KADANT INC
For the period ended Jul 4, 2026. Filed Aug 12, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 4, 2026 · Filed Aug 12, 2026
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Note
- Fair Value Measurements and Fair Value of Financial Instruments
Fair value measurement is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.
Level 3—Unobservable inputs based on the Company's own assumptions.
The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis:
| (In thousands) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Assets: | ||||
| Money market funds and time deposits (a) | $20,740 | $— | $— | $20,740 |
| Banker's acceptance drafts (b) | $— | $6,347 | $— | $6,347 |
| Liabilities: | ||||
| Contingent consideration (c) | $— | $— | $2,012 | $2,012 |
| (In thousands) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Assets: | ||||
| Money market funds and time deposits (a) | $14,139 | $— | $— | $14,139 |
| Banker's acceptance drafts (b) | $— | $9,115 | $— | $9,115 |
| Liabilities: | ||||
| Contingent consideration (c) | $— | $— | $1,941 | $1,941 |
(a)Included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.
(b)Included in accounts receivable in the accompanying condensed consolidated balance sheet.
(c)Included in other long-term liabilities in the accompanying condensed consolidated balance sheet.
The Company uses the market approach technique to value its Level 1 and Level 2 financial assets and liabilities, and there were no changes in valuation techniques during the first six months of 2026. Banker's acceptance drafts are carried at face value, which approximates their fair value due to the short-term nature of the negotiable instrument.
The Company uses the income approach technique to estimate the fair value of its Level 3 contingent consideration, including valuation models that incorporate probability adjusted assumptions and simulations related to the achievement of milestones and the likelihood of making the related payment. The unobservable inputs used in the fair value measurements include the probability of successful achievement of certain revenue targets, forecasted revenue, revenue volatility, and discount rates. These assumptions were estimated based on a review of historical and projected results. Projected contingent consideration related to revenue-based payments is discounted back to the current period using a discounted cash flow model. Changes to the fair value of contingent consideration can result from changes to one or multiple inputs, including the discount rate, projected revenue, revenue volatility, and the assumed probabilities of successful achievement of certain revenue targets. There were no changes in the valuation techniques or significant unobservable inputs used in measuring the contingent consideration during the first six months of 2026.
The following table provides a rollforward of the change in the fair value of the contingent consideration as determined by Level 3 inputs:
| Six Months Ended | ||
|---|---|---|
| (In thousands) | July 4,2026 | June 28,2025 |
| Balance at Beginning of Year | $1,941 | $1,678 |
| Currency translation | 71 | 88 |
| Balance at End of Period | $2,012 | $1,766 |
The carrying value and fair value of debt obligations, excluding lease obligations, are as follows:
| July 4, 2026 | January 3, 2026 | |||
|---|---|---|---|---|
| (In thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value |
| Debt Obligations: | ||||
| Revolving credit facility | $502,452 | $502,452 | $366,707 | $366,707 |
| Senior promissory notes | 4,990 | 4,997 | 4,990 | 4,981 |
| Other | 797 | 797 | 1,023 | 1,023 |
| $508,239 | $508,246 | $372,720 | $372,711 | |
The carrying value of the Company's revolving credit facility approximates the fair value as the obligation bears variable rates of interest, which adjust frequently, based on prevailing market rates. The fair value of the revolving credit facility is based on observable market interest rates and credit spreads available for similar instruments, which represent Level 2 measurements. The fair value of the senior promissory notes is primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period end, which represent Level 2 measurements.
- Business Segment Information
The Company is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing and operates inthree reportable segments consisting of its Flow Control segment, Industrial Processing segment, and Material Handling segment. The Company aggregates its operating segments into its reportable segments where they contain similar products and economic characteristics, and share similar types of customers and production and distribution methods. The Flow Control segment is comprised of its fluid-handling and its doctoring, cleaning, & filtration operating segments, and the Industrial Processing segment is comprised of its wood processing and its fiber processing operating segments.
Each of the Company's reportable segments is led by a segment vice president, who reports directly to the Chief Executive Officer (CEO). The Company has determined that its CEO is its Chief Operating Decision Maker (CODM) who is responsible for assessing performance and allocating resources. The CODM utilizes segment gross profit margin and segment operating income margin to evaluate the performance of each segment and allocate resources effectively. The CODM primarily reviews these profit measures in comparison to forecasts, trends, key performance targets, and results of industry peers to assess profitability, identify areas for improvement, and make strategic decisions regarding investments and resource allocation within each segment.
A description of each reportable segment follows:
Flow Control – Custom-engineered products, systems, and technologies that control the flow of fluids used in industrial and commercial applications to keep critical processes running efficiently in the packaging, paper and tissue, food, energy, defense, and numerous other industrial sectors. The Company's primary products include rotary sealing devices, steam systems, expansion joints, doctor systems, roll and fabric cleaning devices, and filtration and fiber recovery systems.
Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard, process timber, and optimize industrial steam boiler efficiency in the packaging, paper, tissue, wood products and food processing industries, among others. The Company's primary products include fiber processing systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers, custom-engineered profiles and industrial blades, boiler cleaning technologies, and continuous dewatering equipment.
Material Handling – Products and engineered systems used to handle bulk and discrete materials for secondary processing or transport in the aggregates, mining, food, and waste management industries, among others. The Company's primary products include conveying and vibratory equipment and balers. In addition, the Company manufactures and sells biodegradable, absorbent granules used as carriers in agricultural, home lawn and garden, professional lawn, turf and ornamental applications, and for oil and grease absorption.
The following tables present financial information for the Company's reportable segments:
| Three Months Ended July 4, 2026 | ||||||
|---|---|---|---|---|---|---|
| (In thousands) · Flow Control · Industrial Processing · Material Handling · Total | ||||||
| Revenue | $100,310 | $143,800 | $68,765 | $312,875 | ||
| Cost of revenue | 47,633 | 85,312 | 42,925 | 175,870 | ||
| Gross Profit | 52,677 | 58,488 | 25,840 | 137,005 | ||
| Gross Profit Margin | 52.5% | 40.7% | 37.6% | 43.8% | ||
| Operating Expenses: | ||||||
| Selling expenses | 14,988 | 13,658 | 6,834 | 35,480 | ||
| General and administrative expenses | 10,092 | 9,975 | 4,784 | 24,851 | ||
| Research and development expenses | 1,658 | 2,195 | 631 | 4,484 | ||
| Intangible asset amortization expense | 1,268 | 4,669 | 2,689 | 8,626 | ||
| Other segment items | (93) | 708 | 49 | 664 | ||
| Segment Operating Income | $24,764 | $27,283 | $10,853 | $62,900 | ||
| Segment Operating Income Margin | 24.7% | 19.0% | 15.8% | |||
| Corporate Expenses (a) | (12,020) | |||||
| Interest Expense, Net (b) | (4,819) | |||||
| Other Expense, Net (b) | (32) | |||||
| Income Before Provision for Income Taxes | $46,029 | |||||
| (In thousands) | Flow Control | Industrial Processing | Material Handling | Corporate | Total |
|---|---|---|---|---|---|
| Other Segment Disclosures | |||||
| Depreciation expense (c) | $1,773 | $3,899 | $1,221 | $25 | $6,918 |
| Capital expenditures (d) | $7,027 | $2,366 | $1,482 | $72 | $10,947 |
| Three Months Ended June 28, 2025 | ||||||
|---|---|---|---|---|---|---|
| (In thousands) · Flow Control · Industrial Processing · Material Handling · Total | ||||||
| Revenue | $95,947 | $95,937 | $63,383 | $255,267 | ||
| Cost of revenue | 44,289 | 55,066 | 38,870 | 138,225 | ||
| Gross Profit | 51,658 | 40,871 | 24,513 | 117,042 | ||
| Gross Profit Margin | 53.8% | 42.6% | 38.7% | 45.9% | ||
| Operating Expenses: | ||||||
| Selling expenses | 14,478 | 10,851 | 6,825 | 32,154 | ||
| General and administrative expenses | 10,023 | 9,172 | 4,638 | 23,833 | ||
| Research and development expenses | 1,330 | 1,824 | 570 | 3,724 | ||
| Intangible asset amortization expense | 1,410 | 2,436 | 2,689 | 6,535 | ||
| Other segment items | (26) | 1,102 | (148) | 928 | ||
| Segment Operating Income | $24,443 | $15,486 | $9,939 | $49,868 | ||
| Segment Operating Income Margin | 25.5% | 16.1% | 15.7% | |||
| Corporate Expenses (a) | (10,491) | |||||
| Interest Expense, Net (b) | (2,899) | |||||
| Other Expense, Net (b) | (17) | |||||
| Income Before Provision for Income Taxes | $36,461 | |||||
| (In thousands) | Flow Control | Industrial Processing | Material Handling | Corporate | Total |
|---|---|---|---|---|---|
| Other Segment Disclosures | |||||
| Depreciation expense (c) | $1,855 | $2,468 | $1,199 | $12 | $5,534 |
| Capital expenditures | $1,380 | $1,595 | $993 | $— | $3,968 |
| Six Months Ended July 4, 2026 | ||||||
|---|---|---|---|---|---|---|
| (In thousands) · Flow Control · Industrial Processing · Material Handling · Total | ||||||
| Revenue | $198,918 | $266,838 | $128,624 | $594,380 | ||
| Cost of revenue | 94,275 | 156,059 | 80,338 | 330,672 | ||
| Gross Profit | 104,643 | 110,779 | 48,286 | 263,708 | ||
| Gross Profit Margin | 52.6% | 41.5% | 37.5% | 44.4% | ||
| Operating Expenses: | ||||||
| Selling expenses | 30,178 | 27,535 | 13,926 | 71,639 | ||
| General and administrative expenses | 20,100 | 21,801 | 9,549 | 51,450 | ||
| Research and development expenses | 3,053 | 4,279 | 1,208 | 8,540 | ||
| Intangible asset amortization expense | 2,538 | 9,096 | 5,377 | 17,011 | ||
| Other segment items | (194) | 872 | (93) | 585 | ||
| Segment Operating Income | $48,968 | $47,196 | $18,319 | $114,483 | ||
| Segment Operating Income Margin | 24.6% | 17.7% | 14.2% | |||
| Corporate Expenses (a) | (23,494) | |||||
| Interest Expense, Net (b) | (8,952) | |||||
| Other Expense, Net (b) | (45) | |||||
| Income Before Provision for Income Taxes | $81,992 | |||||
| (In thousands) | Flow Control | Industrial Processing | Material Handling | Corporate | Total |
|---|---|---|---|---|---|
| Other Segment Disclosures | |||||
| Depreciation expense (c) | $3,700 | $7,009 | $2,433 | $38 | $13,180 |
| Capital expenditures (d) | $8,049 | $3,229 | $2,718 | $209 | $14,205 |
| Six Months Ended June 28, 2025 | ||||||
|---|---|---|---|---|---|---|
| (In thousands) · Flow Control · Industrial Processing · Material Handling · Total | ||||||
| Revenue | $188,388 | $185,461 | $120,628 | $494,477 | ||
| Cost of revenue | 87,457 | 105,142 | 74,506 | 267,105 | ||
| Gross Profit | 100,931 | 80,319 | 46,122 | 227,372 | ||
| Gross Profit Margin | 53.6% | 43.3% | 38.2% | 46.0% | ||
| Operating Expenses: | ||||||
| Selling expenses | 29,257 | 21,028 | 13,293 | 63,578 | ||
| General and administrative expenses | 18,836 | 17,559 | 8,879 | 45,274 | ||
| Research and development expenses | 2,681 | 3,430 | 1,136 | 7,247 | ||
| Intangible asset amortization expense | 2,903 | 4,814 | 5,517 | 13,234 | ||
| Other segment items | 59 | 1,170 | (177) | 1,052 | ||
| Segment Operating Income | $47,195 | $32,318 | $17,474 | $96,987 | ||
| Segment Operating Income Margin | 25.1% | 17.4% | 14.5% | |||
| Corporate Expenses (a) | (22,024) | |||||
| Interest Expense, Net (b) | (6,204) | |||||
| Other Expense, Net (b) | (33) | |||||
| Income Before Provision for Income Taxes | $68,726 | |||||
| (In thousands) | Flow Control | Industrial Processing | Material Handling | Corporate | Total |
|---|---|---|---|---|---|
| Other Segment Disclosures | |||||
| Depreciation expense (c) | $3,653 | $4,815 | $2,357 | $23 | $10,848 |
| Capital expenditures | $2,889 | $2,920 | $1,992 | $3 | $7,804 |
| July 4,2026 | January 3,2026 | |
|---|---|---|
| (In thousands) | ||
| Total Assets (e) | ||
| Flow Control | $455,768 | $450,911 |
| Industrial Processing | 998,443 | 826,062 |
| Material Handling | 406,713 | 411,813 |
| Corporate (f) | 28,372 | 23,392 |
| $1,889,296 | $1,712,178 | |
(a)Primarily consists of general and administrative expenses.
(b)The Company does not allocate interest expense, net and other expense, net to its segments.
(c)Depreciation expense by reportable segment is included within cost of revenue and selling, general and administrative, and research and development expenses.
(d)Includes $5,842,000 for the purchase of a manufacturing facility in the Flow Control segment that was previously leased by the Company.
(e)Excludes intercompany receivables or payables and investment in subsidiary balances as the CODM uses total assets excluding these amounts as the measurement for the Company's segment assets.
(f)Corporate assets primarily consist of cash and cash equivalents, tax assets, right-of-use assets, and property, plant, and equipment, net.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.