Fourth Quarter Financial Highlights
Revenue increased 11% to a record $286 million
Gross margin increased 50 basis points to 43.9%
Net income was $24 million in both periods
GAAP EPS was $2.04 in both periods
Adjusted EPS increased 1% to $2.27
Adjusted EBITDA increased 11% to $58 million and represented 20.3% of revenue
Operating cash flow increased 17% to $61 million
Bookings increased 12% to $270 million
Fiscal Year Financial Highlights
Revenue was $1.05 billion in both periods
Gross margin increased 90 basis points to 45.2%
Net income decreased 9% to $102 million
GAAP EPS decreased 9% to $8.65
Adjusted EPS decreased 10% to $9.26
Adjusted EBITDA decreased 6% to $216 million and represented 20.6% of revenue
Operating cash flow increased 10% to a record $171 million
Bookings increased 5% to a record $1.03 billion
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"The fourth quarter was a solid finish to the year," said Jeffrey L. Powell, president and chief executive officer of Kadant Inc. "Good execution by our businesses combined with our recent acquisitions drove record revenue performance and strong cash flows despite a challenging economic environment."
Fourth Quarter 2025 Compared to 2024Revenue increased 11 percent to a record $286.2 million compared to $258.0 million in 2024, including increases of eight percent from acquisitions and three percent from the favorable effect of foreign currency translation. Gross margin was 43.9 percent compared to 43.4 percent in 2024.
Net income was $24.0 million in both 2025 and 2024. GAAP EPS was $2.04 in both periods, and adjusted EPS increased one percent to $2.27 in 2025 compared to $2.25 in 2024. Adjusted EPS excludes acquisition-related costs of $0.17 and other costs of $0.07 in 2025, and excludes acquisition-related costs of $0.16 and other costs of $0.06 in 2024.
Adjusted EBITDA increased 11 percent to $58.0 million compared to $52.4 million in 2024 and represented 20.3 percent of revenue in both periods. Operating cash flow increased 17 percent to $60.8 million compared to $51.9 million in 2024. Free cash flow increased 18 percent to $54.7 million compared to $46.3 million in 2024.
Bookings increased 12 percent to $270.0 million compared to $240.6 million in 2024. Organic bookings increased one percent, which excludes increases of eight percent from acquisitions and three percent from the favorable effect of foreign currency translation.
Fiscal Year 2025 Compared to 2024Revenue was $1,052.2 million in 2025 compared to a record $1,053.4 million in 2024. Organic revenue decreased four percent, which excludes increases of three percent from acquisitions and one percent from the favorable effect of foreign currency translation. Gross margin was 45.2 percent compared to 44.3 percent in 2024.
Net income was $102.0 million, decreasing nine percent compared to $111.6 million in 2024. GAAP EPS decreased nine percent to $8.65 compared to $9.48 in 2024, and adjusted EPS decreased 10 percent to $9.26 compared to $10.28 in 2024. Adjusted EPS excludes acquisition-related costs of $0.53 and other costs of $0.08 in 2025, and excludes acquisition-related costs of $0.74 and other costs of $0.06 in 2024.
Adjusted EBITDA decreased six percent to $216.3 million and represented 20.6 percent of revenue compared to a record $229.7 million and 21.8 percent in 2024. Operating cash flow increased 10 percent to a record $171.3 million compared to $155.3 million in 2024. Free cash flow increased 15 percent to a record $154.3 million compared to $134.3 million in 2024.
Bookings increased five percent to a record $1,033.9 million compared to $981.1 million in 2024. Organic bookings increased one percent, which excludes a four percent increase from acquisitions.
Summary and Outlook"Looking ahead to 2026, we are encouraged by improving business activity as we begin the year," continued Mr. Powell. "Our capital project bookings are expected to strengthen supported by steady aftermarket demand, a strong balance sheet, and robust cash flow generation. For 2026, we expect revenue of $1.160 to $1.185 billion, GAAP EPS of $10.27 to $10.62 and, after excluding $0.13 of acquisition-related costs, adjusted EPS of $10.40 to $10.75. For the first quarter of 2026, we expect revenue of $270 to $280 million, GAAP EPS of $1.69 to $1.79 and, after excluding $0.09 of acquisition-related costs, adjusted EPS of $1.78 to $1.88."
Conference Call Kadant will hold a webcast with a slide presentation for investors on Thursday, February 19, 2026, at 11:00 a.m. Eastern Time to discuss its fourth quarter and full year 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 March 20, 2026.
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 fourth quarter and full year 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 fourth quarter of 2025 included $21.9 million from acquisitions and a favorable foreign currency translation effect of $6.5 million compared to the fourth quarter of 2024. Revenue in 2025 included $36.7 million from acquisitions and a favorable foreign currency translation effect of $7.0 million compared to 2024. Our other non-GAAP financial measures exclude acquisition costs, amortization expense related to acquired profit in inventory and backlog, restructuring and impairment 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.
Fourth Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
Pre-tax acquisition costs of $0.9 million in 2025 and $0.3 million in 2024.
Pre-tax amortization of acquired profit in inventory and backlog of $1.1 million in 2025 and $2.2 million in 2024.
Pre-tax indemnification asset reversal of $0.6 million in 2025 and $0.3 million in 2024.
Pre-tax other costs of $1.0 million in 2025 and $0.7 million in 2024.
Adjusted net income and adjusted EPS exclude:
After-tax acquisition costs of $1.1 million ($0.9 million plus tax of $0.2 million) in 2025 and $0.2 million ($0.3 million net of tax of $0.1 million) in 2024.
After-tax amortization of acquired profit in inventory and backlog of $0.9 million ($1.1 million net of tax of $0.2 million) in 2025 and $1.7 million ($2.2 million net of tax of $0.5 million) in 2024.
After-tax other costs of $0.8 million ($1.0 million net of tax of $0.2 million) in 2025 and $0.7 million in 2024.
Free cash flow is calculated as operating cash flow less:
Capital expenditures of $6.1 million in 2025 and $5.6 million in 2024.
Fiscal Year
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
Pre-tax acquisition costs of $4.4 million in 2025 and $2.9 million in 2024.
Pre-tax amortization of acquired profit in inventory and backlog of $2.4 million in 2025 and $8.4 million in 2024.
Pre-tax indemnification asset reversal of $0.6 million in 2025 and $0.2 million in 2024.
Pre-tax other costs of $1.3 million in 2025 and $0.7 million in 2024.
Adjusted net income and adjusted EPS exclude:
After-tax acquisition costs of $4.5 million ($4.4 million plus tax of $0.1 million) in 2025 and $2.3 million ($2.9 million net of tax of $0.6 million) in 2024.
After-tax amortization of acquired profit in inventory and backlog of $1.8 million ($2.4 million net of tax of $0.6 million) in 2025 and $6.4 million ($8.4 million net of tax of $2.0 million) in 2024.
After-tax other costs of $1.0 million in ($1.3 million net of tax of $0.3 million) 2025 and $0.7 million in 2024.
Free cash flow is calculated as operating cash flow less:
Capital expenditures of $17.0 million in 2025 and $21.0 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
Twelve Months Ended
Consolidated Statement of Income
January 3,2026
December 28,2024
January 3,2026
December 28,2024
Revenue
$
286,204
$
258,030
$
1,052,248
$
1,053,384
Costs and Operating Expenses:
Cost of revenue
160,509
146,170
576,520
587,236
Selling, general, and administrative expenses
80,862
70,568
301,863
279,920
Research and development expenses
4,098
3,697
15,264
14,318
Other costs (g)
1,026
658
1,313
658
246,495
221,093
894,960
882,132
Operating Income
39,709
36,937
157,288
171,252
Interest Income
600
529
1,929
1,915
Interest Expense
(5,322
)
(4,642
)
(15,571
)
(20,028
)
Other Expense, Net
(9
)
(21
)
(61
)
(69
)
Income Before Provision for Income Taxes
34,978
32,803
143,585
153,070
Provision for Income Taxes
10,488
8,706
39,904
40,516
Net Income
24,490
24,097
103,681
112,554
Net Income Attributable to Noncontrolling Interests
(465
)
(65
)
(1,712
)
(956
)
Net Income Attributable to Kadant
$
24,025
$
24,032
$
101,969
$
111,598
Earnings per Share Attributable to Kadant:
Basic
$
2.04
$
2.05
$
8.66
$
9.51
Diluted
$
2.04
$
2.04
$
8.65
$
9.48
Weighted Average Shares:
Basic
11,779
11,745
11,773
11,739
Diluted
11,805
11,794
11,794
11,771
Three Months Ended
Three Months Ended
Adjusted Net Income and Adjusted Diluted EPS (a)
January 3,2026
January 3,2026
December 28,2024
December 28,2024
Net Income and Diluted EPS Attributable to Kadant, as Reported
$
24,025
$
2.04
$
24,032
$
2.04
Adjustments, Net of Tax:
Acquisition Costs
1,146
0.10
194
0.02
Amortization of Profit in Inventory and Backlog
850
0.07
1,664
0.14
Other Costs (g)
769
0.07
658
0.06
Adjusted Net Income and Adjusted Diluted EPS (a)
$
26,790
$
2.27
$
26,548
$
2.25
Twelve Months Ended
Twelve Months Ended
January 3,2026
January 3,2026
December 28,2024
December 28,2024
Net Income and Diluted EPS Attributable to Kadant, as Reported
$
101,969
$
8.65
$
111,598
$
9.48
Adjustments, Net of Tax:
Acquisition Costs
4,536
0.38
2,320
0.20
Amortization of Profit in Inventory and Backlog
1,775
0.15
6,394
0.54
Other Costs (g)
985
0.08
658
0.06
Adjusted Net Income and Adjusted Diluted EPS (a)
$
109,265
$
9.26
$
120,970
$
10.28
Three Months Ended
Increase (Decrease)Excluding Acquisitions and FX (a,b)
Revenue by Segment
January 3,2026
December 28,2024
Increase
Flow Control
$
99,639
$
94,684
$
4,955
$
1,639
Industrial Processing
117,635
101,428
16,207
(7,333
)
Material Handling
68,930
61,918
7,012
5,486
$
286,204
$
258,030
$
28,174
$
(208
)
Percentage of Parts and Consumables Revenue
70
%
67
%
