[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]

Core Viewpoint - The Mt York Gold Project is a significant opportunity for growth, with a current resource of 1.4 million ounces of gold and potential for expansion through ongoing drilling and strategic partnerships [2][4][6]. Project Overview - The Mt York Gold Project is located in the Pilbara region and features a single open pit containing the majority of its mineralization, which is noted for its clean metallurgy [2]. - The project has a consistent mineralization over a length of three kilometers, which is unusual for gold projects, enhancing its development potential [3]. Financial Position - The company is fully funded with A$12.4 million in the bank and expects an additional A$10 million from a deal with Pilbara Minerals by the end of 2024, supporting a 20,000 to 30,000 meter drilling program [4][6]. Drilling Program - The upcoming drilling program aims to expand the resource base beyond the current 1.4 million ounces and convert lower confidence resources into higher confidence categories [6]. - A priority area for drilling is the Main Hill extension, where negotiations are ongoing to access an additional 1.5 kilometers of mineralization on Pilbara Minerals' ground [7]. Future Outlook - The company anticipates a busy year ahead with significant news flow expected, which could change market perceptions of Kairos Minerals [8]. - A new resource estimation is planned for 2025, which is viewed as a pivotal moment for the company [9][10].

In a shareholder-friendly move, Kadant Inc. (KAI) recently raised its quarterly dividend by 6.3% to 34 cents per share (annually: $1.36). The new dividend will be paid out on May 7, 2025, to shareholders of record as of April 9.The latest dividend hike underscores Kadant’s sound financial health as it utilizes free cash flow to enhance shareholders’ returns.In fiscal 2024, KAI rewarded shareholders with $14.7 million in dividends. In 2023, the company paid dividends worth $13.2 million. In May 2024, Kadant ...

Financial Performance - Record bookings of $981.1 million in 2024, a 7% increase from 2023, with organic bookings decreasing by 5% due to weaker demand for capital equipment products [185]. - Consolidated revenue increased by 10% in 2024 to $1,053.4 million, including a 12% increase from acquisitions; organic revenue decreased by 2% primarily due to weak demand in the Material Handling segment [200]. - Net income decreased to $112.6 million in 2024 from $116.8 million in 2023, mainly due to an $11.6 million increase in interest expense [212]. - Adjusted EBITDA increased to $229.7 million in 2024, up from $201.3 million in 2023, with an adjusted EBITDA margin of 21.8% [220]. - Free cash flow for 2024 was $134.3 million, slightly up from $133.7 million in 2023 [220]. Segment Performance - Industrial Processing segment bookings rose by 15% in 2024, with an 18% increase from acquisitions; organic bookings decreased by 2% due to reduced demand in North America [188]. - Flow Control segment bookings increased by 1% in 2024, with a 5% increase from acquisitions; organic bookings decreased by 3% primarily due to sluggish manufacturing activity in Europe [188]. - Material Handling segment bookings increased by 5% in 2024, including a 17% increase from acquisitions; organic bookings decreased by 13% due to reduced capital equipment bookings [188]. Acquisitions and Investments - The company acquired Key Knife for $153.4 million, KWS for $79.4 million, and DSTI for $53.6 million in 2024, enhancing its product offerings and market position [194][195][196]. - Cash used in investing activities surged to $319.1 million in 2024, primarily due to $300.3 million for acquisitions [228]. - Planned capital expenditures for 2025 are approximately $24.0 to $26.0 million for property, plant, and equipment [239]. Expenses and Costs - Consolidated SG&A expenses increased by $43.7 million, or 18%, to $279.9 million in 2024, primarily due to $35.6 million from acquisitions and $4.7 million in acquisition-related costs [205]. - SG&A expenses as a percentage of revenue increased to 27% in 2024 from 25% in 2023, mainly due to acquisition-related costs [205]. - Interest expense rose to $20.0 million in 2024 from $8.4 million in 2023, attributed to increased borrowings for acquisitions [210]. Cash Flow and Financing - Cash provided by operating activities decreased to $155.3 million in 2024 from $165.5 million in 2023, primarily due to increased cash used for working capital [225]. - Cash provided by financing activities was $159.9 million in 2024, compared to cash used of $111.1 million in 2023 [229]. - Borrowings under the revolving credit facility were $305.2 million in 2024, primarily used for acquisitions [234]. - Outstanding balance under the Credit Agreement was $278.4 million as of December 28, 2024, with a leverage ratio of 0.99, compliant with debt covenants [235]. Tax and Foreign Earnings - The effective tax rate remained at 26.5% in both 2024 and 2023, higher than the statutory rate of 21% [211]. - Total unremitted foreign earnings amounted to approximately $296.1 million, with $255.3 million intended for indefinite reinvestment [240]. - The company recorded a tax valuation allowance of $7.6 million at year-end 2024 due to uncertainties in future profitability [247]. - The company plans to repatriate $0.6 million of tax expense associated with foreign earnings in 2025 [249]. Currency and Interest Rate Sensitivity - Approximately 50% of sales are to international customers, making the company susceptible to currency exchange rate fluctuations [191]. - A 10% decrease in functional currencies relative to the U.S. dollar would have reduced stockholders' equity by $62.8 million at year-end 2024 [264]. - At year-end 2024, the company had $71.4 million of euro-denominated borrowings, with a 10% increase in the euro against the U.S. dollar potentially decreasing borrowing capacity by approximately $7.1 million [265]. - The fair value of forward currency-exchange contracts is sensitive to fluctuations in foreign currency exchange rates, but any adverse changes will largely be offset by corresponding changes in the fair value of the underlying hedged items [266].

Core Points - Kadant Inc. will replace Inari Medical Inc. in the S&P SmallCap 600 effective February 19, 2025 [1] - Stryker Corp. is acquiring Inari Medical, with the deal expected to be completed soon [1] Summary by Category Index Changes - Effective Date: February 19, 2025 - Addition: Kadant Inc. (Ticker: KAI) in the Industrials sector [1] - Deletion: Inari Medical Inc. (Ticker: NARI) in the Health Care sector [1]

Financial Data and Key Metrics Changes - The fourth quarter revenue was $258 million, an 8% increase compared to Q4 2023, with a 14% increase from acquisitions and a 1% decrease from unfavorable foreign currency translation [23] - Adjusted EBITDA increased 8% to $52.4 million, representing 20.3% of revenue in Q4 2024 [30] - Full-year revenue reached a record $1.053 billion, up 10% compared to 2023, with adjusted EPS increasing to a record $10.28, up 2% from $10.04 in 2023 [14][30] Performance by Business Segment - **Flow Control Segment**: Q4 revenue increased 8% to $95 million, with aftermarket parts revenue up 12% [16] - **Industrial Processing Segment**: Q4 revenue increased 17% to $101 million, driven by acquisitions and capital shipments [18] - **Material Handling Segment**: Q4 revenue declined 4% to $62 million, attributed to the completion of a large capital order in the previous year [20] Market Data and Key Metrics Changes - Aftermarket parts accounted for 66% of total revenue in 2024, up from 62% in 2023, indicating a shift towards more stable revenue sources [27] - The company anticipates that geopolitical and microeconomic challenges will continue to influence business activity, particularly in Europe and Asia [18] Company Strategy and Development Direction - The company focuses on improving margin performance through internal initiatives and customer-focused innovations, which contributed to record financial results [15] - Future growth opportunities are expected to arise from long-term market trends such as decarbonization and automation [18] Management's Comments on Operating Environment and Future Outlook - Management noted that while industrial activity remained stable, there is uncertainty due to geopolitical factors and interest rates affecting capital investments [66][78] - The company expects a stronger second half of 2025, driven by anticipated increases in capital bookings [48][71] Other Important Information - The company has a strong balance sheet and is well-positioned to capitalize on emerging opportunities, with a focus on debt repayment and cash flow generation [22][35] - Guidance for 2025 includes revenue expectations of $1.040 billion to $1.065 billion and adjusted EPS of $9.70 to $10.05, factoring in potential foreign currency translation impacts [44][47] Q&A Session Summary Question: What is the outlook for organic orders and capital bookings? - Management indicated that they expect a significant improvement in capital orders, forecasting a 10% to 20% increase in capital goods orders for 2025 [57][58] Question: What is the current backlog for capital projects? - The total backlog was reported at $257 million, with capital projects making up 57% of that amount [60] Question: How does the company view the impact of tariffs on operations? - Management acknowledged the potential impact of new tariffs but noted that they are exploring ways to mitigate these costs [49][51] Question: What are the expectations for the industrial processing segment? - The industrial processing segment is expected to see the best growth, particularly in wood processing, as demand recovers [97] Question: How is the company addressing pricing in the acquisition pipeline? - Management noted that while pricing is influenced by private equity and interest rates, they remain optimistic about the number of acquisition opportunities [99][100]

Core Insights - Kadant (KAI) reported revenue of $258.03 million for the quarter ended December 2024, marking an 8.1% year-over-year increase, while EPS was $2.25 compared to $2.41 a year ago [1] - The revenue figure was slightly below the Zacks Consensus Estimate of $258.06 million, resulting in a revenue surprise of -0.01%, while the EPS exceeded the consensus estimate of $2.08 by 8.17% [1] Revenue Breakdown - Material Handling Systems generated $61.92 million, falling short of the two-analyst average estimate of $63.87 million [4] - Industrial Processing revenues were reported at $101.43 million, slightly above the two-analyst average estimate of $101.25 million [4] - Flow Control revenues reached $94.68 million, marginally exceeding the average estimate of $94.64 million from two analysts [4] Stock Performance - Kadant's shares have returned +2.8% over the past month, compared to a +4.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Kadant (KAI) reported quarterly earnings of $2.25 per share, exceeding the Zacks Consensus Estimate of $2.08 per share, but down from $2.41 per share a year ago [1] Financial Performance - The earnings surprise for the quarter was 8.17%, following a previous quarter where earnings of $2.84 per share surpassed expectations of $2.43 by 16.87% [2] - Kadant's revenues for the quarter were $258.03 million, slightly missing the Zacks Consensus Estimate by 0.01%, compared to $238.68 million in the same quarter last year [3] - Over the last four quarters, the company has exceeded consensus EPS estimates four times and revenue estimates three times [2][3] Stock Performance - Kadant shares have increased approximately 5.6% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [4] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $2.40 for the upcoming quarter and $10.58 for the current fiscal year [5][8] - The estimate revisions trend for Kadant is currently mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [7] Industry Context - The Manufacturing - General Industrial industry, to which Kadant belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges ahead [9]