What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2024-11-06 · 196 added, 352 removed, 435 unchanged (56% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheet

September 28,

2025 December 28,

12 unchanged sentences

Other Assets 58,878 59,025

Intangible Assets, Net (Notes 1 and 2)

Intangible Assets, Net (Note 1)

274,782 279,494

Goodwill (Notes 1 and 2)

Goodwill (Note 1)

484,501 479,169

6 unchanged sentences

Accrued payroll and employee benefits 34,837 43,815

Accrued warranty costs

10,116 10,664

Customer deposits 35,761 35,887

18 unchanged sentences

Total Kadant Stockholders' Equity 875,951 847,127

Noncontrolling interests (Note 2)

Noncontrolling interests

10,619 11,001

Total Stockholders' Equity 886,570 858,128

2 unchanged sentences

Condensed Consolidated Statement of Income

Three Months Ended Nine Months Ended

September 28,

2024 September 30,

2023 September 28,

2024 September 30,

Three Months Ended

2025 March 30,

(In thousands, except per share amounts)

5 unchanged sentences

Research and development expenses 3,523 3,730

Other costs (Note 3)

203,624 212,048

222,627 200,638 661,039 592,257

Operating Income 35,586 36,927

4 unchanged sentences

Provision for Income Taxes (Note 3)

11,964 10,816 31,810 31,761

Net Income 24,437 24,985

10 unchanged sentences

Condensed Consolidated Statement of Comprehensive Income

Three Months Ended Nine Months Ended

September 28,

2024 September 30,

2023 September 28,

2024 September 30,

Three Months Ended

2025 March 30,

(In thousands)

3 unchanged sentences

Post-retirement liability adjustments, net (net of tax of $ 1 and $ 0 )

Deferred (loss) gain on cash flow hedges (net of tax of $ — , $( 3 ), $ 13 and $( 35 ))

— ( 9 ) 38 ( 107 )

Deferred gain on cash flow hedges (net of tax of $ 0 and $ 13 )

Other comprehensive items 10,013 ( 10,183 )

5 unchanged sentences

Condensed Consolidated Statement of Cash Flows

Nine Months Ended

September 28,

2024 September 30,

Three Months Ended

2025 March 30,

(In thousands)

6 unchanged sentences

Stock-based compensation expense 2,757 2,415

Provision for losses on accounts receivable

(Recovery of) provision for bad debts

Other items, net 2,337 803

9 unchanged sentences

Investing Activities

Acquisitions, net of cash acquired (Note 2)

Acquisitions, net of cash acquired

— ( 232,261 )

1 unchanged sentence

Proceeds from sale of property, plant, and equipment — 1,269

Other investing activities 263 1,222

Net cash used in investing activities ( 3,836 ) ( 237,263 )

Financing Activities

Proceeds from issuance of long-term obligations (Note 6)

Proceeds from issuance of long-term obligations

8,000 234,000

Repayment of short- and long-term obligations ( 22,563 ) ( 33,450 )

3 unchanged sentences

Dividend paid to noncontrolling interest

Acquisition of subsidiary shares from noncontrolling interest (Note 2)

Other financing activities — ( 63 )

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

( 23,085 ) 192,905

1 unchanged sentence

Decrease in Cash, Cash Equivalents, and Restricted Cash ( 2,141 ) ( 23,835 )

( 16,719 ) ( 672 )

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 95,946 106,453

4 unchanged sentences

Condensed Consolidated Statement of Stockholders' Equity

Three Months Ended September 28, 2024

Three Months Ended March 29, 2025

(In thousands, except share and per share amounts) Common

5 unchanged sentences

Shares Amount Shares Amount

Balance at June 29, 2024

Balance at December 28, 2024

14,624,159 $ 146 $ 130,180 $ 859,693 2,878,080 $ ( 70,524 ) $ ( 72,368 ) $ 11,001 $ 858,128

3 unchanged sentences

Activity under stock plans — — ( 1,908 ) — ( 29,780 ) 729 — — ( 1,179 )

Other comprehensive items — — — — — — 13,581 66 13,647

Balance at September 28, 2024 14,624,159 $ 146 $ 127,486 $ 839,422 2,878,835 $ ( 70,543 ) $ ( 44,778 ) $ 11,053 $ 862,786

Nine Months Ended September 28, 2024

(In thousands, except share and per share amounts) Common

Stock Capital in

Excess of Par Value Retained Earnings Treasury

Stock Accumulated

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 — — — 87,566 — — — 891 88,457

Dividends declared – Common Stock, $ 0.96 per share

— — — ( 11,275 ) — — — — ( 11,275 )

Activity under stock plans — — 2,740 — ( 37,143 ) 910 — — 3,650

Noncontrolling interests acquired (Note 2)

— — — — — — — 9,319 9,319

Acquisition of subsidiary shares (Note 2)

— — ( 194 ) — — — — ( 329 ) ( 523 )

Dividend paid to noncontrolling interest

— — — — — — — ( 825 ) ( 825 )

Other comprehensive items — — — — — — 9,944 69 10,013

Balance at September 28, 2024 14,624,159 $ 146 $ 127,486 $ 839,422 2,878,835 $ ( 70,543 ) $ ( 44,778 ) $ 11,053 $ 862,786

Three Months Ended September 30, 2023

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

2 unchanged sentences

Stock Accumulated

Comprehensive Items Noncontrolling Interest Total

Comprehensive Items Noncontrolling Interests

Stockholders' Equity

Shares Amount Shares Amount

Balance at July 1, 2023

Balance at December 30, 2023

14,624,159 $ 146 $ 124,940 $ 763,131 2,915,978 $ ( 71,453 ) $ ( 43,062 ) $ 2,538 $ 776,240

3 unchanged sentences

Activity under stock plans — — ( 2,687 ) — ( 34,765 ) 852 — — ( 1,835 )

Other comprehensive items — — — — — — ( 9,044 ) ( 64 ) ( 9,108 )

Balance at September 30, 2023

14,624,159 $ 146 $ 122,444 $ 739,133 2,917,063 $ ( 71,480 ) $ ( 58,591 ) $ 2,265 $ 733,917

Nine Months Ended September 30, 2023

(In thousands, except share and per share amounts) Common

Stock Capital in

Excess of Par Value Retained Earnings Treasury

Stock Accumulated

Comprehensive Items Noncontrolling Interest Total

Stockholders' Equity

Shares Amount Shares Amount

Balance at December 31, 2022 14,624,159 $ 146 $ 119,924 $ 660,644 2,949,997 $ ( 72,287 ) $ ( 54,578 ) $ 1,722 $ 655,571

Net income — — — 88,673 — — — 571 89,244

Dividends declared – Common Stock, $ 0.87 per share

Noncontrolling interests acquired

— — — — — — — 9,319 9,319

Activity under stock plans — — 2,520 — ( 32,934 ) 807 — — 3,327

Other comprehensive items — — — — — — ( 10,111 ) ( 72 ) ( 10,183 )

Balance at September 30, 2023

Balance at March 30, 2024

14,624,159 $ 146 $ 122,253 $ 784,062 2,881,213 $ ( 70,601 ) $ ( 53,173 ) $ 12,081 $ 794,768

6 unchanged sentences

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 operating segments:

Flow Control, Industrial Processing, and Material Handling.

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 September 28, 2024, its results of operations, comprehensive income, and stockholders' equity for the three- and nine-month periods ended September 28, 2024 and September 30, 2023, and its cash flows for the nine-month periods ended September 28, 2024 and September 30, 2023.

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.

7 unchanged sentences

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 nine months ended September 28, 2024.

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

Nine Months Ended

(In thousands) September 28,

2024 September 30,

Three Months Ended

(In thousands) March 29,

2025 March 30,

Cash Paid for Interest $ 3,657 $ 4,484

Cash Paid for Income Taxes, Net of Refunds $ 11,109 $ 7,313

Non-Cash Investing Activities (Note 2) :

Fair value of assets acquired (adjusted) $ 360,021 $ ( 270 )

Non-Cash Investing Activities:

Fair value of assets acquired

$ — $ 266,061

Fair value of liabilities assumed

Fair value of noncontrolling interest acquired

Fair value of contingent consideration

Purchases of property, plant, and equipment in accounts payable $ 463 $ 1,342

Notes to Condensed Consolidated Financial Statements

Nine Months Ended

(In thousands) September 28,

2024 September 30,

Three Months Ended

(In thousands) March 29,

2025 March 30,

Non-Cash Financing Activities:

5 unchanged sentences

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) September 28,

2024 September 30,

(In thousands) March 29,

2025 March 30,

2024 December 28,

4 unchanged sentences

The components of inventories are as follows:

September 28,

2025 December 28,

10 unchanged sentences

Translation Net

September 28, 2024

March 29, 2025

Definite-Lived

25 unchanged sentences

The Company amortizes definite-lived intangible assets over lives that have been determined based on the anticipated cash flow benefits of the intangible asset.

Intangible assets recorded in connection with the Company's 2024 acquisitions totaled $ 153,895,000 .

See Note 2 , Acquisitions, for further details.

The changes in the carrying amount of goodwill by segment are as follows:

The changes in the carrying amount of goodwill by reportable segment are as follows:

(In thousands) Flow Control Industrial Processing Material Handling Total

4 unchanged sentences

2025 Activity

Acquisitions (Note 2)

16,018 36,405 47,808 100,231

Measurement period adjustment for 2023 acquisition — ( 22 ) — ( 22 )

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 September 28, 2024

Balance at March 29, 2025

Gross balance 134,599 244,437 191,003 570,039

1 unchanged sentence

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

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements

The Company's liability for warranties is included in other current liabilities in the accompanying condensed consolidated balance sheet.

The changes in the carrying amount of product warranty obligations are as follows:

Nine Months Ended

(In thousands) September 28,

2024 September 30,

Three Months Ended

(In thousands) March 29,

2025 March 30,

Balance at Beginning of Year $ 10,664 $ 8,154

11 unchanged sentences

The following table presents revenue by revenue recognition method:

Three Months Ended Nine Months Ended

September 28, September 30, September 28, September 30,

Three Months Ended

March 29, March 30,

(In thousands) 2025 2024

2 unchanged sentences

$ 239,210 $ 248,975

The Company disaggregates its revenue from contracts with customers by reportable operating segment, product type and geography as this best depicts how its revenue is affected by economic factors.

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 Nine Months Ended

September 28, September 30, September 28, September 30,

Three Months Ended

March 29, March 30,

(In thousands) 2025 2024

9 unchanged sentences

$ 239,210 $ 248,975

See Note 11 , Business Segment Information, for information on the disaggregation of revenue by reportable operating segment.

See Note 8 , Business Segment Information, for information on the disaggregation of revenue by reportable segment.

Notes to Condensed Consolidated Financial Statements

The following table presents contract balances from contracts with customers:

September 28,

2025 December 28,

8 unchanged sentences

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 $ 8,897,000 in the third quarter of 2024 and $ 9,613,000 in the third quarter of 2023, and $ 66,036,000 in the first nine months of 2024 and $ 56,841,000 in the first nine months of 2023 that was included in the contract liabilities balance at the beginning of 2024 and 2023, respectively.

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 $ 25,268,000 as of September 28, 2024.

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

2 unchanged sentences

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 $ 6,707,000 at September 28, 2024 and $ 10,826,000 at December 30, 2023, 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.

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.

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.

3 unchanged sentences

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.

At September 28, 2024, the Company believes that it has appropriately accounted for any liability for unrecognized tax benefits.

Notes to Condensed Consolidated Financial Statements

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.

1 unchanged sentence

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 for fiscal years beginning in 2024.

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

Notes to Condensed Consolidated Financial Statements

the Pillar Two Rules and may also adjust domestic tax incentives to align with the Pillar Two Rules on different timelines.

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.

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 December 28, 2024.

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

Segment Reporting - Improving Reportable Segment Disclosures (Topic 280).

In November 2023, the FASB issued ASU No.

2023-07, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

Under this ASU, a company is required to enhance its segment disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

This ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods.

This ASU is effective for the Company's fiscal year ending December 28, 2024, and interim periods beginning in fiscal 2025, with early adoption permitted, and requires retrospective application to all prior periods presented in the financial statements.

This ASU will result in the Company including the additional disclosures in its consolidated financial statements when adopted.

Income Taxes - Improvements to Income Tax Disclosures (Topic 740) .

In December 2023, the FASB issued ASU No.

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 2025, with early adoption permitted, and may be applied retrospectively.

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.

The Company’s acquisitions have been accounted for using the acquisition method of accounting and the results of the acquired businesses are included in its condensed consolidated financial statements from the date of acquisition.

Historically, acquisitions have been made at prices above the fair value of identifiable net assets, resulting in goodwill.

Acquisition costs were $ 469,000 in the third quarter of 2024 and $ 2,533,000 in the nine months ended September 28, 2024 and are included in selling, general, and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income.

The Company expects several synergies in connection with the acquisitions described below, including expansion of product sales into new markets by leveraging its global sales network and relationships, broadening its product portfolio, and strengthening its position in each segment's markets.

The Company funded the acquisitions primarily through borrowings under its revolving credit facility.

Key Knife, Inc.

On January 1, 2024, the Company acquired Key Knife Inc.

and certain of its affiliates (collectively, Key Knife) pursuant to a securities purchase agreement dated December 22, 2023, for $ 153,386,000 , net of cash acquired.

Key Knife is a global supplier of engineered knife systems for custom chipping, planing, and flaking solutions for wood products industries, with revenue of approximately $ 65,000,000 for the twelve months ended September 30, 2023, and is part of the Company's Industrial Processing segment.

Goodwill from the Key Knife acquisition was $ 36,203,000 , of which $ 29,479,000 is expected to be deductible for tax purposes over 15 years.

In addition, separately identifiable intangible assets acquired were $ 91,620,000 , of which $ 77,400,000 is expected to be deductible for tax purposes over 15 years.

As part of the acquisition, the Company acquired a 45 % interest in two of Key Knife's subsidiaries, increasing its noncontrolling interest liability by $ 9,319,000 based on the income valuation approach.

Under a put and purchase option as outlined in the securities purchase agreement, the seller can demand the Company purchase, or the Company can demand that the seller sell to the Company, the remaining interest in these subsidiaries at any time after December 31, 2027.

The purchase price would be based on a total enterprise value as defined in the original purchase agreement.

See Other Acquisitions below for additional information.

KWS Manufacturing Company, Ltd.

On January 24, 2024, the Company acquired all of the outstanding equity securities of KWS Manufacturing Company, Ltd.

(KWS) for $ 81,247,000 , subject to a post-closing adjustment.

The Company paid $ 81,009,000 at closing and assumed a $ 238,000 bank overdraft.

KWS is a leading manufacturer of conveying equipment for the bulk material handling industry, with revenue of approximately $ 45,000,000 for the twelve months ended September 30, 2023, and is part of the Company's Material

Notes to Condensed Consolidated Financial Statements

Handling segment.

Goodwill from the KWS acquisition was $ 38,207,000 and separately identifiable intangibles assets were $ 28,500,000 , both of which are expected to be fully deductible for tax purposes over 15 years.

Dynamic Sealing Technologies LLC

On May 31, 2024, the Company acquired all of the outstanding equity securities of Dynamic Sealing Technologies LLC and affiliates (collectively, DSTI) for $ 53,661,000 , net of cash acquired and subject to a post-closing adjustment.

DSTI is a leading manufacturer of engineered fluid sealing and transfer solutions for rotating applications, with revenue of approximately $ 25,000,000 for the twelve months ended March 31, 2024, and is part of the Company's Flow Control segment.

Goodwill from the DSTI acquisition was $ 15,580,000 , of which $ 15,251,000 is expected to be deductible for tax purposes over 15 years.

In addition, separately identifiable intangible assets acquired were $ 24,290,000 , all of which are expected to be fully deductible for tax purposes over 15 years.

Other Acquisitions

On May 2, 2024, the Company acquired a service business in Germany, which is included in the Company's Material Handling segment, for $ 3,352,000 , net of cash acquired and subject to a post-closing adjustment.

On May 6, 2024, the Company acquired the remaining outstanding shares of a Key Knife subsidiary in which the Company previously held a noncontrolling interest for $ 523,000 in cash.

On August 21, 2024, the Company acquired a technology company as part of its Material Handling segment.

The total purchase price was approximately $ 11,829,000 , which included cash paid at closing of $ 8,623,000 net of cash acquired, an estimated post-closing adjustment of $ 1,421,000 to be paid within 18 months of closing, and contingent consideration with a fair value of $ 1,785,000 .

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 $ 12,068,000 , calculated using the foreign currency spot rate at September 28, 2024.

The valuation of the contingent consideration is dependent on the following assumptions:

the probability of successful achievement of certain revenue targets, forecasted revenue, revenue volatility, and discount rate.

These assumptions were estimated based on a review of historical and projected results.

See Note 10 , Fair Value Measurements and Fair Value of Financial Instruments, for additional information related to the fair value of the contingent consideration assumed in the acquisition.

In August 2024, the Company acquired certain other assets for a total of $ 1,755,000 in cash.

Notes to Condensed Consolidated Financial Statements

Purchase Price Allocation

The following table summarizes the aggregate purchase price and estimated fair values of the net assets and noncontrolling interests acquired related to the 2024 acquisitions:

(In thousands) Total

Cash and Cash Equivalents $ 11,509

Accounts Receivable 12,143

Inventories 27,461

Other Current Assets 3,472

Property, Plant, and Equipment 37,061

Other Assets 14,249

Definite-Lived Intangible Assets

Customer relationships 114,995

Product technology 24,959

Tradenames 9,540

Goodwill 100,231

Total assets acquired 360,021

Accounts Payable 3,316

Customer Deposits

Other Current Liabilities 9,895

Long-Term Deferred Income Taxes 5,455

Other Long-Term Liabilities

Total liabilities assumed 35,575

Noncontrolling interests acquired

Net assets and noncontrolling interests acquired

Purchase Price:

Fair Value of Contingent Consideration ( Note 10)

Estimated Remaining Post-closing Adjustments, Net

The final purchase accounting and purchase price allocations remain subject to change as the Company continues to refine its preliminary valuation of certain acquired assets and liabilities assumed, which may result in adjustments to the assets and liabilities, including goodwill.

The Company expects purchase price allocation adjustments will relate to the valuation of acquired intangibles, inventory, and deferred income taxes primarily associated with its acquisitions made in the second and third quarters of 2024.

Measurement period adjustments were not material to the Company's financial position or results of operations in the third quarter and first nine months of 2024.

The weighted-average amortization period for the definite-lived intangible assets related to the 2024 acquisitions is 17 years, including weighted-average amortization periods of 18 years for customer relationships, 12 years for product technology, and 20 years for tradenames.

Revenue and operating income for the three- and nine-month periods ended September 28, 2024 associated with the 2024 acquisitions from their respective acquisition dates, are as follows:

(In thousands) Three Months Ended September 28, 2024

Nine Months Ended September 28, 2024

Revenue $ 30,477 $ 82,075

Operating Income (a)

$ 1,651 $ 4,258

(a) Includes amortization expense associated with acquired profit in inventory and backlog of $ 1,892,000 in the three months ended September 28, 2024 and $ 6,246,000 in the nine months ended September 28, 2024.

Notes to Condensed Consolidated Financial Statements

Unaudited Supplemental Pro Forma Information

Had the Key Knife, KWS, and DSTI acquisitions been completed as of the beginning of 2023, the Company’s pro forma results of operations for the three- and nine-month periods ended September 28, 2024 and September 30, 2023 would have been as follows:

Three Months Ended Nine Months Ended

(In thousands, except per share amounts) September 28,

September 30,

September 28,

September 30,

Revenue $ 271,614 $ 278,202 $ 806,946 $ 821,052

Net Income Attributable to Kadant $ 33,497 $ 28,973 $ 92,264 $ 80,131

Earnings per Share Attributable to Kadant

Basic $ 2.85 $ 2.48 $ 7.86 $ 6.85

Diluted $ 2.84 $ 2.47 $ 7.84 $ 6.84

The historical consolidated pro forma financial information of the Company, Key Knife, KWS, and DSTI above has been adjusted to give effect to pro forma events that are (i) directly attributable to the acquisitions and related financing arrangements, (ii) expected to have a continuing impact on the Company, and (iii) factually supportable.

Pro forma results include the following non-recurring pro forma adjustments:

• Pre-tax charge to cost of revenue of $ 1,181,000 in the three months ended September 30, 2023 and $ 4,745,000 in the nine months ended September 30, 2023 and reversal of $ 1,181,000 in the three months ended September 28, 2024 and $ 4,041,000 in the nine months ended September 28, 2024 for the sale of inventory revalued at the date of acquisition.

• Pre-tax charge to SG&A expenses of $ 412,000 in the three months ended September 30, 2023 and $ 2,535,000 in the nine months ended September 30, 2023 and reversal of $ 680,000 in the three months ended September 28, 2024 and $ 1,855,000 in the nine months ended September 28, 2024 for intangible asset amortization related to acquired backlog.

• Pre-tax charge to SG&A expenses of $ 2,533,000 in the nine months ended September 30, 2023 and reversal of $ 469,000 in the three months ended September 28, 2024 and $ 2,533,000 in the nine months ended September 28, 2024 for acquisition costs.

• Estimated tax effects related to the pro forma adjustments.

These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that would have resulted had the acquisitions occurred as of the beginning of 2023, or that may result in the future.

The Company's pro forma results of operations exclude its other acquisitions in 2024 as the inclusion of its results would not have been materially different from the pro forma results presented above.

Relocation Costs

The Company incurred costs of $ 535,000 in the third quarter of 2023 and $ 609,000 in the nine months ended September 30, 2023 within its Industrial Processing segment related to the write-down of certain fixed assets that were not moved to a new manufacturing facility in China and facility moving costs.

Restructuring and Impairment Costs

The Company initiated a restructuring plan within its Flow Control segment in the third quarter of 2023 to consolidate a small manufacturing operation into a larger facility in Germany.

As part of this restructuring plan, the Company incurred restructuring and impairment costs totaling $ 434,000 in the third quarter and nine months ended September 30, 2023, including severance costs of $ 369,000 for the termination of 10 employees, asset write-downs of $ 36,000 , and facility and other closure costs of $ 29,000 .

The Company also incurred restructuring costs within its Flow Control segment of $ 366,000 in the fourth quarter of 2023 related to the termination of a contract at one of its operations in Germany.

Notes to Condensed Consolidated Financial Statements

A summary of the changes in accrued restructuring costs included in other current liabilities in the accompanying condensed consolidated balance sheet is as follows:

(In thousands) Severance Costs Contract Termination Costs Total

2023 Restructuring Plan

Balance at December 30, 2023

$ 201 $ 313 $ 514

Usage ( 195 ) ( 303 ) ( 498 )

Currency translation ( 6 ) ( 10 ) ( 16 )

Balance at September 28, 2024

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.

Earnings per Share

Basic and diluted earnings per share (EPS) were calculated as follows:

Three Months Ended Nine Months Ended

(In thousands, except per share amounts) September 28,

2024 September 30,

2023 September 28,

2024 September 30,

Three Months Ended

(In thousands, except per share amounts) March 29,

2025 March 30,

Net Income Attributable to Kadant $ 24,063 $ 24,689

4 unchanged sentences

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 5,000 shares in the third quarter of 2024, 5,000 shares in the third quarter of 2023, 21,000 in the first nine months of 2024 and 23,000 in the first nine months of 2023 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.

Provision for Income Taxes

The provision for income taxes was $ 31,810,000 in the first nine months of 2024 and $ 31,761,000 in the first nine months of 2023.

The effective tax rate of 26 % in the first nine months of 2024 was higher than the Company’s statutory rate of 21% primarily due to the distribution of the Company’s worldwide earnings, nondeductible expenses, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries.

These items were offset in part by foreign tax credits.

The effective tax rate of 26 % in the first nine months of 2023 was higher than the Company's statutory rate of 21% primarily due to the distribution of the Company's worldwide earnings, state taxes, and nondeductible expenses.

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.

Notes to Condensed Consolidated Financial Statements

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.

Long-Term Obligations

Long-term obligations are as follows:

September 28,

2025 December 28,

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Loans under the Credit Agreement are guaranteed by certain domestic subsidiaries of the Company.

During the first nine months of 2024, the Company borrowed an aggregate of $ 305,211,000 under the Credit Agreement, which was primarily used to fund the Company's 2024 acquisitions.

See Note 2 , Acquisitions, for further details.

As of September 28, 2024, the outstanding balance under the Credit Agreement was $ 314,467,000 , which included $ 76,467,000 of euro-denominated borrowings.

The Company had $ 85,321,000 of borrowing capacity available as of September 28, 2024, 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 5.82 % as of September 28, 2024 and 5.24 % as of year-end 2023.

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.

Notes to Condensed Consolidated Financial Statements

Senior Promissory Notes

In 2018, the Company entered into an uncommitted, unsecured Multi-Currency Note Purchase and Private Shelf Agreement (Note Purchase Agreement).

Simultaneous 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.

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.

Notes to Condensed Consolidated Financial Statements

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.

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Debt Compliance

As of September 28, 2024, the Company was in compliance with the covenants related to its debt obligations.

As of March 29, 2025, the Company was in compliance with the covenants related to its debt obligations.

Stock-Based Compensation

The Company recognized stock-based compensation expense of $ 2,627,000 in the third quarter of 2024, $ 2,357,000 in the third quarter of 2023, $ 7,926,000 in the first nine months of 2024 and $ 7,243,000 in the first nine months of 2023 within SG&A expenses in the accompanying condensed consolidated statement of income.

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.

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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 approximately $ 11,319,000 at September 28, 2024, which will be recognized over a weighted average period of 1.7 years.

Non-Employee Director RSUs

On May 15, 2024, the Company granted an aggregate of 3,030 RSUs to its non-employee directors with an aggregate grant date fair value of $ 849,000 , of which 50 % vested on June 1, 2024, 25 % vested on September 28, 2024 and the remaining 25 % will vest on the last day of the fourth fiscal quarter of 2024 subject to continued service as a director on the vesting date.

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

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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 Deferred Loss on Cash Flow Hedges

(In thousands) Foreign Currency Translation Adjustment Pension and Other Post-Retirement Benefit Liability Adjustments

Balance at December 28, 2024 $ ( 72,416 ) $ 48 $ ( 72,368 )

3 unchanged sentences

9,940 4 9,944

Balance at September 28, 2024 $ ( 44,774 ) $ ( 4 ) $ — $ ( 44,778 )

The Company uses forward currency-exchange contracts that generally have maturities of twelve months or less to hedge exposures resulting from fluctuations in currency exchange rates.

Such exposures result from assets and liabilities that are denominated in currencies other than the functional currencies of the Company's subsidiaries.

Forward currency-exchange contracts that hedge forecasted accounts receivable or accounts payable are designated as cash flow hedges and unrecognized gains and losses are recorded to AOCI, net of tax.

Deferred gains and losses are recognized in the statement of income in the period in which the underlying transaction occurs.

The fair values of forward currency-exchange contracts that are designated as fair value hedges and forward currency-exchange contracts that are not designated as hedges are recognized currently in earnings.

Gains and losses reported within SG&A expenses in the accompanying condensed consolidated statement of income associated with the Company's forward currency-exchange contracts that were not designated as hedges were not material for the three- and nine-month periods ended September 28, 2024 and September 30, 2023.

The following table summarizes the fair value of derivative instruments in the accompanying condensed consolidated balance sheet:

September 28, 2024 December 30, 2023

(In thousands) Balance Sheet Location Asset (Liability) (a) Notional Amount (b) Asset (Liability) (a) Notional Amount

Derivatives Designated as Hedging Instruments:

Derivatives in a Liability Position:

Forward currency-exchange contract Other Current Liabilities $ — $ — $ ( 51 ) $ 430

Derivatives Not Designated as Hedging Instruments:

Derivatives in an Asset Position:

Forward currency-exchange contracts Other Current Assets $ 28 $ 839 $ 8 $ 701

(a) See Note 10 , Fair Value Measurements and Fair Value of Financial Instruments, for the fair value measurements relating to these financial instruments.

(b) The 2024 notional amounts are indicative of the level of the Company's recurring derivative activity.

Notes to Condensed Consolidated Financial Statements

The following table summarizes the activity in AOCI associated with the Company's foreign currency exchange contract designated as a cash flow hedge as of and for the nine months ended September 28, 2024:

(In thousands) Total

Unrealized Loss, Net of Tax, at December 30, 2023 $ ( 38 )

Loss recognized in AOCI 38

Unrealized Loss, Net of Tax, at September 28, 2024

Balance at March 29, 2025 $ ( 62,476 ) $ 52 $ ( 62,424 )

Fair Value Measurements and Fair Value of Financial Instruments

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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 September 28, 2024

Fair Value as of March 29, 2025

(In thousands) Level 1 Level 2 Level 3 Total

Money market funds and time deposits $ 15,071 $ — $ — $ 15,071

Banker's acceptance drafts (a) $ — $ 6,707 $ — $ 6,707

Forward currency-exchange contracts $ — $ 28 $ — $ 28

Contingent consideration ( Note 2 ) (b)

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

Contingent consideration (d)

$ — $ — $ 1,699 $ 1,699

1 unchanged sentence

(In thousands) Level 1 Level 2 Level 3 Total

Money market funds and time deposits $ 14,795 $ — $ — $ 14,795

Banker's acceptance drafts (a) $ — $ 10,826 $ — $ 10,826

Forward currency-exchange contracts $ — $ 8 $ — $ 8

Forward currency-exchange contract $ — $ 51 $ — $ 51

(a) Included in accounts receivable in the accompanying condensed consolidated balance sheet.

(b) Included in other long-term liabilities in the accompanying condensed consolidated balance sheet.

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 nine months of 2024.

Money market funds and time deposits (a) $ 21,248 $ — $ — $ 21,248

Banker's acceptance drafts (b) $ — $ 5,299 $ — $ 5,299

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.

Notes to Condensed Consolidated Financial Statements

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.

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Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above.

The Company estimates the fair value of contingent consideration through 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.

Projected contingent

Notes to Condensed Consolidated Financial Statements

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:

(In thousands)

Balance Measured at Inception ( Note 2 )

Currency translation

Balance at September 28, 2024

The carrying value and fair value of debt obligations, excluding lease obligations, are as follows:

September 28, 2024 December 30, 2023

March 29, 2025 December 28, 2024

(In thousands) Carrying Value Fair Value Carrying Value Fair Value

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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.

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)

Balance at December 28, 2024

Currency translation

Balance at March 29, 2025

Business Segment Information

The Company has three reportable operating segments:

Flow Control, Industrial Processing, and Material Handling.

The Flow Control segment consists of the fluid-handling and doctoring, cleaning, & filtration product lines;

the Industrial Processing segment consists of the wood processing and stock-preparation product lines;

and the Material Handling segment consists of the conveying and vibratory, baling, and fiber-based product lines.

A description of each segment follows:

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

Notes to Condensed Consolidated Financial Statements

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 process recycled paper and timber for the packaging, tissue, wood products and alternative fuel industries, among others.

The Company's primary products include stock-preparation systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers and custom engineered knife 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.

2 unchanged sentences

In addition, the Company manufactures and sells biodegradable, absorbent granules used as carriers in agricultural applications and for oil and grease absorption.

Notes to Condensed Consolidated Financial Statements

The following tables present financial information for the Company's reportable operating segments and include the results from the 2024 acquisitions from the date of acquisition.

See Note 2 , Acquisitions, for further details.

Three Months Ended Nine Months Ended

September 28, September 30, September 28, September 30,

(In thousands) 2024 2023 2024 2023

Flow Control $ 97,521 $ 90,798 $ 276,493 $ 276,048

Industrial Processing

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

Material Handling 63,397 59,164 187,551 175,216

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

Income Before Provision for Income Taxes

Flow Control (a)

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

Industrial Processing (b)

Segment Operating Income Margin

24.6 % 18.8 % 13.2 % 19.7 %

Material Handling (c)

Corporate Expenses (b)

Interest Expense, Net

Other Expense, Net

Income Before Provision for Income Taxes

(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

Corporate (d)

Capital expenditures $ 1,509 $ 1,325 $ 999 $ 3 $ 3,836

Notes to Condensed Consolidated Financial Statements

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

Total operating income 48,987 43,544 134,315 126,736

Interest expense, net (e)

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

Other expense, net

General and administrative expenses

9,068 8,936 4,082 22,086

Research and development expenses

1,549 1,675 506 3,730

Capital Expenditures

Flow Control $ 1,894 $ 1,195 $ 5,729 $ 3,889

Industrial Processing

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

Material Handling

Segment Operating Income Margin

25.0 % 18.9 % 9.8 % 19.0 %

Corporate 8 4 21 28

Corporate Expenses (b)

Interest Expense, Net

Other Expense, Net

Income Before Provision for Income Taxes

(In thousands) Flow Control Industrial Processing Material Handling

Other Segment Disclosures

Depreciation expense (c)

$ 1,536 $ 2,327 $ 993 $ 12 $ 4,868

September 28,

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

3 unchanged sentences

415,336 411,178

Corporate 12,223 14,531

Corporate (e)

$ 1,435,439 $ 1,430,345

(a) Includes acquisition-related costs of $ 1,428,000 in the third quarter of 2024 and $ 2,482,000 in the nine months ended September 28, 2024.

Acquisition-related expenses include acquisition costs and amortization expense associated with acquired profit in inventory and backlog.

Includes restructuring and impairment costs of $ 434,000 in both the third quarter and the nine months ended September 30, 2023.

(b) Includes acquisition-related costs of $ 631,000 in the third quarter of 2024 and $ 2,904,000 in the nine months ended September 28, 2024.

Includes relocation costs of $ 535,000 in the third quarter of 2023 and $ 609,000 in the nine months ended September 30, 2023.

(c) Includes acquisition-related costs of $ 302,000 in the third quarter of 2024 and $ 3,393,000 in the nine months ended September 28, 2024.

(d) Represents general and administrative expenses.

(e) The Company does not allocate interest expense, net to its segments.

(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.

Notes to Condensed Consolidated Financial Statements

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Banker's acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity dates.

The Company had $ 10,476,000 at September 28, 2024 and $ 9,090,000 at December 30, 2023 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached 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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements