Financial Data and Key Metrics Changes - Consolidated net revenue increased by 2.2% year-over-year on a constant currency basis for Q4 2025, or 4.4% excluding the impact of warrants, driven by solid e-commerce volume growth in North America and increased automation sales [10][16] - Adjusted EBITDA declined by 10.3% for Q4 on a constant currency basis, or down 1.2% excluding the impact of warrants, bringing the full year's results to down 8.5% on a constant currency basis or down 2.4% excluding the non-cash impact of warrants [13][21] - Gross profit declined by 16% on a constant currency basis in Q4, and 9% for the full year, with expectations for margin improvement in 2026 [18][19] Business Line Data and Key Metrics Changes - Automation achieved nearly 40% growth on a constant currency basis in Q4 and 34.4% growth for the full year, with expectations for substantial growth in 2026 [6][10][29] - North America saw a volume growth of 5.5% in Q4 and 14% for the year, driven by strong e-commerce activity, particularly in December [5][10] - In Europe and Asia Pacific, combined revenue decreased by 1.4% on a constant currency basis in Q4, primarily due to higher rebate activity and a challenging operating environment [11][17] Market Data and Key Metrics Changes - North America was the key driver of performance, with sales up 5.8% for Q4 and 14% for the year, while Europe experienced a revenue decrease of 1.5% year-over-year on a constant currency basis [10][11] - The economic environment in Europe is stabilizing after a period of recession-like conditions, with early signs of improvement in business sentiment [12][27] - The input cost environment has remained stable, but energy market volatility remains a concern, particularly in Europe [12][28] Company Strategy and Development Direction - The company aims to leverage its relationships with large e-commerce players to drive significant growth, expecting over $1 billion in cumulative revenue from these partnerships over the next 8-10 years [8][24] - Automation is positioned as a hedge against labor shortages and rising costs, with a focus on enhancing operational efficiencies and improving margins [25][29] - The company is investing in technology infrastructure to drive productivity and efficiency, with a goal of achieving a net leverage ratio below three times [20][22] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the growth potential in North America and automation, despite uncertainties related to the geopolitical situation in the Middle East [26][30] - The outlook for 2026 includes expected net revenue growth of 5%-12.7% and Adjusted EBITDA growth of 5.4%-19.9%, with automation revenue growth anticipated at 30%-50% [30][31] - The management acknowledged the need for a cautious approach due to recent geopolitical events impacting market sentiment and energy prices [28][56] Other Important Information - The company completed 2025 with a strong liquidity position, holding a cash balance of $63 million and no drawings on its revolving credit facility [22] - Capital expenditures for the year were $30.3 million, reflecting a disciplined approach to spending [22][23] Q&A Session Summary Question: What is the PPS volume outlook for 2026? - Management expects meaningful growth in North America, potentially high single-digit to double-digit growth, while Europe remains uncertain due to geopolitical factors [36][38] Question: What percentage of PPS growth is driven by customer initiatives with Walmart and Amazon? - Both accounts are expected to drive double-digit growth, with automation equipment contributing significantly to the consumables segment [40][41] Question: What is the backlog for automation growth in 2026? - The company enters 2026 with its best backlog ever, expecting to surpass $60 million in automation revenue [42][44] Question: How is free cash flow expected to perform relative to EBITDA guidance? - Free cash flow is anticipated to be around $15 million for the year, considering various expenses and working capital initiatives [46] Question: How does the company view the impact of the Middle East situation on input costs? - While there is some exposure to rising energy prices, the company believes it is manageable and is more concerned about potential demand impacts in Europe [58][59] Question: How does the company plan to unlock shareholder value? - The company aims to double its top line and drive significant EBITDA growth through strategic partnerships and automation initiatives [60][64]

4Q25 Earnings Presentation March 5, 2026 Disclaimers The results of operations data contained in this presentation are based on our preliminary, unaudited results of operations for the quarter and year ended December 31, 2025. Such preliminary data should not be viewed as a comprehensive statement of our financial results for the quarter ended December 31, 2025 CAUTION ABOUT FORWARD-LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of Section 21E of the Securities ...

Financial Performance - Net revenue increased by 80% compared to the prior year, or 44% on a constant currency basis[15] - Global sales of automation equipment increased by 630% compared to the prior year, or 562% on a constant currency basis[15] - Adjusted EBITDA increased by 81% (35% on a constant currency basis), including a 400 bps non-cash headwind for the provision of warrants in revenue ($08 million)[15] - Gross margin decreased by 28% year-over-year to 345% (344% on a constant currency basis) due to increased production costs and product mix[15] - Year-to-date net revenue increased by 56% on a constant currency basis[29] - Year-to-date Adjusted EBITDA decreased by 78% on a constant currency basis[29] Regional Performance - North America revenue increased by 109% due to increased volumes from e-commerce activity among large enterprise accounts[15] - EMEA/APAC revenue increased by 58% (decreased 06% on a constant currency basis) driven by increased automation equipment sales and stronger Euro to USD exchange rates[15] - Volumes in Europe/APAC were down by 25% due to a challenging environment and uncertainty from tariffs and de-stocking in APAC[17] Strategic Agreements - Agreement with Walmart is anticipated to be transformative to Automation and implies, based on expectations and current paper pricing, potential spend of $700 million over 10 years, to achieve full vesting[22] - Potential spend for maximum vesting with Amazon is $400 million excluding the cost of paper related to pre-existing NOAM business lines[32]

Financial Data and Key Metrics Changes - The company reported a 7% sales growth driven by price management, M&A strategy, and improved volume performance [5][6] - Adjusted earnings per share increased by 11% to $2.60, with year-to-date cash flow generation exceeding 100% cash conversion of free cash flow [6][14] - Gross profit margin held steady at 37.3%, with a slight decline of 30 basis points year-over-year [14] Business Line Data and Key Metrics Changes - Americas Welding sales increased approximately 7%, driven by a 6.5% price increase and a 5% contribution from the Vanair acquisition [17] - International Welding segment sales declined by 2.5%, with a 4% favorable foreign exchange translation offset by a 7% drop in volumes [19] - Harris Products Group saw a 19% increase in sales, with 11% higher volumes primarily from the HVAC sector [20] Market Data and Key Metrics Changes - Three out of five end markets experienced growth, largely driven by price increases, with volume growth in general industries and energy sectors [10][11] - Heavy industries faced challenges but showed incremental improvement, while agricultural machinery OEMs are expected to recover in 2026 [11] - Construction infrastructure remained choppy, but organic sales were steady in the first half of the year [11] Company Strategy and Development Direction - The company is focused on maintaining a neutral price-cost position while managing inflationary pressures and supply chain complexities [5][12] - The acquisition of Alloy Steel is expected to enhance margins and earnings immediately upon closing [8][24] - The company aims to achieve approximately $60 million in savings from a six-quarter program, with a focus on permanent structural savings [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in July order trends, indicating strength in general industries and cautiousness in heavy industries [28] - The company anticipates low single-digit organic sales growth for the full year, with acquisitions contributing approximately 270 basis points to sales growth [24] - Management remains cautious about demand trends in the near term but optimistic about future growth as trade policies stabilize [40][41] Other Important Information - The company maintained a solid adjusted return on invested capital of 21.7% and returned $169 million to shareholders through dividends and share repurchases [22][23] - The company expects to see a steady operating income margin for the full year, with a high teens percent incremental margin [26] Q&A Session Summary Question: Can you elaborate on customer demand trends and orders? - Management noted that July order trends are holding strong, particularly in general industries, while heavy industries remain cautious [28] Question: What are the underlying organic demand trends in the Harris segment? - Excluding initial inventory stocking, volumes in the Harris segment are expected to be flattish as they progress into the third quarter [31] Question: How are customers responding to tariff clarity? - Management indicated that clarity around tariff rates is helping to alleviate the wait-and-see attitude among customers regarding capital investments [34] Question: What is the outlook for automation demand? - The automation business is expected to remain steady, with strong quoting activity but a conservative outlook on immediate order inflow [40][41] Question: What should be expected for pricing in Q3? - The company anticipates an additional 200 basis points of incremental pricing impact in Q3 due to actions taken in Q2 [64] Question: What factors influenced the reinstatement of incentive compensation? - The reinstatement was based on business performance and a reassessment of market conditions, as the volume response was better than initially feared [71]