Kadant Inc. Q4 FY2025 earnings call

• Closed 2025 with solid performance despite challenging macro background including tariff volatility and cost pressures. • Performance led to solid margin results and strong cash flow in Q4. • Acquisitions completed in 2025 contributed to revenue growth. • Demand solid across all 3 operating segments with bookings increasing 12% compared to same period last year. • Newsweek recognized as one of America's most responsible companies for sixth straight year

Flow Control segment: Q4 revenue increased 5% to $100 million, with aftermarket parts revenue up 9% compared to prior year period and making up 73% of total revenue. Industrial Processing segment: Q4 revenue rose 16% to $118 million, with aftermarket parts revenue growing 31% in the fourth quarter and representing 76% of revenue. Material Handling segment: Q4 revenue increased 11% to $69 million, with aftermarket parts making up 53% of total revenue

• Full year 2026 revenue guidance: $1.160 billion to $1.185 billion. • Full year 2026 adjusted EPS guidance: $10.40 to $10.75 (excluding amortization of acquired profit and inventory). • First quarter 2026 revenue guidance: $270 million to $280 million. • First quarter 2026 adjusted EPS guidance: $1.78 to $1.88 (excluding amortization of acquired profit and inventory). • Anticipate gross margins for 2026: approximately 45.2% to 45.7%. • Anticipate SG&A as percentage of revenue: approximately 27.7% to 28.3%, R&D expense: approximately 1.4% of revenue. • Anticipate net interest expense for 2026: approximately $15.5 million to $16 million. • Anticipate recurring tax rate for 2026: approximately 27.3% to 27.8%. • Anticipate depreciation and amortization expense for 2026: approximately $60 million to $61 million. • Anticipate CapEx spending in 2026: approximately $23 million to $27 million

• Tariff volatility proved challenging in 2025. • Continued cost pressures. • Geopolitical and macroeconomic challenges influencing business activity

Q: Do you have the numbers for current assets and current liabilities at year-end?

A: Current assets are $542 million and current liabilities are $228 million.

Q: Did you guys give a backlog figure?

A: Backlog at end of fourth quarter was $288 million, 60% capital, 40% parts.

Q: Can you talk about large capital orders where proposals have been outstanding?

A: Discussions ongoing, projects that were expected in back half of 2025 didn't go away due to geopolitical and tariff uncertainties, some orders waiting for letters of credit or down payments.

Q: How do European competitors compete in aftermarket?

A: Typically undercut on price, but total cost of ownership and technical services are important for defending market share