Core Viewpoint - Kadant Inc. is set to release its second quarter results for 2025 on July 29, 2025, followed by a webcast on July 30, 2025, to discuss financial performance and future expectations [1]. Group 1: Financial Performance Announcement - The company will announce its second quarter results after market close on July 29, 2025 [1]. - A webcast will be held on July 30, 2025, at 11:00 a.m. Eastern Time to discuss the financial performance [1]. Group 2: Webcast Participation - Interested participants must register to join the live question and answer session during the call [2]. - A replay of the webcast will be available on the company's website until August 29, 2025 [2]. Group 3: Company Overview - Kadant is a global supplier of technologies and engineered systems focused on Sustainable Industrial Processing® [3]. - The company enhances efficiency, optimizes energy utilization, and maximizes productivity in process industries [3]. - Kadant is headquartered in Westford, Massachusetts, and employs approximately 3,500 people across 20 countries [3].

Core Insights - Kadant Inc. has received orders totaling $18 million from three lumber producers in North America and Europe since its first quarter earnings call, with shipments expected between late 2025 and Q3 2026 [1][2] - The orders include capital equipment for debarking, stranding, chipping, and batch feeding whole logs and lumber wastewood, aimed at producing oriented strand board (OSB) and dimensional lumber [1] - Kadant's smart technology systems will enhance wood processing operations by utilizing key data to optimize production processes [1][2] Company Overview - Kadant Inc. is a global supplier of technologies and engineered systems that promote sustainable industrial processing, enhancing efficiency and productivity in process industries [3] - The company is headquartered in Westford, Massachusetts, and employs approximately 3,500 people across 20 countries [3]

Financial Data and Key Metrics Changes - Revenue in Q1 2025 declined by 4% compared to the same period last year, primarily due to weaker capital shipments in the Industrial Processing segment [10][20] - Free cash flow increased by 15% to $19 million in Q1 2025 compared to $16.6 million in Q1 2024 [21] - Adjusted EBITDA decreased by 8% to $48 million, with an adjusted EBITDA margin of 20%, down from 21% in the prior year [20][10] - GAAP EPS decreased by 3% to $2.04, while adjusted EPS decreased by 12% to $2.10, exceeding the high end of guidance by $0.05 [20][10] Business Line Data and Key Metrics Changes - In the Flow Control segment, bookings increased by 6% to $100 million, with Q1 revenue up 7% to $92 million, driven by strong demand for aftermarket parts [11] - The Industrial Processing segment saw a revenue decline of 15% to $90 million, primarily due to a significant drop in capital shipments, although aftermarket parts revenue made up a record 80% of total revenue in this segment [12][13] - The Material Handling segment experienced stable demand for aftermarket parts, with revenue slightly up to $57 million, while overall bookings remained flat [14][15] Market Data and Key Metrics Changes - Aftermarket parts bookings represented 74% of total bookings, reaching a record $190 million, benefiting from a large installed base [10] - The geopolitical climate and trade policy uncertainties have created a challenging environment, impacting customer decision-making and capital project timing [6][29] Company Strategy and Development Direction - The company is focused on adapting to changing economic circumstances and exploring alternative supply sources in response to tariffs [6][7] - Despite uncertainties, the company remains confident in its ability to deliver value and maintain strong free cash flow [16][17] - The revised guidance for 2025 reflects anticipated revenue of $1.02 billion to $1.04 billion, down from previous estimates due to tariff impacts and delayed capital orders [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is strong demand for aftermarket parts, the uncertainty surrounding tariffs has delayed capital equipment orders [9][28] - The company believes it is well-positioned to respond to changes in trade policy while continuing to support customers [7][16] - Management expressed confidence that the underlying fundamentals of the markets remain strong despite current challenges [16][17] Other Important Information - Gross margin in Q1 2025 was 46.1%, the highest since 2017, up 150 basis points from the previous year [18] - The effective tax rate for Q1 was 24.3%, including benefits from equity awards [20] - The company has a healthy balance sheet with $133 million of borrowing capacity available under its revolving credit facility [24] Q&A Session Summary Question: What is the outlook for deferred orders and project activity? - Management indicated that while there is a pause in project timing, discussions and activity levels remain strong, with no significant cancellations observed [35][37] Question: How are tariffs impacting capital projects? - Management noted that while tariffs have created uncertainty, they do not expect a large number of projects to be canceled, although some may be delayed [49][50] Question: What is the expected mix of parts versus capital sales? - The company anticipates a continued strong performance in parts and consumables, with expectations for capital revenues to improve in the second half of the year [66][67] Question: How is the company addressing tariff-related cost increases? - Management is implementing surcharges and exploring alternative suppliers to mitigate the impact of tariffs, aiming for cost neutrality by the end of the year [73][75]

Financial Data and Key Metrics Changes - Revenue in Q1 2025 declined by 4% compared to the same period last year, primarily due to weaker capital shipments in the Industrial Processing segment [11][18] - Adjusted EBITDA decreased by 8% to $48 million, with an adjusted EBITDA margin decline of 100 basis points compared to the prior year [11][20] - Free cash flow increased by 15% to $19 million in Q1 2025 compared to $16.6 million in Q1 2024 [21] Performance by Business Segment - **Flow Control Segment**: Bookings increased by 6% to $100 million, with Q1 revenue up 7% to $92 million, driven by strong demand for aftermarket parts [12][13] - **Industrial Processing Segment**: Q1 revenue declined by 15% to $90 million, largely due to a significant drop in capital shipments, although aftermarket parts revenue made up a record 80% of total revenue in this segment [14][15] - **Material Handling Segment**: Revenue was slightly up to $57 million, with aftermarket parts comprising 65% of Q1 revenue, despite a decline in capital equipment demand [15][16] Market Data and Key Metrics Changes - Aftermarket parts bookings represented 74% of total bookings, reaching a record $190 million in Q1 2025 [11] - The company noted that the geopolitical climate and trade policy uncertainties have introduced transitory headwinds, particularly affecting capital project timing [12][16] Company Strategy and Industry Competition - The company is exploring alternative supply sources to mitigate the impact of tariffs and is well-positioned to respond to changes in trade policy [6][7] - Management emphasized the importance of maintaining high levels of customer support while navigating the challenges posed by tariffs and geopolitical uncertainties [7][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver value despite ongoing uncertainties, highlighting strong fundamentals in the markets served [16][17] - The company anticipates that the second half of 2025 will be significantly stronger than the first half, with expectations for improved capital order activity [30][31] Other Important Information - The effective tax rate for Q1 was 24.3%, influenced by tax benefits related to equity awards [20] - The company revised its full-year 2025 revenue guidance to $1.02 billion to $1.04 billion, down from previous estimates due to tariff impacts and delays in capital orders [29][30] Q&A Session Summary Question: What is the outlook for deferred orders and project activity? - Management indicated that while there is a pause in project activity due to tariffs, discussions and quote activity remain strong, with no significant project cancellations observed [36][40] Question: How does the company view the impact of tariffs on capital projects? - Management noted that while tariffs have caused delays, they do not expect a significant number of projects to be canceled, emphasizing the need for customers to eventually invest in new equipment [52][56] Question: What is the expected mix of parts versus capital sales for the year? - The company anticipates a parts and consumables revenue percentage of around 69% for the year, with expectations for improved capital revenues in the second half [67][69]

Financial Data and Key Metrics Changes - Revenue in Q1 2025 declined by 4% compared to the same period last year, primarily due to weaker capital shipments in the Industrial Processing segment [11][19] - Adjusted EBITDA decreased by 8% to $48 million, with an adjusted EBITDA margin of 20%, down from 21% in Q1 2024 [11][21] - Free cash flow increased by 15% to $19 million in Q1 2025 compared to $16.6 million in Q1 2024 [22] - GAAP EPS decreased by 3% to $2.04, while adjusted EPS decreased by 12% to $2.10, exceeding the high end of guidance by $0.05 [21][22] Performance by Business Segment - **Flow Control Segment**: Bookings increased by 6% to $100 million, with Q1 revenue up 7% to $92 million, driven by strong demand for Fluid Handling products [12][13] - **Industrial Processing Segment**: Q1 revenue declined by 15% to $90 million, primarily due to a significant drop in capital shipments, although aftermarket parts revenue made up a record 80% of total revenue in this segment [14][15] - **Material Handling Segment**: Revenue was slightly up to $57 million, with aftermarket parts comprising 65% of Q1 revenue, while overall bookings remained flat [15][17] Market Data and Key Metrics Changes - Aftermarket parts bookings represented 74% of total bookings, reaching a record $190 million, benefiting from a large installed base [11][12] - The company noted that the geopolitical climate and trade uncertainties have introduced transitory headwinds, particularly affecting the Industrial Processing segment [13][17] Company Strategy and Industry Competition - The company is assessing supply chain vulnerabilities due to tariffs and exploring alternative supply sources to mitigate impacts [7][8] - Management emphasized the importance of maintaining high levels of customer support while adapting to changing economic circumstances [8][18] - The company expects strong performance in the Flow Control segment despite geopolitical challenges, while the Industrial Processing segment faces more uncertainty [13][17] Management's Comments on Operating Environment and Future Outlook - Management indicated that the uncertainty from tariffs has delayed capital equipment orders, but they remain confident in the long-term fundamentals of their markets [9][18] - The company anticipates that the second half of 2025 will be significantly stronger than the first half, with a revised revenue guidance of $1.02 billion to $1.04 billion [30][31] - Management acknowledged that while there is a healthy level of quote activity for capital equipment, customers are delaying orders due to uncertainty [29][63] Other Important Information - The company expects incremental material costs of approximately $5 million to $6 million due to tariffs, impacting adjusted EPS by $0.32 to $0.39 [28][30] - The effective tax rate for Q1 was 24.3%, influenced by tax benefits related to equity awards [21] Q&A Session Summary Question: Insights on order book and potential deferrals - Management noted that while there is a pause in project timing, discussions and activity levels remain strong, with no projects canceled [36][38] Question: Impact of tariffs on discretionary capital projects - Management indicated that while tariffs create uncertainty, significant project cancellations are rare, and they expect projects to eventually move forward [50][52] Question: Guidance on capital bookings needed for a strong second half - Management stated that a 15% to 20% increase in capital order flow is necessary to achieve a strong second half, with ongoing discussions on several projects [58][60] Question: Understanding the impact of tariffs on pricing and margins - Management confirmed that they are implementing surcharges to mitigate tariff impacts, but the timing of these adjustments may vary [73][76] Question: Expectations for capital project recovery in the back half of the year - Management emphasized the need for capital bookings to materialize in Q2 to support revenue expectations for the second half of 2025 [78][79]

KAI 1Q25 BUSINESS REVIEW– APRIL 2025 | © 2025 KADANT INC. ALL RIGHTS RESERVED. 2 Use of Non-GAAP Financial Measures In addition to the financial measures prepared in accordance with U.S. 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 EPS, adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EB ...

Core Viewpoint - Kadant (KAI) reported quarterly earnings of $2.10 per share, exceeding the Zacks Consensus Estimate of $1.97 per share, but down from $2.38 per share a year ago [1][2] Financial Performance - The earnings surprise for the quarter was 6.60%, with the company having surpassed consensus EPS estimates in all four of the last quarters [2] - Kadant's revenues for the quarter were $239.21 million, slightly above the Zacks Consensus Estimate by 0.13%, but down from $248.98 million year-over-year [3] - The company has exceeded consensus revenue estimates three times in the last four quarters [3] Stock Performance and Outlook - Kadant shares have declined approximately 9.1% since the beginning of the year, compared to a 6% decline in the S&P 500 [4] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market [7] - The consensus EPS estimate for the upcoming quarter is $2.64 on revenues of $267.54 million, and for the current fiscal year, it is $9.94 on revenues of $1.05 billion [8] Industry Context - The Manufacturing - General Industrial industry, to which Kadant belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may impact stock performance [9]

[Kadant Inc. First Quarter 2025 Earnings Release](index=1&type=section&id=Kadant%20Inc.%20First%20Quarter%202025%20Earnings%20Release) [First Quarter 2025 Financial and Operational Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20and%20Operational%20Highlights) Kadant Inc. reported Q1 2025 results largely in line with expectations, achieving record aftermarket parts demand and strong margins despite a decline in overall revenue and EPS - Management noted that despite increasing geopolitical and trade uncertainties, the company's performance was in line with expectations, highlighted by **record demand for aftermarket parts** and strong execution by operations teams, which contributed to **strong margins and healthy free cash flow**[5](index=5&type=chunk) Q1 2025 Key Financial Metrics | Metric | Value | Change vs. Q1 2024 | | :--- | :--- | :--- | | Bookings | $256 million | +3% | | Revenue | $239 million | -4% | | Gross Margin | 46.1% | +150 bps | | Net Income | $24 million | -3% | | GAAP EPS | $2.04 | -3% | | Adjusted EPS | $2.10 | -12% | | Adjusted EBITDA | $48 million | -8% | | Free Cash Flow | $19 million | +15% | [First Quarter 2025 Financial Performance](index=1&type=section&id=First%20Quarter%202025%20Financial%20Performance) Q1 2025 revenue decreased 4% due to organic decline, while gross margin improved, bookings grew 3%, and adjusted EPS fell 12% Q1 2025 vs Q1 2024 Performance Comparison | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $239.2M | $249.0M | -4% | | Organic Revenue | - | - | -5% | | Gross Margin | 46.1% | 44.6% | +150 bps | | Net Income | $24.1M | $24.7M | -3% | | GAAP EPS | $2.04 | $2.10 | -3% | | Adjusted EPS | $2.10 | $2.38 | -12% | | Adjusted EBITDA | $47.9M | $52.2M | -8% | | Free Cash Flow | $19.0M | $16.6M | +15% | | Bookings | $256.2M | $248.4M | +3% | - The **4% revenue decrease to $239.2 million** included a 5% organic decline, a 3% positive impact from acquisitions, and a 2% negative impact from foreign currency translation[6](index=6&type=chunk) - **Bookings increased 3% to $256.2 million**, driven by a 2% organic increase and a 4% contribution from acquisitions, which was partially offset by a 3% unfavorable foreign currency effect[9](index=9&type=chunk) [Business Outlook](index=2&type=section&id=Business%20Outlook) Kadant revised its full-year 2025 guidance downwards for revenue and adjusted EPS due to geopolitical uncertainty, tariffs, and project delays - The 2025 outlook was negatively impacted by estimated incremental **tariff costs of $5 to $6 million** ($0.32 to $0.39 per share) and customer delays of large capital projects, pushing associated revenue into 2026[11](index=11&type=chunk) Full-Year 2025 Guidance Revision | Metric | Previous Guidance | Revised Guidance | | :--- | :--- | :--- | | Revenue | $1.040B - $1.065B | $1.020B - $1.040B | | GAAP EPS | $9.63 - $9.98 | $8.97 - $9.17 | | Adjusted EPS | $9.70 - $10.05 | $9.05 - $9.25 | Second Quarter 2025 Guidance | Metric | Q2 2025 Guidance | | :--- | :--- | | Revenue | $243M - $250M | | GAAP EPS | $1.89 - $1.99 | | Adjusted EPS | $1.90 - $2.00 | [Segment Performance](index=4&type=section&id=Segment%20Performance) Flow Control grew in Q1 2025, while Industrial Processing declined and Material Handling remained stable, with parts and consumables revenue increasing to 75% of the total Q1 2025 Revenue by Segment (in thousands) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | Change | | :--- | :--- | :--- | :--- | | Flow Control | $92,441 | $86,682 | +$5,759 | | Industrial Processing | $89,524 | $105,861 | -$16,337 | | Material Handling | $57,245 | $56,432 | +$813 | Q1 2025 Bookings by Segment (in thousands) | Segment | Q1 2025 Bookings | Q1 2024 Bookings | Change | | :--- | :--- | :--- | :--- | | Flow Control | $99,987 | $94,670 | +$5,317 | | Industrial Processing | $92,366 | $89,877 | +$2,489 | | Material Handling | $63,865 | $63,883 | -$18 | Q1 2025 Gross Margin and Operating Income by Segment | Segment | Gross Margin | Operating Income (in thousands) | | :--- | :--- | :--- | | Flow Control | 53.3% | $22,752 | | Industrial Processing | 44.1% | $16,832 | | Material Handling | 37.7% | $7,535 | - Revenue from parts and consumables **increased to 75% of total revenue** in Q1 2025, up from 69% in Q1 2024[21](index=21&type=chunk) [Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited Q1 2025 consolidated statements of income, balance sheet data, and cash flow information [Consolidated Statement of Income](index=4&type=section&id=Consolidated%20Statement%20of%20Income) For Q1 2025, Kadant reported revenue of $239.2 million, net income of $24.1 million, and a diluted EPS of $2.04 Q1 2025 Consolidated Statement of Income (in thousands, except per share data) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $239,210 | $248,975 | | Operating Income | $35,586 | $36,927 | | Income Before Taxes | $32,265 | $32,839 | | Net Income Attributable to Kadant | $24,063 | $24,689 | | Diluted EPS | $2.04 | $2.10 | [Consolidated Balance Sheet](index=6&type=section&id=Consolidated%20Balance%20Sheet) As of March 29, 2025, total assets were $1.435 billion, with total liabilities of $548.9 million and debt obligations of $274.9 million Balance Sheet Data (in thousands) | Account | March 29, 2025 | December 28, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash, Cash Equivalents, and Restricted Cash | $93,805 | $95,946 | | Total Assets | $1,435,439 | $1,430,345 | | **Liabilities & Equity** | | | | Debt Obligations | $274,936 | $286,504 | | Total Liabilities | $548,869 | $572,217 | | Stockholders' Equity | $886,570 | $858,128 | [Cash Flow Data](index=5&type=section&id=Cash%20Flow%20Data) Q1 2025 operating cash flow was flat at $22.8 million, while free cash flow increased 15% to $19.0 million due to lower capital expenditures Q1 Cash Flow (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Cash Flow | $22,835 | $22,831 | | Capital Expenditures | ($3,836) | ($6,271) | | Free Cash Flow (a) | $18,999 | $16,560 | [Reconciliation of GAAP to Non-GAAP Measures](index=2&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section details the reconciliation of non-GAAP measures like organic revenue and adjusted EPS to their comparable GAAP figures - Non-GAAP measures are used by management to understand trends and forecast performance, excluding items not indicative of core operating results[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) Q1 2025 Reconciliation of Net Income to Adjusted Net Income (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income (GAAP) | $24,063 | $24,689 | | Amortization of Acquired Profit (Net of Tax) | $296 | $2,369 | | Acquisition Costs (Net of Tax) | $315 | $930 | | **Adjusted Net Income (Non-GAAP)** | **$24,674** | **$27,988** | Q1 2025 Reconciliation of Operating Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Income (GAAP) | $35,586 | $36,927 | | Adjustments (Acquired Profit, Backlog, etc.) | $698 | $3,554 | | **Adjusted Operating Income (Non-GAAP)** | **$36,284** | **$41,271** | | Depreciation and Amortization | $11,634 | $10,940 | | **Adjusted EBITDA (Non-GAAP)** | **$47,918** | **$52,211** |

Core Viewpoint - Kadant Inc. reported its first quarter financial results for 2025, showing a decrease in revenue and net income, but strong demand for aftermarket parts and healthy free cash flow despite geopolitical uncertainties [3][4][5][8]. Financial Highlights - Revenue decreased by 4% to $239.2 million compared to $249.0 million in 2024, with organic revenue down 5% [4][9]. - Net income was $24.1 million, a decrease of 3% from $24.7 million in 2024, and GAAP EPS decreased by 3% to $2.04 [5][9]. - Adjusted EPS fell by 12% to $2.10 compared to $2.38 in 2024, excluding acquisition-related costs [5][9]. - Adjusted EBITDA decreased by 8% to $47.9 million, representing 20% of revenue, down from 21% in 2024 [6][9]. - Free cash flow increased by 15% to $19.0 million compared to $16.6 million in 2024 [6][9]. Bookings and Demand - Bookings increased by 3% to $256.2 million compared to $248.4 million in 2024, with organic bookings up 2% [7][9]. - The company experienced record demand for aftermarket parts, contributing to strong margin performance [3][8]. Outlook - The company revised its 2025 revenue guidance to $1.020 to $1.040 billion, down from $1.040 to $1.065 billion, and GAAP EPS guidance to $8.97 to $9.17, revised from $9.63 to $9.98 [8]. - Incremental tariff costs are estimated to be $5 to $6 million for 2025, impacting the financial outlook [8].

Company Announcement - Kadant Inc. will release its 2025 first quarter results after the market closes on April 29, 2025, and will hold a webcast on April 30, 2025, at 11:00 a.m. Eastern Time to discuss financial performance and future expectations [1] - The earnings release and webcast presentation will be available in the "Investors" section of the company's website [2] Company Overview - Kadant is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing, enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries [3] - The company is based in Westford, Massachusetts, and employs approximately 3,500 people across 20 countries [3]