Kadant Inc. (NYSE: KAI) reported its financial results for the
fourth quarter and fiscal year ended January 2, 2021.
Fourth Quarter Financial
Highlights
- Operating cash flow increased 3% to a record $40 million.
- Free cash flow increased 7% to a record $38 million.
- Bookings increased 23% to a record $197 million.
- Revenue decreased 8% to $168 million.
- GAAP diluted EPS increased 84% to $1.40.
- Adjusted diluted EPS increased 17% to $1.54.
- Net income increased 85% to $16 million.
- Adjusted EBITDA was $32 million and represented 19.1% of
revenue.
Fiscal Year Financial
Highlights
- Operating cash flow was $93 million and free cash flow was $85
million.
- Bookings decreased 6% to $648 million.
- Revenue decreased 10% to $635 million.
- GAAP diluted EPS increased 5% to $4.77.
- Adjusted diluted EPS decreased 7% to $5.00.
- Net income increased 6% to $55 million.
- Adjusted EBITDA decreased 9% to $116 million and represented
18.3% of revenue.
Note: Percent changes above are based on comparison
to the prior year period. Free cash flow, adjusted diluted EPS,
adjusted EBITDA, adjusted EBITDA margin, and changes in organic
revenue are non-GAAP financial measures that exclude certain items
as detailed later in this press release under the heading “Use of
Non-GAAP Financial Measures.”
Management Commentary“While the
past year has been dominated by the global pandemic that impacted
communities around the world, I am proud of the pivotal role Kadant
has played in helping essential industries continue to operate,”
said Jeffrey L. Powell, president and chief executive officer. “Our
leadership teams across the globe continue to work tirelessly to
safeguard our employees while meeting the needs of our customers.
New order activity and revenue continued their upward trajectory in
the fourth quarter of 2020 led by robust capital project activity
in our Industrial Processing segment and strong demand for our
parts and consumables across all our operating segments.
“Overall, the quarter was better than expected with
solid execution from our businesses enabling us to deliver strong
margins and earnings in the fourth quarter. This led to record cash
flow from operations and record free cash flow in the quarter
which, combined with our debt repayments, helped reduce our
leverage ratio to 1.61. As our end-market conditions improve and
the broader macroeconomic outlook becomes increasingly positive, we
are well-positioned to capitalize on new opportunities and
accelerate revenue growth.”
Fourth Quarter 2020 compared to
2019Revenue decreased eight percent to $168.4 million
compared to $182.7 million in 2019. Organic revenue was down 10
percent, which excludes an acquisition and a two percent increase
from the favorable effect of foreign currency translation. Gross
margin was 44.1 percent compared to 40.9 percent in 2019.
GAAP diluted earnings per share (EPS) was $1.40
compared to $0.76 in 2019. Adjusted diluted EPS increased 17
percent to $1.54 compared to $1.32 in 2019. Adjusted diluted EPS in
2020 excludes $0.13 of impairment and restructuring costs and $0.01
of acquired backlog amortization. Adjusted diluted EPS in 2019
excludes a $0.55 settlement loss, $0.17 of impairment and
restructuring costs, and a $0.16 discrete tax benefit. Net income
was $16.2 million compared to $8.7 million in 2019 and adjusted
EBITDA was $32.1 million compared to $32.2 million in the prior
year quarter. Cash flow from operations increased three percent to
a record $40.3 million compared to $39.2 million in 2019.
Bookings increased 23 percent to a record $196.5
million compared to $159.8 million in 2019. Organic bookings
increased 20 percent, which excludes an acquisition and a three
percent increase from the favorable effect of foreign currency
translation.
Fiscal Year 2020 compared to
2019Revenue decreased 10 percent to $635.0 million
compared to $704.6 million in 2019. Organic revenue was down 10
percent, which excludes an acquisition and the unfavorable effect
of foreign currency translation. Gross margin was 43.7 percent
compared to 41.7 percent in 2019.
GAAP diluted EPS increased five percent to $4.77
compared to $4.54 in 2019. Adjusted diluted EPS decreased seven
percent to $5.00 compared to $5.36 in 2019. Adjusted diluted EPS in
2020 excludes $0.19 of impairment and restructuring costs, $0.04 of
acquired backlog amortization, $0.03 of acquisition costs, and a
$0.03 discrete tax benefit. Adjusted diluted EPS in 2019 excludes a
$0.55 settlement loss, $0.32 of acquired profit in inventory and
backlog amortization, a $0.29 discrete tax benefit, $0.17 of
impairment and restructuring costs, and $0.06 of acquisition costs.
Net income was $55.2 million compared to $52.1 million in 2019.
Adjusted EBITDA decreased nine percent to $115.9 million compared
to $127.1 million in 2019. Cash flow from operations decreased five
percent to $92.9 million compared to $97.4 million in 2019.
Bookings decreased six percent to $648.5 million
compared to $688.3 million in 2019. Organic bookings were down six
percent, which excludes an acquisition and the unfavorable effect
of foreign currency translation.
Summary and Outlook“Our record
bookings in the fourth quarter were led by strong capital project
activity and solid contributions from our parts and consumables,"
Mr. Powell continued. "As we start 2021, we expect demand to
improve as industrial production continues to strengthen. Our
global footprint and the diversity of our product offerings have
provided stability as the timing of the market recovery has varied
by region and industry. While we have seen a recent strengthening
in demand, there is uncertainty in how global markets may respond
to the pandemic as the vaccine distribution has proven to be uneven
around the world. As a result, we will not be providing guidance at
this time.”
Conference Call Kadant will hold a
webcast with a slide presentation for investors on Thursday,
February 18, 2021, at 11:00 a.m. eastern time to discuss its fourth
quarter and full-year performance, as well as future expectations.
To access the webcast, including the slideshow and accompanying
audio, go to www.kadant.com and click on “Investors.” To
listen to the webcast via teleconference, call 888-326-8410 within
the U.S., or +1-704-385-4884 outside the U.S. and reference
participant passcode 2636925. Prior to the call, our earnings
release and the slides used in the webcast presentation will be
filed with the Securities and Exchange Commission and will be
available at www.sec.gov. An archive of the webcast presentation
will be available on our website until March 19, 2021.
Shortly after the webcast, Kadant will post its
updated general investor presentation incorporating the fourth
quarter and fiscal year results on its website at
www.kadant.com under the “Investors” section.
Use of Non-GAAP Financial
MeasuresIn addition to the financial measures prepared in
accordance with generally accepted accounting principles (GAAP), we
use certain non-GAAP financial measures, including increases or
decreases in revenue excluding the effect of acquisitions and
foreign currency translation (organic revenue), adjusted operating
income, adjusted net income, adjusted diluted EPS, earnings before
interest, taxes, depreciation, and amortization (EBITDA), adjusted
EBITDA, adjusted EBITDA margin, and free cash flow.
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 an
additional measure of our performance.
The non-GAAP financial measures included in this
press release are not meant to be considered superior to or a
substitute for the results of operations prepared in accordance
with GAAP. In addition, the non-GAAP financial measures included in
this press release 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.
Revenue in the fourth quarter of 2020 included a
$3.6 million favorable foreign currency translation effect and $0.7
million from an acquisition. Revenue in 2020 included a $2.2
million unfavorable foreign currency translation effect and $1.6
million from an acquisition. We present increases or decreases in
organic revenue, which excludes the effect of acquisitions and
foreign currency translation, to provide investors insight into
underlying revenue trends.
Our non-GAAP financial measures exclude benefit
plan settlement losses, impairment and restructuring costs,
acquisition costs, amortization expense related to acquired profit
in inventory and backlog, and discrete tax items. Free cash flow
excludes capital expenditures from cash flow from operations. These
items are excluded as 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.
Fourth Quarter
Adjusted operating income, adjusted EBITDA, and
adjusted EBITDA margin exclude:
- Pre-tax impairment and restructuring costs of $2.1 million in
2020 and $2.5 million in 2019.
- Pre-tax expense related to acquired backlog amortization of
$0.2 million in 2020.
Adjusted net income and adjusted diluted EPS
exclude:
- After-tax settlement loss of $6.4 million ($5.9 million pre-tax
and tax expense of $0.5 million) in 2019.
- After-tax impairment and restructuring costs of $1.5 million
($2.1 million net of tax of $0.6 million) in 2020 and $1.9 million
($2.5 million net of tax of $0.6 million) in 2019.
- After-tax expense related to acquired backlog amortization of
$0.1 million ($0.2 million net of tax of $0.1 million) in
2020.
- A discrete tax benefit of $1.8 million in 2019.
Free cash flow is calculated as cash flow from
operations less:
- Capital expenditures of $2.2 million in 2020 and $3.7 million
in 2019.
Fiscal Year
Adjusted operating income, adjusted EBITDA, and
adjusted EBITDA margin exclude:
- Pre-tax impairment and restructuring costs of $3.0 million in
2020 and $2.5 million in 2019.
- Pre-tax acquisition costs of $0.5 million in 2020 and $0.8
million in 2019.
- Pre-tax expense related to acquired backlog amortization of
$0.5 million in 2020 and $1.3 million in 2019.
- Pre-tax expense related to amortization of acquired profit in
inventory of $3.5 million in 2019.
Adjusted net income and adjusted diluted EPS
exclude:
- After-tax settlement loss of $6.4 million ($5.9 million pre-tax
and tax expense of $0.5 million).
- After-tax impairment and restructuring costs of $2.2 million
($3.0 million net of tax of $0.8 million) in 2020 and $1.9 million
($2.5 million net of tax of $0.6 million) in 2019.
- After-tax acquisition costs of $0.4 million ($0.5 million net
of tax of $0.1 million) in 2020 and $0.7 million ($0.8 million net
of tax of $0.1 million) in 2019.
- After-tax expense related to acquired backlog amortization of
$0.4 million ($0.5 million net of tax of $0.1 million) in 2020 and
$1.0 million ($1.3 million net of tax of $0.3 million) in
2019.
- After-tax expense related to amortization of acquired profit in
inventory of $2.7 million ($3.5 million net of tax of $0.8 million)
in 2019.
- A discrete tax benefit of $0.3 million in 2020 and $3.3 million
in 2019.
Free cash flow is calculated as cash flow from
operations less:
- Capital expenditures of $7.6 million in 2020 and $10.0 million
in 2019.
Reconciliations of the non-GAAP financial measures
to the most directly comparable GAAP financial measures are set
forth in this press release.
Financial
Highlights (unaudited) |
|
|
|
|
|
|
|
|
(In thousands,
except per share amounts and percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
Consolidated Statement of Income |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
Revenue |
|
$ |
168,431 |
|
|
|
$ |
182,659 |
|
|
|
$ |
635,028 |
|
|
|
$ |
704,644 |
|
|
Costs and
Operating Expenses: |
|
|
|
|
|
|
|
|
|
Cost of
revenue |
94,212 |
|
|
|
108,032 |
|
|
|
357,722 |
|
|
|
410,884 |
|
|
|
Selling, general,
and administrative expenses |
47,387 |
|
|
|
47,642 |
|
|
|
181,905 |
|
|
|
192,525 |
|
|
|
Research and
development expenses |
2,766 |
|
|
|
2,904 |
|
|
|
11,298 |
|
|
|
10,884 |
|
|
|
Impairment and
restructuring costs (b) |
|
2,053 |
|
|
|
2,528 |
|
|
|
2,979 |
|
|
|
2,528 |
|
|
|
|
|
146,418 |
|
|
|
161,106 |
|
|
|
553,904 |
|
|
|
616,821 |
|
|
Operating
Income |
|
22,013 |
|
|
|
21,553 |
|
|
|
81,124 |
|
|
|
87,823 |
|
|
Interest
Income |
|
41 |
|
|
|
55 |
|
|
|
181 |
|
|
|
213 |
|
|
Interest
Expense |
|
(1,363 |
) |
|
|
(2,612 |
) |
|
|
(7,423 |
) |
|
|
(12,755 |
) |
|
Other Expense, Net
(c) |
|
(100 |
) |
|
|
(6,063 |
) |
|
|
(195 |
) |
|
|
(6,359 |
) |
|
Income Before
Provision for Income Taxes |
|
20,591 |
|
|
|
12,933 |
|
|
|
73,687 |
|
|
|
68,922 |
|
|
Provision for
Income Taxes |
|
4,210 |
|
|
|
4,048 |
|
|
|
17,948 |
|
|
|
16,358 |
|
|
Net Income |
|
16,381 |
|
|
|
8,885 |
|
|
|
55,739 |
|
|
|
52,564 |
|
|
Net Income
Attributable to Noncontrolling Interest |
|
(174 |
) |
|
|
(136 |
) |
|
|
(543 |
) |
|
|
(496 |
) |
|
Net Income
Attributable to Kadant |
|
$ |
16,207 |
|
|
|
$ |
8,749 |
|
|
|
$ |
55,196 |
|
|
|
$ |
52,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share
Attributable to Kadant: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.41 |
|
|
|
$ |
0.77 |
|
|
|
$ |
4.81 |
|
|
|
$ |
4.63 |
|
|
|
|
Diluted |
|
$ |
1.40 |
|
|
|
$ |
0.76 |
|
|
|
$ |
4.77 |
|
|
|
$ |
4.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
11,513 |
|
|
|
11,344 |
|
|
|
11,482 |
|
|
|
11,235 |
|
|
|
|
Diluted |
|
11,608 |
|
|
|
11,525 |
|
|
|
11,564 |
|
|
|
11,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
Adjusted Net Income and Adjusted Diluted EPS
(a) |
Jan. 2, 2021 |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
Dec. 28, 2019 |
Net Income and
Diluted EPS Attributable to Kadant, as Reported |
|
$ |
16,207 |
|
|
|
$ |
1.40 |
|
|
|
$ |
8,749 |
|
|
|
$ |
0.76 |
|
|
Adjustments for
the Following: |
|
|
|
|
|
|
|
|
|
Settlement Loss,
Net of Tax (c) |
|
— |
|
|
|
— |
|
|
|
6,352 |
|
|
|
0.55 |
|
|
|
Impairment and
Restructuring Costs, Net of Tax (b) |
|
1,543 |
|
|
|
0.13 |
|
|
|
1,905 |
|
|
|
0.17 |
|
|
|
Amortization of
Acquired Backlog, Net of Tax (g) |
|
132 |
|
|
|
0.01 |
|
|
|
15 |
|
|
|
— |
|
|
|
Discrete Tax Items
(i) |
|
— |
|
|
|
— |
|
|
|
(1,839 |
) |
|
|
(0.16 |
) |
|
Adjusted Net
Income and Adjusted Diluted EPS (a) |
$ |
17,882 |
|
|
|
$ |
1.54 |
|
|
|
$ |
15,182 |
|
|
|
$ |
1.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Twelve Months Ended |
Adjusted Net Income and Adjusted Diluted EPS
(a) |
Jan. 2, 2021 |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
Dec. 28, 2019 |
Net Income and
Diluted EPS Attributable to Kadant, as Reported |
|
$ |
55,196 |
|
|
|
$ |
4.77 |
|
|
|
$ |
52,068 |
|
|
|
$ |
4.54 |
|
|
Adjustments for
the Following: |
|
|
|
|
|
|
|
|
|
Settlement Loss,
Net of Tax (c) |
|
— |
|
|
|
— |
|
|
|
6,352 |
|
|
|
0.55 |
|
|
|
Impairment and
Restructuring Costs, Net of Tax (b) |
|
2,210 |
|
|
|
0.19 |
|
|
|
1,905 |
|
|
|
0.17 |
|
|
|
Acquisition Costs,
Net of Tax |
|
355 |
|
|
|
0.03 |
|
|
|
699 |
|
|
|
0.06 |
|
|
|
Amortization of
Acquired Profit in Inventory and Backlog, Net of Tax (g,h) |
|
407 |
|
|
|
0.04 |
|
|
|
3,702 |
|
|
|
0.32 |
|
|
|
Discrete Tax Items
(i) |
|
(338 |
) |
|
|
(0.03 |
) |
|
|
(3,338 |
) |
|
|
(0.29 |
) |
|
Adjusted Net
Income and Adjusted Diluted EPS (a) |
$ |
57,830 |
|
|
|
$ |
5.00 |
|
|
|
$ |
61,388 |
|
|
|
$ |
5.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Decrease Excluding Acquisition and FX (a,e) |
Revenue by
Segment (d) |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
Decrease |
|
Flow
Control |
|
$ |
60,115 |
|
|
|
$ |
61,547 |
|
|
|
$ |
(1,432 |
) |
|
|
$ |
(2,304 |
) |
|
Industrial
Processing |
|
69,109 |
|
|
|
79,049 |
|
|
|
(9,940 |
) |
|
|
(12,283 |
) |
|
Material
Handling |
|
39,207 |
|
|
|
42,063 |
|
|
|
(2,856 |
) |
|
|
(3,951 |
) |
|
|
|
|
|
$ |
168,431 |
|
|
|
$ |
182,659 |
|
|
|
$ |
(14,228 |
) |
|
|
$ |
(18,538 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Parts and Consumables Revenue |
|
67 |
|
% |
|
60 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Decrease |
|
Decrease Excluding Acquisition and FX (a,e) |
|
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
|
Flow Control |
|
$ |
225,444 |
|
|
|
$ |
250,339 |
|
|
|
$ |
(24,895 |
) |
|
|
$ |
(22,073 |
) |
|
Industrial
Processing |
|
261,577 |
|
|
|
301,948 |
|
|
|
(40,371 |
) |
|
|
(41,658 |
) |
|
Material
Handling |
|
148,007 |
|
|
|
152,357 |
|
|
|
(4,350 |
) |
|
|
(5,267 |
) |
|
|
|
|
|
$ |
635,028 |
|
|
|
$ |
704,644 |
|
|
|
$ |
(69,616 |
) |
|
|
$ |
(68,998 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Parts and Consumables Revenue |
|
66 |
|
% |
|
63 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Increase (Decrease) |
|
Increase (Decrease) Excluding Acquisition and FX (e) |
Bookings
by Segment (d) |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
|
Flow
Control |
|
$ |
61,878 |
|
|
|
$ |
56,974 |
|
|
|
$ |
4,904 |
|
|
|
$ |
4,171 |
|
|
Industrial
Processing |
|
94,759 |
|
|
|
61,874 |
|
|
|
32,885 |
|
|
|
29,972 |
|
|
Material
Handling |
|
39,898 |
|
|
|
40,935 |
|
|
|
(1,037 |
) |
|
|
(2,196 |
) |
|
|
|
|
|
$ |
196,535 |
|
|
|
$ |
159,783 |
|
|
|
$ |
36,752 |
|
|
|
$ |
31,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Parts and Consumables Bookings |
|
61 |
|
% |
|
70 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Decrease |
|
Decrease Excluding Acquisition and FX (e) |
|
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
|
Flow Control |
|
$ |
228,591 |
|
|
|
$ |
241,220 |
|
|
|
$ |
(12,629 |
) |
|
|
$ |
(9,345 |
) |
|
Industrial
Processing |
|
273,644 |
|
|
|
290,881 |
|
|
|
(17,237 |
) |
|
|
(18,818 |
) |
|
Material
Handling |
|
146,242 |
|
|
|
156,184 |
|
|
|
(9,942 |
) |
|
|
(11,201 |
) |
|
|
|
|
|
$ |
648,477 |
|
|
|
$ |
688,285 |
|
|
|
$ |
(39,808 |
) |
|
|
$ |
(39,364 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Parts and Consumables Bookings |
|
65 |
|
% |
|
64 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
Business
Segment Information (d) |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
Gross
Margin: |
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
52.5 |
|
% |
|
50.5 |
|
% |
|
52.9 |
|
% |
|
51.4 |
|
% |
|
|
Industrial Processing |
|
42.3 |
|
% |
|
36.2 |
|
% |
|
41.3 |
|
% |
|
38.3 |
|
% |
|
|
Material Handling |
|
34.3 |
|
% |
|
35.6 |
|
% |
|
33.7 |
|
% |
|
32.5 |
|
% |
|
|
|
|
44.1 |
|
% |
|
40.9 |
|
% |
|
43.7 |
|
% |
|
41.7 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Operating
Income: |
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
$ |
14,170 |
|
|
|
$ |
12,123 |
|
|
|
$ |
51,530 |
|
|
|
$ |
55,343 |
|
|
|
|
Industrial Processing |
|
10,824 |
|
|
|
10,769 |
|
|
|
42,971 |
|
|
|
49,599 |
|
|
|
|
Material Handling |
|
4,034 |
|
|
|
6,085 |
|
|
|
14,375 |
|
|
|
11,600 |
|
|
|
|
Corporate |
|
(7,015 |
) |
|
|
(7,424 |
) |
|
|
(27,752 |
) |
|
|
(28,719 |
) |
|
|
|
|
|
$ |
22,013 |
|
|
|
$ |
21,553 |
|
|
|
$ |
81,124 |
|
|
|
$ |
87,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income (a,f): |
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
$ |
14,108 |
|
|
|
$ |
12,123 |
|
|
|
$ |
52,189 |
|
|
|
$ |
55,343 |
|
|
|
|
Industrial Processing |
|
12,840 |
|
|
|
13,297 |
|
|
|
45,788 |
|
|
|
52,127 |
|
|
|
|
Material Handling |
|
4,310 |
|
|
|
6,105 |
|
|
|
14,907 |
|
|
|
17,315 |
|
|
|
|
Corporate |
|
(7,015 |
) |
|
|
(7,424 |
) |
|
|
(27,752 |
) |
|
|
(28,719 |
) |
|
|
|
|
|
$ |
24,243 |
|
|
|
$ |
24,101 |
|
|
|
$ |
85,132 |
|
|
|
$ |
96,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures: |
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
$ |
1,141 |
|
|
|
$ |
825 |
|
|
|
$ |
2,808 |
|
|
|
$ |
2,639 |
|
|
|
|
Industrial Processing |
|
663 |
|
|
|
1,890 |
|
|
|
3,123 |
|
|
|
5,113 |
|
|
|
|
Material Handling |
|
372 |
|
|
|
999 |
|
|
|
1,539 |
|
|
|
2,144 |
|
|
|
|
Corporate |
|
— |
|
|
|
7 |
|
|
|
125 |
|
|
|
61 |
|
|
|
|
|
|
$ |
2,176 |
|
|
|
$ |
3,721 |
|
|
|
$ |
7,595 |
|
|
|
$ |
9,957 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
Cash Flow
and Other Data |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
Cash
Provided by Operations |
|
$ |
40,283 |
|
|
|
$ |
39,247 |
|
|
|
$ |
92,884 |
|
|
|
$ |
97,413 |
|
|
Less: Capital
Expenditures |
|
(2,176 |
) |
|
|
(3,721 |
) |
|
|
(7,595 |
) |
|
|
(9,957 |
) |
|
Free Cash Flow
(a) |
|
$ |
38,107 |
|
|
|
$ |
35,526 |
|
|
|
$ |
85,289 |
|
|
|
$ |
87,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization Expense |
|
$ |
8,074 |
|
|
|
$ |
8,086 |
|
|
|
$ |
31,334 |
|
|
|
$ |
32,390 |
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet Data |
|
|
|
|
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
Assets |
|
|
|
|
|
|
|
|
Cash, Cash
Equivalents, and Restricted Cash |
|
|
|
|
|
$ |
66,640 |
|
|
|
$ |
68,273 |
|
|
Accounts
Receivable, net |
|
|
|
|
|
91,540 |
|
|
|
95,740 |
|
|
Inventories |
|
|
|
|
|
106,814 |
|
|
|
102,715 |
|
|
Unbilled
Revenue |
|
|
|
|
|
7,576 |
|
|
|
13,162 |
|
|
Property, Plant,
and Equipment, net |
|
|
|
|
|
84,642 |
|
|
|
86,032 |
|
|
Intangible
Assets |
|
|
|
|
|
160,965 |
|
|
|
173,896 |
|
|
Goodwill |
|
|
|
|
|
351,753 |
|
|
|
336,032 |
|
|
Other Assets |
|
|
|
|
|
57,641 |
|
|
|
63,537 |
|
|
|
|
|
|
|
|
|
|
$ |
927,571 |
|
|
|
$ |
939,387 |
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
Accounts
Payable |
|
|
|
|
|
$ |
32,264 |
|
|
|
$ |
45,852 |
|
|
Debt
Obligations |
|
|
|
|
|
227,963 |
|
|
|
294,717 |
|
|
Other
Borrowings |
|
|
|
|
|
5,511 |
|
|
|
6,308 |
|
|
Other
Liabilities |
|
|
|
|
|
164,928 |
|
|
|
165,431 |
|
|
|
Total
Liabilities |
|
|
|
|
|
430,666 |
|
|
|
512,308 |
|
|
|
Stockholders'
Equity |
|
|
|
|
|
496,905 |
|
|
|
427,079 |
|
|
|
|
|
|
|
|
|
|
$ |
927,571 |
|
|
|
$ |
939,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
Adjusted
Operating Income and Adjusted EBITDA Reconciliation
(a,d) |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
|
Jan. 2, 2021 |
|
Dec. 28, 2019 |
Consolidated |
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to
Kadant |
|
$ |
16,207 |
|
|
|
$ |
8,749 |
|
|
|
$ |
55,196 |
|
|
|
$ |
52,068 |
|
|
|
|
Net Income Attributable to
Noncontrolling Interest |
|
174 |
|
|
|
136 |
|
|
|
543 |
|
|
|
496 |
|
|
|
|
Provision for Income
Taxes |
|
4,210 |
|
|
|
4,048 |
|
|
|
17,948 |
|
|
|
16,358 |
|
|
|
|
Interest Expense, Net |
|
1,322 |
|
|
|
2,557 |
|
|
|
7,242 |
|
|
|
12,542 |
|
|
|
|
Other Expense, Net (c) |
|
100 |
|
|
|
6,063 |
|
|
|
195 |
|
|
|
6,359 |
|
|
|
|
Operating Income |
|
22,013 |
|
|
|
21,553 |
|
|
|
81,124 |
|
|
|
87,823 |
|
|
|
|
Impairment and Restructuring
Costs (b) |
|
2,053 |
|
|
|
2,528 |
|
|
|
2,979 |
|
|
|
2,528 |
|
|
|
|
Acquisition Costs |
|
— |
|
|
|
— |
|
|
|
485 |
|
|
|
843 |
|
|
|
|
Acquired Backlog Amortization
(g) |
|
177 |
|
|
|
20 |
|
|
|
544 |
|
|
|
1,323 |
|
|
|
|
Acquired Profit in Inventory
(h) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,549 |
|
|
|
|
Adjusted Operating Income
(a) |
|
24,243 |
|
|
|
24,101 |
|
|
|
85,132 |
|
|
|
96,066 |
|
|
|
|
Depreciation and
Amortization |
|
7,897 |
|
|
|
8,066 |
|
|
|
30,790 |
|
|
|
31,067 |
|
|
|
|
Adjusted EBITDA (a) |
|
$ |
32,140 |
|
|
|
$ |
32,167 |
|
|
|
$ |
115,922 |
|
|
|
$ |
127,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin
(a,j) |
|
19.1 |
|
% |
|
17.6 |
|
% |
|
18.3 |
|
% |
|
18.0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
$ |
14,170 |
|
|
|
$ |
12,123 |
|
|
|
$ |
51,530 |
|
|
|
$ |
55,343 |
|
|
|
|
Restructuring (Income)
Costs |
|
(62 |
) |
|
|
— |
|
|
|
659 |
|
|
|
— |
|
|
|
|
Adjusted Operating Income
(a) |
|
14,108 |
|
|
|
12,123 |
|
|
|
52,189 |
|
|
|
55,343 |
|
|
|
|
Depreciation and
Amortization |
|
1,604 |
|
|
|
1,780 |
|
|
|
6,333 |
|
|
|
6,603 |
|
|
|
|
Adjusted EBITDA (a) |
|
$ |
15,712 |
|
|
|
$ |
13,903 |
|
|
|
$ |
58,522 |
|
|
|
$ |
61,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin
(a,j) |
|
26.1 |
|
% |
|
22.6 |
|
% |
|
26.0 |
|
% |
|
24.7 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Industrial
Processing |
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
$ |
10,824 |
|
|
|
$ |
10,769 |
|
|
|
$ |
42,971 |
|
|
|
$ |
49,599 |
|
|
|
|
Impairment and Restructuring
Costs |
|
1,933 |
|
|
|
2,528 |
|
|
|
2,138 |
|
|
|
2,528 |
|
|
|
|
Acquisition Costs |
|
— |
|
|
|
— |
|
|
|
485 |
|
|
|
— |
|
|
|
|
Acquired Backlog Amortization
(g) |
|
83 |
|
|
|
— |
|
|
|
194 |
|
|
|
— |
|
|
|
|
Adjusted Operating Income
(a) |
|
12,840 |
|
|
|
13,297 |
|
|
|
45,788 |
|
|
|
52,127 |
|
|
|
|
Depreciation and
Amortization |
|
3,371 |
|
|
|
3,281 |
|
|
|
12,969 |
|
|
|
13,012 |
|
|
|
|
Adjusted EBITDA (a) |
|
$ |
16,211 |
|
|
|
$ |
16,578 |
|
|
|
$ |
58,757 |
|
|
|
$ |
65,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin
(a,j) |
|
23.5 |
|
% |
|
21.0 |
|
% |
|
22.5 |
|
% |
|
21.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Material
Handling |
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
$ |
4,034 |
|
|
|
$ |
6,085 |
|
|
|
$ |
14,375 |
|
|
|
$ |
11,600 |
|
|
|
|
Restructuring Costs |
|
182 |
|
|
|
— |
|
|
|
182 |
|
|
|
— |
|
|
|
|
Acquisition Costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
843 |
|
|
|
|
Acquired Backlog Amortization
(g) |
|
94 |
|
|
|
20 |
|
|
|
350 |
|
|
|
1,323 |
|
|
|
|
Acquired Profit in Inventory
(h) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,549 |
|
|
|
|
Adjusted Operating Income
(a) |
|
4,310 |
|
|
|
6,105 |
|
|
|
14,907 |
|
|
|
17,315 |
|
|
|
|
Depreciation and
Amortization |
|
2,862 |
|
|
|
2,946 |
|
|
|
11,278 |
|
|
|
11,205 |
|
|
|
|
Adjusted EBITDA (a) |
|
$ |
7,172 |
|
|
|
$ |
9,051 |
|
|
|
$ |
26,185 |
|
|
|
$ |
28,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin
(a,j) |
|
18.3 |
|
% |
|
21.5 |
|
% |
|
17.7 |
|
% |
|
18.7 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
|
|
|
Operating Loss |
|
$ |
(7,015 |
) |
|
|
$ |
(7,424 |
) |
|
|
$ |
(27,752 |
) |
|
|
$ |
(28,719 |
) |
|
|
|
Depreciation and
Amortization |
|
60 |
|
|
|
59 |
|
|
|
210 |
|
|
|
247 |
|
|
|
|
EBITDA (a) |
|
$ |
(6,955 |
) |
|
|
$ |
(7,365 |
) |
|
|
$ |
(27,542 |
) |
|
|
$ |
(28,472 |
) |
|
|
|
|
|
|
|
|
|
|
|
(a) |
Represents a
non-GAAP financial measure. |
|
|
|
|
|
|
|
|
|
|
|
(b) |
The fourth
quarter of 2020 includes an intangible asset impairment charge of
$1,861 ($1,389 after tax) related to our Industrial Processing
segment's timber-harvesting product line and consolidated
restructuring costs of $192 ($154 after tax), and the full-year
2020 includes an intangible asset impairment charge of $1,861
($1,389 after tax) and restructuring costs of $1,118 ($821 after
tax). The fourth quarter and full-year of 2019 includes an
intangible asset impairment charge of $2,336 ($1,765 after tax) and
restructuring costs of $192 ($140 after tax) related to our
Industrial Processing segment's timber-harvesting product
line. |
|
|
|
|
|
|
|
|
|
|
|
(c) |
Includes a
settlement loss of $5,887 ($6,352 after tax) in the three- and
twelve-month periods ended December 28, 2019 associated with the
termination of defined benefit plans at one of our U.S.
operations. |
|
|
|
|
|
|
|
|
|
|
|
(d) |
Reflects our new
reportable operating segments announced on April 22, 2020. Prior
period information has been recast to conform to the current period
presentation. |
|
|
|
(e) |
Represents the
increase (decrease) resulting from the exclusion of an acquisition
and from the conversion of current period amounts reported in local
currencies into U.S. dollars at the exchange rate of the prior
period compared to the U.S. dollar amount reported in the prior
period. |
|
|
(f) |
See reconciliation
to the most directly comparable GAAP financial measure under
"Adjusted Operating Income and Adjusted EBITDA
Reconciliation." |
|
|
(g) |
Represents
intangible amortization expense associated with acquired
backlog. |
|
|
|
|
|
|
|
|
|
|
|
(h) |
Represents expense
within cost of revenues associated with amortization of acquired
profit in inventory. |
|
|
|
|
|
|
|
|
|
|
|
(i) |
The discrete tax
benefit of $1,839, or $0.16 per diluted share, in the fourth
quarter of 2019 and $3,338, or $0.29 per diluted share, for the
full-year 2019 relates to the exercise of employee stock options,
which were significantly higher in these periods than in other
comparable reporting periods. |
|
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|
|
|
|
|
|
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(j) |
Calculated as
adjusted EBITDA divided by revenue in each period. |
About Kadant Kadant Inc. is a
global supplier of high-value, critical components and engineered
systems used in process industries worldwide. The Company’s
products, technologies, and services play an integral role in
enhancing process efficiency, optimizing energy utilization, and
maximizing productivity in resource-intensive industries. Kadant is
based in Westford, Massachusetts, with approximately 2,600
employees in 20 countries worldwide. For more information, visit
www.kadant.com.
Safe Harbor StatementThe following
constitutes a “Safe Harbor” statement under the Private Securities
Litigation Reform Act of 1995: This press release contains
forward-looking statements that involve a number of risks and
uncertainties, including forward-looking statements about our
future financial and operating performance, demand for our
products, and economic and industry outlook. These forward-looking
statements represent our expectations as of the date of this press
release. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events, or otherwise. These forward-looking statements are
subject to known and unknown risks and uncertainties that may cause
our actual results to differ materially from these forward-looking
statements as a result of various important factors, including
those set forth under the heading "Risk Factors" in Kadant’s annual
report on Form 10-K for the year ended December 28, 2019 and
subsequent filings with the Securities and Exchange Commission.
These include risks and uncertainties relating to the impact of the
COVID-19 pandemic on our operating and financial results; adverse
changes in global and local economic conditions; the variability
and difficulty in accurately predicting revenues from large capital
equipment and systems projects; our customers’ ability to obtain
financing for capital equipment projects; international sales and
operations; health epidemics; changes to government regulations and
policies around the world; policies of the Chinese government; the
variability and uncertainties in sales of capital equipment in
China; levels of residential construction activity; reductions by
our wood processing customers of their capital spending or
production of oriented strand board; changes to the global timber
supply; cyclical economic conditions affecting the global mining
industry; development and use of digital media; currency
fluctuations; demand for coal, including economic and environmental
risks associated with coal; price increases or shortages of raw
materials; dependence on certain suppliers; our acquisition
strategy; failure of our information systems or breaches of data
security and cybertheft; compliance with government regulations and
policies and compliance with laws; implementation of our internal
growth strategy; competition; soundness of suppliers and customers;
changes in our tax provision or exposure to additional tax
liabilities; our ability to successfully manage our manufacturing
operations; disruption in production; future restructurings;
economic conditions and regulatory changes caused by the United
Kingdom’s exit from the European Union; our debt obligations;
restrictions in our credit agreement and note purchase agreement;
substitution of an alternative index for LIBOR; loss of key
personnel and effective succession planning; protection of
intellectual property; fluctuations in our share price; soundness
of financial institutions; environmental laws and regulations;
climate change; environmental, health and safety laws and
regulations; adequacy of our insurance coverage; anti-takeover
provisions; and reliance on third-party research.
ContactsInvestor Contact
Information:Michael McKenney, 978-776-2000IR@kadant.comorMedia
Contact Information:Wes Martz, 269-278-1715media@kadant.com
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