KADANT INC
For the period ended Oct 3, 2026. Filed Nov 10, 2026.
View on SEC.govAbout this filing
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.
Oct 3, 2026 · Filed Nov 10, 2026
KAI$299.83-1.1%Stored close · as of Nov 10, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-07-04; filed 2026-08-12.
0000886346-26-000052
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-10-03; filed 2026-11-10.
0000886346-26-000064
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 130 previous paragraphs and 132 current paragraphs.
61 unchanged; 41 reworded; 30 added; 28 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (30)
Current report
Unless otherwise indicated, references to 2026 and 2025 in the Industry and Business Overview discussion below refer to the first nine months of each of the respective fiscal years.
Current report
Consolidated bookings increased 21% to $924.0 million in 2026 compared to 2025 driven by a 13% contribution from acquisitions, and higher demand for both parts and consumables and capital equipment products.
Current report
Parts and consumables bookings increased 21% in 2026 compared to 2025 and represented 72% of consolidated bookings, driven by demand in the core end markets we serve, as well as more recent demand supporting the defense industry and factory modernization and automation. Demand for our parts and consumables products remained stable throughout 2026, supported by our large global installed base, which continues to generate recurring business from aftermarket parts, maintenance upgrades, and related service requirements.
Current report
Capital equipment bookings increased 20% in 2026 compared to 2025, including 10% organic growth. The organic increase was led by our Industrial Processing segment where capital equipment demand remained relatively stable during 2026, but exceeded levels experienced in the comparatively weak 2025 period. Despite the increased capital equipment bookings in 2026, uncertainty persists regarding the timing of large capital equipment project orders. Customer inquiries and quotation activity remain healthy across all our segments; however, volatility in trade policies, inflationary pressures, and ongoing geopolitical conflicts have contributed to higher input-cost pressures and broader economic uncertainty. These factors have contributed to customer caution in approving large capital projects, resulting in extended approval cycles and increased variability in the timing of orders. This trend is particularly pronounced in our Industrial Processing segment, where average capital order values are significantly higher than in our other segments. As a result, the pipeline of large capital orders awaiting final customer approval has increased, and we remain optimistic about converting these opportunities into bookings in 2027.
Current report
•Industrial Processing – Our Industrial Processing segment bookings increased 43% in 2026 compared to 2025, including a 34% contribution from acquisitions. Organic bookings increased 7% in 2026 with higher bookings at our fiber processing product line offsetting weaker demand at our wood processing product line. Organic bookings at our fiber processing product line increased 31% in 2026 due to the execution of previously delayed projects and a favorable comparison to a weak 2025 period impacted by economic and tariff-related uncertainty. Organic bookings at our wood processing product line decreased 5% in 2026 due to softer demand for wood products. Elevated financing and construction costs have dampened consumer confidence resulting in a decline in new construction in the United States, leading to reduced demand for oriented strand board, lumber, and our wood processing products. Mills have responded with production curtailments and extended downtime. Overall, this segment continues to be negatively impacted by the volatility in the timing of capital project orders. Quotation activity remains high and project discussions continue across most regions; however, customers continue to defer larger capital investments. We expect demand for our capital equipment products to strengthen during the remainder of 2026, while demand for our parts and consumables products is expected to remain stable.
Current report
Third Quarter 2026 Compared with Third Quarter 2025
Current report
Consolidated revenue increased 15% in the third quarter of 2026, including an 11% contribution from acquisitions. Organic revenue increased 4%, reflecting stable demand for both parts and consumables and capital equipment products. Increased revenue in North America and Asia was partially offset by weaker performance in Europe, as macroeconomic uncertainties have led to more cautious capital spending.
Current report
Revenue at our Flow Control segment increased 8% in the third quarter of 2026, driven by higher demand for our parts and consumables products in our core end markets, as well as more recent demand supporting the defense industry and factory modernization and automation. Revenue also benefited from the fulfillment of several large orders originally scheduled for the fourth quarter. Stronger demand in North America offset weaker performance in Europe, reflecting challenging market conditions in the region.
Current report
Revenue at our Industrial Processing segment increased 35% in the third quarter of 2026, largely due to contributions from our recent acquisitions. Organic revenue increased 6% due to higher demand for our capital equipment products in North America and Asia, including projects focused on energy efficiency and modernization. These increases were partially offset by weaker demand in Europe, reflecting challenging market conditions, higher input costs, and continued customer caution in purchasing decisions.
Current report
Revenue at our Material Handling segment decreased 4% in the third quarter of 2026 due to lower capital equipment revenue at our baling businesses resulting from customer-requested delivery delays. The decrease was partially offset by higher demand for our parts and consumables products at our conveying and vibratory businesses in North America.
Current report
Consolidated gross profit margin decreased to 44.7% in the third quarter of 2026 from 45.2% in the third quarter of 2025 primarily due to lower margins achieved on our capital equipment products. Incremental profit in inventory amortization expense and post-acquisition profit deferrals at our most recent acquisition lowered gross profit margin by 0.8 percentage points, which was largely offset by an increase of 0.6 percentage points from tariff refunds.
Current report
•Increased to 53.0% at our Flow Control segment from 51.9% in the 2025 period, primarily due to higher margins achieved on our parts and consumables products, as well as a higher proportion of parts and consumables revenue in the 2026 period.
Current report
•Decreased to 42.0% at our Industrial Processing segment from 43.6% in the 2025 period. Incremental profit in inventory amortization expense and post-acquisition profit deferrals at our most recent acquisition lowered gross profit margin by 1.7 percentage points, which was partially offset by an increase of 0.7 percentage points from tariff refunds.
Current report
•Decreased to 37.9% at our Material Handling segment from 38.5% in the 2025 period, primarily due to lower margins achieved on our capital equipment products, partially offset by a higher proportion of parts and consumables product revenue, which increased to 57% of revenue compared to 52% in the 2025 period.
Current report
Consolidated SG&A expenses increased $6.9 million, or 9%, in the third quarter of 2026 compared to the third quarter of 2025, primarily due to the inclusion of $6.1 million of operating expenses and $2.3 million of intangible amortization expense from acquisitions, partially offset by a decrease of $2.0 million in acquisition-related costs. Acquisition-related costs included in SG&A consist of acquisition costs and backlog amortization expense.
Current report
•Decreased $0.8 million at our Flow Control segment primarily due to an increase of $0.3 million in foreign currency transaction gains and a $0.3 million decrease in external commissions.
Current report
•Increased $6.6 million at our Industrial Processing segment primarily due to the inclusion of $6.1 million of operating expenses and $2.3 million of intangible amortization expense from acquisitions, partially offset by a decrease of $1.8 million of acquisition costs.
Current report
•Increased $1.0 million at Corporate largely due to higher professional service fees.
Current report
The effective tax rate of 29.5% in the third quarter of 2025 was higher than our statutory rate of 21% primarily due to an increase in liabilities for uncertain tax positions, the distribution of our worldwide earnings, nondeductible expenses, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries. These items were offset in part by a net tax benefit from the remeasurement of certain deferred income tax assets and liabilities due to the decrease to Germany's future statutory tax rate enacted in July 2025 and foreign tax credits.
Current report
Revenue by segment in the first nine months of 2026 and 2025 is as follows:
Current report
Consolidated revenue increased 18% in the first nine months of 2026, including a 13% increase attributable to acquisitions. Organic revenue increased 4%, primarily due to higher demand for our capital equipment products at our Industrial Processing segment and, to a lesser extent, stable demand for our aftermarket parts at our Flow Control segment. Higher demand in North America and Asia was partially offset by lower demand in Europe, where challenging economic conditions have contributed to weaker organic performance.
Current report
Revenue at our Flow Control segment increased 6% in the first nine months of 2026 driven by higher demand for our parts and consumables products, particularly in North America and Asia. Demand in Europe was tempered by ongoing geopolitical tensions, energy price volatility, and macroeconomic uncertainty, which contributed to more cautious customer spending. Demand for our capital equipment products in the first nine months of 2026 was impacted by weak conditions in the pulp and paper industry, including mill closures, production curtailments, and industry consolidation.
Current report
Revenue at our Industrial Processing segment increased 41% in the first nine months of 2026, largely due to contributions from our recent acquisitions. Organic revenue increased 5%, driven by higher capital shipments in 2026 compared to the weaker performance in the prior-year period when tariff-related uncertainty led to constrained capital spending. Geographically, increased demand for our capital equipment in North America and Asia was partially offset by lower demand in Europe, where constrained market conditions have led customers to defer major capital expenditures.
Current report
Revenue at our Material Handling segment increased 3% in the first nine months of 2026, primarily due to higher demand for our parts and consumables products across all regions as customers focused their spending on maintenance and critical replacement parts.
Current report
Consolidated gross profit margin decreased to 44.5% in the first nine months of 2026 from 45.7% in the first nine months of 2025 largely due to lower margins achieved on our capital equipment products. Incremental profit in inventory amortization expense and post-acquisition profit deferrals at our most recent acquisition lowered gross profit margin by 0.8 percentage points, which was largely offset by an increase of 0.6 percentage points from tariff refunds.
Current report
•Decreased to 41.7% at our Industrial Processing segment from 43.4% in the 2025 period primarily due to a lower proportion of higher-margin parts and consumables revenue, which declined to 72% of revenue from 77% in the 2025 period. In addition, incremental profit in inventory amortization expense and post-acquisition profit deferrals at our most recent acquisition lowered gross profit margin by 1.7 percentage points, which was partially offset by an increase of 0.8 percentage points from tariff refunds.
Current report
•Decreased to 37.7% at our Material Handling segment from 38.3% in the 2025 period due to lower margins achieved on our capital equipment products, partially offset by a higher proportion of parts and consumables product revenue, which increased to 60% of revenue compared to 58% in the 2025 period.
Current report
Consolidated SG&A expenses increased $25.9 million, or 12%, in the first nine months of 2026 compared to the first nine months of 2025, primarily due to the inclusion of $17.6 million of operating expenses and $6.6 million of intangible amortization expense from acquisitions, and a $4.0 million unfavorable impact from foreign currency translation. These increases were partially offset by a decrease of $2.5 million in acquisition-related costs.
Current report
•Increased $21.3 million at our Industrial Processing segment principally due to the inclusion of $17.6 million of operating expenses and $6.6 million of intangible amortization expense from acquisitions, and a $1.1 million unfavorable impact from foreign currency translation, partially offset by a decrease of $1.7 million of acquisition costs and a $0.7 million decrease in bad debt expense.
Current report
Cash flow information for the first nine months of 2026 and 2025 is as follows:
Removed paragraphs (28)
Previous report
Consolidated bookings increased 16% to $312 million in the second quarter of 2026 compared to the second quarter of 2025, led by contributions from our recent acquisitions, and record demand for our parts and consumables products at our Industrial Processing segment. Our large installed base throughout the world continues to generate a stable stream of recurring business from aftermarket parts, maintenance upgrades, and related service requirements. Parts and consumables product bookings increased 25% compared to the second quarter of 2025 and represented 72% of consolidated bookings. Capital equipment product bookings decreased 3% compared to the second quarter of 2025. While customer requests and quotation activity remain healthy across all our segments, the timing for securing large capital equipment project orders remains uncertain. The volatility in trade policies, inflation, and geopolitical conflicts have led to pressure on input costs. As a result, customers remain cautious in approving large capital projects pending greater clarity regarding input costs and broader economic conditions. This has led to longer customer approval cycles and increased volatility in the timing of capital project orders. This dynamic is more pronounced in our Industrial Processing segment, where average capital order values are significantly higher than in our other segments. Based on the current level of quote activity, we anticipate stronger capital bookings in the second half of 2026 compared to the first half.
Previous report
•Industrial Processing – Our Industrial Processing segment bookings increased 29% compared to the second quarter of 2025, as recent acquisitions drove record aftermarket parts bookings in the quarter. Demand for our capital equipment products was negatively impacted by the volatility in timing of capital project orders. Quotation activity remains high and project discussions continue across most regions, however, customers continue to defer larger capital investments. Overall, we expect demand for our capital equipment products to strengthen in the second half of 2026, supported by the anticipated receipt of several large capital orders currently in the pipeline. In addition, we expect demand for our aftermarket parts to remain stable in 2026.
Previous report
Second Quarter 2026 Compared with Second Quarter 2025
Previous report
Consolidated revenue increased 23% in the second quarter of 2026, including a 13% increase from acquisitions. Organic revenue increased 8%, including a 23% increase in sales of capital equipment products led by our Industrial Processing segment, and steady demand for our parts and consumables products.
Previous report
Revenue at our Flow Control segment increased 5% in the second quarter of 2026, primarily driven by higher demand for our parts and consumables products, especially in North America and Asia. In addition, capital equipment product revenue increased in China due to the completion of several large projects.
Previous report
Revenue at our Industrial Processing segment increased 50% in the second quarter of 2026, primarily due to contributions from our recent acquisitions and the favorable effect of foreign currency translation. Organic revenue increased 13%, reflecting a higher volume of capital projects in the quarter compared to the prior-year period. Organic revenue from capital equipment products was strongest in North America, while Europe was comparatively weaker due to constrained market conditions, which have impacted input costs and continued to influence our customers’ decision-making process.
Previous report
Revenue at our Material Handling segment increased 8% in the second quarter of 2026, reflecting strong demand for both capital equipment and aftermarket parts products. The increase was primarily driven by our business in Europe, which benefited from a large refurbishment project during the quarter.
Previous report
Consolidated gross profit margin decreased to 43.8% in the second quarter of 2026 from 45.9% in the second quarter of 2025 due to several factors. The proportion of higher-margin aftermarket parts revenue decreased to 68% in 2026 compared to 71% in 2025. In addition, our gross profit margins for both aftermarket parts and capital equipment products were adversely affected by the product mix within these categories. Gross profit margin in our Industrial Processing segment was negatively affected by the lower gross margin profile associated with recent acquisitions.
Previous report
•Decreased to 52.5% at our Flow Control segment from 53.8% in the 2025 period primarily due to lower margins achieved on our parts and consumables products and an unfavorable mix of capital equipment projects in the period.
Previous report
•Decreased to 40.7% at our Industrial Processing segment from 42.6% in the 2025 period due to the lower gross margin profile associated with recent acquisitions. In addition, gross profit margin was negatively impacted by a decrease in the proportion of higher-margin parts and consumables product revenue, which decreased to 69% of revenue in the second quarter of 2026 compared to 76% in the 2025 period, and lower margins achieved on our aftermarket parts products.
Previous report
•Decreased to 37.6% at our Material Handling segment from 38.7% in the 2025 period due to lower margins achieved on our capital equipment products.
Previous report
Consolidated SG&A expenses increased $7.7 million, or 10%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to the inclusion of $7.9 million of SG&A expenses from recent acquisitions.
Previous report
•Increased $0.4 million at our Flow Control segment primarily due to a net unfavorable impact from foreign currency transaction and translation.
Previous report
•Increased $5.4 million at our Industrial Processing segment primarily due to $7.9 million of SG&A expenses from acquisitions, offset in part by a $1.4 million shift from foreign currency losses in the 2025 period to gains in the 2026 period and a $0.5 million decrease in bad debt expense.
Previous report
•Increased $0.4 million at our Material Handling segment primarily due to a $0.2 million unfavorable impact from foreign currency translation and incremental selling-related costs.
Previous report
The effective tax rate of 28.6% in the second quarter of 2026 was higher than our statutory rate of 21%, primarily due to the distribution of our worldwide earnings, state taxes, and nondeductible expenses.
Previous report
Revenue by segment in the first six months of 2026 and 2025 is as follows:
Previous report
Consolidated revenue increased 20% in the first six months of 2026, including a 14% increase from acquisitions. Organic revenue increased 4%, primarily due to higher demand for our capital equipment products compared to the first six months of 2025, and steady demand for our parts and consumables products. Geographically, the economic effects of the conflicts in the Middle East contributed to weaker organic performance in Europe.
Previous report
Revenue at our Flow Control segment increased 6% and organic revenue increased 2% in the first six months of 2026, primarily driven by higher demand for parts and consumables products across all regions, except Europe. Ongoing geopolitical tensions, energy price volatility, and macroeconomic uncertainty have contributed to more cautious spending in Europe. Increased capital equipment product revenue in China due to the completion of several large projects was more than offset by weaker capital equipment demand in other regions.
Previous report
Revenue at our Industrial Processing segment increased 44% in the first six months of 2026, primarily due to our recent acquisitions and the favorable effect of foreign currency translation. Organic revenue increased 5%, reflecting higher demand for our capital equipment products, partially offset by lower demand for our parts and consumables products.
Previous report
Revenue at our Material Handling segment increased 7% in the first six months of 2026, driven by strong demand for both aftermarket and capital equipment products.
Previous report
Consolidated gross profit margin decreased to 44.4% in the first six months of 2026 from 46.0% in the first six months of 2025. The proportion of higher-margin aftermarket parts revenue decreased to 71% in 2026 compared to 73% in 2025. In addition, gross profit margins for both aftermarket parts and capital equipment products were adversely affected by the product mix within these categories. Gross profit margin in our Industrial Processing segment was negatively affected by the lower gross margin profile associated with recent acquisitions.
Previous report
•Decreased to 41.5% at our Industrial Processing segment from 43.3% in the 2025 period due to the lower gross margin profile associated with recent acquisitions. In addition, gross profit margin was impacted by lower margins achieved on our aftermarket products due in part to several large parts orders in the 2025 period. Gross margin was also negatively impacted by a decrease in the proportion of higher-margin parts and consumables product revenue, which decreased to 72% of revenue in the first six months of 2026 compared to 78% in the first six months of 2025.
Previous report
•Decreased to 37.5% at our Material Handling segment from 38.2% in the 2025 period due to lower margins achieved on our capital equipment products.
Previous report
Consolidated SG&A expenses increased $19.0 million, or 13%, in the first six months of 2026 compared to the first six months of 2025, primarily due to the inclusion of $15.8 million of SG&A expenses from acquisitions and an unfavorable impact from foreign currency translation of $3.9 million.
Previous report
•Increased $14.7 million at our Industrial Processing segment principally due to $15.8 million of SG&A expenses from acquisitions, partially offset by a $0.5 million reduction in bad debt expense.
Previous report
•Increased $1.5 million at Corporate due to a benefit received in 2025 related to an intellectual property settlement.
Previous report
Cash flow information in the first six months of 2026 and 2025 is as follows:
Reworded paragraphs (41)
Previous wording
Overall, we expect bookings in 2026 to exceed 2025 levels, largely driven by our Industrial Processing segment and incremental contributions from our recent acquisitions. We continue to see long-term strength in our end markets as customers rely on our products to enhance productivity through more efficient production processes. Additionally, we anticipate growth opportunities related to industrial automation and modernization investments as well as in the energy and defense sectors.
Current wording
Overall, we expect bookings in the full year 2026 to exceed full year 2025 levels, due to strong contributions from our recent acquisitions and stable growth in demand for our products. Looking forward, we see long-term strength in our end markets as customers rely on our products to enhance productivity through more efficient production processes. Additionally, we anticipate growth opportunities related to industrial automation and modernization investments, infrastructure spending, and investments in the energy and defense sectors.
Previous wording
•Flow Control – Our Flow Control segment bookings increased 11% compared to the second quarter of 2025, reflecting strong demand for our parts and consumables products across all regions. Stronger demand in North America, fueled by factory automation projects, was tempered by weaker demand in Europe, which was negatively impacted by mill closures and low factory utilization rates. Demand for our capital equipment products was limited as customers remained cautious regarding their capital spending decisions amid market uncertainty. We expect consistent demand for the remainder of 2026 and long-term strength in this segment due to its diversified market exposure.
Current wording
•Flow Control – Our Flow Control segment bookings increased 10% in 2026 compared to 2025, reflecting strong demand across all regions for our parts and consumables products, especially in North America, where stronger demand benefited from factory automation projects. Demand for our capital equipment products was limited as customers remained cautious about capital spending amid market uncertainty. We expect demand for our products in this segment to remain stable for the remainder of 2026 and anticipate long-term strength in this segment due to its diversified market exposure.
Previous wording
•Material Handling – Our Material Handling segment bookings increased 3% compared to the second quarter of 2025, reflecting stable demand as customers balance challenging macroeconomic conditions. In this environment, customers are prioritizing maintenance spending and smaller incremental investments over large expansion projects. We expect modest growth in demand for our products in this segment to continue for the remainder of 2026.
Current wording
•Material Handling – Our Material Handling segment bookings increased 6% in 2026 compared to 2025, reflecting strong demand in North America for our parts and consumables products, particularly at our conveying and vibratory businesses. In the current environment, customers continue to prioritize maintenance spending and smaller incremental investments over large expansion projects. We expect demand for our products in this segment to remain stable for the remainder of 2026. Looking ahead, we believe infrastructure spending and continued data center expansion will provide future growth opportunities.
Previous wording
Our global operations have been and continue to be impacted by complex market conditions fueled by volatile trade policies, inflationary pressures, and geopolitical tensions. We expect our operating environment to continue to be challenging, especially for large capital equipment projects where the order timing is uncertain. However, we believe that the fundamentals of our business remain strong, supported by our solid market position in key product lines, experienced global operations teams, and long-term strength of our end markets. For more information related to these challenges, and other factors impacting our business, please see Risk Factors, included in Part I, Item 1A, of our Annual Report, as further amended in Part II, Item 1A, within this report, and as may be further amended and/or restated in subsequent filings with the SEC.
Current wording
Our global operations have been and continue to be affected by challenging market conditions fueled by volatility in trade policies, inflationary pressures, and geopolitical uncertainty. We expect these conditions to persist, especially for large capital equipment projects where the order timing is uncertain. Nevertheless, we believe that the fundamentals of our business remain strong, supported by our established market position in key product lines, experienced global operations teams, and long-term strength of our end markets. For more information related to these challenges, and other factors impacting our business, please see Risk Factors, included in Part I, Item 1A, of our Annual Report, as further amended in Part II, Item 1A, within this report, and as may be further amended and/or restated in subsequent filings with the SEC.
Previous wording
The United States has imposed tariffs in the past and more recently proposed and implemented new tariffs on certain imports, which have and will continue to increase the cost of some of the parts and equipment we import. In addition, foreign countries have implemented and may in the future implement additional retaliatory tariffs in response to these actions by the United States, which have negatively impacted and may in the future negatively impact our operations. Although we are working to mitigate the impact of tariffs through pricing and sourcing strategies, we cannot be sure these strategies will effectively mitigate the impact of these costs. For more information on risks associated with our global operations, including tariffs, please see Risk Factors, included in Part I, Item 1A, of our Annual Report, as further amended in Part II, Item 1A, within this report, and as may be further amended and/or restated in subsequent filings with the SEC.
Current wording
The United States has imposed tariffs in the past and more recently proposed and implemented new tariffs on certain imports, which have increased and will continue to increase the cost of some of the parts and equipment we import. In addition, foreign countries have implemented and may in the future implement additional retaliatory tariffs in response to these actions by the United States, which have negatively impacted and may in the future negatively impact our operations. Although we are working to mitigate the impact of tariffs through pricing and sourcing strategies, we cannot be sure these strategies will effectively mitigate the impact of these costs. For more information on risks associated with our global operations, including tariffs, please see Risk Factors, included in Part I, Item 1A, of our Annual Report, as further amended in Part II, Item 1A, within this report, and as may be further amended and/or restated in subsequent filings with the SEC.
Previous wording
On April 30, 2026, we completed the acquisition of voestalpine BÖHLER Profil GmbH & Co KG and voestalpine BÖHLER Profil VerwaltungsGmbH for a net purchase price of $170.1 million. Upon closing, the acquired entities were renamed Kadant Profil GmbH & Co KG and Kadant Profil Verwaltungs GmbH (collectively, Kadant Profil). Kadant Profil is a manufacturer of customized rolled profiles and industrial knife solutions for demanding industrial applications and is part of our Industrial Processing segment. See Note 2, Acquisitions, in the accompanying condensed consolidated financial statements for further details.
Current wording
On April 30, 2026, we completed the acquisition of voestalpine BÖHLER Profil GmbH & Co KG and voestalpine BÖHLER Profil VerwaltungsGmbH for a net purchase price of $170.2 million. Upon closing, the acquired entities were renamed Kadant Profil GmbH & Co KG and Kadant Profil Verwaltungs GmbH (collectively, Kadant Profil). Kadant Profil is a manufacturer of customized rolled profiles and industrial knife solutions for demanding industrial applications and is part of our Industrial Processing segment. See Note 2, Acquisitions, in the accompanying condensed consolidated financial statements for further details.
Previous wording
The following table presents the change in revenue by segment between the second quarters of 2026 and 2025, and those changes excluding the effect of acquisitions and foreign currency translation which we refer to as change in organic revenue. Organic revenue excludes the effect of acquisitions for the four quarterly reporting periods following the date of the acquisition. The presentation of the change in organic revenue is a non-GAAP measure. We believe this non-GAAP measure helps investors gain an understanding of our underlying operations consistent with how management measures and forecasts its performance, especially when comparing such results to prior periods. This non-GAAP measure should not be considered superior to or a substitute for the corresponding U.S. generally accepted accounting principles (GAAP) measure.
Current wording
The following table presents the change in revenue by segment between the third quarters of 2026 and 2025, and those changes excluding the effect of acquisitions and foreign currency translation which we refer to as change in organic revenue. Organic revenue excludes the effect of acquisitions for the four quarterly reporting periods following the date of the acquisition. The presentation of the change in organic revenue is a non-GAAP measure. We believe this non-GAAP measure helps investors gain an understanding of our underlying operations consistent with how management measures and forecasts its performance, especially when comparing such results to prior periods. This non-GAAP measure should not be considered superior to or a substitute for the corresponding U.S. generally accepted accounting principles (GAAP) measure.
Previous wording
Revenue by reportable segment in the second quarters of 2026 and 2025 is as follows:
Current wording
Revenue by reportable segment in the third quarters of 2026 and 2025 is as follows:
Previous wording
Gross profit margin by reportable segment in the second quarters of 2026 and 2025 is as follows:
Current wording
Gross profit margin by reportable segment in the third quarters of 2026 and 2025 is as follows:
Previous wording
Selling, general, and administrative (SG&A) expenses by reportable segment and Corp orate in the second quarters of 2026 and 2025 are as follows:
Current wording
Selling, general, and administrative (SG&A) expenses by reportable segment and Corp orate in the third quarters of 2026 and 2025 are as follows:
Previous wording
Interest expense increased to $5.3 million in the second quarter of 2026 from $3.3 million in the second quarter of 2025 due to increased borrowings under our revolving credit facility, which were primarily used to fund our acquisitions during the second half of 2025 and first half of 2026, partially offset by a lower weighted-average interest rate.
Current wording
Interest expense increased to $5.6 million in the third quarter of 2026 from $3.1 million in the third quarter of 2025 due to increased borrowings under our revolving credit facility, which were primarily used to fund our acquisitions, partially offset by a lower weighted-average interest rate.
Previous wording
Provision for income taxes increased to $13.2 million in the second quarter of 2026 from $9.8 million in the second quarter of 2025.
Current wording
Provision for income taxes increased to $12.8 million in the third quarter of 2026 from $11.8 million in the third quarter of 2025.
Previous wording
The effective tax rate of 25.7% in the first six months of 2025 was higher than our statutory rate of 21% primarily due to nondeductible expenses, the distribution of our worldwide earnings, and state taxes. These items were offset in part by net excess income tax benefits from stock-based compensation arrangements.
Current wording
The effective tax rate of 26.4% in the third quarter of 2026 was higher than our statutory rate of 21%, primarily due to nondeductible expenses, the distribution of our worldwide earnings and state taxes. These items were offset in part by a benefit from research and development tax credits.
Previous wording
Net income increased to $32.8 million in the second quarter of 2026 from $26.6 million in the second quarter of 2025 primarily due to a $11.5 million increase in operating income, offset in part by a $2.0 million increase in interest expense and a $3.4 million increase in provision for income taxes (see discussions above for further details).
Current wording
Net income increased to $35.7 million in the third quarter of 2026 from $28.1 million in the third quarter of 2025 primarily due to a $10.9 million increase in operating income, offset in part by a $2.5 million increase in interest expense and a $1.0 million increase in provision for income taxes (see discussions above for further details).
Previous wording
First Six Months 2026 Compared with First Six Months 2025
Current wording
First Nine Months 2026 Compared with First Nine Months 2025
Previous wording
The following table presents changes in revenue and organic revenue by segment between the first six months of 2026 and 2025. Organic revenue is a non-GAAP measure as defined above in the results of operations for the second quarter of 2026 compared with the second quarter of 2025.
Current wording
The following table presents changes in revenue and organic revenue by segment between the first nine months of 2026 and 2025. Organic revenue is a non-GAAP measure as defined above in the results of operations for the third quarter of 2026 compared with the third quarter of 2025.
Previous wording
Gross profit margin by segment in the first six months of 2026 and 2025 is as follows:
Current wording
Gross profit margin by segment in the first nine months of 2026 and 2025 is as follows:
Previous wording
•Decreased to 52.6% at our Flow Control segment from 53.6% in the 2025 period primarily due to lower margins achieved on our parts and consumables products.
Current wording
•Decreased to 52.7% at our Flow Control segment from 53.0% in the 2025 period primarily due to lower margins achieved on our parts and consumables products.
Previous wording
SG&A expenses by reportable segment and Corporate in the first six months of 2026 and 2025 are as follows:
Current wording
SG&A expenses by reportable segment and Corporate in the first nine months of 2026 and 2025 are as follows:
Previous wording
•Increased $1.6 million at our Flow Control segment due to a $2.1 million unfavorable impact from foreign currency translation, offset in part by a $0.5 million reduction in backlog amortization expense.
Current wording
•Increased $0.8 million at our Flow Control segment due to a $2.2 million unfavorable impact from foreign currency translation, partially offset by a $0.7 million reduction in acquisition-related costs and a $0.7 million decrease in external commissions.
Previous wording
•Increased $1.2 million at our Material Handling segment primarily due to a $0.6 million unfavorable impact from foreign currency translation and incremental selling-related costs.
Current wording
•Increased $1.3 million at our Material Handling segment primarily due to a $0.7 million unfavorable impact from foreign currency translation and a $0.6 million increase in external commissions.
Previous wording
•Increased $1.5 million at Corporate due to a benefit received in 2025 related to an intellectual property settlement.
Current wording
•Increased $2.5 million at Corporate primarily reflecting the impact of an intellectual property settlement received in 2025.
Previous wording
Interest expense increased to $9.8 million in the first six months of 2026 from $7.2 million in the first six months of 2025 due to higher borrowings under our revolving credit facility used to finance acquisitions during the second half of 2025 and first half of 2026, partially offset by a lower weighted-average interest rate. We expect interest expense to remain higher than prior-year levels for the remainder of 2026, primarily due to borrowings used to finance our April 2026 acquisition of Kadant Profil.
Current wording
Interest expense increased to $15.4 million in the first nine months of 2026 from $10.2 million in the first nine months of 2025 primarily due to higher borrowings under our revolving credit facility, which were primarily used to fund our acquisitions. We expect interest expense to remain higher than prior-year levels for the remainder of 2026, primarily due to borrowings used to finance our April 2026 acquisition of Kadant Profil.
Previous wording
Provision for income taxes increased to $23.3 million in the first six months of 2026 from $17.7 million in the first six months of 2025.
Current wording
Provision for income taxes increased to $36.1 million in the first nine months of 2026 from $29.4 million in the first nine months of 2025.
Previous wording
The effective tax rate of 28.4% in the first six months of 2026 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, state taxes, and nondeductible expenses.
Current wording
The effective tax rate of 27.7% in the first nine months of 2026 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, state taxes, and nondeductible expenses.
Previous wording
The effective tax rate of 26.9% in the second quarter of 2025 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, state taxes, nondeductible expenses, and the cost of repatriating the earnings of certain foreign subsidiaries. These items were offset in part by foreign tax credits.
Current wording
The effective tax rate of 27.1% in the first nine months of 2025 was higher than our statutory rate of 21% primarily due to nondeductible expenses, the distribution of our worldwide earnings, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries. These items were offset in part by a net tax benefit from the remeasurement of certain deferred income tax assets and liabilities due to the decrease to Germany's future statutory rate enacted in July 2025 and foreign tax credits.
Previous wording
Net income increased to $58.7 million in the first six months of 2026 from $51.1 million in the first six months of 2025 primarily due to a $16.0 million increase in operating income, offset in part by a $2.6 million increase in interest expense and a $5.7 million increase in provision for income taxes (see discussions above for further details).
Current wording
Net income increased to $94.4 million in the first nine months of 2026 from $79.2 million in the first nine months of 2025 primarily due to a $27.0 million increase in operating income, offset in part by a $5.1 million increase in interest expense and a $6.7 million increase in provision for income taxes (see discussions above for further details).
Previous wording
In addition to the financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures, including organic revenue (defined as revenue excluding the effect of acquisitions and foreign currency translation), adjusted operating income, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, adjusted EBITDA margin (defined as adjusted EBITDA divided by revenue), and free cash flow (defined as cash flow provided by operations less capital expenditures).
Current wording
In addition to the financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures, including organic revenue (defined as revenue excluding the effect of acquisitions and foreign currency translation), adjusted operating income, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, adjusted EBITDA margin (defined as adjusted EBITDA divided by revenue), and free cash flow (defined as cash flow provided by operating activities less capital expenditures).
Previous wording
(c) Represents the net indemnification asset provision related to the establishment of tax reserves associated with uncertain tax positions.
Current wording
(c) Represents the net indemnification asset reversal or provision related to the release of or establishment of tax reserves associated with uncertain tax positions.
Previous wording
(a) Includes $5.8 million paid in the second quarter of 2026 for the purchase of a previously leased manufacturing facility in the Flow Control segment.
Current wording
(a) Includes $5.8 million paid in the nine months ended October 3, 2026 for the purchase of a previously leased manufacturing facility in the Flow Control segment.
Previous wording
Consolidated working capital was $356.7 million at July 4, 2026, compared with $313.8 million at January 3, 2026. Cash and cash equivalents were $134.5 million at July 4, 2026, compared with $119.6 million at January 3, 2026, which included cash and cash equivalents held by our foreign subsidiaries of $114.5 million at July 4, 2026 and $100.3 million at January 3, 2026.
Current wording
Consolidated working capital was $348.0 million at October 3, 2026, compared with $313.8 million at January 3, 2026. Cash and cash equivalents were $133.9 million at October 3, 2026, compared with $119.6 million at January 3, 2026, which included cash and cash equivalents held by our foreign subsidiaries of $118.6 million at October 3, 2026 and $100.3 million at January 3, 2026.
Previous wording
Cash provided by operating activities increased to $75.4 million in the first six months of 2026 from $63.3 million in the first six months of 2025. Our operating cash flows are primarily generated from cash received from customers, offset by cash payments for items such as inventory, employee compensation, operating leases, income taxes, and interest payments on outstanding debt obligations.
Current wording
Cash provided by operating activities increased to $138.3 million in the first nine months of 2026 from $110.6 million in the first nine months of 2025. Our operating cash flows are primarily generated from cash received from customers, offset by cash payments for items such as inventory, employee compensation, operating leases, income taxes, and interest payments on outstanding debt obligations.
Previous wording
Significant operating cash outflows associated with working capital in the first six months of 2026 were primarily attributable to increases in accounts receivable and contract assets and decreases in customer deposits and other liabilities. Accounts receivable and contract assets used $9.7 million of cash, primarily due to the timing of billings and customer payments. Customer deposits used $7.5 million of cash, primarily due to the timing of capital equipment orders, and other liabilities used $8.4 million of cash, primarily related to incentive compensation payments.
Current wording
Significant operating cash outflows associated with working capital in the first nine months of 2026 were primarily attributable to increases in accounts receivable and contract assets and decreases in customer deposits. Accounts receivable and contract assets used $22.5 million of cash, primarily due to the timing of billings and customer payments. Customer deposits used $7.8 million of cash, primarily due to the timing of capital equipment orders. These uses of cash were partially offset by $7.7 million of cash provided by a decrease in inventories.
Previous wording
Significant cash outflows associated with working capital in the first six months of 2025 were primarily attributable to a decrease in other liabilities and an increase in inventory. Purchases of inventory used cash of $14.8 million, and other current liabilities used cash of $13.4 million primarily related to incentive compensation payments. These cash outflows were partially offset by customer deposits, which provided $9.4 million of cash due to higher capital equipment orders, and contract assets, which provided $7.7 million of cash primarily due to the timing of billings on contracts accounted for over time.
Current wording
Significant operating cash outflows associated with working capital in the first nine months of 2025 were primarily attributable to increases in inventories and accounts receivable and decreases in other liabilities. A net increase in inventories used cash of $12.9 million, accounts receivable used cash of $7.7 million due to the timing of shipments, and other liabilities used cash of $10.4 million primarily related to incentive compensation payments. These cash outflows were partially offset by customer deposits, which provided $7.2 million of cash due to higher capital equipment orders, and contract assets, which provided $8.9 million of cash primarily due to the timing of billings on contracts accounted for over time.
Previous wording
Cash used in investing activities was $185.1 million in the first six months of 2026, compared with $6.9 million in the first six months of 2025. The increase in 2026 was primarily attributable to $171.8 million of acquisition consideration, net of cash acquired, including $170.1 million for the acquisition of Kadant Profil and $1.7 million of post-closing payments related to acquisitions completed in 2024. Capital expenditures increased to $14.2 million in the first six months of 2026, compared with $7.8 million in the first six months of 2025, primarily due to the purchase of a manufacturing facility that had previously been leased.
Current wording
Cash used in investing activities was $190.0 million in the first nine months of 2026, compared with $26.2 million in the first nine months of 2025. The increase in 2026 was primarily attributable to $171.9 million of acquisition consideration, net of cash acquired, including $170.2 million for the acquisition of Kadant Profil and $1.7 million of post-closing payments related to acquisitions completed in 2024. Capital expenditures increased to $19.0 million in the first nine months of 2026, compared with $11.0 million in the first nine months of 2025, largely due to the purchase of a manufacturing facility that had previously been leased.
Previous wording
Cash provided by financing activities was $127.4 million in the first six months of 2026, compared with cash used of $61.5 million in the first six months of 2025. The increase in the first six months of 2026 primarily reflected higher net borrowings under our revolving credit facility, including borrowings of $190.9 million used primarily to finance the acquisition of Kadant Profil, partially offset by repayments of long-term obligations of $49.2 million. In the first six months of 2025, borrowings under our revolving credit facility were $8.0 million and repayments of long-term obligations were $56.9 million. Cash dividends paid to stockholders increased to $8.3 million in 2026, compared with $7.8 million in 2025. Taxes paid related to the vesting of equity awards decreased to $4.9 million in 2026, compared with $6.1 million in 2025.
Current wording
Cash provided by financing activities was $71.8 million in the first nine months of 2026, compared with cash used of $59.3 million in the first nine months of 2025. The increase in the first nine months of 2026 primarily reflected higher net borrowings under our revolving credit facility, including borrowings of $190.9 million used primarily to finance the acquisition of Kadant Profil, partially offset by repayments of long-term obligations of $100.6 million. In the first nine months of 2025, borrowings under our revolving credit facility were $29.0 million and repayments of long-term obligations were $69.4 million. Cash dividends paid to stockholders increased to $12.5 million in 2026, compared with $11.8 million in 2025. Taxes paid related to the vesting of equity awards decreased to $4.9 million in 2026, compared with $6.1 million in 2025.
Previous wording
The exchange rate effect on cash, cash equivalents, and restricted cash represents the impact of translation of cash balances at our foreign subsidiaries. The $2.8 million decrease in cash, cash equivalents, and restricted cash in the first six months of 2026 related to exchange rates was primarily attributable to the strengthening of the U.S. dollar against the euro and Swedish krona, offset in part by the weakening of the U.S. dollar against the Chinese renminbi. The $6.3 million increase in cash, cash equivalents, and restricted cash in the first six months of 2025 related to exchange rates was primarily attributable to the weakening of the U.S. dollar against the euro and, to a lesser extent, the Swedish krona and the Canadian dollar.
Current wording
The exchange rate effect on cash, cash equivalents, and restricted cash represents the impact of translation of cash balances at our foreign subsidiaries. In the first nine months of 2026, exchange rate changes resulted in a $4.2 million decrease in cash, cash equivalents, and restricted cash primarily due to the strengthening of the U.S. dollar against the euro and, to a lesser extent, the Swedish krona, partially offset by the weakening of the U.S. dollar against the Chinese renminbi. In the first nine months of 2025, exchange rate changes resulted in a $5.9 million increase in cash, cash equivalents, and restricted cash primarily due to the weakening of the U.S. dollar against the euro and, to a lesser extent, the Swedish krona and the Canadian dollar.
Previous wording
In April 2026, we borrowed approximately $181.8 million of euro-denominated debt under our revolving credit facility to fund the acquisition of Kadant Profil. As of July 4, 2026, our outstanding balance under the Credit Agreement was $502.5 million, which included $245.5 million of euro-denominated borrowings, and we had $248.7 million of available committed borrowing capacity, in addition to a $200.0 million uncommitted, unsecured incremental borrowing facility. Under our debt agreements, our leverage ratio must be less than 3.75 to 1 or, if we elect, for the quarter during which a material acquisition occurs and for the three fiscal quarters thereafter, must be less than 4.25 to 1. As of July 4, 2026, our leverage ratio was 1.72 and we were in compliance with our debt covenants.
Current wording
During the second quarter of 2026, we borrowed approximately $181.8 million of euro-denominated debt under our revolving credit facility to fund the acquisition of Kadant Profil. As of October 3, 2026, outstanding borrowings under the Credit Agreement totaled $447.5 million, including $233.5 million of euro-denominated borrowings. We had $300.5 million of available committed borrowing capacity, as well as an additional $200.0 million of uncommitted, unsecured incremental borrowing capacity. Under our debt agreements, our leverage ratio must be less than 3.75 to 1 or, if we elect, for the quarter during which a material acquisition occurs and for the three fiscal quarters thereafter, must be less than 4.25 to 1. As of October 3, 2026, our leverage ratio was 1.49 and we were in compliance with our debt covenants.
Previous wording
We paid cash dividends of $8.3 million in the first six months of 2026. On May 21, 2026, we declared a quarterly cash dividend of $0.36 per share totaling $4.3 million that will be paid on August 13, 2026. Future declarations of dividends are subject to our board of directors' approval and may be adjusted as business needs or market conditions change. The declaration of cash dividends is subject to our compliance with the covenant in our Credit Agreement related to our consolidated leverage ratio.
Current wording
We paid cash dividends of $12.5 million in the first nine months of 2026. On September 10, 2026, we declared a quarterly cash dividend of $0.36 per share totaling $4.3 million that will be paid on November 12, 2026. Future declarations of dividends are subject to our board of directors' approval and may be adjusted as business needs or market conditions change. The declaration of cash dividends is subject to our compliance with the covenant in our Credit Agreement related to our consolidated leverage ratio.
Previous wording
We plan to make expenditures of approximately $12.0 to $16.0 million during the remainder of 2026 for property, plant, and equipment.
Current wording
We plan to make expenditures of approximately $9.0 to $11.0 million during the remainder of 2026 for property, plant, and equipment.
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