Welcome to the Third Quarter 2015 Kadant Incorporations' Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Chief Financial Officer to Mike McKenney.

Thank you, operator. Good morning, everyone, and welcome to Kadant's third quarter 2015 earnings call. With me on the call today is Jon Painter, 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 expectations, plans and prospects are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Our actual results may 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 3, 2015 and subsequent filings with the Securities and Exchange Commission. Our Form 10-K is on file with the SEC and is also available in the Investors section of our website at www.kadant.com under the heading SEC Filings. In addition, any forward-looking statements we make during this webcast represent our views 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 estimates change and you should not rely on these forward-looking statements as representing our views on any date after today. 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 issued yesterday, which is available in the Investors section of our website at www.kadant.com under the heading Investor News. With that, I will turn the call over to Jon Painter, who will give you an update on Kadant's business and future prospects. Following Jon's remarks, I will give an overview of our financial results for the quarter and we will then have a Q&A session. Jon?

Thanks, Mike. Hello everyone, it's my pleasure to brief on our third quarter results and our outlook for the remainder of the year. Overall despite significant currency headwinds we had another strong quarter with excellent cash flow operating margins and better than expected earnings per share performance. I will begin today's Business Review with a financial highlights of the quarter. We finished the third quarter with revenue of 92 million down 7% compared to the third quarter of 2014. Foreign currency translation had a large impact on Q3 revenue and excluding the effect of FX our revenue in Q3 was up 2%. Gross margins in the third quarter continue to be very strong at 48%, operating income with some 25% to 13 million or 14% of sales which is the highest operating margin since our spin off in 2001. Our adjusted EBITDA was 15 million or 17% of the sales up14% compared to Q3 of last year. Our GAAP diluted earnings per share was up 30% to $0.78 in the third quarter despite an $0.11 negative impact from foreign currency translation. Our adjusted earnings per share was up 24% to $0.78 excluding the impact of the FX are adjusted earnings per share increased 41%. Our bookings of 99 million were down 2% compared to Q3 of 2014. However our bookings performance was matched by the impact of the strong dollar as our bookings are up 8% when excluding the impact of FX. Cash flow for the third quarter was excellent at 16 million and we ended the quarter with net cash of 27 million. During the quarter we repurchased approximately 118,000 shares or $5 million at an average price of 41.27. As you can see from slide 6 . FX continues to have a significant effect on our results when…

Thank you, Jon. I'll start with our gross margin performance. Consolidated product gross margins were 47.5% in the third quarter of 2015 up 280 basis points compared to the third quarter of 2014. The increasing gross margins from last year's third quarter was due to higher margins in our capital business as well as a favorable product mix. Our higher margin parts and consumables revenue represented 69% of total revenue in the third quarter of 2015 compared to 64% in the third quarter of 2014. Looking ahead we expect the full year 2015 consolidated gross margins will be approximately 46%. Now let's turn to slide 17, our quarterly SG&A expenses, SG&A expenses were 29.2 million in the third quarter of 2015 down 2.7 million from last year's third quarter and included a favorable foreign currency translation effect of 2.5 million. Excluding the translation effect of 2.5 million, the SG&A from acquisitions as well as the transaction expenses of acquisitions SG&A expenses were down 600,000 or 2% compared to the third quarter of 2014. SG&A as a percentage of revenue was 31.8% in the third quarter of 2015 compared to 32.3% in last year's third quarter. Looking ahead we expect that SG&A spending in 2015 as a percentage of revenue will be approximately 31.5% compared to 32.2% in 2014. Now let's turn to slide 18, adjusted operating income. Our adjusted operating income which excludes restructuring costs and expenses related to acquired inventory and backlog was 12.7 million or 13.8% of revenue for the third quarter of 2015 compared to 10.7 million or 10.8% of revenue in the third quarter of 2014. Adjusted operating income was up 2 million or 19% principally due to improved gross margins as well as a modest 50 basis point improvement in SG&A expenses as a percentage…

[Operator Instructions]. Our first question comes from the line of Walter Liptak from [indiscernible] Global.

Just a couple of quick questions here, first with regard to the guidance you guys mentiobned larger delays in capital bookings and shipment I was wondering if you can provide a little more color on the expectations there.

Sure. We've had over the years we've had delays in capital before and typically the typical pattern of those delays it's a large stock prep order in China. It's probably happened to us many times over the years. This is a little different in that these projects and delays are more related to our doctoring, cleaning and filtration and our fluid handling lines, so they're smaller projects these are kind of the million dollar in under range. So there's more of them and they're not all in China. I would say probably Europe, North America, China and maybe even probably a little heavier in Europe, nothing particularly special in terms of the reasons for the delays, I would say the typical types of delays you see. You know the usually part of a larger project so other things can often cause a delay. There is some in the projects in China there is some projects which I would call financing delay but nothing like that in North America and Europe.

And then just kind of switching gears talking about North America little bit. Obviously part sales continue to be strong and could you talk a little bit about your guidance expectations, obviously you continuously said that it's continued be a priority. Can you talk a little bit about your expectations for that and where you see those going, will they maintain the level they're currently at and then on the other side of that could you also just provide a little color on just in sales in North America and what kind of quote activity, it sounds like Jon in your prepared comments like. It seems to be a kind of a healthy environment if you could just provide a more color on the system--

Sure. In my remarks I said North America is having an outstanding year driven largely where our stock prep business. I mean they are really both in capital and in parts doing incredibly well and I would say the other one is doing quite well as our wood processing. And frankly when I also said that I think 2015 will be a tough act to follow I was largely talking about our stock prep business in North America. They had a number of capital projects this year which will be hard frankly to repeat in terms of revenue and income for that product line next year. What was the other parts of your question?

Just kind of about system sales, the environment and just talking about--

Good environment in North America it continues to be a good environment. There is always a little bit to sort of timing of capital orders. They can make one year like frankly our doctoring, cleaning and filtration product line. You know they had a very, very strong '14. So they had some tough comparisons this year because last year '14 was so good. So that kind of comes and goes I actually take it as a little bit of a positive that those two product lines tend to cycle a little differently I would say our fluid handling and our doctoring, cleaning and filtration product line cycle more similarly -- our stock prep product lines maybe cycles a little different from those other two.

Next question comes from the line of Dan Jacome from Sidoti.

Just a couple here, well guess cermanic blades any update on that just I'm curious about the response rates or what traction you're seen in that product line as we enter the New Year?

Sure. I mean you know just kind of update you, we’re -- we did this acquisition in the beginning of last year and we spent much of the time here really building a production facility here in the U.S. and I'm hoping that that will be done first quarter next year. We in the meantime we're sort of taking the blades out for trials, they're all going it extremely well. I mean they're performing. technically quite well so we couldn't be more pleased with that, quite understandably our customers want to see the production facility up and running before they're really going to commit and so that's kind of I would say where we are.

And then just turning to North America obviously very strong, containerboard robust, I was just curious what your initial thoughts were when you saw Westrock, I guess over a million tons of capacity last week. Just curious what you were thinking when you saw that?

This happens all the time. I'm frankly is interested in anything I'm sort of overall containerboard demand and how they're doing and I was sitting just limiting to containerboard. So we're really interested kind of overall tons produced and sometimes if they can maintain their profitability and prove it by closing some mills down that's life, I'd rather there were more mills but ultimately we need them to be very profitable which they are.

And then lastly hate to sound like a nag but you're sitting here a record backlog, looks like highest cash earning margin ever, I mean stocks kind of been lagging I was wondering if there's anything you might be doing next year to maybe get the story a little bit more out there next year and if you guys have ever considered possibly holding an Analyst Day.

And you know it is a little bit frustrating I think a lot of that blame probably falls on me in terms of if you will getting the story out on the stock and we are that is something that we're looking at to have kind of Analyst Day either in New York or maybe out here and maybe have people come to our facility out here in Massachusetts.

Next question comes from the line of Anthony Young from Macquarie.

You mentioned possibly having the majority of your business outside of the paper industry at some point. What sort of timeframe were you talking about when you made those comments?

I quite purposely didn't give one, but all I'm saying, the fact of the matter is that a lot of the acquisitions that we're looking at are outside of the paper industry. And that what is not is not because we are down on the paper industry I'd actually prefer to do an acquisition inside the paper industry because we've got better synergies. But in just in terms of good business is available there's more outside than in. That said, it could go the other way if we had a good acquisition inside the paper industry we would happily do that but as I look forward particularly driven by acquisitions I wouldn't be surprised to know that the majority of acquisitions are outside the paper industry. That's really what that was driving sorts and I wasn't -- again I'm definitely not signaling any kind of plan to get outside the paper industry or desire to get outside the paper industry, it's more just the nature of what's available in terms of acquisitions.

And then I guess just to feed into that, I mean you guys reported last beginning of August and you know we obviously had a sharp correction in mid to late August and from point during September. Previously you talked about multiples and prices being somewhat elevated I guess for things that you are looking at and have you seen things come in or people still sticking to you know there's--

To be honest with you, I haven't really seen a change in terms of the private company market. It's still an issue that when the companies are larger they tend to have kind of more of higher pricing and the smaller ones are still more reasonable. I think it probably takes some more sustained correction to work its way into M&A in in terms of stock market.

I will now like to turn the call back over to Mike McKenney for closing remarks.