Financial Data and Key Metrics Changes - The company reported a 9.2% increase in consolidated sales year-over-year, with acquisitions contributing 6.3 percentage points to this growth [17] - EBITDA increased by 13.4% year-over-year, resulting in EBITDA margins of 12.2%, which expanded by 46 basis points from the previous year [21] - Earnings per share (EPS) rose by 11.4% to $2.63, benefiting from a reduced share count due to buyback activity [21] Business Line Data and Key Metrics Changes - The service center segment saw organic sales growth of 4.4%, driven by internal initiatives and firming technical MRO demand [22] - The engineered solutions segment experienced a 19.4% increase in sales, primarily due to acquisitions, but organic sales decreased by 0.4% year-over-year [23] - Hydradyne's EBITDA contribution improved by over 20% sequentially, indicating strong progress in integration and synergy initiatives [14] Market Data and Key Metrics Changes - Year-over-year organic sales growth was reported at 3%, the strongest in two years, with 16 out of the top 30 markets generating positive sales growth [6][17] - Strongest growth was observed in machinery, food and beverage, refining, pulp and paper, metals, oil and gas, and aggregates, while declines were noted in lumber and wood, transportation, chemicals, mining, and utilities [6] Company Strategy and Development Direction - The company remains focused on M&A as a top capital allocation priority for fiscal 2026, with an active pipeline of mid-sized targets [15] - Continued investments in engineering systems and production capacity are expected to leverage demand tailwinds moving forward [11] - The company aims to capitalize on trends in automation, life sciences, and technology, positioning itself to link legacy industrial production with advanced applications [32] Management's Comments on Operating Environment and Future Outlook - Management described the underlying demand backdrop as stable to slightly positive, with expectations for continued improvement in core markets [6][30] - The company anticipates a choppy near-term sales environment due to seasonal factors and trade policy uncertainty, but remains optimistic about the second half of fiscal 2026 [30][28] - Positive order momentum and customer sentiment are gradually improving, with expectations for increased capital investment decisions [31] Other Important Information - The company achieved 17% incremental margins on EBITDA, despite ongoing inflationary pressures [13] - Cash generated from operating activities was $119.3 million, with free cash flow totaling $112 million, representing a conversion of 111% relative to net income [25] - The balance sheet remains strong, with approximately $419 million in cash and net leverage at 0.3x EBITDA [26] Q&A Session Summary Question: Holiday shutdowns and customer activity - Management indicated it is still early to assess customer plans for holiday shutdowns, but some customers are expected to remain active [36] Question: Supplier pricing behavior - Management noted no significant changes in supplier behavior, with price increases being orderly and manageable [39][40] Question: Engineered solutions performance - Management expects engineered solutions to potentially outperform service centers in the second half of fiscal 2026 due to order backlog conversions [44] Question: Order growth dynamics - Management explained that project complexity and scheduling variances affect order conversion times, but remains optimistic about the pipeline [52] Question: Pricing expectations - Management stated that pricing contributions were better than expected, but it is too early to predict further increases beyond the current guidance [55] Question: Capital allocation priorities - Management confirmed that organic growth opportunities and M&A remain top priorities, with ongoing strong cash generation [63] Question: Margin guidance and dynamics - Management highlighted that LIFO expenses and non-routine rebates from the previous year would impact sequential EBITDA margins [68] Question: Hydradyne synergies - Management confirmed that Hydradyne's integration and synergy initiatives are on track, with positive contributions expected [72]

Financial Data and Key Metrics Changes - The company reported a 9.2% increase in consolidated sales year-over-year, with acquisitions contributing 6.3 percentage points to growth, while organic sales growth was 3% [17] - EBITDA increased by 13.4% year-over-year, with EBITDA margins expanding to 12.2%, up 46 basis points from the previous year [21] - Earnings per share (EPS) rose 11.4% to $2.63, benefiting from a reduced share count due to buyback activity [21] Business Line Data and Key Metrics Changes - The service center segment saw organic sales growth of 4.4%, driven by internal initiatives and firming technical MRO demand [22] - The engineered solutions segment experienced a 19.4% increase in sales, primarily due to acquisitions, but organic sales decreased by 0.4% year-over-year [23] - Hydradyne's EBITDA contribution improved by over 20% sequentially, indicating strong progress in integration and synergy initiatives [14] Market Data and Key Metrics Changes - Year-over-year organic sales growth was reported at 3%, the strongest in two years, with 16 out of the top 30 markets showing positive sales growth [6] - Strongest growth was observed in machinery, food and beverage, refining, pulp and paper, metals, oil and gas, and aggregates, while declines were noted in lumber and wood, transportation, chemicals, mining, and utilities [6][7] - The company noted a stable to slightly positive underlying demand backdrop, with positive order momentum across various segments [10][30] Company Strategy and Development Direction - The company aims to leverage ongoing operational initiatives and structural mix tailwinds to achieve mid to high teen incremental annual margin targets [13] - M&A remains a top capital allocation priority, with an active pipeline of mid-sized targets across both segments [15] - The company is focused on enhancing its technical differentiation and value-added service capabilities through strategic acquisitions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the first quarter performance, highlighting stronger top-line trends and sustained positive order momentum [30] - The company anticipates that industrial activity will remain mixed in the near term, with expectations for order conversion to be more weighted toward the second half of fiscal 2026 [27][28] - Management noted that customer sentiment is gradually improving, with favorable demand signals across traditional and emerging markets [31] Other Important Information - The company ended the quarter with approximately $419 million in cash and a net leverage ratio of 0.3 times EBITDA, indicating a solid balance sheet position [25] - Free cash flow totaled $112 million, representing a conversion rate of 111% relative to net income [25] Q&A Session Summary Question: Insights on holiday shutdowns from customers - Management indicated it is still early to assess customer plans for holiday shutdowns, but some customers are expected to remain active [36] Question: Supplier pricing behavior - Management noted no significant changes in supplier behavior, with price increases being orderly and manageable [39][40] Question: Engineered solutions performance expectations - Management expects engineered solutions to potentially outperform service centers in the second half of fiscal 2026 due to order backlog conversions [44] Question: Order growth dynamics - Management explained that order growth is encouraging, but project conversion times vary based on complexity and scheduling [52] Question: Pricing expectations for the year - Management maintained a cautious outlook on pricing, indicating it may not ramp beyond the current 200 basis points without clearer market activity [55] Question: Capital allocation priorities - Management confirmed that organic growth opportunities and M&A remain top priorities, with a disciplined approach to acquisitions [63]

Financial Data and Key Metrics Changes - The company reported a 9.2% increase in consolidated sales year-over-year, with acquisitions contributing 6.3 percentage points to growth, while organic sales growth was 3% [17] - EBITDA increased by 13.4% year-over-year, resulting in EBITDA margins of 12.2%, which expanded by 46 basis points from the previous year [20] - Earnings per share (EPS) rose by 11.4% to $2.63, benefiting from a reduced share count due to buyback activity [21] Business Line Data and Key Metrics Changes - The service center segment saw organic sales growth of 4.4% year-over-year, with EBITDA increasing by 10.1% and EBITDA margin expanding to 13.9% [22] - The engineered solutions segment experienced a 19.4% increase in sales, primarily driven by acquisitions, but organic sales decreased by 0.4% due to softer project-related shipments [23] - Hydradyne's EBITDA contribution improved by over 20% sequentially, with strong progress on sales synergies and operational efficiencies [14][25] Market Data and Key Metrics Changes - Year-over-year organic sales growth was reported at 3%, the strongest in two years, with 16 out of the top 30 markets generating positive sales growth [5][17] - Strongest growth was observed in machinery, food and beverage, refining, pulp and paper, metals, oil and gas, and aggregates, while declines were noted in lumber and wood, transportation, chemicals, mining, and utilities [5] - The company noted a stable to slightly positive underlying demand backdrop, with positive order momentum across various segments [9][10] Company Strategy and Development Direction - The company aims to leverage ongoing operational initiatives and structural mix tailwinds to achieve mid to high teen incremental annual margin targets [12] - M&A remains a top capital allocation priority, with an active pipeline of mid-sized targets that could enhance technical differentiation and service capabilities [15] - The company is focused on capitalizing on trends in automation, fluid power technologies, and life sciences, with a strong emphasis on cross-selling opportunities [10][11][73] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the first quarter performance, highlighting stronger top-line trends and sustained positive order momentum [31] - The company anticipates that industrial activity will remain mixed in the near term, with expectations for order conversion to be more weighted toward the second half of fiscal 2026 [27] - Management noted that feedback from customers is gradually improving, with demand indications becoming more favorable across traditional and emerging markets [32] Other Important Information - The company ended the quarter with approximately $419 million in cash and a net leverage ratio of 0.3 times EBITDA, indicating a solid balance sheet position [25][26] - The company repurchased approximately 204,000 shares for $53 million during the first quarter [26] Q&A Session Summary Question: Customer holiday shutdowns and impact on December quarter - Management indicated it is still early to assess customer plans for holiday shutdowns, but some customers may lean into planned maintenance activities [36][37] Question: Supplier pricing behavior and inflation management - Management noted no significant changes in supplier behavior, with price increases being orderly and manageable [39][40] Question: Engineered solutions segment performance expectations - Management expects service centers to continue performing well in the second quarter, with potential for engineered solutions to outperform in the second half of fiscal 2026 [42][43] Question: Order conversion delays and project dynamics - Management acknowledged variances in project timelines but remains encouraged by continuous order expansion and a good pipeline for execution [48][50] Question: Pricing expectations for the year - Management stated that while pricing came in better than expected, it remains early to predict further increases beyond the current guidance [51][52] Question: Capital allocation priorities and M&A activity - Management confirmed that organic growth opportunities remain a priority, with M&A being actively pursued alongside share repurchases and dividend growth [58][59] Question: Hydradyne synergies and integration progress - Management reported that Hydradyne's synergies are on track, with ongoing progress in cross-selling and cost-reduction initiatives [66][67]