Financial Data and Key Metrics Changes - The company's Q3 revenue was flat year-over-year at $272 million, benefiting from record aftermarket parts revenue, which increased by 6% compared to the same period last year [6][13] - Adjusted EBITDA for Q3 was $58 million, with an adjusted EBITDA margin of 21.4% [6] - GAAP EPS decreased by 12% to $2.35, while adjusted EPS decreased by 9% to $2.59, exceeding the high end of guidance by $0.36 due to higher-than-expected aftermarket parts revenue [19][20] Business Line Data and Key Metrics Changes - In the flow control segment, revenue declined by 3% year-over-year, but new order activity increased by 5% [8] - The industrial processing segment saw a 4% decrease in revenue to $106 million, with aftermarket parts revenue reaching a record $81 million, representing 76% of total Q3 revenue [9] - The material handling segment achieved record revenue of $70 million, up 11% year-over-year, driven by an 18% increase in capital shipments [10] Market Data and Key Metrics Changes - Market demand for capital equipment remains sluggish, but there is increasing activity anticipated in early Q4 [5] - Capital bookings were below expectations due to weak market conditions in the pulp and paper industry, particularly affecting the industrial processing segment [25] Company Strategy and Development Direction - The company is focusing on its aftermarket parts business as a core strategic area, which has shown resilience during economic headwinds [5] - Recent acquisitions, including Clyde Industries, are expected to enhance operational capabilities and contribute to revenue growth in the upcoming quarters [10][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about capital orders moving forward, despite delays in booking due to administrative processes [31] - The company anticipates solid improvement in the second half of 2025, with expectations for increased demand for capital equipment and strong aftermarket parts activity [70] Other Important Information - The company renewed its revolving credit facility, increasing borrowing capacity from $400 million to $750 million, which supports its acquisition strategy [23] - Cash flow from operations and free cash flow for Q3 were $47 million and $44 million, respectively, indicating strong business model performance [20] Q&A Session Summary Question: Percentage of aftermarket parts revenue for segments - Flow control segment: 74% this quarter vs. 70% last year; industrial processing: 76% vs. 67%; material handling: 52% vs. 55% [29] Question: Clarification on capital bookings and demand - Management noted that several projects are in late stages, but administrative requirements may delay bookings into 2026 [31] Question: Impact of tariffs on sales and capital equipment needs - While conditions have improved, uncertainty remains, and clients are gradually adapting to the new environment [33] Question: Backlog and capital equipment orders - The backlog at the end of Q3 was $273 million, with capital orders making up about 60% [59][60] Question: Contribution from recent acquisitions - Expected revenue contribution from Clyde Industries and Babini is in the range of $23 to $25 million combined for Q4 [49]