Kadant (KAI) Q1 2025 earnings summary

Executive summary

• Bookings increased 3% to $256 million, while revenue declined 4% year-over-year to $239.2 million, primarily due to weaker capital equipment demand in Industrial Processing.

• Record aftermarket parts demand drove strong margin performance and solid free cash flow, offsetting declines in capital equipment sales.

• Gross margin improved by 150 basis points to 46.1%, the highest since 2017, driven by a higher proportion of parts and consumables revenue.

• Net income was $24.1 million, down 3% year-over-year, with adjusted EPS down 12% to $2.10.

• Management cited strong operational execution and rapid response to trade and geopolitical uncertainties.

Financial highlights

• Revenue: $239.2 million, down 4% year-over-year; organic revenue down 5%.

• Adjusted EBITDA: $47.9 million, down 8%; margin at 20.0%, down 100 basis points.

• Free cash flow increased 15% to $19.0 million.

• Aftermarket parts revenue rose 5% to a record $179 million, making up 75% of Q1 revenue.

• Gross margin reached 46.1%, up from 44.6% year-over-year.

Outlook and guidance

• 2025 revenue guidance revised to $1.020–$1.040 billion, down from $1.040–$1.065 billion.

• Adjusted EPS guidance lowered to $9.05–$9.25, reflecting a $0.32–$0.39 per share tariff impact.

• Q2 2025 revenue guidance: $243–$250 million; Adjusted EPS: $1.90–$2.00.

• Tariffs expected to add $5–$6 million in costs, mainly in Q2 and Q3.

• Some large capital projects delayed to 2026 due to economic and trade uncertainty.