Third-Quarter 2026 Results Conference Call
Prepared remarks and analyst questions with Clarence Biggs, Michael Waddams, Vickie Sanders and Alisa Janine Gallup.
Prepared remarks
Operator
Good morning, and welcome to the Usual Industries third-quarter 2026 results call. Joining us are Clarence Biggs, Michael Waddams, Vickie Sanders and Alisa Janine Gallup. Management will make prepared remarks, followed by questions. Please limit your initial contribution to one question and one follow-up.
Clarence Biggs
Thank you. We delivered another quarter of revenue growth and made considerable progress across our enterprise priorities. Revenue increased 6.9%, and adjusted operating income increased 3.4%. Bexler is now contributing for a full quarter, and our leadership team has established a clearer basis for managing the combined business.
Clarence Biggs
There is sometimes a tendency to look at an acquisition exclusively through the financial results. The results matter. So does the ability to get the right people together, establish ownership and use the same information. We now have a shared decision register. I have seen it myself. It is a considerable improvement on asking who has the latest spreadsheet.
Clarence Biggs
We are also making progress with 30by30. We hired 710 colleagues during the quarter and approved more than a thousand requisitions. Our AI standard is in place, and our terminology review has concluded. For those updating their models, company remains the preferred description.
Michael Waddams
Revenue was $2.640 billion, compared with $2.470 billion. Acquired businesses contributed $145 million to the increase, existing businesses contributed $18 million and currency contributed $7 million. The growth attributable to existing businesses was approximately 0.7%.
Michael Waddams
Operating income was $288 million, down from $301 million. Restructuring expense was $38 million and integration expense was $12 million. Excluding those amounts, adjusted operating income was $338 million. The equivalent adjustments last year totaled $26 million, giving adjusted operating income of $327 million. Both reported and adjusted margins declined.
Michael Waddams
Net income was $186 million, or $1.24 per diluted share. Cash from operations was $228 million. After $62 million of capital expenditure, free cash flow was $166 million. Collections remain a fourth-quarter priority. Our full-year revenue and adjusted margin outlooks are unchanged.
Vickie Sanders
On Bexler, the immediate priority has been service continuity. We have retained existing intake routes while bringing cross-business decisions into a common register. That means a colleague can now identify the owner of a decision even where the service request still needs to enter through a different system. We are working through those remaining arrangements in sequence.
Alisa Janine Gallup
Our fourth-quarter calendar will bring leaders and colleagues together through the annual recognition program and 31 Days of Enterprise Alignment. Liquid January follows in the new year. We have coordinated the dates across functions so that the programs support the operating calendar. The opening reception is booked.
Operator
We will now take questions. Julia Ware, Harbury Research.
Questions and answers
Julia Ware
Clarence, nearly all the revenue increase came from acquisitions. What gives you confidence that the initiatives you described are improving the underlying business?
Clarence Biggs
I would start with the fact that the underlying business grew. We have not described the environment as easy. The acquisitions extend our reach, and the enterprise programs give us a more consistent platform from which to operate. You cannot run a business of this size with every division using a different starting point.
Julia Ware
When would you expect that consistency to produce a measurable improvement in organic growth?
Michael Waddams
We have not attached an incremental revenue target to the decision register or the terminology program. Those are operating initiatives. For the existing businesses, we are focused on renewals, conversion and collections. The 0.7% figure is the current result.
Operator
Martin Keene, Aldermere Partners.
Martin Keene
On the adjusted result, the excluded expenses almost doubled. How much of the improvement depends on treating recurring integration work as an adjustment?
Michael Waddams
The reconciliation is fairly direct. Reported operating income declined $13 million. The adjustments increased $24 million. That produces an $11 million increase in adjusted operating income. The costs are incurred expenses; we have shown them separately to make the comparison available.
Martin Keene
Are those costs expected to end?
Michael Waddams
Individual projects have completion dates. We are not providing a date on which the company will cease to have integration expenses.
Clarence Biggs
We remain active in portfolio development. It would be unusual for us to stop improving the business merely to eliminate a reporting category.
Operator
Nadia Reed, Alton Vale Research.
Nadia Reed
Vickie, which systems have actually been retired since the Bexler acquisition?
Vickie Sanders
We have retired two reporting distribution lists and one of the standing review meetings. We have not yet retired the underlying service platforms. The milestone for this quarter was a common decision process, and we delivered that.
Nadia Reed
So the integration milestone does not yet carry a cost saving?
Vickie Sanders
Not from platform retirement. It gives us a record of what needs to happen before a platform can be retired. Previously, some of those dependencies were being discovered after the retirement date had been announced.
Operator
Samuel Pike, Westmere Research.
Samuel Pike
Clarence mentioned 710 hires. The release says 220 net additions. Which measure is being used for 30by30?
Michael Waddams
Net additions. We began the quarter with 47,500 positions and ended with 47,720. There were 710 hires and 490 departures. The approved requisitions are a separate pipeline measure and are not included in occupied positions.
Samuel Pike
And the 1,140 requisitions have budget approval?
Vickie Sanders
They have permission to proceed to recruitment. Final offers remain subject to the applicable approvals. Some of the requisitions replace people included in the departure number.
Clarence Biggs
The important point is that leaders now know which roles they intend to recruit.
Operator
Julia Ware has a follow-up.
Julia Ware
Does Liquid January have an operating objective, or is it an employee event?
Alisa Janine Gallup
It has a cash-discipline workstream and a colleague-engagement workstream. Finance is responsible for the first. My team is responsible for the second. We have found that it is helpful to give the initiative a visible identity.
Michael Waddams
My objective is to reduce collection days.
Alisa Janine Gallup
And we are providing several opportunities for the relevant people to meet.
Julia Ware
Is the reception budget included in the cash-discipline target?
Michael Waddams
The reception budget is included in expenses.
Operator
We have a question from Nadia Reed on the October workforce programs.
Nadia Reed
You removed 1,400 positions on October 1 and welcomed 1,620 people the next day. How does that reduce the cost base?
Michael Waddams
The removed roles represent $92 million of annualized compensation costs. The new cohort represents $108 million. Across those two programs, the annualized compensation run rate is $16 million higher. The separation costs are additional.
Nadia Reed
Then what is the consolidated saving?
Michael Waddams
There is no consolidated saving from those two movements taken together.
Vickie Sanders
The operating plan delivered the removals assigned to Operations. The new positions belong to the growth allocation. We would not charge another program’s new hires against the savings target without changing the target.
Alisa Janine Gallup
The talent program had its own approved requirements. Recruitment was underway before the efficiency changes were completed. The new colleagues did not arrive because 1,400 desks happened to become available.
Clarence Biggs
Both teams delivered the priorities they were given. We are managing a portfolio of decisions, not a single hiring number.
Operator
Samuel Pike has a question on the appointment review.
Samuel Pike
Marianne Duvall worked with Vickie before, and Julian Bellamy has a business interest with Alisa’s husband. Your auditors asked for records, but both appointments remain. What did the review actually change?
Alisa Janine Gallup
The relationships were disclosed. The review established that the disclosures did not reach every required approver. Specified compensation and supplier decisions now require independent approval.
Samuel Pike
Was the external services agreement approved through your office?
Alisa Janine Gallup
It was proposed through the program. No payment was released, and the proposal has been withdrawn.
Michael Waddams
The financial-reporting auditors are continuing their review of the revised process. The Board’s decision to retain the appointments is a separate decision.
Samuel Pike
Can Vickie and Alisa still qualify for program bonuses?
Clarence Biggs
The compensation framework remains in place. The committee will consider delivery and the full record of the year.
Operator
We have time for a final question from Martin Keene.
Martin Keene
With operating profit, net income and free cash flow all down, do you expect executive incentive outcomes to decline as well?
Clarence Biggs
Compensation is a Board matter. Our framework considers financial performance together with strategic delivery and the responsibilities carried by the leadership team. I would not want to prejudge the committee’s work.
Martin Keene
Do the integration milestones count as strategic delivery?
Clarence Biggs
The committee has the full record of the quarter.
Michael Waddams
The annual compensation discussion will describe the measures used.
Operator
That concludes the question period. Mr. Biggs, your closing remarks.
Clarence Biggs
Thank you for joining us. We have a clear set of priorities and a leadership team committed to delivering them. We look forward to updating you on our progress next quarter.
Operator
The call has concluded. The earnings release and transcript are available through Investor Relations.
