Kadant’s first quarter was marked by mixed signals, as steady aftermarket parts demand offset weaker capital equipment sales and a challenging macroeconomic backdrop. Management cited uncertainty from new tariffs and economic headwinds in Europe and China as significant factors weighing on capital project timing, with CEO Jeff Powell noting, “the rapidly evolving tariff situation has delayed capital equipment orders as our customers assess potential impact on their businesses.” Despite these pressures, strong aftermarket bookings and robust execution in the Flow Control segment helped maintain margins and free cash flow. Management’s tone was notably cautious, highlighting the unpredictable trade environment and its impact on customer decision-making.
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Kadant (KAI) Q1 CY2025 Highlights:
- Revenue: $239.2 million vs analyst estimates of $238.8 million (3.9% year-on-year decline, in line)
- Adjusted EPS: $2.10 vs analyst estimates of $1.97 (6.9% beat)
- Adjusted EBITDA: $47.92 million vs analyst estimates of $48.63 million (20% margin, 1.5% miss)
- The company dropped its revenue guidance for the full year to $1.03 billion at the midpoint from $1.05 billion, a 2.1% decrease
- Management lowered its full-year Adjusted EPS guidance to $9.15 at the midpoint, a 7.3% decrease
- Operating Margin: 14.9%, in line with the same quarter last year
- Market Capitalization: $3.64 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Kadant’s Q1 Earnings Call
- Ross Sparenblek (William Blair) asked about the risk of further capital order deferrals. CEO Jeff Powell acknowledged customers are delaying—not canceling—projects, with timing highly sensitive to tariff clarity and economic signals.
- Gary Prestopino (Barrington) questioned whether delayed projects could ultimately be canceled due to tariffs. Powell explained cancellations are rare and noted Kadant’s global footprint allows it to shift focus as trade flows evolve.
- Kurt Yinger (D.A. Davidson) inquired about the level of capital bookings needed for a second-half rebound. CFO Michael McKenney said a 15–20% increase in capital order flow is necessary to meet current expectations, though delays could push revenue into next year.
- Walt Liptak (Seaport Research) asked for clarification on the estimated tariff cost impact and the pace of cost mitigation. McKenney responded that $5–6 million in unmitigated tariff costs are anticipated, with ongoing efforts to neutralize the impact by year-end.
- Kurt Yinger (D.A. Davidson) followed up on the mix of parts versus capital sales and whether strong aftermarket demand would persist. McKenney indicated aftermarket revenue should remain elevated, but acknowledged some customers may have accelerated purchases in anticipation of higher costs.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of capital equipment order recovery as customers gain clarity on tariffs, (2) the company’s success in mitigating input cost pressures through supply chain and pricing actions, and (3) the sustainability of elevated aftermarket parts demand. Developments in global trade policy and the timing of customer investment decisions will also be critical markers for Kadant’s execution.
Kadant currently trades at $308.73, down from $315.03 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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