Kadant Inc. Q1 FY2026 earnings call

Bullet points:

• First quarter was a strong start with robust demand and solid earnings growth, exceeding expectations across most financial metrics.
• Double-digit organic growth and recent acquisitions led to 25% bookings growth in Q1, revenue up 18%, aftermarket parts revenue a record $209 million (74% of total revenue), adjusted EBITDA increased 19% to $57 million (20.2% of revenue), adjusted EPS $2.84.
• Refining 80-20 performance system contributed to results despite economic headwinds and competition.
• Completed acquisition of Cadent Profile, which will be accretive to earnings growth when inventory is sold to third-party customers.

Flow control segment: Bookings increased 12% to a record $112 million, Q1 revenue increased 7% to $99 million, aftermarket parts revenue making up 77% of total Q1 revenue, adjusted EBITDA increased 5% with a margin of 27.8%. Industrial processing segment: Record bookings of $145 million in Q1, organic bookings up 23%, revenue increased 37% to a record $123 million due to acquisitions, adjusted EBITDA margin 24%. Material handling segment: Revenue increased 5% to $60 million, new order activity up modestly to $65 million, unfavorable product mix led to lower EBITDA margin, backlog strong with positive end market fundamentals

Bullet points:

• Raised 2026 revenue guidance to $1,178,000,000 to $1,203,000,000 from previous $1,160,000,000 to $1,185,000,000.
• Revised 2026 adjusted EPS to $12.33 to $12.68, excluding intangible amortization and acquisition-related costs.
• Q2 2026 revenue guidance 296 to 306 million, adjusted EPS guidance $2.88 to $2.98, excluding intangible amortization and acquisition-related costs.
• Assumptions include gross margins 44.5 to 45%, SG&A as percent of revenue 27.6 to 28.1%, net interest expense 20 to 21 million, tax rate 27.5 to 28%, depreciation expense 27 to 27.5 million, intangible amortization expense $34.5 million.

Bullet points:

• Global trade challenges and ongoing conflict in the Middle East create uncertainty that may impact capital project activity and financial results.
• Unfavorable product mix in material handling segment led to downward pressure on gross margin and EBITDA margin.
• Acquisition of Cadent Profile has a dilutive effect on adjusted EPS until inventory held by other Cadent businesses is sold to third-party customers.

Q: Gary Prestapino asked about capital projects and the acquisition of VBP.

A: Gary was told several capital projects that were monitored didn't come in in 2025 but are alive in 2026, one came in in Q1 and two more in Q2; the profitability of the acquired business has stepped down as they work through on-hand inventory.

Q: Ross Berenbeck asked about geography, factory utilization rates.

A: North America is the strongest market, Asia was strong in Q1, Europe is most sensitive to Middle East conflict and energy prices; factory utilization in Europe is slow with customers delaying due to energy price uncertainty.

Q: Addie Maiden asked about FY26 sales outlook.

A: FY26 sales outlook has 2% growth, split 71% parts and consumables, 29% capital; parts and consumables are up organically for both revenue and bookings with no major concerns around lower contribution