Kadant Q2 Earnings Call Highlights

Record second-quarter results: Revenue rose 23% year over year to $312.9 million, while adjusted EBITDA increased 30% to $68.1 million and adjusted EPS climbed 26% to $3.42. Results benefited from acquisitions, 8% organic growth and record aftermarket parts revenue of $214.2 million. Aftermarket demand is offsetting softer capital-equipment activity: Customers continue to delay or extend approval of large projects amid geopolitical and macroeconomic uncertainty, but management believes most projects are postponed rather than canceled. Bookings rose 16% to $312 million, with equipment backlog at $182 million and aftermarket revenue remaining near record levels.

Full-year guidance was raised: Kadant now expects 2026 revenue of $1.19 billion to $1.21 billion and adjusted EPS of $12.43 to $12.68. Management remains cautious about project timing but anticipates stronger demand in the second half and improving capital-spending conditions into 2027.

Kadant NYSE: KAI reported record second-quarter revenue, adjusted earnings and EBITDA for 2026, supported by acquisitions, organic growth and continued demand for aftermarket parts and services even as customers delayed some large capital-equipment commitments. Revenue rose 23% from a year earlier to a record $312.9 million, including 8% organic growth. Organic capital revenue increased 23%, while record aftermarket parts revenue totaled $214.2 million. Bookings increased 16% to $312 million, according to President and Chief Executive Officer Jeff Powell.

Adjusted EBITDA increased 30% to a record $68.1 million, or 21.8% of revenue, compared with $52.4 million, or 20.5% of revenue, in the prior-year period. GAAP diluted earnings per share increased 24% to $2.75, while adjusted diluted EPS rose 26% to a record $3.42. The adjusted result exceeded the high end of the company’s prior guidance by $0.44, which CFO Michael McKenney attributed largely to lower operating expenses and stronger-than-expected acquisition performance.

Powell said global capital-equipment markets remained soft amid geopolitical uncertainty, longer customer approval cycles and delayed project releases. However, he said quote activity and commercial engagement remained healthy, and the company believes deferred projects have largely been postponed rather than canceled.

“Our large installed base provides reoccurring profitable revenue through maintenance upgrades, aftermarket parts, and growing service demand,” Powell said. He added that customers are seeking to maximize productivity and reduce input costs.

During the question-and-answer session, Powell said the company’s aftermarket activity has remained at record or near-record levels even though its customers are not operating at record rates. He said this suggests equipment across the installed base has aged and requires more maintenance to remain operational.

Kadant reported equipment backlog of $182 million at quarter-end. McKenney said that as large capital orders are received, they are likely to convert into revenue during 2027. The company expects quarterly bookings to remain around the $300 million level during the second half, he said.

Flow Control: Bookings increased 11% year over year, aided by strong aftermarket demand and stronger-than-expected North American capital-project bookings. Revenue increased 5% to $100 million. Aftermarket revenue reached a record $76 million, representing 76% of segment revenue, while adjusted EBITDA margin was 27.7%. Industrial Processing: Bookings rose 29% to $136 million, with recent acquisitions contributing to growth. Revenue reached a record $144 million, including 13% organic growt...