Kadant Revenue Hits Record on Acquisitions as Organic Bookings Slip
Kadant posted record quarterly revenue of $312.9 million, up 23% from a year earlier, even as organic bookings turned negative for the first time in over a year.
Kadant (KAI) reported record revenue of $312.9 million for the second quarter of 2026, up 23% from a year earlier. The growth accelerated from 18% in the first quarter and 11% in the fourth quarter of 2025, marking the fastest pace in more than a year.
The quarter's more notable shift came in organic performance. Organic revenue grew 8%, reversing a 1% organic decline in the first quarter and a 4% organic contraction in the third quarter of 2025. The turnaround came alongside a weaker signal on future demand: organic bookings fell 1% even as headline bookings, boosted by acquisitions, rose 16%. First-quarter organic bookings had grown 10%, so the swing to negative organic bookings growth stands out against an otherwise improving quarter.
Gross margin compressed 210 basis points from a year earlier to 43.8%, a steeper decline than the first quarter's 110-basis-point contraction to 45.0%. Pressure was due to unfavorable product mix and the addition of lower-margin acquired businesses. Adjusted EBITDA margin nonetheless expanded to a record 21.8%, up 130 basis points from a year earlier, ending three straight quarters of year-over-year margin compression that had run from 23.3% in the third quarter of 2025 down to 20.2% in the first quarter of 2026.
The Industrial Processing segment drove the quarter, with revenue up 50% to $143.8 million on 13% organic growth and Adjusted EBITDA margin expansion of 390 basis points to 26.1%. The segment's parts-and-consumables mix fell to 69% of revenue from 76% a year earlier as acquired capital-equipment businesses diluted the aftermarket share, pulling the consolidated mix down to 68% from 71%. Flow Control's Adjusted EBITDA margin slipped 120 basis points to 27.7% on European demand weakness even as bookings there rose 10.5%, while Material Handling posted the slowest segment growth, with revenue up 8.5% and margin down 30 basis points to 21.5%.
Operating cash flow grew 32% year over year to $53.5 million, reversing a 4% decline to $21.9 million in the first quarter. Capital expenditures nearly tripled to $10.9 million from $4.0 million a year earlier, causing free cash flow growth of 17% to trail the increase in operating cash flow. Net income rose 24% in the quarter, extending a re-acceleration that followed a 12% decline in the third quarter of 2025, a flat fourth quarter, and 6% growth in the first quarter of 2026.
Kadant raised its full-year revenue guidance to a range of $1.190 billion to $1.210 billion from $1.178 billion to $1.203 billion, the second consecutive quarterly increase after a similar raise in the first quarter. Full-year GAAP earnings guidance moved in the other direction, narrowing to $9.78 to $10.03 a share from $9.80 to $10.15, with the midpoint down about seven cents on incremental amortization and interest costs tied to acquisitions. Adjusted earnings guidance held roughly steady at $12.43 to $12.68 a share, a modest increase from the prior $12.33-to-$12.68 range.
The acquisitions financing the growth pushed net debt to $373.0 million, more than double the $151.7 million reported a year earlier and up from $243.5 million in the first quarter. Leverage rose to 1.72 times Adjusted EBITDA from 0.86 times a year earlier. The buildup follows a full-year 2025 in which net income fell 9% to $102.0 million and Adjusted EBITDA fell 6% to $216.3 million despite flat revenue, a stretch the first two quarters of 2026 have now reversed.