Kadant’s third quarter results were shaped by a resilient aftermarket parts business, which offset sluggish demand for capital equipment across its Flow Control and Industrial Processing segments. Management credited robust aftermarket orders and operational execution for sequential improvements, even as global economic headwinds and ongoing trade uncertainty weighed on capital project bookings. CEO Jeffrey Powell pointed out, "Our aftermarket parts business is one of our core strategic development areas, and it is encouraging to see this part of our business continue to thrive," highlighting the company’s ability to adapt during periods of weak capital demand.
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Kadant (KAI) Q3 CY2025 Highlights:
- Revenue: $271.6 million vs analyst estimates of $260.7 million (flat year on year, 4.2% beat)
- Adjusted EPS: $2.59 vs analyst estimates of $2.16 (19.7% beat)
- Adjusted EBITDA: $58.02 million vs analyst estimates of $51.13 million (21.4% margin, 13.5% beat)
- Revenue Guidance for Q4 CY2025 is $275 million at the midpoint, below analyst estimates of $279.6 million
- Management reiterated its full-year Adjusted EPS guidance of $9.15 at the midpoint
- Operating Margin: 15.7%, down from 18% in the same quarter last year
- Market Capitalization: $3.26 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 From Kadant’s Q3 Earnings Call
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Gary Prestopino (Barrington Research) asked about the proportion of aftermarket revenue by segment. CFO Michael McKenney provided detailed figures, noting aftermarket now comprises 69% of total revenue, up from 65% last year.
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Gary Prestopino (Barrington Research) pressed for clarity on delayed capital bookings. CEO Jeffrey Powell explained that several large projects are in late stages, but administrative requirements and international banking processes are causing timing uncertainty.
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Ross Sparenblek (William Blair) inquired about the impact of tariffs and the likelihood of further disruption. Powell responded that while volatility has lessened, the situation is “not settled,” and ongoing trade policy shifts could affect customer purchasing decisions.
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Kurt Yinger (D.A. Davidson) questioned whether anticipated large fiber processing orders would be enough to drive a step change in capital equipment bookings. McKenney said such orders would be “very, very helpful,” but broad-based recovery, especially in housing, is needed for sustained growth.
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Edward Odre (Boston Partners) sought to distinguish the contributions of price versus volume in parts and consumables growth. McKenney emphasized that volume was a bigger driver this quarter, reflecting higher maintenance activity.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) progress on the integration and performance of the Clyde Industries and Babbini acquisitions, (2) improvement in capital equipment order flow, particularly in the Industrial Processing and Flow Control segments, and (3) ongoing resilience in aftermarket parts demand as customers defer capital investments. The evolution of global trade policies and macroeconomic stability will also be critical factors shaping order timing and segment performance.
Kadant currently trades at $276.81, down from $298.04 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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