials and the unique attributes of this transaction. Mike? I'd like to provide some additional color on the financial metrics associated with the proposed transaction. The purchase price is approximately EUR 157 million, subject to customary adjustments, and the company had approximately EUR 52 million in revenue for the fiscal year ended March 31st, 2025, which is 100% from parts and consumable products. This company is a valued supplier to several Kadant businesses, and approximately 45% of their '25 revenue represents this activity. I want to highlight that once this company is part of Kadant, the revenue generated from other Kadant businesses will become intercompany revenue and therefore not part of Kadant's reported revenue. While the externally reported revenue will be smaller, both gross margin and EBITDA margins under Kadant will benefit from the combination. The timing of this benefit, however, may vary by quarter as the recognition of the gross margin related to intercompany sales to Kadant businesses is dependent on the ultimate shipment to third-party customers. In addition, I wanted to note that our Kadant businesses will initially be using any on-hand inventory purchase prior to the closing of the acquisition to fulfill shipments to third-party customers before the new post-acquisition purchases are consumed. These factors, along with normal acquisition fair value accounting, will make this acquisition dilutive in 2026. While we'll incorporate this acquisition, we will incorporate this acquisition into our 2026 guidance after the closing occurs. The company had approximately EUR 15.6 million of adjusted EBITDA in fiscal year 2025, with a resulting EBITDA multiple on the transaction of about 10x. In addition, beneficial tax attributes associated with the transaction are worth approximately 1.5 turns on the EBITDA multiple. With that factored in, the multiple is about 8.5x. We plan to fund the acquisition primarily through borrowings under our revolving credit facility in Europe. We estimated that our leverage ratio, as defined in our credit agreement, will increase to just above two after the transaction closes, and as a result, we anticipate our borrowing rate to be approximately 3.5% for this debt in 2026. I'm going to now turn the call over for questions, but before we start, I should mention that the Q&A session is specific to the proposed transaction as we are currently in the fourth quarter 2025 closing process and cannot comment on the fourth quarter 2025 results or our guidance for 2026 until our upcoming earnings call later this month. With that, we'd be happy to take your questions. Shannon? Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ross Sparenblek with William Blair. Your line is now open. Hey, good morning, gentlemen. Congrats on the acquisition. Hi, Ross. Thank you. Excuse me. Can you maybe just elaborate a little further on kind of the attractiveness of this asset and why the parent wanted to sell? Yeah. From our perspective, as I mentioned, Ross, we've worked with these guys forever, and as Mike just indicated, about 45% of their business is with us. So they've become a bigger and bigger supplier and a more and more critical supplier to us. They have very specialized processes that they have patented that they use for making their components. And so we, for more than 10 years, really have continued to expand our relationship with them and have really thought that they really would be a great fit within the Kadant organization. So we're very pleased that we were able to acquire them. I think their parent company, of course, voestalpine is a very, very large, one of the biggest companies in Austria, and this was a smaller division for them and maybe slightly non-core. And so as it became more and more important to us and the relationship continued to grow and develop, I think we both concluded that it would be better probably as part of the Kadant organization. So we feel very fortunate that we were able to reach an agreement with the parent company to purchase this. As you know, all of our components tend to be mission-critical, and they tend to be alloy and metal-based, and that's what these guys really specialize in, making critical components. And because they have this near-net-shaped technology, it really reduces the downstream cost and processing time for a finished product. So they'll be able to help a lot of our Kadant companies, we believe, over time. Okay. No, that's very helpful. And then maybe just on the initial dilution dynamics, Mike, if you could maybe just help us kind of think through. I mean, it's definitely accretive on a margin basis, but something along the lines of the inventory, maybe some FIFO, is going to impact near-term? Yeah, exactly, Ross. So I was trying to give that color so folks would be aware. Of course, as I mentioned on the call, roughly half the revenue is with Kadant. So once they become part of Kadant, that revenue will become intercompany revenue and we'll eliminate it. So we won't be able to recognize the profit on those intercompany transactions until that product is delivered to a third-party customer. And the additional little bit of color on that and why I mentioned the dilutive impact is because in the short run here, we already have components that we've purchased from this company, and we're going to need to work through that inventory, just as you said on a FIFO. We need to work through that inventory before we start consuming the inventory that will have been purchased post-acquisition. So until we get through that, the profit on those intercompany transactions will be, so to speak, deferred. And I think that'll be a few quarters because these are important components, and we have a few quarters' worth stocked. That is very helpful. Maybe just one more, and I'll pass it along. You kind of, excuse me, hinted at SG&A or not SG&A, but R&D Synergies. Is there anything else we should think of or any buckets that stand out near-term once you own this asset? Well, as you know, we have a key strategic focus on parts and consumables, and this is a 100% part consumable business. So we will work with them to continue to try to expand their non-Kadant business around the world. But they'll work with all of our other divisions to try to find opportunities to sell into our other divisions that they haven't done before. So it's just we really think there's unique opportunities here with their manufacturing and their specialized expertise to really expand their market share globally outside of Kadant and even within Kadant, more opportunities. So it's like every other kind of acquisition that we make. We integrate them into our global network, our direct sales network around the world, and work with them to try to expand their market opportunities. Maybe just what was the feedback from your direct sales force when you brought this opportunity? Well, I can tell you they're very happy. I would tell you that there were two divisions within our company that if you asked the presidents what kept them up at night, they would tell you it was this relationship with this company because we had become very dependent on this company for key components. And because of their patented processes, they're really the only company in the world that can provide it. And so it was something that kept a few of our guys up at night. And so having them in the family now, I think, is a great relief and a great acquisition for us. That's great to hear. All right. Thank you, guys. I'll pass it along. Thank you. Our next question comes from the line of Gary Prestopino with Barrington. Your line is now open. All right. Hi, guys. I think they called my name. The operator broke up. Just a couple of questions here just so I can understand this. You're buying this company. You're going to have intercompany revenues, so it actually will be less than 45% on what you're supplied from the company itself. But what about the impact on the Adjusted EBITDA on that? Would you still be able to get the full Adjusted EBITDA margin impact from all of the sales that you're getting from this company? Yeah. Good question, Gary. Yes. We will realize that, and that's part of the messaging I was giving here in terms of the intercompany activity. But recognition of that will be delayed until we work through the current inventory on hand, at least for the intercompany, the pieces that now become intercompany. But yes, we'll realize all the margin benefit. How quickly will that once you work through that FIFO impact, how quickly does that inventory turn? It turns quickly. These are its parts and consumables. But as I said, I think it may take us a good part of 2026 to work through it, a few quarters to work through inventory on hand. When we finally close the transaction and we have another call, I'll give a little more color on what we think the timing is going to be for that turn. Okay. That's very helpful. And then you mentioned something. The company produces products for technically challenging applications. Then you mentioned something about some kind of patent they have or patented technology. Could you just go over that so I can understand what are some of the competitive advantages this has? Sure. They've developed processing lines that make these critical components. They actually developed and built the processing lines themselves, and they patented them. As I mentioned earlier, they make near-net shapes. When you think of a lot of components and products, they'll start out as, say, a bar stock or maybe an ingot of, say, an alloy. It gets processed, gets heated up, it gets formed, gets pressed, and there's often an awful lot of machining that goes on to get to your final component shape and profile and characteristics. They have developed processes that get you much closer to that final shape than many, many companies currently have the ability to do, and therefore, it really reduces the machining time. In some cases, they can make things with their patented process lines where there's almost nothing, no post-processing required. And so it's just a very cost-effective way to get to a final shape or a near-net shape. And they developed these process lines themselves. They built them themselves, and they patented them. Okay. That's interesting. And then it looks like are they making the fan blades for jet engines when you look at the picture of aviation and marine? Is that part of what you're talking about? I think they make the stators that go on the engines. So they make particular components. They're not making the turbine blades themselves, but they're making other parts of the turbine engine. Okay. Thank you very much. Thank you. As a reminder, to ask a question at this time, please press star one one on your touch-tone telephone. Our next question comes from the line of Kurt Yinger with D.A. Davidson. Your line is now open. Great. Thanks. And good morning, everyone. Just one question. Going back to kind of the customer base and maybe widening that out, does the company also kind of sell to your competitors? And I guess, how does that factor in in terms of I don't know if it's a dissynergy risk or maybe a point of friction going forward with kind of that rest of the third-party sales? Yeah. I mean, we have many of our companies that sell to people that we also compete with, Kurt, and this will be no different. They'll continue to serve everybody. They'll continue to supply to the entire industry just as our companies do now. And so there are probably a couple of places where they will be selling to people that we also compete with, but that's not new to us. Like I said, many of our divisions do that now. They'll sell to their competitors. Sometimes we'll be specced in from the end customer, but other times, we just have a relationship with our competitors, and there's certain things that we do better, and we supply to them. So I don't expect this to be any different than that. Okay. Perfect. Thank you. Thank you. Once again, to ask a question at this time, please press star one one on your touch-tone telephone. We have a follow-up question from the line of Ross Sparenblek with William Blair. Your line is now open. Hey, guys. Just one quick follow-up. Excuse me. Can you maybe provide the end-market mix there? I assume it's probably 45% to share the main customer, but only aviation, marine, and industrial, and then kind of just the growth profile there? Yeah. So obviously, we're the biggest part. They'll less than half. And then it gets diluted down, and it's pretty diverse after that, Ross. So I wouldn't say that there's any other particular market that is, for instance, 20% or 30%. I mean, they supply into a lot of broad industries. They supply into the aviation industry. They provide some in the automotive industry and just industrial machinery in general. So it's a pretty broad mix that they supply into after you get away from Kadant. Okay. I just didn't know if there was anything tied to Airbus that we should be calling out? Then maybe just, yeah, growth rate historically from the other customers. In the near term, Ross, the last two years, they've grown in the 8% range. If I go back a little further, say, five years, it's been about 10%. Of course, we're conservative, and we didn't model a high single-digit growth, so. All right. Fantastic, gentlemen. Thanks again. Thank you. I'm currently showing no further questions at this time. I now like to turn the call back over to Jeff Powell for closing remarks. Thank you. Well, I just want to thank everybody for joining us today, and we look forward to reporting on the progress. We're really pleased and welcome the Böhler family into Kadant, and we look forward to talking about it and presenting in the future. Thank you. This concludes today's conference. Thank you for your participation. You may now disconnect. Good day, and thank you for standing by. Welcome to the Kadant to Acquire voestalpine BÖHLER Profil 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael McKenney, Executive Vice President and Chief Financial Officer. Please go ahead. Thank you, Shannon. Good morning, everyone. Welcome to Kadant's conference call to discuss its proposed acquisition of voestalpine BÖHLER Profil. 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 Kadant's future plans and expectations, including the expected benefits of the proposed acquisition of voestalpine BÖHLER Profil, 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 28th, 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. With that, I'll turn the call over to Jeff Powell, who'll discuss the acquisition. Following our remarks, we will have a Q&A session. Jeff? Thanks, Mike. Good morning, and thank you for joining us today. We announced last week that we've entered into an agreement to acquire voestalpine BÖHLER Profil. Today, we'd like to share some details on the transaction and the company. The company is located in Bruckbach, Austria, and is over 150 years old. They manufacture high-quality precision components that go into technically challenging applications, and they possess unique expertise in patented processes as well as a history of innovation. Revenue for their fiscal year 2025 was EUR 51.5 million. They produce near-net-shaped products that reduce the amount of downstream machining and processing, thereby lowering the total cost of production. Kadant has sourced components from BÖHLER for more than 30 years, including knives for our wood processing businesses. They also manufacture components that go into turbine engines and a broad range of industrial applications. Böhler has been at the top of our acquisition target list for more than 10 years. As I mentioned, we have worked with them for 30 years, and they have been instrumental in helping us develop products and components for our wood processing businesses. They have an excellent management team that we have worked with and know very well. 100% of their business is parts and consumables, and that is, as most of you know, a key strategic focus for Kadant. Böhler will continue to operate in their current location as a standalone division and will be part of our industrial processing reporting segment. The business will go forward as Kadant Profil GmbH & Co KG. With that, Mike will give you more details on the financials and the unique attributes of this transaction. Mike? I'd like to provide some additional color on the financial metrics associated with the proposed transaction. The purchase price is approximately EUR 157 million, subject to customary adjustments, and the company had approximately EUR 52 million in revenue for the fiscal year ended March 31st, 2025, which is 100% from parts and consumable products. This company is a valued supplier to several Kadant businesses, and approximately 45% of their '25 revenue represents this activity. I want to highlight that once this company is part of Kadant, the revenue generated from other Kadant businesses will become intercompany revenue and therefore not part of Kadant's reported revenue. While the externally reported revenue will be smaller, both gross margin and EBITDA margins under Kadant will benefit from the combination. The timing of this benefit, however, may vary by quarter, as the recognition of the gross margin related to intercompany sales to Kadant businesses is dependent on the ultimate shipment to third-party customers. In addition, I wanted to note that our Kadant businesses will initially be using any on-hand inventory purchased prior to the closing of the acquisition to fulfill shipments to third-party customers before the new post-acquisition purchases are consumed. These factors, along with normal acquisition fair value accounting, will make this acquisition dilutive in 2026. While we'll incorporate this acquisition, we will incorporate this acquisition into our 2026 guidance after the closing occurs. The company had approximately EUR 15.6 million of adjusted EBITDA in fiscal year 2025, with a resulting EBITDA multiple on the transaction of about 10x. In addition, beneficial tax attributes associated with the transaction are worth approximately 1.5 turns on the EBITDA multiple. With that factored in, the multiple is about 8.5x. We plan to fund the acquisition primarily through borrowings under our revolving credit facility in Europe. We estimated that our leverage ratio, as defined in our credit agreement, will increase to just above 2 after the transaction closes, and as a result, we anticipate our borrowing rate to be approximately 3.5% for this debt in 2026. I'm going to now turn the call over for questions, but before we start, I should mention that the Q&A session is specific to the proposed transaction, as we are currently in the fourth quarter 2025 closing process and cannot comment on the fourth quarter 2025 results or our guidance for 2026 until our upcoming earnings call later this month. With that, we'd be happy to take your questions. Shannon? Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ross Sparenblek with William Blair. Your line is now open. Hey, good morning, gentlemen, and congrats on the acquisition. Hi, Ross. Thank you. Excuse me. Can you maybe just elaborate a little further on kind of the attractiveness of this asset and why the parent wanted to sell? Yeah. From our perspective, as I mentioned, Ross, we've worked with these guys forever, and as Mike just indicated, about 45% of their business is with us. So they've become a bigger and bigger supplier and a more and more critical supplier to us. They have very specialized processes that they have patented that they use for making their components. And so we, for more than 10 years, really have continued to expand our relationship with them and have really thought that they really would be a great fit within the Kadant organization. So we're very pleased that we were able to acquire them. I think their parent company, of course, voestalpine is a very, very large, one of the biggest companies in Austria, and this was a smaller division for them and maybe slightly non-core. And so as it became more and more important to us and the relationship continued to grow and develop, I think we both concluded that it would be better, probably as part of the Kadant organization. So we feel very fortunate that we were able to reach an agreement with the parent company to purchase this. As you know, all of our components tend to be mission-critical, and they tend to be alloy and metal-based, and that's what these guys really specialize in, making critical components. And because they have this near-net-shaped technology, it really reduces the downstream cost and processing time for a finished product. So they'll be able to help a lot of our Kadant companies, we believe, over time. Okay. No, that's very helpful. And then maybe just on the initial dilution dynamics, Mike, if you could maybe just help us kind of think through. I mean, it's definitely accretive on a margin basis, but something along the lines of the inventory, maybe some FIFO, is going to impact near-term? Yeah, exactly, Ross. So I was trying to give that color so folks would be aware. Of course, as I mentioned on the call, roughly half the revenue is with Kadant. So once they become part of Kadant, that revenue will become intercompany revenue and we'll eliminate it. So we won't be able to recognize the profit on those intercompany transactions until that product is delivered to a third-party customer. And the additional little bit of color on that and why I mentioned the dilutive impact is because in the short run here, we already have components that we've purchased from this company, and we're going to need to work through that inventory, just as you said on a FIFO. We need to work through that inventory before we start consuming the inventory that will have been purchased post-acquisition. Until we get through that, the profit on those intercompany transactions will be, so to speak, deferred. I think that'll be a few quarters because these are important components, and we have a few quarters' worth stocked. That is very helpful. Maybe just one more, and I'll pass it along. You kind of, excuse me, hinted at SG&A or not SG&A, but R&D synergies. Is there anything else we should think of or any buckets that stand out near-term once you own this asset? Well, as you know, we have a key strategic focus on parts and consumables, and this is a 100% part consumable business. So we will work with them to continue to try to expand their non-Kadant business around the world. But they'll work with all of our other divisions to try to find opportunities to sell into our other divisions that they haven't done before. So it's just we really think there's unique opportunities here with their manufacturing and their specialized expertise to really expand their market share globally outside of Kadant and even within Kadant, more opportunities. So it's like every other kind of acquisition that we make. We integrate them into our global network, our direct sales network around the world, and work with them to try to expand their market opportunities. Maybe just what was the feedback from your direct salesforce when you brought this opportunity? Well, I can tell you they're very happy. I would tell you that there were two divisions within our company that if you asked the presidents what kept them up at night, they would tell you it was this relationship with this company because we had become very dependent on this company for key components. And because of their patented processes, they're really the only company in the world that can provide it. And so it was something that kept a few of our guys up at night. And so having them in the family now, I think, is a great relief and a great acquisition for us. That's great to hear. All right. Thank you, guys. I'll pass it along. Thank you. Our next question comes from the line of Gary Prestopino with Barrington. Your line is now open. All right. Hi, guys. I think they called my name. The operator broke up. Just a couple of questions here just so I can understand this. You're buying this company. You're going to have intercompany revenues, so it actually will be less than 45% on what you're supplied from the company itself. But what about the impact on to Adjusted EBITDA on that? Would you still be able to get the full Adjusted EBITDA margin impact from all of the sales that you're getting from this company? Yeah. Good question, Gary. Yes, we will realize that, and that's part of the messaging I was giving here in terms of the intercompany activity. But recognition of that will be delayed until we work through the current inventory on hand, at least for the intercompany, the pieces that now become intercompany. But yes, we'll realize all the margin benefit. How quickly will that, once you work through that FIFO impact, how quickly does that inventory turn? It turns quickly. These are parts and consumables. But as I said, I think it may take us a good part of 2026 to work through it, a few quarters to work through inventory on hand. When we finally close the transaction and we have another call, I'll give a little more color on what we think the timing is going to be for that turn. Okay. That's very helpful. And then you mentioned something. The company produces products for technically challenging applications, and you mentioned something about some kind of patent they have or patented technology. Could you just go over that so I can understand some of the competitive advantages this has? Sure. So they've developed processing lines that make these critical components. They actually developed and built the processing lines themselves, and they patented them. And as I mentioned earlier, they make near-net shapes. So when you think of a lot of components and products, they'll start out as, say, a bar stock or maybe an ingot of, say, an alloy. And it gets processed, gets heated up, it gets formed, gets pressed, and there's often an awful lot of machining that goes on to get to your final component shape and profile and characteristics. They have developed processes that get you much closer to that final shape than many, many companies currently have the ability to do, and therefore, it really reduces the machining time. In some cases, they can make things with their patented process lines where there's almost nothing, no post-processing required. And so it's just a very cost-effective way to get to a final shape or a near-net shape. And they developed these process lines themselves. They built them themselves, and they patented them. Okay. That's interesting. And then it looks like are they making the fan blades for jet engines? When you look at the picture of aviation and marine, is that part of what they're doing? I think they make the stators that go on the engines. So they make particular components. They're not making the turbine blades themselves, but they're making other parts of the turbine engine. Okay. Thank you very much. Thank you. As a reminder, to ask a question at this time, please press star one one on your touch-tone telephone. Our next question comes from the line of Kurt Yinger with D.A. Davidson. Your line is now open. Great. Thanks. And good morning, everyone. Just one question. Going back to kind of the customer base and maybe widening that out, does the company also kind of sell to your competitors? And I guess, how does that factor in in terms of, I don't know, if it's a dissynergy risk or maybe a point of friction going forward with kind of that rest of the third-party sales? Yeah. I mean, we have many of our companies that sell to people that we also compete with, Kurt, and this will be no different. They'll continue to serve everybody. They'll continue to supply to the entire industry just as our companies do now. And so there are probably a couple of places where they will be selling to people that we also compete with, but that's not new to us. Like I said, many of our divisions do that now. They'll sell to their competitors. Sometimes we'll be specced in from the end customer, but other times, we just have a relationship with our competitors, and there's certain things that we do better, and we supply to them. So I don't expect this to be any different than that. Okay. Perfect. Thank you. Thank you. Once again, to ask a question at this time, please press star one one on your touch-tone telephone. We have a follow-up question from the line of Ross Sparenblek with William Blair. Your line is now open. Hey, guys. Just one quick follow-up. Excuse me. Can you maybe provide the end-market mix there? I assume it's probably 45% to share the main customer, but only aviation, marine, and industrial, and kind of just the growth profile there? Yeah. So obviously, we're the biggest part. No less than half. And then it gets diluted down, and it's pretty diverse after that, Ross. So I wouldn't say that there's any other particular market that is, for instance, 20% or 30%. I mean, they supply into a lot of broad industries. They supply into the aviation industry. They provide some in the automotive industry and just industrial machinery in general. So it's a pretty broad mix that they supply into after you get away from Kadant. Okay. I just didn't know if there was anything tied to Airbus, so we should be calling out. And then maybe just, yeah, growth rate historically from the other customers. In the near term, Ross, the last two years, they've grown in the 8% range. And if I go back a little further, say, five years, it's been about 10%. Of course, we're conservative, and we didn't model a high single-digit growth, so. All right. Fantastic, gentlemen. Thanks again. Thank you. I'm currently showing no further questions at this time. I now like to turn the call back over to Jeff Powell for closing remarks. Thank you. Well, I just want to thank everybody for joining us today, and we look forward to reporting on the progress. We're really pleased and welcome the Böhler family into Kadant, and we look forward to talking about it and presenting in the future. Thank you. This concludes today's conference. Thank you for your participation. You may now disconnect.

Speaker 5: Good day, and thank you for standing by. Welcome to the Kadant to Acquire a voestalpine BÖHLER Profil 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael McKenney, Executive Vice President and Chief Financial Officer. Please go ahead. Good day, and thank you for standing by. good day and thank you for standing by Welcome to the Kadant to Acquire a voestalpine BÖHLER Profil conference call. welcome to the kadant to acquire a voestalpine böhler profil conference call At this time, all participants are in a listen-only mode. at this time all participants are in a listen-only mode After the speaker's presentation, there will be a question-and-answer session. 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 one one on your telephone. to ask a question during the session you will need to press star one one on your telephone You will then hear an automated message advising your hand is raised. you will then hear an automated message advising your hand is raised To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please be advised that today's conference is being recorded. please be advised that today's conference is being recorded I would now like to hand the conference over to your speaker today, Michael McKenney, Executive Vice President and Chief Financial Officer. i would now like to hand the conference over to your speaker today michael mckenney executive vice president and chief financial officer Please go ahead. please go ahead

Speaker 4: Thank you, Shannon. Good morning, everyone. Welcome to Kadant's conference call to discuss its proposed acquisition of voestalpine BÖHLER Profil. 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 Kadant's future plans and expectations, including the expected benefits of the proposed acquisition of voestalpine BÖHLER Profil, are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Thank you, Shannon. thank you shannon Good morning, everyone. good morning everyone Welcome to Kadant's conference call to discuss its proposed acquisition of voestalpine BÖHLER Profil. welcome to kadant's conference call to discuss its proposed acquisition of voestalpine böhler profil With me on the call today is Jeff Powell, our President and Chief Executive Officer. 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. before we begin let me read our safe harbor statement Various remarks that we may make today about Kadant's future plans and expectations, including the expected benefits of the proposed acquisition of voestalpine BÖHLER Profil, are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. various remarks that we may make today about kadant's future plans and expectations including the expected benefits of the proposed acquisition of voestalpine böhler profil 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 28th, 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. With that, I'll turn the call over to Jeff Powell, who'll discuss the acquisition. Following our remarks, we will have a Q&A session. Jeff? 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 28th, 2024, and subsequent filings with the Securities and Exchange Commission. 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 28th 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. 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. 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 With that, I'll turn the call over to Jeff Powell, who'll discuss the acquisition. with that i'll turn the call over to jeff powell who'll discuss the acquisition Following our remarks, we will have a Q&A session. following our remarks we will have a q&a session Jeff? jeff

Speaker 2: Thanks, Mike. Good morning, and thank you for joining us today. We announced last week that we've entered into an agreement to acquire voestalpine BÖHLER Profil. Today, we'd like to share some details on the transaction and the company. The company is located in Bruckbach, Austria, and is over 150 years old. They manufacture high-quality precision components that go into technically challenging applications, and they possess unique expertise in patented processes as well as a history of innovation. Revenue for their fiscal year 2025 was EUR 51.5 million. They produce near-net-shaped products that reduce the amount of downstream machining and processing, thereby lowering the total cost of production. Kadant has sourced components from BÖHLER for more than 30 years, including knives for our wood processing businesses. They also manufacture components that go into turbine engines and a broad range of industrial applications. Thanks, Mike. thanks mike Good morning, and thank you for joining us today. good morning and thank you for joining us today We announced last week that we've entered into an agreement to acquire voestalpine BÖHLER Profil. we announced last week that we've entered into an agreement to acquire voestalpine böhler profil Today, we'd like to share some details on the transaction and the company. today we'd like to share some details on the transaction and the company The company is located in Bruckbach, Austria, and is over 150 years old. the company is located in bruckbach austria and is over 150 years old They manufacture high-quality precision components that go into technically challenging applications, and they possess unique expertise in patented processes as well as a history of innovation. they manufacture high-quality precision components that go into technically challenging applications and they possess unique expertise in patented processes as well as a history of innovation Revenue for their fiscal year 2025 was EUR 51.5 million. revenue for their fiscal year 2025 was eur 51.5 million They produce near-net-shaped products that reduce the amount of downstream machining and processing, thereby lowering the total cost of production. they produce near-net-shaped products that reduce the amount of downstream machining and processing thereby lowering the total cost of production Kadant has sourced components from BÖHLER for more than 30 years, including knives for our wood processing businesses. kadant has sourced components from böhler for more than 30 years including knives for our wood processing businesses They also manufacture components that go into turbine engines and a broad range of industrial applications. they also manufacture components that go into turbine engines and a broad range of industrial applications Böhler has been at the top of our acquisition target list for more than 10 years. As I mentioned, we have worked with them for 30 years, and they have been instrumental in helping us develop products and components for our wood processing businesses. They have an excellent management team that we have worked with and know very well. 100% of their business is parts and consumables, and that is, as most of you know, a key strategic focus for Kadant. Böhler will continue to operate in their current location as a standalone division and will be part of our industrial processing reporting segment. The business will go forward as Kadant Profil GmbH & Co. KG. With that, Mike will give you more details on the financials and the unique attributes of this transaction. Mike? Böhler has been at the top of our acquisition target list for more than 10 years. böhler has been at the top of our acquisition target list for more than 10 years As I mentioned, we have worked with them for 30 years, and they have been instrumental in helping us develop products and components for our wood processing businesses. as i mentioned we have worked with them for 30 years and they have been instrumental in helping us develop products and components for our wood processing businesses They have an excellent management team that we have worked with and know very well. 100% of their business is parts and consumables, and that is, as most of you know, a key strategic focus for Kadant. they have an excellent management team that we have worked with and know very well 100% of their business is parts and consumables and that is as most of you know a key strategic focus for kadant Böhler will continue to operate in their current location as a standalone division and will be part of our industrial processing reporting segment. böhler will continue to operate in their current location as a standalone division and will be part of our industrial processing reporting segment The business will go forward as Kadant Profil GmbH & Co. KG. the business will go forward as kadant profil gmbh & co kg With that, Mike will give you more details on the financials and the unique attributes of this transaction. with that mike will give you more details on the financials and the unique attributes of this transaction Mike? mike

Speaker 4: I'd like to provide some additional color on the financial metrics associated with the proposed transaction. The purchase price is approximately EUR 157 million, subject to customary adjustments, and the company had approximately EUR 52 million in revenue for the fiscal year ended March 31st, 2025, which is 100% from parts and consumable products. This company is a valued supplier to several Kadant businesses, and approximately 45% of their '25 revenue represents this activity. I want to highlight that once this company is part of Kadant, the revenue generated from other Kadant businesses will become intercompany revenue and therefore not part of Kadant's reported revenue. While the externally reported revenue will be smaller, both gross margin and EBITDA margins under Kadant will benefit from the combination. I'd like to provide some additional color on the financial metrics associated with the proposed transaction. i'd like to provide some additional color on the financial metrics associated with the proposed transaction The purchase price is approximately EUR 157 million, subject to customary adjustments, and the company had approximately EUR 52 million in revenue for the fiscal year ended March 31st, 2025, which is 100% from parts and consumable products. the purchase price is approximately eur 157 million subject to customary adjustments and the company had approximately eur 52 million in revenue for the fiscal year ended march 31st 2025 which is 100% from parts and consumable products This company is a valued supplier to several Kadant businesses, and approximately 45% of their '25 revenue represents this activity. this company is a valued supplier to several kadant businesses and approximately 45% of their '25 revenue represents this activity I want to highlight that once this company is part of Kadant, the revenue generated from other Kadant businesses will become intercompany revenue and therefore not part of Kadant's reported revenue. i want to highlight that once this company is part of kadant the revenue generated from other kadant businesses will become intercompany revenue and therefore not part of kadant's reported revenue While the externally reported revenue will be smaller, both gross margin and EBITDA margins under Kadant will benefit from the combination. while the externally reported revenue will be smaller both gross margin and ebitda margins under kadant will benefit from the combination The timing of this benefit, however, may vary by quarter as the recognition of the gross margin related to intercompany sales to Kadant businesses is dependent on the ultimate shipment to third-party customers. In addition, I wanted to note that our Kadant businesses will initially be using any on-hand inventory purchase prior to the closing of the acquisition to fulfill shipments to third-party customers before the new post-acquisition purchases are consumed. These factors, along with normal acquisition fair value accounting, will make this acquisition dilutive in 2026. While we'll incorporate this acquisition, we will incorporate this acquisition into our 2026 guidance after the closing occurs. The company had approximately EUR 15.6 million of adjusted EBITDA in fiscal year 2025, with a resulting EBITDA multiple on the transaction of about 10x. In addition, beneficial tax attributes associated with the transaction are worth approximately 1.5 turns on the EBITDA multiple. The timing of this benefit, however, may vary by quarter as the recognition of the gross margin related to intercompany sales to Kadant businesses is dependent on the ultimate shipment to third-party customers. the timing of this benefit however may vary by quarter as the recognition of the gross margin related to intercompany sales to kadant businesses is dependent on the ultimate shipment to third-party customers In addition, I wanted to note that our Kadant businesses will initially be using any on-hand inventory purchase prior to the closing of the acquisition to fulfill shipments to third-party customers before the new post-acquisition purchases are consumed. in addition i wanted to note that our kadant businesses will initially be using any on-hand inventory purchase prior to the closing of the acquisition to fulfill shipments to third-party customers before the new post-acquisition purchases are consumed These factors, along with normal acquisition fair value accounting, will make this acquisition dilutive in 2026. these factors along with normal acquisition fair value accounting will make this acquisition dilutive in 2026 While we'll incorporate this acquisition, we will incorporate this acquisition into our 2026 guidance after the closing occurs. while we'll incorporate this acquisition we will incorporate this acquisition into our 2026 guidance after the closing occurs The company had approximately EUR 15.6 million of adjusted EBITDA in fiscal year 2025, with a resulting EBITDA multiple on the transaction of about 10x. the company had approximately eur 15.6 million of adjusted ebitda in fiscal year 2025 with a resulting ebitda multiple on the transaction of about 10x In addition, beneficial tax attributes associated with the transaction are worth approximately 1.5 turns on the EBITDA multiple. in addition beneficial tax attributes associated with the transaction are worth approximately 1.5 turns on the ebitda multiple With that factored in, the multiple is about 8.5x. We plan to fund the acquisition primarily through borrowings under our revolving credit facility in Europe. We estimated that our leverage ratio, as defined in our credit agreement, will increase to just above two after the transaction closes, and as a result, we anticipate our borrowing rate to be approximately 3.5% for this debt in 2026. I'm going to now turn the call over for questions, but before we start, I should mention that the Q&A session is specific to the proposed transaction as we are currently in the fourth quarter 2025 closing process and cannot comment on the fourth quarter 2025 results or our guidance for 2026 until our upcoming earnings call later this month. With that, we'd be happy to take your questions. Shannon? With that factored in, the multiple is about 8.5x. with that factored in the multiple is about 8.5x We plan to fund the acquisition primarily through borrowings under our revolving credit facility in Europe. we plan to fund the acquisition primarily through borrowings under our revolving credit facility in europe We estimated that our leverage ratio, as defined in our credit agreement, will increase to just above two after the transaction closes, and as a result, we anticipate our borrowing rate to be approximately 3.5% for this debt in 2026. we estimated that our leverage ratio as defined in our credit agreement will increase to just above two after the transaction closes and as a result we anticipate our borrowing rate to be approximately 3.5% for this debt in 2026 I'm going to now turn the call over for questions, but before we start, I should mention that the Q&A session is specific to the proposed transaction as we are currently in the fourth quarter 2025 closing process and cannot comment on the fourth quarter 2025 results or our guidance for 2026 until our upcoming earnings call later this month. i'm going to now turn the call over for questions but before we start i should mention that the q&a session is specific to the proposed transaction as we are currently in the fourth quarter 2025 closing process and cannot comment on the fourth quarter 2025 results or our guidance for 2026 until our upcoming earnings call later this month With that, we'd be happy to take your questions. with that we'd be happy to take your questions Shannon? shannon

Speaker 5: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ross Sparenblek with William Blair. Your line is now open. Thank you. thank you As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. as a reminder to ask a question please press star one one on your telephone and wait for your name to be announced To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please stand by while we compile the Q&A roster. please stand by while we compile the q&a roster Our first question comes from the line of Ross Sparenblek with William Blair. our first question comes from the line of ross sparenblek with william blair Your line is now open. your line is now open

Speaker 6: Hey, good morning, gentlemen. Congrats on the acquisition. Hey, good morning, gentlemen. hey good morning gentlemen Congrats on the acquisition. congrats on the acquisition

Speaker 2: Hi, Ross. Hi, Ross. hi ross

Speaker 6: Thank you. Thank you. thank you Excuse me. Can you maybe just elaborate a little further on kind of the attractiveness of this asset and why the parent wanted to sell? Excuse me. excuse me Can you maybe just elaborate a little further on kind of the attractiveness of this asset and why the parent wanted to sell? can you maybe just elaborate a little further on kind of the attractiveness of this asset and why the parent wanted to sell

Speaker 2: Yeah. From our perspective, as I mentioned, Ross, we've worked with these guys forever, and as Mike just indicated, about 45% of their business is with us. So they've become a bigger and bigger supplier and a more and more critical supplier to us. They have very specialized processes that they have patented that they use for making their components. And so we, for more than 10 years, really have continued to expand our relationship with them and have really thought that they really would be a great fit within the Kadant organization. So we're very pleased that we were able to acquire them. I think their parent company, of course, voestalpine is a very, very large, one of the biggest companies in Austria, and this was a smaller division for them and maybe slightly non-core. Yeah. yeah From our perspective, as I mentioned, Ross, we've worked with these guys forever, and as Mike just indicated, about 45% of their business is with us. from our perspective as i mentioned ross we've worked with these guys forever and as mike just indicated about 45% of their business is with us So they've become a bigger and bigger supplier and a more and more critical supplier to us. so they've become a bigger and bigger supplier and a more and more critical supplier to us They have very specialized processes that they have patented that they use for making their components. they have very specialized processes that they have patented that they use for making their components And so we, for more than 10 years, really have continued to expand our relationship with them and have really thought that they really would be a great fit within the Kadant organization. and so we for more than 10 years really have continued to expand our relationship with them and have really thought that they really would be a great fit within the kadant organization So we're very pleased that we were able to acquire them. so we're very pleased that we were able to acquire them I think their parent company, of course, voestalpine is a very, very large, one of the biggest companies in Austria, and this was a smaller division for them and maybe slightly non-core. i think their parent company of course voestalpine is a very very large one of the biggest companies in austria and this was a smaller division for them and maybe slightly non-core And so as it became more and more important to us and the relationship continued to grow and develop, I think we both concluded that it would be better probably as part of the Kadant organization. So we feel very fortunate that we were able to reach an agreement with the parent company to purchase this. As you know, all of our components tend to be mission-critical, and they tend to be alloy and metal-based, and that's what these guys really specialize in, making critical components. And because they have this near-net-shaped technology, it really reduces the downstream cost and processing time for a finished product. So they'll be able to help a lot of our Kadant companies, we believe, over time. And so as it became more and more important to us and the relationship continued to grow and develop, I think we both concluded that it would be better probably as part of the Kadant organization. and so as it became more and more important to us and the relationship continued to grow and develop i think we both concluded that it would be better probably as part of the kadant organization So we feel very fortunate that we were able to reach an agreement with the parent company to purchase this. so we feel very fortunate that we were able to reach an agreement with the parent company to purchase this As you know, all of our components tend to be mission-critical, and they tend to be alloy and metal-based, and that's what these guys really specialize in, making critical components. as you know all of our components tend to be mission-critical and they tend to be alloy and metal-based and that's what these guys really specialize in making critical components And because they have this near-net-shaped technology, it really reduces the downstream cost and processing time for a finished product. and because they have this near-net-shaped technology it really reduces the downstream cost and processing time for a finished product So they'll be able to help a lot of our Kadant companies, we believe, over time. so they'll be able to help a lot of our kadant companies we believe over time

Speaker 6: Okay. No, that's very helpful. And then maybe just on the initial dilution dynamics, Mike, if you could maybe just help us kind of think through. I mean, it's definitely accretive on a margin basis, but something along the lines of the inventory, maybe some FIFO, is going to impact near-term? Okay. okay No, that's very helpful. no that's very helpful And then maybe just on the initial dilution dynamics, Mike, if you could maybe just help us kind of think through. and then maybe just on the initial dilution dynamics mike if you could maybe just help us kind of think through I mean, it's definitely accretive on a margin basis, but something along the lines of the inventory, maybe some FIFO, is going to impact near-term? i mean it's definitely accretive on a margin basis but something along the lines of the inventory maybe some fifo is going to impact near-term

Speaker 2: Yeah, exactly, Ross. So I was trying to give that color so folks would be aware. Of course, as I mentioned on the call, roughly half the revenue is with Kadant. So once they become part of Kadant, that revenue will become intercompany revenue and we'll eliminate it. So we won't be able to recognize the profit on those intercompany transactions until that product is delivered to a third-party customer. And the additional little bit of color on that and why I mentioned the dilutive impact is because in the short run here, we already have components that we've purchased from this company, and we're going to need to work through that inventory, just as you said on a FIFO. We need to work through that inventory before we start consuming the inventory that will have been purchased post-acquisition. Yeah, exactly, Ross. yeah exactly ross So I was trying to give that color so folks would be aware. so i was trying to give that color so folks would be aware Of course, as I mentioned on the call, roughly half the revenue is with Kadant. of course as i mentioned on the call roughly half the revenue is with kadant So once they become part of Kadant, that revenue will become intercompany revenue and we'll eliminate it. so once they become part of kadant that revenue will become intercompany revenue and we'll eliminate it So we won't be able to recognize the profit on those intercompany transactions until that product is delivered to a third-party customer. so we won't be able to recognize the profit on those intercompany transactions until that product is delivered to a third-party customer And the additional little bit of color on that and why I mentioned the dilutive impact is because in the short run here, we already have components that we've purchased from this company, and we're going to need to work through that inventory, just as you said on a FIFO. and the additional little bit of color on that and why i mentioned the dilutive impact is because in the short run here we already have components that we've purchased from this company and we're going to need to work through that inventory just as you said on a fifo We need to work through that inventory before we start consuming the inventory that will have been purchased post-acquisition. we need to work through that inventory before we start consuming the inventory that will have been purchased post-acquisition So until we get through that, the profit on those intercompany transactions will be, so to speak, deferred. And I think that'll be a few quarters because these are important components, and we have a few quarters' worth stocked. So until we get through that, the profit on those intercompany transactions will be, so to speak, deferred. so until we get through that the profit on those intercompany transactions will be so to speak deferred And I think that'll be a few quarters because these are important components, and we have a few quarters' worth stocked. and i think that'll be a few quarters because these are important components and we have a few quarters' worth stocked

Speaker 6: That is very helpful. Maybe just one more, and I'll pass it along. You kind of, excuse me, hinted at SG&A or not SG&A, but R&D Synergies. Is there anything else we should think of or any buckets that stand out near-term once you own this asset? That is very helpful. that is very helpful Maybe just one more, and I'll pass it along. maybe just one more and i'll pass it along You kind of, excuse me, hinted at SG&A or not SG&A, but R&D Synergies. you kind of excuse me hinted at sg&a or not sg&a but r&d synergies Is there anything else we should think of or any buckets that stand out near-term once you own this asset? is there anything else we should think of or any buckets that stand out near-term once you own this asset

Speaker 2: Well, as you know, we have a key strategic focus on parts and consumables, and this is a 100% part consumable business. So we will work with them to continue to try to expand their non-Kadant business around the world. But they'll work with all of our other divisions to try to find opportunities to sell into our other divisions that they haven't done before. So it's just we really think there's unique opportunities here with their manufacturing and their specialized expertise to really expand their market share globally outside of Kadant and even within Kadant, more opportunities. So it's like every other kind of acquisition that we make. We integrate them into our global network, our direct sales network around the world, and work with them to try to expand their market opportunities. Well, as you know, we have a key strategic focus on parts and consumables, and this is a 100% part consumable business. well as you know we have a key strategic focus on parts and consumables and this is a 100% part consumable business So we will work with them to continue to try to expand their non-Kadant business around the world. so we will work with them to continue to try to expand their non-kadant business around the world But they'll work with all of our other divisions to try to find opportunities to sell into our other divisions that they haven't done before. but they'll work with all of our other divisions to try to find opportunities to sell into our other divisions that they haven't done before So it's just we really think there's unique opportunities here with their manufacturing and their specialized expertise to really expand their market share globally outside of Kadant and even within Kadant, more opportunities. so it's just we really think there's unique opportunities here with their manufacturing and their specialized expertise to really expand their market share globally outside of kadant and even within kadant more opportunities So it's like every other kind of acquisition that we make. so it's like every other kind of acquisition that we make We integrate them into our global network, our direct sales network around the world, and work with them to try to expand their market opportunities. we integrate them into our global network our direct sales network around the world and work with them to try to expand their market opportunities

Speaker 6: Maybe just what was the feedback from your direct sales force when you brought this opportunity? Maybe just what was the feedback from your direct sales force when you brought this opportunity? maybe just what was the feedback from your direct sales force when you brought this opportunity

Speaker 2: Well, I can tell you they're very happy. I would tell you that there were two divisions within our company that if you asked the presidents what kept them up at night, they would tell you it was this relationship with this company because we had become very dependent on this company for key components. And because of their patented processes, they're really the only company in the world that can provide it. And so it was something that kept a few of our guys up at night. And so having them in the family now, I think, is a great relief and a great acquisition for us. Well, I can tell you they're very happy. well i can tell you they're very happy I would tell you that there were two divisions within our company that if you asked the presidents what kept them up at night, they would tell you it was this relationship with this company because we had become very dependent on this company for key components. i would tell you that there were two divisions within our company that if you asked the presidents what kept them up at night they would tell you it was this relationship with this company because we had become very dependent on this company for key components And because of their patented processes, they're really the only company in the world that can provide it. and because of their patented processes they're really the only company in the world that can provide it And so it was something that kept a few of our guys up at night. and so it was something that kept a few of our guys up at night And so having them in the family now, I think, is a great relief and a great acquisition for us. and so having them in the family now i think is a great relief and a great acquisition for us

Speaker 6: That's great to hear. All right. Thank you, guys. I'll pass it along. That's great to hear. that's great to hear All right. all right Thank you, guys. thank you guys I'll pass it along. i'll pass it along

Speaker 5: Thank you. Our next question comes from the line of Gary Prestopino with Barrington. Your line is now open. Thank you. thank you Our next question comes from the line of Gary Prestopino with Barrington. our next question comes from the line of gary prestopino with barrington Your line is now open. your line is now open

Speaker 1: All right. Hi, guys. I think they called my name. The operator broke up. Just a couple of questions here just so I can understand this. You're buying this company. You're going to have intercompany revenues, so it actually will be less than 45% on what you're supplied from the company itself. But what about the impact on the Adjusted EBITDA on that? Would you still be able to get the full Adjusted EBITDA margin impact from all of the sales that you're getting from this company? All right. all right Hi, guys. hi guys I think they called my name. i think they called my name The operator broke up. the operator broke up Just a couple of questions here just so I can understand this. just a couple of questions here just so i can understand this You're buying this company. you're buying this company You're going to have intercompany revenues, so it actually will be less than 45% on what you're supplied from the company itself. you're going to have intercompany revenues so it actually will be less than 45% on what you're supplied from the company itself But what about the impact on the Adjusted EBITDA on that? but what about the impact on the adjusted ebitda on that Would you still be able to get the full Adjusted EBITDA margin impact from all of the sales that you're getting from this company? would you still be able to get the full adjusted ebitda margin impact from all of the sales that you're getting from this company

Speaker 2: Yeah. Good question, Gary. Yes. We will realize that, and that's part of the messaging I was giving here in terms of the intercompany activity. But recognition of that will be delayed until we work through the current inventory on hand, at least for the intercompany, the pieces that now become intercompany. But yes, we'll realize all the margin benefit. Yeah. yeah Good question, Gary. good question gary Yes. yes We will realize that, and that's part of the messaging I was giving here in terms of the intercompany activity. we will realize that and that's part of the messaging i was giving here in terms of the intercompany activity But recognition of that will be delayed until we work through the current inventory on hand, at least for the intercompany, the pieces that now become intercompany. but recognition of that will be delayed until we work through the current inventory on hand at least for the intercompany the pieces that now become intercompany But yes, we'll realize all the margin benefit. but yes we'll realize all the margin benefit

Speaker 1: How quickly will that once you work through that FIFO impact, how quickly does that inventory turn? How quickly will that once you work through that FIFO impact, how quickly does that inventory turn? how quickly will that once you work through that fifo impact how quickly does that inventory turn

Speaker 2: It turns quickly. These are its parts and consumables. But as I said, I think it may take us a good part of 2026 to work through it, a few quarters to work through inventory on hand. When we finally close the transaction and we have another call, I'll give a little more color on what we think the timing is going to be for that turn. It turns quickly. it turns quickly These are its parts and consumables. these are its parts and consumables But as I said, I think it may take us a good part of 2026 to work through it, a few quarters to work through inventory on hand. but as i said i think it may take us a good part of 2026 to work through it a few quarters to work through inventory on hand When we finally close the transaction and we have another call, I'll give a little more color on what we think the timing is going to be for that turn. when we finally close the transaction and we have another call i'll give a little more color on what we think the timing is going to be for that turn

Speaker 1: Okay. That's very helpful. And then you mentioned something. The company produces products for technically challenging applications. Then you mentioned something about some kind of patent they have or patented technology. Could you just go over that so I can understand what are some of the competitive advantages this has? Okay. okay That's very helpful. that's very helpful And then you mentioned something. and then you mentioned something The company produces products for technically challenging applications. the company produces products for technically challenging applications Then you mentioned something about some kind of patent they have or patented technology. then you mentioned something about some kind of patent they have or patented technology Could you just go over that so I can understand what are some of the competitive advantages this has? could you just go over that so i can understand what are some of the competitive advantages this has

Speaker 2: Sure. They've developed processing lines that make these critical components. They actually developed and built the processing lines themselves, and they patented them. As I mentioned earlier, they make near-net shapes. When you think of a lot of components and products, they'll start out as, say, a bar stock or maybe an ingot of, say, an alloy. It gets processed, gets heated up, it gets formed, gets pressed, and there's often an awful lot of machining that goes on to get to your final component shape and profile and characteristics. They have developed processes that get you much closer to that final shape than many, many companies currently have the ability to do, and therefore, it really reduces the machining time. In some cases, they can make things with their patented process lines where there's almost nothing, no post-processing required. Sure. sure They've developed processing lines that make these critical components. they've developed processing lines that make these critical components They actually developed and built the processing lines themselves, and they patented them. they actually developed and built the processing lines themselves and they patented them As I mentioned earlier, they make near-net shapes. as i mentioned earlier they make near-net shapes When you think of a lot of components and products, they'll start out as, say, a bar stock or maybe an ingot of, say, an alloy. when you think of a lot of components and products they'll start out as say a bar stock or maybe an ingot of say an alloy It gets processed, gets heated up, it gets formed, gets pressed, and there's often an awful lot of machining that goes on to get to your final component shape and profile and characteristics. it gets processed gets heated up it gets formed gets pressed and there's often an awful lot of machining that goes on to get to your final component shape and profile and characteristics They have developed processes that get you much closer to that final shape than many, many companies currently have the ability to do, and therefore, it really reduces the machining time. they have developed processes that get you much closer to that final shape than many many companies currently have the ability to do and therefore it really reduces the machining time In some cases, they can make things with their patented process lines where there's almost nothing, no post-processing required. in some cases they can make things with their patented process lines where there's almost nothing no post-processing required And so it's just a very cost-effective way to get to a final shape or a near-net shape. And they developed these process lines themselves. They built them themselves, and they patented them. And so it's just a very cost-effective way to get to a final shape or a near-net shape. and so it's just a very cost-effective way to get to a final shape or a near-net shape And they developed these process lines themselves. and they developed these process lines themselves They built them themselves, and they patented them. they built them themselves and they patented them

Speaker 1: Okay. That's interesting. And then it looks like are they making the fan blades for jet engines when you look at the picture of aviation and marine? Is that part of what you're talking about? Okay. okay That's interesting. that's interesting And then it looks like are they making the fan blades for jet engines when you look at the picture of aviation and marine? and then it looks like are they making the fan blades for jet engines when you look at the picture of aviation and marine Is that part of what you're talking about? is that part of what you're talking about

Speaker 2: I think they make the stators that go on the engines. So they make particular components. They're not making the turbine blades themselves, but they're making other parts of the turbine engine. I think they make the stators that go on the engines. i think they make the stators that go on the engines So they make particular components. so they make particular components They're not making the turbine blades themselves, but they're making other parts of the turbine engine. they're not making the turbine blades themselves but they're making other parts of the turbine engine

Speaker 1: Okay. Thank you very much. Okay. okay Thank you very much. thank you very much

Speaker 5: Thank you. As a reminder, to ask a question at this time, please press star one one on your touch-tone telephone. Our next question comes from the line of Kurt Yinger with D.A. Davidson. Your line is now open. Thank you. thank you As a reminder, to ask a question at this time, please press star one one on your touch-tone telephone. as a reminder to ask a question at this time please press star one one on your touch-tone telephone Our next question comes from the line of Kurt Yinger with D.A. our next question comes from the line of kurt yinger with d.a Davidson. davidson Your line is now open. your line is now open

Speaker 3: Great. Thanks. And good morning, everyone. Just one question. Going back to kind of the customer base and maybe widening that out, does the company also kind of sell to your competitors? And I guess, how does that factor in in terms of I don't know if it's a dissynergy risk or maybe a point of friction going forward with kind of that rest of the third-party sales? Great. great Thanks. thanks And good morning, everyone. and good morning everyone Just one question. just one question Going back to kind of the customer base and maybe widening that out, does the company also kind of sell to your competitors? going back to kind of the customer base and maybe widening that out does the company also kind of sell to your competitors And I guess, how does that factor in in terms of I don't know if it's a dissynergy risk or maybe a point of friction going forward with kind of that rest of the third-party sales? and i guess how does that factor in in terms of i don't know if it's a dissynergy risk or maybe a point of friction going forward with kind of that rest of the third-party sales

Speaker 2: Yeah. I mean, we have many of our companies that sell to people that we also compete with, Kurt, and this will be no different. They'll continue to serve everybody. They'll continue to supply to the entire industry just as our companies do now. And so there are probably a couple of places where they will be selling to people that we also compete with, but that's not new to us. Like I said, many of our divisions do that now. They'll sell to their competitors. Sometimes we'll be specced in from the end customer, but other times, we just have a relationship with our competitors, and there's certain things that we do better, and we supply to them. So I don't expect this to be any different than that. Yeah. yeah I mean, we have many of our companies that sell to people that we also compete with, Kurt, and this will be no different. i mean we have many of our companies that sell to people that we also compete with kurt and this will be no different They'll continue to serve everybody. they'll continue to serve everybody They'll continue to supply to the entire industry just as our companies do now. they'll continue to supply to the entire industry just as our companies do now And so there are probably a couple of places where they will be selling to people that we also compete with, but that's not new to us. and so there are probably a couple of places where they will be selling to people that we also compete with but that's not new to us Like I said, many of our divisions do that now. like i said many of our divisions do that now They'll sell to their competitors. they'll sell to their competitors Sometimes we'll be specced in from the end customer, but other times, we just have a relationship with our competitors, and there's certain things that we do better, and we supply to them. sometimes we'll be specced in from the end customer but other times we just have a relationship with our competitors and there's certain things that we do better and we supply to them So I don't expect this to be any different than that. so i don't expect this to be any different than that

Speaker 3: Okay. Perfect. Thank you. Okay. okay Perfect. perfect Thank you. thank you

Speaker 5: Thank you. Once again, to ask a question at this time, please press star one one on your touch-tone telephone. We have a follow-up question from the line of Ross Sparenblek with William Blair. Your line is now open. Thank you. thank you Once again, to ask a question at this time, please press star one one on your touch-tone telephone. once again to ask a question at this time please press star one one on your touch-tone telephone We have a follow-up question from the line of Ross Sparenblek with William Blair. we have a follow-up question from the line of ross sparenblek with william blair Your line is now open. your line is now open

Speaker 6: Hey, guys. Just one quick follow-up. Excuse me. Can you maybe provide the end-market mix there? I assume it's probably 45% to share the main customer, but only aviation, marine, and industrial, and then kind of just the growth profile there? Hey, guys. hey guys Just one quick follow-up. just one quick follow-up Excuse me. excuse me Can you maybe provide the end-market mix there? can you maybe provide the end-market mix there I assume it's probably 45% to share the main customer, but only aviation, marine, and industrial, and then kind of just the growth profile there? i assume it's probably 45% to share the main customer but only aviation marine and industrial and then kind of just the growth profile there

Speaker 2: Yeah. So obviously, we're the biggest part. They'll less than half. And then it gets diluted down, and it's pretty diverse after that, Ross. So I wouldn't say that there's any other particular market that is, for instance, 20% or 30%. I mean, they supply into a lot of broad industries. They supply into the aviation industry. They provide some in the automotive industry and just industrial machinery in general. So it's a pretty broad mix that they supply into after you get away from Kadant. Yeah. yeah So obviously, we're the biggest part. so obviously we're the biggest part They'll less than half. they'll less than half And then it gets diluted down, and it's pretty diverse after that, Ross. and then it gets diluted down and it's pretty diverse after that ross So I wouldn't say that there's any other particular market that is, for instance, 20% or 30%. so i wouldn't say that there's any other particular market that is for instance 20% or 30% I mean, they supply into a lot of broad industries. i mean they supply into a lot of broad industries They supply into the aviation industry. they supply into the aviation industry They provide some in the automotive industry and just industrial machinery in general. they provide some in the automotive industry and just industrial machinery in general So it's a pretty broad mix that they supply into after you get away from Kadant. so it's a pretty broad mix that they supply into after you get away from kadant

Speaker 6: Okay. I just didn't know if there was anything tied to Airbus that we should be calling out? Then maybe just, yeah, growth rate historically from the other customers. Okay. okay I just didn't know if there was anything tied to Airbus that we should be calling out? i just didn't know if there was anything tied to airbus that we should be calling out Then maybe just, yeah, growth rate historically from the other customers. then maybe just yeah growth rate historically from the other customers

Speaker 2: In the near term, Ross, the last two years, they've grown in the 8% range. If I go back a little further, say, five years, it's been about 10%. Of course, we're conservative, and we didn't model a high single-digit growth, so. In the near term, Ross, the last two years, they've grown in the 8% range. in the near term ross the last two years they've grown in the 8% range If I go back a little further, say, five years, it's been about 10%. if i go back a little further say five years it's been about 10% Of course, we're conservative, and we didn't model a high single-digit growth, so. of course we're conservative and we didn't model a high single-digit growth so

Speaker 6: All right. Fantastic, gentlemen. Thanks again. All right. all right Fantastic, gentlemen. fantastic gentlemen Thanks again. thanks again

Speaker 5: Thank you. I'm currently showing no further questions at this time. I now like to turn the call back over to Jeff Powell for closing remarks. Thank you. thank you I'm currently showing no further questions at this time. i'm currently showing no further questions at this time I now like to turn the call back over to Jeff Powell for closing remarks. i now like to turn the call back over to jeff powell for closing remarks

Speaker 2: Thank you. Well, I just want to thank everybody for joining us today, and we look forward to reporting on the progress. We're really pleased and welcome the Böhler family into Kadant, and we look forward to talking about it and presenting in the future. Thank you. Thank you. thank you Well, I just want to thank everybody for joining us today, and we look forward to reporting on the progress. well i just want to thank everybody for joining us today and we look forward to reporting on the progress We're really pleased and welcome the Böhler family into Kadant, and we look forward to talking about it and presenting in the future. we're really pleased and welcome the böhler family into kadant and we look forward to talking about it and presenting in the future Thank you. thank you

Speaker 5: This concludes today's conference. Thank you for your participation. You may now disconnect. Good day, and thank you for standing by. Welcome to the Kadant to Acquire voestalpine BÖHLER Profil 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael McKenney, Executive Vice President and Chief Financial Officer. Please go ahead. This concludes today's conference. this concludes today's conference Thank you for your participation. thank you for your participation You may now disconnect. you may now disconnect Good day, and thank you for standing by. good day and thank you for standing by Welcome to the Kadant to Acquire voestalpine BÖHLER Profil conference call. welcome to the kadant to acquire voestalpine böhler profil conference call At this time, all participants are in a listen-only mode. at this time all participants are in a listen-only mode After the speaker's presentation, there will be a question-and-answer session. 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 one one on your telephone. to ask a question during the session you will need to press star one one on your telephone You will then hear an automated message advising your hand is raised. you will then hear an automated message advising your hand is raised To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please be advised that today's conference is being recorded. please be advised that today's conference is being recorded I would now like to hand the conference over to your speaker today, Michael McKenney, Executive Vice President and Chief Financial Officer. i would now like to hand the conference over to your speaker today michael mckenney executive vice president and chief financial officer Please go ahead. please go ahead

Speaker 4: Thank you, Shannon. Good morning, everyone. Welcome to Kadant's conference call to discuss its proposed acquisition of voestalpine BÖHLER Profil. 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 Kadant's future plans and expectations, including the expected benefits of the proposed acquisition of voestalpine BÖHLER Profil, are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Thank you, Shannon. thank you shannon Good morning, everyone. good morning everyone Welcome to Kadant's conference call to discuss its proposed acquisition of voestalpine BÖHLER Profil. welcome to kadant's conference call to discuss its proposed acquisition of voestalpine böhler profil With me on the call today is Jeff Powell, our President and Chief Executive Officer. 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. before we begin let me read our safe harbor statement Various remarks that we may make today about Kadant's future plans and expectations, including the expected benefits of the proposed acquisition of voestalpine BÖHLER Profil, are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. various remarks that we may make today about kadant's future plans and expectations including the expected benefits of the proposed acquisition of voestalpine böhler profil 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 28th, 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. With that, I'll turn the call over to Jeff Powell, who'll discuss the acquisition. Following our remarks, we will have a Q&A session. Jeff? 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 28th, 2024, and subsequent filings with the Securities and Exchange Commission. 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 28th 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. 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. 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 With that, I'll turn the call over to Jeff Powell, who'll discuss the acquisition. with that i'll turn the call over to jeff powell who'll discuss the acquisition Following our remarks, we will have a Q&A session. following our remarks we will have a q&a session Jeff? jeff

Speaker 2: Thanks, Mike. Good morning, and thank you for joining us today. We announced last week that we've entered into an agreement to acquire voestalpine BÖHLER Profil. Today, we'd like to share some details on the transaction and the company. The company is located in Bruckbach, Austria, and is over 150 years old. They manufacture high-quality precision components that go into technically challenging applications, and they possess unique expertise in patented processes as well as a history of innovation. Revenue for their fiscal year 2025 was EUR 51.5 million. They produce near-net-shaped products that reduce the amount of downstream machining and processing, thereby lowering the total cost of production. Kadant has sourced components from BÖHLER for more than 30 years, including knives for our wood processing businesses. They also manufacture components that go into turbine engines and a broad range of industrial applications. Thanks, Mike. thanks mike Good morning, and thank you for joining us today. good morning and thank you for joining us today We announced last week that we've entered into an agreement to acquire voestalpine BÖHLER Profil. we announced last week that we've entered into an agreement to acquire voestalpine böhler profil Today, we'd like to share some details on the transaction and the company. today we'd like to share some details on the transaction and the company The company is located in Bruckbach, Austria, and is over 150 years old. the company is located in bruckbach austria and is over 150 years old They manufacture high-quality precision components that go into technically challenging applications, and they possess unique expertise in patented processes as well as a history of innovation. they manufacture high-quality precision components that go into technically challenging applications and they possess unique expertise in patented processes as well as a history of innovation Revenue for their fiscal year 2025 was EUR 51.5 million. revenue for their fiscal year 2025 was eur 51.5 million They produce near-net-shaped products that reduce the amount of downstream machining and processing, thereby lowering the total cost of production. they produce near-net-shaped products that reduce the amount of downstream machining and processing thereby lowering the total cost of production Kadant has sourced components from BÖHLER for more than 30 years, including knives for our wood processing businesses. kadant has sourced components from böhler for more than 30 years including knives for our wood processing businesses They also manufacture components that go into turbine engines and a broad range of industrial applications. they also manufacture components that go into turbine engines and a broad range of industrial applications Böhler has been at the top of our acquisition target list for more than 10 years. As I mentioned, we have worked with them for 30 years, and they have been instrumental in helping us develop products and components for our wood processing businesses. They have an excellent management team that we have worked with and know very well. 100% of their business is parts and consumables, and that is, as most of you know, a key strategic focus for Kadant. Böhler will continue to operate in their current location as a standalone division and will be part of our industrial processing reporting segment. The business will go forward as Kadant Profil GmbH & Co KG. With that, Mike will give you more details on the financials and the unique attributes of this transaction. Mike? Böhler has been at the top of our acquisition target list for more than 10 years. böhler has been at the top of our acquisition target list for more than 10 years As I mentioned, we have worked with them for 30 years, and they have been instrumental in helping us develop products and components for our wood processing businesses. as i mentioned we have worked with them for 30 years and they have been instrumental in helping us develop products and components for our wood processing businesses They have an excellent management team that we have worked with and know very well. 100% of their business is parts and consumables, and that is, as most of you know, a key strategic focus for Kadant. they have an excellent management team that we have worked with and know very well 100% of their business is parts and consumables and that is as most of you know a key strategic focus for kadant Böhler will continue to operate in their current location as a standalone division and will be part of our industrial processing reporting segment. böhler will continue to operate in their current location as a standalone division and will be part of our industrial processing reporting segment The business will go forward as Kadant Profil GmbH & Co KG. the business will go forward as kadant profil gmbh & co kg With that, Mike will give you more details on the financials and the unique attributes of this transaction. with that mike will give you more details on the financials and the unique attributes of this transaction Mike? mike

Speaker 4: I'd like to provide some additional color on the financial metrics associated with the proposed transaction. The purchase price is approximately EUR 157 million, subject to customary adjustments, and the company had approximately EUR 52 million in revenue for the fiscal year ended March 31st, 2025, which is 100% from parts and consumable products. This company is a valued supplier to several Kadant businesses, and approximately 45% of their '25 revenue represents this activity. I want to highlight that once this company is part of Kadant, the revenue generated from other Kadant businesses will become intercompany revenue and therefore not part of Kadant's reported revenue. While the externally reported revenue will be smaller, both gross margin and EBITDA margins under Kadant will benefit from the combination. I'd like to provide some additional color on the financial metrics associated with the proposed transaction. i'd like to provide some additional color on the financial metrics associated with the proposed transaction The purchase price is approximately EUR 157 million, subject to customary adjustments, and the company had approximately EUR 52 million in revenue for the fiscal year ended March 31st, 2025, which is 100% from parts and consumable products. the purchase price is approximately eur 157 million subject to customary adjustments and the company had approximately eur 52 million in revenue for the fiscal year ended march 31st 2025 which is 100% from parts and consumable products This company is a valued supplier to several Kadant businesses, and approximately 45% of their '25 revenue represents this activity. this company is a valued supplier to several kadant businesses and approximately 45% of their '25 revenue represents this activity I want to highlight that once this company is part of Kadant, the revenue generated from other Kadant businesses will become intercompany revenue and therefore not part of Kadant's reported revenue. i want to highlight that once this company is part of kadant the revenue generated from other kadant businesses will become intercompany revenue and therefore not part of kadant's reported revenue While the externally reported revenue will be smaller, both gross margin and EBITDA margins under Kadant will benefit from the combination. while the externally reported revenue will be smaller both gross margin and ebitda margins under kadant will benefit from the combination The timing of this benefit, however, may vary by quarter, as the recognition of the gross margin related to intercompany sales to Kadant businesses is dependent on the ultimate shipment to third-party customers. In addition, I wanted to note that our Kadant businesses will initially be using any on-hand inventory purchased prior to the closing of the acquisition to fulfill shipments to third-party customers before the new post-acquisition purchases are consumed. These factors, along with normal acquisition fair value accounting, will make this acquisition dilutive in 2026. While we'll incorporate this acquisition, we will incorporate this acquisition into our 2026 guidance after the closing occurs. The company had approximately EUR 15.6 million of adjusted EBITDA in fiscal year 2025, with a resulting EBITDA multiple on the transaction of about 10x. The timing of this benefit, however, may vary by quarter, as the recognition of the gross margin related to intercompany sales to Kadant businesses is dependent on the ultimate shipment to third-party customers. the timing of this benefit however may vary by quarter as the recognition of the gross margin related to intercompany sales to kadant businesses is dependent on the ultimate shipment to third-party customers In addition, I wanted to note that our Kadant businesses will initially be using any on-hand inventory purchased prior to the closing of the acquisition to fulfill shipments to third-party customers before the new post-acquisition purchases are consumed. in addition i wanted to note that our kadant businesses will initially be using any on-hand inventory purchased prior to the closing of the acquisition to fulfill shipments to third-party customers before the new post-acquisition purchases are consumed These factors, along with normal acquisition fair value accounting, will make this acquisition dilutive in 2026. these factors along with normal acquisition fair value accounting will make this acquisition dilutive in 2026 While we'll incorporate this acquisition, we will incorporate this acquisition into our 2026 guidance after the closing occurs. while we'll incorporate this acquisition we will incorporate this acquisition into our 2026 guidance after the closing occurs The company had approximately EUR 15.6 million of adjusted EBITDA in fiscal year 2025, with a resulting EBITDA multiple on the transaction of about 10x. the company had approximately eur 15.6 million of adjusted ebitda in fiscal year 2025 with a resulting ebitda multiple on the transaction of about 10x In addition, beneficial tax attributes associated with the transaction are worth approximately 1.5 turns on the EBITDA multiple. With that factored in, the multiple is about 8.5x. We plan to fund the acquisition primarily through borrowings under our revolving credit facility in Europe. We estimated that our leverage ratio, as defined in our credit agreement, will increase to just above 2 after the transaction closes, and as a result, we anticipate our borrowing rate to be approximately 3.5% for this debt in 2026. I'm going to now turn the call over for questions, but before we start, I should mention that the Q&A session is specific to the proposed transaction, as we are currently in the fourth quarter 2025 closing process and cannot comment on the fourth quarter 2025 results or our guidance for 2026 until our upcoming earnings call later this month. In addition, beneficial tax attributes associated with the transaction are worth approximately 1.5 turns on the EBITDA multiple. in addition beneficial tax attributes associated with the transaction are worth approximately 1.5 turns on the ebitda multiple With that factored in, the multiple is about 8.5x. with that factored in the multiple is about 8.5x We plan to fund the acquisition primarily through borrowings under our revolving credit facility in Europe. we plan to fund the acquisition primarily through borrowings under our revolving credit facility in europe We estimated that our leverage ratio, as defined in our credit agreement, will increase to just above 2 after the transaction closes, and as a result, we anticipate our borrowing rate to be approximately 3.5% for this debt in 2026. we estimated that our leverage ratio as defined in our credit agreement will increase to just above 2 after the transaction closes and as a result we anticipate our borrowing rate to be approximately 3.5% for this debt in 2026 I'm going to now turn the call over for questions, but before we start, I should mention that the Q&A session is specific to the proposed transaction, as we are currently in the fourth quarter 2025 closing process and cannot comment on the fourth quarter 2025 results or our guidance for 2026 until our upcoming earnings call later this month. i'm going to now turn the call over for questions but before we start i should mention that the q&a session is specific to the proposed transaction as we are currently in the fourth quarter 2025 closing process and cannot comment on the fourth quarter 2025 results or our guidance for 2026 until our upcoming earnings call later this month With that, we'd be happy to take your questions. Shannon? With that, we'd be happy to take your questions. with that we'd be happy to take your questions Shannon? shannon

Speaker 5: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ross Sparenblek with William Blair. Your line is now open. Thank you. thank you As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. as a reminder to ask a question please press star one one on your telephone and wait for your name to be announced To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please stand by while we compile the Q&A roster. please stand by while we compile the q&a roster Our first question comes from the line of Ross Sparenblek with William Blair. our first question comes from the line of ross sparenblek with william blair Your line is now open. your line is now open

Speaker 6: Hey, good morning, gentlemen, and congrats on the acquisition. Hey, good morning, gentlemen, and congrats on the acquisition. hey good morning gentlemen and congrats on the acquisition

Speaker 2: Hi, Ross. Thank you. Hi, Ross. hi ross Thank you. thank you

Speaker 6: Excuse me. Can you maybe just elaborate a little further on kind of the attractiveness of this asset and why the parent wanted to sell? Excuse me. excuse me Can you maybe just elaborate a little further on kind of the attractiveness of this asset and why the parent wanted to sell? can you maybe just elaborate a little further on kind of the attractiveness of this asset and why the parent wanted to sell

Speaker 2: Yeah. From our perspective, as I mentioned, Ross, we've worked with these guys forever, and as Mike just indicated, about 45% of their business is with us. So they've become a bigger and bigger supplier and a more and more critical supplier to us. They have very specialized processes that they have patented that they use for making their components. And so we, for more than 10 years, really have continued to expand our relationship with them and have really thought that they really would be a great fit within the Kadant organization. So we're very pleased that we were able to acquire them. I think their parent company, of course, voestalpine is a very, very large, one of the biggest companies in Austria, and this was a smaller division for them and maybe slightly non-core. Yeah. yeah From our perspective, as I mentioned, Ross, we've worked with these guys forever, and as Mike just indicated, about 45% of their business is with us. from our perspective as i mentioned ross we've worked with these guys forever and as mike just indicated about 45% of their business is with us So they've become a bigger and bigger supplier and a more and more critical supplier to us. so they've become a bigger and bigger supplier and a more and more critical supplier to us They have very specialized processes that they have patented that they use for making their components. they have very specialized processes that they have patented that they use for making their components And so we, for more than 10 years, really have continued to expand our relationship with them and have really thought that they really would be a great fit within the Kadant organization. and so we for more than 10 years really have continued to expand our relationship with them and have really thought that they really would be a great fit within the kadant organization So we're very pleased that we were able to acquire them. so we're very pleased that we were able to acquire them I think their parent company, of course, voestalpine is a very, very large, one of the biggest companies in Austria, and this was a smaller division for them and maybe slightly non-core. i think their parent company of course voestalpine is a very very large one of the biggest companies in austria and this was a smaller division for them and maybe slightly non-core And so as it became more and more important to us and the relationship continued to grow and develop, I think we both concluded that it would be better, probably as part of the Kadant organization. So we feel very fortunate that we were able to reach an agreement with the parent company to purchase this. As you know, all of our components tend to be mission-critical, and they tend to be alloy and metal-based, and that's what these guys really specialize in, making critical components. And because they have this near-net-shaped technology, it really reduces the downstream cost and processing time for a finished product. So they'll be able to help a lot of our Kadant companies, we believe, over time. And so as it became more and more important to us and the relationship continued to grow and develop, I think we both concluded that it would be better, probably as part of the Kadant organization. and so as it became more and more important to us and the relationship continued to grow and develop i think we both concluded that it would be better probably as part of the kadant organization So we feel very fortunate that we were able to reach an agreement with the parent company to purchase this. so we feel very fortunate that we were able to reach an agreement with the parent company to purchase this As you know, all of our components tend to be mission-critical, and they tend to be alloy and metal-based, and that's what these guys really specialize in, making critical components. as you know all of our components tend to be mission-critical and they tend to be alloy and metal-based and that's what these guys really specialize in making critical components And because they have this near-net-shaped technology, it really reduces the downstream cost and processing time for a finished product. and because they have this near-net-shaped technology it really reduces the downstream cost and processing time for a finished product So they'll be able to help a lot of our Kadant companies, we believe, over time. so they'll be able to help a lot of our kadant companies we believe over time

Speaker 6: Okay. No, that's very helpful. And then maybe just on the initial dilution dynamics, Mike, if you could maybe just help us kind of think through. I mean, it's definitely accretive on a margin basis, but something along the lines of the inventory, maybe some FIFO, is going to impact near-term? Okay. okay No, that's very helpful. no that's very helpful And then maybe just on the initial dilution dynamics, Mike, if you could maybe just help us kind of think through. and then maybe just on the initial dilution dynamics mike if you could maybe just help us kind of think through I mean, it's definitely accretive on a margin basis, but something along the lines of the inventory, maybe some FIFO, is going to impact near-term? i mean it's definitely accretive on a margin basis but something along the lines of the inventory maybe some fifo is going to impact near-term

Speaker 2: Yeah, exactly, Ross. So I was trying to give that color so folks would be aware. Of course, as I mentioned on the call, roughly half the revenue is with Kadant. So once they become part of Kadant, that revenue will become intercompany revenue and we'll eliminate it. So we won't be able to recognize the profit on those intercompany transactions until that product is delivered to a third-party customer. And the additional little bit of color on that and why I mentioned the dilutive impact is because in the short run here, we already have components that we've purchased from this company, and we're going to need to work through that inventory, just as you said on a FIFO. We need to work through that inventory before we start consuming the inventory that will have been purchased post-acquisition. Yeah, exactly, Ross. yeah exactly ross So I was trying to give that color so folks would be aware. so i was trying to give that color so folks would be aware Of course, as I mentioned on the call, roughly half the revenue is with Kadant. of course as i mentioned on the call roughly half the revenue is with kadant So once they become part of Kadant, that revenue will become intercompany revenue and we'll eliminate it. so once they become part of kadant that revenue will become intercompany revenue and we'll eliminate it So we won't be able to recognize the profit on those intercompany transactions until that product is delivered to a third-party customer. so we won't be able to recognize the profit on those intercompany transactions until that product is delivered to a third-party customer And the additional little bit of color on that and why I mentioned the dilutive impact is because in the short run here, we already have components that we've purchased from this company, and we're going to need to work through that inventory, just as you said on a FIFO. and the additional little bit of color on that and why i mentioned the dilutive impact is because in the short run here we already have components that we've purchased from this company and we're going to need to work through that inventory just as you said on a fifo We need to work through that inventory before we start consuming the inventory that will have been purchased post-acquisition. we need to work through that inventory before we start consuming the inventory that will have been purchased post-acquisition Until we get through that, the profit on those intercompany transactions will be, so to speak, deferred. I think that'll be a few quarters because these are important components, and we have a few quarters' worth stocked. Until we get through that, the profit on those intercompany transactions will be, so to speak, deferred. until we get through that the profit on those intercompany transactions will be so to speak deferred I think that'll be a few quarters because these are important components, and we have a few quarters' worth stocked. i think that'll be a few quarters because these are important components and we have a few quarters' worth stocked

Speaker 6: That is very helpful. Maybe just one more, and I'll pass it along. You kind of, excuse me, hinted at SG&A or not SG&A, but R&D synergies. Is there anything else we should think of or any buckets that stand out near-term once you own this asset? That is very helpful. that is very helpful Maybe just one more, and I'll pass it along. maybe just one more and i'll pass it along You kind of, excuse me, hinted at SG&A or not SG&A, but R&D synergies. you kind of excuse me hinted at sg&a or not sg&a but r&d synergies Is there anything else we should think of or any buckets that stand out near-term once you own this asset? is there anything else we should think of or any buckets that stand out near-term once you own this asset

Speaker 2: Well, as you know, we have a key strategic focus on parts and consumables, and this is a 100% part consumable business. So we will work with them to continue to try to expand their non-Kadant business around the world. But they'll work with all of our other divisions to try to find opportunities to sell into our other divisions that they haven't done before. So it's just we really think there's unique opportunities here with their manufacturing and their specialized expertise to really expand their market share globally outside of Kadant and even within Kadant, more opportunities. So it's like every other kind of acquisition that we make. We integrate them into our global network, our direct sales network around the world, and work with them to try to expand their market opportunities. Well, as you know, we have a key strategic focus on parts and consumables, and this is a 100% part consumable business. well as you know we have a key strategic focus on parts and consumables and this is a 100% part consumable business So we will work with them to continue to try to expand their non-Kadant business around the world. so we will work with them to continue to try to expand their non-kadant business around the world But they'll work with all of our other divisions to try to find opportunities to sell into our other divisions that they haven't done before. but they'll work with all of our other divisions to try to find opportunities to sell into our other divisions that they haven't done before So it's just we really think there's unique opportunities here with their manufacturing and their specialized expertise to really expand their market share globally outside of Kadant and even within Kadant, more opportunities. so it's just we really think there's unique opportunities here with their manufacturing and their specialized expertise to really expand their market share globally outside of kadant and even within kadant more opportunities So it's like every other kind of acquisition that we make. so it's like every other kind of acquisition that we make We integrate them into our global network, our direct sales network around the world, and work with them to try to expand their market opportunities. we integrate them into our global network our direct sales network around the world and work with them to try to expand their market opportunities

Speaker 6: Maybe just what was the feedback from your direct salesforce when you brought this opportunity? Maybe just what was the feedback from your direct salesforce when you brought this opportunity? maybe just what was the feedback from your direct salesforce when you brought this opportunity

Speaker 2: Well, I can tell you they're very happy. I would tell you that there were two divisions within our company that if you asked the presidents what kept them up at night, they would tell you it was this relationship with this company because we had become very dependent on this company for key components. And because of their patented processes, they're really the only company in the world that can provide it. And so it was something that kept a few of our guys up at night. And so having them in the family now, I think, is a great relief and a great acquisition for us. Well, I can tell you they're very happy. well i can tell you they're very happy I would tell you that there were two divisions within our company that if you asked the presidents what kept them up at night, they would tell you it was this relationship with this company because we had become very dependent on this company for key components. i would tell you that there were two divisions within our company that if you asked the presidents what kept them up at night they would tell you it was this relationship with this company because we had become very dependent on this company for key components And because of their patented processes, they're really the only company in the world that can provide it. and because of their patented processes they're really the only company in the world that can provide it And so it was something that kept a few of our guys up at night. and so it was something that kept a few of our guys up at night And so having them in the family now, I think, is a great relief and a great acquisition for us. and so having them in the family now i think is a great relief and a great acquisition for us

Speaker 6: That's great to hear. All right. Thank you, guys. I'll pass it along. That's great to hear. that's great to hear All right. all right Thank you, guys. thank you guys I'll pass it along. i'll pass it along

Speaker 5: Thank you. Our next question comes from the line of Gary Prestopino with Barrington. Your line is now open. Thank you. thank you Our next question comes from the line of Gary Prestopino with Barrington. our next question comes from the line of gary prestopino with barrington Your line is now open. your line is now open

Speaker 1: All right. Hi, guys. I think they called my name. The operator broke up. Just a couple of questions here just so I can understand this. You're buying this company. You're going to have intercompany revenues, so it actually will be less than 45% on what you're supplied from the company itself. But what about the impact on to Adjusted EBITDA on that? Would you still be able to get the full Adjusted EBITDA margin impact from all of the sales that you're getting from this company? All right. all right Hi, guys. hi guys I think they called my name. i think they called my name The operator broke up. the operator broke up Just a couple of questions here just so I can understand this. just a couple of questions here just so i can understand this You're buying this company. you're buying this company You're going to have intercompany revenues, so it actually will be less than 45% on what you're supplied from the company itself. you're going to have intercompany revenues so it actually will be less than 45% on what you're supplied from the company itself But what about the impact on to Adjusted EBITDA on that? but what about the impact on to adjusted ebitda on that Would you still be able to get the full Adjusted EBITDA margin impact from all of the sales that you're getting from this company? would you still be able to get the full adjusted ebitda margin impact from all of the sales that you're getting from this company

Speaker 2: Yeah. Good question, Gary. Yes, we will realize that, and that's part of the messaging I was giving here in terms of the intercompany activity. But recognition of that will be delayed until we work through the current inventory on hand, at least for the intercompany, the pieces that now become intercompany. But yes, we'll realize all the margin benefit. Yeah. yeah Good question, Gary. good question gary Yes, we will realize that, and that's part of the messaging I was giving here in terms of the intercompany activity. yes we will realize that and that's part of the messaging i was giving here in terms of the intercompany activity But recognition of that will be delayed until we work through the current inventory on hand, at least for the intercompany, the pieces that now become intercompany. but recognition of that will be delayed until we work through the current inventory on hand at least for the intercompany the pieces that now become intercompany But yes, we'll realize all the margin benefit. but yes we'll realize all the margin benefit

Speaker 1: How quickly will that, once you work through that FIFO impact, how quickly does that inventory turn? How quickly will that, once you work through that FIFO impact, how quickly does that inventory turn? how quickly will that once you work through that fifo impact how quickly does that inventory turn

Speaker 2: It turns quickly. These are parts and consumables. But as I said, I think it may take us a good part of 2026 to work through it, a few quarters to work through inventory on hand. When we finally close the transaction and we have another call, I'll give a little more color on what we think the timing is going to be for that turn. It turns quickly. it turns quickly These are parts and consumables. these are parts and consumables But as I said, I think it may take us a good part of 2026 to work through it, a few quarters to work through inventory on hand. but as i said i think it may take us a good part of 2026 to work through it a few quarters to work through inventory on hand When we finally close the transaction and we have another call, I'll give a little more color on what we think the timing is going to be for that turn. when we finally close the transaction and we have another call i'll give a little more color on what we think the timing is going to be for that turn

Speaker 1: Okay. That's very helpful. And then you mentioned something. The company produces products for technically challenging applications, and you mentioned something about some kind of patent they have or patented technology. Could you just go over that so I can understand some of the competitive advantages this has? Okay. okay That's very helpful. that's very helpful And then you mentioned something. and then you mentioned something The company produces products for technically challenging applications, and you mentioned something about some kind of patent they have or patented technology. the company produces products for technically challenging applications and you mentioned something about some kind of patent they have or patented technology Could you just go over that so I can understand some of the competitive advantages this has? could you just go over that so i can understand some of the competitive advantages this has

Speaker 2: Sure. So they've developed processing lines that make these critical components. They actually developed and built the processing lines themselves, and they patented them. And as I mentioned earlier, they make near-net shapes. So when you think of a lot of components and products, they'll start out as, say, a bar stock or maybe an ingot of, say, an alloy. And it gets processed, gets heated up, it gets formed, gets pressed, and there's often an awful lot of machining that goes on to get to your final component shape and profile and characteristics. They have developed processes that get you much closer to that final shape than many, many companies currently have the ability to do, and therefore, it really reduces the machining time. In some cases, they can make things with their patented process lines where there's almost nothing, no post-processing required. Sure. sure So they've developed processing lines that make these critical components. so they've developed processing lines that make these critical components They actually developed and built the processing lines themselves, and they patented them. they actually developed and built the processing lines themselves and they patented them And as I mentioned earlier, they make near-net shapes. and as i mentioned earlier they make near-net shapes So when you think of a lot of components and products, they'll start out as, say, a bar stock or maybe an ingot of, say, an alloy. so when you think of a lot of components and products they'll start out as say a bar stock or maybe an ingot of say an alloy And it gets processed, gets heated up, it gets formed, gets pressed, and there's often an awful lot of machining that goes on to get to your final component shape and profile and characteristics. and it gets processed gets heated up it gets formed gets pressed and there's often an awful lot of machining that goes on to get to your final component shape and profile and characteristics They have developed processes that get you much closer to that final shape than many, many companies currently have the ability to do, and therefore, it really reduces the machining time. they have developed processes that get you much closer to that final shape than many many companies currently have the ability to do and therefore it really reduces the machining time In some cases, they can make things with their patented process lines where there's almost nothing, no post-processing required. in some cases they can make things with their patented process lines where there's almost nothing no post-processing required And so it's just a very cost-effective way to get to a final shape or a near-net shape. And they developed these process lines themselves. They built them themselves, and they patented them. And so it's just a very cost-effective way to get to a final shape or a near-net shape. and so it's just a very cost-effective way to get to a final shape or a near-net shape And they developed these process lines themselves. and they developed these process lines themselves They built them themselves, and they patented them. they built them themselves and they patented them

Speaker 1: Okay. That's interesting. And then it looks like are they making the fan blades for jet engines? When you look at the picture of aviation and marine, is that part of what they're doing? Okay. okay That's interesting. that's interesting And then it looks like are they making the fan blades for jet engines? and then it looks like are they making the fan blades for jet engines When you look at the picture of aviation and marine, is that part of what they're doing? when you look at the picture of aviation and marine is that part of what they're doing

Speaker 2: I think they make the stators that go on the engines. So they make particular components. They're not making the turbine blades themselves, but they're making other parts of the turbine engine. I think they make the stators that go on the engines. i think they make the stators that go on the engines So they make particular components. so they make particular components They're not making the turbine blades themselves, but they're making other parts of the turbine engine. they're not making the turbine blades themselves but they're making other parts of the turbine engine

Speaker 1: Okay. Thank you very much. Okay. okay Thank you very much. thank you very much

Speaker 5: Thank you. As a reminder, to ask a question at this time, please press star one one on your touch-tone telephone. Our next question comes from the line of Kurt Yinger with D.A. Davidson. Your line is now open. Thank you. thank you As a reminder, to ask a question at this time, please press star one one on your touch-tone telephone. as a reminder to ask a question at this time please press star one one on your touch-tone telephone Our next question comes from the line of Kurt Yinger with D.A. our next question comes from the line of kurt yinger with d.a Davidson. davidson Your line is now open. your line is now open

Speaker 3: Great. Thanks. And good morning, everyone. Just one question. Going back to kind of the customer base and maybe widening that out, does the company also kind of sell to your competitors? And I guess, how does that factor in in terms of, I don't know, if it's a dissynergy risk or maybe a point of friction going forward with kind of that rest of the third-party sales? Great. great Thanks. thanks And good morning, everyone. and good morning everyone Just one question. just one question Going back to kind of the customer base and maybe widening that out, does the company also kind of sell to your competitors? going back to kind of the customer base and maybe widening that out does the company also kind of sell to your competitors And I guess, how does that factor in in terms of, I don't know, if it's a dissynergy risk or maybe a point of friction going forward with kind of that rest of the third-party sales? and i guess how does that factor in in terms of i don't know if it's a dissynergy risk or maybe a point of friction going forward with kind of that rest of the third-party sales

Speaker 2: Yeah. I mean, we have many of our companies that sell to people that we also compete with, Kurt, and this will be no different. They'll continue to serve everybody. They'll continue to supply to the entire industry just as our companies do now. And so there are probably a couple of places where they will be selling to people that we also compete with, but that's not new to us. Like I said, many of our divisions do that now. They'll sell to their competitors. Sometimes we'll be specced in from the end customer, but other times, we just have a relationship with our competitors, and there's certain things that we do better, and we supply to them. So I don't expect this to be any different than that. Yeah. yeah I mean, we have many of our companies that sell to people that we also compete with, Kurt, and this will be no different. i mean we have many of our companies that sell to people that we also compete with kurt and this will be no different They'll continue to serve everybody. they'll continue to serve everybody They'll continue to supply to the entire industry just as our companies do now. they'll continue to supply to the entire industry just as our companies do now And so there are probably a couple of places where they will be selling to people that we also compete with, but that's not new to us. and so there are probably a couple of places where they will be selling to people that we also compete with but that's not new to us Like I said, many of our divisions do that now. like i said many of our divisions do that now They'll sell to their competitors. they'll sell to their competitors Sometimes we'll be specced in from the end customer, but other times, we just have a relationship with our competitors, and there's certain things that we do better, and we supply to them. sometimes we'll be specced in from the end customer but other times we just have a relationship with our competitors and there's certain things that we do better and we supply to them So I don't expect this to be any different than that. so i don't expect this to be any different than that

Speaker 3: Okay. Perfect. Thank you. Okay. okay Perfect. perfect Thank you. thank you

Speaker 5: Thank you. Once again, to ask a question at this time, please press star one one on your touch-tone telephone. We have a follow-up question from the line of Ross Sparenblek with William Blair. Your line is now open. Thank you. thank you Once again, to ask a question at this time, please press star one one on your touch-tone telephone. once again to ask a question at this time please press star one one on your touch-tone telephone We have a follow-up question from the line of Ross Sparenblek with William Blair. we have a follow-up question from the line of ross sparenblek with william blair Your line is now open. your line is now open

Speaker 6: Hey, guys. Just one quick follow-up. Excuse me. Can you maybe provide the end-market mix there? I assume it's probably 45% to share the main customer, but only aviation, marine, and industrial, and kind of just the growth profile there? Hey, guys. hey guys Just one quick follow-up. just one quick follow-up Excuse me. excuse me Can you maybe provide the end-market mix there? can you maybe provide the end-market mix there I assume it's probably 45% to share the main customer, but only aviation, marine, and industrial, and kind of just the growth profile there? i assume it's probably 45% to share the main customer but only aviation marine and industrial and kind of just the growth profile there

Speaker 2: Yeah. So obviously, we're the biggest part. No less than half. And then it gets diluted down, and it's pretty diverse after that, Ross. So I wouldn't say that there's any other particular market that is, for instance, 20% or 30%. I mean, they supply into a lot of broad industries. They supply into the aviation industry. They provide some in the automotive industry and just industrial machinery in general. So it's a pretty broad mix that they supply into after you get away from Kadant. Yeah. yeah So obviously, we're the biggest part. so obviously we're the biggest part No less than half. no less than half And then it gets diluted down, and it's pretty diverse after that, Ross. and then it gets diluted down and it's pretty diverse after that ross So I wouldn't say that there's any other particular market that is, for instance, 20% or 30%. so i wouldn't say that there's any other particular market that is for instance 20% or 30% I mean, they supply into a lot of broad industries. i mean they supply into a lot of broad industries They supply into the aviation industry. they supply into the aviation industry They provide some in the automotive industry and just industrial machinery in general. they provide some in the automotive industry and just industrial machinery in general So it's a pretty broad mix that they supply into after you get away from Kadant. so it's a pretty broad mix that they supply into after you get away from kadant

Speaker 6: Okay. I just didn't know if there was anything tied to Airbus, so we should be calling out. And then maybe just, yeah, growth rate historically from the other customers. Okay. okay I just didn't know if there was anything tied to Airbus, so we should be calling out. i just didn't know if there was anything tied to airbus so we should be calling out And then maybe just, yeah, growth rate historically from the other customers. and then maybe just yeah growth rate historically from the other customers

Speaker 2: In the near term, Ross, the last two years, they've grown in the 8% range. And if I go back a little further, say, five years, it's been about 10%. Of course, we're conservative, and we didn't model a high single-digit growth, so. In the near term, Ross, the last two years, they've grown in the 8% range. in the near term ross the last two years they've grown in the 8% range And if I go back a little further, say, five years, it's been about 10%. and if i go back a little further say five years it's been about 10% Of course, we're conservative, and we didn't model a high single-digit growth, so. of course we're conservative and we didn't model a high single-digit growth so

Speaker 6: All right. Fantastic, gentlemen. Thanks again. All right. all right Fantastic, gentlemen. fantastic gentlemen Thanks again. thanks again

Speaker 5: Thank you. I'm currently showing no further questions at this time. I now like to turn the call back over to Jeff Powell for closing remarks. Thank you. thank you I'm currently showing no further questions at this time. i'm currently showing no further questions at this time I now like to turn the call back over to Jeff Powell for closing remarks. i now like to turn the call back over to jeff powell for closing remarks

Speaker 2: Thank you. Well, I just want to thank everybody for joining us today, and we look forward to reporting on the progress. We're really pleased and welcome the Böhler family into Kadant, and we look forward to talking about it and presenting in the future. Thank you. Thank you. thank you Well, I just want to thank everybody for joining us today, and we look forward to reporting on the progress. well i just want to thank everybody for joining us today and we look forward to reporting on the progress We're really pleased and welcome the Böhler family into Kadant, and we look forward to talking about it and presenting in the future. we're really pleased and welcome the böhler family into kadant and we look forward to talking about it and presenting in the future Thank you. thank you

Speaker 5: This concludes today's conference. Thank you for your participation. You may now disconnect. This concludes today's conference. this concludes today's conference Thank you for your participation. thank you for your participation You may now disconnect. you may now disconnect