View:
Download DOC
Download PDF
Download XLS
Document


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): August 1, 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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).    Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨




KADANT INC.

Item 2.02 Results of Operations and Financial Condition.

On August 1, 2017, Kadant Inc. (the “Company”) announced its financial results for the fiscal quarter ended July 1, 2017. 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 August 1, 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: August 1, 2017
By
/s/ Michael J. McKenney
 
 
Michael J. McKenney
Senior Vice President and
   Chief Financial Officer

3


Exhibit
Exhibit 99
https://cdn.kscope.io/dae8b47776e78b4d783c0ea717f1eee5-kadantlogoa04.jpg

KADANT INC.
One Technology Park Drive
Westford, MA 01886

NEWS
Kadant Reports 2017 Second Quarter Results
Raises Revenue and EPS Guidance for the Second Half of 2017

WESTFORD, Mass. - August 1, 2017 - Kadant Inc. (NYSE: KAI) reported its financial results for the second quarter ended July 1, 2017.

Second Quarter 2017 Highlights
•
GAAP diluted EPS decreased 4% to $0.72
•
Adjusted diluted EPS increased 18% to a record $1.04
•
Net income decreased 3% to $8 million
•
Adjusted EBITDA increased 5% to a record $19 million and represented 17% of revenue
•
Revenue decreased 1% to $110 million
•
Gross margin was 47.9%
•
Bookings increased 23% to a record $120 million
•
Cash flows from operations increased 73% to $24 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.

Management Commentary
“Following our strong first quarter of 2017, we had another outstanding quarter with record bookings, adjusted diluted EPS, and adjusted EBITDA,” said Jonathan Painter, president and chief executive officer of Kadant. “Our adjusted diluted EPS performance achieved a new milestone and was driven by a strong gross margin, which benefited from near-record parts and consumables revenue. Our adjusted diluted EPS excludes the costs related to our acquisition of the forest products business of NII FPG Company (NII), which we completed in early July. We are working hard on the integration of this business, which is proceeding quite well. The more we learn about NII and its management team the more optimistic we are about our future together.

“Our record bookings of $120 million in the second quarter extended our strong bookings performance beyond the previous two quarters and was led by our Stock-Preparation and Wood-Processing product lines, each of which achieved over 30 percent growth in bookings compared to the same period last year. From a geographic perspective, bookings in China and Europe were strong in the second quarter for both capital and parts and consumables products. Another highlight of the quarter was our cash flows from operations of $24 million, which were the second highest in our history.”

Second Quarter 2017 Results
Revenue decreased one percent compared to the second quarter of 2016 to $110.2 million, including a $2.7 million decrease from the unfavorable effect of foreign currency translation. Excluding the impact of foreign currency translation, revenue was up one percent compared to the second quarter of 2016. Gross margin was 47.9 percent. Net income was $8.1 million, or $0.72 per diluted share, compared to $8.3 million, or $0.75 per diluted share, in the second quarter of 2016, and included an $0.8 million, or $0.07 per diluted share, decrease from the unfavorable effects of foreign currency translation. Adjusted diluted EPS increased 18 percent to $1.04 in the second quarter of 2017, compared to $0.88 in the second quarter of 2016. Adjusted diluted EPS in the second quarter of 2017 excludes $0.32 of acquisition costs. Adjusted diluted EPS in the second quarter of 2016 excludes $0.12 of amortization from acquired profit in inventory and backlog and $0.01 of acquisition costs. Adjusted EBITDA increased five percent to $18.8 million compared to $17.9 million in the second quarter of 2016. Adjusted EBITDA excludes $4.1 million of acquisition costs in the second quarter of 2017 and $0.3 million of acquisition costs and $1.9 million from


the amortization of acquired profit in inventory and backlog in the second quarter of 2016. Bookings increased 23 percent to a record $120.3 million compared to $98.1 million in the second quarter of 2016, including a $3.5 million decrease from the unfavorable effect of foreign currency translation.

Guidance
“We are increasing our guidance for the second half of 2017 due to both the improved outlook for our existing business, as well as the acquisition of NII,” Mr. Painter continued. “We expect to report full year revenue of $488 to $494 million, revised from our previous guidance of $427 to $437 million. We expect to achieve GAAP diluted EPS of $3.18 to $3.26 in 2017, revised from our previous guidance of $3.27 to $3.37. The revised 2017 guidance includes acquisition costs of $4.8 million, or $0.36 per diluted share, and amortization expense associated with acquired profit in inventory and backlog of $7.0 million, or $0.45 per diluted share. Excluding these acquisition-related expenses, we expect adjusted diluted EPS of $3.99 to $4.07 for 2017. For the third quarter of 2017, we expect GAAP diluted EPS of $0.83 to $0.87 on revenue of $139 to $142 million, including $0.02 of acquisition costs and $0.27 of amortization expense associated with acquired inventory and backlog. Excluding these acquisition-related expenses, we expect adjusted diluted EPS of $1.12 to $1.16 for the third quarter of 2017.”

Conference Call
Kadant will hold a webcast with a slide presentation for investors on Tuesday, August 1, 2017, at 4:30 p.m. eastern time to discuss its second quarter performance, as well as future expectations. To access the webcast, including the slideshow and accompanying audio, go to www.kadant.com and click on “Investors”. To listen to the webcast via teleconference, call 888-326-8410 within the U.S., or +1-704-385-4884 outside the U.S. and reference participant passcode 58886672. 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 September 1, 2017.

Shortly after the webcast, Kadant will post its updated general investor presentation incorporating the second quarter results on its 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 earnings per share (EPS), adjusted earnings before interest, taxes, depreciation, and amortization (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 a $2.7 million and a $3.8 million unfavorable foreign currency translation effect in the second quarter and first six months of 2017, respectively, compared to the same periods in 2016. Revenue in the first six months of 2017 also included $13.3 million from an acquisition completed in 2016. 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, amortization of acquired profit in inventory and backlog, and other income. 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:
•
A pre-tax gain on the sale of assets of $0.3 million in the first six months of 2016.

•
Pre-tax acquisition costs of $4.1 million in the second quarter and $4.4 million in the first six months of 2017. Pre-tax acquisition costs of $0.3 million in the second quarter and $1.7 million in the first six months of 2016.

•
Pre-tax expense related to acquired profit in inventory and backlog of $1.9 million in the second quarter and first six months of 2016.

Adjusted net income and adjusted diluted EPS exclude:
•
An after-tax gain on the sale of assets of $0.2 million ($0.3 million net of tax of $0.1 million) in the first six months of 2016.

•
After-tax acquisition costs of $3.6 million ($4.1 million net of tax of $0.5 million) in the second quarter of 2017 and $3.8 million ($4.4 million net of tax of $0.6 million) in the first six months of 2017. After-tax acquisition costs of $0.2 million ($0.3 million net of tax of $0.1 million) in the second quarter of 2016 and $1.5 million ($1.7 million net of tax of $0.2 million) in the first six months of 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 the second quarter and first six months of 2016.

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
 
Six Months Ended
Consolidated Statement of Income
 
July 1, 2017
 
July 2, 2016
 
July 1, 2017
 
July 2, 2016
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
$
110,242

 
$
111,828

 
$
213,099

 
$
208,366

Costs and Operating Expenses:
 
 
 
 
 
 
 
 
 
Cost of revenues
57,418

 
61,567

 
111,283

 
114,129

 
Selling, general, and administrative expenses
39,159

 
36,072

 
73,958

 
68,568

 
Research and development expenses
2,222

 
1,945

 
4,369

 
3,649

 
Other income
—

 
—

 
—

 
(317
)
 
 
 
98,799

 
99,584

 
189,610

 
186,029

Operating Income
 
11,443

 
12,244

 
23,489

 
22,337

Interest Income
 
102

 
66

 
206

 
121

Interest Expense
 
(392
)
 
(340
)
 
(740
)
 
(609
)
 
 
 
 
 
 
 
 
 
Income Before Provision for Income Taxes
 
11,153

 
11,970

 
22,955

 
21,849

Provision for Income Taxes
 
2,955

 
3,531

 
5,690

 
6,419

Net Income
 
8,198

 
8,439

 
17,265

 
15,430

Net Income Attributable to Noncontrolling Interest
 
(102
)
 
(128
)
 
(218
)
 
(243
)
Net Income Attributable to Kadant
 
$
8,096

 
$
8,311

 
$
17,047

 
$
15,187

 
 
 
 
 
 
 
 
 
 
 
Earnings per Share Attributable to Kadant:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.74

 
$
0.76

 
$
1.55

 
$
1.40

 
 
Diluted
 
$
0.72

 
$
0.75

 
$
1.52

 
$
1.37

 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares:
 
 
 
 
 
 
 
 
 
 
Basic
 
11,001

 
10,870

 
10,976

 
10,831

 
 
Diluted
 
11,296

 
11,152

 
11,250

 
11,085

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Three Months Ended
Adjusted Net Income and Adjusted Diluted EPS (b)
 
July 1, 2017
 
July 1, 2017
 
July 2, 2016
 
July 2, 2016
 
 
 
 
 
 
 
 
 
 
 
Net Income and Diluted EPS Attributable to Kadant, as Reported
 
$
8,096

 
$
0.72

 
$
8,311

 
$
0.75

Adjustments for the Following:
 
 
 
 
 
 
 
 
 
Acquisition Costs, Net of Tax
 
3,627

 
0.32

 
168

 
0.01

 
Amortization of Acquired Profit in Inventory and Backlog, Net of Tax
 
—

 
—

 
1,358

 
0.12

Adjusted Net Income and Adjusted Diluted EPS
 
$
11.723

 
$
1.04

 
$
9,837

 
$
0.88

 
 
 
 
 
 
 
 
 
 
 

-more-

 
 
 
 
Six Months Ended
 
Six Months Ended
 
 
 
 
July 1, 2017
 
July 1, 2017
 
July 2, 2016
 
July 2, 2016
 
 
 
 
 
 
 
 
 
 
 
Net Income and Diluted EPS Attributable to Kadant, as Reported
 
$
17,047

 
$
1.52

 
$
15,187

 
$
1.37

Adjustments for the Following:
 
 
 
 
 
 
 
 
 
Acquisition Costs, Net of Tax
 
3,833

 
0.34

 
1,510

 
0.14

 
Amortization of Acquired Profit in Inventory and Backlog, Net of Tax
 
—

 
—

 
1,358

 
0.12

 
Other Income, Net of Tax
 
—

 
—

 
(247
)
 
(0.02
)
Adjusted Net Income and Adjusted Diluted EPS
 
$
20,880

 
$
1.86

 
$
17,808

 
$
1.61

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
Excluding Effect
 
 
 
 
Three Months Ended
 
 
 
of Currency
Revenues by Product Line
 
July 1, 2017
 
July 2, 2016
 
Increase (Decrease)
 
Translation (a,b)
Stock-Preparation
 
$
46,178

 
$
49,641

 
$
(3,463
)
 
$
(2,253
)
Doctoring, Cleaning, & Filtration
 
27,033

 
27,580

 
(547
)
 
54

Fluid-Handling
 
22,520

 
23,110

 
(590
)
 
(155
)
 
Papermaking Systems
 
95,731

 
100,331

 
(4,600
)
 
(2,354
)
 
Wood Processing Systems
 
11,393

 
8,768

 
2,625

 
3,125

 
Fiber-Based Products
 
3,118

 
2,729

 
389

 
389

 
 
 
 
$
110,242

 
$
111,828

 
$
(1,586
)
 
$
1,160

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
Excluding Effect
 
 
 
 
Six Months Ended
 
Increase (Decrease)
 
of Currency
 
 
July 1, 2017
 
July 2, 2016
 
 
Translation (a,b)
Stock-Preparation
 
$
87,331

 
$
88,059

 
$
(728
)
 
$
1,008

Doctoring, Cleaning, & Filtration
 
52,383

 
51,419

 
964

 
2,167

Fluid-Handling
 
44,567

 
44,880

 
(313
)
 
357

 
Papermaking Systems
 
184,281

 
184,358

 
(77
)
 
3,532

 
Wood Processing Systems
 
21,336

 
17,475

 
3,861

 
4,013

 
Fiber-Based Products
 
7,482

 
6,533

 
949

 
949

 
 
 
 
$
213,099

 
$
208,366

 
$
4,733

 
$
8.494

 
 
 
 
 
 
 
 
 
 
 

-more-

 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
Excluding Effect
 
 
 
 
Three Months Ended
 
 
 
of Currency
Sequential Revenues by Product Line
 
July 1, 2017
 
April 1, 2017
 
Increase (Decrease)
 
Translation (a,b)
Stock-Preparation
 
$
46,178

 
$
41,153

 
$
5,025

 
$
4,341

Doctoring, Cleaning, & Filtration
 
27,033

 
25,350

 
1,683

 
1,370

Fluid-Handling
 
22,520

 
22,047

 
473

 
196

 
Papermaking Systems
 
95,731

 
88,550

 
7,181

 
5,907

 
Wood Processing Systems
 
11,393

 
9,943

 
1,450

 
1,635

 
Fiber-Based Products
 
3,118

 
4,364

 
(1,246
)
 
(1,246
)
 
 
 
 
$
110,242

 
$
102,857

 
$
7,385

 
$
6,296

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
Excluding Effect
 
 
 
 
Three Months Ended
 
 
 
of Currency
Revenues by Geography (c)
 
July 1, 2017
 
July 2, 2016
 
Increase (Decrease)
 
Translation (a,b)
North America
 
$
51,557

 
$
53,830

 
$
(2,273
)
 
$
(1,736
)
Europe
 
33,952

 
32,960

 
992

 
2,400

Asia
 
16,545

 
13,985

 
2,560

 
3,465

Rest of World
 
8,188

 
11,053

 
(2,865
)
 
(2,969
)
 
 
 
 
$
110,242

 
$
111,828

 
$
(1,586
)
 
$
1,160

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
(Decrease)
 
 
 
 
 
 
 
 
 
 
Excluding Effect
 
 
 
 
Six Months Ended
 
Increase (Decrease)
 
of Currency
 
 
July 1, 2017
 
July 2, 2016
 
 
Translation (a,b)
North America
 
$
101,723

 
$
108,639

 
$
(6,916
)
 
$
(6,539
)
Europe
 
66,703

 
53,925

 
12,778

 
15,031

Asia
 
28,443

 
26,990

 
1,453

 
3,077

Rest of World
 
16,230

 
18,812

 
(2,582
)
 
(3,075
)
 
 
 
 
$
213,099

 
$
208,366

 
$
4,733

 
$
8,494

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
Excluding Effect
 
 
 
 
Three Months Ended
 
 
 
of Currency
Sequential Revenues by Geography (c)
 
July 1, 2017
 
April 1, 2017
 
Increase
 
Translation (a,b)
North America
 
$
51,557

 
$
50,166

 
$
1,391

 
$
1,407

Europe
 
33,952

 
32,751

 
1,201

 
277

Asia
 
16,545

 
11,898

 
4,647

 
4,507

Rest of World
 
8,188

 
8,042

 
146

 
105

 
 
 
 
$
110,242

 
$
102,857

 
$
7,385

 
$
6,296

 
 
 
 
 
 
 
 
 
 
 

-more-

 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
Excluding Effect
 
 
 
 
Three Months Ended
 
 
 
of Currency
Bookings by Product Line
 
July 1, 2017
 
July 2, 2016
 
Increase
 
Translation (a)
Stock-Preparation
 
$
50,166

 
$
37,152

 
$
13,014

 
$
14,526

Doctoring, Cleaning, & Filtration
 
32,145

 
27,868

 
4,277

 
5,227

Fluid-Handling
 
25,207

 
23,391

 
1,816

 
2,368

 
Papermaking Systems
 
107,518

 
88,411

 
19,107

 
22,121

 
Wood Processing Systems
 
10,543

 
7,977

 
2,566

 
3,028

 
Fiber-Based Products
 
2,194

 
1,739

 
455

 
455

 
 
 
 
$
120,255

 
$
98,127

 
$
22,128

 
$
25,604

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
 
 
 
 
 
 
 
 
 
 
Excluding Effect
 
 
 
 
Six Months Ended
 
Increase (Decrease)
 
of Currency
 
 
July 1, 2017
 
July 2, 2016
 
 
Translation (a)
Stock-Preparation
 
$
98,488

 
$
66,189

 
$
32,299

 
$
34,654

Doctoring, Cleaning, & Filtration
 
58,698

 
58,869

 
(171
)
 
1,369

Fluid-Handling
 
51,326

 
45,886

 
5,440

 
6,464

 
Papermaking Systems
 
208,512

 
170,944

 
37,568

 
42,487

 
Wood Processing Systems
 
23,624

 
18,358

 
5,266

 
5,271

 
Fiber-Based Products
 
6,969

 
5,729

 
1,240

 
1,240

 
 
 
 
$
239,105

 
$
195,031

 
$
44,074

 
$
48,998

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
Business Segment Information
 
July 1, 2017
 
July 2, 2016
 
July 1, 2017
 
July 2, 2016
Gross Margin:
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
48.1
%
 
44.6
%
 
48.0
%
 
45.5
%
 
 
Other
 
46.5
%
 
48.4
%
 
46.3
%
 
43.3
%
 
 
 
 
47.9
%
 
44.9
%
 
47.8
%
 
45.2
%
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
$
17,445

 
$
14,335

 
$
31,703

 
$
27,832

 
 
Corporate and Other
 
(6,002
)
 
(2,091
)
 
(8,214
)
 
(5,495
)
 
 
 
 
$
11,443

 
$
12,244

 
$
23,489

 
$
22,337

 
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Income (b, g):
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
$
17,445

 
$
16,307

 
$
31,703

 
$
30,892

 
 
Corporate and Other
 
(1,904
)
 
(1,877
)
 
(3,797
)
 
(5,281
)
 
 
 
 
$
15,541

 
$
14,430

 
$
27,906

 
$
25,611

 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures:
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
$
1,293

 
$
1,140

 
$
2,777

 
$
1,658

 
 
Corporate and Other
 
420

 
72

 
658

 
78

 
 
 
 
$
1,713

 
$
1,212

 
$
3,435

 
$
1,736

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
Cash Flow and Other Data
 
July 1, 2017
 
July 2, 2016
 
July 1, 2017
 
July 2, 2016
Cash Provided by Operations
 
$
23,693

 
$
13,691

 
$
25,376

 
$
19,209

Depreciation and Amortization Expense
 
3,275

 
4,913

 
6,531

 
7,477

 
 
 
 
 
 
 
 
 
 
 

-more-

Balance Sheet Data
 
 
 
 
 
July 1, 2017
 
Dec. 31, 2016
Assets
 
 
 
 
 
 
 
 
Cash, Cash Equivalents, and Restricted Cash
 
 
 
 
 
$
87,981

 
$
73,569

Accounts Receivable, net
 
 
 
 
 
68,994

 
65,963

Inventories
 
 
 
 
 
63,390

 
54,951

Unbilled Contract Costs and Fees
 
 
 
 
 
6,421

 
3,068

Other Current Assets
 
 
 
 
 
14,377

 
9,799

Property, Plant and Equipment, net
 
 
 
 
 
49,983

 
47,704

Intangible Assets
 
 
 
 
 
51,659

 
52,730

Goodwill
 
 
 
 
 
158,827

 
151,455

Other Assets
 
 
 
 
 
13,182

 
11,452

 
 
 
 
 
 
 
 
$
514,814

 
$
470,691

Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
Accounts Payable
 
 
 
 
 
$
28,875

 
$
23,929

Long-term Debt
 
 
 
 
 
60,673

 
61,494

Capital Lease Obligations
 
 
 
 
 
5,094

 
4,917

Other Liabilities
 
 
 
 
 
108,835

 
96,072

 
Total Liabilities
 
 
 
 
 
203,477

 
186,412

 
Stockholders' Equity
 
 
 
 
 
311,337

 
284,279

 
 
 
 
 
 
 
 
$
514,814

 
$
470,691

 
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Income and Adjusted EBITDA
 
Three Months Ended
 
Six Months Ended
Reconciliation
 
July 1, 2017
 
July 2, 2016
 
July 1, 2017
 
July 2, 2016
Consolidated
 
 
 
 
 
 
 
 
 
 
Net Income Attributable to Kadant
 
$
8,096

 
$
8,311

 
$
17,047

 
$
15,187

 
 
Net Income Attributable to Noncontrolling Interest
 
102

 
128

 
218

 
243

 
 
Provision for Income Taxes
 
2,955

 
3,531

 
5,690

 
6,419

 
 
Interest Expense, net
 
290

 
274

 
534

 
488

 
 
Operating Income
 
11,443

 
12,244

 
23,489

 
22,337

 
 
Other Income
 
—

 
—

 
—

 
(317
)
 
 
Acquisition Costs (d)
 
4,098

 
260

 
4,417

 
1,665

 
 
Acquired Backlog Amortization (e)
 
—

 
1,468

 
—

 
1,468

 
 
Acquired Profit in Inventory (f)
 
—

 
458

 
—

 
458

 
 
Adjusted Operating Income (b)
 
15,541

 
14,430

 
27,906

 
25,611

 
 
Depreciation and Amortization
 
3,275

 
3,445

 
6,531

 
6,009

 
 
Adjusted EBITDA (b)
 
$
18,816

 
$
17,875

 
$
34,437

 
$
31,620

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (b, h)
 
17.1
%
 
16.0
%
 
16.2
%
 
15.2
%
 
 
 
 
 
 
 
 
 
 
 
Papermaking Systems
 
 
 
 
 
 
 
 
 
 
Operating Income
 
$
17,445

 
$
14,335

 
$
31,703

 
$
27,832

 
 
Other Income
 
—

 
—

 
—

 
(317
)
 
 
Acquisition Costs (d)
 
—

 
46

 
—

 
1,451

 
 
Acquired Backlog Amortization (e)
 
—

 
1,468

 
—

 
1,468

 
 
Acquired Profit in Inventory (f)
 
—

 
458

 
—

 
458

 
 
Adjusted Operating Income (b)
 
17,445

 
16,307

 
31,703

 
30,892

 
 
Depreciation and Amortization
 
2,618

 
2,737

 
5,211

 
4,613

 
 
Adjusted EBITDA (b)
 
$
20,063

 
$
19,044

 
$
36,914

 
$
35,505

 
 
 
 
 
 
 
 
 
Corporate and Other
 
 
 
 
 
 
 
 
 
 
Operating Loss
 
$
(6,002
)
 
$
(2,091
)
 
$
(8,214
)
 
$
(5,495
)
 
 
Acquisition Costs (d)
 
4,098

 
214

 
4,417

 
214

 
 
Adjusted Operating Income (b)
 
(1,904
)
 
(1,877
)
 
(3,797
)
 
(5,281
)
 
 
Depreciation and Amortization
 
657

 
708

 
1,320

 
1,396

 
 
Adjusted EBITDA (b)
 
$
(1,247
)
 
$
(1,169
)
 
$
(2,477
)
 
$
(3,885
)
 
 
 
 
 
 
 
 
 
 

-more-

 
 
 
 
 
 
 
 
 
 
(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 associated with our acquisitions.
 
 
(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)
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 2,300 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. 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 December 31, 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




###