Kadant Reports Second Quarter 2025 Results
WESTFORD, Mass., July 29, 2025 (GLOBE NEWSWIRE) -- Kadant Inc. (NYSE:KAI) reported its financial results for the second quarter ended June 28, 2025.
Second Quarter Financial Highlights
Bookings increased 7% to $269 million
Revenue decreased 7% to $255 million
Gross margin increased 150 basis points to 45.9%
Net income decreased 16% to $26 million
GAAP EPS decreased 17% to $2.22
Adjusted EPS decreased 18% to $2.31
Adjusted EBITDA decreased 15% to $52 million and represented 20.5% of revenue
Operating cash flow increased 44% to $40 million
Free cash flow increased 58% to $37 million
Ending backlog was $299 million
Note: Percent changes above are based on comparison to the prior year period. All references to earnings per share (EPS) are to our EPS as calculated on a diluted basis. Adjusted EPS, adjusted EBITDA, adjusted EBITDA margin, free cash flow, and changes in organic revenue are non-GAAP financial measures that exclude certain items as detailed later in this press release under the heading "Use of Non-GAAP Financial Measures."
Management Commentary"We had strong cash flow and a solid improvement in our capital equipment bookings in the second quarter," said Jeffrey L. Powell, president and chief executive officer of Kadant Inc. "Our strong bookings, particularly notable in the current environment of evolving trade policies, demonstrate our customers' preference for Kadant equipment and technologies to help drive sustainable value in their operations."
Second Quarter 2025 Compared to 2024Revenue decreased seven percent to $255.3 million compared to $274.8 million in 2024. Organic revenue decreased eight percent, which excludes a one percent increase from the favorable effect of foreign currency translation. Gross margin was 45.9 percent compared to 44.4 percent in 2024.
Net income was $26.2 million, decreasing 16 percent compared to $31.3 million in 2024. GAAP EPS decreased 17 percent to $2.22 compared to $2.66 in 2024, while adjusted EPS decreased 18 percent to $2.31 compared to $2.81 in 2024. Adjusted EPS excludes acquisition-related costs of $0.09 in 2025 and $0.15 in 2024.
Adjusted EBITDA decreased 15 percent to $52.4 million and represented 20.5 percent of revenue compared to $61.8 million and 22.5 percent of revenue in 2024. Operating cash flow increased 44 percent to $40.5 million compared to $28.1 million in 2024. Free cash flow increased 58 percent to $36.5 million compared to $23.1 million in 2024.
Bookings increased seven percent to $269.4 million compared to $251.7 million in 2024. Organic bookings increased six percent, which excludes a one percent increase from the favorable effect of foreign currency translation.
Summary and Outlook"We have a healthy backlog and expect stronger bookings in the second half of 2025," continued Mr. Powell. "Capital project activity remains high and stable demand for our aftermarket parts is expected to continue. We are maintaining our revenue and adjusted EPS guidance for the full year and expect revenue of $1.020 to $1.040 billion and adjusted EPS of $9.05 to $9.25. The 2025 adjusted EPS guidance excludes $0.16 of acquisition-related costs, revised from $0.08 of acquisition-related costs in our previous guidance. We expect GAAP EPS of $8.89 to $9.09, revised from our previous GAAP EPS guidance of $8.97 to $9.17. For the third quarter of 2025, we expect revenue of $256 to $263 million, GAAP EPS of $2.12 to $2.22 and, after excluding $0.01 of acquisition-related costs, adjusted EPS of $2.13 to $2.23."
Conference Call Kadant will hold a webcast with a slide presentation for investors on Wednesday, July 30, 2025, at 11:00 a.m. Eastern Time to discuss its second quarter financial performance, as well as future expectations. To listen to the call live and view the webcast, go to the "Investors" section of the Company's website at kadant.com. Participants interested in joining the call's live question and answer session are required to register by clicking here or selecting the Q&A link on our website to receive a dial-in number and unique PIN. It is recommended that you join the call 10 minutes prior to the start of the event. A replay of the webcast presentation will be available on our website through August 29, 2025.
Prior to the call, our earnings release and the slides used in the webcast presentation will be filed with the Securities and Exchange Commission and will be available at sec.gov. After the webcast, Kadant will post its updated general investor presentation incorporating the second quarter results on its website at kadant.com under the "Investors" section.
Use of Non-GAAP Financial MeasuresIn addition to the financial measures prepared in accordance with 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 operating income, adjusted net income, adjusted EPS, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, adjusted EBITDA margin, and free cash flow.
We use organic revenue to understand our trends and to forecast and evaluate our financial performance and compare revenue to prior periods. Organic revenue excludes revenue from acquisitions for the four quarterly reporting periods following the date of the acquisition and the effect of foreign currency translation. Revenue in the second quarter of 2025 included $0.8 million from acquisitions and a favorable foreign currency translation effect of $2.1 million compared to the second quarter of 2024. Revenue in the first six months of 2025 included $8.8 million from acquisitions and an unfavorable foreign currency translation effect of $3.7 million compared to the first six months of 2024. Our other non-GAAP financial measures exclude amortization expense related to acquired profit in inventory and backlog, acquisition costs, and other income or expense, as indicated. Collectively, these items are excluded as they are not indicative of our core operating results and are not comparable to other periods, which have differing levels of incremental costs, expenditures or income, or none at all. Additionally, we use free cash flow in order to provide insight on our ability to generate cash for acquisitions and debt repayments, as well as for other investing and financing activities.
We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook. We believe that the inclusion of such measures helps investors gain an understanding of our underlying operating performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts and to the performance of our competitors. Such measures are also used by us in our financial and operating decision-making and for compensation purposes. We also believe this information is responsive to investors' requests and gives them additional measures of our performance.
The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for the results of operations or cash flows prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release have limitations associated with their use as compared to the most directly comparable GAAP measures, in that they may be different from, and therefore not comparable to, similar measures used by other companies.
Second Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
Pre-tax amortization of acquired profit in inventory and backlog of $0.2 million in 2025 and $1.2 million in 2024.
Pre-tax acquisition costs of $0.9 million in both 2025 and 2024.
Pre-tax indemnification asset provision of $0.1 million in 2024.
Adjusted net income and adjusted EPS exclude:
After-tax amortization of acquired profit in inventory and backlog of $0.2 million in 2025 and $0.9 million ($1.2 million net of tax of $0.3 million) in 2024.
After-tax acquisition costs of $0.9 million in 2025 and $0.8 million ($0.9 million net of tax of $0.1 million) in 2024.
Free cash flow is calculated as operating cash flow less:
Capital expenditures of $4.0 million in 2025 and $5.0 million in 2024.
First Six Months
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
Pre-tax amortization of acquired profit in inventory and backlog of $0.6 million in 2025 and $4.4 million in 2024.
Pre-tax acquisition costs of $1.2 million in 2025 and $2.1 million in 2024.
Adjusted net income and adjusted EPS exclude:
After-tax amortization of acquired profit in inventory and backlog of $0.5 million ($0.6 million net of tax of $0.1 million) in 2025 and $3.3 million ($4.4 million net of tax of $1.1 million) in 2024.
After-tax acquisition costs of $1.2 million in 2025 and $1.7 million ($2.1 million net of tax of $0.4 million) in 2024.
Free cash flow is calculated as operating cash flow less:
Capital expenditures of $7.8 million in 2025 and $11.2 million in 2024.
Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release.
Financial Highlights (unaudited)
(In thousands, except per share amounts and percentages)
Three Months Ended
Six Months Ended
Consolidated Statement of Income
June 28,2025
June 29,2024
June 28,2025
June 29,2024
Revenue
$
255,267
$
274,765
$
494,477
$
523,740
Costs and Operating Expenses:
Cost of revenue
138,225
152,878
267,105
290,891
Selling, general, and administrative expenses
73,941
70,004
145,162
140,309
Research and development expenses
3,724
3,482
7,247
7,212
215,890
226,364
419,514
438,412
Operating Income
39,377
48,401
74,963
85,328
Interest Income
439
368
956
979
Interest Expense
(3,338
)
(5,201
)
(7,160
)
(9,870
)
Other Expense, Net
(17
)
(2
)
(33
)
(32
)
Income Before Provision for Income Taxes
36,461
43,566
68,726
76,405
Provision for Income Taxes
9,822
11,992
17,650
19,846
Net Income
26,639
31,574
51,076
56,559
Net Income Attributable to Noncontrolling Interests
(480
)
(283
)
(854
)
(579
)
Net Income Attributable to Kadant
$
26,159
$
31,291
$
50,222
$
55,980
Earnings per Share Attributable to Kadant:
Basic
$
2.22
$
2.66
$
4.27
$
4.77
Diluted
$
2.22
$
2.66
$
4.26
$
4.76
Weighted Average Shares:
Basic
11,776
11,743
11,768
11,734
Diluted
11,793
11,766
11,784
11,755
Three Months Ended
Three Months Ended
Adjusted Net Income and Adjusted Diluted EPS (a)
June 28,2025
June 28,2025
June 29,2024
June 29,2024
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 (a)
$
27,232
$
2.31
$
33,018
$
2.81
Six Months Ended
Six Months Ended
June 28,2025
June 28,2025
June 29,2024
June 29,2024
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 (a)
$
51,906
$
4.40
$
61,006
$
5.19
Three Months Ended
Increase(Decrease)Excluding
Revenue by Segment
June 28,2025
June 29,2024
Increase(Decrease)
Acquisitionsand FX (a,b)
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
)
$
255,267
$
274,765
$
(19,498
)
$
(22,430
)
Percentage of Parts and Consumables Revenue
71
%
63
%
Six Months Ended
Increase(Decrease)
Increase(Decrease)Excluding
June 28,2025
June 29,2024
Acquisitionsand FX (a,b)
