Kadant Inc. Reports 7% Revenue Decline in Q2 2025, Announces Strategic Acquisitions

Kadant Inc. reported its financial results for the second quarter and first half of 2025, revealing a consolidated revenue of $255.3 million for the quarter, a decrease of 7% compared to $274.8 million in the same period last year. For the first six months, revenue totaled $494.5 million, down 6% from $523.7 million in 2024. The decline in revenue was primarily attributed to a significant drop in capital equipment orders, which fell by 28% year-over-year in the second quarter, reflecting ongoing economic uncertainty and delayed customer decision-making.

The company's net income for the second quarter was $26.6 million, down from $31.6 million in the prior year, while net income for the first half was $51.1 million, compared to $56.6 million in 2024. The decrease in profitability was driven by a $9 million reduction in operating income, partially offset by lower interest expenses and tax provisions. Earnings per share for the second quarter were $2.22, down from $2.66 a year earlier, and for the first half, EPS was $4.27, compared to $4.77 in 2024.

Kadant's operational metrics showed a mixed performance across its segments. The Flow Control segment saw a 4% increase in revenue, driven by strong demand for parts and consumables, while the Industrial Processing segment experienced a 16% decline, primarily due to reduced capital equipment demand. The Material Handling segment's revenue decreased by 6%, impacted by market uncertainties related to tariffs. The company reported a consolidated gross profit margin of 45.9%, an increase from 44.4% in the previous year, attributed to a higher proportion of parts and consumables revenue.

Strategically, Kadant announced the acquisition of Babbini S.p.A and G.P.S. Engineering S.r.l., two Italian companies specializing in industrial dewatering and engineered power transmission solutions, for approximately $18.7 million. This acquisition is expected to enhance Kadant's product offerings and operational efficiencies within its Industrial Processing segment. The company also reported a significant increase in its backlog, which rose to $299.1 million, a 16% increase from the end of 2024, indicating potential future revenue growth.

Looking ahead, Kadant anticipates stronger bookings in 2025 compared to 2024, particularly in the Industrial Processing segment, although the timing of capital orders remains uncertain due to ongoing tariff negotiations and economic conditions. The company plans to continue focusing on its core operations while exploring further acquisition opportunities to drive long-term growth.