KAI
$100.24
Kadant
$4.42
4.61%
Earnings Details
Quarter December 2019
Wednesday, February 12, 2020 5:06:00 PM
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Summary

Kadant Misses

Kadant (KAI) reported Quarter December 2019 earnings of $1.32 per share on revenue of $182.7 million. The consensus earnings estimate was $1.28 per share on revenue of $173.7 million. The Earnings Whisper number was $1.36 per share. Revenue grew 11.4% on a year-over-year basis.

The company said it expects first quarter earnings of $0.80 to $1.08 per share on revenue of $153.0 million to $163.0 million and 2020 earnings of $5.00 to $5.10 per share on revenue of $690.0 million to $700.0 million. The current consensus earnings estimate is $1.33 per share on revenue of $169.7 million for the quarter ending March 31, 2020 and $5.97 per share on revenue of $718.4 million for the year ending December 31, 2020.

Kadant Inc develops, manufactures, and markets equipment and products for the papermaking, paper recycling and other process industries. It also designs and manufactures stranders and related equipment used in the production of oriented strand board.

Results
Reported Earnings
$1.32
Earnings Whisper
$1.36
Consensus Estimate
$1.28
Reported Revenue
$182.7 Mil
Revenue Estimate
$173.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Kadant Reports Fourth Quarter and Fiscal Year 2019 Results

WESTFORD, Mass., Feb. 12, 2020 (GLOBE NEWSWIRE) -- Kadant Inc. (NYSE: KAI) reported its financial results for the fourth quarter and fiscal year ended December 28, 2019.

Fourth Quarter Financial Highlights

  • Revenue increased 11% to $183 million
  • GAAP diluted EPS decreased to $0.76 compared to $1.61 in 2018
  • Adjusted diluted EPS decreased 20% to $1.32
  • Net income decreased to $8.7 million compared to $18.4 million in 2018
  • Adjusted EBITDA increased 1% to $32 million
  • Bookings increased 9% to $160 million
  • Cash flows from operations were a record $39 million

Fiscal Year Financial Highlights

  • Revenue increased 11% to $705 million
  • GAAP diluted EPS decreased 14% to $4.54
  • Adjusted diluted EPS was $5.36
  • Net income decreased 14% to $52 million
  • Adjusted EBITDA increased 10% to $127 million
  • Bookings increased 3% to $688 million
  • Cash flows from operations increased 55% to a record $97 million
  • Free cash flow increased 88% to a record $87 million

Note: Adjusted diluted EPS, adjusted EBITDA, and free cash flow 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”. The term “organic” in this press release is a non-GAAP financial measure, which excludes the impact of an acquisition and the effect of foreign currency translation.

Management Commentary
“The fourth quarter was a solid finish to another record-setting year,” said Jeffrey L. Powell, president and chief executive officer. “Kadant’s full-year organic revenue increased for the third consecutive year and contributed to strong performance in a number of key financial metrics, including adjusted diluted EPS and adjusted EBITDA. We were particularly pleased with our record cash flows from operations for the year of $97 million, up 55 percent from 2018, and record free cash flows of $87 million, up 88 percent from 2018.

“A strong backlog entering 2019 and favorable market conditions during the first half of the year coupled with excellent operating execution led to our highest level of revenue and bookings despite the weakness in global demand that emerged in the second half of 2019.

“Parts and consumables revenue increased 18 percent to a record $441 million for the year and represented 63 percent of our total revenue compared to 59 percent in 2018. Parts and consumables demand was strong in the fourth quarter comprising 70 percent of our total fourth quarter bookings. For the full-year, parts and consumables bookings increased 17 percent compared to 2018.”

Fourth Quarter 2019 compared to 2018
Revenue increased 11 percent to $182.7 million compared to $163.9 million in 2018. Organic revenue was down one percent, which excludes a 14 percent increase from an acquisition and a two percent decrease from the unfavorable effect of foreign currency translation. Gross margin was 40.9 percent compared to 43.3 percent in 2018.

GAAP diluted EPS was $0.76 compared to $1.61 in 2018. Adjusted diluted EPS decreased 20 percent to $1.32 compared to $1.66 in 2018. Adjusted diluted EPS in 2019 excludes a $0.55 charge to terminate a defined benefit plan at one of our U.S. operations, a $0.17 impairment and restructuring charge, and a $0.16 discrete tax benefit. Adjusted diluted EPS in 2018 excludes a $0.14 discrete tax benefit, $0.10 of acquisition costs, and a $0.09 charge associated with the termination of defined benefit plans at one of our U.S. operations.

Adjusted EBITDA increased one percent to $32.2 million compared to $32.0 million in 2018. Cash flows from operations increased to a record $39.2 million compared to $10.4 million in 2018.

Bookings increased nine percent to $159.8 million compared to $147.1 million in 2018. Organic bookings were down six percent, which excludes a 16 percent increase from an acquisition and a one percent decrease from the unfavorable effect of foreign currency translation.

Fiscal Year 2019 compared to 2018
Revenue increased 11 percent to $704.6 million compared to $633.8 million in 2018. Organic revenue growth was one percent, which excludes a 13 percent increase from an acquisition and a three percent decrease from the unfavorable effect of foreign currency translation. Gross margin was 41.7 percent compared to 43.9 percent in 2018.

GAAP diluted EPS decreased 14 percent to $4.54 compared to $5.30 in 2018. Adjusted diluted EPS increased to $5.36 compared to $5.34 in 2018. Adjusted diluted EPS in 2019 excludes a $0.55 charge to terminate a defined benefit plan at one of our U.S. operations, $0.38 of acquisition-related costs, a $0.29 discrete tax benefit, and a $0.17 impairment and restructuring charge. Adjusted diluted EPS in 2018 excludes a $0.29 discrete tax benefit, $0.12 of acquisition-related costs, $0.11 of restructuring costs, and a $0.09 charge associated with the termination of defined benefit plans at one of our U.S. operations.

Adjusted EBITDA increased 10 percent to $127.1 million compared to $115.2 million in 2018. Cash flows from operations increased 55 percent to a record $97.4 million in 2019 compared to $63.0 million in 2018.

Bookings increased three percent to $688.3 million compared to $670.4 million in 2018. Organic bookings were down eight percent, which excludes a 13 percent increase from an acquisition and a two percent decrease from the unfavorable effect of foreign currency translation.

Summary and Outlook
“Overall, our healthy balance sheet and strong operating cash flows position us well for what looks to be a somewhat challenging environment for industrial markets in 2020,” Mr. Powell continued. “We expect to report full year GAAP diluted EPS of $4.98 to $5.08 in 2020 on revenue of $690 to $700 million. The 2020 guidance includes pre-tax amortization expense associated with acquired backlog of $0.4 million, or $0.02 per diluted share, and excluding this item, we expect adjusted diluted EPS of $5.00 to $5.10. For the first quarter of 2020, we expect GAAP diluted EPS of $0.80 to $1.08 on revenue of $153 to $163 million. The wide guidance range for the quarter is due to the uncertainty surrounding the impact of the coronavirus in China and the government-mandated business closures, which have impacted employees of our subsidiaries in China. Our subsidiaries received permission to re-open with significant restrictions earlier this week; however, if these restrictions are extended or if there is a broader impact on our customers or suppliers, such impact could affect the timing of shipments and our financial results in the first quarter of 2020.”

Conference Call
Kadant will hold a webcast with a slide presentation for investors on Thursday, February 13, 2020, at 11:00 a.m. eastern time to discuss its fourth quarter and full-year performance, as well as future expectations. To access the webcast, including the slideshow and accompanying audio, go to www.kadant.com and click on “Investors.” To listen to the webcast via teleconference, call 888-326-8410 within the U.S., or 704-385-4884 outside the U.S. and reference participant passcode 7473987. 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. A replay of the webcast will be available on our website through March 13, 2020.

Shortly after the webcast, Kadant will post its updated general investor presentation incorporating the fourth quarter and fiscal year results on our website at www.kadant.com under 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 (organic revenue), adjusted operating income, adjusted net income, adjusted diluted earnings per share (EPS), adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA), adjusted EBITDA margin, and free cash flow. 

We believe that 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 to 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 $22.3 million from an acquisition and a $2.4 million unfavorable foreign currency translation effect in the fourth quarter of 2019. Revenue included $83.4 million from an acquisition and an $18.6 million unfavorable foreign currency translation effect in 2019. We present increases or decreases in revenue excluding the effect of acquisitions and foreign currency translation to provide investors insight into underlying revenue trends.                    

Adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted diluted EPS exclude acquisition costs, impairment costs, restructuring costs, and amortization expense related to acquired profit in inventory and backlog. Adjusted net income and adjusted diluted EPS also exclude settlement and curtailment losses and discrete tax items. Free cash flow excludes capital expenditures from cash flow from operations. All these items are excluded as they are not indicative of our core operating results and are not comparable to other periods, which have differing levels of incremental costs, expenditures or income, or none at all.

Fourth Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:

  • Pre-tax impairment and restructuring cost of $2.5 million in 2019.
  • Pre-tax acquisition costs of $1.3 million in 2018.

Adjusted net income and adjusted diluted EPS exclude:

  • After-tax settlement loss of $6.4 million ($5.9 million pre-tax and tax expense of $0.5 million) in 2019 and an after-tax curtailment loss of $1.1 million ($1.4 million net of tax of $0.3 million) in 2018 associated with the termination of defined benefits plans at one of our U.S. operations.
  • After-tax impairment and restructuring cost of $1.9 million ($2.5 million net of tax of $0.6 million) in 2019.
  • After-tax acquisition costs of $1.1 million ($1.3 million net of tax of $0.2 million) in 2018.
  • A discrete tax benefit of $1.8 million in 2019 and $1.6 million in 2018.

Free cash flow excludes:

  • Capital expenditures of $3.7 million in both 2019 and 2018.

Fiscal Year
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:

  • Pre-tax impairment and restructuring cost of $2.5 million in 2019.
  • Pre-tax restructuring cost of $1.7 million in 2018.
  • Pre-tax acquisition costs of $0.8 million in 2019 and $1.3 million in 2018.
  • Pre-tax expense related to acquired profit in inventory and backlog of $4.9 million in 2019 and $0.3 million in 2018.

Adjusted net income and adjusted diluted EPS exclude:

  • After-tax settlement loss of $6.4 million ($5.9 million pre-tax and tax expense of $0.5 million) in 2019 and an after-tax curtailment loss of $1.1 million ($1.4 million net of tax of $0.3 million) in 2018 associated with the termination of defined benefits plans at one of our U.S. operations.
  • After-tax impairment and restructuring costs of $1.9 million ($2.5 million net of tax of $0.6 million) in 2019.
  • After-tax restructuring cost of $1.3 million ($1.7 million net of tax of $0.4 million) in 2018.
  • After-tax acquisition costs of $0.7 million ($0.8 million net of tax of $0.1 million) in 2019 and $1.1 million ($1.3 million net of tax of $0.2 million) in 2018.
  • After-tax expense related to acquired profit in inventory and backlog of $3.7 million ($4.9 million net of tax of $1.2 million) and $0.2 million ($0.3 million net of tax of $0.1 million) in 2018.
  • A discrete tax benefit of $3.3 million in 2019 and $3.2 million in 2018.

Free cash flow excludes:

  • Capital expenditures of $10.0 million in 2019 and $16.6 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.


            
 Financial Highlights (unaudited)        
 (In thousands, except per share amounts and percentages)        
            
    Three Months Ended Twelve Months Ended 
 Consolidated Statement of IncomeDec. 28, 2019 Dec. 29, 2018 Dec. 28, 2019 Dec. 29, 2018 
            
 Revenues$182,659  $163,935  $704,644  $633,786  
            
 Costs and Operating Expenses:        
  Cost of revenues 108,032   92,990   410,884   355,505  
  Selling, general, and administrative expenses 47,642   43,618   192,525   177,414  
  Research and development expenses 2,904   2,503   10,884   10,552  
  Impairment and restructuring costs (c) 2,528   -   2,528   1,717  
    161,106   139,111   616,821   545,188  
            
 Operating Income 21,553   24,824   87,823   88,598  
 Interest Income 55   44   213   379  
 Interest Expense (2,612)  (1,712)  (12,755)  (7,032) 
 Other Expense, Net (b) (6,063)  (1,681)  (6,359)  (2,417) 
            
 Income Before Provision for Income Taxes 12,933   21,475   68,922   79,528  
 Provision for Income Taxes 4,048   2,907   16,358   18,482  
            
 Net Income 8,885   18,568   52,564   61,046  
            
 Net Income Attributable to Noncontrolling Interest (136)  (146)  (496)  (633) 
            
 Net Income Attributable to Kadant$8,749  $18,422  $52,068  $60,413  
            
 Earnings per Share Attributable to Kadant:        
   Basic$0.77  $1.66  $4.63  $5.45  
            
   Diluted$0.76  $1.61  $4.54  $5.30  
            
 Weighted Average Shares:        
   Basic 11,344   11,107   11,235   11,086  
            
   Diluted 11,525   11,436   11,457   11,400  
            
    Three Months Ended Three Months Ended 
 Adjusted Net Income and Adjusted Diluted EPS (a)Dec. 28, 2019 Dec. 28, 2019 Dec. 29, 2018 Dec. 29, 2018 
            
 Net Income and Diluted EPS Attributable to Kadant, as Reported$8,749  $0.76  $18,422  $1.61  
 Adjustments for the Following:        
  Settlement and Curtailment Losses, Net of Tax (b) 6,352   0.55   1,078   0.09  
  Impairment and Restructuring Costs, Net of Tax (c) 1,905   0.17   -   -  
  Acquisition Costs, Net of Tax -   -   1,096   0.10  
  Amortization of Acquired Backlog, Net of Tax (d) 15   -   -   -  
  Discrete Tax Items (e) (1,839)  (0.16)  (1,577)  (0.14) 
            
 Adjusted Net Income and Adjusted Diluted EPS (a)$15,182  $1.32  $19,019  $1.66  
            
    Twelve Months Ended Twelve Months Ended 
    Dec. 28, 2019 Dec. 28, 2019 Dec. 29, 2018 Dec. 29, 2018 
            
 Net Income and Diluted EPS Attributable to Kadant, as Reported$52,068  $4.54  $60,413  $5.30  
 Adjustments for the Following:        
  Settlement and Curtailment Losses, Net of Tax (b) 6,352   0.55   1,078   0.09  
  Impairment and Restructuring Costs, Net of Tax (c) 1,905   0.17   1,308   0.11  
  Acquisition Costs, Net of Tax 699   0.06   1,096   0.10  
  Amortization of Acquired Profit in Inventory and Backlog, Net of Tax (d,i) 3,702   0.32   189   0.02  
  Discrete Tax Items (e) (3,338)  (0.29)  (3,249)  (0.29) 
            
 Adjusted Net Income and Adjusted Diluted EPS (a)$61,388  $5.36  $60,835  $5.34  
            
          Increase 
          (Decrease) 
          Excluding 
    Three Months Ended Increase (Decrease) Acquisition 
 Revenue by SegmentDec. 28, 2019 Dec. 29, 2018  and FX (a,f) 
            
 Stock-Preparation$56,098  $57,091  $(993) $9  
 Fluid-Handling 32,300   33,330   (1,030)  (440) 
 Doctoring, Cleaning, & Filtration 29,247   28,667   580   1,045  
            
  Papermaking Systems 117,645   119,088   (1,443)  614  
  Wood Processing Systems 38,538   42,031   (3,493)  (3,210) 
  Material Handling Systems 22,301   -   22,301   -  
  Fiber-Based Products 4,175   2,816   1,359   1,359  
            
    $182,659  $163,935  $18,724  $(1,237) 
            
          Increase 
          (Decrease) 
          Excluding 
    Twelve Months Ended Increase (Decrease) Acquisition 
    Dec. 28, 2019 Dec. 29, 2018  and FX (a,f) 
            
 Stock-Preparation$215,091  $221,933  $(6,842) $341  
 Fluid-Handling 132,501   131,830   671   4,488  
 Doctoring, Cleaning, & Filtration 117,838   116,136   1,702   4,946  
            
  Papermaking Systems 465,430   469,899   (4,469)  9,775  
  Wood Processing Systems 143,187   151,366   (8,179)  (3,816) 
  Material Handling Systems 83,364   -   83,364   -  
  Fiber-Based Products 12,663   12,521   142   142  
            
    $704,644  $633,786  $70,858  $6,101  
            
          Increase 
          (Decrease) 
          Excluding 
    Three Months Ended Increase (Decrease) Acquisition 
 Revenue by Geography (g)Dec. 28, 2019 Dec. 29, 2018  and FX (a,f) 
            
 North America$95,368  $78,538  $16,830  $(2,607) 
 Europe 48,944   43,244   5,700   7,041  
 Asia 22,960   31,151   (8,191)  (9,744) 
 Rest of World 15,387   11,002   4,385   4,073  
            
    $182,659  $163,935  $18,724  $(1,237) 
            
          Increase 
          (Decrease) 
          Excluding 
    Twelve Months Ended Increase (Decrease) Acquisition 
    Dec. 28, 2019 Dec. 29, 2018  and FX (a,f) 
            
 North America$386,952  $305,618  $81,334  $8,086  
 Europe 180,888   174,681   6,207   15,686  
 Asia 84,705   109,688   (24,983)  (25,414) 
 Rest of World 52,099   43,799   8,300   7,743  
            
    $704,644  $633,786  $70,858  $6,101  
            
          Increase 
          (Decrease) 
          Excluding 
    Three Months Ended Increase (Decrease) Acquisition 
 Bookings by SegmentDec. 28, 2019 Dec. 29, 2018  and FX (f) 
            
 Stock-Preparation$43,934  $41,371  $2,563  $3,172  
 Fluid-Handling 28,339   30,867   (2,528)  (1,970) 
 Doctoring, Cleaning, & Filtration 28,635   32,938   (4,303)  (3,926) 
            
  Papermaking Systems 100,908   105,176   (4,268)  (2,724) 
  Wood Processing Systems 30,923   38,971   (8,048)  (7,789) 
  Material Handling Systems 23,460   -   23,460   -  
  Fiber-Based Products 4,492   2,940   1,552   1,552  
            
    $159,783  $147,087  $12,696  $(8,961) 
            
          Increase 
          (Decrease) 
          Excluding 
    Twelve Months Ended Increase (Decrease) Acquisition 
    Dec. 28, 2019 Dec. 29, 2018  and FX (f) 
            
 Stock-Preparation$215,948  $228,444  $(12,496) $(4,947) 
 Fluid-Handling 129,125   138,230   (9,105)  (5,050) 
 Doctoring, Cleaning, & Filtration 112,095   119,541   (7,446)  (4,432) 
            
  Papermaking Systems 457,168   486,215   (29,047)  (14,429) 
  Wood Processing Systems 129,865   172,184   (42,319)  (37,944) 
  Material Handling Systems 88,123   -   88,123   -  
  Fiber-Based Products 13,129   12,028   1,101   1,101  
            
    $688,285  $670,427  $17,858  $(51,272) 
            
            
    Three Months Ended Twelve Months Ended 
 Segment Information Dec. 28, 2019 Dec. 29, 2018 Dec. 28, 2019 Dec. 29, 2018 
            
 Gross Margin:        
   Papermaking Systems 43.6%  44.1%  44.2%  44.9% 
   Wood Processing Systems 37.2%  40.2%  40.7%  40.3% 
   Material Handling Systems 30.7%  -   28.3%  -  
   Fiber-Based Products 51.6%  53.1%  49.5%  50.8% 
            
     40.9%  43.3%  41.7%  43.9% 
            
 Operating Income:        
   Papermaking Systems$19,864  $22,052  $81,232  $83,454  
   Wood Processing Systems 5,308   9,857   28,166   31,237  
   Material Handling Systems 2,255   -   3,132   -  
   Corporate and Other (5,874)  (7,085)  (24,707)  (26,093) 
            
    $21,553  $24,824  $87,823  $88,598  
            
 Adjusted Operating Income (a,h):        
   Papermaking Systems$19,864  $22,052  $81,232  $85,171  
   Wood Processing Systems 7,836   9,857   30,694   31,489  
   Material Handling Systems 2,275   -   8,847   -  
   Corporate and Other (5,874)  (5,764)  (24,707)  (24,772) 
            
    $24,101  $26,145  $96,066  $91,888  
            
 Capital Expenditures:        
   Papermaking Systems$2,237  $2,880  $6,127  $12,717  
   Wood Processing Systems 710   686   2,133   3,272  
   Material Handling Systems 590   -   1,195   -  
   Corporate and Other 184   176   502   570  
            
    $3,721  $3,742  $9,957  $16,559  
            
    Three Months Ended Twelve Months Ended 
 Cash Flow and Other DataDec. 28, 2019 Dec. 29, 2018 Dec. 28, 2019 Dec. 29, 2018 
            
 Cash Provided by Operations$39,247  $10,435  $97,413  $62,985  
 Less: Capital Expenditures (3,721)  (3,742)  (9,957)  (16,559) 
            
 Free Cash Flow (a)$35,526  $6,693  $87,456  $46,426  
            
 Depreciation and Amortization Expense$8,086  $5,829  $32,390  $23,568  
            
 Balance Sheet Data    Dec. 28, 2019 Dec. 29, 2018 
            
 Assets        
 Cash, Cash Equivalents, and Restricted Cash    $68,273  $46,117  
 Accounts Receivable, net     95,740   92,624  
 Inventories     102,715   86,373  
 Unbilled Revenues     13,162   15,741  
 Property, Plant, and Equipment, net     86,032   80,157  
 Intangible Assets     173,896   113,347  
 Goodwill     336,032   258,174  
 Other Assets     63,537   33,216  
            
        $939,387  $725,749  
 Liabilities and Stockholders' Equity        
 Accounts Payable    $45,852  $35,720  
 Debt Obligations     294,717   171,434  
 Other Borrowings     6,308   4,387  
 Other Liabilities     165,431   139,637  
            
  Total Liabilities     512,308   351,178  
  Stockholders' Equity     427,079   374,571  
            
        $939,387  $725,749  
            
 Adjusted Operating Income and Adjusted EBITDAThree Months Ended Twelve Months Ended 
 Reconciliation (a)Dec. 28, 2019 Dec. 29, 2018 Dec. 28, 2019 Dec. 29, 2018 
            
 Consolidated        
   Net Income Attributable to Kadant$8,749  $18,422  $52,068  $60,413  
   Net Income Attributable to Noncontrolling Interest 136   146   496   633  
   Provision for Income Taxes 4,048   2,907   16,358   18,482  
   Interest Expense, Net 2,557   1,668   12,542   6,653  
   Other Expense, Net (b) 6,063   1,681   6,359   2,417  
            
   Operating Income 21,553   24,824   87,823   88,598  
   Impairment and Restructuring Costs (c) 2,528   -   2,528   1,717  
   Acquisition Costs -   1,321   843   1,321  
   Acquired Backlog Amortization (d) 20   -   1,323   252  
   Acquired Profit in Inventory (i) -   -   3,549   -  
            
   Adjusted Operating Income (a) 24,101   26,145   96,066   91,888  
   Depreciation and Amortization 8,066   5,829   31,067   23,316  
            
   Adjusted EBITDA (a)$32,167  $31,974  $127,133  $115,204  
            
   Adjusted EBITDA Margin (a,j) 17.6%  19.5%  18.0%  18.2% 
            
 Papermaking Systems        
   Operating Income$19,864  $22,052  $81,232  $83,454  
   Restructuring Costs (c) -   -   -   1,717  
            
   Adjusted Operating Income (a) 19,864   22,052   81,232   85,171  
   Depreciation and Amortization 3,405   3,154   13,010   12,561  
            
   Adjusted EBITDA (a)$23,269  $25,206  $94,242  $97,732  
            
 Wood Processing Systems        
   Operating Income$5,308  $9,857  $28,166  $31,237  
   Impairment and Restructuring Costs (c) 2,528   -   2,528   -  
   Acquired Backlog Amortization (d) -   -   -   252  
            
   Adjusted Operating Income (a) 7,836   9,857   30,694   31,489  
   Depreciation and Amortization 2,409   2,480   9,571   10,065  
            
   Adjusted EBITDA (a)$10,245  $12,337  $40,265  $41,554  
            
 Material Handling Systems        
   Operating Income$2,255  $-  $3,132  $-  
   Acquisition Costs -   -   843   -  
   Acquired Backlog Amortization (d) 20   -   1,323   -  
   Acquired Profit in Inventory (i) -   -   3,549   -  
            
   Adjusted Operating Income (a) 2,275   -   8,847   -  
   Depreciation and Amortization 2,044   -   7,695   -  
            
   Adjusted EBITDA (a)$4,319  $-  $16,542  $-  
            
 Corporate and Other        
   Operating Loss$(5,874) $(7,085) $(24,707) $(26,093) 
   Acquisition Costs -   1,321   -   1,321  
            
   Adjusted Operating Loss (a) (5,874)  (5,764)  (24,707)  (24,772) 
   Depreciation and Amortization 208   195   791   690  
            
   Adjusted EBITDA (a)$(5,666) $(5,569) $(23,916) $(24,082) 
            
 (a)Represents a non-GAAP financial measure.        
            
 (b)Represents a settlement loss of $5,887 ($6,352 after tax) in the fourth quarter of 2019 and a curtailment loss of $1,425 ($1,078 after
   tax) in the fourth quarter of 2018 included in Other Expense, Net associated with the termination of defined benefit plans at one of our
   U.S. operations.        
            
 (c)Represents an intangible asset impairment charge of $2,336 ($1,765 after tax) and a restructuring charge of $192 ($140 after tax) 
   in the fourth quarter of 2019 related to our Wood Processing Systems segment's timber-harvesting product line and a restructuring
   charge of $1,717 ($1,308 after tax) in 2018 related to our Papermaking Systems segment's stock-preparation product line. 
            
 (d)Represents intangible amortization expense associated with acquired backlog.     
            
 (e)The discrete tax benefit of $1,839, or $0.16 per diluted share, in the fourth quarter of 2019 and $3,338, or $0.29 per diluted share, for
   the full-year 2019 relates to the exercise of employee stock options. The impact of the tax benefit both for the fourth quarter of 2019,
   as well as the aggregate impact for the full year 2019, is significantly higher than the future tax benefit anticipated for the remaining
   outstanding stock options. As a result, our adjusted diluted EPS excludes this benefit for all periods in 2019, including recasting our
   adjusted diluted EPS for the second and third quarters of 2019. Adjusted diluted EPS in 2018 was not recast as the discrete tax 
   benefit was not material.        
            
   In addition for full-year 2019, we recast our adjusted diluted EPS in the second quarter of 2019 to no longer exclude a tax 
   benefit of $1,186, or $0.10 per diluted share, related to the repatriation of foreign earnings due to the recurring nature of this activity
   in 2019 and expected prospectively.        
            
   The discrete tax benefit of $1,577, or $0.14 per diluted share, in the fourth quarter of 2018 and $3,249, or $0.29 per diluted share, for
   the full-year 2018 relates to adjustments to the provisional amounts recognized due to the U.S. tax legislation enacted in December
   2017 and for the full-year 2018 also includes the reversal of tax reserves associated with uncertain tax positions.  
            
 (f)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.        
            
 (g)Geographic revenues are attributed to regions based on customer location.  
            
 (h)See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and Adjusted EBITDA
   Reconciliation."        
            
 (i)Represents expense within cost of revenues associated with amortization of acquired profit in inventory.   
            
 (j)Calculated as adjusted EBITDA divided by revenue in each period.       
            

About Kadant 
Kadant Inc. is a global supplier of high-value, critical components and engineered systems used in process industries worldwide. The Company’s products, technologies, and services play an integral role in enhancing process efficiency, optimizing energy utilization, and maximizing productivity in resource-intensive industries. Kadant is based in Westford, Massachusetts, with approximately 2,800 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 the impact of the coronavirus on our operating and financial results; adverse changes in global and local economic conditions; the variability and difficulty in accurately predicting revenues from large capital equipment and systems projects; our customers’ ability to obtain financing for capital equipment projects; international sales and operations; 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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Source: Kadant Inc