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• Revenue: Declined 4% compared to the same period last year.

• Aftermarket Parts Revenue: Made up 75% of Q1 revenue, up 5% to a record $179 million.

• Gross Margin: 46.1%, up 150 basis points from 44.6% in Q1 '24.

• Adjusted EBITDA: $47.9 million, down 8% from $52.2 million in Q1 '24.

• Free Cash Flow: Increased 15% to $19 million compared to $16.6 million in Q1 '24.

• SG&A Expenses: Increased to 29.8% of revenue from 28.2% in Q1 '24.

• GAAP EPS: Decreased 3% to $2.04.

• Adjusted EPS: Decreased 12% to $2.10.

• Flow Control Segment Revenue: Increased 7% to $92 million.

• Industrial Processing Segment Revenue: Declined 15% compared to Q1 '24.

• Material Handling Segment Revenue: $57 million, up slightly compared to the prior year period.

• Net Debt: Decreased $10 million to $183 million at the end of Q1 '25.

• Leverage Ratio: Decreased to 0.95 from 0.99 at the end of '24.

• Tariff Impact Estimate: Incremental material costs of approximately $5 million to $6 million or $0.32 to $0.39 per share.

• Revised Full Year 2025 Revenue Guidance: $1.02 billion to $1.04 billion.

• Revised Full Year 2025 Adjusted EPS Guidance: $9.05 to $9.25.

• Warning! GuruFocus has detected 5 Warning Sign with TKR.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kadant Inc (NYSE:KAI) reported strong demand for aftermarket parts, which represented 75% of Q1 revenue and was up 5% to a record $179 million.

• The flow control segment experienced solid demand, with bookings up 6% and revenue increasing by 7% compared to Q1 of last year.

• Gross margin improved to 46.1%, the highest since 2017, driven by a higher percentage of aftermarket parts.

• Free cash flow increased by 15% to $19 million in Q1 2025 compared to the same period last year.

• Kadant Inc (NYSE:KAI) maintains a healthy balance sheet with a leverage ratio of 0.95 and significant borrowing capacity available under its credit facility.

Negative Points

• Revenue in Q1 2025 declined by 4% compared to the same period last year due to weaker capital shipments in the industrial processing segment.

• Adjusted EBITDA decreased by 8% to $47.9 million, with a decline in the adjusted EBITDA margin by 100 basis points compared to the previous year.

• The industrial processing segment saw a 15% decline in revenue due to a significant drop in capital shipments.

• The company revised its full-year 2025 guidance downward, expecting lower revenue and adjusted EPS due to tariff impacts and delays in capital orders.

• Tariffs have introduced significant uncertainty, impacting customer decision-making and delaying capital equipment orders.