Kadant Inc. (NYSE: KAI) reported its financial results for the
fourth quarter and fiscal year ended December 30, 2023.
Fourth Quarter Financial
Highlights
- Revenue increased 3% to $239 million
- Operating cash flow increased 68% to $59 million
- Free cash flow increased 114% to $49 million
- Net income increased 5% to $27 million
- GAAP EPS increased 4% to $2.33
- Adjusted EPS increased 3% to $2.41
- Adjusted EBITDA decreased 2% to $48 million and represented
20.3% of revenue
- Bookings increased 1% to $218 million
Fiscal Year Financial
Highlights
- Revenue increased 6% to a record $958 million
- Operating cash flow increased 61% to a record $166 million
- Free cash flow increased 80% to $134 million
- Net income decreased 4% to $116 million
- GAAP EPS decreased 4% to $9.90 compared to 2022 which included
a $1.30 gain on sale of a facility
- Adjusted EPS increased 9% to a record $10.04
- Adjusted EBITDA increased 6% to a record $201 million and
represented a record 21.0% of revenue
- Bookings decreased 4% to $917 million
- Ending backlog was $310 million
Note: Percent changes above are based on comparison to the prior
year period. All references to earnings per share (EPS) are to our
EPS as calculated on a diluted basis. Free cash flow, adjusted 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“The fourth quarter was a
solid finish to a record-setting year,” said Jeffrey L. Powell,
president and chief executive officer for Kadant. “Despite
macroeconomic headwinds in certain regions, we had another
well-executed quarter. Growth in our material handling segment was
particularly notable led by record capital equipment revenue. This
contributed to strong adjusted EBITDA performance and healthy cash
flow in the fourth quarter.
“Strong capital project activity in the first half of the year
and sustained high aftermarket demand led to the record-setting
revenue for the year. For the full year 2023, our adjusted EPS
reached a record $10.04, our adjusted EBITDA was a record $201
million, and our operating cash flow was a record $166
million.”
Fourth Quarter 2023 Compared to 2022Revenue
increased three percent to $238.7 million compared to $232.1
million in 2022. Organic revenue increased one percent, which
excludes a two percent increase from the favorable effect of
foreign currency translation. Gross profit margin decreased to 42.7
percent compared to 43.1 percent in 2022.
Net income increased five percent to $27.4 million compared to
$26.1 million in 2022. GAAP EPS increased four percent to $2.33
compared to $2.23 in 2022. Adjusted EPS increased three percent to
$2.41 compared to $2.33 in 2022. Adjusted EPS excludes $0.10 of
acquisition costs, $0.05 of other income related to the
manufacturing facility project in China, $0.02 of restructuring
costs, and $0.01 of relocation costs in 2023. Adjusted EPS excludes
$0.09 of restructuring and impairment costs and $0.01 of
acquisition costs in 2022.
Adjusted EBITDA decreased two percent to $48.5 million and
represented 20.3 percent of revenue compared to $49.5 million and
21.3 percent of revenue in the prior year quarter. Operating cash
flow increased 68 percent to $59.2 million compared to $35.2
million in 2022. Free cash flow increased 114 percent to $49.5
million compared to $23.2 million in 2022.
Bookings increased one percent to $218.0 million compared to
$215.3 million in 2022, including a one percent increase from the
favorable effect of foreign currency translation.
Fiscal Year 2023 Compared to 2022Revenue
increased six percent to a record $957.7 million compared to $904.7
million in 2022 and organic revenue also increased six percent.
Gross profit margin increased to 43.5 percent compared to 43.1
percent in 2022.
Net income was $116.1 million decreasing four percent compared
to $120.9 million in 2022. GAAP EPS decreased four percent to $9.90
compared to $10.35 in 2022. Adjusted EPS increased nine percent to
a record $10.04 compared to $9.24 in 2022. Adjusted EPS excludes
$0.10 of acquisition costs, $0.05 of relocation costs and $0.05 of
other income both related to the manufacturing facility project in
China, and $0.04 of restructuring costs in 2023. Adjusted EPS
excludes a $1.30 gain on the sale of a Chinese facility, $0.11 of
restructuring and impairment costs, and $0.08 of
acquisition-related costs in 2022.
Adjusted EBITDA increased six percent to a record $201.3 million
and represented a record 21.0 percent of revenue compared to $189.1
million and 20.9 percent of revenue in the prior year. Operating
cash flow increased 61 percent to a record $165.5 million compared
to $102.6 million in 2022. Free cash flow increased 80 percent to
$133.7 million compared to $74.4 million in 2022.
Bookings decreased four percent to $917.4 million compared to
$958.2 million in 2022.
Summary and Outlook“While still facing economic
uncertainties around the world, we expect to achieve record
revenue, cash flow, and adjusted EBITDA in 2024,” continued Mr.
Powell. “Our earnings performance will be affected by increased
borrowing costs and non-cash intangible amortization expense
associated with our recently announced acquisitions. We are
experiencing healthy demand in our key end markets, however, our
first quarter will be weaker than the remaining quarters of 2024
due to the timing of capital projects. For 2024, we expect revenue
of $1.040 billion to $1.065 billion, GAAP EPS of $9.55 to $9.85,
and adjusted EPS of $9.75 to $10.05. The 2024 adjusted EPS guidance
excludes $0.20 of amortization expense associated with acquired
inventory and backlog. For the first quarter of 2024, we expect
revenue of $238 to $246 million, GAAP EPS of $1.76 to $1.86, and,
after excluding $0.14 of amortization expense associated with
acquired inventory and backlog, adjusted EPS of $1.90 to
$2.00.”
Conference Call Kadant will hold a webcast with
a slide presentation for investors on Thursday, February 15, 2024,
at 11:00 a.m. eastern time to discuss its fourth quarter and
full-year financial performance, as well as future expectations. To
listen to the call live and view the webcast, go to the “Investors”
section of the Company’s website at www.kadant.com. Participants
interested in joining the call’s live question and answer session
are required to register by clicking here or selecting the Q&A
link on our website to receive a dial-in number and unique PIN. It
is recommended that you join the call 10 minutes prior to the start
of the event. A replay of the webcast presentation will be
available on our website through March 15, 2024.
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. After the
webcast, Kadant will post its updated general investor presentation
incorporating the fourth quarter and full-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 EPS, earnings before interest, taxes,
depreciation, and amortization (EBITDA), adjusted EBITDA, adjusted
EBITDA margin, and free cash flow.
We use organic revenue to understand our trends and to forecast
and evaluate our financial performance and compare revenue to prior
periods. Organic revenue excludes revenue from acquisitions for the
four quarterly reporting periods following the date of the
acquisition and the effect of foreign currency translation. Revenue
in the fourth quarter of 2023 included a favorable foreign currency
translation effect of $3.7 million. Revenue in 2023 included an
unfavorable foreign currency translation effect of $2.0 million.
Our other non-GAAP financial measures exclude relocation costs,
restructuring and impairment costs, acquisition costs, amortization
expense related to acquired profit in inventory and backlog, and
other income or expense, as indicated. Collectively, 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. Additionally, we use free cash flow in order to
provide insight on our ability to generate cash for acquisitions
and debt repayments, as well as for other investing and financing
activities.
We believe these non-GAAP financial measures, when taken
together with the corresponding GAAP financial measures, provide
meaningful supplemental information regarding our performance by
excluding certain items that may not be indicative of our core
business, operating results, or future outlook. We believe that the
inclusion of such measures helps investors gain an understanding of
our underlying operating performance and future prospects,
consistent with how management measures and forecasts our
performance, especially when comparing such results to previous
periods or forecasts and to the performance of our competitors.
Such measures are also used by us in our financial and operating
decision-making and for compensation purposes. We also believe this
information is responsive to investors' requests and gives them 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.
Fourth Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA
margin exclude:
- Pre-tax other income of $0.8 million in 2023.
- Pre-tax acquisition costs of $1.4 million in 2023 and $0.2
million in 2022.
- Pre-tax indemnification asset reversal of $0.7 million in
2022.
- Pre-tax relocation costs of $0.2 million in 2023.
- Pre-tax restructuring and impairment costs of $0.3 million in
2023 and $1.1 million in 2022.
Adjusted net income and adjusted EPS exclude:
- After-tax other income of $0.6 million ($0.8 million net of tax
of $0.2 million) in 2023.
- After-tax acquisition costs of $1.2 million ($1.4 million net
of tax of $0.2 million) in 2023 and $0.2 million in 2022.
- After-tax relocation costs of $0.1 million ($0.2 million net of
tax of $0.1 million) in 2023.
- After-tax restructuring and impairment costs of $0.2 million
($0.3 million net of tax of $0.1 million) in 2023 and $1.1 million
in 2022.
Free cash flow is calculated as operating cash flow less:
- Capital expenditures of $9.8 million in 2023 and $12.0 million
in 2022.
Fiscal Year
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA
margin exclude:
- Pre-tax other income of $0.8 million in 2023.
- Pre-tax gain on the sale of a facility of $20.2 million in
2022.
- Pre-tax acquisition-related costs of $1.4 million in 2023 and
$1.2 million in 2022.
- Pre-tax indemnification asset reversals of $0.1 million in 2023
and $1.3 million in 2022.
- Pre-tax relocation costs of $0.8 million in 2023.
- Pre-tax restructuring and impairment costs of $0.8 million in
2023 and $1.3 million in 2022.
Adjusted net income and adjusted EPS exclude:
- After-tax other income of $0.6 million ($0.8 million net of tax
of $0.2 million) in 2023.
- After-tax gain on the sale of a facility of $15.1 million
($20.2 million net of tax of $5.1 million) in 2022.
- After-tax acquisition-related costs of $1.2 million ($1.4
million net of tax of $0.2 million) in 2023 and $0.9 million ($1.2
million net of tax of $0.3 million) in 2022.
- After-tax relocation costs of $0.6 million ($0.8 million net of
tax of $0.2 million) in 2023.
- After-tax restructuring and impairment costs of $0.5 million
($0.8 million net of tax of $0.3 million) in 2023 and $1.3 million
in 2022.
Free cash flow is calculated as operating cash flow less:
- Capital expenditures of $31.9 million in 2023 and $28.2 million
in 2022.
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 |
|
December 30,2023 |
|
December 31,2022 |
|
December 30,2023 |
|
December 31,2022 |
Revenue |
|
$ |
238,679 |
|
|
$ |
232,100 |
|
|
$ |
957,672 |
|
|
$ |
904,739 |
|
Costs and
Operating Expenses: |
|
|
|
|
|
|
|
|
|
Cost of
revenue |
|
136,695 |
|
|
|
132,150 |
|
|
|
541,366 |
|
|
|
515,184 |
|
|
Selling, general,
and administrative expenses |
|
59,823 |
|
|
|
56,765 |
|
|
|
236,264 |
|
|
|
224,405 |
|
|
Research and
development expenses |
|
3,460 |
|
|
|
3,150 |
|
|
|
13,562 |
|
|
|
12,724 |
|
|
Gain on sale and
other (income) costs, net (b) |
|
(320 |
) |
|
|
1,080 |
|
|
|
723 |
|
|
|
(18,856 |
) |
|
|
|
|
199,658 |
|
|
|
193,145 |
|
|
|
791,915 |
|
|
|
733,457 |
|
Operating
Income |
|
|
39,021 |
|
|
|
38,955 |
|
|
|
165,757 |
|
|
|
171,282 |
|
Interest
Income |
|
|
705 |
|
|
|
254 |
|
|
|
1,758 |
|
|
|
904 |
|
Interest
Expense |
|
|
(1,676 |
) |
|
|
(2,157 |
) |
|
|
(8,398 |
) |
|
|
(6,478 |
) |
Other Expense,
Net |
|
|
(39 |
) |
|
|
(12 |
) |
|
|
(101 |
) |
|
|
(72 |
) |
Income Before
Provision for Income Taxes |
|
|
38,011 |
|
|
|
37,040 |
|
|
|
159,016 |
|
|
|
165,636 |
|
Provision for
Income Taxes |
|
|
10,449 |
|
|
|
10,831 |
|
|
|
42,210 |
|
|
|
43,906 |
|
Net Income |
|
|
27,562 |
|
|
|
26,209 |
|
|
|
116,806 |
|
|
|
121,730 |
|
Net Income
Attributable to Noncontrolling Interest |
|
|
(166 |
) |
|
|
(130 |
) |
|
|
(737 |
) |
|
|
(802 |
) |
Net Income
Attributable to Kadant |
|
$ |
27,396 |
|
|
$ |
26,079 |
|
|
$ |
116,069 |
|
|
$ |
120,928 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share
Attributable to Kadant: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.34 |
|
|
$ |
2.24 |
|
|
$ |
9.92 |
|
|
$ |
10.38 |
|
|
|
Diluted |
|
$ |
2.33 |
|
|
$ |
2.23 |
|
|
$ |
9.90 |
|
|
$ |
10.35 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
11,707 |
|
|
|
11,664 |
|
|
|
11,700 |
|
|
|
11,654 |
|
|
|
Diluted |
|
|
11,759 |
|
|
|
11,708 |
|
|
|
11,729 |
|
|
|
11,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
Adjusted
Net Income and Adjusted Diluted EPS (a) |
December 30,2023 |
|
December 30,2023 |
|
December 31,2022 |
|
December 31,2022 |
Net Income
and Diluted EPS Attributable to Kadant, as Reported |
|
$ |
27,396 |
|
|
$ |
2.33 |
|
|
$ |
26,079 |
|
|
$ |
2.23 |
|
Adjustments, Net
of Tax: |
|
|
|
|
|
|
|
|
|
Other Income |
|
|
(631 |
) |
|
|
(0.05 |
) |
|
|
— |
|
|
|
— |
|
|
Acquisition
Costs |
|
|
1,194 |
|
|
|
0.10 |
|
|
|
159 |
|
|
|
0.01 |
|
|
Relocation
Costs |
|
|
142 |
|
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
|
Restructuring and
Impairment Costs |
|
|
226 |
|
|
|
0.02 |
|
|
|
1,080 |
|
|
|
0.09 |
|
Adjusted Net
Income and Adjusted Diluted EPS (a) |
|
$ |
28,327 |
|
|
$ |
2.41 |
|
|
$ |
27,318 |
|
|
$ |
2.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Twelve Months Ended |
|
|
|
|
December 30,2023 |
|
December 30,2023 |
|
December 31,2022 |
|
December 31,2022 |
Net Income and
Diluted EPS Attributable to Kadant, as Reported |
|
$ |
116,069 |
|
|
$ |
9.90 |
|
|
$ |
120,928 |
|
|
$ |
10.35 |
|
Adjustments, Net
of Tax: |
|
|
|
|
|
|
|
|
|
Gain on Sale and
Other Income (b) |
|
|
(631 |
) |
|
|
(0.05 |
) |
|
|
(15,143 |
) |
|
|
(1.30 |
) |
|
Acquisition-Related Costs |
|
|
1,194 |
|
|
|
0.10 |
|
|
|
881 |
|
|
|
0.08 |
|
|
Relocation
Costs |
|
|
599 |
|
|
|
0.05 |
|
|
|
— |
|
|
|
— |
|
|
Restructuring and
Impairment Costs |
|
|
521 |
|
|
|
0.04 |
|
|
|
1,287 |
|
|
|
0.11 |
|
Adjusted Net
Income and Adjusted Diluted EPS (a) |
|
$ |
117,752 |
|
|
$ |
10.04 |
|
|
$ |
107,953 |
|
|
$ |
9.24 |
|
|
|
|
|
Three Months Ended |
|
|
|
Increase (Decrease) Excluding Acquisition and FX (a,e) |
Revenue by Segment |
|
December 30,2023 |
|
December 31,2022 |
|
Increase (Decrease) |
|
Flow Control |
|
$ |
87,403 |
|
|
$ |
91,181 |
|
|
$ |
(3,778 |
) |
|
$ |
(5,806 |
) |
Industrial
Processing |
|
|
86,974 |
|
|
|
90,126 |
|
|
|
(3,152 |
) |
|
|
(3,894 |
) |
Material
Handling |
|
|
64,302 |
|
|
|
50,793 |
|
|
|
13,509 |
|
|
|
12,539 |
|
|
|
|
|
$ |
238,679 |
|
|
$ |
232,100 |
|
|
$ |
6,579 |
|
|
$ |
2,839 |
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Parts and Consumables Revenue |
|
|
60 |
% |
|
|
60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Increase |
|
IncreaseExcluding Acquisition and FX (a,e) |
|
|
December 30,2023 |
|
December 31,2022 |
|
|
Flow Control |
|
$ |
363,451 |
|
|
$ |
349,107 |
|
|
$ |
14,344 |
|
|
$ |
12,375 |
|
Industrial
Processing |
|
|
354,703 |
|
|
|
353,698 |
|
|
|
1,005 |
|
|
|
6,419 |
|
Material
Handling |
|
|
239,518 |
|
|
|
201,934 |
|
|
|
37,584 |
|
|
|
36,173 |
|
|
|
|
|
$ |
957,672 |
|
|
$ |
904,739 |
|
|
$ |
52,933 |
|
|
$ |
54,967 |
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Parts and Consumables Revenue |
|
|
62 |
% |
|
|
63 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Increase (Decrease) |
|
Increase (Decrease) Excluding Acquisition and FX (e) |
Bookings by Segment |
|
December 30,2023 |
|
December 31,2022 |
|
|
Flow Control |
|
$ |
85,354 |
|
|
$ |
78,753 |
|
|
$ |
6,601 |
|
|
$ |
4,785 |
|
Industrial
Processing |
|
|
84,130 |
|
|
|
84,081 |
|
|
|
49 |
|
|
|
(419 |
) |
Material
Handling |
|
|
48,535 |
|
|
|
52,507 |
|
|
|
(3,972 |
) |
|
|
(4,656 |
) |
|
|
|
|
$ |
218,019 |
|
|
$ |
215,341 |
|
|
$ |
2,678 |
|
|
$ |
(290 |
) |
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Parts and Consumables Bookings |
|
|
64 |
% |
|
|
62 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Increase (Decrease) |
|
Increase (Decrease) Excluding Acquisition and FX (e) |
|
|
December 30,2023 |
|
December 31,2022 |
|
|
Flow Control |
|
$ |
361,216 |
|
|
$ |
361,113 |
|
|
$ |
103 |
|
|
$ |
(685 |
) |
Industrial
Processing |
|
|
330,136 |
|
|
|
378,186 |
|
|
|
(48,050 |
) |
|
|
(41,564 |
) |
Material
Handling |
|
|
226,017 |
|
|
|
218,915 |
|
|
|
7,102 |
|
|
|
6,194 |
|
|
|
|
|
$ |
917,369 |
|
|
$ |
958,214 |
|
|
$ |
(40,845 |
) |
|
$ |
(36,055 |
) |
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Parts and Consumables Bookings |
|
|
64 |
% |
|
|
62 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
Business Segment Information |
|
December 30,2023 |
|
December 31,2022 |
|
December 30,2023 |
|
December 31,2022 |
Gross Profit
Margin: |
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
|
50.4 |
% |
|
|
51.3 |
% |
|
|
51.8 |
% |
|
|
52.0 |
% |
|
|
Industrial
Processing |
|
|
41.2 |
% |
|
|
40.3 |
% |
|
|
40.2 |
% |
|
|
39.2 |
% |
|
|
Material
Handling |
|
|
34.4 |
% |
|
|
33.1 |
% |
|
|
35.7 |
% |
|
|
34.4 |
% |
|
|
Consolidated |
|
|
42.7 |
% |
|
|
43.1 |
% |
|
|
43.5 |
% |
|
|
43.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating
Income: |
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
$ |
20,993 |
|
|
$ |
22,636 |
|
|
$ |
95,249 |
|
|
$ |
89,942 |
|
|
|
Industrial
Processing (b) |
|
|
17,313 |
|
|
|
18,760 |
|
|
|
69,281 |
|
|
|
89,754 |
|
|
|
Material
Handling |
|
|
10,686 |
|
|
|
6,154 |
|
|
|
40,692 |
|
|
|
27,644 |
|
|
|
Corporate |
|
|
(9,971 |
) |
|
|
(8,595 |
) |
|
|
(39,465 |
) |
|
|
(36,058 |
) |
|
|
|
|
$ |
39,021 |
|
|
$ |
38,955 |
|
|
$ |
165,757 |
|
|
$ |
171,282 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income (a,f): |
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
$ |
21,301 |
|
|
$ |
23,873 |
|
|
$ |
95,991 |
|
|
$ |
91,505 |
|
|
|
Industrial
Processing |
|
|
17,727 |
|
|
|
19,344 |
|
|
|
70,304 |
|
|
|
70,905 |
|
|
|
Material
Handling |
|
|
11,061 |
|
|
|
6,336 |
|
|
|
41,194 |
|
|
|
28,543 |
|
|
|
Corporate |
|
|
(9,971 |
) |
|
|
(8,595 |
) |
|
|
(39,465 |
) |
|
|
(36,058 |
) |
|
|
|
|
$ |
40,118 |
|
|
$ |
40,958 |
|
|
$ |
168,024 |
|
|
$ |
154,895 |
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures: |
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
$ |
2,031 |
|
|
$ |
2,001 |
|
|
$ |
5,920 |
|
|
$ |
4,425 |
|
|
|
Industrial
Processing (h) |
|
|
6,061 |
|
|
|
8,458 |
|
|
|
22,068 |
|
|
|
20,137 |
|
|
|
Material
Handling |
|
|
1,664 |
|
|
|
1,494 |
|
|
|
3,834 |
|
|
|
3,575 |
|
|
|
Corporate |
|
|
— |
|
|
|
55 |
|
|
|
28 |
|
|
|
62 |
|
|
|
|
|
$ |
9,756 |
|
|
$ |
12,008 |
|
|
$ |
31,850 |
|
|
$ |
28,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
Cash Flow and Other Data |
|
December 30,2023 |
|
December 31,2022 |
|
December 30,2023 |
|
December 31,2022 |
Operating Cash
Flow |
|
$ |
59,234 |
|
|
$ |
35,163 |
|
|
$ |
165,545 |
|
|
$ |
102,625 |
|
Less: Capital
Expenditures (h) |
|
|
(9,756 |
) |
|
|
(12,008 |
) |
|
|
(31,850 |
) |
|
|
(28,199 |
) |
Free Cash Flow
(a) |
|
$ |
49,478 |
|
|
$ |
23,155 |
|
|
$ |
133,695 |
|
|
$ |
74,426 |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization Expense |
|
$ |
8,380 |
|
|
$ |
8,549 |
|
|
$ |
33,297 |
|
|
$ |
34,936 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data |
|
|
|
|
|
December 30,2023 |
|
December 31,2022 |
Assets |
|
|
|
|
|
|
|
|
Cash, Cash
Equivalents, and Restricted Cash |
|
|
|
|
|
$ |
106,453 |
|
|
$ |
79,725 |
|
Accounts
Receivable, net |
|
|
|
|
|
|
133,929 |
|
|
|
130,297 |
|
Inventories |
|
|
|
|
|
|
152,677 |
|
|
|
163,672 |
|
Contract
Assets |
|
|
|
|
|
|
8,366 |
|
|
|
14,898 |
|
Property, Plant,
and Equipment, net |
|
|
|
|
|
|
140,504 |
|
|
|
118,855 |
|
Intangible
Assets |
|
|
|
|
|
|
159,286 |
|
|
|
175,645 |
|
Goodwill |
|
|
|
|
|
|
392,084 |
|
|
|
385,455 |
|
Other Assets |
|
|
|
|
|
|
82,366 |
|
|
|
81,334 |
|
|
|
|
|
|
|
|
|
$ |
1,175,665 |
|
|
$ |
1,149,881 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
Accounts
Payable |
|
|
|
|
|
$ |
42,104 |
|
|
$ |
58,060 |
|
Debt
Obligations |
|
|
|
|
|
|
109,086 |
|
|
|
199,219 |
|
Other
Borrowings |
|
|
|
|
|
|
1,789 |
|
|
|
1,942 |
|
Other
Liabilities |
|
|
|
|
|
|
246,446 |
|
|
|
235,089 |
|
|
Total
Liabilities |
|
|
|
|
|
|
399,425 |
|
|
|
494,310 |
|
|
Stockholders'
Equity |
|
|
|
|
|
|
776,240 |
|
|
|
655,571 |
|
|
|
|
|
|
|
|
|
$ |
1,175,665 |
|
|
$ |
1,149,881 |
|
|
|
Three Months Ended |
|
Twelve Months Ended |
Adjusted Operating Income and Adjusted EBITDA
Reconciliation (a) |
|
December 30, 2023 |
|
December 31,2022 |
|
December 30,2023 |
|
December 31,2022 |
Consolidated |
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Kadant |
|
$ |
27,396 |
|
|
$ |
26,079 |
|
|
$ |
116,069 |
|
|
$ |
120,928 |
|
|
|
Net Income Attributable to
Noncontrolling Interest |
|
|
166 |
|
|
|
130 |
|
|
|
737 |
|
|
|
802 |
|
|
|
Provision for Income
Taxes |
|
|
10,449 |
|
|
|
10,831 |
|
|
|
42,210 |
|
|
|
43,906 |
|
|
|
Interest Expense, Net |
|
|
971 |
|
|
|
1,903 |
|
|
|
6,640 |
|
|
|
5,574 |
|
|
|
Other Expense, Net |
|
|
39 |
|
|
|
12 |
|
|
|
101 |
|
|
|
72 |
|
|
|
Operating Income |
|
|
39,021 |
|
|
|
38,955 |
|
|
|
165,757 |
|
|
|
171,282 |
|
|
|
Gain on Sale and Other Income
(b) |
|
|
(841 |
) |
|
|
— |
|
|
|
(841 |
) |
|
|
(20,190 |
) |
|
|
Acquisition Costs |
|
|
1,442 |
|
|
|
182 |
|
|
|
1,442 |
|
|
|
668 |
|
|
|
Indemnification Asset
(Provision) Reversal (g) |
|
|
(25 |
) |
|
|
741 |
|
|
|
102 |
|
|
|
1,316 |
|
|
|
Relocation Costs |
|
|
189 |
|
|
|
— |
|
|
|
798 |
|
|
|
— |
|
|
|
Restructuring and Impairment
Costs |
|
|
332 |
|
|
|
1,080 |
|
|
|
766 |
|
|
|
1,334 |
|
|
|
Acquired Backlog Amortization
(c) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
703 |
|
|
|
Acquired Profit in Inventory
Amortization (d) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(218 |
) |
|
|
Adjusted Operating Income
(a) |
|
|
40,118 |
|
|
|
40,958 |
|
|
|
168,024 |
|
|
|
154,895 |
|
|
|
Depreciation and
Amortization |
|
|
8,380 |
|
|
|
8,549 |
|
|
|
33,297 |
|
|
|
34,233 |
|
|
|
Adjusted EBITDA (a) |
|
$ |
48,498 |
|
|
$ |
49,507 |
|
|
$ |
201,321 |
|
|
$ |
189,128 |
|
|
|
Adjusted EBITDA Margin
(a,i) |
|
|
20.3 |
% |
|
|
21.3 |
% |
|
|
21.0 |
% |
|
|
20.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Flow Control |
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
$ |
20,993 |
|
|
$ |
22,636 |
|
|
$ |
95,249 |
|
|
$ |
89,942 |
|
|
|
Acquisition Costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
472 |
|
|
|
Indemnification Asset
(Provision) Reversal (g) |
|
|
(24 |
) |
|
|
741 |
|
|
|
(24 |
) |
|
|
741 |
|
|
|
Restructuring and Impairment
Costs |
|
|
332 |
|
|
|
496 |
|
|
|
766 |
|
|
|
568 |
|
|
|
Acquired Profit in Inventory
Amortization (d) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(218 |
) |
|
|
Adjusted Operating Income
(a) |
|
|
21,301 |
|
|
|
23,873 |
|
|
|
95,991 |
|
|
|
91,505 |
|
|
|
Depreciation and
Amortization |
|
|
2,262 |
|
|
|
2,306 |
|
|
|
9,047 |
|
|
|
9,179 |
|
|
|
Adjusted EBITDA (a) |
|
$ |
23,563 |
|
|
$ |
26,179 |
|
|
$ |
105,038 |
|
|
$ |
100,684 |
|
|
|
Adjusted EBITDA Margin
(a,i) |
|
|
27.0 |
% |
|
|
28.7 |
% |
|
|
28.9 |
% |
|
|
28.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Industrial
Processing |
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
$ |
17,313 |
|
|
$ |
18,760 |
|
|
$ |
69,281 |
|
|
$ |
89,754 |
|
|
|
Gain on Sale and Other Income
(b) |
|
|
(841 |
) |
|
|
— |
|
|
|
(841 |
) |
|
|
(20,190 |
) |
|
|
Acquisition Costs |
|
|
1,066 |
|
|
|
— |
|
|
|
1,066 |
|
|
|
— |
|
|
|
Indemnification Asset Reversal
(g) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
575 |
|
|
|
Relocation Costs |
|
|
189 |
|
|
|
— |
|
|
|
798 |
|
|
|
— |
|
|
|
Restructuring and Impairment
Costs |
|
|
— |
|
|
|
584 |
|
|
|
— |
|
|
|
766 |
|
|
|
Adjusted Operating Income
(a) |
|
|
17,727 |
|
|
|
19,344 |
|
|
|
70,304 |
|
|
|
70,905 |
|
|
|
Depreciation and
Amortization |
|
|
2,975 |
|
|
|
3,099 |
|
|
|
11,798 |
|
|
|
12,575 |
|
|
|
Adjusted EBITDA (a) |
|
$ |
20,702 |
|
|
$ |
22,443 |
|
|
$ |
82,102 |
|
|
$ |
83,480 |
|
|
|
Adjusted EBITDA Margin
(a,i) |
|
|
23.8 |
% |
|
|
24.9 |
% |
|
|
23.1 |
% |
|
|
23.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Material
Handling |
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
$ |
10,686 |
|
|
$ |
6,154 |
|
|
$ |
40,692 |
|
|
$ |
27,644 |
|
|
|
Acquisition Costs |
|
|
376 |
|
|
|
182 |
|
|
|
376 |
|
|
|
196 |
|
|
|
Indemnification Asset
(Provision) Reversal (g) |
|
|
(1 |
) |
|
|
— |
|
|
|
126 |
|
|
|
— |
|
|
|
Acquired Backlog Amortization
(c) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
703 |
|
|
|
Adjusted Operating Income
(a) |
|
|
11,061 |
|
|
|
6,336 |
|
|
|
41,194 |
|
|
|
28,543 |
|
|
|
Depreciation and
Amortization |
|
|
3,125 |
|
|
|
3,120 |
|
|
|
12,379 |
|
|
|
12,382 |
|
|
|
Adjusted EBITDA (a) |
|
$ |
14,186 |
|
|
$ |
9,456 |
|
|
$ |
53,573 |
|
|
$ |
40,925 |
|
|
|
Adjusted EBITDA Margin
(a,i) |
|
|
22.1 |
% |
|
|
18.6 |
% |
|
|
22.4 |
% |
|
|
20.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
|
|
|
Operating Loss |
|
$ |
(9,971 |
) |
|
$ |
(8,595 |
) |
|
$ |
(39,465 |
) |
|
$ |
(36,058 |
) |
|
|
Depreciation and
Amortization |
|
|
18 |
|
|
|
24 |
|
|
|
73 |
|
|
|
97 |
|
|
|
EBITDA (a) |
|
$ |
(9,953 |
) |
|
$ |
(8,571 |
) |
|
$ |
(39,392 |
) |
|
$ |
(35,961 |
) |
|
|
|
|
|
|
|
|
|
|
|
(a) |
Represents a
non-GAAP financial measure. |
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
Includes a $20.2
million pre-tax gain on the sale of a manufacturing facility in
China in the twelve months ended December 31, 2022 in our
Industrial Processing segment pursuant to a relocation plan. |
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
Represents
intangible amortization expense associated with acquired
backlog. |
|
|
|
|
|
|
|
|
|
|
|
|
(d) |
Represents income
within cost of revenue associated with amortization of acquired
profit in inventory. |
|
|
|
|
|
|
|
|
|
|
|
|
(e) |
Represents the
increase (decrease) excluding an acquisition and resulting 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 the
provision for or reversal of indemnification assets related to tax
reserves associated with uncertain tax positions. |
|
|
|
|
|
|
|
|
|
|
|
|
(h) |
Includes $1.6
million and $7.4 million in the three and twelve months ended
December 30, 2023, respectively, and $5.0 million and $10.4 million
in the three and twelve months ended December 31, 2022,
respectively, related to the construction of a new manufacturing
facility in China. |
|
|
|
|
|
|
|
|
|
|
|
|
(i) |
Calculated as
adjusted EBITDA divided by revenue in each period. |
|
About Kadant Kadant Inc. is a global supplier
of technologies and engineered systems that drive Sustainable
Industrial Processing. The Company’s products and services play an
integral role in enhancing efficiency, optimizing energy
utilization, and maximizing productivity in process industries.
Kadant is based in Westford, Massachusetts, with approximately
3,400 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 fiscal year ended December 31, 2022 and subsequent
filings with the Securities and Exchange Commission. These include
risks and uncertainties relating to adverse changes in global and
local economic conditions; the variability and difficulty in
accurately predicting revenues from large capital equipment and
systems projects; health epidemics and pandemics; our acquisition
strategy; 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; development and use of digital media; cyclical economic
conditions affecting the global mining industry; demand for coal,
including economic and environmental risks associated with coal;
failure of our information systems or breaches of data security and
cybertheft; implementation of our internal growth strategy; supply
chain constraints, inflationary pressure, price increases and
shortages in raw materials; competition; changes in our tax
provision or exposure to additional tax liabilities; our ability to
successfully manage our manufacturing operations; disruption in
production; future restructurings; loss of key personnel and
effective succession planning; protection of intellectual property;
climate change; adequacy of our insurance coverage; global
operations; policies of the Chinese government; the variability and
uncertainties in sales of capital equipment in China; currency
fluctuations; changes to government regulations and policies around
the world; compliance with government regulations and policies and
compliance with laws; environmental laws and regulations;
environmental, health and safety laws and regulations impacting the
mining industry; our debt obligations; restrictions in our credit
agreement and note purchase agreement; soundness of financial
institutions; fluctuations in our share price; and anti-takeover
provisions.
ContactsInvestor Contact Information:Michael
McKenney, 978-776-2000IR@kadant.com orMedia Contact
Information:Wes Martz, 269-278-1715media@kadant.com
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