KAI

Kadant’s second quarter was marked by robust top-line growth, with management crediting strong aftermarket demand and contributions from recent acquisitions as key drivers. CEO Jeffrey Powell highlighted that, despite continued softness in global capital equipment markets and lingering geopolitical uncertainties, the company’s large installed base and service-driven model supported recurring profitable revenue. He also pointed to increased quote activity and engagement across operating segments, particularly in aftermarket parts, which offset delayed orders for large capital projects. Is now the time to buy KAI? Find out in our full research report (it’s free). Revenue: $312.9 million vs analyst estimates of $299.2 million (22.6% year-on-year growth, 4.6% beat) Adjusted EPS: $3.42 vs analyst estimates of $2.77 (23.6% beat) Adjusted EBITDA: $68.1 million vs analyst estimates of $62.39 million (21.8% margin, 9.2% beat) The company slightly lifted its revenue guidance for the full year to $1.2 billion at the midpoint from $1.19 billion Management slightly raised its full-year Adjusted EPS guidance to $12.56 at the midpoint Operating Margin: 16.3%, in line with the same quarter last year Market Capitalization: $3.94 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Ross Sparenblek (William Blair) asked about areas of project pipeline strength and received details on diversified recovery in packaging, aerospace, and OSB, with Powell noting, “the environment is stronger…the pipeline is stronger.” Ross Sparenblek (William Blair) inquired about M&A performance. CFO Michael McKenney stated Clyde and Profil are performing well, while the fiber processing acquisition faces short-term demand challenges but is expected to improve. Gary Prestopino (Barrington) questioned outlook for capital equipment bookings. Powell described continued customer caution but noted improving bookings and expectations for ongoing recovery. Gary Prestopino (Barrington) asked if strong aftermarket sales implied aging equipment. Powell confirmed aftermarket demand is driven by longer-running, older machines, indicating deferred capital replacement. Ross Sparenblek (William Blair) sought clarity on equipment backlog and order levels. McKenney validated the analyst’s calculations, confirming growing backlog positions Kadant for future revenue. In the coming quarters, the StockStory team will monitor (1) the pace at which large capital project orders convert to revenue, indicating a potential recovery in capital equipment markets; (2) continued resilience and growth in aftermarket parts and service demand, which supports earnings stability; and (3) the integration progress and margin improvement from recent acquisitions. Execution on these fronts will be critical to validating Kadant’s outlook. Kadant currently trades at $331.05, down from $334.92 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 11:00 a.m. ET Executive Vice President and Chief Financial Officer - Michael McKenney President and Chief Executive Officer - Jeffrey Powell Operator: Good day, and thank you for standing by. Welcome to the Q2 2026 Kadant Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michael McKenney, Executive Vice President and CFO. Please go ahead. Michael McKenney: Thank you, Loraine. Good morning, everyone, and welcome to Kadant's Second Quarter 2026 Earnings Call. With me on the call today is Jeff Powell, our President and Chief Executive Officer. Before we begin, let me read our safe harbor statement. Various remarks that we may make today about Kadant's future plans and expectations, financial and operating results and prospects are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements as a result of various important factors, including those outlined at the beginning of our slide presentation and those discussed under the heading Risk Factors in our annual report on Form 10-K for the fiscal year ended January 3, 2026, and subsequent filings with the Securities and Exchange Commission. In addition, any forward-looking statements we make during this webcast represent our views and estimates only as of today. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views or estimates change. During this webcast, we will refer to some non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is contained in our second quarter earnings press release and the slides presented on the webcast and discussed in the conference call, which are available in the Investors section of our website at kadant.com. Finally, I want to note that when we refer to GAAP earnings per share or EPS and adjusted EPS on this call, we are referring to each of these measures as calculated on a diluted basis. With that, I'll turn the call over to Jeff Powell, who will give you an update on Kadant's business and future prospects. Following Jeff's remarks, I'll give an overview of our financial results for the quarter, and we will then have a Q&A session. Jeff? Jeffrey Powell: Thanks, Mike. Hello, everyone. Thank you for joining us this morning to review our second quarter results and discuss our business outlook for the second half of 2026. I'll begin by reviewing our second quarter highlights. We delivered excellent results in the second quarter despite continued softness in global capital equipment markets. Across all operating segments, commercial activity was strong, particularly in our aftermarket business, even as our customers remain cautious about the evolving geopolitical environment. Despite the uncertainties, our business model continues to perform. Our large installed base provides reoccurring profitable revenue through maintenance upgrades, aftermarket parts and growing service demand as our customers seek to maximize productivity while reducing input costs. This dynamic was evident across all operating segments in the second quarter and remains a key source of earnings stability. We are seeing healthy quote activity and commercial engagement, while the primary headwinds remain customer approval cycles, delayed project releases and geopolitical uncertainty. Overall demand remained healthy in the second quarter, and our operational execution and cost discipline led to meeting or exceeding profitability expectations. Against the backdrop of continued trade policy uncertainty and geopolitical tension, our second quarter performance was particularly noteworthy. I want to congratulate our sales and operations teams around the world for their outstanding execution and strong results. Turning next to Slide 6. I'd like to review our Q2 financial performance. Bookings in the second quarter increased 16% to $312 million, led by contributions from our recent acquisitions and strong demand for aftermarket parts. Even as new orders for large capital projects were delayed, we are encouraged by the fact that multiple large projects are not yet formally released are in advanced stages. Revenue increased 23% to a record $313 million. While our revenue benefited from our recent acquisitions, I am pleased to report that organic revenue increased 8% with all operating segments achieving solid growth. Adjusted EBITDA was a record $68 million, up 30% from the prior year period. Our adjusted EPS was a record at $3.42, up 26% compared to our performance in the second quarter of 2025. Strong cash flow remains an important feature of our business model. During the second quarter, operating cash flow increased 32% compared to the same period last year to $54 million. Free cash flow was also healthy at $43 million, up 17%. Capital project activity has remained soft for an extended period, as I noted earlier, but we expect improving capital spending trends in the second half of 2026 and entering 2027. Industrial automation, modernization investments, energy and defense, among others, remain important growth drivers for our businesses. I'll provide more details on that when I review our operating segments, and I'll begin with our Flow Control. As you can see on Slide 7, our Flow Control segment delivered a solid quarter despite an extremely challenging European economic environment. We had solid bookings in the second quarter of 2026, up 11% compared to the same period last year and benefited from strong aftermarket demand, while capital project bookings, particularly in North America, were stronger than expected. Revenue in the second quarter increased 5% to $100 million, even as weaker manufacturing activity in Europe dampened our results. Our aftermarket revenue was a record $76 million and made up 76% of total revenue. Our adjusted EBITDA margin was relatively stable at 27.7% despite mixed market conditions. As we look ahead to the second half of 2026, we expect demand to remain consistent as the year progresses. Although Europe faces stiff economic headwinds, this segment continues to benefit from its diversified market exposure, while the investment environment in North America and Asia continues to show signs of optimism. Our Industrial Processing segment delivered excellent quarterly results despite ongoing uncertainty in global capital markets. Our competitive positioning is strong and our recent acquisitions boosted new orders to $136 million, up 29% compared to the same period last year. Revenue increased to a record $144 million with strong contributions from both aftermarket parts and capital equipment shipments. While acquisitions led this growth, our organic growth of 13% was excellent. Operational leverage in our recent acquisitions contributed to our improved margin performance in this segment. Adjusted EBITDA was 26.1% of revenue and a record $38 million in the second quarter. Looking ahead to the second half of 2026, we believe our aftermarket parts demand will remain stable and that the current market softness in capital business is largely timing driven. We are encouraged that our capital project pipeline continues to grow, and we believe these projects will accelerate once economic confidence improves. Turning now to our Material Handling segment. We had good performance across our business even as customers remain cautious regarding large capital expenditures. Similar to our other segments, aftermarket parts and service performed well in the quarter and contributed to our bookings of $73 million. This growth was largely due to robust demand for our high-performance baler product line. Strong revenue volume and solid execution led to adjusted EBITDA increasing 7% to $15 million. The business activity remains strong with several larger capital projects under discussion. Based on our market analysis, we believe our material handling markets are stable and recovering capital equipment demand is expected in 2027. The segment remains well positioned for growth as project conversions improve, while continued aftermarket and service activity supports earnings. Growing opportunities remain tied to demand in infrastructure, mining, food processing and recycling. As I conclude my prepared remarks, I want to emphasize how pleased I am with our operations teams as they execute their strategic initiatives to create and capture more value. Our business continued to win new orders and deliver exceptional results despite the prolonged geopolitical uncertainties. Although customer caution and extended approval cycles are affecting capital project timing, we believe demand is being deferred rather than lost. Looking ahead to the second half of 2026, we believe demand will strengthen relative to the first half of the year and the softness in global capital spending will begin to strengthen. Commercial activity remains healthy. Our backlog is growing and our ability to execute with our strong cost discipline is shown across the operating segments. With that, I'll turn the call over to Mike for a review of our financial performance for Q2 and our guidance outlook for the remainder of the year. Mike? Michael McKenney: Thank you, Jeff. I'll start with some key financial metrics from our second quarter. Second quarter record revenue of $312.9 million included record aftermarket parts revenue of $214.2 million. Organic revenue increased 8% compared to the second quarter of '25, including a 23% increase in organic capital revenue. Record revenue drove an increase in gross profit in the second quarter, but at a comparatively lower gross margin. Gross margin was 43.8% in the second quarter of '26, down 210 basis points compared to 45.9% in the second quarter of '25. Our mix of higher-margin aftermarket parts revenue decreased to 68% compared to 71% in the second quarter '25. Our gross margin was lower as a result of the higher capital mix and as a result of the product mix within both aftermarket and capital categories. We had a benefit in the second quarter from tariff refunds, but this was largely offset by the negative impact from the amortization of acquired profit and inventory and deferred profit associated with our Kadant Profil acquisition, which I outlined on our last earnings call. As a refresher,Kadant Profil has been a long-time supplier to several Kadant businesses and a significant portion of its revenue, approximately 50% is now intercompany revenue under Kadant. The associated profit generated on this intercompany activity is recognized in Kadant's results, but the timing depends on when the underlying product is sold to the third-party customer. Our Kadant businesses had on-hand inventory at the acquisition date that needs to be consumed before profit related to post-acquisition activity can be recognized. We estimate it will take the remainder of the year to work through the remaining acquisition date inventory. SG&A expenses were well managed and as a percentage of revenue decreased to 26.1% in the second quarter of '26 compared to 29% in the prior year period. SG&A expenses increased $7.7 million or 10% to $81.6 million in the second quarter of '26 compared to $73.9 million in the second quarter of '25. This increase includes incremental SG&A expense of $7.9 million related to our acquisitions. Our GAAP EPS increased 24% to $2.75 in the second quarter, and our adjusted EPS increased 26% to a record $3.42. This growth was attributed to higher organic revenue and stronger performance from our acquisitions. Second quarter of '26 adjusted EPS exceeded the high end of our guidance range by $0.44, largely due to lower operating expenses and better acquisition performance than forecasted. This strong performance contributed to record adjusted EBITDA and strong cash flow performance in the quarter, which I'll discuss further -- in further detail on the next slide. Adjusted EBITDA increased 30% to a record $68.1 million compared to $52.4 million in the second quarter of '25 due to strong performance at our Industrial Processing segment. As a percentage of revenue, adjusted EBITDA was 21.8% compared to 20.5% in the second quarter '25. As outlined in the chart, our cash flow of $53.5 million increased significantly compared to the first quarter of '26 and was up 32% compared to the second quarter of '25. Our capital expenditures increased to $10.9 million in the second quarter of '26 compared to $4 million in the prior period due in part to the purchase of a previously leased manufacturing facility. After excluding capital expenditures, free cash flow increased 17% to $42.6 million compared to the second quarter of '25. Let me turn next to our EPS results for the quarter. Our adjusted EPS increased $0.71 from $2.71 in the second quarter of '25 to $3.42 in the second quarter '26. This included increases of $0.67 due to higher revenue, $0.52 from our acquisitions, excluding the associated borrowing costs and $0.01 from lower noncontrolling interest expense. These increases were partially offset by $0.23 due to a lower gross margin percentage, $0.12 due to higher interest expense, $0.08 from a higher effective tax rate and $0.06 from higher operating expenses. Collectively, included in all the categories I just mentioned was a favorable foreign currency translation effect of $0.05 in the second quarter of '26 compared to the second quarter of last year. Looking at our liquidity metrics on Slide 15. Our cash conversion days decreased to 133 at the end of the second quarter '26 compared to 147 at the end of the first quarter of '26. Working capital as a percentage of revenue was 19.3% in the second quarter of '26 compared to 17.7% in the second quarter of '25 due to the lack of a full year of revenue for our most recent acquisitions. If you exclude the acquisition impact from this calculation, it would be 17.4%, which is slightly below the second quarter of '25. Our net debt, that is debt less cash, was $373 million in the second quarter, increasing $129 million sequentially. We borrowed $181.8 million to fund our recent acquisition and repaid $29.8 million in the second quarter. Our leverage ratio, calculated in accordance with our credit agreement increased to 1.72 at the end of the second quarter of '26 compared to 1.27 last quarter. At the end of the second quarter '26, we had $249 million of borrowing capacity available under our revolving credit facility and an additional $200 million of uncommitted borrowing capacity. Now I'll review our guidance for '26. Our record second quarter revenue and strong organic capital revenue have improved our outlook. And as a result, we are modifying our guidance for the year. We are raising our full year '26 revenue guidance to $1.190 billion to $1.210 billion, revised from our previous guidance of $1.178 billion to $1.203 billion. We expect adjusted EPS of $12.43 to $12.68 in '26, revised from our previous guidance of $12.33 to $12.68. Our adjusted EPS guidance excludes $2.17 of intangible amortization expense and $0.48 of acquisition-related costs. We remain cautious with our outlook for the remainder of '26. While aftermarket parts demand remains healthy, we are continuing to see uncertainty related to the timing of capital projects. The geopolitical conflicts and the resulting impact on input costs are resulting in our customers taking a more cautious approach. Customer demand for quotes remains healthy with many active projects, the quote to order time is longer. Our revenue guidance for the third quarter of '26 is $297 million to $307 million, and our adjusted EPS guidance for the third quarter is $2.90 to $3, which excludes $0.55 of intangible amortization expense and $0.07 of acquisition-related costs. '26 guidance includes the following assumptions: gross margins of 44% to 44.5%, SG&A as a percentage of revenue of 27.2% to 27.7%, net interest expense of $19.5 million to $20 million, a tax rate of 27.8% to 28.3%, depreciation expense of $28 million to $28.5 million and intangible amortization expense, which we now add back to our adjusted EPS calculation of approximately $34 million. That concludes my review of the financials, and I'll now turn the call back over to the operator for our Q&A session. Loraine? Operator: [Operator Instructions] Our first question comes from the line of Ross Sparenblek with William Blair. Ross Sparenblek: Just to kick it off on a high level here with the project pipeline comments, several large projects getting close to the finish line. Can you maybe provide more color on the pockets of strength that you're seeing? It feels like resi is still choppy, but June had a pretty strong period for cardboard in the U.S. Just any way we should think about that going forward? Jeffrey Powell: Yes, Ross, I think we have some large projects in the packaging side of the business. We're moving more in on some of these adjacent markets. We booked a very large order this quarter in the second quarter in the Aerospace side of the business. We continue to book orders on the OSB side of the business. That business continues to, I would say, outperform the rest of the wood sector. So it's really kind of -- and we have some large baler projects. So it's actually spread across most of our businesses. There's been -- as we've talked now for, frankly, 2.5 years, there's been this capital equipment investment recession that we've been in, and that just can't last forever. And so we're starting to see projects start to move forward in the planning stage really in almost all of our major sectors. Ross Sparenblek: Okay. And can you maybe just remind us how that would have compared to last year? I mean I just get a sense that there's definitely more diversified recovery coming across your markets, which obviously provides confidence in the go forward. Jeffrey Powell: Yes. I mean it's -- the biggest projects for our business tend to be on these large packaging conversions. Those projects can be anywhere from $10 million to $25 million. And so as you would imagine, they get the most scrutiny, and I think the customers want to have a good visibility on what's going on. That's really what's kind of delayed them all the uncertainties we've seen. But some of those, I think, are moving forward. Some of them we thought actually might have happened last year, and they did not. They got pushed off a year because of just the different uncertainties of tariffs and everything else, the wars. But they aren't going to delay them forever. As I've mentioned many times, we seldom see projects canceled. It's always just a matter of timing on these things. And it's clear that some of these things are starting to move forward where I think the customer could no longer put off making the investments in them. So it's -- the environment is stronger. The pipeline is stronger. I think the timing of some of these larger projects is more near term now than it certainly was this time last year. Ross Sparenblek: Okay. And just on the M&A side and thinking about the 2025 acquisitions, the more recent ones here, can you maybe just give us a sense of how those are performing versus internal expectations and kind of the thoughts on kind of looking out to 2027 on integrating and kind of driving more accretive margins from the 3 that you did in the last, call it, 12 months here? Michael McKenney: Yes. I would say, Ross, the larger transaction we did with Clyde, they are really performing well. they are really doing well. Very, very happy with the results to date. Then going to the one that we just completed, Profil. Of course, I mentioned in the call, we have the profit deferral issue, but they're off to a very good start. They're off to a good start. They had some nice bookings. So we're pretty happy with how they've started out here. And then the smaller one we did on the fiber processing side, a component of what they're doing is supplying a product into our fiber processing systems. And right now, orders are soft in that area, though I would say we're looking at the back half of '26 and into the very front part of '27 as some -- there's -- I think we see some good opportunities on the board. So I'd say 2 of the 3 doing very well. And then the one that we called out more as a technology buy for us to fit into our upcycling system. That one is a little bit more challenged in the short run here because of the lower demand. Operator: Our next question comes from the line of Gary Prestopino with Barrington. Gary Prestopino: Hi jeff and Mike. A couple of questions. First of all, Mike, I didn't write down the organic revenue growth and the organic capital revenue growth. Could you just give me that again, please? Michael McKenney: Yes. The organic revenue growth was 8% and the capital revenue growth was -- organic capital revenue growth was 23%. Gary Prestopino: Okay. In the quarter, I mean, you're once again saying you still expect things to get better on the capital side in the back half of the year, but your clients still seem to be reticent to commit. Is that how we should read this? What the outlook would be maybe for capital for the next 6 months? Jeffrey Powell: I know, Gary, we kind of sound like a broken record. We've been talking about that for -- it feels like forever now, but we are seeing some increase. As I mentioned, we had -- we booked a nice $8 million project this quarter and second quarter on the aerospace side. We booked another OSB order. And then as I said, we're getting further along on some of these larger projects that we've been in discussions on. So we think things are going to -- from a booking standpoint, are going to continue to improve. Second quarter actually, capital equipment revenue, I think, Mike, was the second best ever in the second quarter. So we definitely are starting to see some pickup in the capital equipment activity, and we expect that will continue. But it's been a long slug. I'll tell you that. It's unusual. I said this before, we normally don't see this kind of softness unless we're in a recession, a macro recession. And the economies haven't been in that, of course. It's just that we've got this bifurcated capital investment cycle now where the -- it seems like all the auctions has been sucked out of the room between AI and all the geopolitical uncertainties that have occurred around the world. But we definitely are starting to book some capital, and we think some of these projects are getting closer to being released. Gary Prestopino: Okay. So it's really the mindset is just, okay, we've got a lot of things swirling around here, but eventually, we're going to need this equipment. I mean, does the growth in your aftermarket parts sales indicate that these machines are being run extremely hard and eventually, something's got to give. Jeffrey Powell: Yes. I mean we always say that our aftermarket business is somewhat driven by operating rates. And so we're -- we've been experiencing record or near record aftermarket business, even though none of our customers are operating anywhere near record operating rates. And what that tells us is the average age of the equipment is long, it's aged, it's old and it's taken a lot more to keep it up and running. And so that's a pretty strong indicator as to the status of the installed base out there and the age -- the average age of the installed base. Gary Prestopino: Okay. And then I would just assume that with the change in guidance ranges and all that, the guidance doesn't reflect the beat in this quarter. And that's just more or less conservatism and dealing with the uncertainty going forward? Or was Q2 just a total positive surprise as far as the outperformance? Michael McKenney: Well, we're very happy with the outperformance, but I think you're viewing it correctly, Gary. We want to be cautious here going into the back half of the year. Gary Prestopino: Okay. And one last quick one. Do you have the current assets, current liabilities for the quarter, Mike? Michael McKenney: Yes. One second there. Current assets $581 million, current liabilities, $224 million. Operator: [Operator Instructions] Our next question comes from the line of Ross Sparenblek with William Blair. Ross Sparenblek: Can you help us with the equipment backlog? I'm getting something close to $182 million. There's obviously currency at a minimum that can change that number. Michael McKenney: As I recall, Ross, you asked that on the last call and you were spot on. And your streak continues, Ross. It's $182 million. Ross Sparenblek: All right. And then just based on what you're kind of seeing, and it feels like there's a lot more confidence here based on customer conversations as well and equipment orders are hanging around that $90 million level. Is $300 million quarterly orders kind of the new base that you're thinking for the back half of the year? Michael McKenney: Yes. I'd say, yes, more or less, yes. Ross Sparenblek: Okay. And so then with the third quarter guide, the implication is just more timing related and you're building the backlog looking into 2027? Michael McKenney: Yes. That's right, Ross. We get -- if we -- some of these larger capital orders come in, those are really going to end up being revenue for '27. Ross Sparenblek: Okay. And then we talked about 80/20 for a while. Maybe update us where are we on that program. Last I recall, you're around like 50% done because of the M&A, although I'm not exactly certain which divisions are the focus this year? Jeffrey Powell: Yes, it hasn't changed much. It's still -- we seem to be kind of stuck in that 50% because we'll start 3 companies or 4 companies and we buy 3 or 4 companies. And so the percentage doesn't change. But we're continuing to aggressively pursue that implementation. So we have several businesses that are in the process right now. We continue to refine the initiative, refine the process, specifically for the Kadant businesses. And it's still a primary driver of our increased profitability, our increased EBITDA margins that are part of our 5-year plans. Operator: [Operator Instructions] I'm showing no further questions at this time. I would now like to turn it back to Jeff Powell for closing remarks. Jeffrey Powell: Thank you, Loraine. So before wrapping up the call today, I just want to leave you with a few takeaways. Despite the weaker economies in certain areas of the world and increasing geopolitical uncertainties, our second quarter results demonstrated the resilience of Kadant's business model. We have strong market positions and expect strengthening demand in the second half of the year as project activity is gaining momentum despite ongoing trade issues and follow geopolitical tensions influencing market confidence. Our large installed base, strong aftermarket business and disciplined operational execution enables us to deliver solid results while positioning the company for meaningful upside as capital spending recovers. With that, I want to thank you for joining us at the call today, and we look forward to updating you next quarter. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Before you buy stock in Kadant, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kadant wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Kadant (KAI) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Kadant Inc? Here are five stocks we like better. Record second-quarter results: Revenue rose 23% year over year to $312.9 million, while adjusted EBITDA increased 30% to $68.1 million and adjusted EPS climbed 26% to $3.42. Results benefited from acquisitions, 8% organic growth and record aftermarket parts revenue of $214.2 million. Aftermarket demand is offsetting softer capital-equipment activity: Customers continue to delay or extend approval of large projects amid geopolitical and macroeconomic uncertainty, but management believes most projects are postponed rather than canceled. Bookings rose 16% to $312 million, with equipment backlog at $182 million and aftermarket revenue remaining near record levels. Full-year guidance was raised: Kadant now expects 2026 revenue of $1.19 billion to $1.21 billion and adjusted EPS of $12.43 to $12.68. Management remains cautious about project timing but anticipates stronger demand in the second half and improving capital-spending conditions into 2027. Kadant (NYSE:KAI) reported record second-quarter revenue, adjusted earnings and EBITDA for 2026, supported by acquisitions, organic growth and continued demand for aftermarket parts and services even as customers delayed some large capital-equipment commitments. Revenue rose 23% from a year earlier to a record $312.9 million, including 8% organic growth. Organic capital revenue increased 23%, while record aftermarket parts revenue totaled $214.2 million. Bookings increased 16% to $312 million, according to President and Chief Executive Officer Jeff Powell. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Adjusted EBITDA increased 30% to a record $68.1 million, or 21.8% of revenue, compared with $52.4 million, or 20.5% of revenue, in the prior-year period. GAAP diluted earnings per share increased 24% to $2.75, while adjusted diluted EPS rose 26% to a record $3.42. The adjusted result exceeded the high end of the company’s prior guidance by $0.44, which CFO Michael McKenney attributed largely to lower operating expenses and stronger-than-expected acquisition performance. Powell said global capital-equipment markets remained soft amid geopolitical uncertainty, longer customer approval cycles and delayed project releases. However, he said quote activity and commercial engagement remained healthy, and the company believes deferred projects have largely been postponed rather than canceled. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High “Our large installed base provides reoccurring profitable revenue through maintenance upgrades, aftermarket parts, and growing service demand,” Powell said. He added that customers are seeking to maximize productivity and reduce input costs. During the question-and-answer session, Powell said the company’s aftermarket activity has remained at record or near-record levels even though its customers are not operating at record rates. He said this suggests equipment across the installed base has aged and requires more maintenance to remain operational. → No Hangover: Revisiting Microsoft One Week After Earnings Kadant reported equipment backlog of $182 million at quarter-end. McKenney said that as large capital orders are received, they are likely to convert into revenue during 2027. The company expects quarterly bookings to remain around the $300 million level during the second half, he said. Flow Control: Bookings increased 11% year over year, aided by strong aftermarket demand and stronger-than-expected North American capital-project bookings. Revenue increased 5% to $100 million. Aftermarket revenue reached a record $76 million, representing 76% of segment revenue, while adjusted EBITDA margin was 27.7%. Industrial Processing: Bookings rose 29% to $136 million, with recent acquisitions contributing to growth. Revenue reached a record $144 million, including 13% organic growth. Adjusted EBITDA was a record $38 million, equal to 26.1% of revenue. Material Handling: Bookings totaled $73 million, supported by demand for the company’s BELA product line. Adjusted EBITDA increased 7% to $15 million. Powell said the segment has several larger capital projects under discussion and sees opportunities tied to infrastructure, mining, food processing and recycling. Powell said capital projects under discussion span packaging, aerospace, oriented strand board and baling markets. The company booked an $8 million aerospace project during the quarter and continued to receive orders in the OSB market. He said large packaging conversion projects, which can range from $10 million to $25 million, have faced particularly intensive customer review amid uncertainty around tariffs, wars and other macroeconomic conditions. Second-quarter gross margin declined 210 basis points to 43.8%, from 45.9% a year earlier. McKenney said the decline reflected a larger mix of capital revenue and product mix within both the capital and aftermarket categories. The higher-margin aftermarket mix was 68% of revenue, compared with 71% in the prior-year quarter. The company received a benefit from tariff refunds during the quarter, though that was largely offset by amortization of acquired profit in inventory and deferred profit associated with the Kadant Profil acquisition. McKenney said the company expects to work through remaining acquisition-date inventory during the rest of 2026. SG&A expenses increased 10% to $81.6 million, but declined as a percentage of revenue to 26.1% from 29%. Operating cash flow increased 32% to $53.5 million, while free cash flow increased 17% to $42.6 million. Capital expenditures rose to $10.9 million from $4 million, partly due to the purchase of a previously leased manufacturing facility. Net debt was $373 million at the end of the quarter, up $129 million sequentially after the company borrowed $181.8 million to fund a recent acquisition and repaid $29.8 million. Its leverage ratio increased to 1.72 from 1.27 in the first quarter. Kadant had $249 million available under its revolving credit facility, plus $200 million of uncommitted borrowing capacity. Powell said Clyde Industries, one of the company’s larger recent acquisitions, has performed well. He said Kadant Profil also had a good start, though its reported results are affected by the acquired-profit deferral issue. A smaller technology acquisition tied to fiber-processing and upcycling systems has faced softer near-term demand, he said. Kadant raised its full-year revenue outlook to $1.19 billion to $1.21 billion, from prior guidance of $1.178 billion to $1.203 billion. It now expects adjusted EPS of $12.43 to $12.68, compared with previous guidance of $12.33 to $12.68. For the third quarter, the company forecast revenue of $297 million to $307 million and adjusted EPS of $2.90 to $3.00. The adjusted EPS outlook excludes $0.55 of intangible amortization expense and $0.07 of acquisition-related costs. Management said it remains cautious about the remainder of 2026 due to uncertainty in the timing of capital projects and geopolitical conflicts affecting customer confidence and input costs. Still, Powell said Kadant expects demand to strengthen in the second half relative to the first half, with capital-spending conditions improving into 2027. 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. Originally part of a larger industrial conglomerate, Kadant was established as an independent public company in 1991. 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 [email protected]. The article "Kadant Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Kadant (KAI) reported second quarter results that exceeded earnings and revenue estimates, with management also lifting full year revenue and adjusted EPS guidance after several quarters of outperformance. See our latest analysis for Kadant. The latest earnings beat and guidance update have come alongside firm share price momentum for Kadant, with a 1-month share price return of 8.39% and a year to date share price return of 16.94%. The 3-year total shareholder return of 57.24% points to stronger long term compounding. If this earnings move has you looking beyond Kadant, it could be a good moment to scan other industrial and automation ideas using our robotics and automation stocks screener, starting with 36 robotics and automation stocks. Kadant now trades close to analyst targets after the earnings jump, with intrinsic models pointing to a premium instead of a discount. Is the market being overly cautious about what comes next, or is that skepticism reasonable? The most followed valuation narrative for Kadant puts fair value at $306 per share, which sits below the latest close at $334.92. That gap frames a more cautious view of what the current share price already assumes about future growth and profitability. Read the complete narrative. Want to see how this narrative still arrives at a premium valuation for Kadant? The story leans on steady revenue expansion, firmer margins and a richer future earnings multiple. Curious which combination of growth, profitability and discount rate assumptions supports that stance? The full narrative lays out the numbers behind the $306 fair value call. Result: Fair Value of $306 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, several factors could still challenge this cautious Kadant view. These include the large installed equipment base that supports recurring aftermarket sales and the company’s global manufacturing footprint. Find out about the key risks to this Kadant narrative. With both risks and rewards in play for Kadant, it helps to move quickly and review the underlying data yourself to see what stands out. To weigh those positives against the concerns and sharpen your own view, start with the 1 key reward and 1 important warning sign. If Kadant has sharpened your interest, do not stop here. Use the Simply Wall Street Screener to quickly surface other stocks that fit clear, data backed criteria. Target potential mispricings by scanning 52 high quality undervalued stocks that combine quality fundamentals with attractive valuations. Strengthen your focus on financial resilience by reviewing the solid balance sheet and fundamentals stocks screener (49 results) and see which companies currently meet those filters. Get ahead of the crowd by checking the screener containing 18 high quality undiscovered gems that may not yet be widely followed. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include KAI. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Kadant Inc (NYSE:KAI) delivered record second-quarter revenue of $313 million, up 23% year-over-year, with organic revenue growth of 8% across all operating segments. Adjusted EPS reached a record $3.42, up 26% from the prior year, exceeding the high end of guidance by $0.44 due to strong operational execution and cost discipline. Aftermarket parts revenue hit a record $214.2 million, demonstrating the resilience of the recurring revenue model and strong demand for maintenance and upgrades. The company raised its full-year 2026 revenue guidance to $1.19-$1.21 billion and adjusted EPS guidance to $12.43-$12.68, reflecting improved confidence in the second half. Bookings increased 16% to $312 million, with a growing capital project pipeline and multiple large projects in advanced stages, signaling potential for future growth. Operating cash flow increased 32% to $54 million, and free cash flow rose 17% to $43 million, highlighting strong cash generation capabilities. Gross margin declined 210 basis points to 43.8% due to a higher mix of lower-margin capital equipment revenue and product mix shifts within aftermarket and capital categories. Global capital equipment markets remain soft, with customers delaying project releases and extending approval cycles due to geopolitical uncertainty and trade policy concerns. The European economic environment is extremely challenging, dampening results in the flow control segment despite strong aftermarket demand. The recent acquisition of Arcadian Profile is expected to negatively impact profit recognition through the remainder of the year as the company works through acquisition-date inventory. Net debt increased to $373 million, and the leverage ratio rose to 1.72, reflecting higher borrowing to fund acquisitions, which also increased interest expenses. Management remains cautious about the timing of capital project conversions, noting that quote-to-order times are lengthening and demand is being deferred rather than lost. Warning! GuruFocus has detected 6 Warning Sign with KAI. Is KAI fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more color on the project pipeline and the pockets of strength you're seeing, given that the macro environment remains choppy? A: Jeff Powell (President and CEO): We have several large projects in the packaging side of the business and are moving into adjacent markets. We booked a very large order in the aerospace side during Q2 and continue to book orders on the OSB side, which is outperforming the rest of the wood sector. We also have some large bellar projects. The capital equipment investment recession we've been in for 2.5 years can't last forever, and we're starting to see projects move forward in the planning stage across almost all of our major sectors. The pipeline is stronger, and the timing of some larger projects is more near-term now than it was this time last year. Q: How are your recent acquisitions performing versus internal expectations, and what are your thoughts on integration and driving margins looking out to 2027? A: Jeff Powell (President and CEO): The larger transaction we did with Clyde is performing really well, and we are very happy with the results to date. The one we just completed, Profile, is off to a very good start with some nice bookings, despite the profit deferral issue we've outlined. The smaller one on the fiber processing side is a bit more challenged in the short run due to lower demand, but we see good opportunities on the board for the back half of 2026 and into early 2027. Overall, two of the three are doing very well, while the technology-focused acquisition for our upcycling system is facing short-term headwinds. Q: Can you confirm the organic revenue growth and organic capital revenue growth figures for the quarter? A: Michael McKinney (EVP and CFO): Organic revenue growth was 8%, and organic capital revenue growth was 23% in the second quarter. Q: You continue to expect improvement on the capital side in the back half of the year, but customers still seem reticent to commit. How should we read the outlook for capital over the next six months? A: Jeff Powell (President and CEO): We are seeing some increase in capital activity. We booked a nice $8 million project in the aerospace side during Q2 and are getting further along on some larger projects. The second quarter capital equipment revenue was the second best ever for a Q2, so we are definitely starting to see a pickup. We've had a bifurcated capital investment cycle where all the oxygen has been sucked out of the room between AI and geopolitical uncertainties, but we are starting to book capital and think some projects are getting closer to being released. Q: Does the growth in aftermarket parts sales indicate that machines are being run extremely hard, and eventually something has to give? A: Jeff Powell (President and CEO): Our aftermarket business is somewhat driven by operating rates, and we've been experiencing record or near-record aftermarket business even though none of our customers are operating anywhere near record rates. This tells us the average age of the equipment is long and aged, requiring more to keep it running. This is a strong indicator of the status and age of the installed base out there. Q: Does the change in guidance reflect the beat in Q2, or is it more conservatism given the uncertainty going forward? A: Michael McKinney (EVP and CFO): We are very happy with the outperformance, but you're viewing it correctlywe want to be cautious going into the back half of the year. The guidance raise is modest, reflecting our cautious outlook despite the strong Q2 beat. Q: Can you help us with the equipment backlog figure? A: Michael McKinney (EVP and CFO): The equipment backlog is $182 million. As I recall, you asked this on the last call and were spot on, and your streak continuesit is indeed $182 million. Q: With equipment orders hanging around the $90 million level, is $300 million in quarterly orders the new base for the back half of the year? A: Jeff Powell (President and CEO): Yes, more or less, that's correct. We expect orders to remain around that level, and with the third-quarter guide, the implication is that timing is the main factor. If some of these larger capital orders come in, they will really end up being revenue for 2027, so we are building backlog looking into next year. Q: Can you provide an update on the 80/20 program, which was around 50% complete due to M&A? A: Jeff Powell (President and CEO): It hasn't changed muchwe seem to be stuck at around 50% because we'll start 3 or 4 companies and buy 3 or 4 companies, so the percentage doesn't change. However, we are continuing to aggressively pursue implementation, with several businesses in the process right now. We continue to refine the initiative specifically for Kadant businesses, and it remains a primary driver of our increased profitability and EBITDA margins as part of our 5-year plans. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

WESTFORD, Mass., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Kadant Inc. (NYSE: KAI) reported its financial results for the second quarter ended July 4, 2026. Second Quarter Financial Highlights Bookings increased 16% to $312 million Revenue increased 23% to a record $313 million Gross margin decreased 210 basis points to 43.8% Net income increased 24% to $32 million GAAP EPS increased 24% to $2.75 Adjusted EPS increased 26% to a record $3.42 Adjusted EBITDA increased 30% to a record $68 million and represented 21.8% of revenue Operating cash flow increased 32% to $54 million Backlog was $340 million Note: Percent changes above are based on comparison to the corresponding prior year quarter. 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"Our second-quarter results reflect solid execution across our businesses and robust demand for our aftermarket parts and services, resulting in record revenue and strong earnings growth," said Jeffrey L. Powell, president and chief executive officer of Kadant. "Although capital project timing remains challenged by customer caution and extended approval cycles, we continue to see evidence that interest in our products and technologies remains healthy. Our large installed base and disciplined operational execution enabled us to deliver excellent results in the quarter while positioning the company for meaningful upside as capital spending recovers.” Second Quarter 2026 Compared to 2025Revenue increased 23 percent to a record $312.9 million compared to $255.3 million in 2025. Organic revenue increased eight percent, which excludes an increase of 13 percent from acquisitions, and two percent from the favorable effect of foreign currency translation. Gross margin decreased 210 basis points to 43.8 percent, compared to 45.9 percent in 2025 due in part to an unfavorable product mix and a lower gross margin profile associated with recent acquisitions. Net income was $32.5 million, increasing 24 percent compared to $26.2 million in 2025. GAAP EPS increased 24 percent to $2.75 compared to $2.22 in 2025 and adjusted EPS increased 26 percent to a record $3.42 compared to $2.71 in 2025. Adjusted EPS excludes intangible asset amortization expense of $0.55 and acquisition-related costs of $0.13 in 2026, and intangible asset amortization expense of $0.40 and acquisition-related costs of $0.09 in 2025. Adjusted EBITDA increased 30 percent to a record $68.1 million and represented 21.8 percent of revenue in 2026 compared to $52.4 million and 20.5 percent of revenue in 2025. Operating cash flow increased 32 percent to $53.5 million compared to $40.5 million in 2025. Free cash flow increased 17 percent to $42.6 million compared to $36.5 million in 2025. Bookings increased 16 percent to $312.1 million compared to $269.4 million in 2025. Organic bookings decreased one percent, which excludes increases of 15 percent from acquisitions and two percent from the favorable effect of foreign currency translation. Summary and Outlook“As we look ahead to the second half of the year, we are encouraged by healthy quote activity and active commercial engagement, while the primary headwinds remain customer approval cycles and geopolitical uncertainty,” continued Mr. Powell. “We recognize that the timing of capital project spending can be uneven across our end markets and geographies, and we continue to focus on disciplined execution, cash flow generation, and servicing our customers. We expect revenue of $1.190 to $1.210 billion in 2026, revised from our previous guidance of $1.178 to $1.203 billion, and GAAP EPS of $9.78 to $10.03, revised from our previous guidance of $9.80 to $10.15. We expect adjusted EPS for 2026 of $12.43 to $12.68, revised from our prior guidance of $12.33 to $12.68. Our revised adjusted EPS guidance excludes $2.65 per share of acquisition-related costs. For the third quarter of 2026, we expect revenue of $297 to $307 million, GAAP EPS of $2.28 to $2.38, and adjusted EPS of $2.90 to $3.00, which excludes $0.62 per share of acquisition-related costs.” Conference Call Kadant will hold a webcast with a slide presentation for investors on Wednesday, August 5, 2026, 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 September 4, 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 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 2026 included $33.9 million from acquisitions and a favorable foreign currency translation effect of $4.1 million compared to the second quarter of 2025. Revenue in the first six months of 2026 included $67.9 million from acquisitions and a favorable foreign currency translation effect of $13.9 million compared to the first six months of 2025. Our other non-GAAP financial measures exclude amortization expense related to acquired intangible assets, profit in inventory, and backlog (collectively, purchase accounting expenses); acquisition costs; and other income or expense, as indicated. We exclude purchase accounting expenses and acquisition costs to provide a more meaningful and consistent comparison of our operating results over time and with peer companies. While we have a history of acquisition activity, such transactions do not occur on a predictable cycle, and the size and nature of these transactions will vary. We believe it is important for investors to understand that these intangible assets were recorded as part of purchase accounting and that they contribute to revenue generation. We also exclude other items 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 intangible asset amortization expense of $8.6 million in 2026 and $6.3 million in 2025. Pre-tax profit in inventory and backlog amortization expense of $1.2 million in 2026 and $0.2 million in 2025. Pre-tax acquisition costs of $0.6 million in 2026 and $0.9 million in 2025. Adjusted net income and adjusted EPS exclude: After-tax intangible asset amortization expense of $6.5 million ($8.6 million net of tax of $2.1 million) in 2026 and $4.8 million ($6.3 million net of tax of $1.5 million) in 2025. After-tax profit in inventory and backlog amortization expense of $0.9 million ($1.2 million net of tax of $0.3 million) in 2026 and $0.2 million in 2025. After-tax acquisition costs of $0.6 million in 2026 and $0.9 million in 2025. Free cash flow is calculated as operating cash flow less: Capital expenditures of $10.9 million in 2026 and $4.0 million in 2025. First Six Months Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude: Pre-tax intangible asset amortization expense of $17.0 million in 2026 and $12.7 million in 2025. Pre-tax profit in inventory and backlog amortization expense of $2.6 million in 2026 and $0.6 million in 2025. Pre-tax acquisition costs of $1.3 million in 2026 and $1.2 million in 2025. Adjusted net income and adjusted EPS exclude: After-tax intangible asset amortization expense of $12.8 million ($17.0 million net of tax of $4.2 million) in 2026 and $9.5 million ($12.7 million net of tax of $3.2 million) in 2025. After-tax profit in inventory and backlog amortization expense of $2.0 million ($2.6 million net of tax of $0.6 million) in 2026 and $0.5 million ($0.6 million net of tax of $0.1 million) in 2025. After-tax acquisition costs of $1.3 million in 2026 and $1.2 million in 2025. Free cash flow is calculated as operating cash flow less: Capital expenditures of $14.2 million in 2026 and $7.8 million in 2025. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release. About Kadant Kadant Inc. is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing®. The Company’s products and services play an integral role in enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries. Kadant is based in Westford, Massachusetts, with approximately 4,000 employees in 22 countries worldwide. For more information, visit kadant.com. Safe Harbor StatementThe following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our future financial and operating performance, demand for our products, and economic and industry outlook. These forward-looking statements represent our expectations as of the date of this press release. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements as a result of various important factors, including those set forth under the heading “Risk Factors” in Kadant’s Annual Report on Form 10-K for the fiscal year ended January 3, 2026 and subsequent filings with the Securities and Exchange Commission. These include risks and uncertainties relating to adverse changes in global and local economic conditions; the variability and difficulty in accurately predicting revenues from large capital equipment and systems projects; our acquisition strategy; levels of residential construction activity; reductions by our wood processing customers of their capital spending or production of oriented strand board; changes to the global timber supply; development and use of digital media; cyclical economic conditions affecting the global mining industry; demand for coal, including economic and environmental risks associated with coal; failure of our information systems or breaches of data security and cybersecurity incidents; implementation of our internal growth strategy; competition; our ability to successfully manage our manufacturing operations; supply chain constraints, inflationary pressure, price increases or shortages in raw materials; loss of key personnel and effective succession planning; future restructurings; protection of intellectual property; changes to tax laws and regulations; climate change; adequacy of our insurance coverage; global operations; policies of the Chinese government; the variability and uncertainties in sales of capital equipment in China; currency fluctuations; changes to government regulations and policies around the world; compliance with government regulations and policies and compliance with laws; environmental laws and regulations; environmental, health and safety laws and regulations impacting the mining industry; our debt obligations; restrictions in our credit agreement and note purchase agreement; soundness of financial institutions; fluctuations in our share price; and anti-takeover provisions. ContactsInvestor Contact Information:Michael McKenney, [email protected] Media Contact Information:Wes Martz, [email protected]

Industrial equipment manufacturer Kadant (NYSE:KAI) reported Q2 CY2026 results beating Wall Street’s revenue expectations , with sales up 22.6% year on year to $312.9 million. On the other hand, next quarter’s revenue guidance of $302 million was less impressive, coming in 3.3% below analysts’ estimates. Its non-GAAP profit of $3.42 per share was 23.6% above analysts’ consensus estimates. Is now the time to buy Kadant? Find out in our full research report. Revenue: $312.9 million vs analyst estimates of $299.2 million (22.6% year-on-year growth, 4.6% beat) Adjusted EPS: $3.42 vs analyst estimates of $2.77 (23.6% beat) Adjusted EBITDA: $68.1 million vs analyst estimates of $62.39 million (21.8% margin, 9.2% beat) The company slightly lifted its revenue guidance for the full year to $1.2 billion at the midpoint from $1.19 billion Management slightly raised its full-year Adjusted EPS guidance to $12.56 at the midpoint Operating Margin: 16.3%, in line with the same quarter last year Free Cash Flow was -$10.95 million, down from $36.51 million in the same quarter last year Market Capitalization: $3.83 billion Management Commentary"Our second-quarter results reflect solid execution across our businesses and robust demand for our aftermarket parts and services, resulting in record revenue and strong earnings growth," said Jeffrey L. Powell, president and chief executive officer of Kadant. Headquartered in Massachusetts, Kadant (NYSE:KAI) is a global supplier of high-value, critical components and engineered systems used in process industries worldwide. A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Kadant grew its sales at an impressive 10.8% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers. We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Kadant’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 7% over the last two years was well below its five-year trend. We can better understand the company’s revenue dynamics by analyzing its most important segments, Fluid Handling and Industrial Processing, which are 32.1% and 46% of revenue. Over the last two years, Kadant’s Fluid Handling revenue (piping, cleaning, and filtration) averaged 4.7% year-on-year growth while its Industrial Processing revenue (paper and timber processing equipment) averaged 12% growth. This quarter, Kadant reported robust year-on-year revenue growth of 22.6%, and its $312.9 million of revenue topped Wall Street estimates by 4.6%. Company management is currently guiding for a 11.2% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 6.5% over the next 12 months, similar to its two-year rate. This projection doesn’t excite us and suggests its newer products and services will not catalyze better top-line performance yet. ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE. Kadant has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.4%. This result isn’t surprising as its high gross margin gives it a favorable starting point. Analyzing the trend in its profitability, Kadant’s operating margin decreased by 2.7 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. In Q2, Kadant generated an operating margin profit margin of 16.3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable. Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions. Kadant’s remarkable 12.1% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded. Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business. Kadant’s two-year annual EPS growth of 4% was subpar and lower than its 7% two-year revenue growth. We can take a deeper look into Kadant’s earnings to better understand the drivers of its performance. While we mentioned earlier that Kadant’s operating margin was flat this quarter, a two-year view shows its margin has declined. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals. In Q2, Kadant reported adjusted EPS of $3.42, up from $2.31 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Kadant’s full-year EPS to grow 15.9% from $11.12 to $12.89. We were impressed by how significantly Kadant blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its EPS guidance for next quarter missed and its revenue guidance for next quarter fell short of Wall Street’s estimates. Overall, we think this was still a decent quarter with some key metrics above expectations. The stock remained flat at $335.05 immediately after reporting. Sure, Kadant had a solid quarter, but if we look at the bigger picture, is this stock a buy? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

Kadant (KAI) came out with quarterly earnings of $3.42 per share, beating the Zacks Consensus Estimate of $2.94 per share. This compares to earnings of $2.31 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +16.33%. A quarter ago, it was expected that this equipment supplier for the papermaking and paper recycling industries would post earnings of $2.35 per share when it actually produced earnings of $2.84, delivering a surprise of +20.85%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Kadant, which belongs to the Zacks Engineering - R and D Services industry, posted revenues of $312.88 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.94%. This compares to year-ago revenues of $255.27 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Kadant shares have added about 13.9% since the beginning of the year versus the S&P 500's gain of 11%. While Kadant has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Kadant was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $3.47 on $310.11 million in revenues for the coming quarter and $12.42 on $1.19 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Engineering - R and D Services is currently in the top 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Amentum Holdings (AMTM), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 11. This government services company is expected to post quarterly earnings of $0.63 per share in its upcoming report, which represents a year-over-year change of +12.5%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Amentum Holdings' revenues are expected to be $3.6 billion, up 1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Kadant Inc (KAI) : Free Stock Analysis Report Amentum Holdings, Inc. (AMTM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Industrial equipment manufacturer Kadant (NYSE:KAI) will be reporting results this Tuesday after market close. Here’s what you need to know. Kadant beat analysts’ revenue expectations last quarter, reporting revenues of $281.5 million, up 17.7% year on year. It was an exceptional quarter for the company, with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates. Is Kadant a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members. This quarter, the market is expecting Kadant’s revenue to grow 17.2% year on year, a reversal from the 7.1% decrease it recorded in the same quarter last year. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. Kadant rarely misses Wall Street’s revenue estimates. Looking at Kadant’s peers in the general industrial machinery segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Columbus McKinnon delivered year-on-year revenue growth of 125%, beating analysts’ expectations by 5.9%, and GE Aerospace reported revenues up 24.5%, topping estimates by 6%. Columbus McKinnon traded up 31.1% following the results while GE Aerospace was down 3.2%. Read our full analysis of Columbus McKinnon’s results here and GE Aerospace’s results here. Over the past year, investors have repeatedly shifted their focus from one macro narrative to another (AI disruption and AI capex spending to geopolitics, interest rates, and the broader health of the economy). While some of the general industrial machinery stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 5% on average over the last month. Kadant is down 1.9% during the same time and is heading into earnings with an average analyst price target of $343 (compared to the current share price of $307.50). ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE.