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]

[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]