Good day, and thank you for standing by. Welcome to the Q2 2022 Kadant Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike McKenney, Executive Vice President and Chief Financial Officer. Please go ahead. Thank you, Catherine. Good morning, everyone, and welcome to Kadant's Q2 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 statement 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'll 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 Q2 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'll give you an update on Kadant's business and future prospects. Following Jeff's remarks, I will give an overview of our financial results for the quarter, and we will then have a Q&A session. Jeff? Thanks, Mike. Hello, everyone. Thank you for joining us this morning to review our Q2 results and discuss our business outlook for the second half of 2022. I'll begin by reviewing our operational highlights for the Q2. I'm pleased to report we had a solid quarter with strong demand and excellent execution across all our operating segments. This performance led to record-adjusted EBITDA and strong earnings in the Q2. While our aftermarket demand was very healthy, capital project activity was exceptionally strong, leading to bookings that would have been a new record if not for the negative impact from foreign currency translation associated with the strengthening dollar. Mike will discuss the impact of FX in more detail in his comments. Once again, I'd like to thank our operational teams around the globe for continuing to do a fantastic job in managing our businesses and ensuring that our products get to our customers when needed despite the supply chain disruptions. They've done a great job of meeting our customers' needs in a very challenging environment. Turning now to slide 6, I'd like to review our Q2 financial performance. Our top-line performance was supported by excellent aftermarket demand and capital order shipments, leading to revenue increase of 13% compared to the same period last year. Aftermarket parts revenue was up 17% and represented 66% of our Q2 revenue. Solid execution contributed to our adjusted EBITDA margin of 20.7% and adjusted EPS of $2.24, up 11% compared to Q2 of last year. We continued to benefit from strong demand in Q2, especially in North America and Europe. Bookings were up 25% to $266 million, with a solid contribution from our Material Handling segment, which benefited from our recent acquisition and robust demand for our bulk material handling products. As you know, we typically manufacture and sell in the same currency. This quarter, our bookings were significantly affected by currency translation and reduced our reported bookings by $10 million. Excluding acquisitions and the impact of FX, bookings were up 17% compared to the same period last year and reflect the ongoing demand from our customers. Next, I'd like to discuss our three operating segments, beginning with our Flow Control. Our Flow Control segment had excellent bookings and revenue in the Q2, up 36% and 20% respectively, compared to the same period last year. Our aftermarket parts revenue was a record and made up 73% of total revenue in the Q2. Improved operating leverage led to a record-adjusted EBITDA and an adjusted EBITDA margin of 29.3%. Our Flow Control segment's record-setting bookings performance in the first half of the year is expected to moderate some in the second half. However, with our record backlog, we expect a strong second half of the year. Moving to our Industrial Processing segment. We continue to experience healthy demand, with bookings in this segment up 8% to $110 million. Excluding the negative impact of FX, bookings were up 12%. New orders for our wood processing and recycled fiber systems in North America led the increase in bookings in the Q2. Revenue in this segment increased 2% to $84 million and was affected by an unfavorable foreign currency translation. Excluding the impact of FX, revenue growth was 6% compared to the same period last year. Our adjusted EBITDA margin declined 320 basis points to 21.8% due largely to lower gross margins on capital sales in the Q2 as anticipated, and the prior period, including government assistance programs for COVID relief. Incremental price programs have offset inflationary costs and allowed us to maintain gross margin parity in our aftermarket parts business. We ended the quarter with another record backlog, and this positions us well for the remainder of the year. Like our Flow Control segment, we are expecting a slowdown in bookings in the back half of the year. In our Material Handling segment, we had record demand for aftermarket parts and solid top and bottom-line contribution from our recent acquisition. Revenue in the Q2 was up 23% to $52 million, and aftermarket parts revenue made up 56% of total revenue. Capital bookings in our Material Handling segment were up 93% compared to the same period last year, due largely to contributions from our recent acquisition. Excluding acquisitions and the negative impacts from FX, bookings were up 24%. Solid execution by our business in this segment helped boost adjusted EBITDA by 42% and adjusted EBITDA margin by 300 basis points. Capital project activity remains at a good level, yet we expect a moderation in demand, particularly in our European baler business as the second half of the year unfolds. As we look ahead to the second half of 2022, we continue to see good levels of project activity despite the ongoing macroeconomic challenges. Though as I mentioned, we do expect industrial demand to moderate to a more balanced level compared to the record levels we've experienced in recent quarters as consumer demand slows in response to actions taken by central banks to control inflation. Our record backlog and ability to generate robust cash flow continue to have us well positioned to capitalize on opportunities that may emerge as the year unfolds, and we expect to deliver record financial performance again this year. With that, I'll turn the call over to Mike for a review of our financial performance in Q2 and our guidance outlook for the remainder of the year. Mike. Thank you, Jeff. I'll start with some key financial metrics from our Q2. Consolidated gross margins were 43.3% in the Q2 of 2022, compared to 43.6% in the Q2 of 2021, which included COVID government assistance benefits of 30 basis points. Parts and consumables revenue represented 66% of revenue in the Q2 of 2022, compared to 64% in the prior year. SG&A expenses were $55.3 million in the Q2 of 2022, an increase of $6 million compared to $49.3 million in the Q2 of 2021. The Q2 of 2022 SG&A includes $5 million in SG&A from our acquisitions and a $2.1 million favorable effect from foreign currency translation. SG&A in the Q2 of 2021 was lowered by $1 million from government assistance programs. As a percentage of revenue, SG&A expenses decreased to 25% in the Q2 of 2022, compared to 25.2% in the prior year period. Our diluted EPS was $2.24 in the Q2, compared to $1.96 in the Q2 of 2021. Our diluted EPS in the Q2 of 2021 included $0.05 of acquisition costs. Q2 of 2022 diluted EPS exceeded the high end of our guidance range by $0.28 due to higher revenues, better gross margins, and lower SG&A than forecasted. Adjusted EBITDA increased 11% to a record $46 million, compared to $41.3 million in the Q2 of 2021, due to strong performance in our Flow Control and Material Handling segments. As a percentage of revenue, adjusted EBITDA was 20.7% compared to 21.1% in the Q2 of 2021. Operating cash flow was $18.8 million in the Q2 of 2022 compared to $44.4 million in the Q2 of 2021. Free cash flow was $11.9 million in the Q2 of 2022 compared to $42.3 million in the Q2 of 2021. Decreases in operating cash flow and free cash flow were driven by working capital increasing $17.7 million in the Q2 of 2022 compared to a decrease of $11.8 million in the Q2 last year, a change of $29.5 million. The increase in working capital was primarily driven by an increase in inventory to support sales in the second half of 2022 and an increase in accounts receivable. We had several notable non-operating uses of cash in the Q2 of 2022. We paid down debt by $15.3 million, paid $6.9 million for capital expenditures, and paid a $3 million dividend on our common stock. I would also note that $3.1 million of the $6.9 million capital expenditures amount related to the facility project in China that we announced at the beginning of the year and discussed on the last call. As I had mentioned when we announced this project, the proceeds from selling the old facility to the local government will pay for this new facility. Let me next turn to our EPS results for the quarter. In the Q2 of 2022, both our GAAP and adjusted diluted earnings per share were $2.24. In the Q2 of 2021, GAAP diluted earnings per share was $1.96, and after adding back $0.05 of acquisition costs, adjusted diluted EPS was $2.01. As shown in the chart, the increase of $0.23 in adjusted diluted EPS in the Q2 of 2022 compared to the Q2 of 2021 consists of the following. $0.20 from acquisitions net of interest expense on acquisition borrowings, $0.16 due to higher revenue, and $0.02 due to lower interest expense. These increases were partially offset by $0.10 due to government assistance programs in the prior period, $0.04 due to higher operating costs, and $0.01 due to a lower gross margin percentage. Collectively, including all the categories I just mentioned, was an unfavorable foreign currency translation effect of $0.11 in the Q2 of 2022 compared to the Q2 of last year due to the strengthening of the US dollar. 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, was 123 at the end of the Q2 of 2022, compared to 109 at the end of the Q2 of 2021. Working capital as a percentage of revenue was 12.4% in the Q2 of 2022, compared to 12.7% in the Q2 of 2021. Our net debt, that is debt less cash, decreased $9 million or 5% sequentially to $150 million. Our leverage ratio, calculated in accordance with our credit agreement, was 1.05 at the end of the Q2 of 2022, compared to 1.16 at the end of the Q1 of 2022. Now turning to our guidance for 2022. We are raising the low end of our full-year revenue guidance to $890-$905 million, revised from $885-$905 million, and we are maintaining our adjusted diluted EPS guidance for the full year of $8.80-$9.00. I would like to note that we would have been able to raise our guidance for the year had it not been for the significant strengthening of the US dollar, especially against the euro during the Q2. The adjusted diluted EPS guidance excludes the $1.30 gain on the sale of the facility in China and the associated $0.01 impairment charge, as well as $0.04 of acquisition-related costs. Our revenue guidance for the Q3 of 2022 is $211 million-$218 million, and our EPS guidance is $1.99-$2.09. I will caution here there could be variability in our quarterly results due to several factors, including the variability of order flow and the timing of capital shipments. In addition, other risks that could impact our guidance include supply chain challenges, strengthening of the US dollar, geopolitical tensions, inflation, and China's zero COVID policy. The continued strengthening of the US dollar during the Q2 had a significant impact on our forecast. The 2022 guidance includes a negative foreign currency translation impact of approximately $45 million on revenue compared to 2021, which represents an incremental decrease of $31 million compared to our April forecast. Our adjusted diluted EPS guidance includes a negative foreign currency translation effect of $0.49 compared to 2021, which represents an incremental decrease of $0.35 compared to our April forecast. With mix moving more towards capital in the back half of the year, we now anticipate gross margins for full year 2022 will be 42.5%-43%. That implies gross margins in the Q3 and Q4 will be approximately 100-200 basis points lower than the first half of the year. As a result, as a percentage of revenue, we now anticipate SG&A will be approximately 24.5%-25%, down from our previous guidance of 25%-25.5%. We continue to anticipate R&D expense will be approximately 1.5% of revenue. We expect our tax rate for the remaining quarters will be approximately 28%, and we now anticipate depreciation and amortization will be approximately $34 million-$35 million in 2022. That concludes my review of the financials, and I will now turn the call back over to the operator for our Q&A session. Operator, Catherine, do you have questions? As a reminder, to ask a question, you'll need to press Star 1 1. Please stand by while we compile the Q&A roster. Our first question comes from Chris Howe with Barrington Research. Your line is open. Good morning, Jeff. Good morning, Mike. Good morning, Chris. Morning. Thanks for taking my questions. First one here for Mike. As we look at the revenue guidance taking up the lower end of guidance, in the $211-$218 for the Q3, I think at the midpoint, that would imply about $235, in the Q4 for revenue. Can you just talk about the revenue dynamics here in the second half? I think we were all expecting a little bit more revenue in the Q3 than the $211-$218. More has pushed to the Q4. Well, Chris, one of the things I'd mention to you is what I said at the very end of my discussion here on the call. From the April iteration to the July iteration, we lost $31 million in revenue due to translation. A significant part of that is in the Q3 and Q4. We're taking a haircut just on translation, and I think that's probably the piece you're missing. Okay. That makes sense. If we look at parts and consumables, I think it was mentioned on the last call, or it's been known that greater ability to pass through price here, just given the shorter cycle nature. Can you refresh us on the difference between parts and consumables margin versus capital equipment as it stands today? How you see each portion, parts and consumables and capital equipment versus the inflation headwinds? I know you're essentially caught up on the parts and consumables side, but how is capital equipment faring today? Well, Chris, on that, as you know, we don't give out directly the two parts and consumables and capital. What I often will tell folks is, if you look at our gross margin profile, say the 43.3 in the first half of the year. If you drew a bell curve around that, 15 points to both sides, that would capture essentially most of our transactions. Capital will tend to fall to the lower side of that bell curve. Okay. That's the kind of picture I paint for folks on gross margin. Then regards to the discussion on where we are, parts and consumables and capital, yes, you're right. Yeah. As we mentioned, we've been able to adjust on parts and consumables. We can react more quickly to that. Capital, we do have the risk of it sitting in our backlog for 3 months, 6 months, 9 months, or even a year. What the units are doing is, I would say overall capital is our biggest exposure on the gross margin. What our folks are doing, they're trying to, where they can, negotiate surcharges for materials. We're shortening the amount of time that quotes are valid. They're of course looking at projections on commodities and building that into their pricing when they're quoting things. I think our units have actually, I think on capital, have done an excellent job at trying to maintain our margin profile. I think so far so good. Okay. Actually led me to another question. As far as the mix of backlog, on capital equipment, you're having some success in peeling away, the portion of capital that's been sitting in backlog for a longer period, or kinda how do you stand on getting more towards, newer pricing? Well, the components that are the orders that are in backlog currently, of course, that's, you know, other than the ones that have surcharges, those are, you know, the pricing's fixed. It's really more the people looking forward at what commodities are gonna cost and building that in. Okay. Thanks for taking my questions. Thank you. Our next question comes from Kurt Yinger with D.A. Davidson. Excuse me. Your line is open. Morning, Kurt. Can you hear me? Okay. Good. Yeah. Yeah, we can hear you. Perfect. Based on your commentary, I mean, it sounds like you expect some softer booking activities in the second half. I guess relative to the conversations you're having with your customers, is your sense that you're just kind of seeing some moderation from a very strong two years, or has there been kind of a noticeable pullback in plans around capital activity based on the evolving macro we've seen over the last couple months? Yeah, Kurt, I think, as you pointed out, we've had, you know, the last two quarters, of course, but really for four quarters, we've had exceptionally strong bookings. What we typically see with our customers is when you're on a really strong buying cycle like that, you know, they have to install that equipment. Get it up and optimized. There tends to be a little cyclicality to these buying cycles associated with that. We've just been on such an amazing run for the last few quarters. You know, all said, activity level discussions, things are still quite strong. I think we are factoring in that. I mean, we can't lose sight of the fact that the Fed is on record saying they're gonna slow things down. We, you know, we tend to always try to be pretty conservative, and we believe them when they say they're gonna try to slow down economic activity. We've kind of factored that into our planning and our forecasting. Generally speaking, you know, if we talk to our divisions, you know, things are still, they're still quite active and quite busy. You know, experience tells us that when you're running at a $266 level, and of course it was, you know, effectively $276 this quarter, if not for the currency issue, that's a very, very strong, you know, kind of demand. You know, history would tell us that there will be a little bit of moderation as they start to take delivery of that and install it. Right. Okay. I mean, that comment kind of gets to my next question. As you discussed, I mean, since the financial crisis, there's been kind of this rinse and repeat pattern of two years of elevated organic growth and then kind of a digestion phase. I guess as you look at the markets you serve, and you've done several acquisitions and some of the different drivers there between e-commerce and packaging and just the underbuilt nature of the housing market, you know, is there anything different looking forward, that might help smooth some of that cyclicality, notwithstanding the macro environment? Well, you know, if you look at kind of the growth and diversification over, say, the last 10 years or so, we've worked pretty hard to diversify geographically as well as markets we serve. It certainly and definitely has helped us some from where we were, say, 10 years ago. For instance, right now, you know, our bulk material handling business we mentioned, you know, had record bookings. You know, there's this infrastructure bill that, you know, they really aren't spending it yet, but our customers are getting geared up and prepared for that activity. That helps clearly, you know, if there's a slowdown, possibly some slowdown in one sector, that, you know, you've got another sector that is, you know, seeing increased demand as they prepare to meet the new customer demands associated with that. Yeah, I think we have. Also geographically, you know, you know, we're finding right now our bookings in China actually are and our activity level in China is quite strong. We do have, I think, good diversification geographically, which, you know, unless we go into a kind of a global slowdown, you know, serves us well, as well as some distinct markets we have. We're You know, the general underlying fundamentals, you know, of a migration to you know kind of sustainable materials, I think, you know, is you know we're quite pleased that we're in the markets we're in from a packaging standpoint, from a wood processing standpoint. You know, there's just an underlying trend globally that's gonna serve us. Doesn't mean there aren't going to be some you know some cyclicality to it associated with economic activity. You know, the longer term trends are quite supportive. Got it. Okay. That's helpful. Just my last question. I mean, at a high level, and when you put it all together, it sounds like things are still pretty good from a demand perspective. Are there any specific customer sets or geographies that you've grown kind of increasingly cautious on over the last couple months? You know, I think, you know, you could see it in the bookings of the different segments. They were all up. I mean, we're experiencing good demand everywhere. You know, the issue, the concern you would have is if you would have some particular event. The most, you know, obvious would be if you had a big COVID outbreak in China, and they decided to shut down a region of China for a period of time. That could impact us. That's probably, you know, probably one of the bigger risks that we, you know, that we could envision, is that, you know, you get in the towns we're in, you get a big outbreak of COVID and the government, you know, adhering to the zero-COVID policy, locks down the town for two weeks or four weeks, something like that. That would be a, you know, a significant event to us. Really all of our businesses are experiencing, you know, kind of good demand really, around the world right now. Got it. Okay. Well, appreciate all the color, and I'll turn it over. Thank you. Our next question comes from Walter Liptak with Seaport Global. Your line is open. Hi. Thanks. Good morning, guys. Hey, Walter. Morning, Walter. I wanted to maybe do a follow-on to that last one, but maybe think more specifically about the Industrial Processing and maybe that's where there's the most risk to monetary policy changes. You know, when you're talking about orders slowing in the back half, is there a reference to you know, some of those you know, wood products related companies that produce lumber and other things or OSB for the housing market? Sure. I think the, you know, certainly the housing market, which was running, you know, 1.8 million starts or so for the first several months of this year, it's moderated now. It's kinda the last two months, it's been like 1.55 million, 1.6 million, which is still a good, healthy level. Our customers will be quite busy, I think, and quite happy at 1.6 million, you know, start level. They were really cooking at 1.8 million. They've made a lot of investments to upgrade their facilities and to bring new facilities online. At some point, the organization's resources, you know, and focus starts to be okay. We've got to get these facilities up and running and running optimally. Because of that, you know, we think that, you know, there could be a little bit of a slowdown in the buying cycle. Also, of course, you know, as interest rates go up, mortgage rates go up, and the Fed works to slow the economy down, housing typically fills that. The overall underlying demand for housing is still very strong. The demand gap, you know, the demand versus starts is still growing, still broadening. Again, we like the underlying fundamentals, but we do think for the next, you know, for the next couple quarters that we might see some moderation there, because of all of those variables. Okay, great. You know, I was thinking about, you know, the pricing and what you guys were talking about earlier. The industrial metals prices, some of them have started coming down. I don't know if that flows through to you guys, if it's a second half benefit or if there could be a benefit from lower materials costs in 2023. Well, certainly, you know, metals, in particular stainless, is one of our single biggest costs, and we track that weekly. You're right, it has come down the last few months. I would point out, though, that it's exactly twice the price it was this time in 2020. Twenty-four months ago in August, you know, stainless steel 316 was about $1.50, and now it's a little, it's like $3 and change. It's still twice the price that it was 24 months ago. I think it has quite a ways to continue coming down. But it's definitely, all the commodities are definitely starting to decline in price, and that is helpful for us and will help us going forward for sure. Okay. That sounds great. You know, you talked about China, and it sounded to me like China is reopening after the COVID lockdown. Is that correct? Because there's also mixed things in the news, too, that COVID is starting to spike again. There have been some other shutdowns. What's been your experience? Yeah. China is continuing to adhere to the zero-COVID policy, and the experts believe that they'll stay with that at least until November, when they have their governmental, you know, conference, and Xi Jinping is expected to be, you know, reappointed for a third term. I think they're not gonna take the chance of having any serious outbreak before that. You know, we're hoping that possibly they'll change things a little bit after the conference, you know, at the end of the year. Right now, when they get an outbreak in a region, they lock that region down. Now, our subcontractors, our suppliers of raw materials have been impacted by that. Our plants to date haven't been severely impacted by that. Anytime they see an outbreak in a region, they tend to come in and lock that region down for, you know, 2-4 weeks, depending on the severity of the outbreak. You know, it's always a worry of ours that, you know, if Jining, which is where one of our facilities, or Wuxi, where another of our facilities are, if there was to be an outbreak there, they could come in and lock it down for a few weeks. That would, you know, we'd feel that for sure. Okay. All right. Great. Yeah. Maybe along those lines, Mike, when you were doing your end of your prepared remarks, you put some disclaimers in there. Timing of capital shipments can move around because of zero COVID and supply chain or things like that. Was that always in your guidance remarks, or are you telling us that there could be some timing issues with some of the bigger shipments in the back half of the year? Both, Walter. No, that's always been in there. That's a repeat of. Okay, great. A standard caution. Okay. It's not new. I call that the McKenney safe harbor, that he always puts in. All right. Sounds great. It's always good to be safe. Thanks. Operator. Catherine, do we have additional questions? Yes, one moment. Our next question comes from Bobby Eubank with Chevy Chase Trust. Good morning, guys. Hi, Bobby. Morning, Bobby. Following up on Kurt's question, particularly around, you know, U.S. housing and the Industrial Processing segment. You know, you're not gonna give longer term guidance, but maybe if you just think about the market and existing OSB equipment that's out there, debarking, you know, where do you feel like you are in kind of maybe a total addressable market? You know, age of the fleet, things like that. You know, is equipment from the prior housing cycle, is that coming up on replacement? How do you just think about longer term kind of structural demand in that segment? I have a follow-up. Thank you. Yeah. There's several variables really that affect that market, Bobby. One is, of course, as you pointed out, the aging equipment. You know, our guys recently did some analysis work and said, "Hey, a lot of this equipment's getting quite old." We think, you know, there's clearly gonna be a good replacement demand for the equipment. In addition to that, you're seeing the wood used in more and more construction. I've talked about this before, that particularly in Europe, as they try to meet their climate, you know, their climate initiatives, they traditionally built homes out of concrete block. You know, that's one of the biggest greenhouse gas emitters of all industrial processes. You're seeing more and more construction start to transition over to more wood-based materials. You know, in North America, of course, the predominant building material is lumber, wood. In Europe, traditionally has not been the case. We're seeing that change take place. You have just the general demand, you know, being driven in part by the millennials in America that are all entering their house. I have a 30-year-old daughter who just closed on a house last Friday. A 33-year-old daughter built one a year ago. I know Mike's got three kids doing the same. Many people, you know, are seeing their children, who many of them are in this millennial generation, are entering their prime house buying. That's really also driving the demand up too. Then, of course, you've got the fact that more and more people are working from home, and they find that their home, their current home doesn't exactly meet their needs now that they're working from home. There's a percentage of people that are changing their housing requirements to address their work from home, the new work from home process that we're seeing take over, really not only in the US but really around the world. There's several things that are driving it. If you look at the housing industry, of course, has great metrics, and there's a lot of consultants out there that follow it. They talk about, you know, for the next 10 years, you know, the demand's gonna continue, and we've been underbuilding really since the 2009, 2008, 2009 crash. That demand gap just continues to grow. You know, being exacerbated by the millennials, you know, entering the prime house buying. You know, there's a lot of variables out there, age of equipment, you know, kind of transition to material use, and there's just increased demand based on demographics that all we think are favorable to the industry. Thanks. Hopefully your daughter was able to get a rate lock or something like that. You put in the presentation. Yeah. Her rate lock is the father. I hear. That was her rate lock. You put in the presentation, high energy prices and CO2 reduction targets in Europe are driving capital project activity in the region. I thought that was kind of an interesting comment, a little bit, qualitative, more qualitative than sometimes you put in the presentation. Can you kinda double-click on that and expand on that. Sure On what exactly they're seeing and maybe durability there? Thanks. Sure. As you know, the world has seen a significant increase in the cost of energy. In Europe in particular, that's very acute because, of course, there many countries are very dependent on Russia. With the current Russia-Ukraine conflict, you know, that those supplies are at risk. Between the cost and availability, you know, what we're seeing in Europe is there's a much better payback to install more efficient processing equipment. We're benefiting from that. You know, countries that are paying twice as much for energy and are actually concerned that they may not have as much energy as they need going forward are working hard to reduce their dependence on it. That benefits us because most of our technology, one of the big, you know, kind of value propositions of our technology is more output with less input. You know, we reduce their electricity consumption or their steam consumption or natural gas consumption for the same output. That's, you know, projects are just easier to justify. There's a better payback for them, you know, because of the higher energy prices. Thanks. Good luck in the second half. Thank you. Okay. Thank you, Bobby. There are no other questions in the queue. I'd like to turn the call back to management for any closing remarks. Thank you, Catherine. Before wrapping up the call today, I just wanted to leave you with a few takeaways. Q2 was in many ways a continuation of our Q1, where we saw strong demand for our products and technologies and robust capital project activity. While consumers, industry and governments are dealing with high inflation, our end markets remain well positioned to weather an economic slowdown, and our business fundamentals remain strong. We'll continue to focus on solutions that drive sustainable Industrial Processing, and we look forward to delivering exceptional value to our stakeholders again in 2022. With that, I wanna thank you for joining us today, and we look forward to updating you again next quarter. This concludes today's conference call. Thank you for participating. You may now disconnect. Now disconnect.