Kadant Inc. (NYSE: KAI ) is a manufacturer and supplier of engineered equipment and systems such as fluid handling, filtration, doctoring, material handling, among other things. The company has three reportable segments: Flow Control, Industrial Processing, and Material Handling. Kadant employs approximatelyI have a masters degree in Analytics from Northwestern University and a bachelors degree in Accounting. I have worked in the investment arena for over 10 years starting as an analyst and working my way u ...

Core Insights - Kadant Inc. has been recognized as one of "America's Greatest Companies 2025" by Newsweek magazine, highlighting its strong stock and financial performance, workforce engagement, sustainability efforts, and innovation [1][2] Company Overview - Kadant Inc. is a global supplier of technologies and engineered systems focused on Sustainable Industrial Processing, enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries [3] - The company is headquartered in Westford, Massachusetts, and employs approximately 3,500 individuals across 20 countries [3]

Kadant (KAI 4.12%), a company specializing in engineered industrial equipment and technologies, reported earnings for Q2 FY2025 on July 29, 2025. The biggest news is that adjusted earnings per share (non-GAAP) and revenue both outpaced analyst expectations in Q2 FY2025: Adjusted EPS was $2.31 versus a $1.94 estimate, and GAAP revenue came in at $255.3 million against a $246.0 million forecast. Despite the strong beat, revenue and earnings fell compared to the same period last year as capital equipment deman ...

Core Points - Kadant held its Second Quarter 2025 Earnings Conference Call, featuring key executives including CEO Jeff Powell and CFO Michael McKenney [1][3]. Group 1 - The conference call was initiated by the operator, indicating that the session was being recorded [2]. - Michael McKenney welcomed participants and introduced the call, emphasizing the presence of CEO Jeff Powell [3].

Financial Data and Key Metrics Changes - Bookings in Q2 increased by 7% to $269 million, driven by strong capital performance and stable aftermarket demand [9] - Revenue decreased by 7% compared to the record revenue in 2024, primarily due to softer capital orders [9] - Adjusted EBITDA was $52 million, down 15% from the previous year, with adjusted EPS at $2.31, down 18% [10][20] - Gross margin improved to 45.9%, up 150 basis points from 44.4% in Q2 2024, attributed to a higher percentage of aftermarket parts [18] Business Line Data and Key Metrics Changes - Flow Control segment revenue increased by 4% to $96 million, with aftermarket revenue making up 75% of total revenue [12] - Industrial Processing segment bookings rose by 9% to $105 million, but revenue decreased by 16% due to weaker capital shipments [14] - Material Handling segment bookings were $71 million, a 16% increase, but revenue declined by 6% [15] Market Data and Key Metrics Changes - Overall market demand in North America was near historical highs, despite ongoing trade policy uncertainties [6][7] - The integration of Dynamic Ceiling Technologies was completed, enhancing market access and growth opportunities [13] Company Strategy and Development Direction - The company aims to capitalize on strong cash flows and improve backlog, with expectations for industrial demand to strengthen in the latter half of the year [16] - The acquisition of Babini is expected to enhance the company's technology offerings in dewatering equipment [16][70] Management's Comments on Operating Environment and Future Outlook - Management noted that trade policy uncertainties and tariff changes have created a cautious environment for capital investment [11][28] - There is optimism for a strong second half of 2025, with expectations for improved capital project activity [28][62] Other Important Information - The company reported a significant increase in operating cash flow by 44% to $40.5 million compared to the previous year [21] - The backlog improved by 16% to $299 million, with a book-to-bill ratio over one for the second consecutive quarter [25] Q&A Session Summary Question: Expectations for sequential order improvement - Management confirmed expectations for strong third and fourth quarters, with capital orders anticipated to increase [33][34] Question: Sustainability of aftermarket parts revenue - Management believes the strong aftermarket revenue is due to the age of the installed base, with a modest decline expected in Q3 [37] Question: Current assets and liabilities - Current assets were approximately $475 million, and current liabilities were about $200 million [41] Question: Impact of capital equipment orders on aftermarket parts - Management anticipates a moderation in aftermarket parts as capital equipment orders increase, affecting gross margins [47] Question: Characterization of underlying demand for capital equipment - Management noted a cautious but improving demand environment, with significant project activity expected as uncertainties clear [59][62] Question: Contributions from acquisitions - The Babini acquisition is expected to have a small impact on the top line, with potential dilution in the short term [68][70]

Financial Data and Key Metrics Changes - Bookings in Q2 increased by 7% to $269 million, driven by strong capital performance and stable aftermarket demand [8] - Revenue decreased by 7% compared to the record revenue in 2024, largely due to softer capital orders [9] - Adjusted EBITDA was $52 million, down 15% from the prior year, while adjusted EPS was $2.31, down 18% [9][18] - Gross margin improved to 45.9%, up 150 basis points from 44.4% in Q2 2024, primarily due to a higher percentage of aftermarket parts [16] Business Line Data and Key Metrics Changes - Flow Control segment revenue increased by 4% to $96 million, with aftermarket revenue making up 75% of total revenue [11] - Industrial Processing segment bookings were up 9% to $105 million, but revenue decreased by 16% due to weaker capital shipments [12] - Material Handling segment bookings increased by 16% to $71 million, although revenue declined by 6% [14] Market Data and Key Metrics Changes - Overall market demand in North America was near historical highs, despite ongoing trade policy uncertainty [6] - The integration of Dynamic Ceiling Technologies is complete, expanding opportunities within the Flow Control segment [12] - The company noted that the economic environment remains uncertain, impacting capital investment activity [10] Company Strategy and Development Direction - The company aims to capitalize on strong cash flows and improve backlog, with expectations for industrial demand to strengthen in the second half of the year [15] - The acquisition of Babini is expected to enhance the company's technology offerings in dewatering equipment [15][66] - The company is focused on mitigating tariff impacts through supplier collaboration and cost-sharing strategies [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sequential improvements in bookings and project activity in the latter half of 2025 [9][35] - The ongoing tariff uncertainties are causing customers to delay capital orders, impacting revenue recognition [26][58] - Management anticipates that the second half of the year will be stronger than the first half, with revenue guidance set at $1.02 billion to $1.04 billion for 2025 [27] Other Important Information - The company reported a significant increase in operating cash flow, up 44% to $40.5 million compared to the prior year [19] - Free cash flow increased by 58% to $36.5 million in Q2 2025 [19] - The company maintains a strong liquidity position with $162 million of borrowing capacity available [22] Q&A Session Summary Question: Expectations for sequential order improvement - Management confirmed expectations for strong third and fourth quarters, with capital orders anticipated to increase [32] Question: Sustainability of aftermarket parts revenue - Management indicated that the strong aftermarket revenue is primarily due to the age of the installed base, with a modest decline expected in Q3 [36] Question: Impact of capital equipment orders on aftermarket parts - Management expects a moderate drop in aftermarket parts as capital equipment orders increase, but overall operating rates are anticipated to rise [37] Question: Current assets and liabilities - Current assets were approximately $475 million, and current liabilities were about $200 million [41] Question: Breakdown of parts and consumables revenue - Parts and consumables made up 71% of total revenue this quarter, up from 63% last year [43] Question: Capital equipment bookings and revenue recognition - Management expects capital revenue to pick up in the back half of the year, with some projects recognized over time [44] Question: Tariff impacts on guidance - Management noted that tariff impacts have remained largely unchanged from prior forecasts, with ongoing adjustments being made [72]

Q2 2025 Performance - Bookings increased by 7% to $269.4 million compared to $251.7 million in Q2 2024[11] - Revenue decreased by 7.1% to $255.3 million compared to $274.8 million in Q2 2024[11] - Net income decreased by 16.4% to $26.2 million compared to $31.3 million in Q2 2024[11] - Adjusted EBITDA decreased by 15.2% to $52.4 million compared to $61.8 million in Q2 2024[11] - Free cash flow increased by 58.1% to $36.5 million compared to $23.1 million in Q2 2024[11] Segment Performance - Flow Control revenue increased by 4% to $95.9 million, while bookings decreased by 1.1% to $93.1 million[15] - Industrial Processing revenue decreased by 16.4% to $95.9 million, but bookings increased by 9% to $105.4 million[20] - Material Handling revenue decreased by 6.4% to $63.4 million, but bookings increased by 16.5% to $70.9 million[25] Financial Position - Cash, cash equivalents, and restricted cash increased to $97.2 million[42] - Debt decreased to $247.2 million[42] Guidance - The company expects FY 2025 revenue of $1.020 to $1.040 billion[46]

Company Performance - Kadant reported quarterly earnings of $2.31 per share, exceeding the Zacks Consensus Estimate of $1.94 per share, but down from $2.81 per share a year ago [1] - The earnings surprise for the quarter was +19.07%, following a previous surprise of +6.6% when actual earnings were $2.1 per share against an expectation of $1.97 [2] - The company achieved revenues of $255.27 million for the quarter, surpassing the Zacks Consensus Estimate by 3.66%, but down from $274.77 million year-over-year [3] Market Performance - Kadant shares have declined approximately 0.3% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [4] - The current Zacks Rank for Kadant is 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $2.64 on revenues of $273.82 million, and for the current fiscal year, it is $9.12 on revenues of $1.03 billion [8] - The outlook for the Manufacturing - General Industrial industry, where Kadant operates, is currently in the top 11% of over 250 Zacks industries, suggesting a favorable environment for performance [9]

[Second Quarter 2025 Earnings Overview](index=1&type=section&id=Second%20Quarter%202025%20Earnings%20Overview) [Financial Highlights](index=1&type=section&id=1.1%20Financial%20Highlights) Kadant Inc. reported a decrease in revenue and net income for Q2 2025 compared to Q2 2024, but saw strong increases in bookings and cash flow, with improved gross margin despite declining EPS and EBITDA metrics Second Quarter 2025 Financial Highlights (YoY Change) | Metric | Q2 2025 Value | Change vs. Q2 2024 | | :-------------------------- | :---------------- | :----------------- | | Revenue | $255.3 million | ↓ 7% | | Organic Revenue | N/A | ↓ 8% | | Gross Margin | 45.9% | ↑ 150 bps | | Net Income | $26.2 million | ↓ 16% | | GAAP EPS | $2.22 | ↓ 17% | | Adjusted EPS | $2.31 | ↓ 18% | | Adjusted EBITDA | $52.4 million | ↓ 15% | | Adjusted EBITDA Margin | 20.5% | ↓ 200 bps | | Operating Cash Flow | $40.5 million | ↑ 44% | | Free Cash Flow | $36.5 million | ↑ 58% | | Bookings | $269.4 million | ↑ 7% | | Organic Bookings | N/A | ↑ 6% | | Ending Backlog | $299 million | N/A | [Management Commentary](index=1&type=section&id=1.2%20Management%20Commentary) Jeffrey L. Powell, President and CEO, highlighted strong cash flow and a solid improvement in capital equipment bookings for the second quarter, attributing the bookings growth to customer preference for Kadant's equipment and technologies in driving sustainable value - Kadant achieved **strong cash flow** and a **solid improvement in capital equipment bookings** in Q2 2025[5](index=5&type=chunk) - The increase in bookings, particularly in the current environment of evolving trade policies, demonstrates customer preference for Kadant's equipment and technologies to drive sustainable value[5](index=5&type=chunk) [Detailed Financial Performance](index=4&type=section&id=Detailed%20Financial%20Performance) [Consolidated Income Statement Analysis](index=4&type=section&id=2.1%20Consolidated%20Income%20Statement%20Analysis) Kadant's consolidated income statement for Q2 and the first six months of 2025 shows a decline in revenue, operating income, and net income compared to the prior year periods, despite a slight increase in selling, general, and administrative expenses Consolidated Statement of Income (Three Months Ended June 28, 2025 vs. June 29, 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change | | :---------------------------------- | :------------------ | :------------------ | :----- | | Revenue | $255,267 | $274,765 | ↓ $19,498 | | Cost of revenue | $138,225 | $152,878 | ↓ $14,653 | | Selling, general, and administrative expenses | $73,941 | $70,004 | ↑ $3,937 | | Research and development expenses | $3,724 | $3,482 | ↑ $242 | | Operating Income | $39,377 | $48,401 | ↓ $9,024 | | Net Income Attributable to Kadant | $26,159 | $31,291 | ↓ $5,132 | | Diluted EPS Attributable to Kadant | $2.22 | $2.66 | ↓ $0.44 | Consolidated Statement of Income (Six Months Ended June 28, 2025 vs. June 29, 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change | | :---------------------------------- | :------------------ | :------------------ | :----- | | Revenue | $494,477 | $523,740 | ↓ $29,263 | | Operating Income | $74,963 | $85,328 | ↓ $10,365 | | Net Income Attributable to Kadant | $50,222 | $55,980 | ↓ $5,758 | | Diluted EPS Attributable to Kadant | $4.26 | $4.76 | ↓ $0.50 | [Segmental Performance](index=5&type=section&id=2.2%20Segmental%20Performance) Kadant's segments showed mixed performance in Q2 2025, with Flow Control experiencing revenue growth, while Industrial Processing and Material Handling saw revenue declines; bookings increased in Industrial Processing and Material Handling but decreased in Flow Control, and gross margins improved across all segments [Revenue by Segment](index=5&type=section&id=2.2.1%20Revenue%20by%20Segment) In Q2 2025, Flow Control revenue increased, while Industrial Processing and Material Handling revenues decreased, with organic revenue changes showing a similar trend Revenue by Segment (Three Months Ended June 28, 2025 vs. June 29, 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Increase (Decrease) | Increase (Decrease) Excluding Acquisitions and FX | | :-------------------- | :------------------ | :------------------ | :------------------ | :------------------------------------------------ | | 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) | | Total | $255,267 | $274,765 | $(19,498) | $(22,430) | | Percentage of Parts and Consumables Revenue | 71% | 63% | ↑ 8% | N/A | Revenue by Segment (Six Months Ended June 28, 2025 vs. June 29, 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Increase (Decrease) | Increase (Decrease) Excluding Acquisitions and FX | | :-------------------- | :------------------ | :------------------ | :------------------ | :------------------------------------------------ | | 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) | | Total | $494,477 | $523,740 | $(29,263) | $(34,435) | | Percentage of Parts and Consumables Revenue | 73% | 66% | ↑ 7% | N/A | [Bookings by Segment](index=5&type=section&id=2.2.2%20Bookings%20by%20Segment) Q2 2025 saw increased bookings in Industrial Processing and Material Handling, while Flow Control experienced a slight decrease, resulting in a 7% overall increase in total bookings year-over-year Bookings by Segment (Three Months Ended June 28, 2025 vs. June 29, 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Increase (Decrease) | Increase (Decrease) Excluding Acquisitions and FX | | :-------------------- | :------------------ | :------------------ | :------------------ | :------------------------------------------------ | | 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 | | Total | $269,375 | $251,722 | $17,653 | $15,226 | | Percentage of Parts and Consumables Bookings | 67% | 71% | ↓ 4% | N/A | Bookings by Segment (Six Months Ended June 28, 2025 vs. June 29, 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Increase (Decrease) | Increase (Decrease) Excluding Acquisitions and FX | | :-------------------- | :------------------ | :------------------ | :------------------ | :------------------------------------------------ | | 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 | | Total | $525,593 | $500,152 | $25,441 | $19,260 | | Percentage of Parts and Consumables Bookings | 70% | 70% | 0% | N/A | [Gross Margin by Segment](index=5&type=section&id=2.2.3%20Gross%20Margin%20by%20Segment) All segments, Flow Control, Industrial Processing, and Material Handling, reported an increase in gross margin percentage for both the three and six months ended June 28, 2025, contributing to a consolidated gross margin improvement Gross Margin by Segment (Three Months Ended June 28, 2025 vs. June 29, 2024) | Segment | 2025 | 2024 | Change | | :-------------------- | :--- | :--- | :----- | | Flow Control | 53.8% | 53.0% | ↑ 0.8% | | Industrial Processing | 42.6% | 41.3% | ↑ 1.3% | | Material Handling | 38.7% | 37.8% | ↑ 0.9% | | Consolidated | 45.9% | 44.4% | ↑ 1.5% | Gross Margin by Segment (Six Months Ended June 28, 2025 vs. June 29, 2024) | Segment | 2025 | 2024 | Change | | :-------------------- | :--- | :--- | :----- | | Flow Control | 53.6% | 53.4% | ↑ 0.2% | | Industrial Processing | 43.3% | 41.5% | ↑ 1.8% | | Material Handling | 38.2% | 36.8% | ↑ 1.4% | | Consolidated | 46.0% | 44.5% | ↑ 1.5% | [Operating Income by Segment](index=6&type=section&id=2.2.4%20Operating%20Income%20by%20Segment) Flow Control's operating income increased in Q2 and YTD 2025, while Industrial Processing and Material Handling experienced declines in operating income for the same periods, with corporate operating loss remaining relatively stable Operating Income by Segment (Three Months Ended June 28, 2025 vs. June 29, 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change | | :-------------------- | :------------------ | :------------------ | :----- | | Flow Control | $24,443 | $23,530 | ↑ $913 | | Industrial Processing | $15,486 | $24,092 | ↓ $8,606 | | Material Handling | $9,939 | $11,188 | ↓ $1,249 | | Corporate | $(10,491) | $(10,409) | ↓ $82 | | Consolidated | $39,377 | $48,401 | ↓ $9,024 | Operating Income by Segment (Six Months Ended June 28, 2025 vs. June 29, 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change | | :-------------------- | :------------------ | :------------------ | :----- | | Flow Control | $47,195 | $45,240 | ↑ $1,955 | | Industrial Processing | $32,318 | $44,091 | ↓ $11,773 | | Material Handling | $17,474 | $16,729 | ↑ $745 | | Corporate | $(22,024) | $(20,732) | ↓ $1,292 | | Consolidated | $74,963 | $85,328 | ↓ $10,365 | [Cash Flow and Balance Sheet Data](index=6&type=section&id=2.3%20Cash%20Flow%20and%20Balance%20Sheet%20Data) Kadant demonstrated strong cash generation in Q2 2025, with significant increases in operating and free cash flow, while the balance sheet shows an increase in total assets, primarily driven by goodwill and inventories, and decreased debt obligations Cash Flow Data (Three Months Ended June 28, 2025 vs. June 29, 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change | | :-------------------------- | :------------------ | :------------------ | :----- | | Operating Cash Flow | $40,482 | $28,066 | ↑ $12,416 | | Capital Expenditures | $(3,968) | $(4,974) | ↑ $1,006 | | Free Cash Flow | $36,514 | $23,092 | ↑ $13,422 | | Depreciation and Amortization Expense | $12,069 | $11,991 | ↑ $78 | Cash Flow Data (Six Months Ended June 28, 2025 vs. June 29, 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change | | :-------------------------- | :------------------ | :------------------ | :----- | | Operating Cash Flow | $63,317 | $50,897 | ↑ $12,420 | | Capital Expenditures | $(7,804) | $(11,245) | ↑ $3,441 | | Free Cash Flow | $55,513 | $39,652 | ↑ $15,861 | | Depreciation and Amortization Expense | $24,082 | $23,730 | ↑ $352 | Balance Sheet Data (June 28, 2025 vs. December 28, 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change | | :-------------------------------- | :------------------ | :------------------ | :----- | | Cash, Cash Equivalents, and Restricted Cash | $97,188 | $95,946 | ↑ $1,242 | | Accounts Receivable, Net | $152,574 | $142,462 | ↑ $10,112 | | Inventories | $168,588 | $146,092 | ↑ $22,496 | | Goodwill | $497,824 | $479,169 | ↑ $18,655 | | Total Assets | $1,484,514 | $1,430,345 | ↑ $54,169 | | Debt Obligations | $247,219 | $286,504 | ↓ $39,285 | | Total Liabilities | $547,221 | $572,217 | ↓ $24,996 | | Stockholders' Equity | $937,293 | $858,128 | ↑ $79,165 | [Summary and Outlook](index=2&type=section&id=Summary%20and%20Outlook) [Full Year and Third Quarter 2025 Guidance](index=2&type=section&id=3.1%20Full%20Year%20and%20Third%20Quarter%202025%20Guidance) Kadant is maintaining its full-year revenue and adjusted EPS guidance, expecting stronger bookings in the second half of 2025, and has provided specific guidance for the third quarter of 2025, with revised GAAP EPS guidance for the full year - Kadant expects **stronger bookings** in the second half of 2025 and continued stable demand for aftermarket parts[11](index=11&type=chunk) 2025 Financial Guidance | Metric | Full Year 2025 Guidance | Previous Guidance | Q3 2025 Guidance | | :-------------------- | :---------------------- | :---------------- | :--------------- | | Revenue | $1.020 - $1.040 billion | Maintained | $256 - $263 million | | Adjusted EPS | $9.05 - $9.25 | Maintained | $2.13 - $2.23 | | GAAP EPS | $8.89 - $9.09 | $8.97 - $9.17 (Revised) | $2.12 - $2.22 | | Acquisition-related costs (FY) | $0.16 (Excluded from Adj. EPS) | $0.08 (Revised) | N/A | | Acquisition-related costs (Q3) | N/A | N/A | $0.01 (Excluded from Adj. EPS) | [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) [Use and Definition of Non-GAAP Measures](index=2&type=section&id=4.1%20Use%20and%20Definition%20of%20Non-GAAP%20Measures) Kadant utilizes several non-GAAP financial measures to provide supplemental information on its core operating performance, excluding items not indicative of core business results, while acknowledging these measures are supplemental and not superior to GAAP - Kadant uses non-GAAP measures including **organic revenue**, **adjusted operating income**, **adjusted net income**, **adjusted EPS**, **EBITDA**, **adjusted EBITDA**, **adjusted EBITDA margin**, and **free cash flow**[14](index=14&type=chunk) - These non-GAAP measures exclude items such as revenue from acquisitions, foreign currency translation effects, amortization expense related to acquired profit in inventory and backlog, acquisition costs, and other income or expense, as they are not indicative of core operating results[15](index=15&type=chunk)[18](index=18&type=chunk)[20](index=20&type=chunk) - **Free cash flow** is used to provide insight into the company's ability to generate cash for acquisitions, debt repayments, and other investing/financing activities[15](index=15&type=chunk) - Non-GAAP measures are considered supplemental and not superior to or a substitute for GAAP results, and may not be comparable to similar measures used by other companies[17](index=17&type=chunk) [Reconciliation of Non-GAAP Measures](index=4&type=section&id=4.2%20Reconciliation%20of%20Non-GAAP%20Measures) Detailed reconciliations are provided to bridge GAAP financial measures to their corresponding non-GAAP counterparts, illustrating specific adjustments for items like acquired profit amortization and acquisition costs for both quarterly and year-to-date periods [Adjusted Net Income and EPS Reconciliation](index=4&type=section&id=4.2.1%20Adjusted%20Net%20Income%20and%20EPS%20Reconciliation) The reconciliation for Q2 and YTD 2025 shows adjustments for after-tax amortization of acquired profit in inventory and backlog, and after-tax acquisition costs, leading to higher adjusted net income and EPS compared to GAAP figures Adjusted Net Income and Adjusted Diluted EPS Reconciliation (Three Months Ended June 28, 2025 vs. June 29, 2024) | Metric | 2025 (Net Income in thousands) | 2025 (Diluted EPS) | 2024 (Net Income in thousands) | 2024 (Diluted EPS) | | :------------------------------------------ | :----------------------------- | :----------------- | :----------------------------- | :----------------- | | Net 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 | $27,232 | $2.31 | $33,018 | $2.81 | Adjusted Net Income and Adjusted Diluted EPS Reconciliation (Six Months Ended June 28, 2025 vs. June 29, 2024) | Metric | 2025 (Net Income in thousands) | 2025 (Diluted EPS) | 2024 (Net Income in thousands) | 2024 (Diluted EPS) | | :------------------------------------------ | :----------------------------- | :----------------- | :----------------------------- | :----------------- | | Net 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 | $51,906 | $4.40 | $61,006 | $5.19 | [Adjusted Operating Income and EBITDA Reconciliation](index=8&type=section&id=4.2.2%20Adjusted%20Operating%20Income%20and%20EBITDA%20Reconciliation) Consolidated and segmental reconciliations for Q2 and YTD 2025 detail adjustments to operating income for acquired profit/backlog amortization, acquisition costs, and indemnification asset provisions, leading to adjusted operating income and adjusted EBITDA figures, with adjusted EBITDA margins decreasing across all segments and consolidated Consolidated Adjusted Operating Income and Adjusted EBITDA Reconciliation (Three Months Ended June 28, 2025 vs. June 29, 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Operating Income | $39,377 | $48,401 | | Acquired Profit in Inventory Amortization | $24 | $529 | | Acquired Backlog Amortization | $202 | $695 | | Acquisition Costs | $908 | $940 | | Indemnification Asset (Provision) Reversal | $0 | $(66) | | Adjusted Operating Income | $40,511 | $50,499 | | Depreciation and Amortization | $11,867 | $11,296 | | Adjusted EBITDA | $52,378 | $61,795 | | Adjusted EBITDA Margin | 20.5% | 22.5% | Consolidated Adjusted Operating Income and Adjusted EBITDA Reconciliation (Six Months Ended June 28, 2025 vs. June 29, 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Operating Income | $74,963 | $85,328 | | Acquired Profit in Inventory Amortization | $35 | $2,860 | | Acquired Backlog Amortization | $581 | $1,494 | | Acquisition Costs | $1,245 | $2,064 | | Indemnification Asset (Provision) Reversal | $(29) | $24 | | Adjusted Operating Income | $76,795 | $91,770 | | Depreciation and Amortization | $23,501 | $22,236 | | Adjusted EBITDA | $100,296 | $114,006 | | Adjusted EBITDA Margin | 20.3% | 21.8% | Adjusted EBITDA Margin by Segment (Three Months Ended June 28, 2025 vs. June 29, 2024) | Segment | 2025 | 2024 | Change | | :-------------------- | :--- | :--- | :----- | | Flow Control | 28.9% | 29.2% | ↓ 0.3% | | Industrial Processing | 22.2% | 25.7% | ↓ 3.5% | | Material Handling | 21.8% | 23.2% | ↓ 1.4% | [Additional Information](index=2&type=section&id=Additional%20Information) [About Kadant](index=9&type=section&id=5.1%20About%20Kadant) Kadant Inc. is a global supplier of technologies and engineered systems focused on Sustainable Industrial Processing, aiming to enhance efficiency, optimize energy utilization, and maximize productivity in process industries, operating globally with approximately 3,500 employees across 20 countries - Kadant Inc. is a global supplier of technologies and engineered systems that drive **Sustainable Industrial Processing**[31](index=31&type=chunk) - The company's products and services enhance efficiency, optimize energy utilization, and maximize productivity in process industries[31](index=31&type=chunk) - Kadant has approximately **3,500 employees** in **20 countries** worldwide[31](index=31&type=chunk) [Safe Harbor Statement](index=9&type=section&id=5.2%20Safe%20Harbor%20Statement) This section serves as a 'Safe Harbor' statement under the Private Securities Litigation Reform Act of 1995, indicating that the press release contains forward-looking statements subject to various known and unknown risks and uncertainties that could cause actual results to differ materially from expectations - The press release contains forward-looking statements regarding future financial and operating performance, product demand, and economic outlook[31](index=31&type=chunk) - These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, as detailed in Kadant's Annual Report on Form 10-K and subsequent SEC filings[31](index=31&type=chunk) - Key risk factors include adverse changes in global economic conditions, variability in capital equipment projects, acquisition strategy, supply chain constraints, and currency fluctuations[31](index=31&type=chunk) [Conference Call Details](index=2&type=section&id=5.3%20Conference%20Call%20Details) Kadant will host a webcast and conference call on July 30, 2025, at 11:00 a.m. Eastern Time, for investors to discuss its second-quarter financial performance and future expectations, with details provided for accessing the live webcast and registering for the Q&A session - Kadant will hold a webcast with a slide presentation for investors on **Wednesday, July 30, 2025, at 11:00 a.m. Eastern Time**[12](index=12&type=chunk) - The webcast will discuss second-quarter financial performance and future expectations, accessible via the 'Investors' section of kadant.com[12](index=12&type=chunk) - Participants for the live Q&A session need to register online to receive a dial-in number and unique PIN[12](index=12&type=chunk) [Contacts](index=10&type=section&id=5.4%20Contacts) Contact information is provided for investor relations and media inquiries - Investor Contact: **Michael McKenney, 978-776-2000, IR@kadant.com**[34](index=34&type=chunk) - Media Contact: **Wes Martz, 269-278-1715, media@kadant.com**[34](index=34&type=chunk)

Core Viewpoint - Kadant Inc. reported a decrease in revenue and net income for the second quarter of 2025 compared to the same period in 2024, but showed strong cash flow and an increase in bookings, indicating a solid demand for its products and services [3][4][5][6][8]. Financial Performance - Revenue decreased by 7% to $255.3 million from $274.8 million in 2024, with organic revenue down 8% [4][10]. - Net income fell by 16% to $26.2 million compared to $31.3 million in 2024, with GAAP EPS decreasing by 17% to $2.22 [5][10]. - Adjusted EPS decreased by 18% to $2.31, excluding acquisition-related costs [5][10]. - Adjusted EBITDA decreased by 15% to $52.4 million, representing 20.5% of revenue, down from 22.5% in 2024 [6][10]. Cash Flow and Bookings - Operating cash flow increased by 44% to $40.5 million compared to $28.1 million in 2024 [6][10]. - Free cash flow rose by 58% to $36.5 million from $23.1 million in 2024 [6][10]. - Bookings increased by 7% to $269.4 million from $251.7 million in 2024, with organic bookings up 6% [7][10]. Outlook - The company maintains its revenue guidance for the full year, expecting revenue between $1.020 billion and $1.040 billion and adjusted EPS between $9.05 and $9.25 [8]. - For the third quarter of 2025, revenue is expected to be between $256 million and $263 million, with GAAP EPS projected between $2.12 and $2.22 [8]. Segment Performance - The Flow Control segment reported revenue of $95.9 million, up from $92.3 million in 2024, while the Industrial Processing segment saw a decline to $95.9 million from $114.8 million [21][24]. - The Material Handling segment's revenue decreased to $63.4 million from $67.7 million [21][24]. Company Overview - Kadant Inc. is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing, with approximately 3,500 employees in 20 countries [28].