KAI

KADANT INC. Condensed Consolidated Balance Sheet (Unaudited) July 4, 2026 January 3, 2026 (In thousands, except share and per share amounts) Assets Current Assets: Cash and cash equivalents $ 134,533 $ 119,551 Restricted cash 3,091 3,130 Accounts receivable, net of allowances of $5,143 and $5,149 168,698 158,567 Inventories 216,459 206,854 Contract assets 9,025 6,599 Other current assets 49,017 47,232 Total Current Assets 580,823 541,933 Property, Plant, and Equipment, net of accumulated depreciation of $184,252 and $173,586 228,772 196,656 Other Assets 64,862 67,592 Intangible Assets, Net (Notes 1 and 2) 353,932 350,376 Goodwill (Notes 1 and 2) 660,907 555,621 Total Assets $ 1,889,296 $ 1,712,178 Liabilities and Stockholders' Equity Current Liabilities: Current maturities of long-term obligations (Note 5) $ 3,176 $ 3,129 Accounts payable 56,349 53,362 Accrued payroll and employee benefits 46,440 47,348 Accrued warranty costs 11,724 11,848 Customer deposits 49,460 56,867 Advanced billings 8,561 9,605 Other current liabilities 48,453 46,012 Total Current Liabilities 224,163 228,171 Long-Term Obligations (Note 5) 507,456 371,372 Deferred Income Taxes 64,052 62,479 Other Long-Term Liabilities 59,876 59,089 Commitments and Contingencies (Note 10) Stockholders' Equity: Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued — — Common stock, $.01 par value, 150,000,000 shares authorized; 14,624,159 shares issued 146 146 Capital in excess of par value 139,223 138,844 Retained earnings 995,116 945,641 Treasury stock at cost, 2,815,057 and 2,835,165 shares (68,980) (69,473) Accumulated other comprehensive items (Note 7) (42,551) (35,349) Total Kadant Stockholders' Equity 1,022,954 979,809 Noncontrolling interests 10,795 11,258 Total Stockholders' Equity 1,033,749 991,067 Total Liabilities and Stockholders' Equity $ 1,889,296 $ 1,712,178 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents KADANT INC. Condensed Consolidated Statement of Income (Unaudited) Three Months Ended Six Months Ended July 4, 2026 June 28, 2025 July 4, 2026 June 28, 2025 (In thousands, except per share amounts) Revenue (Notes 1 and 9) $ 312,875 $ 255,267 $ 594,380 $ 494,477 Costs and Operating Expenses: Cost of revenue 175,870 138,225 330,672 267,105 Selling, general, and administrative expenses 81,641 73,941 164,179 145,162 Research and development expenses 4,484 3,724 8,540 7,247 261,995 215,890 503,391 419,514 Operating Income 50,880 39,377 90,989 74,963 Interest Income 495 439 846 956 Interest Expense (5,314) (3,338) (9,798) (7,160) Other Expense, Net (32) (17) (45) (33) Income Before Provision for Income Taxes 46,029 36,461 81,992 68,726 Provision for Income Taxes (Note 4) 13,182 9,822 23,324 17,650 Net Income 32,847 26,639 58,668 51,076 Net Income Attributable to Noncontrolling Interests (379) (480) (691) (854) Net Income Attributable to Kadant $ 32,468 $ 26,159 $ 57,977 $ 50,222 Earnings per Share Attributable to Kadant (Note 3) Basic $ 2.75 $ 2.22 $ 4.91 $ 4.27 Diluted $ 2.75 $ 2.22 $ 4.91 $ 4.26 Weighted Average Shares (Note 3) Basic 11,808 11,776 11,801 11,768 Diluted 11,819 11,793 11,811 11,784 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents KADANT INC. Condensed Consolidated Statement of Comprehensive Income (Unaudited) Three Months Ended Six Months Ended July 4, 2026 June 28, 2025 July 4, 2026 June 28, 2025 (In thousands) Net Income $ 32,847 $ 26,639 $ 58,668 $ 51,076 Other Comprehensive Items: Foreign currency translation adjustment (3,762) 25,038 (7,248) 35,047 Pension and other post-retirement liability adjustments, net (net of tax (benefit) provision of $(2), $2, $(4), and $3) (3) 7 (8) 11 Other comprehensive items (3,765) 25,045 (7,256) 35,058 Comprehensive Income 29,082 51,684 51,412 86,134 Comprehensive Income Attributable to Noncontrolling Interests (360) (654) (637) (1,097) Comprehensive Income Attributable to Kadant $ 28,722 $ 51,030 $ 50,775 $ 85,037 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents KADANT INC. Condensed Consolidated Statement of Cash Flows (Unaudited) Six Months Ended July 4, 2026 June 28, 2025 (In thousands) Operating Activities Net income attributable to Kadant $ 57,977 $ 50,222 Net income attributable to noncontrolling interests 691 854 Net income 58,668 51,076 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 30,191 24,082 Stock-based compensation expense 5,795 5,820 Provision for (recovery of) losses on accounts receivable 92 (44) Other items, net 5,333 3,783 Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable (7,362) (3,126) Contract assets (2,384) 7,665 Inventories 1,153 (14,804) Other assets (159) (2,778) Accounts payable (37) (608) Customer deposits (7,482) 9,360 Other liabilities (8,382) (17,109) Net cash provided by operating activities 75,426 63,317 Investing Activities Acquisitions, net of cash acquired (Note 2) (171,768) — Purchases of property, plant, and equipment (14,205) (7,804) Proceeds from sale of property, plant, and equipment 439 166 Other investing activities 441 698 Net cash used in investing activities (185,093) (6,940) Financing Activities Proceeds from issuance of long-term obligations (Note 5) 190,903 8,000 Repayment of long-term obligations (49,214) (56,930) Tax withholding payments related to stock-based compensation (4,924) (6,056) Dividends paid (8,259) (7,766) Proceeds from issuance of Company common stock — 2,101 Dividends paid to noncontrolling interests (1,100) (825) Payment of debt issuance costs (27) — Net cash provided by (used in) financing activities 127,379 (61,476) Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash (2,769) 6,341 Increase in Cash, Cash Equivalents, and Restricted Cash 14,943 1,242 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 122,681 95,946 Cash, Cash Equivalents, and Restricted Cash at End of Period $ 137,624 $ 97,188 See Note 1, Nature of Operations and Summary of Significant Accounting Policies, under the heading Supplemental Cash Flow Information for further details. The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents KADANT INC. Condensed Consolidated Statement of Stockholders' Equity (Unaudited) Three Months Ended July 4, 2026 (In thousands, except share and per share amounts) Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Items Noncontrolling Interests Total Stockholders' Equity Shares Amount Shares Amount Balance at April 4, 2026 14,624,159 $ 146 $ 136,360 $ 966,899 2,815,702 $ (68,996) $ (38,805) $ 10,545 $ 1,006,149 Net income — — — 32,468 — — — 379 32,847 Dividend declared – Common Stock, $0.36 per share — — — (4,251) — — — — (4,251) Activity under stock plans — — 2,863 — (645) 16 — — 2,879 Dividend paid to noncontrolling interest — — — — — — — (110) (110) Other comprehensive items — — — — — — (3,746) (19) (3,765) Balance at July 4, 2026 14,624,159 $ 146 $ 139,223 $ 995,116 2,815,057 $ (68,980) $ (42,551) $ 10,795 $ 1,033,749 Six Months Ended July 4, 2026 (In thousands, except share and per share amounts) Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Items Noncontrolling Interests Total Stockholders' Equity Shares Amount Shares Amount Balance at January 3, 2026 14,624,159 $ 146 $ 138,844 $ 945,641 2,835,165 $ (69,473) $ (35,349) $ 11,258 $ 991,067 Net income — — — 57,977 — — — 691 58,668 Dividends declared – Common Stock, $0.72 per share — — — (8,502) — — — — (8,502) Activity under stock plans — — 379 — (20,108) 493 — — 872 Dividends paid to noncontrolling interest — — — — — — — (1,100) (1,100) Other comprehensive items — — — — — — (7,202) (54) (7,256) Balance at July 4, 2026 14,624,159 $ 146 $ 139,223 $ 995,116 2,815,057 $ (68,980) $ (42,551) $ 10,795 $ 1,033,749 Three Months Ended June 28, 2025 (In thousands, except share and per share amounts) Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Items Noncontrolling Interests Total Stockholders' Equity Shares Amount Shares Amount Balance at March 29, 2025 14,624,159 $ 146 $ 128,272 $ 879,752 2,848,300 $ (69,795) $ (62,424) $ 10,619 $ 886,570 Net income — — — 26,159 — — — 480 26,639 Dividend declared – Common Stock, $0.34 per share — — — (4,004) — — — — (4,004) Activity under stock plans — — 3,007 — (1,454) 36 — — 3,043 Other comprehensive items — — — — — — 24,871 174 25,045 Balance at June 28, 2025 14,624,159 $ 146 $ 131,279 $ 901,907 2,846,846 $ (69,759) $ (37,553) $ 11,273 $ 937,293 Six Months Ended June 28, 2025 (In thousands, except share and per share amounts) Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Items Noncontrolling Interests Total Stockholders' Equity Shares Amount Shares Amount Balance at December 28, 2024 14,624,159 $ 146 $ 130,180 $ 859,693 2,878,080 $ (70,524) $ (72,368) $ 11,001 $ 858,128 Net income — — — 50,222 — — — 854 51,076 Dividends declared – Common Stock, $0.68 per share — — — (8,008) — — — — (8,008) Activity under stock plans — — 1,099 — (31,234) 765 — — 1,864 Dividend paid to noncontrolling interest — — — — — — — (825) (825) Other comprehensive items — — — — — — 34,815 243 35,058 Balance at June 28, 2025 14,624,159 $ 146 $ 131,279 $ 901,907 2,846,846 $ (69,759) $ (37,553) $ 11,273 $ 937,293 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Kadant Inc. was incorporated in Delaware in November 1991 and trades on the New York Stock Exchange under the ticker symbol "KAI." Kadant Inc. (together with its subsidiaries, the Company) is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing®. Its products and services play an integral role in enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries while helping 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 the Company's three reportable segments consisting of the Flow Control segment, Industrial Processing segment, and Material Handling segment. Interim Financial Statements The interim condensed consolidated financial statements and related notes presented have been prepared by the Company, are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the Company's financial position at July 4, 2026, its results of operations, comprehensive income, and stockholders' equity for the three- and six-month periods ended July 4, 2026 and June 28, 2025, and its cash flows for the six-month periods ended July 4, 2026 and June 28, 2025. Interim results are not necessarily indicative of results for a full year or for any other interim period. The condensed consolidated balance sheet presented as of January 3, 2026 has been derived from the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2026 (Annual Report). The condensed consolidated financial statements and related notes are presented as permitted by the rules and regulations of the Securities and Exchange Commission (SEC) for Form 10-Q and do not contain certain information included in the annual consolidated financial statements and related notes of the Company. The condensed consolidated financial statements and notes included herein should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report. Use of Estimates and Critical Accounting Policies The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Although the Company makes every effort to ensure the accuracy of the estimates and assumptions used in the preparation of its condensed consolidated financial statements or in the application of accounting policies, if business conditions were different, or if the Company were to use different estimates and assumptions, it is possible that materially different amounts could be reported in the Company's condensed consolidated financial statements. Note 1 to the consolidated financial statements in the Annual Report describes the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the Company’s significant accounting policies during the six months ended July 4, 2026. Supplemental Cash Flow Information Six Months Ended (In thousands) July 4, 2026 June 28, 2025 Cash Paid for Interest $ 9,459 $ 6,993 Cash Paid for Income Taxes, Net of Refunds $ 25,079 $ 23,825 Non-Cash Investing Activities: Deferred purchase consideration $ 719 $ — Purchases of property, plant, and equipment in accounts payable $ 1,525 $ 1,090 Non-Cash Financing Activities: Issuance of Company common stock upon vesting of restricted stock units $ 5,834 $ 5,450 Dividends declared but unpaid $ 4,251 $ 4,004 8 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) Restricted Cash The Company's restricted cash generally serves as collateral for bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business and for certain banker's acceptance drafts issued to vendors. The majority of these restrictions will expire over the next twelve months. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the accompanying condensed consolidated balance sheet that are shown in aggregate in the accompanying condensed consolidated statement of cash flows: (In thousands) July 4, 2026 January 3, 2026 June 28, 2025 December 28, 2024 Cash and cash equivalents $ 134,533 $ 119,551 $ 95,321 $ 94,660 Restricted cash 3,091 3,130 1,867 1,286 Total Cash, Cash Equivalents, and Restricted Cash $ 137,624 $ 122,681 $ 97,188 $ 95,946 Inventories The components of inventories are as follows: July 4, 2026 January 3, 2026 (In thousands) Raw Materials $ 91,574 $ 92,674 Work in Process 55,062 44,455 Finished Goods (includes $1,526 and $3,556 at customer locations) 69,823 69,725 $ 216,459 $ 206,854 Intangible Assets, Net Acquired intangible assets by major asset class are as follows: (In thousands) Gross Accumulated Amortization Currency Translation Net July 4, 2026 Definite-Lived Customer relationships $ 421,763 $ (161,147) $ (5,754) $ 254,862 Product technology 112,180 (58,082) (2,460) 51,638 Tradenames 23,926 (6,772) (420) 16,734 Other 25,221 (22,627) (563) 2,031 583,090 (248,628) (9,197) 325,265 Indefinite-Lived Tradenames 29,059 — (392) 28,667 Acquired Intangible Assets $ 612,149 $ (248,628) $ (9,589) $ 353,932 January 3, 2026 Definite-Lived Customer relationships $ 414,629 $ (148,139) $ (4,483) $ 262,007 Product technology 96,744 (54,929) (2,076) 39,739 Tradenames 23,926 (6,106) (366) 17,454 Other 25,221 (22,443) (574) 2,204 560,520 (231,617) (7,499) 321,404 Indefinite-Lived Tradenames 29,059 — (87) 28,972 Acquired Intangible Assets $ 589,579 $ (231,617) $ (7,586) $ 350,376 9 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) Intangible assets are recorded at fair value at the date of acquisition. Subsequent impairment charges are reflected as a reduction in the gross balance, as applicable. Definite-lived intangible assets are stated net of accumulated amortization and currency translation in the accompanying condensed consolidated balance sheet. The Company amortizes definite-lived intangible assets over lives that have been determined based on the anticipated cash flow benefits of the intangible asset. Intangible assets related to the Company's 2026 acquisition totaled $22,219,000. See Note 2, Acquisitions, for further details. Goodwill The changes in the carrying amount of goodwill by reportable segment are as follows: (In thousands) Flow Control Industrial Processing Material Handling Total Balance at January 3, 2026 Gross balance $ 139,759 $ 306,319 $ 195,081 $ 641,159 Accumulated impairment losses — (85,538) — (85,538) Net balance 139,759 220,781 195,081 555,621 2026 Activity Acquisition (Note 2) — 111,140 — 111,140 Measurement-period adjustments for 2025 acquisitions — 1,328 — 1,328 Currency translation (1,667) (4,730) (785) (7,182) Total 2026 activity (1,667) 107,738 (785) 105,286 Balance at July 4, 2026 Gross balance 138,092 414,057 194,296 746,445 Accumulated impairment losses — (85,538) — (85,538) Net balance $ 138,092 $ 328,519 $ 194,296 $ 660,907 Revenue Recognition Most of the Company’s revenue relates to products and services that require minimal customization and is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. The remaining portion of the Company’s revenue is recognized over time based on an input method that compares the costs incurred to date to the total expected costs required to satisfy the performance obligation. Contracts are accounted for on an over time basis when they include products which have no alternative use and an enforceable right to payment over time. Most of the contracts recognized on an over time basis are for large capital equipment projects. These projects are highly customized for the customer and, as a result, would include a significant cost to rework in the event of cancellation. The following table presents revenue by revenue recognition method: Three Months Ended Six Months Ended July 4, June 28, July 4, June 28, (In thousands) 2026 2025 2026 2025 Point in Time $ 290,898 $ 234,836 $ 557,058 $ 452,504 Over Time 21,977 20,431 37,322 41,973 $ 312,875 $ 255,267 $ 594,380 $ 494,477 The Company disaggregates its revenue from contracts with customers by reportable segment, product type and geography as this best depicts how its revenue is affected by economic factors. 10 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents the disaggregation of revenue by product type and geography: Three Months Ended Six Months Ended July 4, June 28, July 4, June 28, (In thousands) 2026 2025 2026 2025 Revenue by Product Type: Parts and consumables $ 214,163 $ 181,783 $ 423,662 $ 361,091 Capital 98,712 73,484 170,718 133,386 $ 312,875 $ 255,267 $ 594,380 $ 494,477 Revenue by Geography (based on customer location): North America $ 186,796 $ 157,968 $ 353,359 $ 317,838 Europe 72,842 63,230 135,044 112,571 Asia 33,544 20,941 64,300 39,643 Rest of world 19,693 13,128 41,677 24,425 $ 312,875 $ 255,267 $ 594,380 $ 494,477 See Note 9, Business Segment Information, for information on the disaggregation of revenue by reportable segment. The following table presents contract balances from contracts with customers: July 4, 2026 January 3, 2026 (In thousands) Contract Assets $ 9,025 $ 6,599 Contract Liabilities $ 59,991 $ 69,093 Contract assets represent unbilled revenue associated with revenue recognized on contracts accounted for on an over time basis, which will be billed in future periods based on the contract terms. Contract liabilities consist of short- and long-term customer deposits, advanced billings, and deferred revenue. Deferred revenue is included in other current liabilities, and long-term customer deposits are included in other long-term liabilities in the accompanying condensed consolidated balance sheet. Contract liabilities will be recognized as revenue in future periods once the revenue recognition criteria are met. The majority of the contract liabilities relate to advance payments on contracts accounted for at a point in time. These advance payments will be recognized as revenue when the Company's performance obligations have been satisfied, which typically occurs when the product has shipped and control of the asset has transferred to the customer. The Company recognized revenue of $18,898,000 in the second quarter of 2026 and $13,238,000 in the second quarter of 2025, and $50,906,000 in the first six months of 2026 and $30,797,000 in the first six months of 2025 that was included in the contract liabilities balance at the beginning of 2026 and 2025, respectively. The majority of the Company's contracts for capital equipment products have an original expected duration of one year or less. Certain capital equipment product contracts require longer lead times and could take up to 24 months to complete. For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining unsatisfied or partially unsatisfied performance obligations was $32,673,000 as of July 4, 2026. The Company will recognize revenue for these performance obligations as they are satisfied, approximately 54% of which is expected to occur within the next twelve months and the remaining 46% thereafter. Note Receivable The Company entered into several agreements with the local government in China, which became effective in 2022, to sell its then-existing manufacturing building and land use rights at one of its subsidiaries in China and relocate to a new facility. The Company received a 31% down payment, with the remaining balance due on the earlier of the sale of the property by the local government or two years from the effective date of the agreements. To date, the local government in China has made various interim payments and the outstanding receivable was $13,553,000 at July 4, 2026, which is included in other current assets in the accompanying condensed consolidated balance sheet. The Company expects this receivable will be repaid in full, although the timing is uncertain. 11 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) Banker's Acceptance Drafts Included in Accounts Receivable The Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are non-interest bearing obligations of the issuing bank and generally mature within six months of the origination date. The Company's Chinese subsidiaries may sell the drafts at a discount to a third-party financial institution or transfer the drafts to vendors in settlement of current accounts payable prior to the scheduled maturity date. These drafts, which totaled $6,347,000 at July 4, 2026 and $9,115,000 at January 3, 2026, are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date. Income Taxes In accordance with Accounting Standards Codification (ASC) 740, Income Taxes (ASC 740), the Company recognizes deferred income taxes based on the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in effect for the year in which these differences are expected to reverse. A tax valuation allowance is established, as needed, to reduce deferred tax assets to the amount expected to be realized. In the period in which it becomes more likely than not that some or all of the deferred tax assets will be realized, the valuation allowance will be adjusted. It is the Company's policy to provide for uncertain tax positions and the related interest and penalties based upon management's assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. At July 4, 2026, the Company believes that it has appropriately accounted for any liability for unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established, the statute of limitations expires for a tax jurisdiction year, or the Company is required to pay amounts in excess of the liability, its effective tax rate in a given financial statement period may be affected. In December 2021, the Organisation for Economic Co-operation and Development (OECD) released model rules introducing a new 15% global minimum tax for large multinational enterprises with an annual global revenue exceeding 750,000,000 euros (Pillar Two Rules). Since the release of the Pillar Two Rules, the OECD has issued multiple tranches of administrative guidance, as well as guidance on transitional safe harbor relief. Various countries, including the member states of the European Union, have adopted the Pillar Two Rules into their domestic laws, with certain rules coming into effect for fiscal years beginning in fiscal 2024. While the Pillar Two Rules serve as a framework for implementing the minimum tax, countries may enact domestic laws that vary slightly from the Pillar Two Rules and may also adjust domestic tax incentives to align with the Pillar Two Rules on different timelines. In January 2026, the OECD released additional administrative guidance (Side-by-Side package) introducing new safe harbors. The package includes an elective Side-by-Side safe harbor that, subject to adoption into local law, may exempt eligible U.S. parented multinational groups from the application of certain aspects of the global minimum tax regime for fiscal years beginning on or after January 1, 2026. The Company continues to evaluate the applicability of available safe harbors, monitor developments in OECD guidance and related local-country implementation, and assess the potential impact on the Company’s future Pillar Two compliance obligations and effective tax rate. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions, including 100% bonus depreciation, domestic research cost expensing pursuant to Internal Revenue Code Section 174, and changes to the calculation of the interest expense limitation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. There was no material impact from the OBBBA provisions during the six months ended July 4, 2026. The Company will continue to monitor the impact of the OBBBA and any additional clarifications or interpretive guidance related to the OBBBA as it is released. Recent Accounting Pronouncements Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosure (Topic 220). In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, to disaggregate operating expense into specific categories to provide enhanced transparency into the nature and function of expenses. This ASU is effective for fiscal year-end 2027 and interim periods beginning in fiscal 2028, with early adoption permitted and may be applied retrospectively. The Company is currently evaluating the effect that the adoption of this ASU will have on its consolidated financial statements. 12 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. In July 2025, the FASB issued ASU No. 2025-05, to provide for a practical expedient permitting an entity to assume that conditions at the balance sheet date remained unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets accounted for under ASC 606, Revenue from Contracts with Customers. The Company adopted this ASU during the first quarter of 2026, which did not have an impact on its consolidated financial statements. Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. In September 2025, the FASB issued ASU No. 2025-06 which improves the practicality of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. Under this ASU, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, it is probable that the project will be completed, and the software will be used to perform the function intended. This ASU is effective for fiscal year 2028, with early adoption permitted and may be applied retrospectively. The Company is currently evaluating the effect that the adoption of this ASU will have on its consolidated financial statements. Interim Reporting (Topic 270): Narrow-Scope Improvements. In December 2025, the FASB issued ASU No. 2025-11, which clarifies the guidance to improve the consistency of interim reporting. This ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have had a material impact on the entity. This ASU is effective for fiscal year 2028, with early adoption permitted. The Company is currently evaluating the effect that the adoption of this ASU will have on its consolidated financial statements. Environmental Credits and Environmental Credit Obligations (Topic 818). In May 2026, the FASB issued ASU No. 2026-02, which establishes guidance for the recognition, measurement, presentation, and disclosure of environmental credits and environmental credit obligations. This ASU is intended to reduce diversity in practice for entities that generate, purchase, sell, or use environmental credits. This ASU is effective for annual and interim reporting periods beginning in fiscal year 2028, with early adoption permitted. The Company is currently evaluating the effect that adoption of this ASU will have on its consolidated financial statements. 2. Acquisitions The Company's acquisitions are accounted for using the acquisition method of accounting. The results of the acquired businesses are included in its condensed consolidated financial statements from the date of acquisition. Historically, acquisitions have been made at prices above the fair value of identifiable net assets, resulting in the recognition of goodwill. Acquisition costs were $604,000 in the second quarter of 2026 and $1,278,000 in the six months ended July 4, 2026, and are included in selling, general and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income. 2026 On January 29, 2026, the Company entered into a definitive agreement to acquire the shares of voestalpine BÖHLER Profil GmbH & Co KG and voestalpine BÖHLER Profil VerwaltungsGmbH. The acquisition was completed on April 30, 2026 for $170,132,000, net of cash acquired and the noncash settlement of a pre-existing balance with the acquired entity, and remains subject to a post-closing purchase price adjustment. The acquisition was funded through borrowings under the Company's revolving credit facility. 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 the Company's Industrial Processing segment. The Company expects the acquisition to generate synergies by expanding product sales into new markets through its global sales network and relationships, broadening its product portfolio, strengthening its position in the markets it serves, leveraging the acquired workforce, and achieving internal production efficiencies. Goodwill recognized in the Kadant Profil acquisition was $111,140,000 and separately identifiable intangible assets acquired were $22,219,000, both of which are expected to be fully deductible for income tax purposes over 15 years. 13 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table summarizes the preliminary estimated fair values of assets acquired and liabilities assumed in connection with the acquisition of Kadant Profil. (In thousands) Total Cash and Cash Equivalents $ 2,917 Accounts Receivable 3,867 Inventories 14,401 Property, Plant and Equipment 31,481 Other Assets 305 Definite-Lived Intangible Assets Customer relationships 6,900 Product technology 15,319 Goodwill 111,140 Total assets acquired $ 186,330 Accounts Payable $ 3,209 Other Current Liabilities 6,104 Long-Term Obligations 3,249 Total liabilities assumed 12,562 Net assets acquired $ 173,768 Purchase Price: Cash consideration $ 176,964 Noncash settlement of pre-existing balance with the acquired entity (3,915) Estimated post-closing adjustment 719 $ 173,768 The weighted-average amortization period for the definite-lived intangible assets related to the Kadant Profil acquisition is 17 years, including weighted-average periods of 24 years for customer relationships and 14 years for product technology. The preliminary purchase price allocation for the Kadant Profil acquisition remains subject to revision as the Company continues to obtain information regarding the valuation of certain acquired assets and assumed liabilities. The Company expects the remaining purchase price adjustments to primarily relate to the valuation of intangible assets and inventory. 2025 During the six months ended July 4, 2026, the Company recorded measurement-period adjustments related to its acquisitions of Babbini S.p.A. and G.P.S. Engineering S.r.l. (collectively, Babbini) on July 9, 2025, and Clyde Industries Holdings, Inc. and its subsidiaries (collectively, Clyde Industries) on October 7, 2025. The adjustments primarily related to inventory and deferred income taxes and were not material to the Company's condensed consolidated financial statements as of and for the three and six months ended July 4, 2026. The preliminary purchase price allocation for the Clyde Industries acquisition remains subject to revision as the Company continues to obtain information regarding the valuation of certain acquired assets and assumed liabilities. The Company expects the remaining purchase price adjustments will primarily relate to the valuation of inventory and deferred income taxes. 2024 On August 21, 2024, the Company acquired a technology company, which is included in its Material Handling segment. The total purchase price was approximately $11,785,000, which included cash paid of $8,843,000, net of cash acquired, a post-closing holdback payment of $1,157,000, which was paid during the first quarter of 2026, and contingent consideration with a fair value of $1,785,000 as of the acquisition date. The contingent consideration is payable upon the achievement of certain revenue performance targets earned between June 30, 2025 and June 30, 2027. The maximum future value of the contingent consideration subject to payment is approximately $12,140,000, calculated using the foreign currency spot rate at July 4, 2026. The fair value of the contingent consideration is dependent on the following assumptions: the 14 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) probability of successful achievement of certain revenue targets, forecasted revenue, revenue volatility, and discount rate. See Note 8, Fair Value Measurements and Fair Value of Financial Instruments, for additional information related to the fair value of the contingent consideration assumed in the acquisition. 3. Earnings per Share Basic and diluted earnings per share (EPS) were calculated as follows: Three Months Ended Six Months Ended (In thousands, except per share amounts) July 4, 2026 June 28, 2025 July 4, 2026 June 28, 2025 Net Income Attributable to Kadant $ 32,468 $ 26,159 $ 57,977 $ 50,222 Basic Weighted Average Shares 11,808 11,776 11,801 11,768 Effect of Restricted Stock Units and Employee Stock Purchase Plan Shares 11 17 10 16 Diluted Weighted Average Shares 11,819 11,793 11,811 11,784 Basic Earnings per Share $ 2.75 $ 2.22 $ 4.91 $ 4.27 Diluted Earnings per Share $ 2.75 $ 2.22 $ 4.91 $ 4.26 The effect of outstanding and unvested restricted stock units (RSUs) of the Company’s common stock totaling 27,000 shares in the second quarter of 2026, 27,000 shares in the second quarter of 2025, 36,000 shares in the first six months of 2026 and 26,000 shares in the first six months of 2025 were not included in the computation of diluted EPS for the respective periods as the effect would have been antidilutive or, for unvested performance-based RSUs, the performance conditions had not been met as of the end of the respective reporting periods. 4. Provision for Income Taxes The provision for income taxes was $23,324,000 in the first six months of 2026 and $17,650,000 in the first six months of 2025. The effective tax rate of 28.4% in the first six months of 2026 was higher than the Company’s statutory rate of 21% primarily due to the distribution of the Company’s worldwide earnings, state taxes, and nondeductible expenses. The effective tax rate of 25.7% in the first six months of 2025 was higher than the Company's statutory rate of 21% primarily due to nondeductible expenses, the distribution of the Company's worldwide earnings, and state taxes. These items were offset in part by net excess income tax benefits from stock-based compensation arrangements. 5. Long-Term Obligations Long-term obligations are as follows: July 4, 2026 January 3, 2026 (In thousands) Revolving Credit Facility, due 2030 $ 502,452 $ 366,707 Senior Promissory Notes, due 2026 to 2028 4,990 4,990 Finance Leases, due 2026 to 2030 2,393 1,781 Other Borrowings, due 2026 to 2031 797 1,023 Total 510,632 374,501 Less: Current Maturities of Long-Term Obligations (3,176) (3,129) Long-Term Obligations $ 507,456 $ 371,372 See Note 8, Fair Value Measurements and Fair Value of Financial Instruments, for the fair value information related to the Company's long-term obligations. 15 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) Revolving Credit Facility The Company's unsecured multi-currency revolving credit facility dated as of March 1, 2017 (as amended and restated to date, the Credit Agreement) matures on September 26, 2030 and has a borrowing capacity of $750,000,000, in addition to an uncommitted, unsecured incremental borrowing facility of $200,000,000. During the second quarter of 2026, the Company borrowed approximately $181,815,000 of euro-denominated debt under the Credit Agreement to finance the acquisition of Kadant Profil. As of July 4, 2026, the outstanding balance under the Credit Agreement was $502,452,000, which included $245,452,000 of euro-denominated borrowings. The Company had $248,668,000 of committed borrowing capacity available as of July 4, 2026, which was primarily calculated by translating its foreign-denominated borrowings using the administrative agent's borrowing date foreign exchange rates, in addition to the $200,000,000 uncommitted, unsecured incremental borrowing facility. The weighted average interest rate for the outstanding balance under the Credit Agreement was 4.19% as of July 4, 2026 and 4.49% as of January 3, 2026. Debt Compliance As of July 4, 2026, the Company was in compliance with the covenants related to its debt obligations. 6. Stock-Based Compensation The Company recognized stock-based compensation expense of $2,879,000 in the second quarter of 2026, $3,063,000 in the second quarter of 2025, $5,795,000 in the first six months of 2026 and $5,820,000 in the first six months of 2025 within SG&A expenses in the accompanying condensed consolidated statement of income. Unrecognized compensation expense related to stock-based compensation totaled $14,556,000 at July 4, 2026, which will be recognized over a weighted average period of 1.8 years. Non-Employee Director RSUs On March 11, 2026, the Company granted an aggregate of 2,565 RSUs to its non-employee directors with an aggregate grant date fair value of $850,000. Twenty-five percent of the RSUs vest on the last day of each fiscal quarter in 2026, subject to the director's continued service through the applicable vesting date. Performance-based RSUs On March 10, 2026, the Company granted performance-based RSUs to certain of its officers, which represented, in aggregate, the right to receive 18,665 shares (target RSU amount), with an aggregate grant date fair value of $6,186,000. The RSUs are subject to adjustment based on the achievement of the performance measure selected for the fiscal year, which is a specified target for adjusted earnings before interest, taxes, depreciation, and amortization (target adjusted EBITDA) generated from operations for the fiscal year. The RSUs are adjusted by comparing the actual adjusted EBITDA for the performance period to the target adjusted EBITDA. Actual adjusted EBITDA between 50% and 100% of the target adjusted EBITDA results in an adjustment of 50% to 100% of the target RSU amount. Actual adjusted EBITDA between 100% and 115% of the target adjusted EBITDA results in an adjustment using a straight-line linear scale between 100% and 150% of the target RSU amount. Actual adjusted EBITDA in excess of 115% results in an adjustment capped at 150% of the target RSU amount. If actual adjusted EBITDA is below 50% of the target adjusted EBITDA for the 2026 fiscal year, these performance-based RSUs will be forfeited. The Company recognizes compensation expense based on the probable number of performance-based RSUs expected to vest. Following the adjustment, the performance-based RSUs will be subject to additional time-based vesting, and will vest in three equal annual installments on March 10 of 2027, 2028, and 2029, provided that the officer is employed by the Company on the applicable vesting dates. Time-based RSUs On March 10, 2026, the Company granted time-based RSUs representing 13,658 shares to certain of its officers and employees with an aggregate grant date fair value of $4,526,000. These time-based RSUs vest in three equal annual installments on March 10 of 2027, 2028, and 2029, provided that a recipient is employed by the Company on the applicable vesting dates. 16 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) 7. Accumulated Other Comprehensive Items Comprehensive income combines net income and other comprehensive items, which represent certain amounts that are reported as components of stockholders' equity in the accompanying condensed consolidated balance sheet. Changes in each component of accumulated other comprehensive items (AOCI), net of tax, are as follows: (In thousands) Foreign Currency Translation Adjustment Pension and Other Post-Retirement Benefit Liability Adjustments Total Balance at January 3, 2026 $ (35,369) $ 20 $ (35,349) Other comprehensive items before reclassifications (7,194) (3) (7,197) Reclassifications from AOCI — (5) (5) Net current period other comprehensive items (7,194) (8) (7,202) Balance at July 4, 2026 $ (42,563) $ 12 $ (42,551) 8. Fair Value Measurements and Fair Value of Financial Instruments Fair value measurement is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: •Level 1—Quoted prices in active markets for identical assets or liabilities. •Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. •Level 3—Unobservable inputs based on the Company's own assumptions. The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis: Fair Value as of July 4, 2026 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits (a) $ 20,740 $ — $ — $ 20,740 Banker's acceptance drafts (b) $ — $ 6,347 $ — $ 6,347 Liabilities: Contingent consideration (c) $ — $ — $ 2,012 $ 2,012 Fair Value as of January 3, 2026 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits (a) $ 14,139 $ — $ — $ 14,139 Banker's acceptance drafts (b) $ — $ 9,115 $ — $ 9,115 Liabilities: Contingent consideration (c) $ — $ — $ 1,941 $ 1,941 (a)Included in cash and cash equivalents in the accompanying condensed consolidated balance sheet. (b)Included in accounts receivable in the accompanying condensed consolidated balance sheet. (c)Included in other long-term liabilities in the accompanying condensed consolidated balance sheet. The Company uses the market approach technique to value its Level 1 and Level 2 financial assets and liabilities, and there were no changes in valuation techniques during the first six months of 2026. Banker's acceptance drafts are carried at face value, which approximates their fair value due to the short-term nature of the negotiable instrument. The Company uses the income approach technique to estimate the fair value of its Level 3 contingent consideration, including valuation models that incorporate probability adjusted assumptions and simulations related to the achievement of milestones and the likelihood of making the related payment. The unobservable inputs used in the fair value measurements 17 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) include the probability of successful achievement of certain revenue targets, forecasted revenue, revenue volatility, and discount rates. These assumptions were estimated based on a review of historical and projected results. Projected contingent consideration related to revenue-based payments is discounted back to the current period using a discounted cash flow model. Changes to the fair value of contingent consideration can result from changes to one or multiple inputs, including the discount rate, projected revenue, revenue volatility, and the assumed probabilities of successful achievement of certain revenue targets. There were no changes in the valuation techniques or significant unobservable inputs used in measuring the contingent consideration during the first six months of 2026. The following table provides a rollforward of the change in the fair value of the contingent consideration as determined by Level 3 inputs: Six Months Ended (In thousands) July 4, 2026 June 28, 2025 Balance at Beginning of Year $ 1,941 $ 1,678 Currency translation 71 88 Balance at End of Period $ 2,012 $ 1,766 The carrying value and fair value of debt obligations, excluding lease obligations, are as follows: July 4, 2026 January 3, 2026 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Debt Obligations: Revolving credit facility $ 502,452 $ 502,452 $ 366,707 $ 366,707 Senior promissory notes 4,990 4,997 4,990 4,981 Other 797 797 1,023 1,023 $ 508,239 $ 508,246 $ 372,720 $ 372,711 The carrying value of the Company's revolving credit facility approximates the fair value as the obligation bears variable rates of interest, which adjust frequently, based on prevailing market rates. The fair value of the revolving credit facility is based on observable market interest rates and credit spreads available for similar instruments, which represent Level 2 measurements. The fair value of the senior promissory notes is primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period end, which represent Level 2 measurements. 9. Business Segment Information The Company is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing and operates in three reportable segments consisting of its Flow Control segment, Industrial Processing segment, and Material Handling segment. The Company aggregates its operating segments into its reportable segments where they contain similar products and economic characteristics, and share similar types of customers and production and distribution methods. The Flow Control segment is comprised of its fluid-handling and its doctoring, cleaning, & filtration operating segments, and the Industrial Processing segment is comprised of its wood processing and its fiber processing operating segments. Each of the Company's reportable segments is led by a segment vice president, who reports directly to the Chief Executive Officer (CEO). The Company has determined that its CEO is its Chief Operating Decision Maker (CODM) who is responsible for assessing performance and allocating resources. The CODM utilizes segment gross profit margin and segment operating income margin to evaluate the performance of each segment and allocate resources effectively. The CODM primarily reviews these profit measures in comparison to forecasts, trends, key performance targets, and results of industry peers to assess profitability, identify areas for improvement, and make strategic decisions regarding investments and resource allocation within each segment. A description of each reportable segment follows: •Flow Control – Custom-engineered products, systems, and technologies that control the flow of fluids used in industrial and commercial applications to keep critical processes running efficiently in the packaging, paper and tissue, food, energy, defense, and numerous other industrial sectors. The Company's primary products include rotary sealing devices, steam systems, expansion joints, doctor systems, roll and fabric cleaning devices, and filtration and fiber recovery systems. 18 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) •Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard, process timber, and optimize industrial steam boiler efficiency in the packaging, paper, tissue, wood products and food processing industries, among others. The Company's primary products include fiber processing systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers, custom-engineered profiles and industrial blades, boiler cleaning technologies, and continuous dewatering equipment. •Material Handling – Products and engineered systems used to handle bulk and discrete materials for secondary processing or transport in the aggregates, mining, food, and waste management industries, among others. The Company's primary products include conveying and vibratory equipment and balers. In addition, the Company manufactures and sells biodegradable, absorbent granules used as carriers in agricultural, home lawn and garden, professional lawn, turf and ornamental applications, and for oil and grease absorption. The following tables present financial information for the Company's reportable segments: Three Months Ended July 4, 2026 (In thousands) Flow Control Industrial Processing Material Handling Total Revenue $ 100,310 $ 143,800 $ 68,765 $ 312,875 Cost of revenue 47,633 85,312 42,925 175,870 Gross Profit 52,677 58,488 25,840 137,005 Gross Profit Margin 52.5% 40.7% 37.6% 43.8% Operating Expenses: Selling expenses 14,988 13,658 6,834 35,480 General and administrative expenses 10,092 9,975 4,784 24,851 Research and development expenses 1,658 2,195 631 4,484 Intangible asset amortization expense 1,268 4,669 2,689 8,626 Other segment items (93) 708 49 664 Segment Operating Income $ 24,764 $ 27,283 $ 10,853 $ 62,900 Segment Operating Income Margin 24.7% 19.0% 15.8% Corporate Expenses (a) (12,020) Interest Expense, Net (b) (4,819) Other Expense, Net (b) (32) Income Before Provision for Income Taxes $ 46,029 (In thousands) Flow Control Industrial Processing Material Handling Corporate Total Other Segment Disclosures Depreciation expense (c) $ 1,773 $ 3,899 $ 1,221 $ 25 $ 6,918 Capital expenditures (d) $ 7,027 $ 2,366 $ 1,482 $ 72 $ 10,947 19 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) Three Months Ended June 28, 2025 (In thousands) Flow Control Industrial Processing Material Handling Total Revenue $ 95,947 $ 95,937 $ 63,383 $ 255,267 Cost of revenue 44,289 55,066 38,870 138,225 Gross Profit 51,658 40,871 24,513 117,042 Gross Profit Margin 53.8% 42.6% 38.7% 45.9% Operating Expenses: Selling expenses 14,478 10,851 6,825 32,154 General and administrative expenses 10,023 9,172 4,638 23,833 Research and development expenses 1,330 1,824 570 3,724 Intangible asset amortization expense 1,410 2,436 2,689 6,535 Other segment items (26) 1,102 (148) 928 Segment Operating Income $ 24,443 $ 15,486 $ 9,939 $ 49,868 Segment Operating Income Margin 25.5% 16.1% 15.7% Corporate Expenses (a) (10,491) Interest Expense, Net (b) (2,899) Other Expense, Net (b) (17) Income Before Provision for Income Taxes $ 36,461 (In thousands) Flow Control Industrial Processing Material Handling Corporate Total Other Segment Disclosures Depreciation expense (c) $ 1,855 $ 2,468 $ 1,199 $ 12 $ 5,534 Capital expenditures $ 1,380 $ 1,595 $ 993 $ — $ 3,968 Six Months Ended July 4, 2026 (In thousands) Flow Control Industrial Processing Material Handling Total Revenue $ 198,918 $ 266,838 $ 128,624 $ 594,380 Cost of revenue 94,275 156,059 80,338 330,672 Gross Profit 104,643 110,779 48,286 263,708 Gross Profit Margin 52.6% 41.5% 37.5% 44.4% Operating Expenses: Selling expenses 30,178 27,535 13,926 71,639 General and administrative expenses 20,100 21,801 9,549 51,450 Research and development expenses 3,053 4,279 1,208 8,540 Intangible asset amortization expense 2,538 9,096 5,377 17,011 Other segment items (194) 872 (93) 585 Segment Operating Income $ 48,968 $ 47,196 $ 18,319 $ 114,483 Segment Operating Income Margin 24.6% 17.7% 14.2% Corporate Expenses (a) (23,494) Interest Expense, Net (b) (8,952) Other Expense, Net (b) (45) Income Before Provision for Income Taxes $ 81,992 (In thousands) Flow Control Industrial Processing Material Handling Corporate Total Other Segment Disclosures Depreciation expense (c) $ 3,700 $ 7,009 $ 2,433 $ 38 $ 13,180 Capital expenditures (d) $ 8,049 $ 3,229 $ 2,718 $ 209 $ 14,205 20 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) Six Months Ended June 28, 2025 (In thousands) Flow Control Industrial Processing Material Handling Total Revenue $ 188,388 $ 185,461 $ 120,628 $ 494,477 Cost of revenue 87,457 105,142 74,506 267,105 Gross Profit 100,931 80,319 46,122 227,372 Gross Profit Margin 53.6% 43.3% 38.2% 46.0% Operating Expenses: Selling expenses 29,257 21,028 13,293 63,578 General and administrative expenses 18,836 17,559 8,879 45,274 Research and development expenses 2,681 3,430 1,136 7,247 Intangible asset amortization expense 2,903 4,814 5,517 13,234 Other segment items 59 1,170 (177) 1,052 Segment Operating Income $ 47,195 $ 32,318 $ 17,474 $ 96,987 Segment Operating Income Margin 25.1% 17.4% 14.5% Corporate Expenses (a) (22,024) Interest Expense, Net (b) (6,204) Other Expense, Net (b) (33) Income Before Provision for Income Taxes $ 68,726 (In thousands) Flow Control Industrial Processing Material Handling Corporate Total Other Segment Disclosures Depreciation expense (c) $ 3,653 $ 4,815 $ 2,357 $ 23 $ 10,848 Capital expenditures $ 2,889 $ 2,920 $ 1,992 $ 3 $ 7,804 July 4, 2026 January 3, 2026 (In thousands) Total Assets (e) Flow Control $ 455,768 $ 450,911 Industrial Processing 998,443 826,062 Material Handling 406,713 411,813 Corporate (f) 28,372 23,392 $ 1,889,296 $ 1,712,178 (a)Primarily consists of general and administrative expenses. (b)The Company does not allocate interest expense, net and other expense, net to its segments. (c)Depreciation expense by reportable segment is included within cost of revenue and selling, general and administrative, and research and development expenses. (d)Includes $5,842,000 for the purchase of a manufacturing facility in the Flow Control segment that was previously leased by the Company. (e)Excludes intercompany receivables or payables and investment in subsidiary balances as the CODM uses total assets excluding these amounts as the measurement for the Company's segment assets. (f)Corporate assets primarily consist of cash and cash equivalents, tax assets, right-of-use assets, and property, plant, and equipment, net. 10. Commitments and Contingencies Right of Recourse In the ordinary course of business, the Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are non-interest bearing obligations of the issuing bank and generally mature within six months of the origination date. The Company's Chinese subsidiaries may use these banker's acceptance drafts prior to the scheduled maturity date to settle outstanding accounts payable with vendors. Banker's acceptance 21 Table of Contents KADANT INC. Notes to Condensed Consolidated Financial Statements (Unaudited) drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity dates. The Company had $11,974,000 at July 4, 2026 and $9,556,000 at January 3, 2026 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached their scheduled maturity dates. Historically, the banker's acceptance drafts have settled upon maturity without any claim of recourse against the Company. Litigation From time to time, the Company is subject to various claims and legal proceedings covering a range of matters that arise in the ordinary course of business. Such litigation may include, but is not limited to, claims and counterclaims by and against the Company for breach of contract or warranty, canceled contracts, product liability, or bankruptcy-related claims. For legal proceedings in which a loss is probable and estimable, the Company accrues a loss based on the low end of the range of estimated loss when there is no better estimate within the range. If the Company were found to be liable for any of the claims or counterclaims against it, the Company would incur a charge against earnings for amounts in excess of legal accruals. 22 Table of Contents KADANT INC.