EX-99.1 2 kaiform8kex991102919.htm KAI FORM 8-K EXHIBIT 99.1 10-29-2019 EARNINGS RELEASE Exhibit
Exhibit 99.1
kadantlogoa34.jpg

KADANT INC.
One Technology Park Drive
Westford, MA 01886

NEWS
Kadant Reports 2019 Third Quarter Results

WESTFORD, Mass., October 29, 2019 - Kadant Inc. (NYSE: KAI) reported its financial results for the third quarter ended September 28, 2019.

Third Quarter 2019 Highlights
•
Revenue increased 5% to $174 million
•
GAAP diluted EPS decreased 14% to $1.41
•
Adjusted diluted EPS decreased 8% to $1.41
•
Net income decreased 14% to $16 million
•
Adjusted EBITDA decreased 4% to $32 million and represented 18.6% of revenue
•
Gross margin was 42.8%
•
Bookings increased 4% to $171 million
•
Cash flow from operations increased 51% to $26 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
“Following our strong first half of 2019, we had another quarter with excellent execution and we solidly beat our EPS guidance,” said Jeffrey L. Powell, president and chief executive officer of Kadant. “Strong operating performance in the third quarter across most of our segments led to one of our highest adjusted EBITDA results of $32 million, or 18.6 percent of revenue. We are particularly pleased with our cash flow from operations of $26 million, up 51 percent from the third quarter of 2018. Despite reduced project activity in China and softer demand for wood processing equipment in North America, our end-markets have remained stable with healthy demand for our parts and consumables.”
 
Third Quarter 2019 Results
Revenue increased five percent to $173.5 million compared to the third quarter of 2018, including $20.3 million from an acquisition and a $3.5 million decrease from the unfavorable effect of foreign currency translation. Excluding the impact of the acquisition and foreign currency translation, revenue decreased five percent compared to the third quarter of 2018. Gross margin was 42.8 percent. Net income was $16.1 million, or $1.41 per diluted share, in the third quarter of 2019 compared to $18.8 million, or $1.64 per diluted share in the third quarter of 2018. Adjusted diluted EPS decreased eight percent to $1.41 compared to $1.53 in the third quarter of 2018. Adjusted diluted EPS in the third quarter of 2018 excludes $0.03 of restructuring costs and a $0.14 discrete tax benefit.

Adjusted EBITDA decreased four percent to $32.3 million compared to $33.5 million in the third quarter of 2018. Adjusted EBITDA excludes $0.4 million of restructuring costs in the third quarter of 2018. Cash flows from operations increased 51 percent to $25.7 million compared to $17.0 million in the third quarter of 2018. Bookings increased four percent to $170.9 million compared to $165.0 million in the third quarter of 2018, including $18.2 million from an acquisition and a $3.4 million decrease from the unfavorable effect of foreign currency translation. Excluding the impact of the acquisition and foreign currency translation, bookings decreased five percent compared to the third quarter of 2018.



Summary and Outlook
“Our performance to date has positioned us well for another record year of financial performance,” Mr. Powell continued. “However, softening macroeconomic conditions and the strengthening U.S. dollar have tempered our revenue outlook for the year. For 2019, we are lowering our revenue guidance primarily due to a negative effect of foreign currency translation of $5 million. We now expect revenue of $694 to $698 million, revised from our previous guidance of $700 to $710 million.

“Since our announcement in late 2018 of our plan to terminate a defined benefit pension plan in the U.S., we have been executing the required termination steps and anticipate completing this process in the fourth quarter. We have lowered our GAAP diluted EPS guidance for an estimated pre-tax pension termination cost of $7.2 million, or $0.64 per diluted share. We now expect to achieve GAAP diluted EPS of $4.38 to $4.46 in 2019, revised from our previous guidance of $4.97 to $5.09. The 2019 guidance also includes pre-tax amortization expense associated with acquired profit in inventory and backlog of $4.9 million, or $0.32 per diluted share, pre-tax acquisition costs of $0.8 million, or $0.06 per diluted share, and a discrete tax benefit of $1.2 million, or $0.10 per diluted share. Excluding these items, we expect adjusted diluted EPS of $5.30 to $5.38 for 2019, revised from our previous guidance of $5.26 to $5.38.

“For the fourth quarter of 2019, we expect GAAP diluted EPS of $0.59 to $0.67 on revenue of $172 to $176 million. The fourth quarter of 2019 guidance includes the pre-tax pension termination cost of $7.2 million, or $0.64 per diluted share. Excluding this expense, we expect adjusted diluted EPS of $1.23 to $1.31 for the fourth quarter of 2019.”

Conference Call
Kadant will hold a webcast with a slide presentation for investors on Wednesday, October 30, 2019, 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 704-385-4884 outside the U.S. and reference participant passcode 8545699. 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 29, 2019.

Shortly after the webcast, Kadant will post its updated general investor presentation incorporating the third quarter results on its website at www.kadant.com in the “Investors” section.

Use of Non-GAAP Financial Measures
In 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 $20.3 million and $61.1 million from an acquisition in the third quarter and first nine months of 2019, respectively. Revenue also included a $3.5 million and $16.3 million unfavorable foreign currency translation effect in the third quarter and first nine months of 2019, 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 profit in inventory and backlog, and discrete tax items. 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 Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
•
Pre-tax restructuring costs of $0.4 million in 2018.

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 reserves associated with uncertain tax positions covering multiple tax years.

First Nine Months
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
•
Pre-tax acquisition costs of $0.8 million in 2019.
•
Pre-tax expense related to amortization of acquired profit in inventory and backlog of $4.9 million in 2019.
•
Pre-tax restructuring costs of $1.7 million in 2018.
•
Pre-tax expense related to amortization of acquired backlog of $0.3 million in 2018.

Adjusted net income and adjusted diluted EPS exclude:
•
After-tax acquisition costs of $0.7 million ($0.8 million net of tax of $0.1 million) in 2019.
•
After-tax expense related to amortization of acquired profit in inventory and backlog of $3.7 million ($4.9 million net of tax of $1.2 million) in 2019.
•
A discrete tax benefit of $1.2 million in 2019.
•
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 amortization of 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.
Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release.
-more-



Financial Highlights (unaudited)
 
 
 
 
 
 
 
 
(In thousands, except per share amounts and percentages)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
Consolidated Statement of Income
 
Sept. 28, 2019
 
Sept. 29, 2018
 
Sept. 28, 2019
 
Sept. 29, 2018
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
$
173,504

 
$
165,745

 
$
521,985

 
$
469,851

Costs and Operating Expenses:
 
 
 
 
 
 
 
 
 
Cost of revenues
99,257

 
92,652

 
302,852

 
262,515

 
Selling, general, and administrative expenses
47,097

 
42,888

 
144,883

 
133,796

 
Research and development expenses
2,597

 
2,452

 
7,980

 
8,049

 
Restructuring costs
—

 
378

 
—

 
1,717

 
 
 
148,951

 
138,370

 
455,715

 
406,077

Operating Income
 
24,553

 
27,375

 
66,270

 
63,774

Interest Income
 
43

 
30

 
158

 
335

Interest Expense
 
(3,066
)
 
(1,738
)
 
(10,143
)
 
(5,320
)
Other Expense, Net
 
(98
)
 
(245
)
 
(296
)
 
(736
)
 
 
 
 
 
 
 
 
 
Income Before Provision for Income Taxes
21,432

 
25,422

 
55,989

 
58,053

Provision for Income Taxes
 
5,219

 
6,443

 
12,310

 
15,575

Net Income
 
16,213

 
18,979

 
43,679

 
42,478

Net Income Attributable to Noncontrolling Interest
 
(98
)
 
(195
)
 
(360
)
 
(487
)
Net Income Attributable to Kadant
 
$
16,115

 
$
18,784

 
$
43,319

 
$
41,991

 
 
 
 
 
 
 
 
 
 
 
Earnings per Share Attributable to Kadant:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
1.43

 
$
1.69

 
$
3.87

 
$
3.79

 
 
Diluted
 
$
1.41

 
$
1.64

 
$
3.79

 
$
3.69

 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares:
 
 
 
 
 
 
 
 
 
 
Basic
 
11,267

 
11,101

 
11,198

 
11,078

 
 
Diluted
 
11,469

 
11,421

 
11,434

 
11,388

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Three Months Ended
Adjusted Net Income and Adjusted Diluted EPS (a)
 
Sept. 28, 2019
 
Sept. 28, 2019
 
Sept. 29, 2018
 
Sept. 29, 2018
 
 
 
 
 
 
 
 
 
 
 
Net Income and Diluted EPS Attributable to Kadant, as Reported
 
$
16,115

 
$
1.41

 
$
18,784

 
$
1.64

Adjustments for the Following:
 
 
 
 
 
 
 
 
 
Restructuring Costs, Net of Tax
 
—

 
—

 
287

 
0.03

 
Amortization of Acquired Profit in Inventory and Backlog, Net of Tax (e,f)
 
16

 
—

 
—

 
—

 
Discrete Tax Items
 
—

 
—

 
(1,542
)
 
(0.14
)
Adjusted Net Income and Adjusted Diluted EPS (a)
$
16,131

 
$
1.41

 
$
17,529

 
$
1.53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
Nine Months Ended
 
 
Sept. 28, 2019
 
Sept. 28, 2019
 
Sept. 29, 2018
 
Sept. 29, 2018
 
 
 
 
 
 
 
 
 
 
 
Net Income and Diluted EPS Attributable to Kadant, as Reported
 
$
43,319

 
$
3.79

 
$
41,991

 
$
3.69

Adjustments for the Following:
 
 
 
 
 
 
 
 
 
Restructuring Costs, Net of Tax
 
—

 
—

 
1,308

 
0.11

 
Acquisition Costs, Net of Tax
 
699

 
0.06

 
—

 
—

 
Amortization of Acquired Profit in Inventory and Backlog, Net of Tax (e,f)
 
3,687

 
0.32

 
189

 
0.02

 
Discrete Tax Items
 
(1,186
)
 
(0.10
)
 
(1,672
)
 
(0.15
)
Adjusted Net Income and Adjusted Diluted EPS (a)
$
46,519

 
$
4.07

 
$
41,816

 
$
3.67

 
 
 
 
 
 
 
 
 
 
 

-more-

 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
Excluding
 
 
 
 
Three Months Ended
 
 
 
Acquisition
Revenues by Product Line
 
Sept. 28, 2019
 
Sept. 29, 2018
 
Increase (Decrease)
 
and FX (a,b)
Stock-Preparation
 
$
56,128

 
$
62,983

 
$
(6,855
)
 
$
(5,321
)
Fluid-Handling
 
32,734

 
33,083

 
(349
)
 
382

Doctoring, Cleaning, & Filtration
 
29,641

 
30,704

 
(1,063
)
 
(377
)
 
Papermaking Systems
 
118,503

 
126,770

 
(8,267
)
 
(5,316
)
 
Wood Processing Systems
 
32,731

 
37,042

 
(4,311
)
 
(3,717
)
 
Material Handling Systems
 
20,282

 
—

 
20,282

 
—

 
Fiber-Based Products
 
1,988

 
1,933

 
55

 
55

 
 
 
 
$
173,504

 
$
165,745

 
$
7,759

 
$
(8,978
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
Excluding
 
 
 
 
Nine Months Ended
 
Increase (Decrease)
 
Acquisition
 
 
Sept. 28, 2019
 
Sept. 29, 2018
 
 
and FX (a,b)
Stock-Preparation
 
$
158,993

 
$
164,842

 
$
(5,849
)
 
$
332

Fluid-Handling
 
100,201

 
98,500

 
1,701

 
4,928

Doctoring, Cleaning, & Filtration
 
88,591

 
87,469

 
1,122

 
3,901

 
Papermaking Systems
 
347,785

 
350,811

 
(3,026
)
 
9,161

 
Wood Processing Systems
 
104,649

 
109,335

 
(4,686
)
 
(606
)
 
Material Handling Systems
 
61,063

 
—

 
61,063

 
—

 
Fiber-Based Products
 
8,488

 
9,705

 
(1,217
)
 
(1,217
)
 
 
 
 
$
521,985

 
$
469,851

 
$
52,134

 
$
7,338

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
Excluding
 
 
 
 
Three Months Ended
 
 
 
Acquisition
Revenues by Geography (c)
 
Sept. 28, 2019
 
Sept. 29, 2018
 
Increase (Decrease)
 
and FX (a,b)
North America
 
$
92,041

 
$
74,089

 
$
17,952

 
$
(892
)
Europe
 
49,146

 
44,912

 
4,234

 
6,507

Asia
 
20,971

 
32,887

 
(11,916
)
 
(11,892
)
Rest of World
 
11,346

 
13,857

 
(2,511
)
 
(2,701
)
 
 
 
 
$
173,504

 
$
165,745

 
$
7,759

 
$
(8,978
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
Excluding
 
 
 
 
Nine Months Ended
 
Increase (Decrease)
 
Acquisition
 
 
Sept. 28, 2019
 
Sept. 29, 2018
 
 
and FX (a,b)
North America
 
$
291,584

 
$
227,080

 
$
64,504

 
$
10,693

Europe
 
131,944

 
131,437

 
507

 
8,645

Asia
 
61,745

 
78,537

 
(16,792
)
 
(15,670
)
Rest of World
 
36,712

 
32,797

 
3,915

 
3,670

 
 
 
 
$
521,985

 
$
469,851

 
$
52,134

 
$
7,338

 
 
 
 
 
 
 
 
 
 
 

-more-

 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
Excluding
 
 
 
 
Three Months Ended
 
Increase (Decrease)
 
Acquisition
Bookings by Product Line
 
Sept. 28, 2019
 
Sept. 29, 2018
 
 
and FX (b)
Stock-Preparation
 
$
63,890

 
$
69,341

 
$
(5,451
)
 
$
(3,673
)
Fluid-Handling
 
32,038

 
29,671

 
2,367

 
3,066

Doctoring, Cleaning, & Filtration
 
26,779

 
27,788

 
(1,009
)
 
(458
)
 
Papermaking Systems
 
122,707

 
126,800

 
(4,093
)
 
(1,065
)
 
Wood Processing Systems
 
27,502

 
36,080

 
(8,578
)
 
(8,157
)
 
Material Handling Systems
 
18,247

 
—

 
18,247

 
—

 
Fiber-Based Products
 
2,474

 
2,120

 
354

 
354

 
 
 
 
$
170,930

 
$
165,000

 
$
5,930

 
$
(8,868
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Decrease
 
 
 
 
 
 
 
 
 
 
Excluding
 
 
 
 
Nine Months Ended
 
Increase (Decrease)
 
Acquisition
 
 
Sept. 28, 2019
 
Sept. 29, 2018
 
 
and FX (b)
Stock-Preparation
 
$
172,014

 
$
187,073

 
$
(15,059
)
 
$
(8,119
)
Fluid-Handling
 
100,786

 
107,363

 
(6,577
)
 
(3,080
)
Doctoring, Cleaning, & Filtration
 
83,460

 
86,603

 
(3,143
)
 
(506
)
 
Papermaking Systems
 
356,260

 
381,039

 
(24,779
)
 
(11,705
)
 
Wood Processing Systems
 
98,942

 
133,213

 
(34,271
)
 
(30,155
)
 
Material Handling Systems
 
64,663

 
—

 
64,663

 
—

 
Fiber-Based Products
 
8,637

 
9,088

 
(451
)
 
(451
)
 
 
 
 
$
528,502

 
$
523,340

 
$
5,162

 
$
(42,311
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
Business Segment Information
 
Sept. 28, 2019
 
Sept. 29, 2018
 
Sept. 28, 2019
 
Sept. 29, 2018
Gross Margin:
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
44.8
%
 
44.6
%
 
44.4
%
 
45.1
%
 
 
Wood Processing Systems
 
41.8
%
 
42.6
%
 
42.0
%
 
40.4
%
 
 
Material Handling Systems
 
32.0
%
 
—

 
27.5
%
 
—

 
 
Fiber-Based Products
 
46.7
%
 
36.6
%
 
48.5
%
 
50.1
%
 
 
 
 
42.8
%
 
44.1
%
 
42.0
%
 
44.1
%
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
$
22,798

 
$
25,919

 
$
61,368

 
$
61,402

 
 
Wood Processing Systems
 
6,787

 
8,704

 
22,858

 
21,380

 
 
Material Handling Systems
 
1,742

 
—

 
877

 
—

 
 
Corporate and Other
 
(6,774
)
 
(7,248
)
 
(18,833
)
 
(19,008
)
 
 
 
 
$
24,553

 
$
27,375

 
$
66,270

 
$
63,774

 
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Income (a,d):
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
$
22,798

 
$
26,297

 
$
61,368

 
$
63,119

 
 
Wood Processing Systems
 
6,787

 
8,704

 
22,858

 
21,632

 
 
Material Handling Systems
 
1,763

 
—

 
6,572

 
—

 
 
Corporate and Other
 
(6,774
)
 
(7,248
)
 
(18,833
)
 
(19,008
)
 
 
 
 
$
24,574

 
$
27,753

 
$
71,965

 
$
65,743

 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures:
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
$
1,376

 
$
1,348

 
$
3,890

 
$
9,837

 
 
Wood Processing Systems
 
444

 
1,026

 
1,423

 
2,586

 
 
Material Handling Systems
 
225

 
—

 
605

 
—

 
 
Corporate and Other
 
48

 
232

 
318

 
394

 
 
 
 
$
2,093

 
$
2,606

 
$
6,236

 
$
12,817

 
 
 
 
 
 
 
 
 
 
 

-more-

 
 
 
 
Three Months Ended
 
Nine Months Ended
Cash Flow and Other Data
 
Sept. 28, 2019
 
Sept. 29, 2018
 
Sept. 28, 2019
 
Sept. 29, 2018
Cash Provided by Operations
 
$
25,678

 
$
16,979

 
$
58,166

 
$
52,550

Depreciation and Amortization Expense
 
7,763

 
5,796

 
24,304

 
17,739

 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Data
 
 
 
 
 
Sept. 28, 2019
 
Dec. 29, 2018
Assets
 
 
 
 
 
 
 
 
Cash, Cash Equivalents, and Restricted Cash
 
 
 
 
 
$
49,971

 
$
46,117

Accounts Receivable, net
 
 
 
 
 
102,131

 
92,624

Inventories
 
 
 
 
 
108,377

 
86,373

Unbilled Revenues
 
 
 
 
 
13,571

 
15,741

Property, Plant, and Equipment, net
 
 
 
 
 
84,049

 
80,157

Intangible Assets
 
 
 
 
 
179,681

 
113,347

Goodwill
 
 
 
 
 
334,491

 
258,174

Other Assets
 
 
 
 
 
63,286

 
33,216

 
 
 
 
 
 
 
 
$
935,557

 
$
725,749

Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
Accounts Payable
 
 
 
 
 
$
40,391

 
$
35,720

Debt Obligations
 
 
 
 
 
310,514

 
171,434

Other Borrowings
 
 
 
 
 
6,310

 
4,387

Other Liabilities
 
 
 
 
 
171,469

 
139,637

 
Total Liabilities
 
 
 
 
 
528,684

 
351,178

 
Stockholders' Equity
 
 
 
 
 
406,873

 
374,571

 
 
 
 
 
 
 
 
$
935,557

 
$
725,749

 
 
 
 
 
 
 
 
 
 
 

-more-

 
 
Three Months Ended
 
Nine Months Ended
Adjusted Operating Income and Adjusted EBITDA Reconciliation
 
Sept. 28, 2019
 
Sept. 29, 2018
 
Sept. 28, 2019
 
Sept. 29, 2018
Consolidated
 
 
 
 
 
 
 
 
 
 
Net Income Attributable to Kadant
 
$
16,115

 
$
18,784

 
$
43,319

 
$
41,991

 
 
Net Income Attributable to Noncontrolling Interest
 
98

 
195

 
360

 
487

 
 
Provision for Income Taxes
 
5,219

 
6,443

 
12,310

 
15,575

 
 
Interest Expense, Net
 
3,023

 
1,708

 
9,985

 
4,985

 
 
Other Expense, Net
 
98

 
245

 
296

 
736

 
 
Operating Income
 
24,553

 
27,375

 
66,270

 
63,774

 
 
Restructuring Costs
 
—

 
378

 
—

 
1,717

 
 
Acquisition Costs
 
—

 
—

 
843

 
—

 
 
Acquired Backlog Amortization (e)
 
21

 
—

 
1,303

 
252

 
 
Acquired Profit in Inventory (f)
 
—

 
—

 
3,549

 
—

 
 
Adjusted Operating Income (a)
 
24,574

 
27,753

 
71,965

 
65,743

 
 
Depreciation and Amortization
 
7,742

 
5,796

 
23,001

 
17,487

 
 
Adjusted EBITDA (a)
 
$
32,316

 
$
33,549

 
$
94,966

 
$
83,230

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (a,g)
 
18.6
%
 
20.2
%
 
18.2
%
 
17.7
%
 
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
 
 
 
 
 
 
 
 
 
Operating Income
 
$
22,798

 
$
25,919

 
$
61,368

 
$
61,402

 
 
Restructuring costs
 
—

 
378

 
—

 
1,717

 
 
Adjusted Operating Income (a)
 
22,798

 
26,297

 
61,368

 
63,119

 
 
Depreciation and Amortization
 
3,206

 
3,132

 
9,605

 
9,407

 
 
Adjusted EBITDA (a)
 
$
26,004

 
$
29,429

 
$
70,973

 
$
72,526

 
 
 
 
 
 
 
 
 
Wood Processing Systems
 
 
 
 
 
 
 
 
 
 
Operating Income
 
$
6,787

 
$
8,704

 
$
22,858

 
$
21,380

 
 
Acquired Backlog Amortization (e)
 
—

 
—

 
—

 
252

 
 
Adjusted Operating Income (a)
 
6,787

 
8,704

 
22,858

 
21,632

 
 
Depreciation and Amortization
 
2,400

 
2,505

 
7,162

 
7,585

 
 
Adjusted EBITDA (a)
 
$
9,187

 
$
11,209

 
$
30,020

 
$
29,217

 
 
 
 
 
 
 
 
 
 
 
Material Handling Systems
 
 
 
 
 
 
 
 
 
 
Operating Income
 
$
1,742

 
$
—

 
$
877

 
$
—

 
 
Acquisition Costs
 
—

 
—

 
843

 
—

 
 
Acquired Backlog Amortization (e)
 
21

 
—

 
1,303

 
—

 
 
Acquired Profit in Inventory (f)
 
—

 
—

 
3,549

 
—

 
 
Adjusted Operating Income (a)
 
1,763

 
—

 
6,572

 
—

 
 
Depreciation and Amortization
 
1,944

 
—

 
5,651

 
—

 
 
Adjusted EBITDA (a)
 
$
3,707

 
$
—

 
$
12,223

 
$
—

 
 
 
 
 
 
 
 
 
 
 
Corporate and Other
 
 
 
 
 
 
 
 
 
 
Operating Loss
 
$
(6,774
)
 
$
(7,248
)
 
$
(18,833
)
 
$
(19,008
)
 
 
Depreciation and Amortization
 
192

 
159

 
583

 
495

 
 
EBITDA (a)
 
$
(6,582
)
 
$
(7,089
)
 
$
(18,250
)
 
$
(18,513
)
 
 
 
 
 
 
 
 
 
 
(a)
Represents a non-GAAP financial measure.
 
 
 
 
 
 
 
 
 
 
 
(b)
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.
 
 
 
(c)
Geographic revenues are attributed to regions based on customer location.
 
 
(d)
See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and Adjusted EBITDA Reconciliation."
 
 

-more-

(e)
Represents intangible amortization expense associated with acquired backlog.
 
 
(f)
Represents expense within cost of revenues associated with amortization of acquired profit in inventory.
 
 
(g)
Calculated as adjusted EBITDA divided by revenue in each period.

-more-

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 2,800 employees in 20 countries worldwide. For more information, visit www.kadant.com.

Safe Harbor Statement
The 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 29, 2018 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; international sales and operations; the variability and uncertainties in sales of capital equipment in China; the oriented strand board market and levels of residential construction activity; development and use of digital media; currency fluctuations; cyclical economic conditions affecting the global mining industry and the continued demand for 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; 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 exit from the European Union; our debt obligations; restrictions in our credit agreement and note purchase agreement; 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.

Contacts
Investor Contact Information:
Michael McKenney, 978-776-2000
mike.mckenney@kadant.com
or
Media Contact Information:
Wes Martz, 269-278-1715
wes.martz@kadant.com








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