UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________________________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 23, 2017
KADANT INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 1-11406 | 52-1762325 |
(State or Other Jurisdiction | (Commission File Number) | (IRS Employer |
of Incorporation) | Identification No.) | |
One Technology Park Drive | ||
Westford, Massachusetts | 01886 | |
(Address of Principal Executive Offices) | (Zip Code) | |
(978) 776-2000
Registrant's telephone number, including area code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
KADANT INC.
Item 2.02 Results of Operations and Financial Condition.
On February 23, 2017, Kadant Inc. (the “Company”) announced its financial results for the fiscal quarter and year ended December 31, 2016. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99 to this Current Report on Form 8-K.
The information in this Form 8-K (including Exhibit 99) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibit | ||
The following exhibit relating to Item 2.02 shall be deemed to be furnished and not filed. | ||
Exhibit No. | Description of Exhibit | |
99 | Press Release issued by the Company on February 23, 2017. | |
2
KADANT INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
KADANT INC. | ||
Date: February 23, 2017 | By | /s/ Michael J. McKenney |
Michael J. McKenney Senior Vice President and Chief Financial Officer | ||
3
Exhibit 99
KADANT INC.
One Technology Park Drive
Westford, MA 01886
NEWS
Kadant Reports Fourth Quarter and Fiscal Year 2016 Results
Q4 Bookings Increase 20% Sequentially
WESTFORD, Mass. - February 23, 2017 - Kadant Inc. (NYSE: KAI) reported its financial results for the fourth quarter and fiscal year ended December 31, 2016.
Fourth Quarter Financial Highlights
• | Revenue was $100 million vs. $108 million |
• | Gross margin was 46% |
• | Diluted EPS was $0.69 vs. $0.94 |
• | Net Income was $8 million vs. $10 million |
• | Adjusted EBITDA was $14.1 million vs. $17.2 million |
• | Bookings were $114 million vs. $76 million |
• | Cash flows from operations were $16 million vs. $12 million |
Fiscal Year Financial Highlights
• | Revenue was a record $414 million vs. $390 million |
• | Gross margin was 45.5% |
• | Diluted EPS was $2.88 vs. $3.10; Adjusted Diluted EPS was $3.10 vs. $3.13 |
• | Net Income was $32 million vs. $34 million |
• | Adjusted EBITDA was a record $61.9 million vs. $61.5 million |
• | Bookings were $403 million vs. $376 million |
• | Cash flows from operations were $51 million vs. $40 million |
Note: Adjusted diluted EPS and adjusted EBITDA are non-GAAP measures that exclude certain items as detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.”
Management Commentary
“We are pleased to report fourth quarter earnings that exceeded our guidance and represented a strong finish to 2016 with record full year revenue and adjusted EBITDA,” said Jonathan W. Painter, president and chief executive officer. “Although revenue was down from a record performance in last year’s fourth quarter, we had a 10 percent increase in revenue from parts and consumables, which represented 64 percent of fourth quarter revenue. This favorable revenue mix led to a 290 basis point increase in gross margin.
“One of the highlights of the quarter was our bookings which increased 20 percent sequentially and 50 percent year-on-year, representing the third best bookings quarter in our history. Importantly, our parts and consumables bookings were up 11 percent over the fourth quarter of last year and 6 percent sequentially, driven by a strong performance in North America. We also had strong capital bookings in China in the fourth quarter and see a fairly active market for capital projects in China in 2017.
“As was the case with the fourth quarter, we faced difficult comparisons with the full year 2015, which was an exceptionally strong year for Kadant. Within that context, we were pleased with our overall performance in 2016. We achieved record revenue of $414 million, despite over $8 million in negative foreign currency translation impact, and we maintained a strong gross margin of 45.5 percent. 2016 was also a very strong year for operating cash flows, which reached a near-record $51 million, up from $40 million in 2015.”
Fourth Quarter 2016 Financials
Revenue was $100.2 million, a 7 percent decline compared to the fourth quarter of 2015, inclusive of $12.0 million from an acquisition and a negative impact of $1.7 million from foreign currency translation. Revenue was $107.6 million in the fourth quarter of 2015. Gross margin was 46.0 percent. Net income was $7.7 million, or $0.69 per diluted share, compared to $10.4 million, or $0.94 per diluted share, in the fourth quarter of 2015. Adjusted EBITDA was $14.1 million, a decrease of 18 percent from $17.2 million in the fourth quarter of 2015. Operating income was $10.7 million versus $14.4 million in the fourth quarter of 2015. Cash flows from operations were $16.3 million, up 32 percent from $12.3 million in the comparable quarter of 2015. Bookings increased 50 percent to $113.6 million from $75.5 million in the comparable period of 2015, inclusive of the net effect of a $12.1 million increase from an acquisition, a $16.1 million booking reversal in the fourth quarter of 2015, and a negative impact of $2.3 million from foreign currency translation.
Fiscal Year 2016 Financials
Revenue increased 6 percent year-over-year to a record $414.1 million for fiscal 2016, inclusive of $40.8 million from an acquisition and a negative impact of $8.4 million from foreign currency translation. Full year 2015 revenue was $390.1 million. Gross margin was 45.5 percent. Net income was $32.1 million, or $2.88 per diluted share, compared to $34.4 million, or $3.10 per diluted share, in 2015. Adjusted diluted EPS was $3.10 for the full year 2016, compared to $3.13 in 2015. Adjusted EBITDA increased 1 percent to a record $61.9 million from $61.5 million in 2015. Operating income was $45.6 million in 2016, compared to $50.1 million in the prior year. Cash flows from operations increased 26 percent to $51.0 million compared to $40.4 million last year. Bookings were $403.5 million, up 7 percent, including the net effect of a $39.4 million increase from an acquisition, a $16.1 million booking reversal in 2015, and a $9.1 million decrease from foreign currency translation. In 2015, bookings were $376.1 million.
Summary and Outlook
“2016 was a year of solid execution for Kadant,” Mr. Painter continued. “We moved forward with several product developments and other initiatives designed to support our expectations of modest organic growth over the long term. In addition, we succeeded in completing an important acquisition that brings potential revenue synergies. We intend to supplement our internal growth with acquisitions, but remain disciplined in considering those opportunities that meet our criteria.
“Looking ahead, we expect 2017 to be a record year for both revenue and EPS. Based on our current visibility, we expect to report GAAP diluted EPS of $3.13 to $3.23 on revenue of $423 million to $433 million. The 2017 guidance includes an unfavorable foreign currency translation effect of $7 million on revenue and $0.10 on diluted EPS compared to 2016. For the first quarter of 2017, we expect GAAP diluted EPS of $0.62 to $0.66 on revenue of $97 million to $100 million.”
Conference Call
Kadant will hold a webcast with a slide presentation for investors on Thursday, February 23, 2017, at 4:30 p.m. eastern time to discuss its fourth quarter and fiscal year performance, as well as future expectations. To access the webcast, including the slideshow and accompanying audio, go to www.kadant.com and click on “Investors.” To listen to the webcast via teleconference, call 888-326-8410 within the U.S., or +1-704-385-4884 outside the U.S. and reference participant passcode 39878251. 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 24, 2017.
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, adjusted operating income, adjusted net income, adjusted diluted 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 $12.0 million and $40.8 million from an acquisition in the fourth quarter and fiscal year 2016, respectively. Revenue also included $1.7 million and $8.4 million unfavorable foreign currency translation effects in the fourth quarter and fiscal year 2016, 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.
Adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted diluted EPS exclude acquisition costs, restructuring costs, other income, and expense related to acquired profit in inventory and backlog. 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.
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
• | Pre-tax gain on the sale of assets of $0.3 million in 2016 and pre-tax restructuring costs of $0.5 million in 2015. |
• | Pre-tax acquisition costs of $1.8 million in 2016. |
• | Pre-tax expense related to acquired profit in inventory and backlog of $1.9 million in 2016 and $0.2 million in 2015. |
Adjusted net income and adjusted diluted EPS exclude:
• | After-tax gain on the sale of assets of $0.2 million ($0.3 million net of tax of $0.1 million) in 2016 and after-tax restructuring costs of $0.4 million ($0.5 million net of tax of $0.1 million) in 2015. |
• | After-tax acquisition costs of $1.6 million ($1.8 million net of tax of $0.2 million) in 2016. |
• | After-tax expense related to acquired profit in inventory and backlog of $1.4 million ($1.9 million net of tax of $0.5 million) in 2016 and $0.1 million ($0.2 million net of tax of $0.1 million) in 2015. |
• | A benefit from discrete tax items of $0.3 million in 2016. The benefit from discrete tax items was primarily due to the reversal of valuation allowances on certain deferred tax assets in the U.S. |
We also report free cash flows, which is calculated as cash flows from continuing operations less capital expenditures of $5.8 million in 2016 and $5.5 million in 2015. This measure provides a view of the continuing operations’ ability to generate cash for use in acquisitions and other investing and financing activities.
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) | ||||||||||||||||||
(In thousands, except per share amounts and percentages) | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
Consolidated Statement of Income | Dec. 31, 2016 | Jan. 2, 2016 | Dec. 31, 2016 | Jan. 2, 2016 | ||||||||||||||
Revenues | $ | 100,241 | $ | 107,600 | $ | 414,126 | $ | 390,107 | ||||||||||
Costs and Operating Expenses: | ||||||||||||||||||
Cost of revenues | 54,168 | 61,207 | 225,737 | 209,982 | ||||||||||||||
Selling, general, and administrative expenses | 33,658 | 30,324 | 135,753 | 122,814 | ||||||||||||||
Research and development expenses | 1,740 | 1,430 | 7,380 | 6,677 | ||||||||||||||
Restructuring costs and other income | — | 215 | (317 | ) | 515 | |||||||||||||
89,566 | 93,176 | 368,553 | 339,988 | |||||||||||||||
Operating Income | 10,675 | 14,424 | 45,573 | 50,119 | ||||||||||||||
Interest Income | 94 | 50 | 269 | 200 | ||||||||||||||
Interest Expense | (379 | ) | (247 | ) | (1,293 | ) | (948 | ) | ||||||||||
Income from Continuing Operations Before Provision | ||||||||||||||||||
for Income Taxes | 10,390 | 14,227 | 44,549 | 49,371 | ||||||||||||||
Provision for Income Taxes | 2,583 | 3,798 | 12,083 | 14,762 | ||||||||||||||
Income from Continuing Operations | 7,807 | 10,429 | 32,466 | 34,609 | ||||||||||||||
Income from Discontinued Operation, Net of Tax | — | 18 | 3 | 74 | ||||||||||||||
Net Income | 7,807 | 10,447 | 32,469 | 34,683 | ||||||||||||||
Net Income Attributable to Noncontrolling Interest | (74 | ) | (62 | ) | (392 | ) | (294 | ) | ||||||||||
Net Income Attributable to Kadant | $ | 7,733 | $ | 10,385 | $ | 32,077 | $ | 34,389 | ||||||||||
Earnings per Share Attributable to Kadant: | ||||||||||||||||||
Basic | $ | 0.71 | $ | 0.96 | $ | 2.95 | $ | 3.16 | ||||||||||
Diluted | $ | 0.69 | $ | 0.94 | $ | 2.88 | $ | 3.10 | ||||||||||
Weighted Average Shares: | ||||||||||||||||||
Basic | 10,915 | 10,767 | 10,869 | 10,867 | ||||||||||||||
Diluted | 11,236 | 11,021 | 11,149 | 11,094 | ||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||
Adjusted Net Income and Adjusted Diluted EPS (b) | Dec. 31, 2016 | Dec. 31, 2016 | Jan. 2, 2016 | Jan. 2, 2016 | ||||||||||||||
Net Income and Diluted EPS Attributable to Kadant, as Reported | $ | 7,733 | $ | 0.69 | $ | 10,385 | $ | 0.94 | ||||||||||
Net Income and Diluted EPS from Discontinued Operation | — | — | (18 | ) | — | |||||||||||||
Net Income and Diluted EPS from Continuing Operations, as Reported | 7,733 | 0.69 | 10,367 | 0.94 | ||||||||||||||
Adjustments for the Following: | ||||||||||||||||||
Restructuring Costs, Net of Tax | — | 142 | 0.01 | |||||||||||||||
Adjusted Net Income and Adjusted Diluted EPS | $ | 7.733 | $ | 0.69 | $ | 10,509 | $ | 0.95 | ||||||||||
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Twelve Months Ended | Twelve Months Ended | |||||||||||||||||
Dec. 31, 2016 | Dec. 31, 2016 | Jan. 2, 2016 | Jan. 2, 2016 | |||||||||||||||
Net Income and Diluted EPS Attributable to Kadant, as Reported | $ | 32,077 | $ | 2.88 | $ | 34,389 | $ | 3.10 | ||||||||||
Net Income and Diluted EPS from Discontinued Operation | (3 | ) | — | (74 | ) | (0.01 | ) | |||||||||||
Net Income and Diluted EPS from Continuing Operations, as Reported | 32,074 | 2.88 | 34,315 | 3.09 | ||||||||||||||
Adjustments for the Following: | ||||||||||||||||||
Acquisition Costs, Net of Tax | 1,625 | 0.15 | — | — | ||||||||||||||
Amortization of Acquired Profit in Inventory and Backlog, Net of Tax | 1,359 | 0.12 | 104 | 0.01 | ||||||||||||||
Benefit from Discrete Tax Items | (261 | ) | (0.02 | ) | — | |||||||||||||
Restructuring Costs and Other Income, Net of Tax | (247 | ) | (0.02 | ) | 351 | 0.03 | ||||||||||||
Adjusted Net Income and Adjusted Diluted EPS | $ | 34,550 | $ | 3.10 | $ | 34,770 | $ | 3.13 | ||||||||||
Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Three Months Ended | Increase (Decrease) | of Currency | ||||||||||||||||
Revenues by Product Line | Dec. 31, 2016 | Jan. 2, 2016 | Translation (a,b) | |||||||||||||||
Stock-Preparation | $ | 39,220 | $ | 46,716 | $ | (7,496 | ) | $ | (7,020 | ) | ||||||||
Doctoring, Cleaning, & Filtration | 25,564 | 24,379 | 1,185 | 2,098 | ||||||||||||||
Fluid-Handling | 21,241 | 23,497 | (2,256 | ) | (1,985 | ) | ||||||||||||
Papermaking Systems | 86,025 | 94,592 | (8,567 | ) | (6,907 | ) | ||||||||||||
Wood Processing Systems | 11,413 | 10,477 | 936 | 936 | ||||||||||||||
Fiber-Based Products | 2,803 | 2,531 | 272 | 272 | ||||||||||||||
$ | 100,241 | $ | 107,600 | $ | (7,359 | ) | $ | (5,699 | ) | |||||||||
Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Twelve Months Ended | Increase (Decrease) | of Currency | ||||||||||||||||
Dec. 31, 2016 | Jan. 2, 2016 | Translation (a,b) | ||||||||||||||||
Stock-Preparation | $ | 171,378 | $ | 148,341 | $ | 23,037 | $ | 24,631 | ||||||||||
Doctoring, Cleaning, & Filtration | 105,938 | 101,523 | 4,415 | 8,111 | ||||||||||||||
Fluid-Handling | 89,145 | 92,797 | (3,652 | ) | (1,866 | ) | ||||||||||||
Papermaking Systems | 366,461 | 342,661 | 23,800 | 30,876 | ||||||||||||||
Wood Processing Systems | 36,850 | 36,387 | 463 | 1,780 | ||||||||||||||
Fiber-Based Products | 10,815 | 11,059 | (244 | ) | (244 | ) | ||||||||||||
$ | 414,126 | $ | 390,107 | $ | 24,019 | $ | 32,412 | |||||||||||
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Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Three Months Ended | Increase (Decrease) | of Currency | ||||||||||||||||
Sequential Revenues by Product Line | Dec. 31, 2016 | Oct. 1, 2016 | Translation (a,b) | |||||||||||||||
Stock-Preparation | $ | 39,220 | $ | 44,099 | $ | (4,879 | ) | $ | (4,035 | ) | ||||||||
Doctoring, Cleaning, & Filtration | 25,564 | 28,955 | (3,391 | ) | (2,855 | ) | ||||||||||||
Fluid-Handling | 21,241 | 23,024 | (1,783 | ) | (1,352 | ) | ||||||||||||
Papermaking Systems | 86,025 | 96,078 | (10,053 | ) | (8,242 | ) | ||||||||||||
Wood Processing Systems | 11,413 | 7,962 | 3,451 | 3,721 | ||||||||||||||
Fiber-Based Products | 2,803 | 1,479 | 1,324 | 1,324 | ||||||||||||||
$ | 100,241 | $ | 105,519 | $ | (5,278 | ) | $ | (3,197 | ) | |||||||||
Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Three Months Ended | Increase (Decrease) | of Currency | ||||||||||||||||
Revenues by Geography (c) | Dec. 31, 2016 | Jan. 2, 2016 | Translation (a,b) | |||||||||||||||
North America | $ | 47,430 | $ | 53,325 | $ | (5,895 | ) | $ | (5,516 | ) | ||||||||
Europe | 29,622 | 20,736 | 8,886 | 9,450 | ||||||||||||||
Asia | 17,247 | 26,701 | (9,454 | ) | (8,427 | ) | ||||||||||||
Rest of World | 5,942 | 6,838 | (896 | ) | (1,206 | ) | ||||||||||||
$ | 100,241 | $ | 107,600 | $ | (7,359 | ) | $ | (5,699 | ) | |||||||||
Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Twelve Months Ended | Increase (Decrease) | of Currency | ||||||||||||||||
Dec. 31, 2016 | Jan. 2, 2016 | Translation (a,b) | ||||||||||||||||
North America | $ | 203,063 | $ | 224,480 | $ | (21,417 | ) | $ | (19,086 | ) | ||||||||
Europe | 115,233 | 73,077 | 42,156 | 43,325 | ||||||||||||||
Asia | 62,703 | 65,750 | (3,047 | ) | 339 | |||||||||||||
Rest of World | 33,127 | 26,800 | 6,327 | 7,834 | ||||||||||||||
$ | 414,126 | $ | 390,107 | $ | 24,019 | $ | 32,412 | |||||||||||
Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Three Months Ended | Increase (Decrease) | of Currency | ||||||||||||||||
Sequential Revenues by Geography (c) | Dec. 31, 2016 | Oct. 1, 2016 | Translation (a,b) | |||||||||||||||
North America | $ | 47,430 | $ | 46,994 | $ | 436 | $ | 781 | ||||||||||
Europe | 29,622 | 31,686 | (2,064 | ) | (978 | ) | ||||||||||||
Asia | 17,247 | 18,466 | (1,219 | ) | (691 | ) | ||||||||||||
Rest of World | 5,942 | 8,373 | (2,431 | ) | (2,309 | ) | ||||||||||||
$ | 100,241 | $ | 105,519 | $ | (5,278 | ) | $ | (3,197 | ) | |||||||||
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Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Three Months Ended | Increase (Decrease) | of Currency | ||||||||||||||||
Bookings by Product Line | Dec. 31, 2016 | Jan. 2, 2016 | Translation (a) | |||||||||||||||
Stock-Preparation | $ | 55,648 | $ | 23,090 | $ | 32,558 | $ | 33,752 | ||||||||||
Doctoring, Cleaning, & Filtration | 23,923 | 20,918 | 3,005 | 3,845 | ||||||||||||||
Fluid-Handling | 19,360 | 19,662 | (302 | ) | (42 | ) | ||||||||||||
Papermaking Systems | 98,931 | 63,670 | 35,261 | 37,555 | ||||||||||||||
Wood Processing Systems | 11,202 | 8,709 | 2,493 | 2,493 | ||||||||||||||
Fiber-Based Products | 3,477 | 3,159 | 318 | 318 | ||||||||||||||
$ | 113,610 | $ | 75,538 | $ | 38,072 | $ | 40,366 | |||||||||||
Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Twelve Months Ended | Increase (Decrease) | of Currency | ||||||||||||||||
Dec. 31, 2016 | Jan. 2, 2016 | Translation (a) | ||||||||||||||||
Stock-Preparation | $ | 158,876 | $ | 138,108 | $ | 20,768 | $ | 23,113 | ||||||||||
Doctoring, Cleaning, & Filtration | 110,064 | 98,593 | 11,471 | 15,288 | ||||||||||||||
Fluid-Handling | 85,696 | 91,943 | (6,247 | ) | (4,749 | ) | ||||||||||||
Papermaking Systems | 354,636 | 328,644 | 25,992 | 33,652 | ||||||||||||||
Wood Processing Systems | 38,183 | 37,309 | 874 | 2,327 | ||||||||||||||
Fiber-Based Products | 10,641 | 10,140 | 501 | 501 | ||||||||||||||
$ | 403,460 | $ | 376,093 | $ | 27,367 | $ | 36,480 | |||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
Business Segment Information | Dec. 31, 2016 | Jan. 2, 2016 | Dec. 31, 2016 | Jan. 2, 2016 | ||||||||||||||
Gross Margin: | ||||||||||||||||||
Papermaking Systems | 46.7 | % | 42.7 | % | 45.9 | % | 45.9 | % | ||||||||||
Other | 41.2 | % | 46.1 | % | 42.2 | % | 48.3 | % | ||||||||||
46.0 | % | 43.1 | % | 45.5 | % | 46.2 | % | |||||||||||
Operating Income: | ||||||||||||||||||
Papermaking Systems | $ | 12,680 | $ | 15,230 | $ | 57,427 | $ | 56,789 | ||||||||||
Corporate and Other | (2,005 | ) | (806 | ) | (11,854 | ) | (6,670 | ) | ||||||||||
$ | 10,675 | $ | 14,424 | $ | 45,573 | $ | 50,119 | |||||||||||
Adjusted Operating Income (b) (g): | ||||||||||||||||||
Papermaking Systems | $ | 12,680 | $ | 15,445 | $ | 60,601 | $ | 57,492 | ||||||||||
Corporate and Other | (2,005 | ) | (806 | ) | (11,587 | ) | (6,670 | ) | ||||||||||
$ | 10,675 | $ | 14,639 | $ | 49,014 | $ | 50,822 | |||||||||||
Capital Expenditures: | ||||||||||||||||||
Papermaking Systems | $ | 2,163 | $ | 1,227 | $ | 5,504 | $ | 4,639 | ||||||||||
Corporate and Other | 62 | 184 | 300 | 840 | ||||||||||||||
$ | 2,225 | $ | 1,411 | $ | 5,804 | $ | 5,479 | |||||||||||
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Three Months Ended | Twelve Months Ended | |||||||||||||||||
Cash Flow and Other Data | Dec. 31, 2016 | Jan. 2, 2016 | Dec. 31, 2016 | Jan. 2, 2016 | ||||||||||||||
Cash Provided by Operations (h) | $ | 16,261 | $ | 12,330 | $ | 51,000 | $ | 40,410 | ||||||||||
Depreciation and Amortization Expense | 3,392 | 2,574 | 14,326 | 10,821 | ||||||||||||||
Twelve Months Ended | ||||||||||||||||||
Free Cash Flow Reconciliation | Dec. 31, 2016 | Jan. 2, 2016 | ||||||||||||||||
Cash Provided by Operations, as Reported | $ | 51,000 | $ | 40,410 | ||||||||||||||
Capital Expenditures | (5,804 | ) | (5,479 | ) | ||||||||||||||
Free Cash Flow (b) | $ | 45,196 | $ | 34,931 | ||||||||||||||
Balance Sheet Data | Dec. 31, 2016 | Jan. 2, 2016 | ||||||||||||||||
Assets | ||||||||||||||||||
Cash, Cash Equivalents, and Restricted Cash | $ | 73,569 | $ | 66,936 | ||||||||||||||
Accounts Receivable, net | 65,963 | 64,321 | ||||||||||||||||
Inventories | 54,951 | 56,758 | ||||||||||||||||
Unbilled Contract Costs and Fees | 3,068 | 6,580 | ||||||||||||||||
Other Current Assets | 9,799 | 10,525 | ||||||||||||||||
Property, Plant and Equipment, net | 47,704 | 42,293 | ||||||||||||||||
Intangible Assets | 52,730 | 38,032 | ||||||||||||||||
Goodwill | 151,455 | 119,051 | ||||||||||||||||
Other Assets | 11,452 | 11,002 | ||||||||||||||||
$ | 470,691 | $ | 415,498 | |||||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||
Accounts Payable | $ | 23,929 | $ | 24,418 | ||||||||||||||
Short- and Long-term Debt | 61,494 | 31,250 | ||||||||||||||||
Capital Lease Obligations | 4,917 | — | ||||||||||||||||
Other Liabilities | 96,072 | 91,885 | ||||||||||||||||
Total Liabilities | 186,412 | 147,553 | ||||||||||||||||
Stockholders' Equity | 284,279 | 267,945 | ||||||||||||||||
$ | 470,691 | $ | 415,498 | |||||||||||||||
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Adjusted Operating Income and Adjusted EBITDA | Three Months Ended | Twelve Months Ended | ||||||||||||||||
Reconciliation | Dec. 31, 2016 | Jan. 2, 2016 | Dec. 31, 2016 | Jan. 2, 2016 | ||||||||||||||
Consolidated | ||||||||||||||||||
Net Income Attributable to Kadant | $ | 7,733 | $ | 10,385 | $ | 32,077 | $ | 34,389 | ||||||||||
Net Income Attributable to Noncontrolling Interest | 74 | 62 | 392 | 294 | ||||||||||||||
Income from Discontinued Operation, Net of Tax | — | (18 | ) | (3 | ) | (74 | ) | |||||||||||
Provision for Income Taxes | 2,583 | 3,798 | 12,083 | 14,762 | ||||||||||||||
Interest Expense, net | 285 | 197 | 1,024 | 748 | ||||||||||||||
Operating Income | 10,675 | 14,424 | 45,573 | 50,119 | ||||||||||||||
Restructuring Costs and Other Income | — | 215 | (317 | ) | 515 | |||||||||||||
Acquisition Costs (d) | — | — | 1,832 | — | ||||||||||||||
Acquired Backlog Amortization (e) | — | — | 1,468 | 107 | ||||||||||||||
Acquired Profit in Inventory (f) | — | — | 458 | 81 | ||||||||||||||
Adjusted Operating Income (b) | 10,675 | 14,639 | 49,014 | 50,822 | ||||||||||||||
Depreciation and Amortization | 3,392 | 2,574 | 12,858 | 10,714 | ||||||||||||||
Adjusted EBITDA (b) | $ | 14,067 | $ | 17,213 | $ | 61,872 | $ | 61,536 | ||||||||||
Papermaking Systems | ||||||||||||||||||
Operating Income | $ | 12,680 | $ | 15,230 | $ | 57,427 | $ | 56,789 | ||||||||||
Restructuring Costs and Other Income | — | 215 | (317 | ) | 515 | |||||||||||||
Acquisition Costs (d) | — | — | 1,565 | — | ||||||||||||||
Acquired Backlog Amortization (e) | — | — | 1,468 | 107 | ||||||||||||||
Acquired Profit in Inventory (f) | — | — | 458 | 81 | ||||||||||||||
Adjusted Operating Income (b) | 12,680 | 15,445 | 60,601 | 57,492 | ||||||||||||||
Depreciation and Amortization | 2,686 | 1,875 | 10,045 | 7,791 | ||||||||||||||
Adjusted EBITDA (b) | $ | 15,366 | $ | 17,320 | $ | 70,646 | $ | 65,283 | ||||||||||
Corporate and Other | ||||||||||||||||||
Operating Loss | $ | (2,005 | ) | $ | (806 | ) | $ | (11,854 | ) | $ | (6,670 | ) | ||||||
Acquisition Costs (d) | — | — | 267 | — | ||||||||||||||
Adjusted Operating Loss (b) | (2,005 | ) | (806 | ) | (11,587 | ) | (6,670 | ) | ||||||||||
Depreciation and Amortization | 706 | 699 | 2,813 | 2,923 | ||||||||||||||
Adjusted EBITDA (b) | $ | (1,299 | ) | $ | (107 | ) | $ | (8,774 | ) | $ | (3,747 | ) | ||||||
(a) | Represents the increase (decrease) resulting from the conversion of current period amounts reported in local currencies into U.S. dollars at the exchange rate of the prior period compared to the U.S. dollar amount reported in the prior period. | |||||||||||||||||
(b) | Represents a non-GAAP financial measure. | |||||||||||||||||
(c) | Geographic revenues are attributed to regions based on customer location. | |||||||||||||||||
(d) | Represents transaction costs related to our acquisition of RT Holding GmbH, the parent corporation of a group of companies known as the PAALGROUP. | |||||||||||||||||
(e) | Represents intangible amortization expense associated with acquired backlog. | |||||||||||||||||
(f) | Represents expense within cost of revenues associated with acquired profit in inventory. | |||||||||||||||||
(g) | See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and Adjusted EBITDA Reconciliation." | |||||||||||||||||
(h) | 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. 2016-09. | |||||||||||||||||
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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 2,000 employees in 18 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. Our actual results may 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 January 2, 2016 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; the variability and uncertainties in sales of capital equipment in China; currency fluctuations; our customers’ ability to obtain financing for capital equipment projects; changes in government regulations and policies; the oriented strand board market and levels of residential construction activity; development and use of digital media; price increases or shortages of raw materials; dependence on certain suppliers; international sales and operations; economic conditions and regulatory changes caused by the United Kingdom’s likely exit from the European Union; disruption in production; our acquisition strategy; our internal growth strategy; competition; soundness of suppliers and customers; our effective tax rate; future restructurings; soundness of financial institutions; our debt obligations; restrictions in our credit agreement; loss of key personnel; reliance on third-party research; protection of patents and proprietary rights; failure of our information systems or breaches of data security; fluctuations in our share price; and anti-takeover provisions. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
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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