Thank you, Michelle. Good morning, everyone, and welcome to Kadant's third quarter 2022 earnings call. 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, financial and operating results and prospects are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements as a result of various important factors, including those outlined at the beginning of our slide presentation and those discussed under the heading Risk Factors in our annual report on Form 10-K for the fiscal year ended January 1, 2022, and subsequent filings with the Securities and Exchange Commission. In addition, any forward-looking statements we make during this webcast represent our views and estimates only as of today. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views or estimates change. During this webcast, we will refer to some non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is contained in our third quarter earnings press release and the slides presented on the webcast and discussed in the conference call, which are available in the Investors section of our website at www.kadant.com. Finally, I wanted to note that when we refer to GAAP earnings per share or EPS and adjusted EPS on this call, we are referring to each of these measures as calculated on a diluted basis. With that, I'll turn the call over to Jeff Powell, who will give you an update on Kadant's business and future prospects. Following Jeff's remarks, I'll give an overview of our financial results for the quarter, and we will then have a Q&A session.

Thanks, Mike. Hello, everyone. Thank you for joining us this morning to review our third quarter results and discuss our outlook for the remainder of the year. I'll begin by reviewing our operational highlights for the third quarter. I'm pleased to report we had a solid quarter with strong revenue performance and excellent execution across all our operating segments. This led to record adjusted EPS and adjusted EBITDA in the third quarter. We had strong demand for aftermarket parts, while new capital order activity moderated as expected from the record-setting pace in the first half of the year. We continue to successfully navigate through increasingly complex market conditions fueled by inflationary pressures, the strength in USD, China's Zero COVID policy, and lingering global supply chain constraints among other factors. As I've commented many times before, operations teams around the globe continue to do an excellent job proactively managing these challenges and executing well, and this quarter was no different. You can see on Slide 6, our Q3 financial performance was notably higher across most key metrics compared to Q3 of last year despite being significantly affected by currency translation. Q3 revenue was up 12% compared to the third quarter of 2021 to $225 million and benefited from record capital shipments. Excluding acquisitions, an unfavorable impact of FX revenue was up 19% compared to the same period last year. Solid execution contributed to our record adjusted EBITDA of $48 million and a record EBITDA margin of 21.3%. All our operating segments delivered excellent adjusted EBITDA margin performance despite continuing inflationary pressures and ongoing supply chain constraints. As anticipated, bookings softened from the record-setting pace in the first half of the year as capital activity slowed while demand for aftermarket parts increased compared to the prior period. I'll review the performance of operating segments next, beginning with our Flow Control segment. The Flow Control segment achieved solid growth in both revenue and bookings activity, with revenue a record $87 million in the third quarter, up 14% compared to Q3 of last year. Bookings were $85 million, up 11% compared to last year. Organic bookings, which exclude acquisitions and FX, were up 19% compared to the same period last year. Strong performance in our Fluid Handling product line in North America led our bookings growth in Q3. Improved operating leverage led to record adjusted EBITDA and an adjusted EBITDA margin of 29.4%. High energy prices and a focus on decarbonization, particularly in Europe, continued to drive project activity in our Flow Control segment as our customers seek to optimize energy utilization. Our end markets remain strong despite the growing uncertainty in the macroeconomic environment. That said, we do expect spending to moderate in the months ahead as central banks continue to take actions designed to reduce inflation. Our Industrial Processing segment revenue increased 5% to $86 million, despite being affected by an unfavorable foreign currency translation. Excluding the impact of FX, revenue growth was 11% compared to the same period last year. Adjusted EBITDA was up 6%, while our adjusted EBITDA margin was excellent at 24%. As anticipated, demand for capital equipment slowed in Q3 in response to the major capacity additions completed over the past several years even as demand for aftermarket parts continued at a robust pace. Our Wood Processing businesses, which have experienced significant demand for capital equipment during the past few years and contributed significantly to our financial results during that period are expected to shift towards a more aftermarket-based product mix as demand for lumber and OSB softens and the focus for manufacturers shifts from capacity additions to plant optimization and operating efficiencies. In our Material Handling segment, we experienced healthy demand for our bulk Material Handling equipment and aftermarket parts. Revenue was up 23% to $52 million with parts revenue making up 57% of total revenue in the quarter. Bookings in this segment were down 2% compared to the same period last year at $48 million in Q3. Excluding the negative effect of currency translation, bookings were up 3%. Solid execution helped boost adjusted EBITDA by 40% and adjusted EBITDA margin by 240 basis points compared to the same period last year. As expected, demand moderation in our billing business has impacted the results in our Material Handling segment. That said, we are experiencing growing business activity for our bulk Material Handling equipment across various sectors. As we look ahead to the remainder of 2022, we are well-positioned to finish the year with record results. We have a significant number of capital projects to deliver in the upcoming quarter, and our backlog remains at a near record level. As global economic challenges continue to mount, we expect new order activity to moderate. It's in uncertain times like these that our organizational strength stands out, and I'm confident our operations teams around the world will continue to deliver outstanding results and a record year. I'd like to pass the call over to Mike now for his review of our Q3 financial performance.

Thank you, Jeff. I'll start with some key financial metrics from our third quarter. Consolidated gross margins were 42.5% in the third quarter of 2022 compared to 41.9% in the third quarter of 2021, which included a 110 basis point negative impact from the amortization of acquired profit and inventory. Parts and Consumables revenue represented 63% of revenue in the third quarter of 2022 compared to 66% in the prior period. SG&A expenses were $53.2 million in the third quarter of '22, an increase of $0.8 million compared to $52.3 million in the third quarter of '21. It was a favorable foreign currency translation effect of $3.4 million in the quarter and a reduction in government assistance benefits of $0.3 million. We also incurred acquisition-related costs of $0.4 million and $1.3 million in the third quarter of 2022 and 2021, respectively. The remaining increase in SG&A expense is primarily associated with increased incentive compensation and travel-related costs due to improved business conditions. As a percentage of revenue, SG&A expenses decreased to 23.7% in the third quarter of '22 compared to 26.2% in the prior year period. Our effective tax rate was 26% in the third quarter of '22, lower than we anticipated, due in part to tax benefits from the reversal of tax reserves associated with uncertain tax positions. Our GAAP diluted EPS was $2.35 in the third quarter, up 34% compared to $1.75 in the third quarter of 2021 and our adjusted diluted EPS increased 21% to a record $2.38. Our third quarter 2022 adjusted diluted EPS exceeded the high end of our guidance range by $0.29 due primarily to higher revenue in our Wood Processing and Doctoring, Cleaning, & Filtration product lines and a lower effective tax rate. Adjusted EBITDA increased 17% to a record $47.8 million compared to $40.9 million in the third quarter of 2021 due to strong performance in our Flow Control segment, which had record revenue and adjusted EBITDA in the quarter. Adjusted EBITDA as a percentage of revenue was a record 21.3% in the third quarter of '22 compared to 20.5% in the prior period. Operating cash flow decreased 34% to $24.9 million in the third quarter of '22 compared to $37.9 million in the third quarter '21. Free cash flow decreased 46% to $18.5 million in the third quarter '22 compared to $34.6 million in the third quarter. The decreases in operating cash flow and free cash flow were principally due to an increase in working capital in the third quarter of '22 of $13.6 million compared to a decrease in working capital in the third quarter '21 of $6.3 million, a change of $19.9 million. We had several notable nonoperating uses of cash in the third quarter '22. We paid down debt by $11.5 million in the quarter and paid $6.4 million for capital expenditures, which included $2.2 million for our facility project in China. We also paid a $3 million dividend on our common stock and $2.7 million to buy a facility in Germany at the end of its lease. Let me turn next to our EPS results for the quarter. In the third quarter of 2022, our GAAP diluted EPS was $2.35, and after adding back $0.02 of acquisition costs and $0.01 of restructuring costs, our adjusted diluted EPS was $2.38. In the third quarter of '21, our GAAP diluted EPS was $1.75, and after adding back acquisition-related costs of $0.22, our adjusted diluted EPS was $1.97. As shown in the chart, the increase of $0.41 in adjusted diluted EPS in the third quarter '22 compared to the third quarter '21 consists of the following: $0.68 due to higher revenue partially offset by $0.13 due to higher operating expenses, $0.08 due to lower gross margins, $0.03 from a higher tax rate, $0.02 due to a decrease in amounts received from government assistance programs and $0.01 from higher net interest expense. Collectively, included in all the categories I just mentioned was an unfavorable foreign currency translation effect of $0.15 in the third quarter of '22 compared to the third quarter of last year due to the strengthening of the USD. Looking at our liquidity metrics on Slide 15. Our cash conversion days, which we calculate by taking days in receivables plus days in inventory and subtracting days in accounts payable, increased to 130 at the end of the third quarter of '22 compared to 113 at the end of the third quarter '21. This increase was primarily driven by a higher number of days in inventory. Working capital as a percentage of revenue was 12.8% in the third quarter '22 compared to 13.5% in the third quarter '21. Our net debt, that is debt less cash, decreased $16 million sequentially to $135 million at the end of the third quarter '22. Our leverage ratio calculated in accordance with our credit agreement was 0.94 at the end of the third quarter '22 compared to 1.05 at the end of the second quarter of '22. Our net interest expense increased $0.2 million to $1.5 million in the third quarter of '22 compared to $1.3 million in the third quarter of '21. At the end of the third quarter, we had $205 million of borrowing capacity available under our revolving credit facility, which matures in December of '23. Now turning to our guidance for the fourth quarter and full year of 2022. We are narrowing our revenue guidance for 2022 to $890 million to $896 million, revised from $890 million to $905 million due to approximately $10 million in capital shipments moving into the first half of 2023 as a result of customer-requested delivery changes and supply chain delays. In addition, we are narrowing our adjusted EPS guidance to $8.80 to $8.97 from $8.80 to $9. For the fourth quarter, we now anticipate revenue of $217 million to $223 million and adjusted EPS of $1.90 to $2.07. I want to outline some of the potential risks impacting our guidance. In the last month of the third quarter, our largest subsidiary in China was impacted by China's Zero COVID policy requiring them to shut down for a short period of time and then gradually reopening it again to full capacity. This only had a modest impact on the quarter as the subsidiary was able to increase capacity once reopened. However, there continues to be a potential risk for further government-mandated shutdowns in this region. In addition, other risks that could impact our guidance include supply chain challenges, strengthening of the USD, geopolitical tensions, and inflation. We continue to anticipate gross margins for the full year of '22 will be $42.5 million to 43%. Gross margins in the fourth quarter will be approximately 70-80 basis points lower than the third quarter as a result of the mix shifting towards more capital. As a percentage of revenue, we continue to anticipate SG&A will be approximately 24.5% to 25% for the year. We expect our tax rate for the fourth quarter will be approximately 28%. We hope these guidance comments are helpful. That concludes my review of the financials, and I will now turn the call back over to the operator for our Q&A session.

Thank you and good morning everyone. By my calculations, capital bookings dropped around 35% to 40% compared to Q2, which was a strong quarter, making it a tough comparison. When you discuss this with your customers, do you sense that it's mainly a knee-jerk reaction to recent macro changes and some project delays? Or do you think it indicates a new baseline on the capital side, whether that’s a digestion phase or a more sustained pullback due to the current environment?

Yes, it seems to be a combination of factors depending on the market and geographic area. Some markets have undergone significant investment programs in recent years and now need to take delivery of equipment and get it installed. However, there are businesses that won’t be delivering products in 2024 because they are fully booked for the year. Customers tend to avoid placing orders for items with delivery dates two years away, especially uncertain about future economic conditions. We have anticipated some moderation in demand in the latter half of the year since the previous four quarters were exceptionally strong. Some of the business, particularly in Flow Control, saw substantial increases in bookings, largely driven by energy prices as many projects are justified by energy savings. The situation varies widely globally. China has been affected by its Zero COVID policy, but there is hope they might reconsider this approach around March and possibly ease restrictions. Overall, I believe it’s a mix of factors, and I don’t view this as establishing a new global baseline. Market conditions will heavily influence the situation in different regions. Meanwhile, the Federal Reserve is actively trying to cool down the economy, leading some to adopt a wait-and-see perspective regarding the implications of this.

Right. Okay. That makes sense. And just going off one of the comments you made on some of your subsidiaries being booked out more than a year. Do you feel like the bookings you've seen over the last couple of quarters on the capital side give you better visibility than in the past? In terms of how quickly those might turn over? Or do you think 2023 is still very much kind of TBD depending on bookings activity over the next, call it, two to three quarters?

Yes. I mean we haven't really started focusing hard on '23. We're right now, we're principally focused on finishing the year. And we have an awful lot of projects that we have to get completed and shipped. That's a big challenge for everybody. So obviously, during the call for the fourth quarter, we'll be giving our outlook and guidance for next year. But I don't think right now that we have a formed opinion on exactly what next year is going to look like. Other than we know we have a strong backlog going into the year. So we know we're going to be quite busy fulfilling the existing orders.

I appreciate the call. Kadant has greatly benefited from the significant number of recycled containerboard conversions over the past five years, which has been a strong trend. I would expect we might start to see a slowdown in this moving forward. Can you remind us which divisions benefited the most from this trend? Additionally, which end markets do you think are best positioned to counteract a potential slowdown in new investments in containerboard conversions?

We analyze the market by looking at both developed and developing countries. Developed countries are experiencing slower growth, with fewer new facilities and more conversions, while the developing world is still focused on new projects and capacity expansion. In North America, there have been a significant number of conversions over the years, and currently, the market seems to be adopting a wait-and-see approach regarding the upcoming changes as many of these projects will become operational in the next six months. We're seeing strong activity in notable markets such as India, the Middle East, and Eastern Europe, which are where new developments are taking place. This activity is expected to offset any potential slowdown in the developed countries over the next year. Outside of developing markets, China remains a key market, but their industrial production has been hindered by unresolved COVID policies, which have caused disruptions. We believe this situation will not be sustainable long-term and anticipate that by 2023, they will return to a normal growth rate and investment cycle. Our focus on areas like the Middle East, Eastern Europe, and India continues, with India being our fastest-growing market, albeit from a smaller base. We made an acquisition last year to bolster our operations there and expect that market to remain strong, though China needs to stabilize before we can fully assess its potential.

So you think that the conversions will continue to be a positive factor for a number of years to come?

Currently, the latest estimates suggest that the global packaging paper business is expected to grow at about 4.8% annually over the next decade. This growth rate is slightly above the forecasted increase in global GDP. The main factors driving this trend include the rapid growth of e-retail, which outpaces overall retail growth, and a shift towards more sustainable, eco-friendly low-carbon materials, moving away from plastics, especially in the food sector. These two factors appear to be propelling the forecasts that indicate growth surpassing GDP over the next ten years.

All right. And Flow Control is probably the biggest beneficiary of that trend from a...

Yes, it would be the Industrial Processing segment, Bill. That's where our stock preparation has the most impact. Flow Control does benefit as well, but the primary advantage comes from our stock preparation product line in Industrial Processing.

Okay. Okay. And I appreciate that. And just real quick, I know you used to break down your China revenues and you don't do that anymore, but can you just give us a little color on how revenues in Asia may have shifted and changed over the last three, four years? Because I know Vietnam got a little bigger and rest of Asia. Are you a little less reliant on China than you used to be as a percentage of total Asian revenues? Or is it still pretty much the major source?

It's still really pretty much the major source, Bill.

Good morning, guys. Thanks for taking the questions. In your prepared remarks, you mentioned capital projects shifting out of the fourth quarter and into the first half of 2023. What's the magnitude and the size of those projects in total? And what segments are you most impacting?

Overall, approximately $10 million in projects were pushed out. This is mainly in the Industrial Processing segment, specifically with movement in the stock prep product line and the wood processing product line. However, most of it is in the wood processing product line, where customers are slightly delayed on their projects and have requested delivery of equipment, either in the first or second quarter of 2023.

John, when these projects are completed, they move to a facility that requires a significant amount of civil work. Everyone is experiencing supply chain issues, labor shortages, and other challenges. If the civil work takes longer than expected, the equipment cannot be installed. Additionally, since this is the last quarter of the year, a two-week delay in delivery at this time would push the schedule into the next year. This reflects the situation we are facing.

Okay. So you'd expect most of this to be delivered in the first quarter? Or am I putting words in your mouth?

Well, I would say first half. There'll be a good chunk in the first quarter, but it's all been shifted to the first half of '23.

What are your thoughts on commodity prices? Metal prices have been declining since they peaked in the spring, but we haven't seen significant benefits from that yet, and many companies have reported their results. Have you benefited from the lower metal prices, and do you expect to in the future? What are your thoughts on input costs?

Yes, you're correct. Our primary purchase cost is stainless steel, which had seen a nice decline through August. However, in September and October, it stabilized, and in fact, it saw a slight increase in October. Looking ahead to future prices up until around mid next year, there are expectations for a mild decline, but it’s not a drastic drop. Our gross margins have remained steady and aligned with our expectations. We haven’t gained or lost significantly from these price changes; we've managed the situation effectively. Our teams globally have done a commendable job. While we haven't experienced significant benefits or drawbacks, we do appreciate the moderation in prices. If the central banks succeed in slowing down the economy, we anticipate further price drops later next year.

Okay, that makes sense. I have a quick question. You mentioned the transition from capital equipment work to focusing more on maintaining facilities, leading to higher aftermarket sales and industrial processing. How do you see that process unfolding? Is it expected to take a couple of quarters, or will it be more of a couple of years?

I don't know. That would be honest with you, we don't know. I know that if you look at, for instance, on the housing side, if you look at kind of the consensus for next year, they're predicting somewhere around, I think, 1.35 million starts a month, which is clearly down from certainly '21 and '22. So it's really, I think, going to be a function of what the Fed does with the interest rates because the underlying demand for housing in particular is still there very strong. Millennials are still in the prime house-buying years. It's just an issue with interest rates going up and some availability down. So I don't know. I mean the underlying fundamentals over the next many years are very strong. It's just a question of what interest rates do. Thank you, Michelle. So before wrapping up today, I just wanted to leave you with a few takeaways. 2022 is shaping up to be the best year in our history across a wide range of metrics. We made solid progress this year on our efforts to accelerate revenue growth and boost our profitability despite the challenging macroeconomic environment. And lastly, as we work through our backlog, we expect to deliver excellent cash flows. We want to thank you for joining the call today, and stay safe.

This concludes today's conference call. Thank you for participating. You may now disconnect.