Kadant Reports Second Quarter 2025 Results

WESTFORD, Mass., July 29, 2025 (GLOBE NEWSWIRE) -- Kadant Inc. (NYSE: KAI) reported its financial results for the second quarter ended June 28, 2025. Second Quarter Financial Highlights Bookings increased 7% to $269 millionRevenue decreased 7% to $255 millionGross margin increased 150 basis points to 45.9%Net income decreased 16% to $26 millionGAAP EPS decreased 17% to $2.22Adjusted EPS decreased 18% to $2.31Adjusted EBITDA decreased 15% to $52 million and represented 20.5% of revenueOperating cash flow increased 44% to $40 millionFree cash flow increased 58% to $37 millionEnding backlog was $299 million Note: Percent changes above are based on comparison to the prior year period. All references to earnings per share (EPS) are to our EPS as calculated on a diluted basis. Adjusted EPS, adjusted EBITDA, adjusted EBITDA margin, free cash flow, and changes in organic revenue are non-GAAP financial measures that exclude certain items as detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.” Management Commentary“We had strong cash flow and a solid improvement in our capital equipment bookings in the second quarter," said Jeffrey L. Powell, president and chief executive officer of Kadant Inc. “Our strong bookings, particularly notable in the current environment of evolving trade policies, demonstrate our customers' preference for Kadant equipment and technologies to help drive sustainable value in their operations.” Second Quarter 2025 Compared to 2024Revenue decreased seven percent to $255.3 million compared to $274.8 million in 2024. Organic revenue decreased eight percent, which excludes a one percent increase from the favorable effect of foreign currency translation. Gross margin was 45.9 percent compared to 44.4 percent in 2024. Net income was $26.2 million, decreasing 16 percent compared to $31.3 million in 2024. GAAP EPS decreased 17 percent to $2.22 compared to $2.66 in 2024, while adjusted EPS decreased 18 percent to $2.31 compared to $2.81 in 2024. Adjusted EPS excludes acquisition-related costs of $0.09 in 2025 and $0.15 in 2024. Adjusted EBITDA decreased 15 percent to $52.4 million and represented 20.5 percent of revenue compared to $61.8 million and 22.5 percent of revenue in 2024. Operating cash flow increased 44 percent to $40.5 million compared to $28.1 million in 2024. Free cash flow increased 58 percent to $36.5 million compared to $23.1 million in 2024. Bookings increased seven percent to $269.4 million compared to $251.7 million in 2024. Organic bookings increased six percent, which excludes a one percent increase from the favorable effect of foreign currency translation. Summary and Outlook"We have a healthy backlog and expect stronger bookings in the second half of 2025,” continued Mr. Powell. “Capital project activity remains high and stable demand for our aftermarket parts is expected to continue. We are maintaining our revenue and adjusted EPS guidance for the full year and expect revenue of $1.020 to $1.040 billion and adjusted EPS of $9.05 to $9.25. The 2025 adjusted EPS guidance excludes $0.16 of acquisition-related costs, revised from $0.08 of acquisition-related costs in our previous guidance. We expect GAAP EPS of $8.89 to $9.09, revised from our previous GAAP EPS guidance of $8.97 to $9.17. For the third quarter of 2025, we expect revenue of $256 to $263 million, GAAP EPS of $2.12 to $2.22 and, after excluding $0.01 of acquisition-related costs, adjusted EPS of $2.13 to $2.23.” Conference Call Kadant will hold a webcast with a slide presentation for investors on Wednesday, July 30, 2025, at 11:00 a.m. Eastern Time to discuss its second quarter financial performance, as well as future expectations. To listen to the call live and view the webcast, go to the “Investors” section of the Company’s website at kadant.com. Participants interested in joining the call’s live question and answer session are required to register by clicking here or selecting the Q&A link on our website to receive a dial-in number and unique PIN. It is recommended that you join the call 10 minutes prior to the start of the event. A replay of the webcast presentation will be available on our website through August 29, 2025. Prior to the call, our earnings release and the slides used in the webcast presentation will be filed with the Securities and Exchange Commission and will be available at sec.gov. After the webcast, Kadant will post its updated general investor presentation incorporating the second quarter results on its website at kadant.com under the “Investors” section. Use of Non-GAAP Financial MeasuresIn addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including increases or decreases in revenue excluding the effect of acquisitions and foreign currency translation (organic revenue), adjusted operating income, adjusted net income, adjusted EPS, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, adjusted EBITDA margin, and free cash flow. We use organic revenue to understand our trends and to forecast and evaluate our financial performance and compare revenue to prior periods. Organic revenue excludes revenue from acquisitions for the four quarterly reporting periods following the date of the acquisition and the effect of foreign currency translation. Revenue in the second quarter of 2025 included $0.8 million from acquisitions and a favorable foreign currency translation effect of $2.1 million compared to the second quarter of 2024. Revenue in the first six months of 2025 included $8.8 million from acquisitions and an unfavorable foreign currency translation effect of $3.7 million compared to the first six months of 2024. Our other non-GAAP financial measures exclude amortization expense related to acquired profit in inventory and backlog, acquisition costs, and other income or expense, as indicated. Collectively, these items are excluded as they are not indicative of our core operating results and are not comparable to other periods, which have differing levels of incremental costs, expenditures or income, or none at all. Additionally, we use free cash flow in order to provide insight on our ability to generate cash for acquisitions and debt repayments, as well as for other investing and financing activities. We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook. We believe that the inclusion of such measures helps investors gain an understanding of our underlying operating performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts and to the performance of our competitors. Such measures are also used by us in our financial and operating decision-making and for compensation purposes. We also believe this information is responsive to investors' requests and gives them additional measures of our performance. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for the results of operations or cash flows prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release have limitations associated with their use as compared to the most directly comparable GAAP measures, in that they may be different from, and therefore not comparable to, similar measures used by other companies. Second Quarter Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude: Pre-tax amortization of acquired profit in inventory and backlog of $0.2 million in 2025 and $1.2 million in 2024.Pre-tax acquisition costs of $0.9 million in both 2025 and 2024.Pre-tax indemnification asset provision of $0.1 million in 2024. Adjusted net income and adjusted EPS exclude: After-tax amortization of acquired profit in inventory and backlog of $0.2 million in 2025 and $0.9 million ($1.2 million net of tax of $0.3 million) in 2024.After-tax acquisition costs of $0.9 million in 2025 and $0.8 million ($0.9 million net of tax of $0.1 million) in 2024. Free cash flow is calculated as operating cash flow less: Capital expenditures of $4.0 million in 2025 and $5.0 million in 2024. First Six Months Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude: Pre-tax amortization of acquired profit in inventory and backlog of $0.6 million in 2025 and $4.4 million in 2024.Pre-tax acquisition costs of $1.2 million in 2025 and $2.1 million in 2024. Adjusted net income and adjusted EPS exclude: After-tax amortization of acquired profit in inventory and backlog of $0.5 million ($0.6 million net of tax of $0.1 million) in 2025 and $3.3 million ($4.4 million net of tax of $1.1 million) in 2024.After-tax acquisition costs of $1.2 million in 2025 and $1.7 million ($2.1 million net of tax of $0.4 million) in 2024. Free cash flow is calculated as operating cash flow less: Capital expenditures of $7.8 million in 2025 and $11.2 million in 2024. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release. Financial Highlights (unaudited)(In thousands, except per share amounts and percentages) Three Months Ended Six Months EndedConsolidated Statement of Income June 28,2025 June 29,2024 June 28,2025 June 29,2024Revenue $255,267 $274,765 $494,477 $523,740 Costs and Operating Expenses: Cost of revenue 138,225 152,878 267,105 290,891 Selling, general, and administrative expenses 73,941 70,004 145,162 140,309 Research and development expenses 3,724 3,482 7,247 7,212 215,890 226,364 419,514 438,412 Operating Income 39,377 48,401 74,963 85,328 Interest Income 439 368 956 979 Interest Expense (3,338) (5,201) (7,160) (9,870)Other Expense, Net (17) (2) (33) (32)Income Before Provision for Income Taxes 36,461 43,566 68,726 76,405 Provision for Income Taxes 9,822 11,992 17,650 19,846 Net Income 26,639 31,574 51,076 56,559 Net Income Attributable to Noncontrolling Interests (480) (283) (854) (579)Net Income Attributable to Kadant $26,159 $31,291 $50,222 $55,980 Earnings per Share Attributable to Kadant: Basic $2.22 $2.66 $4.27 $4.77 Diluted $2.22 $2.66 $4.26 $4.76 Weighted Average Shares: Basic 11,776 11,743 11,768 11,734 Diluted 11,793 11,766 11,784 11,755 Three Months Ended Three Months EndedAdjusted Net Income and Adjusted Diluted EPS (a)June 28,2025 June 28,2025 June 29,2024 June 29,2024Net Income and Diluted EPS Attributable to Kadant, as Reported$26,159 $2.22 $31,291 $2.66 Adjustments, Net of Tax: Acquired Profit in Inventory and Backlog Amortization 170 0.01 929 0.08 Acquisition Costs 903 0.08 798 0.07 Adjusted Net Income and Adjusted Diluted EPS (a)$27,232 $2.31 $33,018 $2.81 Six Months Ended Six Months Ended June 28,2025 June 28,2025 June 29,2024 June 29,2024Net Income and Diluted EPS Attributable to Kadant, as Reported$50,222 $4.26 $55,980 $4.76 Adjustments, Net of Tax: Acquired Profit in Inventory and Backlog Amortization 466 0.04 3,298 0.28 Acquisition Costs 1,218 0.10 1,728 0.15 Adjusted Net Income and Adjusted Diluted EPS (a)$51,906 $4.40 $61,006 $5.19 Three Months Ended Increase(Decrease)Excluding Revenue by Segment June 28,2025 June 29,2024 Increase(Decrease) Acquisitionsand FX (a,b) Flow Control $95,947 $92,290 $3,657 $2,168 Industrial Processing 95,937 114,753 (18,816) (19,271)Material Handling 63,383 67,722 (4,339) (5,327) $255,267 $274,765 $(19,498) $(22,430) Percentage of Parts and Consumables Revenue 71% 63% Six Months Ended Increase(Decrease) Increase(Decrease)Excluding June 28,2025 June 29,2024 Acquisitionsand FX (a,b) Flow Control $188,388 $178,972 $9,416 $2,948 Industrial Processing 185,461 220,614 (35,153) (32,775)Material Handling 120,628 124,154 (3,526) (4,608) $494,477 $523,740 $(29,263) $(34,435) Percentage of Parts and Consumables Revenue 73% 66% Three Months Ended Increase(Decrease) Increase(Decrease)Excluding Bookings by Segment June 28,2025 June 29,2024 Acquisitionsand FX (b) Flow Control $93,055 $94,098 $(1,043) $(2,191)Industrial Processing 105,374 96,714 8,660 8,575 Material Handling 70,946 60,910 10,036 8,842 $269,375 $251,722 $17,653 $15,226 Percentage of Parts and Consumables Bookings 67% 71% Six Months Ended Increase Increase(Decrease)Excluding June 28,2025 June 29,2024 Acquisitionsand FX (b) Flow Control $193,042 $188,768 $4,274 $(3,121)Industrial Processing 197,740 186,591 11,149 14,074 Material Handling 134,811 124,793 10,018 8,307 $525,593 $500,152 $25,441 $19,260 Percentage of Parts and Consumables Bookings 70% 70% Three Months Ended Six Months EndedAdditional Segment Information June 28,2025 June 29,2024 June 28,2025 June 29,2024Gross Margin: Flow Control 53.8% 53.0% 53.6% 53.4% Industrial Processing 42.6% 41.3% 43.3% 41.5% Material Handling 38.7% 37.8% 38.2% 36.8% Consolidated 45.9% 44.4% 46.0% 44.5% Operating Income: Flow Control $24,443 $23,530 $47,195 $45,240 Industrial Processing 15,486 24,092 32,318 44,091 Material Handling 9,939 11,188 17,474 16,729 Corporate (10,491) (10,409) (22,024) (20,732) $39,377 $48,401 $74,963 $85,328 Adjusted Operating Income (a,c): Flow Control $24,682 $24,563 $47,834 $46,475 Industrial Processing 16,358 24,443 33,324 46,237 Material Handling 9,962 11,902 17,661 19,790 Corporate (10,491) (10,409) (22,024) (20,732) $40,511 $50,499 $76,795 $91,770 Capital Expenditures: Flow Control $1,380 $1,961 $2,889 $3,835 Industrial Processing 1,595 1,851 2,920 4,734 Material Handling 993 1,157 1,992 2,663 Corporate — 5 3 13 $3,968 $4,974 $7,804 $11,245 Three Months Ended Six Months EndedCash Flow and Other Data June 28,2025 June 29,2024 June 28,2025 June 29,2024Operating Cash Flow $40,482 $28,066 $63,317 $50,897 Capital Expenditures (3,968) (4,974) (7,804) (11,245)Free Cash Flow (a) $36,514 $23,092 $55,513 $39,652 Depreciation and Amortization Expense $12,069 $11,991 $24,082 $23,730 Balance Sheet Data June 28,2025 December 28,2024Assets Cash, Cash Equivalents, and Restricted Cash $97,188 $95,946 Accounts Receivable, Net 152,574 142,462 Inventories 168,588 146,092 Contract Assets 11,105 18,408 Property, Plant, and Equipment, Net 174,724 170,331 Intangible Assets 272,973 279,494 Goodwill 497,824 479,169 Other Assets 109,538 98,443 $1,484,514 $1,430,345 Liabilities and Stockholders' Equity Accounts Payable $52,541 $51,062 Debt Obligations 247,219 286,504 Other Borrowings 1,704 2,023 Other Liabilities 245,757 232,628 Total Liabilities 547,221 572,217 Stockholders' Equity 937,293 858,128 $1,484,514 $1,430,345 Three Months Ended Six Months EndedAdjusted Operating Income and Adjusted EBITDA Reconciliation (a) June 28,2025 June 29,2024 June 28,2025 June 29,2024Consolidated Net Income Attributable to Kadant $26,159 $31,291 $50,222 $55,980 Net Income Attributable to Noncontrolling Interests 480 283 854 579 Provision for Income Taxes 9,822 11,992 17,650 19,846 Interest Expense, Net 2,899 4,833 6,204 8,891 Other Expense, Net 17 2 33 32 Operating Income 39,377 48,401 74,963 85,328 Acquired Profit in Inventory Amortization (d) 24 529 35 2,860 Acquired Backlog Amortization (e) 202 695 581 1,494 Acquisition Costs 908 940 1,245 2,064 Indemnification Asset (Provision) Reversal (f) — (66) (29) 24 Adjusted Operating Income (a) 40,511 50,499 76,795 91,770 Depreciation and Amortization 11,867 11,296 23,501 22,236 Adjusted EBITDA (a) $52,378 $61,795 $100,296 $114,006 Adjusted EBITDA Margin (a,g) 20.5% 22.5% 20.3% 21.8% Flow Control Operating Income $24,443 $23,530 $47,195 $45,240 Acquired Profit in Inventory Amortization (d) 24 235 35 235 Acquired Backlog Amortization (e) 184 253 463 253 Acquisition Costs 31 566 39 566 Indemnification Asset (Provision) Reversal (f) — (21) 102 181 Adjusted Operating Income (a) 24,682 24,563 47,834 46,475 Depreciation and Amortization 3,081 2,359 6,093 4,580 Adjusted EBITDA (a) $27,763 $26,922 $53,927 $51,055 Adjusted EBITDA Margin (a,g) 28.9% 29.2% 28.6% 28.5% Industrial Processing Operating Income $15,486 $24,092 $32,318 $44,091 Acquired Profit in Inventory Amortization (d) — 294 — 1,585 Acquisition Costs 872 89 1,212 688 Indemnification Asset Provision (f) — (32) (206) (127) Adjusted Operating Income (a) 16,358 24,443 33,324 46,237 Depreciation and Amortization 4,904 5,095 9,629 10,254 Adjusted EBITDA (a) $21,262 $29,538 $42,953 $56,491 Adjusted EBITDA Margin (a,g) 22.2% 25.7% 23.2% 25.6% Material Handling Operating Income $9,939 $11,188 $17,474 $16,729 Acquired Profit in Inventory Amortization (d) — — — 1,040 Acquired Backlog Amortization (e) 18 442 118 1,241 Acquisition Costs 5 285 (6) 810 Indemnification Asset (Provision) Reversal (f) — (13) 75 (30) Adjusted Operating Income (a) 9,962 11,902 17,661 19,790 Depreciation and Amortization 3,870 3,830 7,756 7,378 Adjusted EBITDA (a) $13,832 $15,732 $25,417 $27,168 Adjusted EBITDA Margin (a,g) 21.8% 23.2% 21.1% 21.9% Corporate Operating Loss $(10,491) $(10,409) (22,024) $(20,732) Depreciation and Amortization 12 12 23 24 EBITDA (a) $(10,479) $(10,397) $(22,001) $(20,708) (a) Represents a non-GAAP financial measure. (b) Represents the increase (decrease) resulting from the exclusion of acquisitions and from the conversion of current period amounts reported in local currencies into U.S. dollars at the exchange rate of the prior period compared to the U.S. dollar amount reported in the prior period. (c) See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and Adjusted EBITDA Reconciliation.” (d) Represents amortization expense within cost of revenue associated with acquired profit in inventory. (e) Represents intangible amortization expense associated with acquired backlog. (f) Represents the provision for or reversal of indemnification assets related to the establishment or release of tax reserves associated with uncertain tax positions. (g) Calculated as adjusted EBITDA divided by revenue in each period. About Kadant Kadant Inc. is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing®. The Company’s products and services play an integral role in enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries. Kadant is based in Westford, Massachusetts, with approximately 3,500 employees in 20 countries worldwide. For more information, visit kadant.com. Safe Harbor StatementThe following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our future financial and operating performance, demand for our products, and economic and industry outlook. These forward-looking statements represent our expectations as of the date of this press release. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. 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 set forth under the heading “Risk Factors” in Kadant’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024 and subsequent filings with the Securities and Exchange Commission. These include risks and uncertainties relating to adverse changes in global and local economic conditions; the variability and difficulty in accurately predicting revenues from large capital equipment and systems projects; our acquisition strategy; levels of residential construction activity; reductions by our wood processing customers of their capital spending or production of oriented strand board; changes to the global timber supply; development and use of digital media; cyclical economic conditions affecting the global mining industry; demand for coal, including economic and environmental risks associated with coal; failure of our information systems or breaches of data security and cybersecurity incidents; implementation of our internal growth strategy; competition; our ability to successfully manage our manufacturing operations; supply chain constraints, inflationary pressure, price increases or shortages in raw materials; loss of key personnel and effective succession planning; future restructurings; protection of intellectual property; changes to tax laws and regulations; climate change; adequacy of our insurance coverage; global operations; policies of the Chinese government; the variability and uncertainties in sales of capital equipment in China; currency fluctuations; changes to government regulations and policies around the world; compliance with government regulations and policies and compliance with laws; environmental laws and regulations; environmental, health and safety laws and regulations impacting the mining industry; our debt obligations; restrictions in our credit agreement and note purchase agreement; soundness of financial institutions; fluctuations in our share price; and anti-takeover provisions. ContactsInvestor Contact Information:Michael McKenney, 978-776-2000IR@kadant.com Media Contact Information:Wes Martz, 269-278-1715media@kadant.com

Kadant Reports Second Quarter 2025 Results

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