Kadant 2025 Q1 Earnings Misses Targets as Net Income Declines 2%

Kadant Inc. (NYSE: KAI) reported its fiscal 2025 Q1 earnings on May 7th, 2025. The company's performance fell short of expectations, with revenue declining by 3.9% year-on-year to $239.21 million. Kadant's guidance for the full year also missed expectations, with revenue projections revised downwards. The company now anticipates fiscal 2025 revenue between $1.02 billion and $1.04 billion. The adjusted EPS guidance for the year has been lowered, reflecting the impact of anticipated additional tariff costs.

Revenue

Kadant's revenue for the first quarter of 2025 declined by 3.9% to $239.21 million, compared to $248.97 million in the same quarter of the previous year.

Earnings/Net Income

Kadant's EPS fell by 2.8% to $2.05 in Q1 2025 from $2.11 in Q1 2024, while net income decreased by 2.2% to $24.44 million from $24.98 million in the same period last year. The EPS performance indicates challenges in maintaining growth.

Price Action

The stock price of Kadant edged up 0.94% during the latest trading day, decreased by 1.47% over the most recent full trading week, and dropped 4.91% month-to-date.

Post-Earnings Price Action Review

The strategy of acquiring Kadant shares post a revenue increase quarter-over-quarter and holding for 30 days saw moderate returns, yet it underperformed the market. The strategy's compound annual growth rate was 3.53%, with a maximum drawdown of -14.40% and a Sharpe ratio of 0.36, indicating some degree of risk and limited returns. Compared to a benchmark return of 84.08% over the same period, the strategy significantly lagged behind, leaving much to be desired for investors aiming for stronger performance.

CEO Commentary

“Our first quarter results were in line with expectations across most financial metrics despite the increasing geopolitical and trade uncertainties,” said Jeffrey L. Powell, President and Chief Executive Officer of Kadant Inc. “We had record demand for our aftermarket parts, and our operations teams around the globe once again executed extremely well in a challenging environment. This solid execution contributed to strong margin performance and healthy free cash flow in the first quarter.”

Guidance

Kadant has revised its 2025 revenue expectations to a range of $1.020 billion to $1.040 billion, down from the previous range of $1.040 billion to $1.065 billion. The company projects GAAP EPS of $8.97 to $9.17, reduced from prior guidance of $9.63 to $9.98. Adjusted EPS is now forecasted between $9.05 and $9.25, reflecting anticipated tariff costs of $5 to $6 million impacting earnings by $0.32 to $0.39 per share.

Additional News

Kadant Inc. (NYSE: KAI) recently completed the acquisition of Dynamic Sealing Technologies LLC, a move expected to enhance its product offerings and market position. The company also announced an increase in its quarterly cash dividend to $0.34 per share, reflecting its continued commitment to returning value to shareholders. Furthermore, Kadant has been recognized by Newsweek magazine as one of America's most responsible companies for the fifth consecutive year, showcasing its dedication to sustainability and corporate responsibility.