Kadant Inc (KAI) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q1 2014 Kadant Inc. Earnings Conference Call. My name is Whitley and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session.

If at any time you require operator assistance, please press start followed by zero and we will be happy to assist you. As a reminder, this call is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Thomas O'Brien, Chief Financial Officer. Please proceed.

Thank you, operator, and good morning everyone and welcome to Kadant's First Quarter 2014 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 December 28, 2013. Our Form 10-K is on file with the SEC and is also available in the investor section of our website at www.kadant.com under the heading SEC filings. In addition, any forward-looking statements we make during this webcast represents 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 first 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 would give an overview of our financial results of the quarter and we will then have a Q&A session.

Jon?

Thanks, Tom.

Hello, everyone. It's my pleasure to brief you on our first quarter results as well as update you on our outlook for 2014. Overall, we have a great quarter with record bookings and adjusted EBITDA. I'll begin today's business to review of a financial highlights of the quarter.

We finished the quarter with revenue of 93 million which was up 23% compared to the first quarter of 2013. Gross margins remain strong at 45%. Operating income was 7.6 million up 3% compared to Q1 of last year. More importantly, our adjusted EBITDA was a new record at 12.7 million or nearly 14% of sales up 36% compared to Q1 of last year.

Our GAAP diluted earnings per share was $0.45 in the first quarter including $0.02 of restructuring cost and $0.13 of expense related to acquire profit in the inventory and backlog associated with the businesses we acquired last year. Without question, the highlight of the quarter was our record booking which increased 27% over Q1 of last year to 115 million.

Turning to our revenue performance, you can see that all of our product lines are up for the first quarter. The most significant contributor to our year-over-year revenue growth was our acquisitions which contributed 19 million to Q1 revenue.

Excluding the acquisitions, our Q1 revenues were down slightly compared to the same period last year. I'll discuss this in more detail when I cover our business sections in the specific regions of the world.

As I noted, the highlight of the quarter was our record bookings. I also noted on our last call that we anticipated a significant step-up in bookings in the first half of 2014 and I can say they're coming in about as we expected. Our bookings of 115 million in Q1 were up 27% compared to Q1 of last year with acquisitions contributing 16 million.

Excluding the impact from acquisitions, our bookings are still up 9% compared to the same period last year which is an excellent start for the year. The strong bookings performance was broadly based with all of our major product line seeing increases of 20% or more.

It was also a solid booking quarter for both capital and spare parts. Very strong capital booking in our doctoring, cleaning and filtration and stock-prep product lines in North America contributed to a 38% increase in global capital bookings in Q1 compared to Q1 of last year.

I should also note that our wood processing systems product line is off to an excellent start in Q2 with nearly 7 million with the major orders booked in April. Overall, I'm very encouraged not only by our booking performance in Q2 but also by the continued activity level we're seeing Q2.

The bookings in revenue trend chart on Slide 8 shows a quarterly revenue which is the red line and our bookings which are the blue bars. Our Q1 revenue was down slightly from Q4. The record bookings in Q1 will lose revenue in the coming quarters. Finally, as I mentioned, bookings are up nearly 37% sequentially for a record of 115 million.

Our revenue for parts and consumables was also a record at 61 million for the first quarter and made up 65% of our revenues. The companies we acquired last year had very strong parts and consumables business and this has led to our record results.

Revenue was up 3% sequentially and 19% over Q1 of last year with particularly strong performance in our fluid-handling product line. We also had record parts and consumables booking which were up 20% over Q1 of last year and 18% sequentially.

I now would like to take the next few minutes to provide a brief review of our business activities in each of the major geographic regions of the world. Let me start with North America.

North America was definitely the star of Q1 with the strongest regional performance in both bookings and revenues. Our revenues in North America were up 38% compared to the first quarter of 2013, to 54 million and up 32% sequentially. Most of our major product lines have substantial increases in revenue. Overall, I can say we're seeing a very good environment for capital investment particularly in the U.S. There are several rebuilds going on this year as well as conversions from these (inaudible) container board such as PCAs in conversion of its newly acquired mill in DeRidder, Louisiana.

Bookings in North America in Q1 were 70 million up 61% compared to the same period last year and 60% sequentially. All of our major product lines have significant increases in bookings. The addition of Carmanah which is based in North America was also a major contributor to our booking performance.

I should note that Q1 included a large stock-prep capital order for a customer in Mexico valued of more than 11 million that I mentioned in our Q4 call in February. We continue to see a very healthy level of project activity in North America including several large chemical pulping projects in the U.S.

For the last several years, we focused on developing product offerings for virgin fiber. The fiber cost for virgin mills in the U.S. out east to the lowest in the world and this low cost advantage is driving increased capital investments which in turn is providing opportunities for our chemical pulping business.

The market in Europe is not as strong as North America but we are seeing growing signs of improvements. Our Q1 revenues in Europe were 20 million, up 17% over Q1 last year but we're down 24% sequentially from a relatively strong Q4. Q1 bookings of 25 million were down 9% compared to a strong a Q1 of last year but we're up 27% sequentially.

2014 is also a good start in Europe. So far this year, we've received orders for two stock-prep system upgrades for customers in Turkey and a combined value of more than $3 million and an order for a driver system section rebuilt for a customer in Russia. Needless to say, we are cautious about the situation in Russia. At this point, however, our exposure is fairly limited with only 1.7 million of our backlog from customers in Russia.

Next, let's take a look at China. The economy in China has remained relatively rich in investment and new capacity seems to be shifting to investments in improved deficiency. Although focused on efficiency improvements can benefit from Kadant products, the sluggish economic environment has suppressed our revenue and bookings in Q1.

Our Q1 revenues in China were 7 million, down 40% compared to Q1 of last year and down to 46% sequentially. This decline in revenue was found in all of our major product lines but particularly in our stock-prep product line. Our bookings in China were down 22% in Q1 to 9 million compared to Q1 of last year, about 5% sequentially due to higher capital orders in our stock (inaudible).

I can say despite the weak market environment, we are seeing some project activity in China including some large stock preps system projects. In fact, in April, we received an order for $3.8 million for an approach flow on OCC system for a recycle line of our customer. Of all the pulp and paper industry in China, it's somewhat sought the market for oriented strand board or OSB which is a new product for the China market is quite promising.

Potential applications for OSB in China include creating material in container bed liners used in shipping as well as forms for pouring concrete foundation and sub-pouring for construction. Since OSB is more cost effective to produce some plywood, and does not require large trees which are scarce in China, it's ideal for this market.

There were two strander orders placed in China so far this year and I'm pleased to report that secured both of them in April for a combined value of more than $4 million. These installations will provide valuable references and this growing region.

Turning to South America, in Slide 14, you can see the first quarter of 2014 was significantly stronger than the first quarter of 2013 due to the acquisition of CBTI. Revenues in South America were $7 million in Q1, up to 64% compared to the same period last year, but down 31% sequentially. Bookings in Q1 more than doubled the 6 million compared to the same period last year although they were down 11% sequentially.

In general, the market in South America and specifically Brazil, has been impacted by the overall weakness of the economy. There is, however, a small but growing middle class that is expected to continue to drive demand container board and tissue products in the coming years.

Let me close my remarks with a few comments and our guidance for Q2 and the full year 2014. Our strong bookings in Q1 and expected strong bookings in Q2 puts us in a good position for 2014. For the second quarter, we expect to generate $0.66 to $0.68 of GAAP diluted earnings per share and revenues of 104 million to 106 million which includes $0.04 for amortization of acquired property profit in the inventory and backlog.

For the full year, we're maintaining our GAAP diluted earnings per share guidance of $2.60 to $2.70 but increasing our revenue guidance to $410 million to $420 million up from our previous guidance of $405 million to $415 million. You might ask why given the Q1 EPS strong bookings in the increase in revenue guidance, we're not also increasing our earnings per share guidance for the year.

In short, the answer is taxes. We're now anticipating a higher percentage of our income from higher tax jurisdictions such as the U.S. and this has led us to increase our forecasted tax rate from 32% to 34%. This increase has diversely affected our expected earnings per share by $0.11 for the year.

I'll now pass the call over to Tom for additional details on our financial performance in Q1.

Tom?

Well, thank you, Jon.

I'll begin with an overview of our gross margin performance. Consolidated gross margins were 45.2% in the first quarter of 2014, down 210 basis points compared to the first quarter of 2013. The decrease in consolidated gross margins from last year's first quarter was almost entirely due to the affect of amortizing the acquired profit and inventory associated with acquisitions we made last year. Excluding this item, consolidated gross margins would have been 47% in the first quarter of 2014 or 30 basis points lower than last year. Our paper making systems segment gross margins which do not include the result of Carmanah were 47.5%, the second highest level ever achieved in our company's history.

Now let's turn to Slide 18 in our quarterly SG&A expenses. SG&A expenses were 32.5 million in the first quarter of 2014, up 5.5 million from last year's first quarter and included in unfavorable foreign currency translation effect of 300,000. Excluding the translation effect, SG&A expenses were up 5.2 million of the last year's first quarter including a 4.9 million increase associated with the SG&A and transaction expenses of acquisitions.

Sgan expenses as a percentage of revenues were 34.8% in the first quarter of 2014 compared to 35.4% in last year's first quarter. Looking forward, we expect that SG&A spending in 2014 as a percentage of revenues will be approximately 31% to 32% compared to 34% in 2013.

Let me turn to our EPS results for the quarter. We reported GAAP diluted earnings continuing operations of $0.45 in the first quarter of 2014 compared to $0.47 in the first quarter of 2013. The first quarter of 2014 included $0.02 restructuring expenses. Excluding this item, adjusted diluted EPS was $0.47 in the first quarter of 2014 equal to last year's EPS results.

As you can see on Slide 19 where we analyzed the results from the first quarter of 2013 to the first quarter of 2014, the 2014 period included increases of $0.13 from the combined effects of the of the operating results of the acquisitions and lower acquisition transaction expenses and $0.03 due to higher gross margin percentages.

These increases were offset by $0.06 of higher operating expenses, $0.05 cents from lower revenues, $0.04 from higher effective tax rate and $0.01 from higher minority interest. The $0.13 of accretion from the acquisitions includes a diluted effect of $0.13 associated with the amortization of acquired profit and inventory and backlog.

We expect that the remaining balances for acquired profits and inventories and backlog representing approximately $0.04 in diluted EPS will be recognized in the second quarter of 2014 and we've included this amount in our guidance for the second quarter.

I'd like to make a few comments on the increase on our effective tax rate in the first quarter of 2014 and our expectations for the full year of 2014. As Jon noted, we not expect that our effective tax rate will be approximately 34% in 2014 up from our previous estimate of 32% currently due to shift in the geographic distribution of earnings that is more earnings in the U.S. where the rate is higher and less earnings in certain of our international financial subsidiaries where the rates are lower than the U.S.

This had the effective decreasing diluted EPS by $0.04 in the first quarter of 2014 and $0.11 in the full year compared to the rates used in our guidance issued in February 2014. And finally, with respect to our diluted EPS result, the translation effect on net income from foreign exchange was immaterial in the first quarter of 2014 compared to last year.

Now let's turn to our cash flows, working capital, and debt leverage starting on Slide 20. Operating cash flows from continuing operations with 6.2 million in the first quarter of 2014 and although down 11% from last year, nonetheless represents a solid start to the year considering that historically, the first quarter is oftentimes the weak quarter for operating cash flows.

Free cash flow defined as cash flows from continuing operation less CapEx with 5.7 million in the first quarter of 2014, down slightly from last year's 5.8 million. We had several notable non-operating uses of the cash during the first quarter of 2014. The most significant of which was 2 million for a small technology acquisition in our DCF product line that we discussed in our last earnings call.

We also purchased $1.9 million of our common stock, paid a dividend of 1.4 million and expended 500,000 in CapEx. The stock repurchases in the quarter represented 50,000 shares at an average price of $38.35 per share.

During the first quarter of 2014, we returned 3.3 million of capital to our shareholders. As I've just noted, 1.9 million from share repurchases and 1.4 million from dividends. This represented approximately 65% of our net income from continuing operations in the quarter.

Let's now look at our key working capital metrics on Slide 21. As you can see, we did have another quarter of sequential deterioration in our days in inventory and measure partly due to a delay in shipping a large system order to a customer in China which had the effect of increasing days in inventory business six days in the first quarter of 2014.

Days in inventory were 110 in the first quarter of 2014 compared to 95 days in the first quarter of 2013. Our days in receivables measure improved to 68 days in the first quarter of 2014, down from 70 days in the fourth quarter of 2013 and 72 days in the first quarter of 2013. Our AP days measure deteriorated slightly on a sequential basis and was down to five days compared to last year's first quarter.

Looking at the overall working capital position, our cash conversion days calculated by taking days in receivables plus days in inventory and subtracting days in accounts payable were 132 at the end of the first quarter of 2014, up 14 days and 16 days from the fourth quarter of 2013 and the first quarter of 2013 respectively largely due to the increasing days in inventory.

Also, working capital is a percentage of the last 12-month revenues was 15.4% in the first quarter of 2014, improving 120 basis points sequentially but up 60 basis points compared to the first quarter of 2013. I would note that despite that build in inventory, the 15.4% performance and our overall working capital management is still quite good.

Our net cash position increased by 2.7 million in the first quarter of 2014 compared to the fourth quarter of 2013 including a use of cash of 2 million for acquisitions and 3.3 million of dividends and stock repurchases during the first quarter. Net cash that is cashless debt at the end of the first quarter of 2014 was 14.3 million compared to 11.6 million in the fourth quarter of 2013 and 51.8 million in the first quarter of 2013.

And finally, as you can see on Slide 24, our leverage ratio calculated as defined in our credit facility was 0.66 at the end of the first quarter of 2014. Under the credit facility, this ratio must be less than 3.5. After the quarter ended, we utilized some of our overseas cash cash to repay approximately 19 million of debt in Canada which is associated with the acquisition of Carmanah in November 2013. As such, I will expect to record a decline of the leverage ratio in the second quarter of 2014.

That concludes my review of the financial and I will now turn the call back to the operator for our Q&A session. Operator?

Ladies and gentlemen, if you like to ask a question, please press star followed by one on your phone.

Our first question comes from the line of Walter Liptak. Please proceed.

Hi, guys. Good morning.

Hi, Walt.

Hi, Walt.

Well, I wanted to start by asking a little bit about the guidance for the year and, you know, the bookings look good but I wonder if you can provide a little bit of color on what you think the mix of businesses in bookings with the gross margin look like for the rest of the year.

In terms of gross margins, Walt, I think we're still anticipating 45 to 40 -- 44% to 45% which I think is what we said last time, so no big change there.

That includes, you know, about half of percentage point reduction for the, you know, the amortization of acquired profit and inventory as well which we know that effect in the first quarter. So no real change in our thinking in terms of gross margins.

Okay. Okay. Great.

I think in terms of the mix, you know, we'll obviously a little more contribution from North America in the U.S. You know, it's kind of relating to the tax. I don't know that I would call out a mix in the product line particularly a change.

Okay. Is North America typically, you know, is the gross margin about the same there as other parts of the world or is it higher?

Really, you know, it depends on the capital spares mix, you know. As you know, our spare parts understandably have a little higher gross margins. And, you know, so part of the -- part of the uptick in North America was capital.

In [EMEA], that is largely spare parts market if you will. So, you know, that would probably been down a little bit from where they are in average. But I think Jon is right and the overall margins will be about what we thought.

Okay. Great.

And, you know, the trend globally is, you know, pretty clear that North American is strong. So maybe can start there and just talk about what kind of products both in the quarter and then, you know, is it possible or, you know, how do you think about the core business excluding Carmanah in terms of bookings?

Sure. One of the, you know, commonly on North America. So obviously the $11 million stock-prep order was a big order. You know, that doesn't come along every day, right? So that's, you know, a little more unusual, an order of that size.

But I can -- I was kind of pleased that we had pretty strong results in our doctoring capital business, our fluid-handling business. I think our stock-prep capital business even going forward, has a lot of opportunities, probably more in the virgin side than recycle. So pretty, pretty broad for North America.

Carmanah, you know, because housing used heavily in North America, that's kind of their strongest market and the housing market is continuing to, you know, the growth, you know, OSB mills are turning which gives them a spare stream or sometimes you'll have ones that converting to our ring, as they call, it which will be a large spare part for us to follow on, stream spare. So it's very, very promising on the Carmanah side as well.

You know, China is weaker but, you know, as I said, I think the second quarter has got some capital in it. We had, you know, strong stock on the housing side with those OSB mills. And, you know, we've already booked a pretty significant recycling order.

Okay. Just to go back to North America for a second, can you tell us what the growth rate would have been without Carmanah in there in terms of bookings?

It would have been very good. I don't have that off the top of my head but I can tell you that all of our business --

I think if you go back to the chart that we showed North America, I think it's about 11 million of bookings in there for Carmanah. (Inaudible) the number right.

Yes.

We could them from there Walt. I don't have that right in front of me but --

Okay. I heard you.

But for North America, it was about 28 million or so. We're still excellent here.

Okay. Yes. Sounds like it's very good.

So when China, I heard you that, you know, capital, you know, the amortization spending in the second quarter, you got some visibility to it. Why do you think we have this slower period during the quarter for both instances? Is the government related there or --

Well, you know, they do -- they are in kind of overcapacity position. So, you know, there is overall a little bit of, you know, downward pressure because of that. So I think that's as much as anything. And then, you know, these capital things are kind of lumpy.

Those two, you know, orders for the strander mills, they could have come in Q1, they just happened to come in Q2. That said, you know, I don't -- the stranders are a little bit unusual. You know, so it's not like I'm expecting to get two a quarter for the rest of the year in China. This might well be it for strander orders for China. That's a significant, you know -- there are significant investments for the overall mill and what's good about them, of course, is it leads to a spare part stream for us in China.

On the recycling side, we, you know, even though the timing of the order seem to be falling the second quarter and after, there are still plenty out there that could provide the opportunity, some sizeable systems, I would say.

Okay. So is this market, you know, I guess we've seen the orders or the bookings, you know, kind of bounce around here for the last year. Is this market -- you think finally starting to turn with some of the visibility theme in the second quarter?

I would say that we, you know, we have a decent number of projects. I can't tell what the timing is or, you know, how long they'll, you know, whether they actually turn into orders but we have a significant amount of project in China right now. You know, I have to say there's a little disconnect between that and what you might read in the press, you know, about some oversupply.

I will say that, you know, we're mainly in container board and that's the best grade to be and it's probably the one that's most in balance. So I think as their economy, you know, becomes more internal with people buying, you know, washing machines and houses and stuff like that, it should generate internal demand for boxes which we'll be, you know, will lead to more capacity additions.

) Okay. And then you've mentioned the strander board sales that's two orders. Those were related to Carmanah. Is that right?

Correct. Yes.

Okay. So, I guess, you know, the integration is going pretty well and you're already starting to book some sales there. what do you think the market potential is and, you know, how do you get there? What kind of channel do you need?

Well, so, you know, it's a pretty new marketing in China. I don't -- they don't have wood houses so it's not like it's going to be like the U.S. But they use a lot of wood, you know, in container boards, crating, you know, flooring for the, you know, houses that are largely cement in the forms. I can't -- I can't tell you how quick the uptick is going to be, frankly, you know. I would say it's too new but I think it will take a while.

Are there any big channel partners that you can sell through? I don't know if you have building --

We do have a -- we have a very significant channel partner, if you will. There's a company in Germany called [Diefenbaker] and they sell the press which is really the heart of these OSB mills and we're essentially partnering with them for these types of sales. So we're partnering with them in these orders in China and we're also partnering with them for some other orders in, you know, developing countries, if you will.

Okay. Well, sounds good, guys. Thanks very much.

All right. Thank you, Walt.

Thanks, Walt.

Your next question comes from the line of Rudy Hokanson, Barrington. Please proceed.

Hi, Rudy.

Good morning. Good morning. I'm going to ask a question about China a little bit differently and I know that as soon as you made the acquisition, you started putting the sales force that you have in China and team them up with the acquisition and I was wondering what's the strategy on the sales effort going forward in terms of building that base and working together with your, you know, traditional product lines as well as introducing the new ones.

Because as you said, it's not just housing. There are a lot of different usage for the products and it seems that that, you know, the $4 million are -- I know it's not off the bat, but still, relatively quickly is something that points to a reception for your product line there, you know, the OSB. And I was just wondering if you could maybe flush out that strategy a bit more because China is an important part for Kadant down the road.

Okay. Sure. So, you know, just talking about, our Carmanah product, if you will, the OSB in China. So I would say as an overall for growth and capital, China is the most important market. I say that only because North America is mature, it's not going to add as much capital as you might see in other parts of the world.

What we really provided in terms of sale synergy in China was not so much using our sales force to sell stranding products. We really, you know, it's a unique product. It's a technical sale that Carmanah people themselves are the ones who, you know, who really, you know, make that happen.

What we probably provided on the sale side is just familiarity with how business is done in China. We had some of our recycling and stock prep sales guys travel with them. You know, they are to table kind of helping them interpret things and so forth.

The other -- the other thing we're utilizing from a selling channel point of view, as I mentioned earlier, was our relationship with [Diefenbaker]. You know, they are the largest press manufacturer in the world. They are a great partner to have and between -- there are a good also way to get ourselves in there.

The other thing I would say in China, that's probably helped us in China is the fact that we're there, you know. We're able to say we're going to do some manufacturing in China. We're able to say, you know, you're going to have a place where you can get your spare parts with infrastructure, if you will, on China so I think it's helped them that way as well.

Okay. Thank you.

Does that answer your question?

Yes. Thank you.

Now, another question. In terms of the tax rate, as you pooled the cash from overseas to help pay down debt, is that -- are the taxes that you would have paid to pull the cash -- did they contribute also to a higher tax rate?

Well, that's a very good question, Rudy, and the answer is they did to some extent, yes, because there was the withholding the taxes that were not creditable. But we didn't actually -- we didn't actually take that cash and bring it back to the U.S. It's actually what we did was we lent it from one of our China operations to our -- to one of our subsidiaries in Canada and then they paid down the debt. So the cash never really came back to the U.S.

So therefore, we didn't have to pay the higher tax rate in the U.S. but there were some -- there was a little friction there with some withholding taxes that did contribute to the higher rate.

Okay. And could you please --

Sorry.

No, no. I don't want to interrupt you.

The main -- I'd say the main reason for the increase in the rate, again, is the difference in the geographic distribution of earnings. So we, you know, we estimate this every quarter. And we did have, you know, as we mentioned more income coming out of the U.S. than previously in our previous guidance. That was the main reason for the increase in the rate. But you -- to pick up on that point that it contribute as well.

Okay. Thank you. And could you just repeat for me what you said the effective impact on the higher tax rate will be in the second quarter? I mean, for the year you said it will be $0.11. What will it be in the second quarter?

I don't think we actually gave a number for the second quarter, Rudy. So, you know, it's probably, you know, in $0.0.2 to $0.03 range, I think something like that.

Okay. Thank you. Those are my questions -- yes, go ahead.

You would also -- try to talk to you about the different applications for OSB and talking about how we've, you know, using in freight is quite different than using in housing and so forth. That's not something we get involved with, you know. We only sell our products so the guys would make the OSB and then all those different applications and having OSB penetrate the different applications from, you know, deadlines for containers or furniture, whatever is there -- that's their business, not so much us. We don't have to get out there and talk to people who make furniture and get them these OSB.

Is there -- is there any market research, you know, if there might be in the U.S., in China in terms of growth rate for demand for OSB?

What we looked at when we're doing the acquisition is as much just projects in the pipeline, you know, that we already saw. It's -- I think it's a little tricky to say how quick that uptick's going to be in China.

Okay. Thank you. Those are my questions.

Okay. Thanks, Rudy.

Ladies and gentlemen, once again, if you'd like to ask a question, please press star followed by one.

There are no further questions in queue.

Okay. Thanks, operator.

Let me conclude today's call with what I think are the three key takeaway points. First, we set a new record for bookings at 115 million with solid contribution from our acquisitions as well as from our existing businesses particularly in North America. Second, we had record revenues and booking for parts that consumable to business. And finally, we set a new record for adjusted EBITDA at $12.7 million of 36% compared to Q1 of last year.

I look forward to updating you on our progress on our next call. Thanks very much for listening. Bye.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.