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].

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]

Q1 2025 Performance - Bookings increased by 3.1% to $256.2 million compared to $248.4 million in Q1 2024 [11] - Revenue decreased by 3.9% to $239.2 million compared to $249.0 million in Q1 2024 [11] - Net income decreased by 2.5% to $24.1 million compared to $24.7 million in Q1 2024 [11] - Adjusted EBITDA decreased by 8.2% to $47.9 million compared to $52.2 million in Q1 2024, with adjusted EBITDA margin decreasing by 100 bps to 20.0% [11] - Free cash flow increased by 14.7% to $19.0 million compared to $16.6 million in Q1 2024 [11] Segment Performance - Flow Control revenue increased by 6.6% to $92.4 million, with bookings up 5.6% to $100.0 million and adjusted EBITDA up 8.4% to $26.2 million [15] - Industrial Processing revenue decreased by 15.4% to $89.5 million, but bookings increased by 2.8% to $92.4 million [20] - Material Handling revenue increased by 1.4% to $57.2 million, with bookings remaining flat at $63.9 million [25] Financial Outlook - The company revised its FY 2025 revenue guidance to $1.020 to $1.040 billion from $1.040 to $1.065 billion [45] - The company revised its FY 2025 adjusted EPS guidance to $9.05 to $9.25 from $9.70 to $10.05 [45]

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]