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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 29, 2025
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________
Commission file number 001-11406
KADANT INC.
(Exact name of registrant as specified in its charter)

Delaware |  | 52-1762325
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

One Technology Park Drive
Westford, Massachusetts 01886
(Address of principal executive offices, including zip code)
(978) 776-2000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, $.01 par value |  | KAI |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ |  | Accelerated filer | ☐
Non-accelerated filer | ☐ |  | Smaller reporting company | ☐
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 25, 2025, the registrant had 11,775,859 shares of common stock outstanding.

Table of Contents
Kadant Inc.
Report on Form 10-Q
For the Quarterly Period Ended March 29, 2025
Table of Contents

|  | Page
PART I: Financial Information
Item 1. | Financial Statements (unaudited) |
| Condensed Consolidated Balance Sheet as of March 29, 2025 and December 28, 2024 | 3
| Condensed Consolidated Statement of Income for the three-month periods ended March 29, 2025 and March 30, 2024 | 4
| Condensed Consolidated Statement of Comprehensive Income for the three-month periods ended March 29, 2025 and March 30, 2024 | 5
| Condensed Consolidated Statement of Cash Flows for the three-month periods ended March 29, 2025 and March 30, 2024 | 6
| Condensed Consolidated Statement of Stockholders' Equity for the three-month periods ended March 29, 2025 and March 30, 2024 | 7
| Notes to Condensed Consolidated Financial Statements | 8
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 21
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 29
Item 4. | Controls and Procedures | 29
PART II: Other Information
Item 1A. | Risk Factors | 30
Item 5. | Other Information | 31
Item 6. | Exhibits | 32

Table of Contents
PART 1 – FINANCIAL INFORMATION
Item 1 – Financial Statements
KADANT INC.
Condensed Consolidated Balance Sheet
(Unaudited)

|  | March 29, 2025 |  | December 28, 2024
(In thousands, except share and per share amounts) |  |
Assets |  |  |  |
Current Assets: |  |  |  |
Cash and cash equivalents |  | $ | 91,678 |  |  | $ | 94,660 |
Restricted cash |  | 2,127 |  |  | 1,286 |
Accounts receivable, net of allowances of $4,300 and $4,403 |  | 145,907 |  |  | 142,462 |
Inventories |  | 153,544 |  |  | 146,092 |
Contract assets |  | 12,222 |  |  | 18,408 |
Other current assets |  | 41,252 |  |  | 39,418 |
Total Current Assets |  | 446,730 |  |  | 442,326 |
Property, Plant, and Equipment, net of accumulated depreciation of $152,021 and $145,359 |  | 170,548 |  |  | 170,331 |
Other Assets |  | 58,878 |  |  | 59,025 |
Intangible Assets, Net (Note 1) |  | 274,782 |  |  | 279,494 |
Goodwill (Note 1) |  | 484,501 |  |  | 479,169 |
Total Assets |  | $ | 1,435,439 |  |  | $ | 1,430,345 |
Liabilities and Stockholders' Equity |  |  |  |
Current Liabilities: |  |  |  |
Current maturities of long-term obligations (Note 4) |  | $ | 3,378 |  |  | $ | 3,376 |
Accounts payable |  | 49,305 |  |  | 51,062 |
Accrued payroll and employee benefits |  | 34,837 |  |  | 43,815 |
Accrued warranty costs |  | 10,116 |  |  | 10,664 |
Customer deposits |  | 35,761 |  |  | 35,887 |
Advanced billings |  | 10,316 |  |  | 7,641 |
Other current liabilities |  | 36,910 |  |  | 39,120 |
Total Current Liabilities |  | 180,623 |  |  | 191,565 |
Long-Term Obligations (Note 4) |  | 273,498 |  |  | 285,151 |
Long-Term Deferred Income Taxes |  | 42,643 |  |  | 41,850 |
Other Long-Term Liabilities |  | 52,105 |  |  | 53,651 |
Commitments and Contingencies (Note 9) |  |  |  |
Stockholders' Equity: |  |  |  |
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued |  | — |  |  | — |
Common stock, $.01 par value, 150,000,000 shares authorized; 14,624,159 shares issued |  | 146 |  |  | 146 |
Capital in excess of par value |  | 128,272 |  |  | 130,180 |
Retained earnings |  | 879,752 |  |  | 859,693 |
Treasury stock at cost, 2,848,300 and 2,878,080 shares |  | (69,795) |  |  | (70,524) |
Accumulated other comprehensive items (Note 6) |  | (62,424) |  |  | (72,368) |
Total Kadant Stockholders' Equity |  | 875,951 |  |  | 847,127 |
Noncontrolling interests |  | 10,619 |  |  | 11,001 |
Total Stockholders' Equity |  | 886,570 |  |  | 858,128 |
Total Liabilities and Stockholders' Equity |  | $ | 1,435,439 |  |  | $ | 1,430,345 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Table of Contents
KADANT INC.
Condensed Consolidated Statement of Income
(Unaudited)

|  | Three Months Ended |  |
|  | March 29, 2025 |  | March 30, 2024 |  |  |  |
(In thousands, except per share amounts) |  |  |  |
Revenue (Notes 1 and 8) |  | $ | 239,210 |  |  | $ | 248,975 |  |  |  |  |
Costs and Operating Expenses: |  |  |  |  |  |  |  |
Cost of revenue |  | 128,880 |  |  | 138,013 |  |  |  |  |
Selling, general, and administrative expenses |  | 71,221 |  |  | 70,305 |  |  |  |  |
Research and development expenses |  | 3,523 |  |  | 3,730 |  |  |  |  |
|  | 203,624 |  |  | 212,048 |  |  |  |  |
Operating Income |  | 35,586 |  |  | 36,927 |  |  |  |  |
Interest Income |  | 517 |  |  | 611 |  |  |  |  |
Interest Expense |  | (3,822) |  |  | (4,669) |  |  |  |  |
Other Expense, Net |  | (16) |  |  | (30) |  |  |  |  |
Income Before Provision for Income Taxes |  | 32,265 |  |  | 32,839 |  |  |  |  |
Provision for Income Taxes (Note 3) |  | 7,828 |  |  | 7,854 |  |  |  |  |
Net Income |  | 24,437 |  |  | 24,985 |  |  |  |  |
Net Income Attributable to Noncontrolling Interests |  | (374) |  |  | (296) |  |  |  |  |
Net Income Attributable to Kadant |  | $ | 24,063 |  |  | $ | 24,689 |  |  |  |  |
Earnings per Share Attributable to Kadant (Note 2) |  |  |  |  |  |  |  |
Basic |  | $ | 2.05 |  |  | $ | 2.11 |  |  |  |  |
Diluted |  | $ | 2.04 |  |  | $ | 2.10 |  |  |  |  |
Weighted Average Shares (Note 2) |  |  |  |  |  |  |  |
Basic |  | 11,760 |  |  | 11,724 |  |  |  |  |
Diluted |  | 11,776 |  |  | 11,744 |  |  |  |  |

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Table of Contents
KADANT INC.
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)

|  | Three Months Ended |  |
|  | March 29, 2025 |  | March 30, 2024 |  |  |  |
(In thousands) |  |  |  |
Net Income |  | $ | 24,437 |  |  | $ | 24,985 |  |  |  |  |
Other Comprehensive Items: |  |  |  |  |  |  |  |
Foreign currency translation adjustment |  | 10,009 |  |  | (10,222) |  |  |  |  |
Post-retirement liability adjustments, net (net of tax of $1 and $0) |  | 4 |  |  | 1 |  |  |  |  |
Deferred gain on cash flow hedges (net of tax of $0 and $13) |  | — |  |  | 38 |  |  |  |  |
Other comprehensive items |  | 10,013 |  |  | (10,183) |  |  |  |  |
Comprehensive Income |  | 34,450 |  |  | 14,802 |  |  |  |  |
Comprehensive Income Attributable to Noncontrolling Interests |  | (443) |  |  | (224) |  |  |  |  |
Comprehensive Income Attributable to Kadant |  | $ | 34,007 |  |  | $ | 14,578 |  |  |  |  |

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Table of Contents
KADANT INC.
Condensed Consolidated Statement of Cash Flows
(Unaudited)

|  | Three Months Ended
|  | March 29, 2025 |  | March 30, 2024
(In thousands) |  |
Operating Activities |  |  |  |
Net income attributable to Kadant |  | $ | 24,063 |  |  | $ | 24,689 |
Net income attributable to noncontrolling interests |  | 374 |  |  | 296 |
Net income |  | 24,437 |  |  | 24,985 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
Depreciation and amortization |  | 12,013 |  |  | 11,739 |
Stock-based compensation expense |  | 2,757 |  |  | 2,415 |
(Recovery of) provision for bad debts |  | (240) |  |  | 413 |
Other items, net |  | 2,337 |  |  | 803 |
Changes in assets and liabilities, net of effects of acquisitions: |  |  |  |
Accounts receivable |  | (1,068) |  |  | (7,956) |
Contract assets |  | 6,310 |  |  | (2,425) |
Inventories |  | (5,516) |  |  | (6,721) |
Other assets |  | (1,368) |  |  | 609 |
Accounts payable |  | (1,658) |  |  | 15,036 |
Customer deposits |  | (827) |  |  | (778) |
Other liabilities |  | (14,342) |  |  | (15,289) |
Net cash provided by operating activities |  | 22,835 |  |  | 22,831 |
Investing Activities |  |  |  |
Acquisitions, net of cash acquired |  | — |  |  | (232,261) |
Purchases of property, plant, and equipment |  | (3,836) |  |  | (6,271) |
Proceeds from sale of property, plant, and equipment |  | — |  |  | 1,269 |
Net cash used in investing activities |  | (3,836) |  |  | (237,263) |
Financing Activities |  |  |  |
Proceeds from issuance of long-term obligations |  | 8,000 |  |  | 234,000 |
Repayment of short- and long-term obligations |  | (22,563) |  |  | (33,450) |
Tax withholding payments related to stock-based compensation |  | (6,036) |  |  | (5,855) |
Dividends paid |  | (3,762) |  |  | (3,395) |
Proceeds from issuance of Company common stock |  | 2,101 |  |  | 1,605 |
Dividend paid to noncontrolling interest |  | (825) |  |  | — |
Net cash (used in) provided by financing activities |  | (23,085) |  |  | 192,905 |
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash |  | 1,945 |  |  | (2,308) |
Decrease in Cash, Cash Equivalents, and Restricted Cash |  | (2,141) |  |  | (23,835) |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period |  | 95,946 |  |  | 106,453 |
Cash, Cash Equivalents, and Restricted Cash at End of Period |  | $ | 93,805 |  |  | $ | 82,618 |

See Note 1, Nature of Operations and Summary of Significant Accounting Policies,
under the heading Supplemental Cash Flow Information for further details.
The accompanying notes are an integral part of these condensed consolidated financial statements.
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KADANT INC.
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)

|  | Three Months Ended March 29, 2025
(In thousands, except share and per share amounts) |  | Common Stock |  | Capital in Excess of Par Value |  | Retained Earnings |  | Treasury Stock |  | Accumulated Other Comprehensive Items |  | Noncontrolling Interests |  | Total Stockholders' Equity
| Shares |  | Amount |  |  |  | Shares |  | Amount |  |  |
Balance at December 28, 2024 |  | 14,624,159 |  |  | $ | 146 |  |  | $ | 130,180 |  |  | $ | 859,693 |  |  | 2,878,080 |  |  | $ | (70,524) |  |  | $ | (72,368) |  |  | $ | 11,001 |  |  | $ | 858,128 |
Net income |  | — |  |  | — |  |  | — |  |  | 24,063 |  |  | — |  |  | — |  |  | — |  |  | 374 |  |  | 24,437 |
Dividend declared – Common Stock, $0.34 per share |  | — |  |  | — |  |  | — |  |  | (4,004) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (4,004) |
Activity under stock plans |  | — |  |  | — |  |  | (1,908) |  |  | — |  |  | (29,780) |  |  | 729 |  |  | — |  |  | — |  |  | (1,179) |
Dividend paid to noncontrolling interest |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (825) |  |  | (825) |
Other comprehensive items |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9,944 |  |  | 69 |  |  | 10,013 |
Balance at March 29, 2025 |  | 14,624,159 |  |  | $ | 146 |  |  | $ | 128,272 |  |  | $ | 879,752 |  |  | 2,848,300 |  |  | $ | (69,795) |  |  | $ | (62,424) |  |  | $ | 10,619 |  |  | $ | 886,570 |

|  | Three Months Ended March 30, 2024
(In thousands, except share and per share amounts) |  | Common Stock |  | Capital in Excess of Par Value |  | Retained Earnings |  | Treasury Stock |  | Accumulated Other Comprehensive Items |  | Noncontrolling Interests |  | Total Stockholders' Equity
| Shares |  | Amount |  |  |  | Shares |  | Amount |  |  |
Balance at December 30, 2023 |  | 14,624,159 |  |  | $ | 146 |  |  | $ | 124,940 |  |  | $ | 763,131 |  |  | 2,915,978 |  |  | $ | (71,453) |  |  | $ | (43,062) |  |  | $ | 2,538 |  |  | $ | 776,240 |
Net income |  | — |  |  | — |  |  | — |  |  | 24,689 |  |  | — |  |  | — |  |  | — |  |  | 296 |  |  | 24,985 |
Dividend declared – Common Stock, $0.32 per share |  | — |  |  | — |  |  | — |  |  | (3,758) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,758) |
Activity under stock plans |  | — |  |  | — |  |  | (2,687) |  |  | — |  |  | (34,765) |  |  | 852 |  |  | — |  |  | — |  |  | (1,835) |
Noncontrolling interests acquired |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9,319 |  |  | 9,319 |
Other comprehensive items |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (10,111) |  |  | (72) |  |  | (10,183) |
Balance at March 30, 2024 |  | 14,624,159 |  |  | $ | 146 |  |  | $ | 122,253 |  |  | $ | 784,062 |  |  | 2,881,213 |  |  | $ | (70,601) |  |  | $ | (53,173) |  |  | $ | 12,081 |  |  | $ | 794,768 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Kadant Inc. was incorporated in Delaware in November 1991 and trades on the New York Stock Exchange under the ticker symbol "KAI."
Kadant Inc. (together with its subsidiaries, the Company) is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing®. Its products and services play an integral role in enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries while helping customers advance their sustainability initiatives with products that reduce waste or generate more yield with fewer inputs, particularly fiber, energy, and water. Producing more while consuming less is a core aspect of Sustainable Industrial Processing and a major element of the strategic focus of the Company's three reportable segments consisting of the Flow Control segment, Industrial Processing segment, and Material Handling segment.
Interim Financial Statements
The interim condensed consolidated financial statements and related notes presented have been prepared by the Company, are unaudited, and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the Company's financial position at March 29, 2025, its results of operations, comprehensive income, cash flows and stockholders' equity for the three-month periods ended March 29, 2025 and March 30, 2024. Interim results are not necessarily indicative of results for a full year or for any other interim period.
The condensed consolidated balance sheet presented as of December 28, 2024 has been derived from the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (Annual Report). The condensed consolidated financial statements and related notes are presented as permitted by the rules and regulations of the Securities and Exchange Commission (SEC) for Form 10-Q and do not contain certain information included in the annual consolidated financial statements and related notes of the Company. The condensed consolidated financial statements and notes included herein should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report.
Use of Estimates and Critical Accounting Policies
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Although the Company makes every effort to ensure the accuracy of the estimates and assumptions used in the preparation of its condensed consolidated financial statements or in the application of accounting policies, if business conditions were different, or if the Company were to use different estimates and assumptions, it is possible that materially different amounts could be reported in the Company's condensed consolidated financial statements.
Note 1 to the consolidated financial statements in the Annual Report describes the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the Company’s significant accounting policies during the three months ended March 29, 2025.
Supplemental Cash Flow Information

|  | Three Months Ended
(In thousands) |  | March 29, 2025 |  | March 30, 2024
Cash Paid for Interest |  | $ | 3,657 |  |  | $ | 4,484 |
Cash Paid for Income Taxes, Net of Refunds |  | $ | 11,109 |  |  | $ | 7,313 |
Non-Cash Investing Activities: |  |  |  |
Fair value of assets acquired |  | $ | — |  |  | $ | 266,061 |
Fair value of liabilities assumed |  | $ | — |  |  | $ | 18,436 |
Fair value of noncontrolling interest acquired |  | $ | — |  |  | $ | 9,319 |
Purchases of property, plant, and equipment in accounts payable |  | $ | 463 |  |  | $ | 1,342 |

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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

|  | Three Months Ended
(In thousands) |  | March 29, 2025 |  | March 30, 2024
Non-Cash Financing Activities: |  |  |  |
Issuance of Company common stock upon vesting of restricted stock units |  | $ | 5,033 |  |  | $ | 4,703 |
Dividends declared but unpaid |  | $ | 4,004 |  |  | $ | 3,758 |

Restricted Cash
The Company's restricted cash generally serves as collateral for bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business and for certain banker's acceptance drafts issued to vendors. The majority of these restrictions will expire over the next twelve months.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the accompanying condensed consolidated balance sheet that are shown in aggregate in the accompanying condensed consolidated statement of cash flows:

(In thousands) |  | March 29, 2025 |  | March 30, 2024 |  | December 28, 2024 |  | December 30, 2023
Cash and cash equivalents |  | $ | 91,678 |  |  | $ | 81,440 |  |  | $ | 94,660 |  |  | $ | 103,832 |
Restricted cash |  | 2,127 |  |  | 1,178 |  |  | 1,286 |  |  | 2,621 |
Total Cash, Cash Equivalents, and Restricted Cash |  | $ | 93,805 |  |  | $ | 82,618 |  |  | $ | 95,946 |  |  | $ | 106,453 |

Inventories
The components of inventories are as follows:

|  | March 29, 2025 |  | December 28, 2024
(In thousands) |  |
Raw Materials |  | $ | 61,938 |  |  | $ | 60,750 |
Work in Process |  | 32,486 |  |  | 27,692 |
Finished Goods (includes $661 and $554 at customer locations) |  | 59,120 |  |  | 57,650 |
|  | $ | 153,544 |  |  | $ | 146,092 |

Intangible Assets, Net
Acquired intangible assets by major asset class are as follows:

(In thousands) |  | Gross |  | Accumulated Amortization |  | Currency Translation |  | Net
March 29, 2025 |  |  |  |  |  |  |  |
Definite-Lived |  |  |  |  |  |  |  |
Customer relationships |  | $ | 334,168 |  |  | $ | (132,255) |  |  | $ | (7,469) |  |  | $ | 194,444 |
Product technology |  | 92,206 |  |  | (50,719) |  |  | (2,943) |  |  | 38,544 |
Tradenames |  | 16,534 |  |  | (5,307) |  |  | (451) |  |  | 10,776 |
Other |  | 25,221 |  |  | (21,740) |  |  | (645) |  |  | 2,836 |
|  | 468,129 |  |  | (210,021) |  |  | (11,508) |  |  | 246,600 |
Indefinite-Lived |  |  |  |  |  |  |  |
Tradenames |  | 29,059 |  |  | — |  |  | (877) |  |  | 28,182 |
Acquired Intangible Assets |  | $ | 497,188 |  |  | $ | (210,021) |  |  | $ | (12,385) |  |  | $ | 274,782 |

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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

(In thousands) |  | Gross |  | Accumulated Amortization |  | Currency Translation |  | Net
December 28, 2024 |  |  |  |  |  |  |  |
Definite-Lived |  |  |  |  |  |  |  |
Customer relationships |  | $ | 334,066 |  |  | $ | (127,664) |  |  | $ | (8,607) |  |  | $ | 197,795 |
Product technology |  | 92,106 |  |  | (49,294) |  |  | (3,245) |  |  | 39,567 |
Tradenames |  | 16,536 |  |  | (5,084) |  |  | (481) |  |  | 10,971 |
Other |  | 25,221 |  |  | (21,280) |  |  | (668) |  |  | 3,273 |
|  | 467,929 |  |  | (203,322) |  |  | (13,001) |  |  | 251,606 |
Indefinite-Lived |  |  |  |  |  |  |  |
Tradenames |  | 29,059 |  |  | — |  |  | (1,171) |  |  | 27,888 |
Acquired Intangible Assets |  | $ | 496,988 |  |  | $ | (203,322) |  |  | $ | (14,172) |  |  | $ | 279,494 |

Intangible assets are recorded at fair value at the date of acquisition. Subsequent impairment charges are reflected as a reduction in the gross balance, as applicable. Definite-lived intangible assets are stated net of accumulated amortization and currency translation in the accompanying condensed consolidated balance sheet. The Company amortizes definite-lived intangible assets over lives that have been determined based on the anticipated cash flow benefits of the intangible asset.
Goodwill
The changes in the carrying amount of goodwill by reportable segment are as follows:

(In thousands) |  | Flow Control |  | Industrial Processing |  | Material Handling |  | Total
Balance at December 28, 2024 |  |  |  |  |  |  |  |
Gross balance |  | $ | 132,205 |  |  | $ | 243,066 |  |  | $ | 189,436 |  |  | $ | 564,707 |
Accumulated impairment losses |  | — |  |  | (85,538) |  |  | — |  |  | (85,538) |
Net balance |  | 132,205 |  |  | 157,528 |  |  | 189,436 |  |  | 479,169 |
2025 Activity |  |  |  |  |  |  |  |
Measurement period adjustments for 2024 acquisitions |  | (173) |  |  | — |  |  | 109 |  |  | (64) |
Currency translation |  | 2,567 |  |  | 1,371 |  |  | 1,458 |  |  | 5,396 |
Total 2025 activity |  | 2,394 |  |  | 1,371 |  |  | 1,567 |  |  | 5,332 |
Balance at March 29, 2025 |  |  |  |  |  |  |  |
Gross balance |  | 134,599 |  |  | 244,437 |  |  | 191,003 |  |  | 570,039 |
Accumulated impairment losses |  | — |  |  | (85,538) |  |  | — |  |  | (85,538) |
Net balance |  | $ | 134,599 |  |  | $ | 158,899 |  |  | $ | 191,003 |  |  | $ | 484,501 |

Measurement period adjustments for the Company's acquisitions completed in the second and third quarters of 2024 were not material to its financial position or results of operations in the first quarter of 2025.
Warranty Obligations
The Company's contracts covering the sale of its products include warranty provisions that provide assurance to its customers that the products will comply with agreed-upon specifications during a defined period of time. The Company provides for the estimated cost of product warranties at the time of sale based on historical occurrence rates and repair costs, as well as knowledge of any specific warranty problems that indicate projected warranty costs may vary from historical patterns. The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications.
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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The changes in the carrying amount of product warranty obligations are as follows:

|  | Three Months Ended
(In thousands) |  | March 29, 2025 |  | March 30, 2024
Balance at Beginning of Year |  | $ | 10,664 |  |  | $ | 8,154 |
Provision charged to expense |  | 1,009 |  |  | 1,069 |
Usage |  | (1,728) |  |  | (724) |
Acquisitions |  | — |  |  | 475 |
Currency translation |  | 171 |  |  | (150) |
Balance at End of Period |  | $ | 10,116 |  |  | $ | 8,824 |

Revenue Recognition
Most of the Company’s revenue relates to products and services that require minimal customization and is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. The remaining portion of the Company’s revenue is recognized over time based on an input method that compares the costs incurred to date to the total expected costs required to satisfy the performance obligation. Contracts are accounted for on an over time basis when they include products which have no alternative use and an enforceable right to payment over time. Most of the contracts recognized on an over time basis are for large capital equipment projects. These projects are highly customized for the customer and, as a result, would include a significant cost to rework in the event of cancellation.
The following table presents revenue by revenue recognition method:

|  | Three Months Ended |  |
|  | March 29, |  | March 30, |  |  |  |
(In thousands) |  | 2025 |  | 2024 |  |  |  |
Point in Time |  | $ | 217,668 |  |  | $ | 216,493 |  |  |  |  |
Over Time |  | 21,542 |  |  | 32,482 |  |  |  |  |
|  | $ | 239,210 |  |  | $ | 248,975 |  |  |  |  |

The Company disaggregates its revenue from contracts with customers by reportable segment, product type and geography as this best depicts how its revenue is affected by economic factors.
The following table presents the disaggregation of revenue by product type and geography:

|  | Three Months Ended |  |
|  | March 29, |  | March 30, |  |  |  |
(In thousands) |  | 2025 |  | 2024 |  |  |  |
Revenue by Product Type: |  |  |  |  |  |  |  |
Parts and consumables |  | $ | 179,308 |  |  | $ | 171,130 |  |  |  |  |
Capital |  | 59,902 |  |  | 77,845 |  |  |  |  |
|  | $ | 239,210 |  |  | $ | 248,975 |  |  |  |  |
Revenue by Geography (based on customer location): |  |  |  |  |  |  |  |
North America |  | $ | 159,870 |  |  | $ | 156,491 |  |  |  |  |
Europe |  | 49,341 |  |  | 55,787 |  |  |  |  |
Asia |  | 18,702 |  |  | 22,554 |  |  |  |  |
Rest of world |  | 11,297 |  |  | 14,143 |  |  |  |  |
|  | $ | 239,210 |  |  | $ | 248,975 |  |  |  |  |

See Note 8, Business Segment Information, for information on the disaggregation of revenue by reportable segment.
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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table presents contract balances from contracts with customers:

|  | March 29, 2025 |  | December 28, 2024
(In thousands) |  |
Contract Assets |  | $ | 12,222 |  |  | $ | 18,408 |
Contract Liabilities |  | $ | 48,498 |  |  | $ | 46,062 |

Contract assets represent unbilled revenue associated with revenue recognized on contracts accounted for on an over time basis, which will be billed in future periods based on the contract terms. Contract liabilities consist of short- and long-term customer deposits, advanced billings, and deferred revenue. Deferred revenue is included in other current liabilities, and long-term customer deposits are included in other long-term liabilities in the accompanying condensed consolidated balance sheet. Contract liabilities will be recognized as revenue in future periods once the revenue recognition criteria are met. The majority of the contract liabilities relate to advance payments on contracts accounted for at a point in time. These advance payments will be recognized as revenue when the Company's performance obligations have been satisfied, which typically occurs when the product has shipped and control of the asset has transferred to the customer.
The Company recognized revenue of $17,559,000 in th e first quarter of 2025 and $33,666,000 in the first quarter of 2024 that was included in the contract liabilities balance at the beginning of 2025 and 2024, respectively. The majority of the Company's contracts for capital equipment have an original expected duration of one year or less. Certain capital equipment contracts require longer lead times and could take up to 24 months to complete. For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining unsatisfied or partially unsatisfied performance obligations was $29,173,000 as of March 29, 2025. The Company will recognize revenue for these performance obligations as they are satisfied, approximately 66% of which is expected to occur within the next twelve months and the remaining 34% thereafter.
Note Receivable - China Transaction
The Company entered into several agreements with the local government in China, which became effective in the first quarter of 2022, to sell its then existing manufacturing building and land use rights at one of its subsidiaries in China for $25,159,000 and relocate to a new facility (China Transaction). The Company received a 31% down payment and recognized a receivable of $16,082,000, which was the present value of the remaining amount of the sale proceeds, and which was due on the earlier of the sale of the property by the local government or two years from the effective date of the agreements. The government settled $685,000 of the receivable in 2024. The outstanding receivable was $14,451,000 as of March 29, 2025, which the Company expects will be repaid in full, although the timing is uncertain. The subsidiary, which is part of the Industrial Processing segment, relocated to its new facility during the third quarter of 2023.
Banker's Acceptance Drafts Included in Accounts Receivable
The Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are non-interest bearing obligations of the issuing bank and generally mature within six months of the origination date. The Company's Chinese subsidiaries may sell the drafts at a discount to a third-party financial institution or transfer the drafts to vendors in settlement of current accounts payable prior to the scheduled maturity date. These drafts, which totaled $3,953,000 at March 29, 2025 and $5,299,000 at December 28, 2024, are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date.
Income Taxes
In accordance with Accounting Standards Codification (ASC) 740, Income Taxes (ASC 740), the Company recognizes deferred income taxes based on the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in effect for the year in which these differences are expected to reverse. A tax valuation allowance is established, as needed, to reduce deferred tax assets to the amount expected to be realized. In the period in which it becomes more likely than not that some or all of the deferred tax assets will be realized, the valuation allowance will be adjusted.
It is the Company's policy to provide for uncertain tax positions and the related interest and penalties based upon management's assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.
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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
At March 29, 2025, the Company believes that it has appropriately accounted for any liability for unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established, the statute of limitations expires for a tax jurisdiction year, or the Company is required to pay amounts in excess of the liability, its effective tax rate in a given financial statement period may be affected.
In December 2021, the Organisation for Economic Co-operation and Development (OECD) released model rules introducing a new 15% global minimum tax for large multinational enterprises with an annual global revenue exceeding 750,000,000 euros (Pillar Two Rules). Since the release of the Pillar Two Rules, the OECD has issued four tranches of administrative guidance, as well as guidance on transitional safe harbor relief. Various countries, including the member states of the European Union, have adopted the Pillar Two Rules into their domestic laws, with certain rules coming into effect beginning in fiscal 2024. Some countries are in the process of drafting legislation for adoption in future years. While the Pillar Two Rules serve as a framework for implementing the minimum tax, countries may enact domestic laws that vary slightly from the Pillar Two Rules and may also adjust domestic tax incentives to align with the Pillar Two Rules on different timelines. The Company continues to monitor developments of the Pillar Two Rules and evaluate the potential impact they may have on the jurisdictions in which it operates, including eligibility to qualify for transitional safe harbor relief. To date, the Pillar Two Rules have not had a material impact on the Company's effective tax rate or consolidated financial statements, and the Company does not expect the Pillar Two Rules to have a material impact on its effective tax rate or consolidated financial statements for the fiscal year ending January 3, 2026.
Recent Accounting Pronouncements Not Yet Adopted
Income Taxes - Improvements to Income Tax Disclosures (Topic 740). In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, to improve income tax disclosure requirements, primarily through enhanced disclosures related to the income tax rate reconciliation and income taxes paid. This ASU is effective for fiscal year-end 2025, with early adoption permitted and may be applied retrospectively. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.
Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosure (Topic 220). In November 2024, the FASB issued ASU No. 2024-03, to disaggregate operating expense into specific categories to provide enhanced transparency into the nature and function of expenses. This ASU is effective for fiscal year-end 2027 and interim periods beginning in fiscal 2028, with early adoption permitted and may be applied retrospectively. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.
2. Earnings per Share
Basic and diluted earnings per share (EPS) were calculated as follows:

|  | Three Months Ended |  |
(In thousands, except per share amounts) |  | March 29, 2025 |  | March 30, 2024 |  |  |  |
Net Income Attributable to Kadant |  | $ | 24,063 |  |  | $ | 24,689 |  |  |  |  |
Basic Weighted Average Shares |  | 11,760 |  |  | 11,724 |  |  |  |  |
Effect of Restricted Stock Units and Employee Stock Purchase Plan Shares |  | 16 |  |  | 20 |  |  |  |  |
Diluted Weighted Average Shares |  | 11,776 |  |  | 11,744 |  |  |  |  |
Basic Earnings per Share |  | $ | 2.05 |  |  | $ | 2.11 |  |  |  |  |
Diluted Earnings per Share |  | $ | 2.04 |  |  | $ | 2.10 |  |  |  |  |

The effect of outstanding and unvested restricted stock units (RSUs) of the Company’s common stock totaling 26,000 shares in the first quarter of 2025 and 33,000 shares in the first quarter of 2024 were not included in the computation of diluted EPS for the respective periods as the effect would have been antidilutive or, for unvested performance-based RSUs, the performance conditions had not been met as of the end of the respective reporting periods.
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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
3. Provision for Income Taxes
The provision for income taxes was $7,828,000 in the first quarter of 2025 and $7,854,000 in the first quarter of 2024.
The effective tax rate of 24% in the first quarter of 2025 was higher than the Company’s statutory rate of 21% primarily due to nondeductible expenses, the distribution of the Company’s worldwide earnings, and state taxes. These items were offset in part by net excess income tax benefits from stock-based compensation arrangements, the reversal of tax reserves associated with uncertain tax positions, and foreign tax credits.
The effective tax rate of 24% in the first quarter of 2024 was higher than the Company's statutory rate of 21% primarily due to nondeductible expenses, the distribution of the Company's worldwide earnings, state taxes, the cost of repatriating the earnings of certain foreign subsidiaries, and tax expense associated with the Global Intangible Low-Taxed Income provisions. These items were offset in part by net excess income tax benefits from stock-based compensation arrangements, foreign tax credits, and a tax benefit associated with a foreign exchange loss recognized upon the Company's repatriation of certain previously taxed foreign earnings.
4. Long-Term Obligations
Long-term obligations are as follows:

|  | March 29, 2025 |  | December 28, 2024
(In thousands) |  |
Revolving Credit Facility, due 2027 |  | $ | 267,007 |  |  | $ | 278,384 |
Senior Promissory Notes, due 2025 to 2028 |  | 6,660 |  |  | 6,660 |
Finance Leases, due 2025 to 2029 |  | 1,939 |  |  | 2,023 |
Other Borrowings, due 2025 to 2028 |  | 1,270 |  |  | 1,460 |
Total |  | 276,876 |  |  | 288,527 |
Less: Current Maturities of Long-Term Obligations |  | (3,378) |  |  | (3,376) |
Long-Term Obligations |  | $ | 273,498 |  |  | $ | 285,151 |

See Note 7, Fair Value Measurements and Fair Value of Financial Instruments, for the fair value information related to the Company's long-term obligations.
Revolving Credit Facility
The Company's unsecured multi-currency revolving credit facility, originally entered into on March 1, 2017 (as amended and restated to date, the Credit Agreement) matures on November 30, 2027 and has a borrowing capacity of $400,000,000, in addition to an uncommitted, unsecured incremental borrowing facility of $200,000,000. Interest on borrowings outstanding accrues and is payable in arrears calculated at one of the following rates selected by the Company: (i) the Base Rate, as defined, plus an applicable margin of 0% to 1.25%, or (ii) Eurocurrency Rate, Term SOFR (plus a 10 basis point credit spread adjustment), Term CORRA, and RFR, as applicable and defined, plus an applicable margin of 1.0% to 2.25%. The margin is determined based upon the ratio of the Company's total debt, net of unrestricted cash up to $50,000,000, to earnings before interest, taxes, depreciation, and amortization as defined in the Credit Agreement. Additionally, the Credit Agreement requires the payment of a commitment fee payable in arrears on the available borrowing capacity under the Credit Agreement, which ranges from 0.125% to 0.350%.
Obligations under the Credit Agreement, which includes customary events of default under such financing arrangements, may be accelerated upon the occurrence of an event of default. In addition, the Credit Agreement contains negative covenants applicable to the Company and its subsidiaries, including financial covenants requiring the Company to maintain a maximum consolidated leverage ratio of 3.75 to 1.00, or, if the Company elects, for the quarter during which a material acquisition occurs and for the three fiscal quarters thereafter, 4.25 to 1.00, and limitations on making certain restricted payments (including dividends and stock repurchases).
Loans under the Credit Agreement are guaranteed by certain domestic subsidiaries of the Company.
As of March 29, 2025, the outstanding balance under the Credit Agreement was $267,007,000, which included $74,007,000 of euro-denominated borrowings. The Company had $133,130,000 of borrowing capacity available as of March 29, 2025, which was calculated by translating its foreign-denominated borrowings using the administrative agent's borrowing date foreign exchange rates, in addition to the $200,000,000 uncommitted, unsecured incremental borrowing facility.
The weighted average interest rate for the outstanding balance under the Credit Agreement was 4.85% as of March 29, 2025 and 5.27% as of year-end 2024.
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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Senior Promissory Notes
In 2018, the Company entered into an uncommitted, unsecured Multi-Currency Note Purchase and Private Shelf Agreement (Note Purchase Agreement). Simultaneously with the execution of the Note Purchase Agreement, the Company issued senior promissory notes (Initial Notes) in an aggregate principal amount of $10,000,000, with a per annum interest rate of 4.90% payable semiannually, and a maturity date of December 14, 2028. The Company is required to prepay a portion of the principal of the Initial Notes beginning on December 14, 2023 and each year thereafter, and may optionally prepay the principal on the Initial Notes, together with any prepayment premium, at any time in accordance with the Note Purchase Agreement. The obligations of the Initial Notes may be accelerated upon an event of default as defined in the Note Purchase Agreement, which includes customary events of default under such financing arrangements.
The Initial Notes are pari passu with the Company’s indebtedness under the Credit Agreement, and any other senior debt of the Company, subject to certain specified exceptions, and participate in a sharing agreement with respect to the obligations of the Company and its subsidiaries under the Credit Agreement. The Initial Notes are guaranteed by certain of the Company’s domestic subsidiaries.
Debt Compliance
As of March 29, 2025, the Company was in compliance with the covenants related to its debt obligations.
5. Stock-Based Compensation
The Company recognized stock-based compensation expense of $2,757,000 in the first quarter of 2025 and $2,415,000 in the first quarter of 2024 within selling, general and administration (SG&A) expenses in the accompanying condensed consolidated statement of income. The Company recognizes compensation expense for all stock-based awards granted to employees and directors based on the grant date estimate of fair value for those awards. The fair value of RSUs is based on the grant date price of the Company's common stock, reduced by the present value of estimated dividends foregone during the requisite service period. For time-based RSUs, compensation expense is recognized ratably over the requisite service period for the entire award based on the grant date fair value, and net of actual forfeitures recorded when they occur. For performance-based RSUs, compensation expense is recognized ratably over the requisite service period for each separately vesting portion of the award based on the grant date fair value, net of actual forfeitures recorded when they occur, and remeasured each reporting period until the total number of RSUs to be issued is known. Unrecognized compensation expense related to stock-based compensation totaled $15,981,000 at March 29, 2025, which will be recognized over a weighted average period of 2.0 years.
Performance-based RSUs
On March 4, 2025, the Company granted performance-based RSUs to certain of its officers, which represented, in aggregate, the right to receive 14,626 shares (target RSU amount), with an aggregate grant date fair value of $5,406,000. The RSUs are subject to adjustment based on the achievement of the performance measure selected for the fiscal year, which is a specified target for adjusted earnings before interest, taxes, depreciation, and amortization (target adjusted EBITDA) generated from operations for the fiscal year. The RSUs are adjusted by comparing the actual adjusted EBITDA for the performance period to the target adjusted EBITDA. Actual adjusted EBITDA between 50% and 100% of the target adjusted EBITDA results in an adjustment of 50% to 100% of the target RSU amount. Actual adjusted EBITDA between 100% and 115% of the target adjusted EBITDA results in an adjustment using a straight-line linear scale between 100% and 150% of the target RSU amount. Actual adjusted EBITDA in excess of 115% results in an adjustment capped at 150% of the target RSU amount. If actual adjusted EBITDA is below 50% of the target adjusted EBITDA for the 2025 fiscal year, these performance-based RSUs will be forfeited. The Company recognizes compensation expense based on the probable number of performance-based RSUs expected to vest. Following the adjustment, the performance-based RSUs will be subject to additional time-based vesting, and will vest in three equal annual installments on March 10 of 2026, 2027, and 2028, provided that the officer is employed by the Company on the applicable vesting dates.
Time-based RSUs
On March 4, 2025, the Company granted time-based RSUs representing 11,199 shares to certain of its officers and employees with an aggregate grant date fair value of $4,139,000. These time-based RSUs vest in three equal annual installments on March 10 of 2026, 2027, and 2028, provided that a recipient is employed by the Company on the applicable vesting dates.
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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
6. Accumulated Other Comprehensive Items
Comprehensive income combines net income and other comprehensive items, which represent certain amounts that are reported as components of stockholders' equity in the accompanying condensed consolidated balance sheet.
Changes in each component of accumulated other comprehensive items (AOCI), net of tax, are as follows:

(In thousands) |  | Foreign Currency Translation Adjustment |  | Pension and Other Post-Retirement Benefit Liability Adjustments |  |  |  | Total
Balance at December 28, 2024 |  | $ | (72,416) |  |  | $ | 48 |  |  |  |  | $ | (72,368) |
Other comprehensive items before reclassifications |  | 9,940 |  |  | 3 |  |  |  |  | 9,943 |
Reclassifications from AOCI |  | — |  |  | 1 |  |  |  |  | 1 |
Net current period other comprehensive items |  | 9,940 |  |  | 4 |  |  |  |  | 9,944 |
Balance at March 29, 2025 |  | $ | (62,476) |  |  | $ | 52 |  |  |  |  | $ | (62,424) |

7. Fair Value Measurements and Fair Value of Financial Instruments
Fair value measurement is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
•Level 1—Quoted prices in active markets for identical assets or liabilities.
•Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.
•Level 3—Unobservable inputs based on the Company's own assumptions.
The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis:

|  | Fair Value as of March 29, 2025
(In thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |  |
Money market funds and time deposits (a) |  | $ | 14,954 |  |  | $ | — |  |  | $ | — |  |  | $ | 14,954 |
Banker's acceptance drafts (b) |  | $ | — |  |  | $ | 3,953 |  |  | $ | — |  |  | $ | 3,953 |
Forward currency-exchange contracts (c) |  | $ | — |  |  | $ | 3 |  |  | $ | — |  |  | $ | 3 |
Liabilities: |  |  |  |  |  |  |  |
Contingent consideration (d) |  | $ | — |  |  | $ | — |  |  | $ | 1,699 |  |  | $ | 1,699 |

|  | Fair Value as of December 28, 2024
(In thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |  |
Money market funds and time deposits (a) |  | $ | 21,248 |  |  | $ | — |  |  | $ | — |  |  | $ | 21,248 |
Banker's acceptance drafts (b) |  | $ | — |  |  | $ | 5,299 |  |  | $ | — |  |  | $ | 5,299 |
Liabilities: |  |  |  |  |  |  |  |
Forward currency-exchange contracts (c) |  | $ | — |  |  | $ | 39 |  |  | $ | — |  |  | $ | 39 |
Contingent consideration (d) |  | $ | — |  |  | $ | — |  |  | $ | 1,678 |  |  | $ | 1,678 |

(a)Included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.
(b)Included in accounts receivable in the accompanying condensed consolidated balance sheet.
(c)Included in other current assets at March 29, 2025 and other current liabilities at December 28, 2024 in the accompanying condensed consolidated balance sheet.
(d)Included in other long-term liabilities in the accompanying condensed consolidated balance sheet.
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Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first quarter of 2025. Banker's acceptance drafts are carried at face value, which approximates their fair value due to the short-term nature of the negotiable instrument. The fair values of the forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The forward currency-exchange contracts are hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above.
The carrying value and fair value of debt obligations, excluding lease obligations, are as follows:

|  | March 29, 2025 |  | December 28, 2024
(In thousands) |  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
Debt Obligations: |  |  |  |  |  |  |  |
Revolving credit facility |  | $ | 267,007 |  |  | $ | 267,007 |  |  | $ | 278,384 |  |  | $ | 278,384 |
Senior promissory notes |  | 6,660 |  |  | 6,670 |  |  | 6,660 |  |  | 6,511 |
Other |  | 1,270 |  |  | 1,270 |  |  | 1,460 |  |  | 1,460 |
|  | $ | 274,937 |  |  | $ | 274,947 |  |  | $ | 286,504 |  |  | $ | 286,355 |

The carrying value of the Company's revolving credit facility approximates the fair value as the obligation bears variable rates of interest, which adjust frequently, based on prevailing market rates. The fair value of the senior promissory notes is primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period end, which represent Level 2 measurements.
Contingent Consideration
In connection with the acquisition of a technology company in August 2024, the Company assumed contingent consideration with a fair value of $1,785,000 measured at the date of acquisition. The contingent consideration is payable upon the achievement of certain revenue performance targets earned between June 30, 2025 and June 30, 2027. The maximum future value of the contingent consideration subject to payment is approximately $11,011,000, calculated using the foreign currency spot rate at March 29, 2025.
The Company uses the income approach technique to estimate the fair value of its Level 3 contingent consideration, including valuation models that incorporate probability adjusted assumptions and simulations related to the achievement of milestones and the likelihood of making the related payment. The unobservable inputs used in the fair value measurements include the probability of successful achievement of certain revenue targets, forecasted revenue, revenue volatility, and discount rates. These assumptions were estimated based on a review of historical and projected results. Projected contingent consideration related to revenue-based payments are discounted back to the current period using a discounted cash flow model. Changes to the fair value of contingent consideration can result from changes to one or multiple inputs, including the discount rate, projected revenue, revenue volatility, and the assumed probabilities of successful achievement of certain revenue targets.
The following table provides a rollforward of the change in the fair value of the contingent consideration as determined by Level 3 inputs during the first quarter of 2025:

(In thousands) |  | Total
Balance at December 28, 2024 |  | $ | 1,678 |
Currency translation |  | 21 |
Balance at March 29, 2025 |  | $ | 1,699 |

8. Business Segment Information
The Company is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing and operates in three reportable segments consisting of its Flow Control segment, Industrial Processing segment, and Material Handling segment. The Company aggregated its operating segments into its reportable segments where they contained similar products and economic characteristics, and shared similar types of customers, and production and distribution methods. The Flow Control segment is comprised of its fluid-handling and its doctoring, cleaning, & filtration operating segments, and the Industrial Processing segment is comprised of its wood processing and its fiber processing operating segments.
Each of the Company's reportable segments is led by a segment vice president, who reports directly to the Chief Executive Officer (CEO). The Company has determined that its CEO is its Chief Operating Decision Maker (CODM) who is
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Notes to Condensed Consolidated Financial Statements
(Unaudited)
responsible for assessing performance and allocating resources. The CODM utilizes segment gross profit margin and segment operating income margin to evaluate the performance of each segment and allocate resources effectively. The CODM primarily reviews these profit measures in comparison to forecasts, trends, key performance targets, and results of industry peers to assess profitability, identify areas for improvement, and make strategic decisions regarding investments and resource allocation within each segment.
A description of each reportable segment follows:
•Flow Control – Custom-engineered products, systems, and technologies that control the flow of fluids used in industrial and commercial applications to keep critical processes running efficiently in the packaging, tissue, food, metals, energy, and other industrial sectors. The Company's primary products include rotary sealing devices, steam systems, expansion joints, doctor systems, roll and fabric cleaning devices, and filtration and fiber recovery systems.
•Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber for use in the packaging, tissue, wood products and alternative fuel industries, among others. The Company's primary products include fiber processing systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers and custom engineered knife systems. In addition, the Company provides industrial automation and digitization solutions to process industries.
•Material Handling – Products and engineered systems used to handle bulk and discrete materials for secondary processing or transport in the aggregates, mining, food, and waste management industries, among others. The Company's primary products include conveying and vibratory equipment and balers. In addition, the Company manufactures and sells biodegradable, absorbent granules used as carriers in agricultural applications and for oil and grease absorption.
The following tables present financial information for the Company's reportable segments:

Three Months Ended March 29, 2025
(In thousands) |  | Flow Control |  | Industrial Processing |  | Material Handling |  | Total
Revenue |  | $ | 92,441 |  |  | $ | 89,524 |  |  | $ | 57,245 |  |  | $ | 239,210 |
Cost of revenue |  | 43,168 |  |  | 50,076 |  |  | 35,636 |  |  | 128,880 |
Gross Profit |  | 49,273 |  |  | 39,448 |  |  | 21,609 |  |  | 110,330 |
Gross Profit Margin |  | 53.3% |  | 44.1% |  | 37.7% |  | 46.1%
Operating Expenses: |  |  |  |  |  |  |  |
Selling expenses |  | 14,779 |  |  | 10,177 |  |  | 6,468 |  |  | 31,424 |
General and administrative expenses |  | 8,813 |  |  | 8,387 |  |  | 4,241 |  |  | 21,441 |
Research and development expenses |  | 1,351 |  |  | 1,606 |  |  | 566 |  |  | 3,523 |
Intangible asset amortization expense |  | 1,493 |  |  | 2,378 |  |  | 2,828 |  |  | 6,699 |
Other segment items (a) |  | 85 |  |  | 68 |  |  | (29) |  |  | 124 |
Segment Operating Income |  | $ | 22,752 |  |  | $ | 16,832 |  |  | $ | 7,535 |  |  | $ | 47,119 |
Segment Operating Income Margin |  | 24.6% |  | 18.8% |  | 13.2% |  | 19.7%
Corporate Expenses (b) |  | (11,533) |
Interest Expense, Net |  | (3,305) |
Other Expense, Net |  | (16) |
Income Before Provision for Income Taxes |  | $ | 32,265 |

(In thousands) |  | Flow Control |  | Industrial Processing |  | Material Handling |  | Corporate |  | Total
Other Segment Disclosures |  |  |  |  |  |  |  |  |  |
Depreciation expense (c) |  | $ | 1,798 |  |  | $ | 2,347 |  |  | $ | 1,158 |  |  | $ | 11 |  |  | $ | 5,314 |
Capital expenditures |  | $ | 1,509 |  |  | $ | 1,325 |  |  | $ | 999 |  |  | $ | 3 |  |  | $ | 3,836 |

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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Three Months Ended March 30, 2024
(In thousands) |  | Flow Control |  | Industrial Processing |  | Material Handling |  | Total
Revenue |  | $ | 86,682 |  |  | $ | 105,861 |  |  | $ | 56,432 |  |  | $ | 248,975 |
Cost of revenue |  | 39,999 |  |  | 61,669 |  |  | 36,345 |  |  | 138,013 |
Gross Profit |  | 46,683 |  |  | 44,192 |  |  | 20,087 |  |  | 110,962 |
Gross Profit Margin |  | 53.9% |  | 41.7% |  | 35.6% |  | 44.6%
Operating Expenses: |  |  |  |  |  |  |  |
Selling expenses |  | 13,544 |  |  | 10,372 |  |  | 6,215 |  |  | 30,131 |
General and administrative expenses |  | 9,068 |  |  | 8,936 |  |  | 4,082 |  |  | 22,086 |
Research and development expenses |  | 1,549 |  |  | 1,675 |  |  | 506 |  |  | 3,730 |
Intangible asset amortization expense |  | 685 |  |  | 2,832 |  |  | 3,354 |  |  | 6,871 |
Other segment items (a) |  | 127 |  |  | 378 |  |  | 389 |  |  | 894 |
Segment Operating Income |  | $ | 21,710 |  |  | $ | 19,999 |  |  | $ | 5,541 |  |  | $ | 47,250 |
Segment Operating Income Margin |  | 25.0% |  | 18.9% |  | 9.8% |  | 19.0%
Corporate Expenses (b) |  | (10,323) |
Interest Expense, Net | (4,058) |
Other Expense, Net | (30) |
Income Before Provision for Income Taxes | $ | 32,839 |

(In thousands) |  | Flow Control |  | Industrial Processing |  | Material Handling |  | Corporate |  | Total
Other Segment Disclosures |  |  |  |  |  |  |  |  |  |
Depreciation expense (c) |  | $ | 1,536 |  |  | $ | 2,327 |  |  | $ | 993 |  |  | $ | 12 |  |  | $ | 4,868 |
Capital expenditures |  | $ | 1,874 |  |  | $ | 2,883 |  |  | $ | 1,506 |  |  | $ | 8 |  |  | $ | 6,271 |

|  | March 29, 2025 |  | December 28, 2024
(In thousands) |  |
Total Assets (d) |  |  |  |
Flow Control |  | $ | 439,798 |  |  | $ | 431,536 |
Industrial Processing |  | 571,962 |  |  | 569,817 |
Material Handling |  | 415,336 |  |  | 411,178 |
Corporate (e) |  | 8,343 |  |  | 17,814 |
|  | $ | 1,435,439 |  |  | $ | 1,430,345 |

(a)Includes acquisition costs, net indemnification asset reversals associated with uncertain tax positions, and certain gains and losses.
(b)Primarily consists of general and administrative expenses.
(c)Depreciation expense by reportable segment is included within cost of revenue and selling, general and administrative, and research and development expenses.
(d)Excludes intercompany receivables or payables and investment in subsidiary balances as the CODM uses total assets excluding these amounts as the measurement for the Company's segment assets.
(e)Corporate assets primarily consist of cash and cash equivalents, tax assets, right-of-use assets, and property, plant, and equipment, net.
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KADANT INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
9. Commitments and Contingencies
Right of Recourse
In the ordinary course of business, the Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are non-interest bearing obligations of the issuing bank and generally mature within six months of the origination date. The Company's Chinese subsidiaries may use these banker's acceptance drafts prior to the scheduled maturity date to settle outstanding accounts payable with vendors. Banker's acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity dates. The Company had $5,381,000 at March 29, 2025 and $7,952,000 at December 28, 2024 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached their scheduled maturity dates. Historically, the banker's acceptance drafts have settled upon maturity without any claim of recourse against the Company.
Litigation
From time to time, the Company is subject to various claims and legal proceedings covering a range of matters that arise in the ordinary course of business. Such litigation may include, but is not limited to, claims and counterclaims by and against the Company for breach of contract or warranty, canceled contracts, product liability, or bankruptcy-related claims. For legal proceedings in which a loss is probable and estimable, the Company accrues a loss based on the low end of the range of estimated loss when there is no better estimate within the range. If the Company were found to be liable for any of the claims or counterclaims against it, the Company would incur a charge against earnings for amounts in excess of legal accruals.
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Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations
When we use the terms "we," "us," "our," and the "Company," we mean Kadant Inc., a Delaware corporation, and its consolidated subsidiaries, taken as a whole, unless the context otherwise indicates.
This Quarterly Report on Form 10-Q and the documents we incorporate by reference in this report include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements are not statements of historical fact and may include statements regarding possible or assumed future results of operations. Forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management, using information currently available to our management. When we use words such as "believes," "expects," "anticipates," "intends," "plans," "estimates," "seeks," "should," "likely," "will," "would," "may," "continue," "could," or similar expressions, we are making forward-looking statements.
Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions. Our future results of operations may differ materially from those expressed in the forward-looking statements. Many of the important factors that will determine these results are beyond our ability to control or predict. You should not put undue reliance on any forward-looking statements. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. For a discussion of important factors that may cause our actual results to differ materially from those suggested by the forward-looking statements, you should read carefully the section captioned Risk Factors, included in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (Annual Report), as further amended in Part II, Item 1A, within this report, and as may be further amended and/or restated in subsequent filings with the SEC.
Overview
Company Background
We are a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing®. Our products and services play an integral role in enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries while helping our customers advance their sustainability initiatives with products that reduce waste or generate more yield with fewer inputs, particularly fiber, energy, and water. Producing more while consuming less is a core aspect of Sustainable Industrial Processing and a major element of the strategic focus of our business.
Our financial results are reported in three reportable segments consisting of our Flow Control segment, Industrial Processing segment, and Material Handling segment. We have aggregated our operating segments into reportable segments where they contained similar products and economic characteristics, and shared similar types of customers, and production and distribution methods. Our Flow Control segment consists of our fluid-handling and doctoring, cleaning, & filtration operating segments and our Industrial Processing segment consists of our wood processing and fiber processing operating segments. A description of each reportable segment is as follows:
•Flow Control – Custom-engineered products, systems, and technologies that control the flow of fluids used in industrial and commercial applications to keep critical processes running efficiently in the packaging, tissue, food, metals, energy, and other industrial sectors. Our primary products include rotary sealing devices, steam systems, expansion joints, doctor systems, roll and fabric cleaning devices, and filtration and fiber recovery systems.
•Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber for use in the packaging, tissue, wood products, and alternative fuel industries, among others. Our primary products include fiber processing systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers and custom engineered knife systems. In addition, we provide industrial automation and digitization solutions to process industries.
•Material Handling – Products and engineered systems used to handle bulk and discrete materials for secondary processing or transport in the aggregates, mining, food, and waste management industries, among others. Our primary products include conveying and vibratory equipment and balers. In addition, we manufacture and sell biodegradable, absorbent granules used as carriers in agricultural applications and for oil and grease absorption.
See Note 8, Business Segment Information, in the accompanying condensed consolidated financial statements for financial information on our reportable segments.
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Industry and Business Overview
Our consolidated bookings increased 3% to $256.2 million in the first quarter of 2025 compared to the first quarter of 2024 due to record demand for our parts and consumables products, which increased to 74% of total bookings. Within our segments, both our Flow Control and Industrial Processing segments had record demand for parts and consumables products as customers focused on critical parts and maintenance requirements. While demand for our parts and consumables products remains strong, a lengthening in quote to order times for capital orders has resulted in a decline in capital bookings. The Trump administration introduced new tariffs, subsequently modified and expanded them, and later reduced them for 90 days for most countries. In addition, the Trump administration imposed a very high tariff rate on imports from China, with China initiating a retaliatory tariff on imports from the U.S. These tariff changes have created significant uncertainty in the markets and impacted our customers’ decision-making process related to capital projects. While investments in maintenance and mission-critical equipment continue, customers with flexibility in project timing are deferring capital expenditures until there is greater clarity regarding the tariff situation and the economy. This impact is more pronounced in our Industrial Processing segment, where the average capital order size is significantly higher than in our other segments. Our operations teams have been assessing their exposure to the currently enacted and proposed tariffs and are working on implementing mitigation measures.
From a geographic perspective, in North America the tariff situation has created uncertainty in the markets, which may lead to inflationary pressures. In China, supportive government policies helped stimulate domestic demand and manufacturing activity, but the escalating trade tensions with the U.S. are generally expected to have a negative effect. In Europe, in addition to the trade policy uncertainty, sluggish market conditions have also been impacted by high interest rates and energy costs.
Overall, we expect stronger capital bookings in 2025 compared to 2024, especially in our Industrial Processing segment. However, the timing for securing capital orders can be uncertain and could shift by quarter and into 2026 due in part to the outcome of the tariff negotiations and the timing of any tariff changes. We expect steady demand for our aftermarket products to continue for the remainder of 2025. We see long-term strength in our end markets as customers continue to rely on our products to help maximize productivity through more efficient production processes. In addition, we see growth opportunities from proposed and adopted legislation in the U.S. and abroad aimed at fueling investment.
An overview of our business by reportable segment is as follows:
•Flow Control – Our Flow Control segment bookings increased 6% in the first quarter of 2025 compared to the first quarter of 2024 driven by record demand for our parts and consumables products. Excluding acquisitions and the unfavorable effect of foreign currency translation, organic bookings decreased 1% compared to the prior year primarily due to constrained capital spending due to macroeconomic conditions, especially in North America and China. We expect steady demand for the remainder of 2025 and long-term strength in our end markets.
•Industrial Processing – Our Industrial Processing segment bookings increased 3%, while organic bookings increased 6% in the first quarter of 2025 compared to the first quarter of 2024 due to record demand for our aftermarket products, partially offset by weak demand for our capital products at our fiber processing product line. Our wood processing product line had record demand for aftermarket products in the first quarter of 2025 as customers focused their spending on critical parts required to keep machines operational. While demand for our capital equipment at our wood processing product line also increased in the first quarter of 2025 compared to the prior year, it was constrained by uncertain market conditions. Although there is ongoing quote activity for large capital projects, tariff-related uncertainty has led to a lengthening in quote to order times as customers wait for conditions to improve. Some customers in Europe have already delayed capital orders until early 2026. Bookings at our fiber processing product line decreased 7% compared to the first quarter of 2024 due to constrained capital spending related to macroeconomic conditions, especially in North America and Europe. The tariff-related uncertainty has had a bigger impact on this segment due to the higher average order size and our customers’ ability to delay the timing for large capital projects.
•Material Handling – Our Material Handling segment bookings were flat compared to the first quarter of 2024, with strong performance at our baling business offset by weaker performance at our conveying and vibratory business. Our baling business experienced record demand for our aftermarket products in the first quarter of 2025 as customers focused their expenditures on maintenance requirements. This compares to relatively weak demand for our capital equipment products compared to the fourth quarter of 2024 as customers were hesitant to commit to capital expenditures. Despite the overall increase in demand at our baling businesses, market conditions remain constrained, driven by a decline in used paper prices, market uncertainty related to tariffs and concerns over borrowing costs, all of which impact the timing of capital orders. From a tariff perspective, we anticipate some competitive advantage at our North American baling business as customers evaluate the incremental tariff costs on foreign-made balers. Our conveying and vibratory business had comparatively lower bookings in the first quarter of 2025 due to several large projects in the first quarter of 2024. Bookings at this business increased sequentially, led by increased demand for our capital equipment products. However, ongoing tariff-related uncertainty in the markets has tempered demand for our
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capital equipment products, and we anticipate customers shifting their capital expenditures from larger capital projects to smaller aftermarket products in the short-term. For the overall Material Handling segment, planned infrastructure projects and asset modernization in the recycling and waste management sectors are expected to lead to increased demand in 2025.
Our global operations have been and continue to be impacted by complex market conditions fueled by tariff-related uncertainty in the markets, inflationary pressures, geopolitical tensions, and labor availability. We expect our operating environment to continue to be challenging, which creates continued uncertainty for the remainder of 2025. However, we believe that the fundamentals of our business remain strong, particularly given our solid market position in key product lines, solid global operations teams, and long-term strength of our end markets. For more information related to these challenges, and other factors impacting our business, please see Risk Factors, included in Part I, Item 1A, of our Annual Report, as further amended in Part II, Item IA, within this report, and as may be further amended and/or restated in subsequent filings with the SEC.
International Sales
Approximately half of o ur sales are to customers outside the United States, mainly in Europe, Asia, and Canada. As a result, our financial performance can be materially affected by currency exchange rate fluctuations between the U.S. dollar and foreign currencies. To mitigate the impact of foreign currency transaction fluctuations, we generally seek to charge our customers in the same currency in which our operating costs are incurred. Additionally, we may enter into forward currency exchange contracts to hedge certain firm purchase and sale commitments denominated in currencies other than our subsidiaries' functional currencies. We currently do not use derivative instruments to hedge our exposure to exchange rate fluctuations created by the translation into the U.S. dollar of our foreign subsidiaries' results that are in functional currencies other than the U.S. dollar.
Global Trade
The United States has imposed tariffs in the past and more recently proposed and implemented new tariffs on certain imports, which has and will continue to increase the cost of some of the parts and equipment we import. In addition, foreign countries have implemented and may in the future implement additional retaliatory tariffs in response to these actions by the United States, which have negatively impacted and may in the future negatively impact our operations. Although we are working to mitigate the impact of tariffs through pricing and sourcing strategies, we cannot be sure these strategies will effectively mitigate the impact of these costs. For more information on risks associated with our global operations, including tariffs, please see Risk Factors, included in Part I, Item 1A, of our Annual Report, as further amended in Part II, Item IA, within this report, and as may be further amended and/or restated in subsequent filings with the SEC.
Acquisitions
We expect that a significant driver of our long-term growth will be through the acquisition of businesses and technologies that complement or augment our existing products and services or may involve entry into a new process industry. We have acquired several businesses in recent years and continue to pursue acquisition opportunities.
Results of Operations
First Quarter 2025 Compared With First Quarter 2024
Revenue
The following table presents the change in revenue by segment between the first quarters of 2025 and 2024, and those changes excluding the effect of acquisitions and foreign currency translation which we refer to as change in organic revenue. Organic revenue excludes the effect of acquisitions for the four quarterly reporting periods following the date of the acquisition. The presentation of the change in organic revenue is a non-GAAP measure. We believe this non-GAAP measure helps investors gain an understanding of our underlying operations consistent with how management measures and forecasts its performance, especially when comparing such results to prior periods. This non-GAAP measure should not be considered superior to or a substitute for the corresponding U.S. generally accepted accounting principles (GAAP) measure.
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Revenue by reportable segment in the first quarters of 2025 and 2024 is as follows:

|  | Three Months Ended |  | Increase (Decrease) |  |  |  | Acquisitions |  | Currency Translation |  | (Non-GAAP) Change in Organic Revenue
(In thousands, except percentages) |  | March 29, 2025 |  | March 30, 2024 |  |  | % Change |  |  |  | Increase (Decrease) |  | % Change
Flow Control |  | $ | 92,441 |  |  | $ | 86,682 |  |  | $ | 5,759 |  |  | 7 | % |  | $ | 7,512 |  |  | $ | (2,533) |  |  | $ | 780 |  |  | 1 | %
Industrial Processing |  | 89,524 |  |  | 105,861 |  |  | (16,337) |  |  | (15) | % |  | — |  |  | (2,833) |  |  | (13,504) |  |  | (13) | %
Material Handling |  | 57,245 |  |  | 56,432 |  |  | 813 |  |  | 1 | % |  | 500 |  |  | (406) |  |  | 719 |  |  | 1 | %
Consolidated |  | $ | 239,210 |  |  | $ | 248,975 |  |  | $ | (9,765) |  |  | (4) | % |  | $ | 8,012 |  |  | $ | (5,772) |  |  | $ | (12,005) |  |  | (5) | %

Consolidated revenue decreased 4% in the first quarter of 2025, including a 3% increase from acquisitions and a 2% decrease from the unfavorable effect of foreign currency translation. Organic revenue decreased 5% primarily due to weaker demand at our Industrial Processing segment, especially for our capital equipment products. From a geographic perspective, organic revenue was impacted by softening demand, especially in Europe and Asia, due to weak macroeconomic conditions.
Revenue at our Flow Control segment increased 7%, including a 9% increase from acquisitions and a 3% decrease from the unfavorable effect of foreign currency translation. Organic revenue increased 1% in the first quarter of 2025 driven by higher demand for our parts and consumable products at our doctoring, cleaning & filtration product line. This increase was partially offset by lower demand for our capital equipment products in North America and Europe due to challenging market conditions.
Revenue at our Industrial Processing segment decreased 15% in the first quarter of 2025, while organic revenue decreased 13% primarily driven by reduced demand for our capital equipment products at both our wood processing and fiber processing businesses. Capital equipment revenue decreased at our wood processing business, especially in North America, as economic uncertainty caused customers to delay major capital expenditures and focus their spending on critical parts. As a result, our wood processing product line had record parts and consumables revenue in the first quarter of 2025. Capital equipment revenue decreased at our fiber processing business due to depressed conditions, especially in China, which resulted in more cautious capital spending in the first quarter of 2025.
Revenue at our Material Handling segment increased 1% in the first quarter of 2025 led by higher demand for our parts and consumables products, especially at our baling business. This increase was partially offset by a decrease in capital equipment revenue at our conveying and vibratory business in North America due in part to several large projects in the first quarter of 2024, which resulted in comparatively lower revenue in the first quarter of 2025.
Gross Profit Margin
Gross profit margin by reportable segment in the first quarters of 2025 and 2024 is as follows:

|  | Three Months Ended |  | Basis Point Change
|  | March 29, 2025 |  | March 30, 2024 |
Flow Control |  | 53.3% |  | 53.9% |  | (60) | bps
Industrial Processing |  | 44.1% |  | 41.7% |  | 240 | bps
Material Handling |  | 37.7% |  | 35.6% |  | 210 | bps
Consolidated |  | 46.1% |  | 44.6% |  | 150 | bps

Consolidated gross profit margin increased to 46.1% in the first quarter of 2025 from 44.6% in the first quarter of 2024 due to an increase in the proportion of higher-margin parts and consumables revenue, which increased to 75% of total revenue in the first quarter of 2025 compared to 69% in in the first quarter of 2024, and the inclusion of $2.3 million of amortization expense related to acquired profit in inventory in the first quarter of 2024, which decreased consolidated gross profit margin in the first quarter of 2024 by 0.9 percentage points.
Within our reportable segments, gross profit margin:
•Decreased to 53.3% at our Flow Control segment from 53.9% in the 2024 period primarily due to lower margins achieved on our capital equipment products, partially offset by an increase in the proportion of higher-margin parts and consumables revenue in 2025.
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•Increased to 44.1% at our Industrial Processing segment from 41.7% in the 2024 period due to the inclusion of $1.3 million of amortization expense related to acquired profit in inventory in the 2024 period, which decreased gross profit margin in 2024 by 1.2 percentage points, and an increase in the proportion of higher-margin parts and consumables revenue in 2025.
•Increased to 37.7% at our Material Handling segment from 35.6% in the 2024 period due to the inclusion of $1.0 million of amortization expense related to acquired profit in inventory in the 2024 period, which decreased gross profit margin in 2024 by 1.8 percentage points and, to a lesser extent, higher margins achieved on our capital equipment products in 2025.
Based on our assessment of the newly implemented tariffs currently in effect in the markets in which we operate, we anticipate our consolidated gross margins will be negatively impacted by incremental material costs of approximately $5.0 to $6.0 million in 2025, primarily affecting the second and third quarters, associated with tariffs costs that cannot be mitigated in the short-term. This estimate is subject to change pending the outcome of ongoing tariff negotiations.
Selling, General, and Administrative Expenses
Selling, general, and administrative (SG&A) expenses by reportable segment and corporate in the first quarters of 2025 and 2024 are as follows:

|  | Three Months Ended |  |  |
(In thousands, except percentages) |  | March 29, 2025 |  | March 30, 2024 |  | Increase (Decrease) |  | % Change
Flow Control |  | $ | 25,170 |  |  | $ | 23,424 |  |  | $ | 1,746 |  |  | 7%
Industrial Processing |  | 21,010 |  |  | 22,518 |  |  | (1,508) |  |  | (7)%
Material Handling |  | 13,508 |  |  | 14,040 |  |  | (532) |  |  | (4)%
Corporate |  | 11,533 |  |  | 10,323 |  |  | 1,210 |  |  | 12%
Consolidated |  | $ | 71,221 |  |  | $ | 70,305 |  |  | $ | 916 |  |  | 1%
Consolidated as a Percentage of Revenue |  | 29.8% |  | 28.2% |  |  |  |

Consolidated SG&A expenses as a percentage of revenue increased to 29.8% in 2025 compared to 28.2% in 2024 principally due to the decrease in revenue. Consolidated SG&A expenses increased $0.9 million, or 1%, primarily due to the inclusion of $3.2 million of SG&A expenses from acquisitions made during the second and third quarters of 2024, partially offset by a $1.4 million favorable effect of foreign currency translation and a decrease of $1.2 million of acquisition-related costs. Acquisition-related costs included in SG&A consist of amortization expense associated with acquired backlog and acquisition costs.
Within our reportable segments and corporate, SG&A expenses:
•Increased $1.7 million at our Flow Control segment principally due to the inclusion of $2.6 million of SG&A expenses from acquisitions and an increase of $0.3 million of acquisition-related costs, partially offset by a $0.7 million favorable effect of foreign currency translation.
•Decreased $1.5 million at our Industrial Processing segment due to a $0.6 million favorable effect of foreign currency translation and a decrease of $0.3 million of acquisition-related costs and $0.3 million in bad debt expense.
•Decreased $0.5 million at our Material Handling segment principally due to a decrease of $1.2 million of acquisition-related costs, partially offset by an increase of $0.6 million of SG&A expenses from acquisitions.
•Increased $1.2 million at Corporate due to annual wage increases and consulting costs.
Interest Expense
Interest expense decreased to $3.8 million in the first quarter of 2025 from $4.7 million in the first quarter of 2024 due to decreased borrowings under our revolving credit facility and, to a lesser extent, a lower weighted-average interest rate.
Provision for Income Taxes
Provision for income taxes was $7.8 million in the first quarter of 2025 and $7.9 million in the first quarter of 2024.
The effective tax rate of 24% in the first quarter of 2025 was higher than our statutory rate of 21% primarily due to nondeductible expenses, the distribution of our worldwide earnings, and state taxes. These items were offset in part by net
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excess income tax benefits from stock-based compensation arrangements, the reversal of tax reserves associated with uncertain tax positions, and foreign tax credits.
The effective tax rate of 24% in the first quarter of 2024 was higher than our statutory rate of 21% primarily due to nondeductible expenses, the distribution of our worldwide earnings, state taxes, the cost of repatriating the earnings of certain foreign subsidiaries, and tax expense associated with the Global Intangible Low-Taxed Income provisions. These items were offset in part by net excess income tax benefits from stock-based compensation arrangements, foreign tax credits, and a tax benefit associated with a foreign exchange loss recognized upon our repatriation of certain previously taxed foreign earnings.
Net Income
Net income decreased to $24.4 million in the first quarter of 2025 from $25.0 million in the first quarter of 2024 primarily due to a $1.3 million decrease in operating income, offset in part by a $0.8 million decrease in interest expense (see discussions above for further details).
Non-GAAP Key Performance Indicators
In addition to the financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures, including organic revenue (defined as revenue excluding the effect of acquisitions and foreign currency translation), adjusted operating income, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, adjusted EBITDA margin (defined as adjusted EBITDA divided by revenue), and free cash flow (defined as cash flow provided by operations less capital expenditures).
We use organic revenue to understand our trends and to forecast and evaluate our financial performance and compare revenue to prior periods (see discussion in Revenue above). Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude amortization expense related to acquired profit in inventory and backlog, acquisition costs, and other income or expense, as indicated. These items are excluded 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.
Our non-GAAP financial measures 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, our non-GAAP financial measures 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.
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A reconciliation of adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin from net income attributable to Kadant is as follows:

|  | Three Months Ended |  |
(In thousands, except percentages) |  | March 29, 2025 |  | March 30, 2024 |  |  |  |
Net Income Attributable to Kadant |  | $ | 24,063 |  | $ | 24,689 |  |  |  |  |
Net Income Attributable to Noncontrolling Interests |  | 374 |  | 296 |  |  |  |  |
Provision for Income Taxes |  | 7,828 |  | 7,854 |  |  |  |  |
Interest Expense, Net |  | 3,305 |  | 4,058 |  |  |  |  |
Other Expense, Net |  | 16 |  | 30 |  |  |  |  |
Operating Income |  | 35,586 |  | 36,927 |  |  |  |  |
Acquired Profit in Inventory Amortization (a) |  | 11 |  | 2,331 |  |  |  |  |
Acquired Backlog Amortization (b) |  | 379 |  | 799 |  |  |  |  |
Acquisition Costs |  | 337 |  | 1,124 |  |  |  |  |
Indemnification Asset (Provision) Reversal, Net (c) |  | (29) |  | 90 |  |  |  |  |
Adjusted Operating Income (non-GAAP measure) |  | 36,284 |  | 41,271 |  |  |  |  |
Depreciation and Amortization |  | 11,634 |  | 10,940 |  |  |  |  |
Adjusted EBITDA (non-GAAP measure) |  | $ | 47,918 |  | $ | 52,211 |  |  |  |  |
Adjusted EBITDA Margin (non-GAAP measure) |  | 20.0% |  | 21.0% |  |  |  |

(a) Represents amortization expense within cost of revenue associated with acquired profit in inventory.
(b) Represents intangible amortization expense associated with acquired backlog.
(c) Represents the provision for or reversal of indemnification assets related to the establishment or release of tax reserves associated with uncertain tax positions.
A reconciliation of free cash flow from cash flow provided by operating activities is as follows:

|  | Three Months Ended |  |
(In thousands) |  | March 29, 2025 |  | March 30, 2024 |  |  |  |
Cash Provided by Operating Activities |  | $ | 22,835 |  |  | $ | 22,831 |  |  |  |  |
Capital Expenditures |  | (3,836) |  |  | (6,271) |  |  |  |  |
Free Cash Flow (non-GAAP measure) |  | $ | 18,999 |  |  | $ | 16,560 |  |  |  |  |

Liquidity and Capital Resources
Consolidated working capital was $266.1 million at March 29, 2025, compared with $250.8 million at December 28, 2024. Cash and cash equivalents were $91.7 million at March 29, 2025, compared with $94.7 million at December 28, 2024, which included cash and cash equivalents held by our foreign subsidiaries o f $76.9 million at March 29, 2025 and $73.8 million at December 28, 2024.
Cash Flows
Cash flow information in the first quarters of 2025 and 2024 is as follows:

|  | Three Months Ended
(In thousands) |  | March 29, 2025 |  | March 30, 2024
Net Cash Provided by Operating Activities |  | $ | 22,835 |  |  | $ | 22,831 |
Net Cash Used in Investing Activities |  | (3,836) |  |  | (237,263) |
Net Cash (Used in) Provided by Financing Activities |  | (23,085) |  |  | 192,905 |
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash |  | 1,945 |  |  | (2,308) |
Decrease in Cash, Cash Equivalents, and Restricted Cash |  | $ | (2,141) |  |  | $ | (23,835) |

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Operating Activities
Cash provided by operating activities was $22.8 million in both the first quarters of 2025 and 2024. Our operating cash flows are primarily generated from cash received from customers, offset by cash payments for items such as inventory, employee compensation, operating leases, income taxes, and interest payments on outstanding debt obligations.
Significant operating cash outflows associated with working capital in the first quarter of 2025 related to other liabilities and inventory. Decreases in other liabilities used cash of $14.3 million primarily related to incentive compensation payments and purchases of inventory used cash of $5.5 million. These uses of cash were offset in part by cash provided from the reduction in contract assets of $6.3 million related to contracts accounted for on an over time basis.
Significant cash outflows associated with working capital in the first quarter of 2024 related to other liabilities, accounts receivable, and inventory. Decreases in other liabilities used cash of $15.3 million primarily related to incentive compensation payments. Increases in accounts receivable used cash of $8.0 million mostly due to the timing of payments and purchases of inventory used cash of $6.7 million. These uses of cash were offset in part by cash provided by an increase in accounts payable of $15.0 million related to inventory purchases and the timing of payments.
Investing Activities
Cash used in investing activities was $3.8 million in the first quarter of 2025, compared with $237.3 million in the first quarter of 2024. Cash used in investing activities in the first quarter of 2025 consisted of capital expenditures of $3.8 million. Cash used in investing activities in the first quarter of 2024 included consideration paid for acquisitions, net of cash acquired, of $232.3 million and capital expenditures of $6.3 million.
Financing Activities
Cash used in financing activities was $23.1 million in the first quarter of 2025, compared with cash provided by financing activities of $192.9 million in the first quarter of 2024. Borrowings under our revolving credit facility were $8.0 million in 2025 compared to $234.0 million in 2024, which was primarily used to fund our 2024 acquisitions. Repayments of short- and long-term obligations were $22.6 million in 2025 and $33.5 million in 2024. Cash dividends paid to stockholders were $3.8 million in 2025 and $3.4 million in 2024. In addition, taxes paid related to the vesting of equity awards were $6.0 million in 2025 and $5.9 million in 2024.
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash
The exchange rate effect on cash, cash equivalents, and restricted cash represents the impact of translation of cash balances at our foreign subsidiaries. The $1.9 million increase in cash, cash equivalents, and restricted cash in the first quarter of 2025 related to exchange rates was primarily attributable to the weakening of the U.S. dollar against the euro, the Swedish krona, and the Brazilian real. The $2.3 million decrease in cash, cash equivalents, and restricted cash in the first quarter of 2024 was primarily attributable to the strengthening of the U.S. dollar against the euro, the Canadian dollar, the Chinese renminbi and Swedish krona.
Borrowing Capacity and Debt Obligations
Our unsecured multi-currency revolving credit facility originally entered into on March 1, 2017 (as amended and restated to date, the Credit Agreement) matures on November 30, 2027 and has a total borrowing capacity of $400.0 million.
As of March 29, 2025, our outstanding balance under the Credit Agreement was $267.0 million, which included $74.0 million of euro-denominated borrowings, and we had $133.1 million of available borrowing capacity, in addition to a $200.0 million uncommitted, unsecured incremental borrowing facility. Under our debt agreements, our leverage ratio must be less than 3.75 or, if we elect, for the quarter during which a material acquisition occurs and for the three fiscal quarters thereafter, must be less than 4.25. As of March 29, 2025, our leverage ratio was 0.95 and we were in compliance with our debt covenants. See Note 4, Long-Term Obligations, in the accompanying condensed consolidated financial statements for additional information regarding our debt obligations.
Additional Liquidity and Capital Resources
On May 16, 2024, our board of directors approved the repurchase of up to $50.0 million of our equity securities during the period from May 16, 2024 to May 16, 2025. We have not repurchased any shares of our common stock under this authorization.
We paid cash dividends of $3.8 million in the first quarter of 2025. On March 5, 2025, we declared a quarterly cash dividend of $0.34 per share totaling $4.0 million that was paid on May 7, 2025. Future declarations of dividends are subject to
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our board of directors' approval and may be adjusted as business needs or market conditions change. The declaration of cash dividends is subject to our compliance with the covenant in our Credit Agreement related to our consolidated leverage ratio.
We plan to make expenditures of approximately $20.0 to $22.0 million during the remainder of 2025 for property, plant, and equipment.
As of March 29, 2025, we had approximately $121.0 million of total unremitted foreign earnings. It is our intent to indefinitely reinvest $60.4 million of these earnings to support the current and future capital needs of our foreign operations, including debt repayments, if any. In the first quarter of 2025, we recorded withholding taxes on the earnings in certain foreign subsidiaries that we plan to repatriate in the foreseeable future. The foreign withholding taxes that would be required if we were to remit the indefinitely-reinvested foreign earnings to the United States would be approximately $1.6 million.
We believe that existing cash and cash equivalents, along with future cash generated from operations, and our existing borrowing capacity will be sufficient to meet the capital requirements of our operations for the next 12 months and the foreseeable future.
Application of Critical Accounting Policies and Estimates
Management's discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities, and the reported amounts of revenue and expenses during the reporting period. Our critical accounting policies are defined as those that entail significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. Management evaluates its estimates on an ongoing basis based on historical experience, current economic and market conditions, and other assumptions management believes are reasonable. We believe that our most critical accounting policies which are significant to our consolidated financial statements, and which involve the most complex or subjective decisions or assessments, are those described in Management's Discussion and Analysis of Financial Condition and Results of Operations under the heading Application of Critical Accounting Estimates in Part II, Item 7, of our Annual Report. There have been no material changes to these critical accounting policies since the end of fiscal 2024 that warrant disclosure.
Recent Accounting Pronouncements
See Note 1, under the heading Recent Accounting Pronouncements Not Yet Adopted, in the accompanying condensed consolidated financial statements for details.
Item 3 – Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk from changes in interest rates and foreign currency exchange rates has not changed materially from our exposure as disclosed in Part II, Item 7A, of our Annual Report.
Item 4 – Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 29, 2025. The term "disclosure controls and procedures," as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon the evaluation of our disclosure controls and procedures as of March 29, 2025, our Chief Executive Officer and Chief Financial Officer concluded that as of March 29, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
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Changes in Internal Control over Financial Reporting
There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the fiscal quarter ended March 29, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1A – Risk Factors
Careful consideration should be given to the factors discussed in Part I, Item 1A, Risk Factors, in our Annual Report for the fiscal year ended December 28, 2024, which could materially affect our business, financial condition or future results, in addition to the information set forth in this Quarterly Report on Form 10-Q. Except for the revised risk factor below regarding "Operating globally subjects us to changes in government regulations and policies in multiple jurisdictions around the world, including those related to tariffs and trade barriers, taxation, exchange controls and political risks," there have been no material changes from the risk factors disclosed in our Annual Report.
Operating globally subjects us to changes in government regulations and policies in multiple jurisdictions around the world, including those related to tariffs and trade barriers, taxation, exchange controls and political risks.
Changes in government policies, political unrest, economic sanctions, trade embargoes, or other adverse trade regulations can negatively impact our business. Non-U.S. markets contribute a substantial portion of our revenues, and we intend to continue expanding our presence in these regions. For example, we operate businesses in Mexico and Canada, and we benefited from the North American Free Trade Agreement, which has been replaced by the United States-Mexico-Canada Agreement (USMCA), from which we also benefit. If the United States were to withdraw from or materially modify the USMCA or impose significant tariffs or taxes on goods imported into the United States, the cost of our products could significantly increase or no longer be priced competitively, which in turn could have a material adverse effect on our business and results of operations.
Since February 2025, the Trump administration has announced or imposed a series of tariffs on U.S. trading partners. In February 2025, the Trump administration imposed a 25% tariff on Canada and Mexico for goods not covered by the USMCA, and a 20% tariff on China. On April 2, 2025, President Trump announced a 10% "baseline" reciprocal tariff on all U.S. trading partners effective April 5, 2025, and higher, country-specific reciprocal tariffs on 57 countries. The Trump administration subsequently paused the additional country-specific reciprocal tariffs for all countries except China. As of May 5, 2025, imports from most countries, excluding those from Canada, Mexico, and China, are subject to an additional 10% tariff; imports from China are subject to an additional 145% tariff; and non-USMCA compliant imports from Canada and Mexico are subject to an additional 25% tariff (except for Canadian energy and energy resources and potash, which are subject to a 10% tariff). In response to the U.S. tariff changes, certain foreign countries, such as China, increased their tariffs on certain U.S. imports. Our business has been negatively affected by these tariffs and may be negatively affected in the future by this quickly evolving tariff situation and the economic uncertainty created thereby.
Our business is also affected by various product or sector-specific tariffs that the United States imposes on trading partners. Certain products imported from China, including pulp and paper machinery, are subject to tariffs imposed by the Office of the United States Trade Representative, pursuant to Section 301 of the Trade Act of 1974. The tariffs on pulp and paper machinery are set at 25%. In addition, the U.S. Department of Commerce has imposed tariffs of 25% on numerous categories of steel and aluminum imports, under Section 232 of the Trade Expansion Act of 1962, and has expanded these tariffs to include certain derivative steel and aluminum products. The Company imports products that are impacted by these tariffs. While we try to mitigate the impact of the existing and other proposed tariffs by the Trump administration through pricing and sourcing strategies, we cannot be certain how our customers and competitors will react to the actions we take. The tariffs have and could in the future negatively affect our ability to compete against competitors who do not manufacture in China and/or are not subject to the tariffs.
The United States has tightened trade sanctions targeting countries like China and Russia. For example, since 2018 the United States has imposed various trade and economic sanctions targeting certain persons in Russia and certain types of business with Russia. The United States has continued to expand export control restrictions applicable to certain Chinese firms and continued its assessment of new controls for "emerging foundational technologies," escalating U.S.-China tension concerning technology. Moreover, tensions between the U.S. and China have increased and future actions by the U.S. or Chinese governments may impact our operations in and supply from China, as well as sales to and from China. In response, Russia and China have begun considering and, in some cases, implementing trade sanctions that could affect U.S.-owned businesses. The imposition of trade sanctions has and may in the future continue to make it generally more difficult to do
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business in Russia and China and cause delays or prevent shipment of products or services performed by our personnel, or to receive payment for products or services.
Additionally, the military conflict between Russia and Ukraine and the global response to it has and may in the future adversely impact our revenues, gross margins and financial results. The United States, the European Union, and many other countries have imposed sanctions on Russia, individuals in Russia and Russian businesses, including several large banks. In 2024, our sales to Russia were minimal at $2.6 million. As a result of the international sanctions regime in place against Russia, it has become extremely difficult to sell any of our equipment or services into Russia. Any proposed sales into Russia are evaluated on a case-by-case basis, taking into account the risks related to the sale, the costs associated with ensuring compliance with applicable sanctions and the likelihood of receiving payment from either party's banks. It is not possible to predict the broader or longer-term consequences of this conflict, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, security conditions, currency exchange rates and financial markets. Such geopolitical instability and uncertainty has and could continue to have in the future a negative impact on our ability to sell to, ship products to, collect payments from, and support customers in certain regions based on trade restrictions, embargoes and export control law restrictions, and logistics restrictions, and could increase the costs, risks and adverse impacts from these new challenges. The conflict between Russia and Ukraine, as well as other conflicts such as those in the Middle East, may also have the effect of heightening other risks disclosed in our Annual Report, any of which could materially and adversely affect our business and results of operations. Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation and business and consumer spending; disruptions to our global technology infrastructure, including through cyberattack, ransomware attack, or cyber-intrusion; adverse changes in international trade policies and relations; our ability to maintain or increase our prices, including any fuel surcharges in response to rising fuel costs; the energy crisis resulting from the Russia-Ukraine conflict, particularly in Europe; our ability to implement and execute our business strategy; disruptions in global supply chains; our exposure to foreign currency fluctuations; and constraints, volatility, or disruption in the capital markets. Such restrictions have and may in the future continue to have a material adverse impact on our business and operating results.
Item 5 – Other Information
Insider Trading Arrangements
None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarter ended March 29, 2025.
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Item 6 – Exhibits

Exhibit Number |  | Description of Exhibit
10.1* |  | S ummary of N on-employee D irector C ompensation of the Registrant.
31.1 |  | Certification of the Principal Executive Officer of the Registrant Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2 |  | Certification of the Principal Financial Officer of the Registrant Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32 |  | Certification of the Chief Executive Officer and the Chief Financial Officer of the Registrant Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS |  | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document.
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*Indicates management contract or compensatory plan or arrangement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| KADANT INC.
Date: May 7, 2025 | /s/ Michael J. McKenney
| Michael J. McKenney
| Executive Vice President and Chief Financial Officer
| (Principal Financial Officer)

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