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Nature of Operations and Summary of Significant Accounting Policies | 3 Months Ended
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Apr. 04, 2026
Accounting Policies [Abstract] |
Nature of Operations and Summary of Significant Accounting Policies | 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 April 4, 2026, its results of operations, comprehensive income, cash flows and stockholders' equity for the three-month periods ended April 4, 2026 and March 29, 2025. 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 January 3, 2026 has been derived from the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2026 (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 April 4, 2026. Supplemental Cash Flow Information
|  | Three Months Ended
(In thousands) |  | April 4, 2026 |  | March 29, 2025
Cash Paid for Interest |  | $ | 4,253 |  |  | $ | 3,657 |
Cash Paid for Income Taxes, Net of Refunds |  | $ | 9,457 |  |  | $ | 11,109 |
Non-Cash Investing Activities: |  |  |  |
Reduction in fair value of assets acquired |  | $ | 1,490 |  |  | $ | — |
Reduction in fair value of liabilities assumed |  | $ | 1,490 |  |  | $ | — |
Purchases of property, plant, and equipment in accounts payable |  | $ | 1,296 |  |  | $ | 463 |
Non-Cash Financing Activities: |  |  |  |
Issuance of Company common stock upon vesting of restricted stock units |  | $ | 5,626 |  |  | $ | 5,033 |
Dividends declared but unpaid |  | $ | 4,251 |  |  | $ | 4,004 |
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) |  | April 4, 2026 |  | January 3, 2026 |  | March 29, 2025 |  | December 28, 2024
Cash and cash equivalents |  | $ | 117,025 |  |  | $ | 119,551 |  |  | $ | 91,678 |  |  | $ | 94,660 |
Restricted cash |  | 2,792 |  |  | 3,130 |  |  | 2,127 |  |  | 1,286 |
Total Cash, Cash Equivalents, and Restricted Cash |  | $ | 119,817 |  |  | $ | 122,681 |  |  | $ | 93,805 |  |  | $ | 95,946 |
Inventories The components of inventories are as follows:
|  | April 4, 2026 |  | January 3, 2026
(In thousands) |  |
Raw Materials |  | $ | 92,102 |  |  | $ | 92,674 |
Work in Process |  | 51,760 |  |  | 44,455 |
Finished Goods (includes $5,095 and $3,556 at customer locations) |  | 70,969 |  |  | 69,725 |
|  | $ | 214,831 |  |  | $ | 206,854 |
Intangible Assets, Net Acquired intangible assets by major asset class are as follows:
(In thousands) |  | Gross |  | Accumulated Amortization |  | Currency Translation |  | Net
April 4, 2026 |  |  |  |  |  |  |  |
Definite-Lived |  |  |  |  |  |  |  |
Customer relationships |  | $ | 414,746 |  |  | $ | (154,612) |  |  | $ | (5,197) |  |  | $ | 254,937 |
Product technology |  | 96,744 |  |  | (56,416) |  |  | (2,086) |  |  | 38,242 |
Tradenames |  | 23,926 |  |  | (6,439) |  |  | (401) |  |  | 17,086 |
Other |  | 25,221 |  |  | (22,535) |  |  | (563) |  |  | 2,123 |
|  | 560,637 |  |  | (240,002) |  |  | (8,247) |  |  | 312,388 |
Indefinite-Lived |  |  |  |  |  |  |  |
Tradenames |  | 29,059 |  |  | — |  |  | (277) |  |  | 28,782 |
Acquired Intangible Assets |  | $ | 589,696 |  |  | $ | (240,002) |  |  | $ | (8,524) |  |  | $ | 341,170 |
January 3, 2026 |  |  |  |  |  |  |  |
Definite-Lived |  |  |  |  |  |  |  |
Customer relationships |  | $ | 414,629 |  |  | $ | (148,139) |  |  | $ | (4,483) |  |  | $ | 262,007 |
Product technology |  | 96,744 |  |  | (54,929) |  |  | (2,076) |  |  | 39,739 |
Tradenames |  | 23,926 |  |  | (6,106) |  |  | (366) |  |  | 17,454 |
Other |  | 25,221 |  |  | (22,443) |  |  | (574) |  |  | 2,204 |
|  | 560,520 |  |  | (231,617) |  |  | (7,499) |  |  | 321,404 |
Indefinite-Lived |  |  |  |  |  |  |  |
Tradenames |  | 29,059 |  |  | — |  |  | (87) |  |  | 28,972 |
Acquired Intangible Assets |  | $ | 589,579 |  |  | $ | (231,617) |  |  | $ | (7,586) |  |  | $ | 350,376 |
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 January 3, 2026 |  |  |  |  |  |  |  |
Gross balance |  | $ | 139,759 |  |  | $ | 306,319 |  |  | $ | 195,081 |  |  | $ | 641,159 |
Accumulated impairment losses |  | — |  |  | (85,538) |  |  | — |  |  | (85,538) |
Net balance |  | 139,759 |  |  | 220,781 |  |  | 195,081 |  |  | 555,621 |
2026 Activity |  |  |  |  |  |  |  |
Measurement period adjustments for 2025 acquisitions |  | — |  |  | (1,566) |  |  | — |  |  | (1,566) |
Currency translation |  | (1,223) |  |  | (1,258) |  |  | (486) |  |  | (2,967) |
Total 2026 activity |  | (1,223) |  |  | (2,824) |  |  | (486) |  |  | (4,533) |
Balance at April 4, 2026 |  |  |  |  |  |  |  |
Gross balance |  | 138,536 |  |  | 303,495 |  |  | 194,595 |  |  | 636,626 |
Accumulated impairment losses |  | — |  |  | (85,538) |  |  | — |  |  | (85,538) |
Net balance |  | $ | 138,536 |  |  | $ | 217,957 |  |  | $ | 194,595 |  |  | $ | 551,088 |
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. The changes in the carrying amount of product warranty obligations are as follows:
|  | Three Months Ended
(In thousands) |  | April 4, 2026 |  | March 29, 2025
Balance at Beginning of Year |  | $ | 11,848 |  |  | $ | 10,664 |
Provision charged to expense |  | 522 |  |  | 1,009 |
Usage |  | (1,854) |  |  | (1,728) |
Currency translation |  | (25) |  |  | 171 |
Balance at End of Period |  | $ | 10,491 |  |  | $ | 10,116 |
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 |  |
|  | April 4, |  | March 29, |  |  |  |
(In thousands) |  | 2026 |  | 2025 |  |  |  |
Point in Time |  | $ | 266,160 |  |  | $ | 217,668 |  |  |  |  |
Over Time |  | 15,345 |  |  | 21,542 |  |  |  |  |
|  | $ | 281,505 |  |  | $ | 239,210 |  |  |  |  |
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 |  |
|  | April 4, |  | March 29, |  |  |  |
(In thousands) |  | 2026 |  | 2025 |  |  |  |
Revenue by Product Type: |  |  |  |  |  |  |  |
Parts and consumables |  | $ | 209,499 |  |  | $ | 179,308 |  |  |  |  |
Capital |  | 72,006 |  |  | 59,902 |  |  |  |  |
|  | $ | 281,505 |  |  | $ | 239,210 |  |  |  |  |
Revenue by Geography (based on customer location): |  |  |  |  |  |  |  |
North America |  | $ | 166,563 |  |  | $ | 159,870 |  |  |  |  |
Europe |  | 62,202 |  |  | 49,341 |  |  |  |  |
Asia |  | 30,756 |  |  | 18,702 |  |  |  |  |
Rest of world |  | 21,984 |  |  | 11,297 |  |  |  |  |
|  | $ | 281,505 |  |  | $ | 239,210 |  |  |  |  |
See Note 9, Business Segment Information, for information on the disaggregation of revenue by reportable segment. The following table presents contract balances from contracts with customers:
|  | April 4, 2026 |  | January 3, 2026
(In thousands) |  |
Contract Assets |  | $ | 5,921 |  |  | $ | 6,599 |
Contract Liabilities |  | $ | 76,852 |  |  | $ | 69,093 |
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 $32,008,000 in the first quarter of 2026 and $17,559,000 in the first quarter of 2025 that was included in the contract liabilities balance at the beginning of 2026 and 2025, respectively. The majority of the Company's contracts for capital equipment products have an original expected duration of one year or less. Certain capital equipment product 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 $26,575,000 as of April 4, 2026. The Company will recognize revenue for these performance obligations as they are satisfied, approximately 80% of which is expected to occur within the next twelve months and the remaining 20% thereafter. Note Receivable The Company entered into several agreements with the local government in China, which became effective in 2022, to sell its then-existing manufacturing building and land use rights at one of its subsidiaries in China and relocate to a new facility. The Company received a 31% down payment, with the remaining balance due on the earlier of the sale of the property by the local government or two years from the effective date of the agreements. To date, the local government in China has made various interim payments and the outstanding receivable was $13,795,000 at April 4, 2026, which is included in other current assets in the accompanying condensed consolidated balance sheet. The Company expects this receivable will be repaid in full, although the timing is uncertain. 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 $9,294,000 at April 4, 2026 and $9,115,000 at January 3, 2026, 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. At April 4, 2026, 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 multiple 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 for fiscal years beginning in fiscal 2024. 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. In January 2026, the OECD released additional administrative guidance (Side-by-Side package) introducing new safe harbors. The package includes an elective Side-by-Side safe harbor that, subject to adoption into local law, may exempt eligible U.S. parented multinational groups from the application of certain aspects of the global minimum tax regime for fiscal years beginning on or after January 1, 2026. The Company continues to evaluate the applicability of available safe harbors, monitor developments in OECD guidance and related local-country implementation, and assess the potential impact on the Company’s future Pillar Two compliance obligations and effective tax rate. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions, including 100% bonus depreciation, domestic research cost expensing pursuant to Internal Revenue Code Section 174, and changes to the calculation of the interest expense limitation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. There was no material impact from the OBBBA provisions during the three months ended April 4, 2026. The Company will continue to monitor the impact of the OBBBA and any additional clarifications or interpretive guidance related to the OBBBA as it is released. Recent Accounting Pronouncements Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosure (Topic 220). In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 effect that the adoption of this ASU will have on its consolidated financial statements. Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. In July 2025, the FASB issued ASU No. 2025-05, to provide for a practical expedient permitting an entity to assume that conditions at the balance sheet date remained unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets accounted for under ASC 606, Revenue from Contracts with Customers. The Company adopted this ASU during the first quarter of 2026, which did not have an impact on its consolidated financial statements. Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. In September 2025, FASB issued ASU No. 2025-06 which improves the practicality of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. Under this ASU, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, it is probable that the project will be completed, and the software will be used to perform the function intended. This ASU is effective for fiscal year 2028, with early adoption permitted and may be applied retrospectively. The Company is currently evaluating the effect that the adoption of this ASU will have on its consolidated financial statements. Interim Reporting (Topic 270): Narrow-Scope Improvements. In December 2025, the FASB issued ASU No. 2025-11, which clarifies the guidance to improve the consistency of interim reporting. This ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have had a material impact on the entity. This ASU is effective for fiscal year 2028, with early adoption permitted. The Company is currently evaluating the effect that the adoption of this ASU will have on its consolidated financial statements.

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- Definition The entire disclosure for the business description and accounting policies concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Accounting policies describe all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483426/235-10-50-1 + Details
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