KADANT (KAI)·Q4 2025 Earnings Summary

Kadant Beats on Record Revenue as Aftermarket Strength Offsets Capital Softness

February 23, 2026 · by Fintool AI Agent

Kadant delivered its 8th consecutive earnings beat in Q4 FY2025, posting record revenue of $286.2 million (up 11% YoY) and adjusted EPS of $2.27, which came in above the high end of its guidance range. Aftermarket parts hit a record 70% of revenue as customers pushed aging equipment harder amid deferred capital spending. Management set conservative FY2026 guidance but flagged meaningful upside if pending capital orders materialize.

Did Kadant Beat Earnings?

Yes — decisively on both metrics, extending an impressive beat streak.

Kadant has now beaten EPS estimates for 8 consecutive quarters and revenue estimates for at least 6 straight quarters. The Q4 beat came despite tariff headwinds and a higher-than-expected 30% tax rate.

Historical Beat/Miss Trend

Values retrieved from S&P Global

How Did the Stock React?

Shares jumped +3.7% on earnings day (February 19), rallying from $315.56 to close at $327.08. The stock continued to $339.91 the following day before pulling back to $327.52 as of today — still up meaningfully from pre-earnings levels.

Year-to-date, KAI is up approximately 5%, trading at $327.52 against a 52-week range of $244.87 - $387.53.

What Did Management Guide?

Management issued conservative FY2026 guidance but explicitly noted upside potential from delayed capital orders.

FY2026 Full-Year Guidance

Q1 2026 Guidance

Management emphasized that Q1 will be the weakest quarter due to soft capital bookings in H2 2025, but expects improvement as the year progresses.

Important: New EPS Methodology

Starting Q1 2026, Kadant will add back all recurring intangible amortization expense to adjusted EPS — not just acquired backlog amortization. This adds approximately $2.13 per share to FY2026 adjusted EPS.

Rationale: Intangible amortization has grown 22% annually with acquisition activity and is non-cash. The change aligns adjusted EPS with EBITDA and cash flow metrics and improves peer comparability.

What Changed From Last Quarter?

1. Capital order delays persisted — CEO Jeff Powell noted that large capital projects expected in H2 2025 didn't materialize, pushing potential orders into 2026. The company has provided proposals and is waiting for customers to commit.

2. Aftermarket hit new records — Parts and consumables reached 70% of Q4 revenue and 71% for the full year, both record highs. This reflects customers running older equipment harder rather than investing in new capacity.

3. New acquisition methodology — The shift to exclude all intangible amortization from adjusted EPS represents a significant change that will make historical comparisons more complex.

4. Pending acquisition announced — Kadant entered a definitive agreement to acquire voestalpine Böhler Profil GmbH for ~EUR 157M. The transaction is expected to close in Q1 2026 and will increase the leverage ratio to just above 2x.

Segment Performance

Flow Control (35% of revenue)

• Revenue: $100M (+5% YoY)
• Aftermarket mix: 73% of segment revenue
• Bookings: +7% YoY
• North America performed well; Europe and Asia remained soft
• Long-term tailwinds from automation, defense, and energy expected

Industrial Processing (41% of revenue)

• Revenue: $118M (+16% YoY)
• Aftermarket mix: 76% (segment record)
• EBITDA margin: +90bps YoY improvement
• Clyde Industries and Babbini acquisitions contributing; integration progressing well
• Increasing project activity expected in 2026

Material Handling (24% of revenue)

• Revenue: $69M (+11% YoY)
• Aftermarket mix: 53%
• EBITDA margin: 22.1% (+130bps YoY)
• Data center and infrastructure construction driving demand
• High level of project activity expected to yield new orders

Key Management Quotes

On capital order delays:

"It's really unusual to see this kind of softness when the economies are still growing. And I think it's just because of all the uncertainty. The tariff thing, notwithstanding what the current administration says, the tariff thing has been highly chaotic for our customers to manage and to plan and to budget around." — CEO Jeff Powell

On the outlook:

"Things seem to have calmed down a little bit... customers are starting to say, okay, at least we know where we are now, so we can start to plan around that." — CEO Jeff Powell

On guidance approach:

"We tend to always try to underpromise and over-deliver... hopefully we'll get to mid-year and customers will have placed some of those orders and we'll be able to take our guidance up." — CEO Jeff Powell

On aftermarket strength:

"The only explanation you can have for aftermarket overperforming consistently for such an extended period of time with these lower operating rates is that they're making up for that capacity taken offline by pushing everything harder, and the equipment's just older." — CEO Jeff Powell

Capital Allocation & Balance Sheet

• Free Cash Flow (FY25): $154.3M (record, +15% YoY)
• Debt repaid in FY25: $122.2M (42% of outstanding debt)
• Net debt (Q4 end): $251.8M
• Leverage ratio: 1.33x (expected to rise to ~2x post-Böhler acquisition)
• Borrowing capacity: $383M available under Revolving Credit Facility
• Backlog: $288M (60% capital, 40% parts)

Risks & Concerns

1. Capital order timing uncertainty — Large orders continue to be delayed, creating visibility challenges. Guidance assumes only 1-3% organic growth with capital orders providing upside.

2. Tariff volatility — 2025 results were materially impacted by tariff uncertainty, particularly affecting Flow Control margins.

3. Q1 weakness expected — Q1 2026 will be the weakest quarter due to soft H2 2025 bookings, potentially creating investor concern despite full-year upside.

4. New EPS methodology complexity — While the change is reasonable, investors may struggle with historical comparisons during the transition period.

5. Elevated leverage post-acquisition — The Böhler acquisition will push leverage to ~2x, reducing near-term M&A capacity.

Forward Catalysts

The Bottom Line

Kadant delivered another solid beat in Q4, extending its EPS beat streak to 8 quarters, driven by record aftermarket revenue and contributions from recent acquisitions. The stock rallied on the results, though management's conservative FY2026 guidance and weak Q1 outlook may temper near-term enthusiasm. The key question for 2026 is whether delayed capital orders finally convert — management has clear visibility on the pipeline and explicitly flagged guidance upside potential. For investors, the transition to the new EPS methodology adds $2.13/share, making the headline numbers look better even as underlying growth remains steady. Watch for the Q1 report to include Böhler acquisition impacts and any early signs of capital order acceleration.

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Data sourced from Kadant Inc. Q4 FY2025 earnings call transcript, 8-K filing, and S&P Global.

Related Links:

• Kadant Research
• Q4 2025 Earnings Transcript