Third Quarter Financial Highlights
Revenue was $272 million in both periods
Gross margin increased 50 basis points to 45.2%
Net income decreased 12% to $28 million
GAAP EPS decreased 12% to $2.35
Adjusted EPS decreased 9% to $2.59
Adjusted EBITDA decreased 8% to $58 million and represented 21.4% of revenue
Operating cash flow decreased 10% to $47 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"Despite a persistent softness in demand for capital equipment and continued global trade uncertainties, our businesses executed well and delivered solid gross margin performance during the quarter," said Jeffrey L. Powell, president and chief executive officer of Kadant Inc. "Our businesses exceeded our earnings expectations led by record revenue performance in our aftermarket parts business."
Third Quarter 2025 Compared to 2024Revenue was $271.6 million in both periods. Organic revenue decreased four percent, which excludes increases of two percent from an acquisition and two percent from the favorable effect of foreign currency translation. Gross margin was 45.2 percent compared to 44.7 percent in 2024.
Net income was $27.7 million, decreasing 12 percent compared to $31.6 million in 2024. GAAP EPS decreased 12 percent to $2.35 compared to $2.68 in 2024 and adjusted EPS decreased nine percent to $2.59 compared to $2.84 in 2024. Adjusted EPS excludes acquisition-related costs of $0.22 and other costs of $0.02 in 2025 and acquisition-related costs of $0.15 in 2024.
Adjusted EBITDA decreased eight percent to $58.0 million and represented 21.4 percent of revenue compared to a record $63.3 million and 23.3 percent of revenue in 2024. Operating cash flow decreased 10 percent to $47.3 million compared to $52.5 million in 2024. Free cash flow decreased nine percent to $44.1 million compared to $48.3 million in 2024.
Bookings decreased one percent to $238.4 million compared to $240.3 million in 2024. Organic bookings decreased four percent, which excludes increases of one percent from an acquisition and two percent from the favorable effect of foreign currency translation.
Summary and Outlook"We anticipate healthy demand for aftermarket parts and improving order activity for our capital equipment in the fourth quarter following prolonged delays in project execution," continued Mr. Powell. "We are incorporating our recent acquisitions into our guidance and now expect revenue of $1.036 to $1.046 billion in 2025, revised from our previous guidance of $1.020 to $1.040 billion. We are maintaining our adjusted EPS guidance of $9.05 to $9.25. The 2025 adjusted EPS guidance excludes $0.51 of acquisition-related costs and $0.02 of other costs, revised from $0.16 of acquisition-related costs in our previous guidance. We now expect GAAP EPS of $8.52 to $8.72 in 2025, revised from our previous GAAP EPS guidance of $8.89 to $9.09. For the fourth quarter of 2025, we expect revenue of $270 to $280 million, GAAP EPS of $1.91 to $2.11 and, after excluding $0.14 of acquisition-related costs, adjusted EPS of $2.05 to $2.25."
Conference Call Kadant will hold a webcast with a slide presentation for investors on Wednesday, October 29, 2025, at 11:00 a.m. Eastern Time to discuss its third 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 November 28, 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 third 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 third quarter of 2025 included $5.9 million from an acquisition and a favorable foreign currency translation effect of $4.2 million compared to the third quarter of 2024. Revenue in the first nine months of 2025 included $14.8 million from acquisitions and a favorable foreign currency translation effect of $0.5 million compared to the first nine months of 2024. Our other non-GAAP financial measures exclude acquisition costs, amortization expense related to acquired profit in inventory and backlog, 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.
Third Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
Pre-tax acquisition costs of $2.3 million in 2025 and $0.5 million in 2024.
Pre-tax amortization of acquired profit in inventory and backlog of $0.6 million in 2025 and $1.9 million in 2024.
Pre-tax impairment costs of $0.3 million in 2025.
Pre-tax indemnification asset provision of $0.2 million in 2024.
Adjusted net income and adjusted EPS exclude:
After-tax acquisition costs of $2.2 million ($2.3 million net of tax of $0.1 million) in 2025 and $0.4 million ($0.5 million net of tax of $0.1 million) in 2024.
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 $1.4 million ($1.9 million net of tax of $0.5 million) in 2024.
After-tax impairment costs of $0.2 million ($0.3 million net of tax of $0.1 million) in 2025.
Free cash flow is calculated as operating cash flow less:
Capital expenditures of $3.2 million in 2025 and $4.2 million in 2024.
First Nine Months
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
Pre-tax acquisition costs of $3.5 million in 2025 and $2.5 million in 2024.
Pre-tax amortization of acquired profit in inventory and backlog of $1.2 million in 2025 and $6.2 million in 2024.
Pre-tax impairment costs of $0.3 million in 2025.
Pre-tax indemnification asset provision of $0.2 million in 2024.
Adjusted net income and adjusted EPS exclude:
After-tax acquisition costs of $3.4 million ($3.5 million net of tax of $0.1 million) in 2025 and $2.1 million ($2.5 million net of tax of $0.4 million) in 2024.
After-tax amortization of acquired profit in inventory and backlog of $0.9 million ($1.2 million net of tax of $0.3 million) in 2025 and $4.7 million ($6.2 million net of tax of $1.5 million) in 2024.
After-tax impairment costs of $0.2 million ($0.3 million net of tax of $0.1 million) in 2025.
Free cash flow is calculated as operating cash flow less:
Capital expenditures of $11.0 million in 2025 and $15.4 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
Nine Months Ended
Consolidated Statement of Income
September 27,2025
September 28,2024
September 27,2025
September 28,2024
Revenue
$
271,567
$
271,614
$
766,044
$
795,354
Costs and Operating Expenses:
Cost of revenue
148,906
150,175
416,011
441,066
Selling, general, and administrative expenses
75,839
69,043
221,001
209,352
Research and development expenses
3,919
3,409
11,166
10,621
Other costs
287
—
287
—
228,951
222,627
648,465
661,039
Operating Income
42,616
48,987
117,579
134,315
Interest Income
373
407
1,329
1,386
Interest Expense
(3,089
)
(5,516
)
(10,249
)
(15,386
)
Other Expense, Net
(19
)
(16
)
(52
)
(48
)
Income Before Provision for Income Taxes
39,881
43,862
108,607
120,267
Provision for Income Taxes
11,766
11,964
29,416
31,810
Net Income
28,115
31,898
79,191
88,457
Net Income Attributable to Noncontrolling Interests
(393
)
(312
)
(1,247
)
(891
)
Net Income Attributable to Kadant
$
27,722
$
31,586
$
77,944
$
87,566
Earnings per Share Attributable to Kadant:
Basic
$
2.35
$
2.69
$
6.62
$
7.46
Diluted
$
2.35
$
2.68
$
6.61
$
7.44
Weighted Average Shares:
Basic
11,777
11,745
11,771
11,737
Diluted
11,802
11,780
11,790
11,763
Three Months Ended
Three Months Ended
Adjusted Net Income and Adjusted Diluted EPS (a)
September 27,2025
September 27,2025
September 28,2024
September 28,2024
Net Income and Diluted EPS Attributable to Kadant, as Reported
$
27,722
$
2.35
$
31,586
$
2.68
Adjustments, Net of Tax:
Acquisition Costs
2,172
0.18
398
0.03
Acquired Profit in Inventory and Backlog Amortization
459
0.04
1,432
0.12
Other Costs
216
0.02
—
—
Adjusted Net Income and Adjusted Diluted EPS (a)
$
30,569
$
2.59
$
33,416
$
2.84
Nine Months Ended
Nine Months Ended
September 27,2025
September 27,2025
September 28,2024
September 28,2024
Net Income and Diluted EPS Attributable to Kadant, as Reported
$
77,944
$
6.61
$
87,566
$
7.44
Adjustments, Net of Tax:
Acquisition Costs
3,390
0.29
2,126
0.18
Acquired Profit in Inventory and Backlog Amortization
925
0.08
4,730
0.40
Other Costs
216
0.02
—
—
Adjusted Net Income and Adjusted Diluted EPS (a)
$
82,475
$
7.00
$
94,422
$
8.03
Three Months Ended
Increase(Decrease)Excluding Acquisitionsand FX (a,b)
Revenue by Segment
September 27,2025
September 28,2024
Increase(Decrease)
Flow Control
$
94,839
$
97,521
$
(2,682
)
$
(4,696
)
Industrial Processing
106,393
110,696
(4,303
)
(11,202
)
Material Handling
70,335
63,397
6,938
5,745
$
271,567
$
271,614
$
(47
)
$
(10,153
)
Percentage of Parts and Consumables Revenue
69
%
65
%
