<div id="readability-page-1"><p>Kadant <span>NYSE: KAI<span></span></span> reported fourth-quarter and full-year 2025 results that management said reflected resilient execution despite a “challenging macro background,” citing tariff volatility and continued cost pressures. On the company’s earnings call, President and CEO Jeff Powell and CFO Michael McKenney also outlined the company’s outlook for 2026, discussed order timing for larger capital projects, and detailed a planned change to how Kadant calculates adjusted EPS starting in the first quarter of 2026.</p><h2>Fourth-quarter results: record revenue and strong cash flow</h2> <p>Kadant posted fourth-quarter revenue of a record $286.2 million, up 11% from the fourth quarter of 2024. McKenney said the increase included an 8% contribution from acquisitions and a 3% benefit from foreign currency translation. </p><p>Powell said fourth-quarter performance benefited from acquisitions completed in 2025 and “solid demand” in the flow control and material handling segments, as well as a record aftermarket parts business. Bookings increased 12% year over year, and Powell said that while acquisitions accounted for “most of the growth” in orders, organic demand was stable versus the prior year and improved sequentially. </p><p>Gross margin rose 50 basis points to 43.9% in the quarter, which McKenney attributed to a higher proportion of aftermarket parts (70% of revenue versus 67% in the prior-year period). SG&amp;A increased to 28.3% of revenue from 27.3%, with SG&amp;A dollars up 15% to $80.9 million. McKenney said the SG&amp;A increase included $7.0 million related to 2025 acquisitions and a $1.7 million unfavorable currency impact. </p><p>GAAP EPS was $2.04 in both periods, while adjusted EPS increased to $2.27, slightly above Kadant’s guidance range of $2.05 to $2.25. Adjusted EBITDA increased 11% to $58.0 million, and adjusted EBITDA margin was 20.3%. Operating cash flow in the fourth quarter was $61 million, which Powell described as “excellent.”  </p><h2>Full-year 2025: mix shift toward aftermarket, lower capital revenue pressure</h2> <p>For fiscal 2025, Kadant reported revenue of $1.052 billion, essentially flat with $1.053 billion in 2024. McKenney said the result included a 3% increase from acquisitions and a 1% favorable currency effect. </p><p>Powell noted that aftermarket parts represented a record 71% of total revenue for the year. Gross margin improved to 45.2% from 44.3%, which management attributed to the higher aftermarket mix. At the same time, adjusted results were pressured by weaker capital project activity and costs tied to tariffs. Powell said softness in capital project activity, along with rising tariffs and other cost pressures, contributed to adjusted EPS of $9.26, down from $10.28 in 2024. </p><p>McKenney added that adjusted EBITDA decreased 6% to $216.3 million (20.6% of revenue) versus a record $229.7 million (21.8%) in 2024, and he attributed the weaker 2025 performance “in large part” to lower capital revenue, which he said declined 16% year over year. </p><p>Cash generation improved. Operating cash flow rose 10% to a record $171.3 million, and free cash flow increased 15% to a record $154.3 million. McKenney said Kadant repaid $122.2 million of debt in 2025—about 42% of outstanding debt at the end of 2024—while also funding acquisition activity.  </p><h2>Segment commentary: aftermarket strength and a cautious capital backdrop</h2> <p>Management highlighted stable demand across operating segments, with performance varying by geography and end market. </p><ul>   <li><strong>Flow control:</strong> Fourth-quarter revenue increased 5% to $100 million. Aftermarket parts revenue rose 9% and represented 73% of segment revenue. Powell said adjusted EBITDA and margin declined year over year due to weaker gross margins related to tariffs and product mix. Bookings were up 7%, while softness persisted in the manufacturing sector, particularly in Europe and Asia.</li>   <li><strong>Industrial processing:</strong> Powell said capital project activity stayed “relatively soft” throughout 2025 and remained similar in the fourth quarter. Segment revenue increased 16% to $118 million, aided by the acquisitions of Clyde Industries and Babbini in the second half of the year. Aftermarket parts revenue grew 31% and represented 76% of segment revenue. Adjusted EBITDA margin improved 90 basis points, which Powell attributed largely to product mix.</li>   <li><strong>Material handling:</strong> Fourth-quarter revenue increased 11% to $69 million, driven by growth in capital revenue. Aftermarket parts were 53% of segment revenue. Adjusted EBITDA margin increased 130 basis points to 22.1%. Powell said modernization in recycling and waste management, along with infrastructure and data center construction, was expected to support increased order activity.</li> </ul>  <h2>Backlog, order delays, and customer behavior</h2> <p>On the call, management said end-of-quarter backlog was $288 million, split 60% capital and 40% parts. McKenney also noted that Clyde Industries brought approximately $30 million of backlog at the time it was acquired. </p><p>Executives repeatedly pointed to delays in customers placing capital orders. Powell said Kadant had proposals outstanding for large capital projects and described the company’s 2026 guidance as conservative because of the order delays experienced in 2025. He also said some projects had moved forward operationally but were waiting on letters of credit or down payments before becoming bookings. </p><p>Powell also discussed what he characterized as unusual softness in capital bookings given that economies were still growing, saying the level of softness resembled periods such as 2008 and 2009. He attributed the caution largely to uncertainty, including the volatility of tariffs. At the same time, he said customers were increasingly focused on productivity improvements and cost reduction rather than adding new capacity. </p><p>Management also said aftermarket performance outpaced what would typically be expected given low global operating rates. Powell suggested customers were running existing equipment harder as capacity had been taken offline and equipment was older after several years of underinvestment.  </p><h2>2026 guidance and a change to adjusted EPS reporting</h2> <p>Kadant provided 2026 guidance that excludes the pending acquisition of voestalpine Böhlerin Profil GmbH, which the company announced in January. McKenney said the transaction is expected to close in the first quarter of 2026, subject to Austrian regulatory approvals and customary closing conditions, and that Kadant would revise guidance on a future call. </p><p>For 2026, Kadant guided to revenue of $1.16 billion to $1.185 billion and adjusted EPS of $10.40 to $10.75, excluding $0.13 related to amortization of acquired profit and inventory. For the first quarter of 2026, the company expects revenue of $270 million to $280 million and adjusted EPS of $1.78 to $1.88, excluding $0.09 related to amortization of acquired profit and inventory. McKenney said the first quarter is expected to be the weakest quarter of the year due primarily to soft capital bookings in the back half of 2025. </p><p>McKenney also provided additional framework around organic growth assumptions embedded in guidance, saying the company modeled organic growth of “a little less than 1%–3%,” with confidence largely tied to parts and consumables and only modest improvement assumed in capital absent large project awards. </p><p>In addition, Kadant said it plans to begin adding back recurring intangible amortization expense in its adjusted EPS calculation starting in the first quarter of 2026. McKenney said recurring intangible amortization expense has increased with acquisition activity and is projected to rise 22% in 2026. Under the revised presentation, Kadant’s 2026 adjusted EPS guidance would be $12.53 to $12.88 after adding back recurring intangible amortization, compared with the previously presented $10.40 to $10.75. For 2025, McKenney said previously reported adjusted EPS of $9.26 would be $11.01 under the new approach, and Kadant expects to file an SEC Form 8-K with reconciliations of prior periods.</p><h2>About Kadant <span>NYSE: KAI<span></span></span></h2><p>Kadant Inc, headquartered in Westford, Massachusetts, is a global supplier of high‐value, critical components and engineered systems for the pulp and paper industry and other process industries. The company's product portfolio spans stock preparation technologies, refiners and pulpers, fluid handling systems, and web‐handling equipment designed to optimize the efficiency and quality of paper production. In addition to capital equipment, Kadant offers aftermarket services, including spare parts, maintenance programs and process optimization consulting, which together support long‐term customer productivity and reliability.  </p><p>Originally part of a larger industrial conglomerate, Kadant was established as an independent public company in 1991.</p><h2>Featured Articles</h2><ul><li>Five stocks we like better than Kadant</li><li>The gold chart Wall Street is terrified of…</li><li>NEW LAW: Congress Approves Setup For Digital Dollar?</li><li>Buy this Gold Stock Before May 2026</li><li>What a Former CIA Agent Knows About the Coming Collapse</li><li>This $15 Stock Could Go Down as the #1 Stock of 2026</li></ul><p><em>This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.</em></p><h2>Should You Invest $1,000 in Kadant Right Now?</h2><p>Before you consider Kadant, you'll want to hear this.</p><p>MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Kadant wasn't on the list.</p><p>While Kadant currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.</p><p>View The Five Stocks Here</p>                  </div>

<p>Kadant (NYSE: KAI) reported strong Q4 and full-year 2025 results, with record revenue of $286.2 million, up 11% year-over-year. The company faced challenges from tariff volatility and cost pressures but achieved a gross margin of 43.9%. Adjusted EPS rose to $2.27, exceeding guidance. For the full year, revenue was flat at $1.052 billion, with aftermarket parts making up 71% of total revenue. Operating cash flow reached a record $171.3 million, and Kadant repaid $122.2 million of debt. Management highlighted stable demand across segments despite a cautious capital project environment.</p>

Kadant Q4 Earnings Call Highlights