What changed in this filing

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Item 1. Financial Statements

2025-11-05 compared with 2025-08-06 · 172 added, 121 removed, 614 unchanged (32% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheet

September 27,

2025 December 28,

24 unchanged sentences

Accrued warranty costs

10,389 10,664

Customer deposits 49,124 35,887

24 unchanged sentences

Condensed Consolidated Statement of Income

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

Three Months Ended Nine Months Ended

September 27,

2025 September 28,

2024 September 27,

2025 September 28,

(In thousands, except per share amounts)

25 unchanged sentences

Condensed Consolidated Statement of Comprehensive Income

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

Three Months Ended Nine Months Ended

September 27,

2025 September 28,

2024 September 27,

2025 September 28,

(In thousands)

11 unchanged sentences

Condensed Consolidated Statement of Cash Flows

Six Months Ended

2025 June 29,

Nine Months Ended

September 27,

2025 September 28,

(In thousands)

6 unchanged sentences

Stock-based compensation expense 8,516 7,926

(Recovery of) provision for bad debts

Provision for bad debts

Non-cash impairment costs

Other items, net 3,722 2,834

9 unchanged sentences

Investing Activities

Acquisitions, net of cash acquired

Acquisitions, net of cash acquired ( Note 2 )

( 16,483 ) ( 302,024 )

13 unchanged sentences

Acquisition of subsidiary shares from noncontrolling interest

Payment of debt issuance costs ( Note 5 )

Net cash (used in) provided by financing activities

9 unchanged sentences

Condensed Consolidated Statement of Stockholders' Equity

Three Months Ended June 28, 2025

Three Months Ended September 27, 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

Balance at June 28, 2025

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

Net income — — — 27,722 — — — 393 28,115

3 unchanged sentences

Other comprehensive items — — — — — — ( 2,544 ) ( 6 ) ( 2,550 )

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

Balance at September 27, 2025 14,624,159 $ 146 $ 133,912 $ 925,624 2,846,024 $ ( 69,738 ) $ ( 40,097 ) $ 11,660 $ 961,507

Nine Months Ended September 27, 2025

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

12 unchanged sentences

Other comprehensive items — — — — — — 32,271 237 32,508

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

Balance at September 27, 2025 14,624,159 $ 146 $ 133,912 $ 925,624 2,846,024 $ ( 69,738 ) $ ( 40,097 ) $ 11,660 $ 961,507

Three Months Ended September 28, 2024

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

5 unchanged sentences

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

Balance at June 29, 2024

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

Net income — — — 31,586 — — — 312 31,898

2 unchanged sentences

Activity under stock plans — — 2,594 — ( 803 ) 20 — — 2,614

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

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

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

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

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

14 unchanged sentences

Other comprehensive items — — — — — — ( 1,716 ) ( 20 ) ( 1,736 )

Balance at June 29, 2024 14,624,159

Balance at September 28, 2024

$ 146 $ 127,486 $ 839,422 2,878,835 $ ( 70,543 ) $ ( 44,778 ) $ 11,053 $ 862,786

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 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.

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 27, 2025, its results of operations, comprehensive income, and stockholders' equity for the three- and nine-month periods ended September 27, 2025 and September 28, 2024, and its cash flows for the nine-month periods ended September 27, 2025 and September 28, 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 six months ended June 28, 2025.

There have been no material changes in the Company’s significant accounting policies during the nine months ended September 27, 2025.

Supplemental Cash Flow Information

Six Months Ended

(In thousands) June 28,

2025 June 29,

Nine Months Ended

(In thousands) September 27,

2025 September 28,

Cash Paid for Interest $ 9,824 $ 15,034

4 unchanged sentences

Fair value of liabilities assumed

Fair value of noncontrolling interest acquired

$ 14,124 $ 35,575

Fair value of noncontrolling interests acquired

Fair value of contingent consideration

Purchases of property, plant, and equipment in accounts payable $ 398 $ 590

Notes to Condensed Consolidated Financial Statements

Six Months Ended

(In thousands) June 28,

2025 June 29,

Nine Months Ended

(In thousands) September 27,

2025 September 28,

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) June 28,

2025 June 29,

(In thousands) September 27,

2025 September 28,

2024 December 28,

4 unchanged sentences

The components of inventories are as follows:

September 27,

2025 December 28,

10 unchanged sentences

Translation Net

June 28, 2025

September 27, 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.

During the nine months ended September 27, 2025, the Company recognized intangible assets of $ 5,278,000 associated with its July 2025 acquisition (see Note 2 , Acquisition) and incremental intangibles of $ 200,000 related to a measurement period adjustment for a prior period acquisition.

The Company also recognized an impairment charge of $ 287,000 in the third quarter of 2025 associated with previously acquired technology that will no longer be utilized, which is included in other costs in the accompanying condensed consolidated statement of income.

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

5 unchanged sentences

2025 Activity

Acquisition ( Note 2 )

Measurement period adjustments for 2024 acquisitions ( 173 ) — 321 148

1 unchanged sentence

Total 2025 activity 7,022 5,646 5,251 17,919

Balance at June 28, 2025

Balance at September 27, 2025

Gross balance 139,227 248,712 194,687 582,626

1 unchanged sentence

Net balance $ 139,227 $ 163,174 $ 194,687 $ 497,088

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 six months of 2025.

Warranty Obligations

1 unchanged sentence

The Company provides for the estimated cost of product warranties at the time of sale based on historical occurrence rates and repair costs, as well as knowledge of any specific warranty problems that indicate projected warranty costs may vary from historical patterns.

The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications.

Notes to Condensed Consolidated Financial Statements

The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications.

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

Six Months Ended

(In thousands) June 28,

2025 June 29,

Nine Months Ended

(In thousands) September 27,

2025 September 28,

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

11 unchanged sentences

The following table presents revenue by revenue recognition method:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 27, September 28, September 27, September 28,

(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 Six Months Ended

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

Three Months Ended Nine Months Ended

September 27, September 28, September 27, September 28,

(In thousands) 2025 2024 2025 2024

12 unchanged sentences

The following table presents contract balances from contracts with customers:

September 27,

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 $ 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 Company recognized revenue of $ 6,064,000 in th e third quarter of 2025 and $ 8,897,000 in the third quarter of 2024, and $ 36,861,000 in the first nine months of 2025 and $ 66,036,000 in the first nine 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 $ 34,055,000 as of June 28, 2025.

The Company will recognize revenue for these performance obligations as they are satisfied, approximately 78 % of which is expected to occur within the next twelve months and the remaining 22 % thereafter.

1 unchanged sentence

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 received a 31 % down payment, with the remaining balance due on the earlier of the sale of the property by the local government or two years from the effective date of the agreements.

To date, the government has paid $ 1,803,000 , and the remaining receivable was $ 13,592,000 as of September 27, 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.

3 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 $ 6,287,000 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.

These drafts, which totaled $ 8,861,000 at September 27, 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 27, 2025, the Company believes that it has appropriately accounted for any liability for unrecognized tax

Notes to Condensed Consolidated Financial Statements

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.

In December 2021, the Organisation for Economic Co-operation and Development (OECD) released model rules introducing a new 15% global minimum tax for large multinational enterprises with an annual global revenue exceeding 750,000,000 euros (Pillar Two Rules).

Since the release of the Pillar Two Rules, the OECD has issued four tranches of administrative guidance, as well as guidance on transitional safe harbor relief.

Since the release of the Pillar Two Rules, the OECD has issued five tranches of administrative guidance, as well as guidance on transitional safe harbor relief.

Various countries, including the member states of the European Union, have adopted the Pillar Two Rules into their domestic laws, with certain rules coming into effect beginning in fiscal 2024.

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

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

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions, including 100% bonus depreciation, domestic research cost expensing pursuant to Internal Revenue Code §174, and changes to the calculation of the interest expense limitation.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

There is no material impact of the OBBBA provisions to the Company's effective tax rate or consolidated financial statements for the quarter ended September 27, 2025.

The Company is still evaluating any potential impact to cash tax payments related to the provisions of the OBBBA.

The Company will continue to monitor the current and future impact of the OBBBA on its effective tax rate and consolidated financial statements as additional clarifications or interpretive guidance related to the OBBBA is released.

Recent Accounting Pronouncements Not Yet Adopted

Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2025-06 which improves the practicality of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods.

Under this ASU, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, it is probable that the project will be completed, and the software will be used to perform the function intended.

This ASU is effective for fiscal year 2028, with early adoption permitted and may be applied retrospectively.

The Company is currently evaluating the effect that the adoption of this ASU will have on its consolidated financial statements.

Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

In July 2025, the FASB issued ASU No.

2025-05, to provide for a practical expedient permitting an entity to assume that conditions at the balance sheet date remained unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets accounted for under ASC 606, Revenue from Contracts with Customers.

This ASU is effective for fiscal year 2026, with early adoption permitted.

The amendments in this ASU should be applied prospectively.

The Company is currently evaluating the effect that the adoption of this ASU will have on its consolidated financial statements.

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

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

In December 2023, the FASB issued ASU No.

2023-09, to improve income tax disclosure requirements, primarily through enhanced disclosures related to the income tax rate reconciliation and income taxes paid.

This ASU is effective for fiscal year-end 2025, with early adoption permitted and may be applied retrospectively.

The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.

This ASU is effective for fiscal year-end 2025 and may be applied retrospectively.

The Company is in the process of determining the financial disclosures required under this ASU and continues to evaluate the effect that the adoption of this ASU will have on its consolidated financial statements.

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosure (Topic 220).

2 unchanged sentences

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.

The Company is currently evaluating the effect that the adoption of this ASU will have on its consolidated financial statements.

Notes to Condensed Consolidated Financial Statements

The Company's acquisitions are 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 $ 2,253,000 in the third quarter of 2025 and $ 3,498,000 in the nine months ended September 27, 2025 and are included in selling, general and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income.

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 $ 16,483,000 , net of cash acquired.

The fair value of assets acquired totaled $ 35,470,000 , including cash of $ 4,863,000 , inventory of $ 13,825,000 , property, plant, and equipment of $ 5,355,000 , and intangible assets of $ 5,278,000 .

The fair value of liabilities assumed was $ 14,124,000 , including customer deposits of $ 3,857,000 and accounts payable of $ 2,954,000 .

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

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

See Note 11 , Subsequent Events, for details on the Company's acquisition that occurred on October 7, 2025.

Earnings per Share

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

Three Months Ended Six Months Ended

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

2025 June 29,

2024 June 28,

2025 June 29,

Three Months Ended Nine Months Ended

(In thousands, except per share amounts) September 27,

2025 September 28,

2024 September 27,

2025 September 28,

Net Income Attributable to Kadant $ 27,722 $ 31,586 $ 77,944 $ 87,566

4 unchanged sentences

Diluted Earnings per Share $ 2.35 $ 2.68 $ 6.61 $ 7.44

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.

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 2025, 5,000 shares in the third quarter of 2024, 19,000 in the first nine months of 2025 and 21,000 in the first nine months 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.

Provision for Income Taxes

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.

The provision for income taxes was $ 29,416,000 in the first nine months of 2025 and $ 31,810,000 in the first nine months of 2024.

The effective tax rate of 27 % in the first nine 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, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries.

These items were offset in part by a net tax benefit from the re-measurement of certain deferred income tax assets and liabilities due to the decrease to Germany's future statutory tax rate enacted in July 2025 and foreign tax credits.

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.

Notes to Condensed Consolidated Financial Statements

Long-Term Obligations

Long-term obligations are as follows:

September 27,

2025 December 28,

1 unchanged sentence

Revolving Credit Facility, due 2030

$ 248,075 $ 278,384

Senior Promissory Notes, due 2025 to 2028

7 unchanged sentences

Revolving Credit Facility

The Company's unsecured multi-currency revolving credit facility, originally entered into on March 1, 2017 (as amended and restated to date, the Credit Agreement) matures on November 30, 2027 and has a borrowing capacity of $ 400,000,000 , in addition to an uncommitted, unsecured incremental borrowing facility of $ 200,000,000 .

Interest on borrowings outstanding accrues and is payable in arrears calculated at one of the following rates selected by the Company:

(i) the Base Rate, as defined, plus an applicable margin of 0 % to 1.25 %, or (ii) Eurocurrency Rate, Term SOFR (plus a 10 basis point credit spread adjustment), Term CORRA, and RFR, as applicable and defined, plus an applicable margin of 1.0 % to 2.25 %.

On September 26, 2025, the Company entered into an eighth amendment and joinder (the Eighth Amendment) to its unsecured multi-currency revolving credit facility, originally dated as of March 1, 2017 (as amended and restated to date, the Credit Agreement).

The Eighth Amendment, among other things, increased the Company's aggregate borrowing capacity from $ 400,000,000 to $ 750,000,000 and extended the maturity date from November 30, 2027 to September 26, 2030.

In addition to the increased committed borrowing capacity, an uncommitted, unsecured incremental borrowing facility of $ 200,000,000 continues to be available under the Credit Agreement.

Interest on borrowings outstanding under the Credit Agreement accrues and is payable in arrears calculated at one of the following rates selected by the Company:

(i) the Base Rate, as defined, plus an applicable margin of 0.25 % to 1.25 %, or (ii) Eurocurrency Rate, Term SOFR, Term CORRA, AUD Rate, and RFR, as applicable and defined, plus an applicable margin of 1.25 % to 2.25 %.

The margin is determined based upon the ratio of the Company's total debt, net of unrestricted cash up to $ 50,000,000 , to earnings before interest, taxes, depreciation, and amortization as defined in the Credit Agreement.

Additionally, the Credit Agreement requires the payment of a commitment fee payable in arrears on the available borrowing capacity under the Credit Agreement, which ranges from 0.125 % to 0.350 %.

Additionally, the Credit Agreement requires the payment of a commitment fee payable in arrears on the available committed borrowing capacity under the Credit Agreement, which ranges from 0.150 % to 0.350 %.

Obligations under the Credit Agreement, which includes customary events of default under such financing arrangements, may be accelerated upon the occurrence of an event of default.

1 unchanged sentence

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

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.

During the third quarter of 2025, the Company borrowed approximately $ 21,000,000 of euro-denominated debt to finance the acquisition of Babbini.

As of September 27, 2025, the outstanding balance under the Credit Agreement was $ 248,075,000 , which included $ 101,075,000 of euro-denominated borrowings.

The Company had $ 501,968,000 of available committed borrowing capacity as of September 27, 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.

See Note 11, Subsequent Events, for the additional borrowings incurred under the Company's Credit Agreement in connection with its acquisition that occurred on October 7, 2025.

The weighted average interest rate for the outstanding balance under the Credit Agreement was 4.48 % as of September 27, 2025 and 5.27 % as of December 28, 2024.

During the third quarter of 2025, the Company incurred $ 2,549,000 of debt issuance costs related to the Eighth Amendment.

Unamortized debt issuance costs related to the Credit Agreement, included in other assets in the accompanying condensed consolidated balance sheet, were $ 3,199,000 at September 27, 2025 and $ 993,000 at December 28, 2024 and are being amortized to interest expense using the straight-line method.

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 June 28, 2025, the Company was in compliance with the covenants related to its debt obligations.

As of September 27, 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 $ 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 recognized stock-based compensation expense of $ 2,696,000 in the third quarter of 2025, $ 2,627,000 in the third quarter of 2024, $ 8,516,000 in the first nine months of 2025 and $ 7,926,000 in the first nine months of 2024 within 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 $ 13,950,000 at June 28, 2025, which will be recognized over a weighted average period of 1.8 years.

Unrecognized compensation expense related to stock-based compensation totaled $ 11,316,000 at September 27, 2025, which will be recognized over a weighted average period of 1.7 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.

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 % vested 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

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.

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

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32,258 13 32,271

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

Balance at September 27, 2025 $ ( 40,158 ) $ 61 $ ( 40,097 )

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 June 28, 2025

Fair Value as of September 27, 2025

(In thousands) Level 1 Level 2 Level 3 Total

1 unchanged sentence

Banker's acceptance drafts (b) $ — $ 8,861 $ — $ 8,861

Forward currency-exchange contracts (c) $ — $ 3 $ — $ 3

Contingent consideration (d)

Contingent consideration (c)

$ — $ — $ 1,766 $ 1,766

3 unchanged sentences

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

Forward currency-exchange contracts (c)

Forward currency-exchange contracts (d)

$ — $ 39 $ — $ 39

Contingent consideration (d)

Contingent consideration (c)

$ — $ — $ 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 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.

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.

(d) Included in other current liabilities at December 28, 2024 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 nine 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.

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.

In connection with the acquisition of a technology company in August 2024, the Company assumed contingent consideration with an estimated 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 $ 11,443,000 , calculated using the foreign currency spot rate at June 28, 2025.

The maximum future value of the contingent consideration subject to payment is approximately $ 11,445,000 , calculated using the foreign currency spot rate at September 27, 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 six months 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 nine months of 2025:

(In thousands)

1 unchanged sentence

Currency translation

Balance at June 28, 2025

Balance at September 27, 2025

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

June 28, 2025 December 28, 2024

September 27, 2025 December 28, 2024

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

8 unchanged sentences

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

Notes to Condensed Consolidated Financial Statements

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 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.

1 unchanged sentence

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.

The CODM utilizes segment gross profit margin and segment

Notes to Condensed Consolidated Financial Statements

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.

2 unchanged sentences

The Company's primary products include rotary sealing devices, steam systems, expansion joints, doctor systems, roll and fabric cleaning devices, and filtration and fiber recovery systems.

• Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber for use in the packaging, tissue, wood products and alternative fuel industries, among others.

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

• Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber, and optimize industrial steam boiler efficiency for use in the packaging, paper, tissue, wood products and food processing industries, among others.

The Company's primary products include fiber processing systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers, custom-engineered knife systems, industrial boiler cleaning technologies, and continuous dewatering equipment.

In addition, the Company provides industrial automation and digitization solutions to process industries.

3 unchanged sentences

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

Three Months Ended June 28, 2025

Three Months Ended September 27, 2025

(In thousands) Flow Control Industrial Processing Material Handling Total

25 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Three Months Ended June 29, 2024

Three Months Ended September 28, 2024

(In thousands) Flow Control Industrial Processing Material Handling Total

24 unchanged sentences

Capital expenditures $ 1,894 $ 1,209 $ 1,074 $ 8 $ 4,185

Six Months Ended June 28, 2025

Nine Months Ended September 27, 2025

(In thousands) Flow Control Industrial Processing Material Handling Total

15 unchanged sentences

Income Before Provision for Income Taxes $ 108,607

Notes to Condensed Consolidated Financial Statements

(In thousands) Flow Control Industrial Processing Material Handling

3 unchanged sentences

Capital expenditures $ 4,102 $ 3,703 $ 3,190 $ 3 $ 10,998

Notes to Condensed Consolidated Financial Statements

Six Months Ended June 29, 2024

Nine Months Ended September 28, 2024

(In thousands) Flow Control Industrial Processing Material Handling Total

26 unchanged sentences

Capital expenditures $ 5,729 $ 5,943 $ 3,737 $ 21 $ 15,430

2025 December 28,

September 27,

(In thousands)

8 unchanged sentences

$ 1,532,234 $ 1,430,345

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

(a) Primarily 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 $ 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.

The Company had $ 8,046,000 at September 27, 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.

4 unchanged sentences

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.

On October 7, 2025, the Company acquired Clyde Industries Holdings, Inc.

and its subsidiaries (Clyde Industries) pursuant to a securities purchase agreement for $ 175,000,000 in cash, subject to customary adjustments.

Clyde Industries is a manufacturer of highly engineered boiler efficiency and cleaning system technologies, with revenue of approximately $ 92,000,000 for its fiscal year ended February 28, 2025.

Clyde Industries is headquartered in Atlanta, Georgia, with operations in Brazil, China, Indonesia, Canada, Finland, Columbia and India and has approximately 400 employees worldwide.

Clyde Industries is part of the Company's Industrial Processing segment.

As a result of the acquisition, the Company expects to expand its product sales into new markets by leveraging Clyde Industries' existing presence.

The Company has not yet completed its preliminary assessment of the fair value of the assets acquired and liabilities assumed in this acquisition, including the valuation of intangible assets and goodwill, due to the proximity of the acquisition to the issuance of these condensed consolidated financial statements.

Accordingly and as permitted by ASC 80 5, Business Combinations , the Company is unable to provide further disclosures, including the allocation of the purchase price for this acquisition at this time.

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.

In October 2025, the Company borrowed $ 170,000,000 under its existing revolving credit facility, pursuant to the terms of the Credit Agreement, to fund the Clyde Industries acquisition.

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