Reports Record Revenue and Diluted
EPS
Kadant Inc. (NYSE: KAI) reported its financial results for the
third quarter ended September 29, 2018.
Third Quarter 2018 Highlights
- Revenue increased 8% to a record $166 million
- GAAP diluted EPS increased 40% to a record $1.64
- Adjusted diluted EPS increased 3% to a record $1.53
- Net income increased 41% to $19 million
- Adjusted EBITDA increased 11% to a record $34 million and
represented 20% of revenue
- Gross margin was 44.1%
- Bookings increased 22% to $165 million
- Backlog was $192 million
- Cash flow from operations was $17 million
Note: Adjusted diluted EPS, adjusted EBITDA, and adjusted EBITDA
margin 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 record-setting pace
we set in the first half of 2018 continued into the third quarter,”
said Jonathan Painter, president and chief executive officer.
“Strong internal growth and excellent execution led to record
revenue and diluted EPS. Capacity build-outs at mills in Asia and
strong demand in North America, particularly for our Fluid-Handling
and Stock-Preparation product lines, led this growth. Our bookings
increased 22 percent due almost entirely to internal growth,
contributing to our near-record backlog of $192 million at the end
of the third quarter. Our operating units executed extremely well
this quarter resulting in record adjusted EBITDA, representing 20
percent of revenue.”
Third Quarter 2018 ResultsRevenue increased
eight percent to a record $165.7 million compared to the third
quarter of 2017, including $0.9 million from an acquisition and a
$3.8 million decrease from the unfavorable effect of foreign
currency translation. Excluding the impact of the acquisition and
foreign currency translation, revenue increased 10 percent compared
to the third quarter of 2017. Gross margin was 44.1 percent. Net
income increased 41 percent to $18.8 million, or $1.64 per diluted
share, compared to $13.3 million, or $1.17 per diluted share, in
the third quarter of 2017. Adjusted diluted EPS increased three
percent to $1.53 compared to $1.49 in the third quarter of 2017.
Adjusted diluted EPS excludes a $0.14 discrete tax benefit and
$0.03 of restructuring costs in the third quarter of 2018 and $0.32
of acquisition-related costs in the third quarter of 2017.
Adjusted EBITDA increased 11 percent to a record $33.5 million
compared to $30.1 million in the third quarter of 2017. Adjusted
EBITDA excludes $0.4 million of restructuring costs in the third
quarter of 2018 and $4.9 million of acquisition-related costs in
the third quarter of 2017. Cash flows from operations increased 144
percent to $17.0 million compared to $7.0 million in the third
quarter of 2017. Bookings increased 22 percent to $165.0 million
compared to $135.5 million in the third quarter of 2017, including
$1.2 million from an acquisition and a $3.8 million decrease from
the unfavorable effect of foreign currency translation. Excluding
the impact of the acquisition and foreign currency translation,
bookings increased 24 percent compared to the third quarter of
2017.
Summary and Outlook“Our strong performance in
the first three quarters of 2018 has positioned us for another
record year of financial performance,” Mr. Painter continued.
“However, the timing of capital bookings and shipments as well as
some modest currency headwinds have caused us to revise our
previous guidance.
“For 2018, we now expect to report full year revenue of $628 to
$632 million, revised from our previous guidance of $630 to $638
million. We expect to achieve GAAP diluted EPS of $4.93 to $4.98 in
2018, revised from our previous guidance of $4.89 to
$4.99. The revised 2018 guidance includes a pre-tax
curtailment loss of $1.4 million, or $0.09 per diluted share,
related to the termination of defined benefit plans at one of our
U.S. operations. The revised 2018 guidance also includes pre-tax
restructuring costs of $1.7 million, or $0.11 per diluted share,
pre-tax amortization expense associated with acquired backlog of
$0.3 million, or $0.02 per diluted share, and a discrete tax
benefit of $1.7 million, or $0.15 per diluted share. Excluding
these items, we expect adjusted diluted EPS of $5.00 to $5.05 for
2018, revised from our previous guidance of $5.00 to $5.10.
“For the fourth quarter of 2018, we expect GAAP diluted EPS of
$1.24 to $1.29 on revenue of $158 to $162 million. The
fourth quarter guidance includes the pre-tax curtailment loss of
$1.4 million, or $0.09 per diluted share. Excluding the curtailment
loss, we expect adjusted diluted EPS of $1.33 to $1.38 in the
fourth quarter of 2018.”
Conference CallKadant will hold a webcast with
a slide presentation for investors on Tuesday, October 30, 2018, at
11:00 a.m. eastern time to discuss its third quarter 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 8097465. 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
November 30, 2018.
Shortly after the webcast, Kadant will post its updated general
investor presentation incorporating the third quarter 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, adjusted operating income, adjusted net income,
adjusted diluted earnings per share (EPS), earnings before
interest, taxes, depreciation, and amortization (EBITDA), adjusted
EBITDA, and adjusted EBITDA margin.
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 included $0.9 million and $64.6 million from
acquisitions in the third quarter and first nine months of 2018,
respectively. Revenue also included $3.8 million of unfavorable and
$7.6 million of favorable foreign currency translation effect in
the third quarter and first nine months of 2018, respectively. We
present increases or decreases in revenue excluding the effect of
acquisitions and foreign currency translation to provide investors
insight into underlying revenue
trends.
Our non-GAAP financial measures exclude restructuring costs,
acquisition costs, amortization expense related to acquired backlog
and profit in inventory and a discrete tax benefit. 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 or income or none at all.
Third QuarterAdjusted operating income, adjusted EBITDA, and
adjusted EBITDA margin exclude:
- Pre-tax restructuring costs of $0.4 million in 2018.
- Pre-tax acquisition costs of $0.6 million in 2017.
- Pre-tax expense related to acquired profit in inventory and
backlog of $4.3 million in 2017.
Adjusted net income and adjusted diluted EPS exclude:
- After-tax restructuring costs of $0.3 million ($0.4 million net
of tax of $0.1 million) in 2018.
- A discrete tax benefit of $1.5 million in 2018 related to the
reversal of tax reserves associated with uncertain tax positions
covering multiple tax years.
- After-tax acquisition costs of $0.4 million ($0.6 million net
of tax of $0.2 million) in 2017.
- After-tax expense related to acquired profit in inventory and
backlog of $3.2 million ($4.3 million net of tax of $1.1 million)
in 2017.
First Nine MonthsAdjusted operating income, adjusted EBITDA, and
adjusted EBITDA margin exclude:
- Pre-tax restructuring costs of $1.7 million in 2018.
- Pre-tax expense related to acquired backlog of $0.3 million in
2018.
- Pre-tax acquisition costs of $5.0 million in 2017.
- Pre-tax expense related to acquired profit in inventory and
backlog of $4.3 million in 2017.
Adjusted net income and adjusted diluted EPS exclude:
- After-tax restructuring costs of $1.3 million ($1.7 million net
of tax of $0.4 million) in 2018.
- After-tax expense related to acquired backlog of $0.2 million
($0.3 million net of tax of $0.1 million) in 2018.
- A discrete tax benefit of $1.7 million in 2018.
- After-tax acquisition costs of $4.3 million ($5.0 million net
of tax of $0.7 million) in 2017.
- After-tax expense related to acquired profit in inventory and
backlog of $3.2 million ($4.3 million net of tax of $1.1 million)
in 2017.
Reconciliations of the non-GAAP financial measures to the most
directly comparable GAAP financial measures are set forth in this
press release.
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Financial Highlights (unaudited) |
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(In
thousands, except per share amounts and percentages) |
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Three Months Ended |
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Nine Months Ended |
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Consolidated Statement of Income
(a) |
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
|
Revenues |
$ |
165,745 |
|
|
$ |
152,794 |
|
|
$ |
469,851 |
|
|
$ |
365,893 |
|
|
|
Costs and
Operating Expenses: |
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|
|
|
|
|
|
|
|
|
Cost of
revenues |
|
92,652 |
|
|
|
88,139 |
|
|
|
262,515 |
|
|
|
199,369 |
|
|
|
|
Selling,
general, and administrative expenses |
|
42,888 |
|
|
|
42,346 |
|
|
|
133,796 |
|
|
|
115,936 |
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|
|
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Research
and development expenses |
|
2,452 |
|
|
|
2,635 |
|
|
|
8,049 |
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|
|
7,004 |
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|
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Restructuring costs |
|
378 |
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|
|
- |
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|
1,717 |
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- |
|
|
|
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138,370 |
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|
133,120 |
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|
406,077 |
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|
322,309 |
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|
Operating
Income |
|
27,375 |
|
|
|
19,674 |
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|
|
63,774 |
|
|
|
43,584 |
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|
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Interest
Income |
|
30 |
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|
|
94 |
|
|
|
335 |
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|
|
300 |
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Interest
Expense |
|
(1,738 |
) |
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|
(1,282 |
) |
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|
(5,320 |
) |
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|
(2,022 |
) |
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Other
Expense, Net |
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(245 |
) |
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(216 |
) |
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(736 |
) |
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|
(637 |
) |
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Income
Before Provision for Income Taxes |
|
25,422 |
|
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|
18,270 |
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|
58,053 |
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|
41,225 |
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Provision
for Income Taxes |
|
6,443 |
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|
|
4,860 |
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15,575 |
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|
10,550 |
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Net
Income |
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18,979 |
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|
13,410 |
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42,478 |
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|
30,675 |
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Net Income
Attributable to Noncontrolling Interest |
|
(195 |
) |
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(125 |
) |
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(487 |
) |
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(343 |
) |
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Net Income
Attributable to Kadant |
$ |
18,784 |
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$ |
13,285 |
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$ |
41,991 |
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$ |
30,332 |
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Earnings
per Share Attributable to Kadant: |
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Basic |
$ |
1.69 |
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$ |
1.21 |
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$ |
3.79 |
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$ |
2.76 |
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Diluted |
$ |
1.64 |
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$ |
1.17 |
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$ |
3.69 |
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$ |
2.69 |
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Weighted
Average Shares: |
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Basic |
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11,101 |
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11,004 |
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11,078 |
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10,986 |
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Diluted |
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11,421 |
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11,344 |
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11,388 |
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11,282 |
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Three Months Ended |
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Three Months Ended |
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Adjusted Net Income and Adjusted Diluted EPS
(b) |
Sept. 29, 2018 |
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Sept. 29, 2018 |
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Sept. 30, 2017 |
|
Sept. 30, 2017 |
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Net Income and Diluted EPS Attributable to
Kadant, as Reported |
$ |
18,784 |
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$ |
1.64 |
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$ |
13,285 |
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$ |
1.17 |
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Adjustments
for the Following: |
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Restructuring Costs, Net of Tax |
|
287 |
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0.03 |
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- |
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- |
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Acquisition
Costs, Net of Tax |
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- |
|
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- |
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|
441 |
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|
0.04 |
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Amortization of Acquired Profit in
Inventory and Backlog, Net of Tax |
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- |
|
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- |
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|
|
3,191 |
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|
0.28 |
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Discrete Tax Items |
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(1,542 |
) |
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(0.14 |
) |
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- |
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- |
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Adjusted
Net Income and Adjusted Diluted EPS |
$ |
17,529 |
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$ |
1.53 |
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$ |
16,917 |
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$ |
1.49 |
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Nine Months Ended |
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Nine Months Ended |
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Sept. 29, 2018 |
|
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
Sept. 30, 2017 |
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Net Income and Diluted EPS Attributable to
Kadant, as Reported |
$ |
41,991 |
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$ |
3.69 |
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$ |
30,332 |
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$ |
2.69 |
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Adjustments
for the Following: |
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Restructuring Costs, Net of Tax |
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1,308 |
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0.11 |
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- |
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- |
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Acquisition
Costs, Net of Tax |
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- |
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- |
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4,274 |
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|
0.38 |
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Amortization of Acquired Profit in
Inventory and Backlog, Net of Tax |
|
189 |
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0.02 |
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3,191 |
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0.28 |
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Discrete Tax Items |
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(1,672 |
) |
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(0.15 |
) |
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- |
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- |
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Adjusted
Net Income and Adjusted Diluted EPS |
$ |
41,816 |
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$ |
3.67 |
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$ |
37,797 |
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$ |
3.35 |
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Increase |
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(Decrease) |
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Excluding |
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Three Months Ended |
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Increase(Decrease) |
|
Acquisitions |
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Revenues by Product Line |
Sept. 29, 2018 |
|
Sept. 30, 2017 |
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and FX (b,c) |
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Stock-Preparation |
$ |
62,983 |
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$ |
52,065 |
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$ |
10,918 |
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$ |
11,603 |
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Fluid-Handling |
|
33,083 |
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28,532 |
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|
4,551 |
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|
4,451 |
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Doctoring,
Cleaning, & Filtration |
|
30,704 |
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|
30,538 |
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|
166 |
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|
1,059 |
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Papermaking
Systems |
|
126,770 |
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|
111,135 |
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15,635 |
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|
17,113 |
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Wood
Processing Systems |
|
37,042 |
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|
39,714 |
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(2,672 |
) |
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(1,295 |
) |
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Fiber-Based
Products |
|
1,933 |
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|
1,945 |
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|
(12 |
) |
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|
(12 |
) |
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|
$ |
165,745 |
|
|
$ |
152,794 |
|
|
$ |
12,951 |
|
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$ |
15,806 |
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Increase |
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(Decrease) |
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Excluding |
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Nine Months Ended |
|
Increase |
|
Acquisitions |
|
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|
Sept. 29, 2018 |
|
Sept. 30, 2017 |
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and FX (b,c) |
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Stock-Preparation |
$ |
164,842 |
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$ |
139,396 |
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$ |
25,446 |
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$ |
19,732 |
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Fluid-Handling |
|
98,500 |
|
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|
73,099 |
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|
25,401 |
|
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|
11,614 |
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Doctoring,
Cleaning, & Filtration |
|
87,469 |
|
|
|
82,921 |
|
|
|
4,548 |
|
|
|
3,679 |
|
|
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Papermaking
Systems |
|
350,811 |
|
|
|
295,416 |
|
|
|
55,395 |
|
|
|
35,025 |
|
|
|
|
Wood
Processing Systems |
|
109,335 |
|
|
|
61,050 |
|
|
|
48,285 |
|
|
|
(3,513 |
) |
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|
Fiber-Based
Products |
|
9,705 |
|
|
|
9,427 |
|
|
|
278 |
|
|
|
278 |
|
|
|
|
|
|
$ |
469,851 |
|
|
$ |
365,893 |
|
|
$ |
103,958 |
|
|
$ |
31,790 |
|
|
|
|
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|
|
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|
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Increase |
|
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(Decrease) |
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Excluding |
|
|
|
|
|
Three Months Ended |
|
Increase(Decrease) |
|
Acquisitions |
|
|
Revenues by Geography (d) |
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
|
and FX (b,c) |
|
|
|
|
|
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|
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|
|
|
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|
North
America |
$ |
74,089 |
|
|
$ |
68,369 |
|
|
$ |
5,720 |
|
|
$ |
5,867 |
|
|
|
Europe |
|
44,912 |
|
|
|
46,475 |
|
|
|
(1,563 |
) |
|
|
(639 |
) |
|
|
Asia |
|
32,887 |
|
|
|
25,215 |
|
|
|
7,672 |
|
|
|
8,359 |
|
|
|
Rest of
World |
|
13,857 |
|
|
|
12,735 |
|
|
|
1,122 |
|
|
|
2,219 |
|
|
|
|
|
|
$ |
165,745 |
|
|
$ |
152,794 |
|
|
$ |
12,951 |
|
|
$ |
15,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase |
|
|
|
|
|
|
|
|
|
|
|
(Decrease) |
|
|
|
|
|
|
|
|
|
|
|
Excluding |
|
|
|
|
|
Nine Months Ended |
|
Increase |
|
Acquisitions |
|
|
|
|
|
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
|
and FX (b,c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America |
$ |
227,080 |
|
|
$ |
170,092 |
|
|
$ |
56,988 |
|
|
$ |
10,131 |
|
|
|
Europe |
|
131,437 |
|
|
|
113,178 |
|
|
|
18,259 |
|
|
|
523 |
|
|
|
Asia |
|
78,537 |
|
|
|
53,658 |
|
|
|
24,879 |
|
|
|
21,649 |
|
|
|
Rest of
World |
|
32,797 |
|
|
|
28,965 |
|
|
|
3,832 |
|
|
|
(513 |
) |
|
|
|
|
|
$ |
469,851 |
|
|
$ |
365,893 |
|
|
$ |
103,958 |
|
|
$ |
31,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase |
|
|
|
|
|
|
|
|
|
|
|
Excluding |
|
|
|
|
|
Three Months Ended |
|
Increase |
|
Acquisitions |
|
|
Bookings by Product Line |
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
|
and FX (c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Preparation |
$ |
69,341 |
|
|
$ |
50,797 |
|
|
$ |
18,544 |
|
|
$ |
19,348 |
|
|
|
Fluid-Handling |
|
29,671 |
|
|
|
28,426 |
|
|
|
1,245 |
|
|
|
732 |
|
|
|
Doctoring,
Cleaning, & Filtration |
|
27,788 |
|
|
|
27,656 |
|
|
|
132 |
|
|
|
967 |
|
|
|
|
Papermaking
Systems |
|
126,800 |
|
|
|
106,879 |
|
|
|
19,921 |
|
|
|
21,047 |
|
|
|
|
Wood
Processing Systems |
|
36,080 |
|
|
|
26,548 |
|
|
|
9,532 |
|
|
|
11,022 |
|
|
|
|
Fiber-Based
Products |
|
2,120 |
|
|
|
2,030 |
|
|
|
90 |
|
|
|
90 |
|
|
|
|
|
|
$ |
165,000 |
|
|
$ |
135,457 |
|
|
$ |
29,543 |
|
|
$ |
32,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase |
|
|
|
|
|
|
|
|
|
|
|
(Decrease) |
|
|
|
|
|
|
|
|
|
|
|
Excluding |
|
|
|
|
|
Nine Months Ended |
|
Increase |
|
Acquisitions |
|
|
|
|
|
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
|
and FX (c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Preparation |
$ |
187,073 |
|
|
$ |
149,285 |
|
|
$ |
37,788 |
|
|
$ |
31,027 |
|
|
|
Fluid-Handling |
|
107,363 |
|
|
|
79,752 |
|
|
|
27,611 |
|
|
|
11,581 |
|
|
|
Doctoring,
Cleaning, & Filtration |
|
86,603 |
|
|
|
86,354 |
|
|
|
249 |
|
|
|
(780 |
) |
|
|
|
Papermaking
Systems |
|
381,039 |
|
|
|
315,391 |
|
|
|
65,648 |
|
|
|
41,828 |
|
|
|
|
Wood
Processing Systems |
|
133,213 |
|
|
|
50,172 |
|
|
|
83,041 |
|
|
|
18,489 |
|
|
|
|
Fiber-Based
Products |
|
9,088 |
|
|
|
8,999 |
|
|
|
89 |
|
|
|
89 |
|
|
|
|
|
|
$ |
523,340 |
|
|
$ |
374,562 |
|
|
$ |
148,778 |
|
|
$ |
60,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
Business Segment Information (a) |
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Margin: |
|
|
|
|
|
|
|
|
|
|
|
Papermaking
Systems |
|
44.6 |
% |
|
|
45.6 |
% |
|
|
45.1 |
% |
|
|
47.1 |
% |
|
|
|
|
Wood Processing
Systems |
|
42.6 |
% |
|
|
33.5 |
% |
|
|
40.4 |
% |
|
|
37.1 |
% |
|
|
|
|
Fiber-Based
Products |
|
36.6 |
% |
|
|
35.7 |
% |
|
|
50.1 |
% |
|
|
50.1 |
% |
|
|
|
|
|
|
44.1 |
% |
|
|
42.3 |
% |
|
|
44.1 |
% |
|
|
45.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income: |
|
|
|
|
|
|
|
|
|
|
|
Papermaking
Systems |
$ |
25,919 |
|
|
$ |
21,684 |
|
|
$ |
61,402 |
|
|
$ |
53,247 |
|
|
|
|
|
Wood Processing
Systems |
|
8,704 |
|
|
|
4,418 |
|
|
|
21,380 |
|
|
|
6,511 |
|
|
|
|
|
Corporate and
Other |
|
(7,248 |
) |
|
|
(6,428 |
) |
|
|
(19,008 |
) |
|
|
(16,174 |
) |
|
|
|
|
|
$ |
27,375 |
|
|
$ |
19,674 |
|
|
$ |
63,774 |
|
|
$ |
43,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating Income (b, e): |
|
|
|
|
|
|
|
|
|
|
|
Papermaking
Systems |
$ |
26,297 |
|
|
$ |
21,962 |
|
|
$ |
63,119 |
|
|
$ |
53,840 |
|
|
|
|
|
Wood Processing
Systems |
|
8,704 |
|
|
|
9,043 |
|
|
|
21,632 |
|
|
|
15,238 |
|
|
|
|
|
Corporate and
Other |
|
(7,248 |
) |
|
|
(6,428 |
) |
|
|
(19,008 |
) |
|
|
(16,174 |
) |
|
|
|
|
|
$ |
27,753 |
|
|
$ |
24,577 |
|
|
$ |
65,743 |
|
|
$ |
52,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures: |
|
|
|
|
|
|
|
|
|
|
|
Papermaking
Systems |
$ |
1,348 |
|
|
$ |
3,790 |
|
|
$ |
9,837 |
|
|
$ |
6,567 |
|
|
|
|
|
Wood Processing
Systems |
|
1,026 |
|
|
|
1,358 |
|
|
|
2,586 |
|
|
|
1,649 |
|
|
|
|
|
Corporate and
Other |
|
232 |
|
|
|
135 |
|
|
|
394 |
|
|
|
502 |
|
|
|
|
|
|
$ |
2,606 |
|
|
$ |
5,283 |
|
|
$ |
12,817 |
|
|
$ |
8,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
Cash Flow and Other Data |
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Provided by Operations |
$ |
16,979 |
|
|
$ |
6,952 |
|
|
$ |
52,550 |
|
|
$ |
32,328 |
|
|
|
Depreciation and Amortization Expense |
|
5,796 |
|
|
|
6,525 |
|
|
|
17,739 |
|
|
|
13,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data |
|
|
|
|
Sept. 29, 2018 |
|
Dec. 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Cash, Cash
Equivalents, and Restricted Cash |
|
|
|
|
$ |
58,059 |
|
|
$ |
76,846 |
|
|
|
Accounts
Receivable, net |
|
|
|
|
|
96,326 |
|
|
|
89,624 |
|
|
|
Inventories |
|
|
|
|
|
91,736 |
|
|
|
84,933 |
|
|
|
Unbilled
Revenues |
|
|
|
|
|
8,315 |
|
|
|
2,374 |
|
|
|
Property,
Plant and Equipment, net |
|
|
|
|
|
79,458 |
|
|
|
79,723 |
|
|
|
Intangible
Assets |
|
|
|
|
|
119,246 |
|
|
|
133,036 |
|
|
|
Goodwill |
|
|
|
|
|
262,081 |
|
|
|
268,001 |
|
|
|
Other
Assets |
|
|
|
|
|
26,541 |
|
|
|
26,557 |
|
|
|
|
|
|
|
|
|
|
$ |
741,762 |
|
|
$ |
761,094 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
Accounts
Payable |
|
|
|
|
$ |
34,761 |
|
|
$ |
35,461 |
|
|
|
Debt
Obligations |
|
|
|
|
|
189,052 |
|
|
|
237,011 |
|
|
|
Capital
Lease Obligations |
|
|
|
|
|
4,563 |
|
|
|
5,069 |
|
|
|
Other
Liabilities |
|
|
|
|
|
154,947 |
|
|
|
151,049 |
|
|
|
|
Total
Liabilities |
|
|
|
|
|
383,323 |
|
|
|
428,590 |
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
358,439 |
|
|
|
332,504 |
|
|
|
|
|
|
|
|
|
|
$ |
741,762 |
|
|
$ |
761,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income and Adjusted EBITDA |
Three Months Ended |
|
Nine Months Ended |
|
|
Reconciliation (a, b) |
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
Sept. 29, 2018 |
|
Sept. 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable
to Kadant |
$ |
18,784 |
|
|
$ |
13,285 |
|
|
$ |
41,991 |
|
|
$ |
30,332 |
|
|
|
|
|
Net Income Attributable
to Noncontrolling Interest |
|
195 |
|
|
|
125 |
|
|
|
487 |
|
|
|
343 |
|
|
|
|
|
Provision for Income
Taxes |
|
6,443 |
|
|
|
4,860 |
|
|
|
15,575 |
|
|
|
10,550 |
|
|
|
|
|
Interest Expense,
Net |
|
1,708 |
|
|
|
1,188 |
|
|
|
4,985 |
|
|
|
1,722 |
|
|
|
|
|
Other Expense, Net |
|
245 |
|
|
|
216 |
|
|
|
736 |
|
|
|
637 |
|
|
|
|
|
Operating Income |
|
27,375 |
|
|
|
19,674 |
|
|
|
63,774 |
|
|
|
43,584 |
|
|
|
|
|
Restructuring
Costs |
|
378 |
|
|
|
- |
|
|
|
1,717 |
|
|
|
- |
|
|
|
|
|
Acquisition Costs |
|
- |
|
|
|
585 |
|
|
|
- |
|
|
|
5,002 |
|
|
|
|
|
Acquired Backlog
Amortization (f) |
|
- |
|
|
|
958 |
|
|
|
252 |
|
|
|
958 |
|
|
|
|
|
Acquired Profit in
Inventory (g) |
|
- |
|
|
|
3,360 |
|
|
|
- |
|
|
|
3,360 |
|
|
|
|
|
Adjusted Operating
Income (b) |
|
27,753 |
|
|
|
24,577 |
|
|
|
65,743 |
|
|
|
52,904 |
|
|
|
|
|
Depreciation and
Amortization |
|
5,796 |
|
|
|
5,567 |
|
|
|
17,487 |
|
|
|
12,098 |
|
|
|
|
|
Adjusted EBITDA
(b) |
$ |
33,549 |
|
|
$ |
30,144 |
|
|
$ |
83,230 |
|
|
$ |
65,002 |
|
|
|
|
|
Adjusted EBITDA Margin
(b, h) |
|
20.2 |
% |
|
|
19.7 |
% |
|
|
17.7 |
% |
|
|
17.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Papermaking
Systems |
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
$ |
25,919 |
|
|
$ |
21,684 |
|
|
$ |
61,402 |
|
|
$ |
53,247 |
|
|
|
|
|
Restructuring
costs |
|
378 |
|
|
|
- |
|
|
|
1,717 |
|
|
|
- |
|
|
|
|
|
Acquisition Costs |
|
- |
|
|
|
172 |
|
|
|
- |
|
|
|
487 |
|
|
|
|
|
Acquired Profit in
Inventory (g) |
|
- |
|
|
|
106 |
|
|
|
- |
|
|
|
106 |
|
|
|
|
|
Adjusted Operating
Income (b) |
|
26,297 |
|
|
|
21,962 |
|
|
|
63,119 |
|
|
|
53,840 |
|
|
|
|
|
Depreciation and
Amortization |
|
3,132 |
|
|
|
2,894 |
|
|
|
9,407 |
|
|
|
8,105 |
|
|
|
|
|
Adjusted EBITDA
(b) |
$ |
29,429 |
|
|
$ |
24,856 |
|
|
$ |
72,526 |
|
|
$ |
61,945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood
Processing Systems |
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
$ |
8,704 |
|
|
$ |
4,418 |
|
|
$ |
21,380 |
|
|
$ |
6,511 |
|
|
|
|
|
Acquisition Costs |
|
- |
|
|
|
413 |
|
|
|
- |
|
|
|
4,515 |
|
|
|
|
|
Acquired Backlog
Amortization (f) |
|
- |
|
|
|
958 |
|
|
|
252 |
|
|
|
958 |
|
|
|
|
|
Acquired Profit in
Inventory (g) |
|
- |
|
|
|
3,254 |
|
|
|
- |
|
|
|
3,254 |
|
|
|
|
|
Adjusted Operating
Income (b) |
|
8,704 |
|
|
|
9,043 |
|
|
|
21,632 |
|
|
|
15,238 |
|
|
|
|
|
Depreciation and
Amortization |
|
2,505 |
|
|
|
2,527 |
|
|
|
7,585 |
|
|
|
3,547 |
|
|
|
|
|
Adjusted EBITDA
(b) |
$ |
11,209 |
|
|
$ |
11,570 |
|
|
$ |
29,217 |
|
|
$ |
18,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
and Other |
|
|
|
|
|
|
|
|
|
|
|
Operating Loss |
$ |
(7,248 |
) |
|
$ |
(6,428 |
) |
|
$ |
(19,008 |
) |
|
$ |
(16,174 |
) |
|
|
|
|
Depreciation and
Amortization |
|
159 |
|
|
|
146 |
|
|
|
495 |
|
|
|
446 |
|
|
|
|
|
EBITDA (b) |
$ |
(7,089 |
) |
|
$ |
(6,282 |
) |
|
$ |
(18,513 |
) |
|
$ |
(15,728 |
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(a) |
Prior period
amounts have been restated to conform to the current period
presentation as a result of the adoption of the Financial
Accounting Standards Board's Accounting Standards Update No.
2017-07. |
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(b) |
Represents a
non-GAAP financial measure. |
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(c) |
Represents
the increase (decrease) resulting from the exclusion of
acquisitions 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. |
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(d) |
Geographic
revenues are attributed to regions based on customer
location. |
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(e) |
See
reconciliation to the most directly comparable GAAP financial
measure under "Adjusted Operating Income and Adjusted
EBITDA Reconciliation." |
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(f) |
Represents
intangible amortization expense associated with acquired
backlog. |
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(g) |
Represents
expense within cost of revenues associated with acquired profit in
inventory. |
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(h) |
Calculated as
adjusted EBITDA divided by revenue in each period. |
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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 2,500 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
Kadant’s 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 30, 2017 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; our customers’ ability to obtain financing for capital
equipment projects; the variability and uncertainties in sales of
capital equipment in China; international sales and operations; the
oriented strand board market and levels of residential construction
activity; development and use of digital media; currency
fluctuations; price increases or shortages of raw materials;
dependence on certain suppliers; our acquisition strategy; failure
of our information systems or breaches of data security; changes in
government regulations and policies and compliance with laws; 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 likely exit from the European Union; our
debt obligations; restrictions in our credit agreement; loss of key
personnel; protection of patents and proprietary rights;
fluctuations in our share price; soundness of financial
institutions; environmental laws and regulations; anti-takeover
provisions; and reliance on third-party research.
ContactsInvestor Contact Information:Michael
McKenney, 978-776-2000mike.mckenney@kadant.com orMedia Contact
Information:Wes Martz, 269-278-1715wes.martz@kadant.com
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