What changed in this filing

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Item 1. Financial Statements

2025-08-06 compared with 2025-05-07 · 197 added, 93 removed, 538 unchanged (35% of the section changed)

27 unchanged sentences

Accrued warranty costs

10,116 10,664

Customer deposits 47,646 35,887

24 unchanged sentences

Condensed Consolidated Statement of Income

Three Months Ended

2025 March 30,

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

(In thousands, except per share amounts)

12 unchanged sentences

Provision for Income Taxes (Note 3)

9,822 11,992 17,650 19,846

Net Income 26,639 31,574 51,076 56,559

10 unchanged sentences

Condensed Consolidated Statement of Comprehensive Income

Three Months Ended

2025 March 30,

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

(In thousands)

11 unchanged sentences

Condensed Consolidated Statement of Cash Flows

Three Months Ended

2025 March 30,

Six Months Ended

2025 June 29,

(In thousands)

22 unchanged sentences

Proceeds from sale of property, plant, and equipment 166 1,302

Other investing activities 698 —

Net cash used in investing activities ( 6,940 ) ( 301,518 )

6 unchanged sentences

Proceeds from issuance of Company common stock

Dividend paid to noncontrolling interest

Dividends paid to noncontrolling interests

( 825 ) ( 1,346 )

Acquisition of subsidiary shares from noncontrolling interest

Net cash (used in) provided by financing activities

1 unchanged sentence

Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash 6,341 ( 3,491 )

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

Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash

1,242 ( 31,275 )

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 March 29, 2025

Three Months Ended June 28, 2025

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

5 unchanged sentences

Shares Amount Shares Amount

Balance at March 29, 2025 14,624,159 $ 146 $ 128,272 $ 879,752 2,848,300 $ ( 69,795 ) $ ( 62,424 ) $ 10,619 $ 886,570

Net income — — — 26,159 — — — 480 26,639

Dividend declared – Common Stock, $ 0.34 per share

— — — ( 4,004 ) — — — — ( 4,004 )

Activity under stock plans — — 3,007 — ( 1,454 ) 36 — — 3,043

Other comprehensive items — — — — — — 24,871 174 25,045

Balance at June 28, 2025 14,624,159 $ 146 $ 131,279 $ 901,907 2,846,846 $ ( 69,759 ) $ ( 37,553 ) $ 11,273 $ 937,293

Six Months Ended June 28, 2025

(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 28, 2024 14,624,159 $ 146 $ 130,180 $ 859,693 2,878,080 $ ( 70,524 ) $ ( 72,368 ) $ 11,001 $ 858,128

Net income — — — 50,222 — — — 854 51,076

Dividends declared – Common Stock, $ 0.68 per share

— — — ( 8,008 ) — — — — ( 8,008 )

Activity under stock plans — — 1,099 — ( 31,234 ) 765 — — 1,864

Dividend paid to noncontrolling interest — — — — — — — ( 825 ) ( 825 )

Other comprehensive items — — — — — — 34,815 243 35,058

Balance at June 28, 2025 14,624,159 $ 146 $ 131,279 $ 901,907 2,846,846 $ ( 69,759 ) $ ( 37,553 ) $ 11,273 $ 937,293

Three Months Ended June 29, 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

Stockholders' Equity

Shares Amount Shares Amount

Balance at March 30, 2024 14,624,159 $ 146 $ 122,253 $ 784,062 2,881,213 $ ( 70,601 ) $ ( 53,173 ) $ 12,081 $ 794,768

Net income — — — 31,291 — — — 283 31,574

2 unchanged sentences

Activity under stock plans — — 2,833 — ( 1,575 ) 38 — — 2,871

Acquisition of subsidiary shares — — ( 194 ) — — — — ( 329 ) ( 523 )

Dividend paid to noncontrolling interest — — — — — — — ( 1,346 ) ( 1,346 )

— — — — — — — ( 825 ) ( 825 )

Other comprehensive items — — — — — — ( 5,186 ) ( 14 ) ( 5,200 )

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

Balance at June 29, 2024 14,624,159 $ 146 $ 124,892 $ 811,595 2,879,638 $ ( 70,563 ) $ ( 58,359 ) $ 10,675 $ 818,386

Six Months Ended June 29, 2024

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

2 unchanged sentences

Stock Accumulated

Comprehensive Items Noncontrolling Interests

Comprehensive Items Noncontrolling Interests Total

Stockholders' Equity

1 unchanged sentence

Balance at December 30, 2023 14,624,159 $ 146 $ 124,940 $ 763,131 2,915,978 $ ( 71,453 ) $ ( 43,062 ) $ 2,538 $ 776,240

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

Net income — — — 55,980 — — — 579 56,559

Dividend declared – Common Stock, $ 0.32 per share

Dividends declared – Common Stock, $ 0.64 per share

— — — ( 7,516 ) — — — — ( 7,516 )

1 unchanged sentence

Noncontrolling interests acquired — — — — — — — 9,319 9,319

— — — — — — — 9,319 9,319

Acquisition of subsidiary shares — — ( 194 ) — — — — ( 329 ) ( 523 )

Dividend paid to noncontrolling interest — — — — — — — ( 1,346 ) ( 1,346 )

Other comprehensive items — — — — — — ( 15,297 ) ( 86 ) ( 15,383 )

Balance at March 30, 2024

Balance at June 29, 2024 14,624,159

$ 146 $ 124,892 $ 811,595 2,879,638 $ ( 70,563 ) $ ( 58,359 ) $ 10,675 $ 818,386

8 unchanged sentences

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.

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 June 28, 2025, its results of operations, comprehensive income, and stockholders' equity for the three- and six-month periods ended June 28, 2025 and June 29, 2024, and its cash flows for the six-month periods ended June 28, 2025 and June 29, 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 three months ended March 29, 2025.

There have been no material changes in the Company’s significant accounting policies during the six months ended June 28, 2025.

Supplemental Cash Flow Information

Three Months Ended

(In thousands) March 29,

2025 March 30,

Six Months Ended

(In thousands) June 28,

2025 June 29,

Cash Paid for Interest $ 6,993 $ 9,703

7 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Three Months Ended

(In thousands) March 29,

2025 March 30,

Six Months Ended

(In thousands) June 28,

2025 June 29,

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) March 29,

2025 March 30,

(In thousands) June 28,

2025 June 29,

2024 December 28,

16 unchanged sentences

Translation Net

March 29, 2025

June 28, 2025

Definite-Lived

35 unchanged sentences

Total 2025 activity 7,425 5,856 5,374 18,655

Balance at March 29, 2025

Balance at June 28, 2025

Gross balance 139,630 248,922 194,810 583,362

1 unchanged sentence

Net balance $ 139,630 $ 163,384 $ 194,810 $ 497,824

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

4 unchanged sentences

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

Three Months Ended

(In thousands) March 29,

2025 March 30,

Six Months Ended

(In thousands) June 28,

2025 June 29,

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

11 unchanged sentences

The following table presents revenue by revenue recognition method:

Three Months Ended

March 29, March 30,

Three Months Ended Six Months Ended

June 28, June 29, June 28, June 29,

(In thousands) 2025 2024 2025 2024

4 unchanged sentences

The following table presents the disaggregation of revenue by product type and geography:

Three Months Ended

March 29, March 30,

Three Months Ended Six Months Ended

June 28, June 29, June 28, June 29,

(In thousands) 2025 2024 2025 2024

22 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 $ 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 Company recognized revenue of $ 13,238,000 in th e second quarter of 2025 and $ 23,473,000 in the second quarter of 2024, and $ 30,797,000 in the first six months of 2025 and $ 57,139,000 in the first six months 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 51 % of which is expected to occur within the next twelve months and the remaining 49 % 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.

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 within its Industrial Processing segment for $ 25,159,000 and relocate to a new facility (China Transaction).

The Company received a 31 % down payment and the remaining amount 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.

Since December 2024, the government has paid $ 1,383,000 and the remaining outstanding receivable was $ 13,942,000 as of June 28, 2025, 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

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 $ 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.

These drafts, which totaled $ 6,287,000 at June 28, 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.

4 unchanged sentences

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.

At June 28, 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.

6 unchanged sentences

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.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the U.S.

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.

The Company is currently assessing the impact of OBBBA on its consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

11 unchanged sentences

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,

Three Months Ended Six Months Ended

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

2025 June 29,

2024 June 28,

2025 June 29,

Net Income Attributable to Kadant $ 26,159 $ 31,291 $ 50,222 $ 55,980

4 unchanged sentences

Diluted Earnings per Share $ 2.22 $ 2.66 $ 4.26 $ 4.76

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.

The effect of outstanding and unvested restricted stock units (RSUs) of the Company’s common stock totaling 27,000 shares in the second quarter of 2025, 25,000 shares in the second quarter of 2024, 26,000 in the first six months of 2025 and 29,000 in the first six months of 2024 were not included in the computation of diluted EPS for the respective periods as the

Notes to Condensed Consolidated Financial Statements

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 $ 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.

The provision for income taxes was $ 17,650,000 in the first six months of 2025 and $ 19,846,000 in the first six months of 2024.

The effective tax rate of 26 % in the first six months 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 effective tax rate of 26 % in the first six 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 and net excess income tax benefits from stock-based compensation arrangements.

Long-Term Obligations

20 unchanged sentences

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.

As of June 28, 2025, the outstanding balance under the Credit Agreement was $ 239,214,000 , which included $ 80,214,000 of euro-denominated borrowings.

The Company had $ 161,554,000 of borrowing capacity available as of June 28, 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.

Notes to Condensed Consolidated Financial Statements

The weighted average interest rate for the outstanding balance under the Credit Agreement was 4.59 % as of June 28, 2025 and 5.27 % as of December 28, 2024.

Senior Promissory Notes

6 unchanged sentences

Debt Compliance

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

As of June 28, 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 $ 2,757,000 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 recognized stock-based compensation expense of $ 3,063,000 in the second quarter of 2025, $ 2,884,000 in the second quarter of 2024, $ 5,820,000 in the first six months of 2025 and $ 5,299,000 in the first six months 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.

2 unchanged sentences

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.

Unrecognized compensation expense related to stock-based compensation totaled $ 13,950,000 at June 28, 2025, which will be recognized over a weighted average period of 1.8 years.

Non-Employee Director RSUs

On May 14, 2025, the Company granted an aggregate of 2,635 RSUs to its non-employee directors with an aggregate grant date fair value of $ 850,000 , of which 50 % vested on June 1, 2025, 25 % will vest on the last day of the third fiscal quarter of 2025 and the remaining 25 % will vest on the last day of the fourth fiscal quarter of 2025, subject to continued service as a director on the applicable vesting dates.

Performance-based RSUs

7 unchanged sentences

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.

Following the adjustment, the performance-based RSUs will be subject to additional time-based vesting, and will vest

Notes to Condensed Consolidated Financial Statements

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

1 unchanged sentence

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.

Notes to Condensed Consolidated Financial Statements

Accumulated Other Comprehensive Items

1 unchanged sentence

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

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

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

3 unchanged sentences

34,804 11 34,815

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

Balance at June 28, 2025 $ ( 37,612 ) $ 59 $ ( 37,553 )

Fair Value Measurements and Fair Value of Financial Instruments

5 unchanged sentences

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

Fair Value as of June 28, 2025

(In thousands) Level 1 Level 2 Level 3 Total

12 unchanged sentences

$ — $ — $ 1,678 $ 1,678

Notes to Condensed Consolidated Financial Statements

(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.

(c) Included in other current assets at June 28, 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.

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 six months 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.

2 unchanged sentences

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

$ 274,947 $ 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 maximum future value of the contingent consideration subject to payment is approximately $ 11,443,000 , calculated using the foreign currency spot rate at June 28, 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.

3 unchanged sentences

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:

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 six months of 2025:

(In thousands)

1 unchanged sentence

Currency translation

Balance at March 29, 2025

Balance at June 28, 2025

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

June 28, 2025 December 28, 2024

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

Debt Obligations:

Revolving credit facility $ 239,214 $ 239,214 $ 278,384 $ 278,384

Senior promissory notes 6,660 6,611 6,660 6,511

Other 1,345 1,345 1,460 1,460

$ 247,170 $ 286,504 $ 286,355

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 Company aggregated its operating segments into its reportable segments where they contained similar

Notes to Condensed Consolidated Financial Statements

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 Company has determined that its CEO is its Chief Operating Decision Maker (CODM) who is 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.

10 unchanged sentences

The following tables present financial information for the Company's reportable segments:

Three Months Ended March 29, 2025

Three Months Ended June 28, 2025

(In thousands) Flow Control Industrial Processing Material Handling Total

25 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 30, 2024

Three Months Ended June 29, 2024

(In thousands) Flow Control Industrial Processing Material Handling Total

6 unchanged sentences

Selling expenses 13,715 10,394 6,237 30,346

General and administrative expenses 8,606 8,610 4,157 21,373

Research and development expenses

1,420 1,413 649 3,482

Intangible asset amortization expense 1,072 2,728 3,184 6,984

Other segment items (a) 578 134 180 892

Segment Operating Income

$ 23,530 $ 24,092 $ 11,188 $ 58,810

Segment Operating Income Margin

25.5 % 21.0 % 16.5 % 21.4 %

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)

$ 1,540 $ 2,367 $ 1,088 $ 12 $ 5,007

Capital expenditures $ 1,961 $ 1,851 $ 1,157 $ 5 $ 4,974

Six Months Ended June 28, 2025

(In thousands) Flow Control Industrial Processing Material Handling Total

Revenue $ 188,388 $ 185,461 $ 120,628 $ 494,477

Cost of revenue 87,457 105,142 74,506 267,105

Gross Profit 100,931 80,319 46,122 227,372

Gross Profit Margin 53.6 % 43.3 % 38.2 % 46.0 %

Operating Expenses:

Selling expenses 29,257 21,028 13,293 63,578

General and administrative expenses 18,836 17,559 8,879 45,274

Research and development expenses 2,681 3,430 1,136 7,247

Intangible asset amortization expense 2,903 4,814 5,517 13,234

Other segment items (a) 59 1,170 ( 177 ) 1,052

Segment Operating Income $ 47,195 $ 32,318 $ 17,474 $ 96,987

Segment Operating Income Margin 25.1 % 17.4 % 14.5 % 19.6 %

Corporate Expenses (b) ( 22,024 )

Interest Expense, Net ( 6,204 )

Other Expense, Net ( 33 )

Income Before Provision for Income Taxes $ 68,726

(In thousands) Flow Control Industrial Processing Material Handling

Other Segment Disclosures

Depreciation expense (c)

$ 3,653 $ 4,815 $ 2,357 $ 23 $ 10,848

Capital expenditures $ 2,889 $ 2,920 $ 1,992 $ 3 $ 7,804

Notes to Condensed Consolidated Financial Statements

Six Months Ended June 29, 2024

(In thousands) Flow Control Industrial Processing Material Handling Total

Revenue $ 178,972 $ 220,614 $ 124,154 $ 523,740

Cost of revenue

83,368 129,051 78,472 290,891

Gross Profit 95,604 91,563 45,682 232,849

Gross Profit Margin 53.4 % 41.5 % 36.8 % 44.5 %

Operating Expenses:

Selling expenses

27,259 20,766 12,452 60,477

General and administrative expenses

17,674 17,546 8,239 43,459

Research and development expenses

15 unchanged sentences

Capital expenditures $ 3,835 $ 4,734 $ 2,663 $ 13 $ 11,245

March 29, 2025

2025 December 28,

8 unchanged sentences

16,924 17,814

(a) Includes acquisition costs, net indemnification asset reversals associated with uncertain tax positions, and certain gains and losses.

$ 1,484,514 $ 1,430,345

(a) Includes acquisition costs, indemnification asset provisions and reversals associated with uncertain tax positions, and certain gains and losses.

(b) Primarily consists of general and administrative expenses.

9 unchanged sentences

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.

The Company had $ 6,777,000 at June 28, 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.

3 unchanged sentences

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.

Subsequent Events

On July 9, 2025, the Company acquired all the outstanding equity securities of Babbini S.p.A and G.P.S.

Engineering S.r.l (collectively, Babbini), two Italy-based companies specializing in industrial dewatering and engineered power transmission solutions, for approximately $ 18,700,000 , net of cash acquired, and subject to certain adjustments.

The Company expects several synergies in connection with this acquisition, including expansion of product sales by leveraging Kadant's global sales network and sourcing and manufacturing efficiencies.

This acquisition is also expected to enhance the Company's upcycling solutions for its fiber processing product lines.

Babbini is part of the Company's Industrial Processing segment.

Borrowings Under the Credit Agreement

The Company borrowed approximately $ 21,100,000 of euro-denominated funds under its revolving credit facility to finance the acquisition of Babbini.

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