Kadant Inc.

05/13/2026 | Press release | Distributed by Public on 05/13/2026 12:42

Quarterly Report for Quarter Ending April 4, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
When we use the terms "we," "us," "our," and the "Company," we mean Kadant Inc., a Delaware corporation, and its consolidated subsidiaries, taken as a whole, unless the context otherwise indicates.
This Quarterly Report on Form 10-Q and the documents we incorporate by reference in this report include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements are not statements of historical fact and may include statements regarding possible or assumed future results of operations. Forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management, using information currently available to our management. When we use words such as "believes," "expects," "anticipates," "intends," "plans," "estimates," "seeks," "should," "likely," "will," "would," "may," "continue," "could," or similar expressions, we are making forward-looking statements.
Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions. Our future results of operations may differ materially from those expressed in the forward-looking statements. Many of the important factors that will determine these results are beyond our ability to control or predict. You should not put undue reliance on any forward-looking statements. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. For a discussion of important factors that may cause our actual results to differ materially from those suggested by the forward-looking statements, you should read carefully the section captioned Risk Factors, included in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended January 3, 2026 (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.
Overview
Company Background
We are a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing®. Our products and services play an integral role in enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries while helping our customers advance their sustainability initiatives with products that reduce waste or generate more yield with fewer inputs, particularly fiber, energy, and water. Producing more while consuming less is a core aspect of Sustainable Industrial Processing and a major element of the strategic focus of our business.
Our financial results are presented in three reportable segments consisting of our Flow Control segment, Industrial Processing segment, and Material Handling segment. A description of each reportable segment is as 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. Our 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. Our primary products include fiber processing systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers, custom-engineered knife systems, industrial 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. Our primary products include conveying and vibratory equipment and balers. In addition, we manufacture and sell biodegradable, absorbent granules used as carriers in agricultural, home lawn and garden, professional lawn, turf and ornamental applications, and for oil and grease absorption.
See Note 9, Business Segment Information, in the accompanying condensed consolidated financial statements for financial information on our reportable segments.
Industry and Business Overview
Consolidated bookings increased 19% to a record $320.8 million in the first quarter of 2026 compared to the fourth quarter of 2025 with increased demand across all three segments. Parts and consumables product bookings also reached a record level, increasing 15% compared to the fourth quarter of 2025, due in part to increased demand in anticipation of annual
KADANT INC.
maintenance shutdowns. Capital equipment product bookings increased 29% sequentially, reflecting improved customer confidence as tariff-related uncertainty eased. Customers, however, remain cautious with approvals for large capital projects pending greater clarity regarding input costs and broader economic conditions, which has more recently been impacted by the conflicts in the Middle East, resulting in a lengthening of quote-to-order times. This dynamic is more pronounced in our Industrial Processing segment, where average capital order values are significantly higher than in our other segments. We ended the quarter with a healthy backlog of $325.7 million.
Overall, we expect bookings in 2026 to exceed 2025 levels, largely driven by our Industrial Processing segment, where customer delays associated with pending orders from 2025 have resulted in a number of capital orders in the pipeline, combined with 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 incremental growth opportunities resulting from proposed and enacted legislation in the United States and internationally that is intended to stimulate investment.
An overview of our business by reportable segment is as follows:
•Flow Control - Our Flow Control segment bookings increased 19% compared to the fourth quarter of 2025, reflecting strong demand for both parts and consumables, as well as capital equipment products across all regions. This performance follows the last three quarters of 2025, where bookings were constrained as customers remained cautious regarding their capital spending decisions amid market uncertainty. We expect demand for both aftermarket parts and capital equipment products to increase in 2026 and continue to see long-term strength in our end markets.
•Industrial Processing - Our Industrial Processing segment bookings increased 19% compared to the fourth quarter of 2025, driven by strong demand for aftermarket parts. Demand for our capital equipment products also increased sequentially, but was negatively impacted by the volatility in capital project timing. Overall, we expect demand for our capital equipment products to strengthen in 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 steady in 2026.
•Material Handling - Our Material Handling segment bookings increased 17% compared to the fourth quarter of 2025, primarily driven by higher demand for aftermarket parts primarily in North America. We expect steady demand for aftermarket parts and increased demand for capital equipment products in this segment in 2026.
Our global operations have been and continue to be impacted by complex market conditions fueled by tariff-related uncertainty, 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.
International Sales
Approximately half of our sales are to customers outside the United States, mainly in Europe, Asia, and Canada. As a result, our financial performance can be materially affected by currency exchange rate fluctuations between the U.S. dollar and foreign currencies. To mitigate the impact of foreign currency transaction fluctuations, we generally seek to charge our customers in the same currency in which our operating costs are incurred. Additionally, we may enter into forward currency exchange contracts to hedge certain firm purchase and sale commitments denominated in currencies other than our subsidiaries' functional currencies. We currently do not use derivative instruments to hedge our exposure to exchange rate fluctuations created by the translation into the U.S. dollar of our foreign subsidiaries' results that are in functional currencies other than the U.S. dollar.
Global Trade
The United States has imposed tariffs in the past and more recently proposed and implemented new tariffs on certain imports, which has 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.
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Acquisitions
We expect that a significant driver of our long-term growth will be through the acquisition of businesses and technologies that complement or augment our existing products and services or may involve entry into a new process industry. We have acquired several businesses in recent years and continue to pursue acquisition opportunities.
On April 30, 2026, we completed the acquisition of voestalpine BÖHLER Profil GmbH & Co KG and voestalpine BÖHLER Profil VerwaltungsGmbH for 157.0 million euros, subject to certain customary adjustments. At closing, the company names were changed to 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.
Results of Operations
First Quarter 2026 Compared with First Quarter 2025
Revenue
The following table presents the change in revenue by segment between the first 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.
Revenue by reportable segment in the first quarters of 2026 and 2025 is as follows:
Three Months Ended
Increase
Acquisitions
Currency Translation
(Non-GAAP)
Change in Organic Revenue
(In thousands, except percentages) April 4,
2026 		March 29,
2025 		% Change
Increase (Decrease)
% Change
Flow Control $ 98,608 $ 92,441 $ 6,167 7% $ - $ 4,795 $ 1,372 1 %
Industrial Processing 123,038 89,524 33,514 37% 33,984 3,487 (3,957) (4) %
Material Handling
59,859 57,245 2,614 5% - 1,556 1,058 2 %
Consolidated $ 281,505 $ 239,210 $ 42,295 18% $ 33,984 $ 9,838 $ (1,527) (1) %
Consolidated revenue increased 18% in the first quarter of 2026, including a 14% increase from acquisitions. Organic revenue decreased 1%, as modest growth from aftermarket parts was offset by lower sales of capital equipment products. Demand for our parts and consumables products remained steady and represented 74% of total revenue in the first quarter of 2026. Customers continue to exercise caution with respect to approvals of large capital projects, reflecting uncertainty related to trade policy, cost visibility, and interest rates. This environment was further impacted by the economic effects from the conflicts in the Middle East. As a result, quote-to-order times for large capital equipment projects have lengthened. Geographically, volatility in tariffs and trade policies contributed to weaker organic performance in North America, which was partially offset by increased demand in China, driven by government-led initiatives aimed at stimulating domestic demand and manufacturing activity.
Revenue at our Flow Control segment increased 7% in the first quarter of 2026, primarily driven by higher demand for parts and consumables products across all regions. In addition, capital equipment product revenue increased in China due to the completion of several large projects that had previously been delayed.
Revenue at our Industrial Processing segment increased 37% in the first quarter of 2026 due to acquisitions and the favorable effect of foreign currency translation. Organic revenue decreased 4% reflecting constrained market conditions. While some of the tariff-related uncertainty that began in 2025 has moderated, more recent geopolitical tensions have continued to influence our customers' decision-making process. Organic revenue from parts and consumables products decreased 3%, with the most significant decline in North America, and organic revenue from capital equipment products decreased 10%. Despite these declines, quotation activity remains healthy, and bookings increased 19% in this segment compared to the fourth quarter of 2025.
Revenue at our Material Handling segment increased 5% in the first quarter of 2026, driven by strong demand for our parts and consumables products across all regions.
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Gross Profit Margin
Gross profit margin by reportable segment in the first quarters of 2026 and 2025 is as follows:
Three Months Ended Basis Point Change
April 4,
2026 		March 29,
2025
Flow Control
52.7%
53.3%
(60) bps
Industrial Processing
42.5%
44.1%
(160) bps
Material Handling
37.5%
37.7%
(20) bps
Consolidated
45.0%
46.1%
(110) bps
Consolidated gross profit margin decreased to 45.0% in the first quarter of 2026 from 46.1% in the first quarter of 2025. This decrease was primarily attributable to the inclusion of $1.4 million of amortization expense related to acquired profit in inventory in the first quarter of 2026, which reduced gross profit margin by 0.5 percentage points, and a lower gross margin profile associated with the product mix.
Within our reportable segments, gross profit margin:
•Decreased to 52.7% at our Flow Control segment from 53.3% in the 2025 period primarily due to lower margins achieved on our parts and consumables products.
•Decreased to 42.5% at our Industrial Processing segment from 44.1% in the 2025 period due to the inclusion of $1.4 million of amortization expense related to acquired profit in inventory in the 2026 period, which decreased gross profit margin in 2026 by 1.1 percentage points, and a decrease in the proportion of higher-margin parts and consumables product revenue, which decreased to 76% of consolidated revenue in the first quarter of 2026 compared to 80% in the prior year period.
•Decreased to 37.5% at our Material Handling segment from 37.7% in the 2025 period due to lower margins achieved on our capital equipment products.
Selling, General, and Administrative Expenses
Selling, general, and administrative (SG&A) expenses by reportable segment and Corporate in the first quarters of 2026 and 2025 are as follows:
Three Months Ended
(In thousands, except percentages) April 4,
2026 		March 29,
2025
Increase (Decrease)
% Change
Flow Control $ 26,367 $ 25,170 $ 1,197 5%
Industrial Processing 30,294 21,010 9,284 44%
Material Handling 14,403 13,508 895 7%
Corporate 11,474 11,533 (59) (1)%
Consolidated $ 82,538 $ 71,221 $ 11,317 16%
Consolidated as a Percentage of Revenue 29.3% 29.8%
Consolidated SG&A expenses increased $11.3 million, or 16%, in the first quarter of 2026 compared to the first quarter of 2025. This increase was primarily attributable to $7.9 million of SG&A expenses from acquisitions and an unfavorable impact from foreign currency translation of $2.8 million.
Within our reportable segments and Corporate, SG&A expenses:
•Increased $1.2 million at our Flow Control segment primarily due to a $1.4 million unfavorable impact from foreign currency translation.
•Increased $9.3 million at our Industrial Processing segment primarily due to $7.9 million of SG&A expenses from acquisitions, a $0.9 million unfavorable impact from foreign currency translation and $0.3 million in incremental acquisition-related costs.
•Increased $0.9 million at our Material Handling segment primarily due to a $0.5 million unfavorable impact from foreign currency translation and incremental selling-related costs.
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Interest Expense
Interest expense increased to $4.5 million in the first quarter of 2026 from $3.8 million in the first quarter of 2025 due to increased borrowings under our revolving credit facility, partially offset by a lower weighted-average interest rate. We expect interest expense will be higher for the remainder of 2026 compared to prior periods, primarily as a result of the borrowings used to finance our April 2026 acquisition of Kadant Profil.
Provision for Income Taxes
Provision for income taxes increased to $10.1 million in the first quarter of 2026 from $7.8 million in the first quarter of 2025.
The effective tax rate of 28.2% in the first quarter of 2026 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, nondeductible expenses, and state taxes.
The effective tax rate of 24.3% in the first quarter 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, the reversal of tax reserves associated with uncertain tax positions, and foreign tax credits.
Net Income
Net income increased to $25.8 million in the first quarter of 2026 from $24.4 million in the first quarter of 2025 primarily due to a $4.5 million increase in operating income, offset in part by a $0.7 million increase in interest expense and a $2.3 million increase in provision for income taxes (see discussions above for further details).
Non-GAAP Key Performance Indicators
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).
We use organic revenue to understand our trends and to forecast and evaluate our financial performance and compare revenue to prior periods (see discussion in Revenue above). Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude amortization expense related to acquired intangible assets, profit in inventory, and backlog (collectively, purchase accounting expenses); acquisition costs; and other income or expense, as indicated. We exclude purchase accounting expenses and acquisition costs to provide a more meaningful and consistent comparison of our operating results over time and with peer companies. While we have a history of acquisition activity, such transactions do not occur on a predictable cycle, and the size and nature of these transactions will vary. We believe it is important for investors to understand that these intangible assets were recorded as part of purchase accounting and that they contribute to revenue generation. We also exclude other items when they are not indicative of our core operating results and are not comparable to other periods, which have differing levels of incremental costs, expenditures or income, or none at all. Additionally, we use free cash flow in order to provide insight on our ability to generate cash for acquisitions and debt repayments, as well as for other investing and financing activities.
We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook. We believe that the inclusion of such measures helps investors gain an understanding of our underlying operating performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts and to the performance of our competitors. Such measures are also used by us in our financial and operating decision-making and for compensation purposes. We also believe this information is responsive to investors' requests and gives them additional measures of our performance.
Our non-GAAP financial measures are not meant to be considered superior to or a substitute for the results of operations or cash flows prepared in accordance with GAAP. In addition, our non-GAAP financial measures have limitations associated with their use as compared to the most directly comparable GAAP measures, in that they may be different from, and therefore not comparable to, similar measures used by other companies.
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A reconciliation of adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin from net income attributable to Kadant is as follows:
Three Months Ended
(In thousands, except percentages) April 4,
2026
March 29,
2025
Net Income Attributable to Kadant $ 25,509
$ 24,063
Net Income Attributable to Noncontrolling Interests
312
374
Provision for Income Taxes 10,142
7,828
Interest Expense, Net 4,133
3,305
Other Expense, Net 13
16
Operating Income 40,109
35,586
Intangible Asset Amortization Expense
8,385
6,320
Profit in Inventory Amortization Expense (a)
1,409
11
Backlog Amortization Expense (b)
-
379
Acquisition Costs 674
337
Indemnification Asset Provision (c)
-
(29)
Adjusted Operating Income (d) (non-GAAP measure)
50,577
42,604
Depreciation Expense
6,262
5,314
Adjusted EBITDA (non-GAAP measure)
$ 56,839
$ 47,918
Adjusted EBITDA Margin (non-GAAP measure)
20.2%
20.0%
(a) Represents amortization expense within cost of revenue associated with acquired profit in inventory.
(b) Represents intangible amortization expense associated with acquired backlog.
(c) Represents the net indemnification asset provision related to the establishment of tax reserves associated with uncertain tax positions.
(d) Reflects new methodology, announced on February 19, 2026, to exclude intangible amortization expense.
A reconciliation of free cash flow from cash flow provided by operating activities is as follows:
Three Months Ended
(In thousands) April 4,
2026 		March 29,
2025
Cash Provided by Operating Activities $ 21,916 $ 22,835
Capital Expenditures
(3,258) (3,836)
Free Cash Flow (non-GAAP measure)
$ 18,658 $ 18,999
Liquidity and Capital Resources
Consolidated working capital was $335.2 million at April 4, 2026, compared with $313.8 million at January 3, 2026. Cash and cash equivalents were $117.0 million at April 4, 2026, compared with $119.6 million at January 3, 2026, which included cash and cash equivalents held by our foreign subsidiaries of $107.2 million at April 4, 2026 and $100.3 million at January 3, 2026.
Cash Flow
Cash flow information in the first quarters of 2026 and 2025 is as follows:
Three Months Ended
(In thousands) April 4,
2026 		March 29,
2025
Net Cash Provided by Operating Activities $ 21,916 $ 22,835
Net Cash Used in Investing Activities (3,926) (3,836)
Net Cash Used in Financing Activities
(20,050) (23,085)
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash (804) 1,945
Decrease in Cash, Cash Equivalents, and Restricted Cash
$ (2,864) $ (2,141)
KADANT INC.
Operating Activities
Cash provided by operating activities decreased to $21.9 million in the first quarter of 2026 from $22.8 million in the first quarter 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.
Significant operating cash outflows associated with working capital in the first quarter of 2026 related to accounts receivable, inventory and other liabilities. An increase in accounts receivable used cash of $14.3 million due to the timing of shipments, and purchases of inventory used cash of $9.2 million. In addition, a decrease in other liabilities used cash of $10.6 million, primarily related to incentive compensation payments. These uses of cash were offset in part by cash received from customer deposits of $7.3 million due to the timing of capital equipment product orders.
Significant cash outflows associated with working capital in the first quarter of 2025 related to other liabilities and inventory. Decreases in other liabilities used cash of $14.3 million primarily related to incentive compensation payments, and purchases of inventory used cash of $5.5 million. These uses of cash were offset in part by cash provided from the reduction in contract assets of $6.3 million related to contracts accounted for on an over time basis.
Investing Activities
Cash used in investing activities was $3.9 million in the first quarter of 2026, compared with $3.8 million in the first quarter of 2025. Cash used in investing activities in the first quarter of 2026 included capital expenditures of $3.3 million and a post-closing holdback payment of $1.2 million related to a 2024 acquisition. Cash used in investing activities in the first quarter of 2025 consisted of capital expenditures of $3.8 million.
Financing Activities
Cash used in financing activities was $20.1 million in the first quarter of 2026, compared with $23.1 million in the first quarter of 2025. Borrowings under our revolving credit facility were $9.0 million and repayments of short- and long-term obligations were $19.1 million in 2026 compared with borrowings under our revolving credit facility of $8.0 million and repayments of short- and long-term obligations of $22.6 million in 2025. Cash dividends paid to stockholders were $4.0 million in 2026 and $3.8 million in 2025. In addition, taxes paid related to the vesting of equity awards were $4.9 million in 2026 and $6.0 million in 2025.
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash
The exchange rate effect on cash, cash equivalents, and restricted cash represents the impact of translation of cash balances at our foreign subsidiaries. The $0.8 million decrease in cash, cash equivalents, and restricted cash in the first quarter of 2026 related to exchange rates was primarily attributable to the strengthening of the U.S. dollar against several European currencies, offset in part by the weakening of the U.S. dollar against the Chinese renminbi. The $1.9 million increase in cash, cash equivalents, and restricted cash in the first quarter of 2025 related to exchange rates was primarily attributable to the weakening of the U.S. dollar against the euro, the Swedish krona, and the Brazilian real.
Borrowing Capacity and Debt Obligations
Our unsecured multi-currency revolving credit facility entered into on March 1, 2017 (as amended and restated to date, the Credit Agreement) matures on September 26, 2030 and has a borrowing capacity of $750.0 million.
As of April 4, 2026, our outstanding balance under the Credit Agreement was $355.4 million, which included $78.4 million of euro-denominated borrowings, and we had $394.6 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 April 4, 2026, our leverage ratio was 1.27 and we were in compliance with our debt covenants.
In April 2026, we borrowed 155.0 million euros under our revolving credit facility at an initial interest rate of 3.2% to fund our acquisition of Kadant Profil. Borrowings under our revolving credit facility bear variable rates of interest and adjust frequently based on prevailing market rates and the terms of our Credit Agreement. Following this acquisition, we had available committed borrowing capacity of approximately $211.8 million under our revolving credit facility, in addition to the uncommitted, unsecured incremental borrowing facility of $200.0 million.
See Note 5, Long-Term Obligations in the accompanying condensed consolidated financial statements for additional information regarding our debt obligations.
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Additional Liquidity and Capital Resources
On May 15, 2025, our board of directors approved the repurchase of up to $50.0 million of our equity securities during the period from May 15, 2025 to May 15, 2026. We have not repurchased any shares of our common stock under this authorization.
We paid cash dividends of $4.0 million in the first quarter of 2026. On March 11, 2026, we declared a quarterly cash dividend of $0.36 per share totaling $4.3 million that will be paid on May 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.
We plan to make expenditures of approximately $20.0 to $24.0 million during the remainder of 2026 for property, plant, and equipment.
As of April 4, 2026, we had approximately $153.6 million of total unremitted foreign earnings. It is our intent to indefinitely reinvest $87.4 million of these earnings to support the current and future capital needs of our foreign operations, including debt repayments, if any. In the first quarter of 2026, we recorded withholding taxes on the earnings in certain foreign subsidiaries that we plan to repatriate in the foreseeable future. The foreign withholding taxes that would be required if we were to remit the indefinitely-reinvested foreign earnings to the United States would be approximately $2.7 million.
We believe that existing cash and cash equivalents, along with future cash generated from operations, and our existing borrowing capacity will be sufficient to meet the capital requirements of our operations for the next 12 months and the foreseeable future.
Application of Critical Accounting Policies and Estimates
Management's discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities, and the reported amounts of revenue and expenses during the reporting period. Our critical accounting policies are defined as those that entail significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. Management evaluates its estimates on an ongoing basis based on historical experience, current economic and market conditions, and other assumptions management believes are reasonable. We believe that our most critical accounting policies which are significant to our consolidated financial statements, and which involve the most complex or subjective decisions or assessments, are those described in Management's Discussion and Analysis of Financial Condition and Results of Operations under the heading Application of Critical Accounting Estimates in Part II, Item 7, of our Annual Report. There have been no material changes to these critical accounting policies since the end of fiscal 2025 that warrant disclosure.
Recent Accounting Pronouncements
See Note 1, under the heading Recent Accounting Pronouncements, in the accompanying condensed consolidated financial statements for details.
Kadant Inc. published this content on May 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 13, 2026 at 18:42 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]