0000886346-20-000071 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 28, 2020	Apr. 24, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 28, 2020
Document Transition Report	false
Entity File Number	001-11406
Entity Registrant Name	KADANT INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	52-1762325
Entity Address, Address Line One	One Technology Park Drive
Entity Address, City or Town	Westford
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01886
City Area Code	978
Local Phone Number	776-2000
Title of 12(b) Security	Common Stock, $.01 par value
Trading Symbol	KAI
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		11,469,515
Entity Central Index Key	0000886346
Current Fiscal Year End Date	--01-02
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

Condensed Consolidated Balance Sheet (Unaudited) - USD ($) $ in Thousands	Mar. 28, 2020	Dec. 28, 2019
Current Assets:
Cash and cash equivalents	$ 60,012	$ 66,786
Restricted cash	2,063	1,487
Accounts receivable	93,850	98,438
Less: allowance for credit losses	2,712	2,698
Accounts receivable, net	91,138	95,740
Inventories	102,718	102,715
Unbilled revenue	12,194	13,162
Other current assets	19,556	17,686
Total Current Assets	287,681	297,576
Property, Plant, and Equipment, at Cost	179,639	181,341
Less: accumulated depreciation and amortization	95,891	95,309
Property, Plant, and Equipment, at Cost, Net	83,748	86,032
Other Assets	39,932	45,851
Intangible Assets, Net (Note 1)	166,690	173,896
Goodwill (Note 1)	330,997	336,032
Total Assets	909,048	939,387
Current Liabilities:
Current maturities of long-term obligations (Note 4)	2,687	2,851
Accounts payable	41,196	45,852
Accrued payroll and employee benefits	22,036	31,968
Customer deposits	25,588	24,012
Advanced billings	8,335	11,280
Other current liabilities	30,057	30,206
Total Current Liabilities	129,899	146,169
Long-Term Obligations (Note 4)	292,689	298,174
Other Long-Term Liabilities	62,188	67,965
Commitments and Contingencies (Note 11)
Stockholders' Equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued	0	0
Common stock, $.01 par value, 150,000,000 shares authorized; 14,624,159 shares issued	146	146
Capital in excess of par value	105,457	106,698
Retained earnings	445,027	435,249
Treasury stock at cost, 3,154,644 and 3,214,888 shares	(77,302)	(78,778)
Accumulated other comprehensive items (Note 7)	(50,554)	(37,620)
Total Kadant Stockholders' Equity	422,774	425,695
Noncontrolling interest	1,498	1,384
Total Stockholders' Equity	424,272	427,079
Total Liabilities and Stockholders' Equity	$ 909,048	$ 939,387

Condensed Consolidated Balance Sheet (Unaudited) (Parenthetical) - $ / shares	Mar. 28, 2020	Dec. 28, 2019
Stockholders' Equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	5,000,000	5,000,000
Preferred stock, issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	150,000,000	150,000,000
Common stock, issued (in shares)	14,624,159	14,624,159
Treasury stock (in shares)	3,154,644	3,214,888

Condensed Consolidated Statement of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Income Statement [Abstract]
Revenue (Notes 1 and 10)	$ 159,127	$ 171,316
Costs and Operating Expenses:
Cost of revenue	90,804	100,801
Selling, general, and administrative expenses	45,592	49,319
Research and development expenses	3,076	2,621
Total Costs and Operating Expenses	139,472	152,741
Operating Income	19,655	18,575
Interest Income	51	56
Interest Expense	(2,459)	(3,504)
Other Expense, Net	(32)	(99)
Income Before Provision for Income Taxes	17,215	15,028
Provision for Income Taxes (Note 3)	4,559	3,963
Net Income	12,656	11,065
Net Income Attributable to Noncontrolling Interest	(125)	(165)
Net Income Attributable to Kadant	$ 12,531	$ 10,900
Earnings per Share Attributable to Kadant (Note 2)
Basic (in dollars per share)	$ 1.10	$ 0.98
Diluted (in dollars per share)	$ 1.09	$ 0.96
Weighted Average Shares (Note 2)
Basic (in shares)	11,432	11,133
Diluted (in shares)	11,508	11,385

Condensed Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Statement of Comprehensive Income [Abstract]
Net Income	$ 12,656	$ 11,065
Other Comprehensive Items:
Foreign currency translation adjustment	(12,574)	(465)
Pension and other post-retirement liability adjustments, net (net of tax of $20 and $8)	50	21
Effect of other post-retirement plan settlement	(119)	0
Deferred loss on cash flow hedges (net of tax of $119 and $104)	(302)	(237)
Net current period other comprehensive items	(12,945)	(681)
Comprehensive (Loss) Income	(289)	10,384
Comprehensive Income Attributable to Noncontrolling Interest	(114)	(132)
Comprehensive (Loss) Income Attributable to Kadant	$ (403)	$ 10,252

Condensed Consolidated Statement of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Other Comprehensive Items:
Pension and other post-retirement liability adjustments, tax effect	$ 20	$ 8
Deferred loss on cash flow hedges, tax effect	$ 119	$ 104

Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Operating Activities
Net Income Attributable to Kadant	$ 12,531	$ 10,900
Net income attributable to noncontrolling interest	125	165
Net income	12,656	11,065
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,598	8,231
Stock-based compensation expense	1,639	1,553
Provision for losses on accounts receivable	103	64
Gain on sale of property, plant, and equipment	(10)	(200)
Other items, net	(877)	596
Changes in current assets and liabilities, net of effects of acquisition:
Accounts receivable	1,929	(1,190)
Unbilled revenue	844	(1,055)
Inventories	(3,735)	(3,263)
Other current assets	(1,107)	(189)
Accounts payable	(3,440)	3,872
Other current liabilities	(9,431)	(9,608)
Net cash provided by operating activities	6,169	9,876
Investing Activities
Acquisition, net of cash acquired	0	(175,288)
Purchases of property, plant, and equipment	(2,686)	(2,168)
Proceeds from sale of property, plant, and equipment	14	293
Net cash used in investing activities	(2,672)	(177,163)
Financing Activities
Proceeds from issuance of long-term obligations	0	189,000
Repayment of long-term obligations	(2,969)	(6,404)
Dividends paid	(2,628)	(2,444)
Tax withholding payments related to stock-based compensation	(2,318)	(2,647)
Proceeds from issuance of Company common stock	913	723
Payment of debt issuance costs	0	(36)
Net cash (used in) provided by financing activities	(7,002)	178,192
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash	(2,693)	153
(Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash	(6,198)	11,058
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	68,273	46,117
Cash, Cash Equivalents, and Restricted Cash at End of Period	$ 62,075	$ 57,175

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Capital in Excess of Par Value	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Items	Noncontrolling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adoption of ASU \| ASU No. 2016-02	$ (17)			$ (17)
Beginning balance (in shares) at Dec. 29, 2018		14,624,159			3,514,163
Beginning balance at Dec. 29, 2018	374,571	$ 146	$ 104,731	393,578	$ (86,111)	$ (39,376)	$ 1,603
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	11,065			10,900			165
Dividend declared – Common Stock	(2,570)			(2,570)
Activity under stock plans	(372)		(1,951)		$ 1,579
Activity under stock plans (in shares)					(64,435)
Other comprehensive items	(681)					(648)	(33)
Ending balance (in shares) at Mar. 30, 2019		14,624,159			3,449,728
Ending balance at Mar. 30, 2019	381,996	$ 146	102,780	401,891	$ (84,532)	(40,024)	1,735
Beginning balance (in shares) at Dec. 28, 2019		14,624,159			3,214,888
Beginning balance at Dec. 28, 2019	427,079	$ 146	106,698	435,249	$ (78,778)	(37,620)	1,384
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	12,656			12,531			125
Dividend declared – Common Stock	(2,753)			(2,753)
Activity under stock plans	235		(1,241)		$ 1,476
Activity under stock plans (in shares)					(60,244)
Other comprehensive items	(12,945)					(12,934)	(11)
Ending balance (in shares) at Mar. 28, 2020		14,624,159			3,154,644
Ending balance at Mar. 28, 2020	$ 424,272	$ 146	$ 105,457	$ 445,027	$ (77,302)	$ (50,554)	$ 1,498

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - Parenthetical - $ / shares	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Statement of Stockholders' Equity [Abstract]
Cash dividends declared per common share (in dollars per share)	$ 0.24	$ 0.23

Nature of Operations and Summary of Significant Accounting Policies

3 Months Ended

Mar. 28, 2020

Accounting Policies [Abstract]

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Kadant Inc. was incorporated in Delaware in November 1991 and trades on the New York Stock Exchange under the ticker symbol "KAI."

Kadant Inc. (together with its subsidiaries, the Company) is a global supplier of high-value, critical components and engineered systems used in process industries worldwide. Its products, technologies, and services play an integral role in enhancing process efficiency, optimizing energy utilization, and maximizing productivity in resource-intensive industries.

COVID-19

On March 11, 2020, the World Health Organization designated the novel coronavirus (COVID-19) a global pandemic. The future impact of the COVID-19 pandemic and any resulting economic impact of the pandemic are rapidly evolving and largely unknown. It is possible that the COVID-19 pandemic, the measures taken by the governments throughout the world, and the resulting economic impact may materially and adversely affect the Company’s results of operations, cash flows and financial position. The Company is closely monitoring the impact of COVID-19 on all aspects of its business.

Interim Financial Statements

The interim condensed consolidated financial statements and related notes presented have been prepared by the Company, are unaudited, and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the Company's financial position at March 28, 2020 and its results of operations, comprehensive (loss) income, cash flows, and stockholders' equity for the three-month periods ended March 28, 2020 and March 30, 2019. Interim results are not necessarily indicative of results for a full year or for any other interim period.

The condensed consolidated balance sheet presented as of December 28, 2019 has been derived from the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019. The condensed consolidated financial statements and related notes are presented as permitted by the SEC rules and regulations for Form 10-Q and do not contain certain information included in the annual consolidated financial statements and related notes of the Company. The condensed consolidated financial statements and notes included herein should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019, filed with the SEC.

Financial Statement Presentation

In the first quarter of 2020, the Company realigned its business segments into three new reportable operating segments: Flow Control, Industrial Processing, and Material Handling. The Company previously reported its financial results by combining its operating entities into three reportable operating segments: Papermaking Systems, Wood Processing Systems, and Material Handling Systems, and a separate product line, Fiber-based Products. Financial information for 2019 has been recast to conform to the new segment presentation. See Note 10, Business Segment Information, for further detail regarding the Company's segments.

Use of Estimates and Critical Accounting Policies

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Although the Company makes every effort to ensure the accuracy of the estimates and assumptions used in the preparation of its condensed consolidated financial statements or in the application of accounting policies, if business conditions were different, or if the Company were to use different estimates and assumptions, it is possible that materially different amounts could be reported in the Company's condensed consolidated financial statements.

Notes 1 and 3 to the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019 describe the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the Company’s significant accounting policies during the three months ended March 28, 2020, except that the Company no longer considers its policy with respect to accounting for pension benefits to be a critical accounting policy due to the settlement of its U.S. pension plan in December 2019.

Supplemental Cash Flow Information



	Three Months Ended
(In thousands)	March 28, 2020		March 30, 2019
Cash Paid for Interest	$	2,212	$	2,782
Cash Paid for Income Taxes, Net of Refunds	$	4,698	$	4,679

Non-Cash Investing Activities:
Post-closing acquisition adjustment	$	—	$	1,567

Liabilities assumed of acquired business	$	—	$	29,664

Non-cash additions to property, plant, and equipment	$	128	$	193

Non-Cash Financing Activities:
Issuance of Company common stock upon vesting of restricted stock units	$	3,670	$	3,278
Dividends declared but unpaid	$	2,753	$	2,570

Restricted Cash

The Company's restricted cash serves as collateral for banker's acceptance drafts issued in China and bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business. The majority of the bank guarantees will expire over the next twelve months.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's condensed consolidated balance sheet that are shown in aggregate in the accompanying condensed consolidated statement of cash flows:



(In thousands)	March 28, 2020		March 30, 2019		December 28, 2019		December 29, 2018
Cash and cash equivalents	$	60,012	$	56,478	$	66,786	$	45,830
Restricted cash	2,063		697		1,487		287
Total Cash, Cash Equivalents, and Restricted Cash	$	62,075	$	57,175	$	68,273	$	46,117

Inventories

The components of inventories are as follows:



	March 28, 2020		December 28, 2019
(In thousands)	March 28, 2020		December 28, 2019
Raw Materials	$	49,617	$	49,332
Work in Process	14,495		15,344
Finished Goods	38,606		38,039
	$	102,718	$	102,715

Intangible Assets, Net

Acquired intangible assets by major asset class are as follows:



(In thousands)	Gross		Accumulated Amortization			Currency Translation			Net
March 28, 2020
Definite-Lived
Customer relationships	$	171,583	$	(55,194	)	$	(6,077	)	$	110,312
Product technology	56,011		(28,776		)	(2,096		)	25,139
Tradenames	6,527		(2,551		)	(458		)	3,518
Other	17,964		(13,416		)	(605		)	3,943
	252,085		(99,937		)	(9,236		)	142,912
Indefinite-Lived
Tradenames	24,100		—			(322		)	23,778
Acquired Intangible Assets	$	276,185	$	(99,937	)	$	(9,558	)	$	166,690

December 28, 2019
Definite-Lived
Customer relationships	$	171,583	$	(51,798	)	$	(4,141	)	$	115,644
Product technology	56,011		(27,819		)	(1,709		)	26,483
Tradenames	6,527		(2,421		)	(427		)	3,679
Other	17,964		(13,295		)	(593		)	4,076
	252,085		(95,333		)	(6,870		)	149,882
Indefinite-Lived
Tradenames	24,100		—			(86		)	24,014
Acquired Intangible Assets	$	276,185	$	(95,333	)	$	(6,956	)	$	173,896

Intangible assets are initially recorded at fair value at the date of acquisition. Subsequent impairment charges are reflected as a reduction in the gross balance, as applicable. Definite-lived intangible assets are stated net of accumulated amortization and currency translation in the accompanying condensed consolidated balance sheet. The Company amortizes definite-lived intangible assets over lives that have been determined based on the anticipated cash flow benefits of the intangible asset.

Goodwill

The changes in the carrying amount of goodwill by segment are as follows:



(In thousands)	Flow Control			Industrial Processing			Material Handling			Total
Balance at December 28, 2019 (a)
Gross balance	$	97,680		$	207,536		$	116,325		$	421,541
Accumulated impairment losses	—			(85,509		)	—			(85,509		)
Net balance	97,680			122,027			116,325			336,032
2020 Adjustment
Currency translation	(1,552		)	(3,182		)	(301		)	(5,035		)
Total 2020 adjustment	(1,552		)	(3,182		)	(301		)	(5,035		)
Balance at March 28, 2020
Gross balance	96,128			204,354			116,024			416,506
Accumulated impairment losses	—			(85,509		)	—			(85,509		)
Net balance	$	96,128		$	118,845		$	116,024		$	330,997

(a) Goodwill balances as of December 28, 2019 have been recast to conform to the current period presentation. See Note 10, Business Segment Information, for further details regarding the Company's change in reportable operating segments.

Impairment of Indefinite-Lived Assets

The Company evaluates the recoverability of goodwill and indefinite-lived intangible assets as of the end of each fiscal year or more frequently if events or changes in circumstances indicate that it is more likely than not that the carrying value of an asset might be impaired. Potential impairment indicators include a significant decline in sales, earnings, or cash flows, material adverse changes in the business climate, and a significant decline in the Company's market capitalization due to a sustained decrease in its stock price.

In March 2020, the Company experienced a significant decrease in market capitalization due to a decline in the Company’s stock price. During that time, the overall U.S. stock market also declined significantly amid market volatility driven by the uncertainty surrounding the outbreak of COVID-19. Based on these occurrences, the Company concluded that a triggering event had occurred related to the indefinite-lived assets within its material handling reporting unit. As a result, the Company prepared a quantitative impairment analysis (Step 1) for the material handling reporting unit, which indicated that its fair value exceeded its carrying value and the indefinite-lived assets were not impaired. The Company will continue to monitor for impairment indicators throughout 2020 and will conduct an interim period impairment analysis as required.

Warranty Obligations

The Company's contracts covering the sale of its products include warranty provisions that provide assurance to its customers that the products will comply with agreed-upon specifications during a defined period of time. The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications.

The changes in the carrying amount of accrued warranty costs included in other current liabilities in the accompanying condensed consolidated balance sheet are as follows:



	Three Months Ended
(In thousands)	March 28, 2020			March 30, 2019
Balance at Beginning of Year	$	6,467		$	5,726
Provision charged to expense	1,270			1,076
Usage	(1,365		)	(925		)
Acquisition	—			295
Currency translation	(162		)	(3		)
Balance at End of Period	$	6,210		$	6,169

Revenue Recognition

The Company recognizes revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers. Most of the Company’s revenue is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. Most of the Company’s parts and consumables products and its capital products with minimal customization are accounted for at a point in time. The Company has made a policy election to not treat the obligation to ship as a separate performance obligation under the contract and, as a result, the associated shipping costs are reflected in cost of revenue when revenue is recognized.

The remaining portion of the Company’s revenue is recognized on an over time basis based on an input method that compares the costs incurred to date to the total expected costs required to satisfy the performance obligation. Contracts are accounted for on an over time basis when they include products which have no alternative use and an enforceable right to payment over time. Most of the contracts recognized on an over time basis are for large capital projects. These projects are highly customized for the customer and, as a result, would include a significant cost to rework in the event of cancellation.

The following table presents revenue by revenue recognition method:



	Three Months Ended
	March 28,		March 30,
(In thousands)	2020		2019
Point in Time	$	136,092	$	148,276
Over Time	23,035		23,040
	$	159,127	$	171,316

The transaction price includes estimated variable consideration where applicable. Such variable consideration relates to certain performance guarantees and rights to return the product. The Company estimates variable consideration as the most likely amount to which it expects to be entitled based on the terms of the contracts with customers and historical experience, where relevant. For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation based on the relative stand-alone selling price.

The Company disaggregates its revenue from contracts with customers by reportable operating segment, product type and geography as this best depicts how its revenue is affected by economic factors.

The following table presents the disaggregation of revenue by product type and geography:



	Three Months Ended
	March 28,		March 30,
(In thousands)	2020		2019
Revenue by Product Type:
Parts and Consumables	$	105,098	$	112,850
Capital	54,029		58,466
	$	159,127	$	171,316
Revenue by Geography:
North America	$	93,823	$	100,876
Europe	36,014		38,985
Asia	15,908		17,078
Rest of World	13,382		14,377
	$	159,127	$	171,316

See Note 10, Business Segment Information, for information on the disaggregation of revenue by reportable operating segment.

The following table presents contract balances from contracts with customers:



	March 28, 2020		December 28, 2019
(In thousands)	March 28, 2020		December 28, 2019
Accounts Receivable	$	91,138	$	95,740
Contract Assets	$	12,194	$	13,162
Contract Liabilities	$	35,663	$	37,216

Contract assets represent unbilled revenue associated with revenue recognized on contracts accounted for on an over time basis, which will be billed in future periods based on the contract terms. Contract liabilities consist of customer deposits, advanced billings, and deferred revenue. Deferred revenue is included in other current liabilities in the accompanying condensed consolidated balance sheet. Contract liabilities will be recognized as revenue in future periods once the revenue recognition criteria are met. The majority of the contract liabilities relate to advance payments on contracts accounted for at a point in time. These advance payments will be recognized as revenue when the Company's performance obligations have been satisfied, which typically occurs when the product has shipped and control of the asset has transferred to the customer. The Company recognized revenue of $19,708,000 in the first three months of 2020 and $19,095,000 in the first three months of 2019 that was included in the contract liabilities balance at the beginning of 2020 and 2019. The majority of the Company's contracts for capital equipment have an original expected duration of one year or less. For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining partially unsatisfied

performance obligations as of March 28, 2020 was $13,194,000. The Company will recognize revenue for these performance obligations as they are satisfied, approximately 89% of which is expected to occur within the next twelve months.

Customers in China will often settle their accounts receivable with a banker's acceptance draft, in which case cash settlement will be delayed until the draft matures or is settled prior to maturity. For customers outside of China, final payment for the majority of the Company's products is received in the quarter following the product shipment. Certain of the Company's contracts include a longer period before final payment is due, which is typically within one year of final shipment or transfer of control to the customer.

The Company includes in revenue amounts invoiced for shipping and handling with the corresponding costs reflected in cost of revenue. Provisions for discounts, warranties, returns and other adjustments are provided for in the period in which the related sale was recorded. Sales taxes, value-added taxes, and certain excise taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue.

Accounts Receivable and Allowance for Credit Losses

The Company's accounts receivable arise from sales on credit to customers, are recorded at the invoiced amount, and do not bear interest. The Company establishes an allowance for credit losses to reduce accounts receivable to the net amount expected to be collected. The Company exercises judgment in determining its allowance for credit losses, which is based on its historical collection and write-off experience, adjusted for current macroeconomic trends and conditions, credit policies, specific customer collection issues, and accounts receivable aging categories. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and each customer's current creditworthiness. The Company continuously monitors collections and payments from its customers. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. In some instances, the Company utilizes letters of credit to mitigate its credit exposure.

The changes in the allowance for credit losses are as follows:



	Three Months Ended
(In thousands)	March 28, 2020			March 30, 2019
Balance at Beginning of Period	$	2,698		$	2,897
Provision charged to expense	103			64
Accounts written off	(26		)	(17		)
Currency translation	(63		)	7
Balance at End of Period	$	2,712		$	2,951

Banker's Acceptance Drafts included in Accounts Receivable

The Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are noninterest-bearing obligations of the issuing bank and mature within six months of the origination date. The Company's Chinese subsidiaries may sell the drafts at a discount to a third-party financial institution or transfer the drafts to vendors in settlement of current accounts payable prior to the scheduled maturity date. These drafts, which totaled $3,329,000 at March 28, 2020 and $5,230,000 at December 28, 2019, are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date.

Recently Adopted Accounting Pronouncements

Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, which changes the way entities recognize impairment of financial assets measured at amortized costs, such as accounts receivable, by requiring immediate recognition of estimated credit losses expected to occur over their remaining lives. During 2018 and 2019, the FASB issued additional guidance and clarification. The Company adopted this ASU using a modified retrospective method at the beginning of fiscal 2020. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements. See Accounts Receivable and Allowance for Credit Losses in this section for further information on the Company's allowance for credit losses.

Recent Accounting Pronouncements Not Yet Adopted

Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In March 2020, the FASB issued ASU No. 2020-04, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of reference rates, such as the London Interbank Offered Rate (LIBOR), if certain criteria are met. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. The guidance in this ASU is applicable to the Company's existing contracts and hedging relationships that reference LIBOR, and may be adopted by the Company prospectively beginning March 12, 2020 through December 31, 2022. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.

Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued ASU No. 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance, including the recognition of franchise tax, the treatment of a step up in the tax basis of goodwill, and the timing for recognition of enacted changes in tax laws or rates in the interim period annual effective tax rate computation. This new guidance is effective for the Company in fiscal 2021, with early adoption permitted. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.

Earnings per Share

3 Months Ended

Mar. 28, 2020

Earnings Per Share [Abstract]

Earnings per Share

Basic and diluted earnings per share (EPS) are calculated as follows:



	Three Months Ended
	March 28, 2020		March 30, 2019
(In thousands, except per share amounts)	March 28, 2020		March 30, 2019

Net Income Attributable to Kadant	$	12,531	$	10,900

Basic Weighted Average Shares	11,432		11,133
Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares	76		252
Diluted Weighted Average Shares	11,508		11,385

Basic Earnings per Share	$	1.10	$	0.98

Diluted Earnings per Share	$	1.09	$	0.96

The effect of outstanding and unvested restricted stock units (RSUs) of the Company's common stock totaling 43,000 shares in the first three months of 2020 and 44,000 shares in the first three months of 2019 was not included in the computation of diluted EPS for the respective periods as the effect would have been antidilutive or, for unvested performance-based RSUs, the performance conditions had not been met as of the end of the reporting periods.

Provision for Income Taxes	3 Months Ended
Provision for Income Taxes	Mar. 28, 2020
Income Tax Disclosure [Abstract]
Provision for Income Taxes	Provision for Income Taxes The provision for income taxes was $4,559,000 in the first three months of 2020 and $3,963,000 in the first three months of 2019. The effective tax rate of 26% in the first three months of 2020 was higher than the Company's statutory rate of 21% primarily due to nondeductible expenses, state taxes, the distribution of the Company’s worldwide earnings, and tax expense associated with Global Intangible Low-Taxed Income (GILTI) provisions. This incremental tax expense was offset in part by the reversal of tax reserves associated with uncertain tax positions. The effective tax rate of 26% in the first three months of 2019 was higher than the Company's statutory tax rate of 21% primarily due to nondeductible expenses, the distribution of the Company’s worldwide earnings, state taxes, and tax expense associated with GILTI. This incremental tax expense was offset in part by a decrease in tax related to the net excess income tax benefits from stock-based compensation arrangements. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law and provides a substantial stimulus and assistance package intended to address the impact of the COVID-19 pandemic, including tax relief. The enactment of the CARES Act did not have a material impact on the Company’s provision for income taxes in the first three months of 2020. The Company continues to monitor any effects that may result from the new law.

Long-Term Obligations

3 Months Ended

Mar. 28, 2020

Debt Disclosure [Abstract]

Long-Term Obligations

Long-term obligations are as follows:



	March 28, 2020			December 28, 2019
(In thousands)	March 28, 2020			December 28, 2019
Revolving Credit Facility, due 2023	$	260,485		$	265,419
Commercial Real Estate Loan, due 2020 to 2028	19,163			19,425
Senior Promissory Notes, due 2023 to 2028	10,000			10,000
Finance Leases, due 2020 to 2025	2,079			2,308
Other Borrowings, due 2020 to 2023	3,773			4,000
Unamortized Debt Issuance Costs	(124		)	(127		)
Total	295,376			301,025
Less: Current Maturities of Long-Term Obligations	(2,687		)	(2,851		)
Long-Term Obligations	$	292,689		$	298,174

See Note 8, Derivatives, for the fair value information related to the Company's long-term obligations.

Revolving Credit Facility

In 2018, the Company entered into a second amendment (Second Amendment) to its existing amended and restated five-year, unsecured multi-currency revolving credit facility, dated as of March 1, 2017 (as amended, the Credit Agreement). Pursuant to the Second Amendment, the Company has a borrowing capacity of $400,000,000, with an uncommitted unsecured incremental borrowing facility of $150,000,000 under its Credit Agreement, with a maturity date of December 14, 2023. Interest on borrowings outstanding accrues and is payable in arrears calculated at one of the following rates selected by the Company: (i) the Base Rate, plus an applicable margin of 0% to 1.25%, or (ii) LIBOR (with a zero percent floor), as defined, plus an applicable margin of 1% to 2.25%. The Base Rate is calculated as the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as published by Citizens Bank, N.A. (Citizens) and (c) thirty-day U.S. dollar LIBOR (USD LIBOR), as defined, plus 0.50%. The applicable margin is determined based upon the ratio of the Company's total debt, net of unrestricted cash up to $30,000,000 and certain debt obligations, to earnings before interest, taxes, depreciation, and amortization as defined in the Credit Agreement.

The obligations of the Company under the Credit Agreement may be accelerated upon the occurrence of an event of default, which includes customary events of default under such financing arrangements. In addition, the Credit Agreement contains negative covenants applicable to the Company and its subsidiaries, including financial covenants requiring the Company to maintain a maximum consolidated leverage ratio of 3.75 to 1.00, or for the quarter during which a material acquisition occurs and for the three fiscal quarters thereafter, 4.00 to 1.00, and limitations on making certain restricted payments (including dividends and stock repurchases).

Loans under the Credit Agreement are guaranteed by certain domestic subsidiaries of the Company. In addition, one of the Company’s foreign subsidiaries entered into a separate guarantee agreement limited to certain obligations of two foreign subsidiary borrowers.

As of March 28, 2020, the outstanding balance under the Credit Agreement was $260,485,000, and included $59,713,000 of euro-denominated borrowings and $30,771,000 of Canadian dollar-denominated borrowings. As of March 28, 2020, the Company had $141,467,000 of borrowing capacity available under its Credit Agreement, which was calculated by translating its foreign-denominated borrowings using borrowing date foreign exchange rates.

See Note 8, Derivatives, under the heading Interest Rate Swap Agreements, for information relating to the swap agreements used to hedge the Company’s exposure to movements in the three-month USD LIBOR on its U.S. dollar-denominated debt borrowed under the Credit Agreement.

The weighted average interest rate for the outstanding balance under the Credit Agreement was 2.44% as of March 28, 2020.

Commercial Real Estate Loan

In 2018, the Company and certain domestic subsidiaries borrowed $21,000,000 under a ten-year promissory note (Real Estate Loan), which is repayable in quarterly principal installments of $262,500 with the remaining principal balance of $10,500,000 due July 6, 2028. Interest accrues and is payable quarterly in arrears at a fixed rate of 4.45% per annum. Any future voluntary prepayments are subject to a 2% prepayment fee if paid on or prior to July 6, 2020 and are subject to a 1% prepayment fee if paid in the twelve months following July 6, 2020. Thereafter, no prepayment fee will be applied to voluntary prepayment by the Company.

The Real Estate Loan is secured by real estate and related personal property of the Company and certain of its domestic subsidiaries, pursuant to mortgage and security agreements (Mortgage and Security Agreements). The obligations of the Company under the Real Estate Loan may be accelerated upon the occurrence of an event of default under the Real Estate Loan and the Mortgage and Security Agreements, which includes customary events of default for financings of this type. In addition, a default under the Credit Agreement or any successor credit facility would be an event of default under the Real Estate Loan. The effective interest rate for the Real Estate Loan, including amortization of debt issuance costs, was 4.60% as of March 28, 2020.

Senior Promissory Notes

In 2018, the Company entered into an uncommitted, unsecured Multi-Currency Note Purchase and Private Shelf Agreement (Note Purchase Agreement). Simultaneous with the execution of the Note Purchase Agreement, the Company issued senior promissory notes (Initial Notes) in an aggregate principal amount of $10,000,000, with a per annum interest rate of 4.90% payable semiannually, and a maturity date of December 14, 2028. The Company is required to prepay a portion of the principal of the Initial Notes beginning on December 14, 2023 and each year thereafter, and may optionally prepay the principal on the Initial Notes, together with any prepayment premium, at any time (in a minimum amount of $1,000,000, or the foreign currency equivalent thereof, if applicable) in accordance with the Note Purchase Agreement. The obligations of the Initial Notes may be accelerated upon an event of default as defined in the Note Purchase Agreement, which includes customary events of default under such financing arrangements.

In accordance with the Note Purchase Agreement, the Company may also issue additional senior promissory notes (together with the Initial Notes, the Senior Promissory Notes) up to an additional $115,000,000 until the earlier of December 14, 2021 or the thirtieth day after written notice to terminate the issuance and sale of additional notes pursuant to the Note Purchase Agreement. The Senior Promissory Notes are pari passu with the Company’s indebtedness under the Credit Agreement, and any other senior debt of the Company, subject to certain specified exceptions, and participate in a sharing agreement with respect to the obligations of the Company and its subsidiaries under the Credit Agreement. The Senior Promissory Notes are guaranteed by certain of the Company’s domestic subsidiaries.

Debt Compliance

As of March 28, 2020, the Company was in compliance with the covenants related to its debt obligations.

Finance Leases

The Company's finance leases primarily relate to contracts for its vehicles.

Other Borrowings

Other borrowings include a sale-leaseback financing arrangement for a manufacturing facility in Germany. Under this arrangement, the quarterly lease payment includes principal, interest, and a payment to the landlord toward a loan receivable. The interest rate on the outstanding obligation is 1.79%. The secured loan receivable, which is included in other assets in the accompanying condensed consolidated balance sheet, was $952,000 at March 28, 2020. The lease arrangement provides for a fixed price purchase option, net of the projected loan receivable, of $1,471,000 at the end of the lease term in 2022. If the Company does not exercise the purchase option for the facility, the Company will receive cash from the landlord to settle the loan receivable. As of March 28, 2020, $3,638,000 was outstanding under this obligation.

Stock-Based Compensation	3 Months Ended
Stock-Based Compensation	Mar. 28, 2020
Share-based Payment Arrangement [Abstract]
Stock-Based Compensation	Stock-Based Compensation The Company recognized stock-based compensation expense of $1,639,000 in the first three months of 2020 and $1,553,000 in the first three months of 2019 within selling, general, and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income. The Company recognizes compensation expense for all stock-based awards granted to employees and directors based on the grant date estimate of fair value for those awards. The fair value of RSUs is based on the grant date price of the Company's common stock, reduced by the present value of estimated dividends foregone during the requisite service period. For time-based RSUs, compensation expense is recognized ratably over the requisite service period for the entire award based on the grant date fair value, and net of actual forfeitures recorded when they occur. For performance-based RSUs, compensation expense is recognized ratably over the requisite service period for each separately vesting portion of the award based on the grant date fair value, net of actual forfeitures recorded when they occur, and remeasured each reporting period until the total number of RSUs to be issued is known. Unrecognized compensation expense related to stock-based compensation totaled approximately $9,588,000 at March 28, 2020, and will be recognized over a weighted average period of 2.1 years. Performance-based RSUs On March 2, 2020, the Company granted to certain of its officers performance-based RSUs, which represented, in aggregate, the right to receive 35,808 shares (the target RSU amount), with an aggregate grant date fair value of $3,184,000. The RSUs are subject to adjustment based on the achievement of the performance measure selected for the 2020 fiscal year, which is a specified target for adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) generated from operations for the 2020 fiscal year. The RSUs are adjusted by comparing the actual adjusted EBITDA for the performance period to the target adjusted EBITDA. Actual adjusted EBITDA between 50% and 100% of the target adjusted EBITDA results in an adjustment of 50% to 100% of the RSU amount. Actual adjusted EBITDA between 100% and 115% of the target adjusted EBITDA results in an adjustment using a straight-line linear scale between 100% and 150% of the RSU amount. Actual adjusted EBITDA in excess of 115% results in an adjustment capped at 150% of the RSU amount. If actual adjusted EBITDA is below 50% of the target adjusted EBITDA for the 2020 fiscal year, these performance-based RSUs will be forfeited. The Company recognizes compensation expense based on the probable number of performance-based RSUs expected to vest. Following the adjustment, the performance-based RSUs will be subject to additional time-based vesting, and will vest in three equal annual installments on March 10 of 2021, 2022, and 2023, provided that the officer is employed by the Company on the applicable vesting dates. Time-based RSUs On March 2, 2020, the Company also granted time-based RSUs representing 33,600 shares to its officers and employees with an aggregate grant date fair value of $2,988,000. These time-based RSUs generally vest in three equal annual installments on March 10 of 2021, 2022, and 2023, provided that a recipient remains employed by the Company on the applicable vesting dates.

Retirement Benefit Plans

3 Months Ended

Mar. 28, 2020

Retirement Benefits [Abstract]

Retirement Benefit Plans

The Company includes the service cost component of net periodic benefit cost in operating income and all other components are included in other expense, net in the accompanying condensed consolidated statement of income.

In 2018, the Company's board of directors and its compensation committee approved amendments to freeze and terminate the Company's U.S. pension plan (Retirement Plan) and its restoration plan (Restoration Plan). In the fourth quarter of 2019, the Company settled its Retirement Plan obligation. In the first quarter of 2020, the Company settled its Restoration Plan obligation of $2,427,000 by paying a lump sum to its plan participants.

The components of net periodic benefit cost are as follows:



	Three Months Ended March 28, 2020						Three Months Ended March 30, 2019
(In thousands, except percentages)	Non-U.S. Pension			Other Post-Retirement			U.S. Pension			Non-U.S. Pension			Other Post-Retirement
Service Cost	$	44		$	2		$	—		$	43		$	1
Interest Cost	23			9			283			29			38
Expected Return on Plan Assets	(16		)	(1		)	(249		)	(17		)	(1		)
Recognized Net Actuarial Loss	11			4			8			5			3
Amortization of Prior Service Cost	2			—			—			—			—
	$	64		$	14		$	42		$	60		$	41

The weighted average assumptions used to determine net periodic benefit cost are as follows:

Discount Rate	2.25		%	3.92		%	4.10		%	2.80		%	4.44		%
Expected Long-Term Return on Plan Assets	7.21		%	7.21		%	4.10		%	9.22		%	9.22		%
Rate of Compensation Increase	3.23		%	5.57		%	—		%	2.98		%	5.57		%

The Company does not plan to make any other material cash contributions to its other pension and post-retirement plans in 2020.

Accumulated Other Comprehensive Items

3 Months Ended

Mar. 28, 2020

Equity [Abstract]

Accumulated Other Comprehensive Items

Comprehensive (loss) income combines net income and other comprehensive items, which represent certain amounts that are reported as components of stockholders' equity in the accompanying condensed consolidated balance sheet.

Changes in each component of accumulated other comprehensive items (AOCI), net of tax, are as follows:



(In thousands)	Foreign Currency Translation Adjustment			Pension and Other Post-Retirement Benefit Liability Adjustments			Deferred Loss on Cash Flow Hedges			Total
Balance at December 28, 2019	$	(36,145	)	$	(831	)	$	(644	)	$	(37,620	)
Other comprehensive (loss) income before reclassifications	(12,563		)	38			(345		)	(12,870		)
Reclassifications from AOCI	—			(107		)	43			(64		)
Net current period other comprehensive items	(12,563		)	(69		)	(302		)	(12,934		)
Balance at March 28, 2020	$	(48,708	)	$	(900	)	$	(946	)	$	(50,554	)

Amounts reclassified from AOCI are as follows:



	Three Months Ended
(In thousands)	March 28, 2020			March 30, 2019			Statement of Income Line Item
Retirement Benefit Plans (a)
Recognized net actuarial loss	$	(15	)	$	(16	)	Other expense, net
Amortization of prior service cost	(2		)	—			Other expense, net
Total expense before income taxes	(17		)	(16		)
Income tax benefit	124			4			Provision for income taxes
	107			(12		)
Cash Flow Hedges (b)
Interest rate swap agreements	(34		)	20			Interest expense
Forward currency-exchange contracts	(23		)	—			Cost of revenue
Total (expense) income before income taxes	(57		)	20
Income tax benefit (provision)	14			(5		)	Provision for income taxes
	(43		)	15
Total Reclassifications	$	64		$	3


(a)	Included in the computation of net periodic benefit cost. See Note 6, Retirement Benefit Plans, for additional information.

(b)

See Note 8, Derivatives, for additional information.

Derivatives

3 Months Ended

Mar. 28, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Interest Rate Swap Agreements

The Company has entered into interest rate swap agreements to hedge its exposure to movements in USD LIBOR on its U.S. dollar-denominated debt. In 2018, the Company entered into an interest rate swap agreement (2018 Swap Agreement) with Citizens which has a $15,000,000 notional value and expires on June 30, 2023. On a quarterly basis, the Company receives three-month USD LIBOR, which is subject to a zero percent floor, and pays a fixed rate of interest of 3.15% plus an applicable margin as defined in the Credit Agreement. In 2015, the Company entered into an interest rate swap agreement (2015 Swap Agreement) with Citizens which had a $10,000,000 notional value and expired on March 27, 2020. Under the 2015 Swap Agreement, the Company received three-month USD LIBOR and paid a fixed rate of interest of 1.5% plus an applicable margin as defined in the Credit Agreement.

The interest rate swap agreements have been designated as cash flow hedges and the Company structured its interest rate swap agreements to be 100% effective. Unrealized gains and losses related to the fair values of the swap agreements were recorded to AOCI, net of tax. In the event of early termination of the 2018 Swap Agreement, the Company will receive from or pay to the counterparty the fair value of the interest rate swap agreement, and the unrealized gain or loss outstanding will be recognized in earnings.

The counterparty to the 2018 Swap Agreement could demand an early termination of that agreement if the Company were to be in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and if the Company were to be unable to cure the default (See Note 4, Long-Term Obligations).

Forward Currency-Exchange Contracts

The Company uses forward currency-exchange contracts that have maturities of twelve months or less to hedge exposures resulting from fluctuations in currency exchange rates. Such exposures result from assets and liabilities that are denominated in currencies other than the functional currencies.

Forward currency-exchange contracts that hedge forecasted accounts receivable or accounts payable are designated as cash flow hedges and unrecognized gains and losses are recorded to AOCI, net of tax. Deferred gains and losses are recognized in the statement of income in the period in which the underlying transaction occurs. The fair values of forward currency-

exchange contracts that are designated as fair value hedges and forward currency-exchange contracts that are not designated as hedges are recognized currently in earnings.

The Company recognized within SG&A expenses in the accompanying condensed consolidated statement of income losses of $34,000 in the first three months of 2020 and losses of $37,000 in the first three months of 2019 associated with forward currency-exchange contracts that were not designated as hedges.

The following table summarizes the fair value of the Company's derivative instruments in the accompanying condensed consolidated balance sheet:



		March 28, 2020					December 28, 2019
	Balance Sheet Location	Asset (Liability) (a)			Notional Amount (b)		Asset (Liability) (a)			Notional Amount
(In thousands)	Balance Sheet Location	Asset (Liability) (a)			Notional Amount (b)		Asset (Liability) (a)			Notional Amount
Derivatives Designated as Hedging Instruments:
Derivatives in an Asset Position:
Forward currency-exchange contract	Other Current Assets	$	72		$	1,328	$	—		$	—
2015 Swap Agreement	Other Current Assets	$	—		$	—	$	11		$	10,000
Derivatives in a Liability Position:
Forward currency-exchange contracts	Other Current Liabilities	$	(52	)	$	842	$	(75	)	$	4,825
2018 Swap Agreement	Other Long-Term Liabilities	$	(1,275	)	$	15,000	$	(770	)	$	15,000

Derivatives Not Designated as Hedging Instruments:
Derivatives in an Asset Position:
Forward currency-exchange contracts	Other Current Assets	$	—		$	—	$	3		$	387
Derivatives in a Liability Position:
Forward currency-exchange contracts	Other Current Liabilities	$	(8	)	$	1,032	$	(43	)	$	2,545

(a) See Note 9, Fair Value Measurements and Fair Value of Financial Instruments, for the fair value measurements relating to these financial instruments.

(b) The total 2020 notional amounts are indicative of the level of the Company's recurring derivative activity.

The following table summarizes the activity in AOCI associated with the Company's derivative instruments designated as cash flow hedges as of and for the three months ended March 28, 2020:



(In thousands)	Interest Rate Swap Agreements			Forward Currency- Exchange Contracts			Total
Unrealized Loss, Net of Tax, at December 28, 2019	$	(589	)	$	(55	)	$	(644	)
Loss reclassified to earnings (a)	26			17			43
(Loss) gain recognized in AOCI	(403		)	58			(345		)
Unrealized (Loss) Gain, Net of Tax, at March 28, 2020	$	(966	)	$	20		$	(946	)

(a) See Note 7, Accumulated Other Comprehensive Items, for the income statement classification.

As of March 28, 2020, the Company expects to reclassify losses of $268,000 from AOCI to earnings over the next twelve months based on the estimated cash flows of the 2018 Swap Agreement and the maturity dates of the forward currency-exchange contracts.

Fair Value Measurements and Fair Value of Financial Instruments

3 Months Ended

Mar. 28, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements and Fair Value of Financial Instruments

Fair value measurement is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:


•	Level 1—Quoted prices in active markets for identical assets or liabilities.


•	Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.


•	Level 3—Unobservable inputs based on the Company's own assumptions.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis:



	Fair Value as of March 28, 2020
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds and time deposits	$	6,689	$	—	$	—	$	6,689
Banker's acceptance drafts (a)	$	—	$	3,329	$	—	$	3,329
Forward currency-exchange contract	$	—	$	72	$	—	$	72
Liabilities:
2018 Swap Agreement	$	—	$	1,275	$	—	$	1,275
Forward currency-exchange contracts	$	—	$	60	$	—	$	60



	Fair Value as of December 28, 2019
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds and time deposits	$	9,920	$	—	$	—	$	9,920
Banker's acceptance drafts (a)	$	—	$	5,230	$	—	$	5,230
2015 Swap Agreement	$	—	$	11	$	—	$	11
Forward currency-exchange contracts	$	—	$	3	$	—	$	3

Liabilities:
2018 Swap Agreement	$	—	$	770	$	—	$	770
Forward currency-exchange contracts	$	—	$	118	$	—	$	118


(a)	Included in accounts receivable in the accompanying condensed consolidated balance sheet.

The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first three months of 2020. The Company's banker's acceptance drafts are carried at face value which approximates their fair value due to the short-term nature of the negotiable instrument. The fair values of the Company's forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The fair values of the Company's interest rate swap agreements are based on LIBOR yield curves at the reporting date. The forward currency-exchange contracts and interest rate swap agreements are hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above.

The carrying value and fair value of the Company's debt obligations, excluding lease obligations and other borrowings, are as follows:



	March 28, 2020				December 28, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Debt Obligations:
Revolving credit facility	$	260,485	$	260,485	$	265,419	$	265,419
Commercial real estate loan	19,163		21,656		19,425		20,541
Senior promissory notes	10,000		10,662		10,000		10,803
	$	289,648	$	292,803	$	294,844	$	296,763

The carrying value of the Company's revolving credit facility approximates the fair value as the obligation bears variable rates of interest, which adjust frequently, based on prevailing market rates. The fair values of the commercial real estate loan and senior promissory notes are primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period ends, which represent Level 2 measurements.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Business Segment Information

3 Months Ended

Mar. 28, 2020

Segment Reporting [Abstract]

Business Segment Information

The Company previously reported its financial results by combining its operating entities into three reportable operating segments: Papermaking Systems, Wood Processing Systems, and Material Handling Systems, and a separate product line, Fiber-based Products. During the first quarter of 2020, the Company realigned its reportable operating segments consistent with the Company's strategic initiatives to grow both organically and through acquisitions. Such growth and diversification have resulted in a change in the internal organization of the Company and how its chief operating decision maker makes operating decisions, assesses the performance of the business, and allocates resources. Accordingly, the Company's financial results are reported in three new reportable operating segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment consists of the Company’s fluid-handling and doctoring, cleaning, & filtration product lines; the Industrial Processing segment consists of the Company’s wood processing and stock-preparation product lines (excluding baling products); and the Material Handling segment consists of the Company’s conveying and screening, baling, and fiber-based product lines. Financial information for 2019 has been recast to conform to the new segment presentation. A description of each segment follows.

•

Flow Control – Custom-engineered products, systems, and technologies that control the flow of fluids used in industrial and commercial applications to keep critical processes running efficiently in the packaging, tissue, food processing, metals, and other industrial sectors. The Company's products include rotary sealing devices, steam systems, expansion joints, doctor systems, roll and fabric cleaning devices, and filtration and fiber recovery systems.


•	Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber for use in the packaging, tissue, paper, wood products and alternative fuel industries, among others. The Company's primary products include stock preparation systems and recycling equipment, debarkers, stranders, chippers, and logging machinery.

•

Material Handling – Products and engineered systems used to handle bulk and discrete materials for secondary processing or transport in the mining, aggregates, food processing, waste management, and pulp and paper industries, among others. The Company's primary products include conveying and vibratory equipment and balers. In addition, the Company manufactures and sells biodegradable, absorbent granules used as carriers in agricultural applications and for oil and grease absorption.

The following table presents financial information for the Company's reportable operating segments:



	Three Months Ended
	March 28,		March 30,
(In thousands)	2020		2019
Revenue
Flow Control	$	57,149	$	61,144
Industrial Processing	64,709		72,274
Material Handling	37,269		37,898
	$	159,127	$	171,316



	Three Months Ended
	March 28,			March 30,
(In thousands)	2020			2019

Income Before Provision for Income Taxes
Flow Control	$	13,330		$	12,984
Industrial Processing	9,436			11,854
Material Handling (a)	4,134			731
Corporate (b)	(7,245		)	(6,994		)
Total operating income	19,655			18,575
Interest expense, net (c)	(2,408		)	(3,448		)
Other expense, net (c)	(32		)	(99		)
	$	17,215		$	15,028

Capital Expenditures
Flow Control	$	821		$	471
Industrial Processing	1,464			1,363
Material Handling	398			333
Corporate	3			1
	$	2,686		$	2,168

(a) Includes $4,151,000 of acquisition-related expenses in the three-month period ended March 30, 2019. Acquisition-related expenses include amortization expense associated with acquired profit in inventory and backlog and acquisition transaction costs.

(b) Corporate primarily includes general and administrative expenses.

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 28, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Right of Recourse In the ordinary course of business, the Company's subsidiaries in China may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are noninterest-bearing obligations of the issuing bank and mature within six months of the origination date. The Company's subsidiaries in China may use these banker's acceptance drafts prior to the scheduled maturity date to settle outstanding accounts payable with vendors. Banker's acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity dates. The Company had $5,307,000 at March 28, 2020 and $7,003,000 at December 28, 2019 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached their scheduled maturity dates. Historically, the banker's acceptance drafts have settled upon maturity without any claim of recourse against the Company. Litigation From time to time, the Company is subject to various claims and legal proceedings covering a range of matters that arise in the ordinary course of business. Such litigation may include, but is not limited to, claims and counterclaims by and against the Company for breach of contract or warranty, canceled contracts, product liability, or bankruptcy-related claims. For legal proceedings in which a loss is probable and estimable, the Company accrues a loss based on the low end of the range of estimated loss when there is no better estimate within the range. If the Company were found to be liable for any of the claims or counterclaims against it, the Company would incur a charge against earnings for amounts in excess of legal accruals.

Nature of Operations and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 28, 2020
Accounting Policies [Abstract]
Critical Accounting Policies	The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Although the Company makes every effort to ensure the accuracy of the estimates and assumptions used in the preparation of its condensed consolidated financial statements or in the application of accounting policies, if business conditions were different, or if the Company were to use different estimates and assumptions, it is possible that materially different amounts could be reported in the Company's condensed consolidated financial statements. Notes 1 and 3 to the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019 describe the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the Company’s significant accounting policies during the three months ended March 28, 2020, except that the Company no longer considers its policy with respect to accounting for pension benefits to be a critical accounting policy due to the settlement of its U.S. pension plan in December 2019.
Use of Estimates	Although the Company makes every effort to ensure the accuracy of the estimates and assumptions used in the preparation of its condensed consolidated financial statements or in the application of accounting policies, if business conditions were different, or if the Company were to use different estimates and assumptions, it is possible that materially different amounts could be reported in the Company's condensed consolidated financial statements.
Restricted Cash	The Company's restricted cash serves as collateral for banker's acceptance drafts issued in China and bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business. The majority of the bank guarantees will expire over the next twelve months.
Impairment of Long-Lived Assets	Impairment of Indefinite-Lived Assets The Company evaluates the recoverability of goodwill and indefinite-lived intangible assets as of the end of each fiscal year or more frequently if events or changes in circumstances indicate that it is more likely than not that the carrying value of an asset might be impaired. Potential impairment indicators include a significant decline in sales, earnings, or cash flows, material adverse changes in the business climate, and a significant decline in the Company's market capitalization due to a sustained decrease in its stock price. In March 2020, the Company experienced a significant decrease in market capitalization due to a decline in the Company’s stock price. During that time, the overall U.S. stock market also declined significantly amid market volatility driven by the uncertainty surrounding the outbreak of COVID-19. Based on these occurrences, the Company concluded that a triggering event had occurred related to the indefinite-lived assets within its material handling reporting unit. As a result, the Company prepared a quantitative impairment analysis (Step 1) for the material handling reporting unit, which indicated that its fair value exceeded its carrying value and the indefinite-lived assets were not impaired. The Company will continue to monitor for impairment indicators throughout 2020 and will conduct an interim period impairment analysis as required.
Revenue Recognition	Contract assets represent unbilled revenue associated with revenue recognized on contracts accounted for on an over time basis, which will be billed in future periods based on the contract terms. Contract liabilities consist of customer deposits, advanced billings, and deferred revenue. Deferred revenue is included in other current liabilities in the accompanying condensed consolidated balance sheet. Contract liabilities will be recognized as revenue in future periods once the revenue recognition criteria are met. The majority of the contract liabilities relate to advance payments on contracts accounted for at a point in time. These advance payments will be recognized as revenue when the Company's performance obligations have been satisfied, which typically occurs when the product has shipped and control of the asset has transferred to the customer. The Company recognized revenue of $19,708,000 in the first three months of 2020 and $19,095,000 in the first three months of 2019 that was included in the contract liabilities balance at the beginning of 2020 and 2019. The majority of the Company's contracts for capital equipment have an original expected duration of one year or less. For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining partially unsatisfied performance obligations as of March 28, 2020 was $13,194,000. The Company will recognize revenue for these performance obligations as they are satisfied, approximately 89% of which is expected to occur within the next twelve months. Customers in China will often settle their accounts receivable with a banker's acceptance draft, in which case cash settlement will be delayed until the draft matures or is settled prior to maturity. For customers outside of China, final payment for the majority of the Company's products is received in the quarter following the product shipment. Certain of the Company's contracts include a longer period before final payment is due, which is typically within one year of final shipment or transfer of control to the customer. The Company includes in revenue amounts invoiced for shipping and handling with the corresponding costs reflected in cost of revenue. Provisions for discounts, warranties, returns and other adjustments are provided for in the period in which the related sale was recorded. Sales taxes, value-added taxes, and certain excise taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue. The transaction price includes estimated variable consideration where applicable. Such variable consideration relates to certain performance guarantees and rights to return the product. The Company estimates variable consideration as the most likely amount to which it expects to be entitled based on the terms of the contracts with customers and historical experience, where relevant. For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation based on the relative stand-alone selling price. The Company disaggregates its revenue from contracts with customers by reportable operating segment, product type and geography as this best depicts how its revenue is affected by economic factors. Revenue Recognition The Company recognizes revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers. Most of the Company’s revenue is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. Most of the Company’s parts and consumables products and its capital products with minimal customization are accounted for at a point in time. The Company has made a policy election to not treat the obligation to ship as a separate performance obligation under the contract and, as a result, the associated shipping costs are reflected in cost of revenue when revenue is recognized. The remaining portion of the Company’s revenue is recognized on an over time basis based on an input method that compares the costs incurred to date to the total expected costs required to satisfy the performance obligation. Contracts are accounted for on an over time basis when they include products which have no alternative use and an enforceable right to payment over time. Most of the contracts recognized on an over time basis are for large capital projects. These projects are highly customized for the customer and, as a result, would include a significant cost to rework in the event of cancellation.
Accounts Receivable and Allowance for Credit Losses	Accounts Receivable and Allowance for Credit Losses The Company's accounts receivable arise from sales on credit to customers, are recorded at the invoiced amount, and do not bear interest. The Company establishes an allowance for credit losses to reduce accounts receivable to the net amount expected to be collected. The Company exercises judgment in determining its allowance for credit losses, which is based on its historical collection and write-off experience, adjusted for current macroeconomic trends and conditions, credit policies, specific customer collection issues, and accounts receivable aging categories. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and each customer's current creditworthiness. The Company continuously monitors collections and payments from its customers. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. In some instances, the Company utilizes letters of credit to mitigate its credit exposure.
Banker's Acceptance Drafts Included in Accounts Receivable	Banker's Acceptance Drafts included in Accounts Receivable The Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are noninterest-bearing obligations of the issuing bank and mature within six months of the origination date. The Company's Chinese subsidiaries may sell the drafts at a discount to a third-party financial institution or transfer the drafts to vendors in settlement of current accounts payable prior to the scheduled maturity date. These drafts, which totaled $3,329,000 at March 28, 2020 and $5,230,000 at December 28, 2019, are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date.
Recent Accounting Pronouncements	Recently Adopted Accounting Pronouncements Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, which changes the way entities recognize impairment of financial assets measured at amortized costs, such as accounts receivable, by requiring immediate recognition of estimated credit losses expected to occur over their remaining lives. During 2018 and 2019, the FASB issued additional guidance and clarification. The Company adopted this ASU using a modified retrospective method at the beginning of fiscal 2020. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements. See Accounts Receivable and Allowance for Credit Losses in this section for further information on the Company's allowance for credit losses. Recent Accounting Pronouncements Not Yet Adopted Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In March 2020, the FASB issued ASU No. 2020-04, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of reference rates, such as the London Interbank Offered Rate (LIBOR), if certain criteria are met. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. The guidance in this ASU is applicable to the Company's existing contracts and hedging relationships that reference LIBOR, and may be adopted by the Company prospectively beginning March 12, 2020 through December 31, 2022. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued ASU No. 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance, including the recognition of franchise tax, the treatment of a step up in the tax basis of goodwill, and the timing for recognition of enacted changes in tax laws or rates in the interim period annual effective tax rate computation. This new guidance is effective for the Company in fiscal 2021, with early adoption permitted. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.
Derivatives	The Company uses forward currency-exchange contracts that have maturities of twelve months or less to hedge exposures resulting from fluctuations in currency exchange rates. Such exposures result from assets and liabilities that are denominated in currencies other than the functional currencies. Forward currency-exchange contracts that hedge forecasted accounts receivable or accounts payable are designated as cash flow hedges and unrecognized gains and losses are recorded to AOCI, net of tax. Deferred gains and losses are recognized in the statement of income in the period in which the underlying transaction occurs. The fair values of forward currency- exchange contracts that are designated as fair value hedges and forward currency-exchange contracts that are not designated as hedges are recognized currently in earnings.The Company has entered into interest rate swap agreements to hedge its exposure to movements in USD LIBOR on its U.S. dollar-denominated debt.
Fair Value Measurement	The carrying value of the Company's revolving credit facility approximates the fair value as the obligation bears variable rates of interest, which adjust frequently, based on prevailing market rates. The fair values of the commercial real estate loan and senior promissory notes are primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period ends, which represent Level 2 measurements. The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first three months of 2020. The Company's banker's acceptance drafts are carried at face value which approximates their fair value due to the short-term nature of the negotiable instrument. The fair values of the Company's forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The fair values of the Company's interest rate swap agreements are based on LIBOR yield curves at the reporting date. The forward currency-exchange contracts and interest rate swap agreements are hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above.

Nature of Operations and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 28, 2020

Accounting Policies [Abstract]

Supplemental Cash Flow Information



	Three Months Ended
(In thousands)	March 28, 2020		March 30, 2019
Cash Paid for Interest	$	2,212	$	2,782
Cash Paid for Income Taxes, Net of Refunds	$	4,698	$	4,679

Non-Cash Investing Activities:
Post-closing acquisition adjustment	$	—	$	1,567

Liabilities assumed of acquired business	$	—	$	29,664

Non-cash additions to property, plant, and equipment	$	128	$	193

Non-Cash Financing Activities:
Issuance of Company common stock upon vesting of restricted stock units	$	3,670	$	3,278
Dividends declared but unpaid	$	2,753	$	2,570

Cash and Cash Equivalents



(In thousands)	March 28, 2020		March 30, 2019		December 28, 2019		December 29, 2018
Cash and cash equivalents	$	60,012	$	56,478	$	66,786	$	45,830
Restricted cash	2,063		697		1,487		287
Total Cash, Cash Equivalents, and Restricted Cash	$	62,075	$	57,175	$	68,273	$	46,117

Restricted Cash



(In thousands)	March 28, 2020		March 30, 2019		December 28, 2019		December 29, 2018
Cash and cash equivalents	$	60,012	$	56,478	$	66,786	$	45,830
Restricted cash	2,063		697		1,487		287
Total Cash, Cash Equivalents, and Restricted Cash	$	62,075	$	57,175	$	68,273	$	46,117

Inventories

The components of inventories are as follows:



	March 28, 2020		December 28, 2019
(In thousands)	March 28, 2020		December 28, 2019
Raw Materials	$	49,617	$	49,332
Work in Process	14,495		15,344
Finished Goods	38,606		38,039
	$	102,718	$	102,715

Acquired Intangible Assets

Acquired intangible assets by major asset class are as follows:



(In thousands)	Gross		Accumulated Amortization			Currency Translation			Net
March 28, 2020
Definite-Lived
Customer relationships	$	171,583	$	(55,194	)	$	(6,077	)	$	110,312
Product technology	56,011		(28,776		)	(2,096		)	25,139
Tradenames	6,527		(2,551		)	(458		)	3,518
Other	17,964		(13,416		)	(605		)	3,943
	252,085		(99,937		)	(9,236		)	142,912
Indefinite-Lived
Tradenames	24,100		—			(322		)	23,778
Acquired Intangible Assets	$	276,185	$	(99,937	)	$	(9,558	)	$	166,690

December 28, 2019
Definite-Lived
Customer relationships	$	171,583	$	(51,798	)	$	(4,141	)	$	115,644
Product technology	56,011		(27,819		)	(1,709		)	26,483
Tradenames	6,527		(2,421		)	(427		)	3,679
Other	17,964		(13,295		)	(593		)	4,076
	252,085		(95,333		)	(6,870		)	149,882
Indefinite-Lived
Tradenames	24,100		—			(86		)	24,014
Acquired Intangible Assets	$	276,185	$	(95,333	)	$	(6,956	)	$	173,896

Changes in the Carrying Amount of Goodwill

The changes in the carrying amount of goodwill by segment are as follows:



(In thousands)	Flow Control			Industrial Processing			Material Handling			Total
Balance at December 28, 2019 (a)
Gross balance	$	97,680		$	207,536		$	116,325		$	421,541
Accumulated impairment losses	—			(85,509		)	—			(85,509		)
Net balance	97,680			122,027			116,325			336,032
2020 Adjustment
Currency translation	(1,552		)	(3,182		)	(301		)	(5,035		)
Total 2020 adjustment	(1,552		)	(3,182		)	(301		)	(5,035		)
Balance at March 28, 2020
Gross balance	96,128			204,354			116,024			416,506
Accumulated impairment losses	—			(85,509		)	—			(85,509		)
Net balance	$	96,128		$	118,845		$	116,024		$	330,997

Warranty Obligations

The changes in the carrying amount of accrued warranty costs included in other current liabilities in the accompanying condensed consolidated balance sheet are as follows:



	Three Months Ended
(In thousands)	March 28, 2020			March 30, 2019
Balance at Beginning of Year	$	6,467		$	5,726
Provision charged to expense	1,270			1,076
Usage	(1,365		)	(925		)
Acquisition	—			295
Currency translation	(162		)	(3		)
Balance at End of Period	$	6,210		$	6,169

Revenue by Product Line, Product Type, Geography, and Revenue Recognition Method

The following table presents the disaggregation of revenue by product type and geography:



	Three Months Ended
	March 28,		March 30,
(In thousands)	2020		2019
Revenue by Product Type:
Parts and Consumables	$	105,098	$	112,850
Capital	54,029		58,466
	$	159,127	$	171,316
Revenue by Geography:
North America	$	93,823	$	100,876
Europe	36,014		38,985
Asia	15,908		17,078
Rest of World	13,382		14,377
	$	159,127	$	171,316

The following table presents revenue by revenue recognition method:



	Three Months Ended
	March 28,		March 30,
(In thousands)	2020		2019
Point in Time	$	136,092	$	148,276
Over Time	23,035		23,040
	$	159,127	$	171,316

Balances from Contracts with Customers

The following table presents contract balances from contracts with customers:



	March 28, 2020		December 28, 2019
(In thousands)	March 28, 2020		December 28, 2019
Accounts Receivable	$	91,138	$	95,740
Contract Assets	$	12,194	$	13,162
Contract Liabilities	$	35,663	$	37,216

Accounts Receivable, Allowance for Credit Loss

The changes in the allowance for credit losses are as follows:



	Three Months Ended
(In thousands)	March 28, 2020			March 30, 2019
Balance at Beginning of Period	$	2,698		$	2,897
Provision charged to expense	103			64
Accounts written off	(26		)	(17		)
Currency translation	(63		)	7
Balance at End of Period	$	2,712		$	2,951

Earnings per Share (Tables)

3 Months Ended

Mar. 28, 2020

Earnings Per Share [Abstract]

Basic and Diluted Earnings Per Share

Basic and diluted earnings per share (EPS) are calculated as follows:



	Three Months Ended
	March 28, 2020		March 30, 2019
(In thousands, except per share amounts)	March 28, 2020		March 30, 2019

Net Income Attributable to Kadant	$	12,531	$	10,900

Basic Weighted Average Shares	11,432		11,133
Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares	76		252
Diluted Weighted Average Shares	11,508		11,385

Basic Earnings per Share	$	1.10	$	0.98

Diluted Earnings per Share	$	1.09	$	0.96

Long-Term Obligations (Tables)

3 Months Ended

Mar. 28, 2020

Debt Disclosure [Abstract]

Schedule of Long-Term Obligations

Long-term obligations are as follows:



	March 28, 2020			December 28, 2019
(In thousands)	March 28, 2020			December 28, 2019
Revolving Credit Facility, due 2023	$	260,485		$	265,419
Commercial Real Estate Loan, due 2020 to 2028	19,163			19,425
Senior Promissory Notes, due 2023 to 2028	10,000			10,000
Finance Leases, due 2020 to 2025	2,079			2,308
Other Borrowings, due 2020 to 2023	3,773			4,000
Unamortized Debt Issuance Costs	(124		)	(127		)
Total	295,376			301,025
Less: Current Maturities of Long-Term Obligations	(2,687		)	(2,851		)
Long-Term Obligations	$	292,689		$	298,174

Retirement Benefit Plans (Tables)

3 Months Ended

Mar. 28, 2020

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost and Assumptions Used

The components of net periodic benefit cost are as follows:



	Three Months Ended March 28, 2020						Three Months Ended March 30, 2019
(In thousands, except percentages)	Non-U.S. Pension			Other Post-Retirement			U.S. Pension			Non-U.S. Pension			Other Post-Retirement
Service Cost	$	44		$	2		$	—		$	43		$	1
Interest Cost	23			9			283			29			38
Expected Return on Plan Assets	(16		)	(1		)	(249		)	(17		)	(1		)
Recognized Net Actuarial Loss	11			4			8			5			3
Amortization of Prior Service Cost	2			—			—			—			—
	$	64		$	14		$	42		$	60		$	41

The weighted average assumptions used to determine net periodic benefit cost are as follows:

Discount Rate	2.25		%	3.92		%	4.10		%	2.80		%	4.44		%
Expected Long-Term Return on Plan Assets	7.21		%	7.21		%	4.10		%	9.22		%	9.22		%
Rate of Compensation Increase	3.23		%	5.57		%	—		%	2.98		%	5.57		%

Accumulated Other Comprehensive Items (Tables)

3 Months Ended

Mar. 28, 2020

Equity [Abstract]

Components of Accumulated Other Comprehensive Items

Changes in each component of accumulated other comprehensive items (AOCI), net of tax, are as follows:



(In thousands)	Foreign Currency Translation Adjustment			Pension and Other Post-Retirement Benefit Liability Adjustments			Deferred Loss on Cash Flow Hedges			Total
Balance at December 28, 2019	$	(36,145	)	$	(831	)	$	(644	)	$	(37,620	)
Other comprehensive (loss) income before reclassifications	(12,563		)	38			(345		)	(12,870		)
Reclassifications from AOCI	—			(107		)	43			(64		)
Net current period other comprehensive items	(12,563		)	(69		)	(302		)	(12,934		)
Balance at March 28, 2020	$	(48,708	)	$	(900	)	$	(946	)	$	(50,554	)

Reclassification Out of Accumulated Other Comprehensive Items

Amounts reclassified from AOCI are as follows:



	Three Months Ended
(In thousands)	March 28, 2020			March 30, 2019			Statement of Income Line Item
Retirement Benefit Plans (a)
Recognized net actuarial loss	$	(15	)	$	(16	)	Other expense, net
Amortization of prior service cost	(2		)	—			Other expense, net
Total expense before income taxes	(17		)	(16		)
Income tax benefit	124			4			Provision for income taxes
	107			(12		)
Cash Flow Hedges (b)
Interest rate swap agreements	(34		)	20			Interest expense
Forward currency-exchange contracts	(23		)	—			Cost of revenue
Total (expense) income before income taxes	(57		)	20
Income tax benefit (provision)	14			(5		)	Provision for income taxes
	(43		)	15
Total Reclassifications	$	64		$	3


(a)	Included in the computation of net periodic benefit cost. See Note 6, Retirement Benefit Plans, for additional information.

(b)

See Note 8, Derivatives, for additional information.

Derivatives (Tables)

3 Months Ended

Mar. 28, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Instruments

The following table summarizes the fair value of the Company's derivative instruments in the accompanying condensed consolidated balance sheet:



		March 28, 2020					December 28, 2019
	Balance Sheet Location	Asset (Liability) (a)			Notional Amount (b)		Asset (Liability) (a)			Notional Amount
(In thousands)	Balance Sheet Location	Asset (Liability) (a)			Notional Amount (b)		Asset (Liability) (a)			Notional Amount
Derivatives Designated as Hedging Instruments:
Derivatives in an Asset Position:
Forward currency-exchange contract	Other Current Assets	$	72		$	1,328	$	—		$	—
2015 Swap Agreement	Other Current Assets	$	—		$	—	$	11		$	10,000
Derivatives in a Liability Position:
Forward currency-exchange contracts	Other Current Liabilities	$	(52	)	$	842	$	(75	)	$	4,825
2018 Swap Agreement	Other Long-Term Liabilities	$	(1,275	)	$	15,000	$	(770	)	$	15,000

Derivatives Not Designated as Hedging Instruments:
Derivatives in an Asset Position:
Forward currency-exchange contracts	Other Current Assets	$	—		$	—	$	3		$	387
Derivatives in a Liability Position:
Forward currency-exchange contracts	Other Current Liabilities	$	(8	)	$	1,032	$	(43	)	$	2,545

(a) See Note 9, Fair Value Measurements and Fair Value of Financial Instruments, for the fair value measurements relating to these financial instruments.

(b) The total 2020 notional amounts are indicative of the level of the Company's recurring derivative activity.

Activity in Accumulated Other Comprehensive Items (OCI)

The following table summarizes the activity in AOCI associated with the Company's derivative instruments designated as cash flow hedges as of and for the three months ended March 28, 2020:



(In thousands)	Interest Rate Swap Agreements			Forward Currency- Exchange Contracts			Total
Unrealized Loss, Net of Tax, at December 28, 2019	$	(589	)	$	(55	)	$	(644	)
Loss reclassified to earnings (a)	26			17			43
(Loss) gain recognized in AOCI	(403		)	58			(345		)
Unrealized (Loss) Gain, Net of Tax, at March 28, 2020	$	(966	)	$	20		$	(946	)

(a) See Note 7, Accumulated Other Comprehensive Items, for the income statement classification.

Fair Value Measurements and Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 28, 2020

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities Measured on a Recurring Basis

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis:



	Fair Value as of March 28, 2020
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds and time deposits	$	6,689	$	—	$	—	$	6,689
Banker's acceptance drafts (a)	$	—	$	3,329	$	—	$	3,329
Forward currency-exchange contract	$	—	$	72	$	—	$	72
Liabilities:
2018 Swap Agreement	$	—	$	1,275	$	—	$	1,275
Forward currency-exchange contracts	$	—	$	60	$	—	$	60



	Fair Value as of December 28, 2019
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds and time deposits	$	9,920	$	—	$	—	$	9,920
Banker's acceptance drafts (a)	$	—	$	5,230	$	—	$	5,230
2015 Swap Agreement	$	—	$	11	$	—	$	11
Forward currency-exchange contracts	$	—	$	3	$	—	$	3

Liabilities:
2018 Swap Agreement	$	—	$	770	$	—	$	770
Forward currency-exchange contracts	$	—	$	118	$	—	$	118

(a)

Included in accounts receivable in the accompanying condensed consolidated balance sheet.

Carrying Value and Fair Value of Debt Obligations

The carrying value and fair value of the Company's debt obligations, excluding lease obligations and other borrowings, are as follows:



	March 28, 2020				December 28, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Debt Obligations:
Revolving credit facility	$	260,485	$	260,485	$	265,419	$	265,419
Commercial real estate loan	19,163		21,656		19,425		20,541
Senior promissory notes	10,000		10,662		10,000		10,803
	$	289,648	$	292,803	$	294,844	$	296,763

Business Segment Information (Tables)

3 Months Ended

Mar. 28, 2020

Segment Reporting [Abstract]

Business Segment Reporting Information

The following table presents financial information for the Company's reportable operating segments:



	Three Months Ended
	March 28,		March 30,
(In thousands)	2020		2019
Revenue
Flow Control	$	57,149	$	61,144
Industrial Processing	64,709		72,274
Material Handling	37,269		37,898
	$	159,127	$	171,316



	Three Months Ended
	March 28,			March 30,
(In thousands)	2020			2019

Income Before Provision for Income Taxes
Flow Control	$	13,330		$	12,984
Industrial Processing	9,436			11,854
Material Handling (a)	4,134			731
Corporate (b)	(7,245		)	(6,994		)
Total operating income	19,655			18,575
Interest expense, net (c)	(2,408		)	(3,448		)
Other expense, net (c)	(32		)	(99		)
	$	17,215		$	15,028

Capital Expenditures
Flow Control	$	821		$	471
Industrial Processing	1,464			1,363
Material Handling	398			333
Corporate	3			1
	$	2,686		$	2,168

(b) Corporate primarily includes general and administrative expenses.

Nature of Operations and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands	3 Months Ended
	Mar. 28, 2020 USD ($) Segment	Mar. 30, 2019 USD ($)	Dec. 28, 2019 USD ($)
Accounting Policies [Abstract]
Number of reportable segments \| Segment	3
Bank guarantees, expiration period	12 months
Banker's acceptance drafts, maturity period	6 months
Banker's acceptance drafts	$ 3,329		$ 5,230
Revenue recognized	19,708	$ 19,095
Revenue, remaining performance obligation, amount	$ 13,194

Nature of Operations and Summary of Significant Accounting Policies - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Accounting Policies [Abstract]
Cash Paid for Interest	$ 2,212	$ 2,782
Cash Paid for Income Taxes, Net of Refunds	4,698	4,679
Non-Cash Investing Activities:
Post-closing acquisition adjustment	0	1,567
Liabilities assumed of acquired business	0	29,664
Non-cash additions to property, plant, and equipment	128	193
Non-Cash Financing Activities:
Issuance of Company common stock upon vesting of restricted stock units	3,670	3,278
Dividends declared but unpaid	$ 2,753	$ 2,570

Nature of Operations and Summary of Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 28, 2020	Dec. 28, 2019	Mar. 30, 2019	Dec. 29, 2018
Accounting Policies [Abstract]
Cash and cash equivalents	$ 60,012	$ 66,786	$ 56,478	$ 45,830
Restricted cash	2,063	1,487	697	287
Total Cash, Cash Equivalents, and Restricted Cash	$ 62,075	$ 68,273	$ 57,175	$ 46,117

Nature of Operations and Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	Mar. 28, 2020	Dec. 28, 2019
Accounting Policies [Abstract]
Raw Materials	$ 49,617	$ 49,332
Work in Process	14,495	15,344
Finished Goods	38,606	38,039
Total Inventories	$ 102,718	$ 102,715

Nature of Operations and Summary of Significant Accounting Policies - Intangible Assets By Major Asset Class (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 28, 2020	Dec. 28, 2019
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	$ 252,085	$ 252,085
Accumulated Amortization	(99,937)	(95,333)
Currency Translation	(9,236)	(6,870)
Net	142,912	149,882
Acquired Intangible Assets [Abstract]
Gross	276,185	276,185
Currency Translation	(9,558)	(6,956)
Net	166,690	173,896
Tradenames
Acquired Indefinite-Lived Intangible Assets [Line Items]
Gross	24,100	24,100
Currency Translation	(322)	(86)
Net	23,778	24,014
Customer relationships
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	171,583	171,583
Accumulated Amortization	(55,194)	(51,798)
Currency Translation	(6,077)	(4,141)
Net	110,312	115,644
Product technology
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	56,011	56,011
Accumulated Amortization	(28,776)	(27,819)
Currency Translation	(2,096)	(1,709)
Net	25,139	26,483
Tradenames
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	6,527	6,527
Accumulated Amortization	(2,551)	(2,421)
Currency Translation	(458)	(427)
Net	3,518	3,679
Other
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	17,964	17,964
Accumulated Amortization	(13,416)	(13,295)
Currency Translation	(605)	(593)
Net	$ 3,943	$ 4,076

Nature of Operations and Summary of Significant Accounting Policies - Goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 28, 2020 USD ($)
Goodwill [Roll Forward]
Gross Balance, Beginning Balance	$ 421,541
Accumulated impairment losses	(85,509)
Net Balance, Beginning Balance	336,032
Currency translation	(5,035)
Total 2020 adjustments	(5,035)
Gross Balance, Ending Balance	416,506
Accumulated impairment losses	(85,509)
Net Balance, Ending Balance	330,997
Operating Segment \| Flow Control
Goodwill [Roll Forward]
Gross Balance, Beginning Balance	97,680
Accumulated impairment losses	0
Net Balance, Beginning Balance	97,680
Currency translation	(1,552)
Total 2020 adjustments	(1,552)
Gross Balance, Ending Balance	96,128
Accumulated impairment losses	0
Net Balance, Ending Balance	96,128
Operating Segment \| Industrial Processing
Goodwill [Roll Forward]
Gross Balance, Beginning Balance	207,536
Accumulated impairment losses	(85,509)
Net Balance, Beginning Balance	122,027
Currency translation	(3,182)
Total 2020 adjustments	(3,182)
Gross Balance, Ending Balance	204,354
Accumulated impairment losses	(85,509)
Net Balance, Ending Balance	118,845
Operating Segment \| Material Handling Systems
Goodwill [Roll Forward]
Gross Balance, Beginning Balance	116,325
Accumulated impairment losses	0
Net Balance, Beginning Balance	116,325
Currency translation	(301)
Total 2020 adjustments	(301)
Gross Balance, Ending Balance	116,024
Accumulated impairment losses	0
Net Balance, Ending Balance	$ 116,024

Nature of Operations and Summary of Significant Accounting Policies - Warranty Obligations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Changes in the carrying amount of accrued warranty costs [Roll Forward]
Balance at Beginning of Year	$ 6,467	$ 5,726
Provision charged to expense	1,270	1,076
Usage	(1,365)	(925)
Acquisition	0	295
Currency translation	(162)	(3)
Balance at End of Period	$ 6,210	$ 6,169

Nature of Operations and Summary of Significant Accounting Policies - Revenue Recognition by Product Line, Product Type, Geography and Revenue Recognition Method (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Disaggregation of Revenue [Line Items]
Revenues	$ 159,127	$ 171,316
Parts and Consumables
Disaggregation of Revenue [Line Items]
Revenues	105,098	112,850
Capital
Disaggregation of Revenue [Line Items]
Revenues	54,029	58,466
Point in Time
Disaggregation of Revenue [Line Items]
Revenues	136,092	148,276
Over Time
Disaggregation of Revenue [Line Items]
Revenues	23,035	23,040
North America
Disaggregation of Revenue [Line Items]
Revenues	93,823	100,876
Europe
Disaggregation of Revenue [Line Items]
Revenues	36,014	38,985
Asia
Disaggregation of Revenue [Line Items]
Revenues	15,908	17,078
Rest of World
Disaggregation of Revenue [Line Items]
Revenues	$ 13,382	$ 14,377

Nature of Operations and Summary of Significant Accounting Policies - Revenue from Contract with Customers (Details) - USD ($) $ in Thousands	Mar. 28, 2020	Dec. 28, 2019
Accounting Policies [Abstract]
Accounts Receivable	$ 91,138	$ 95,740
Contract Assets	12,194	13,162
Contract Liabilities	$ 35,663	$ 37,216

Nature of Operations and Summary of Significant Accounting Policies - Performance Obligation Narrative (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-03-29	Mar. 28, 2020
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	89.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months

Nature of Operations and Summary of Significant Accounting Policies - Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance at Beginning of Period	$ 2,698	$ 2,897
Provision charged to expense	103	64
Accounts written off	(26)	(17)
Currency translation	(63)	7
Balance at End of Period	$ 2,712	$ 2,951

Earnings per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Net Income Attributable to Kadant:
Net Income Attributable to Kadant	$ 12,531	$ 10,900
Basic Weighted Average Shares (in shares)	11,432	11,133
Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares (in shares)	76	252
Diluted Weighted Average Shares (in shares)	11,508	11,385
Basic Earnings per Share (in dollars per share)	$ 1.10	$ 0.98
Diluted Earnings per Share (in dollars per share)	$ 1.09	$ 0.96

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Earnings per Share - Narrative (Details) - shares shares in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Amount of antidilutive securities excluded from computation of EPS (in shares)	43	44

Provision for Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 4,559	$ 3,963
Effective tax rate	26.00%	26.00%

Long-Term Obligations - Schedule of Long-Term Obligations (Details) - USD ($) $ in Thousands	Mar. 28, 2020	Dec. 28, 2019
Debt Instrument [Line Items]
Finance Leases, due 2020 to 2025	$ 2,079	$ 2,308
Unamortized Debt Issuance Expense	(124)	(127)
Total	295,376	301,025
Less: Current Maturities of Long-Term Obligations	(2,687)	(2,851)
Long-Term Obligations	292,689	298,174
Revolving Credit Facility, due 2023
Debt Instrument [Line Items]
Outstanding balance	260,485	265,419
Commercial Real Estate Loan, due 2020 to 2028
Debt Instrument [Line Items]
Outstanding balance	19,163	19,425
Senior Promissory Notes, due 2023 to 2028
Debt Instrument [Line Items]
Outstanding balance	10,000	10,000
Other Borrowings, due 2020 to 2023
Debt Instrument [Line Items]
Other Borrowings, due 2020 to 2023	$ 3,773	$ 4,000

Long-Term Obligations - Narrative (Details) - USD ($)	3 Months Ended
Long-Term Obligations - Narrative (Details) - USD ($)	Mar. 28, 2020	Dec. 28, 2019	Jul. 06, 2018
Debt Instrument [Line Items]
Weighted average interest rate for revolving credit facility (in hundredths)	2.44%
Loan receivable	$ 952,000
Commercial Real Estate Loan
Debt Instrument [Line Items]
Effective interest rate	4.60%
Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt	$ 260,485,000	$ 265,419,000
Remaining borrowing capacity	141,467,000
Revolving Credit Facility \| Credit Agreement
Debt Instrument [Line Items]
Borrowing capacity available under committed portion	400,000,000
Additional borrowing capacity under uncommitted portion	$ 150,000,000
Basis spread on variable rate floor (as a percentage)	0.00%
Maximum amount of unrestricted U.S. cash	$ 30,000,000
Revolving Credit Facility \| Credit Agreement \| Base Rate \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percentage)	0.00%
Revolving Credit Facility \| Credit Agreement \| Base Rate \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percentage)	1.25%
Revolving Credit Facility \| Credit Agreement \| LIBOR \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percentage)	1.00%
Revolving Credit Facility \| Credit Agreement \| LIBOR \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percentage)	2.25%
Revolving Credit Facility \| Credit Agreement \| Federal Funds Rate
Debt Instrument [Line Items]
Basis spread on variable rate (as a percentage)	0.50%
Revolving Credit Facility \| Credit Agreement \| Thirty-Day LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (as a percentage)	0.50%
Revolving Credit Facility \| Euro-Denominated Borrowing
Debt Instrument [Line Items]
Long-term debt	$ 59,713,000
Revolving Credit Facility \| Canadian Denominated Borrowing
Debt Instrument [Line Items]
Long-term debt	30,771,000
Secured Debt \| Commercial Real Estate Loan
Debt Instrument [Line Items]
Quarterly installment amount	262,500
Final payment amount	$ 10,500,000
Fixed interest rate	4.45%
Principal amount			$ 21,000,000
Senior Promissory Notes, due 2023 to 2028
Debt Instrument [Line Items]
Long-term debt	$ 10,000,000	$ 10,000,000
Senior Promissory Notes, due 2023 to 2028 \| Note Purchase Agreement
Debt Instrument [Line Items]
Additional borrowing capacity under uncommitted portion	$ 115,000,000
Fixed interest rate	4.90%
Principal amount	$ 10,000,000
Senior Promissory Notes, due 2023 to 2028 \| Note Purchase Agreement \| Minimum
Debt Instrument [Line Items]
Minimum debt prepayment increment	$ 1,000,000
Capital Lease Obligations \| Sale Leaseback Arrangement
Debt Instrument [Line Items]
Effective interest rate	1.79%
Net purchase option	$ 1,471,000
Outstanding balance	$ 3,638,000
Debt Covenant Period One \| Revolving Credit Facility \| Credit Agreement
Debt Instrument [Line Items]
Maximum consolidated leverage ratio after acquisition	3.75
Debt Covenant Period One \| Secured Debt \| Commercial Real Estate Loan
Debt Instrument [Line Items]
Prepayment fee	2.00%
Debt Covenant Period Two \| Revolving Credit Facility \| Credit Agreement
Debt Instrument [Line Items]
Maximum consolidated leverage ratio after acquisition	4.00
Debt Covenant Period Two \| Secured Debt \| Commercial Real Estate Loan
Debt Instrument [Line Items]
Prepayment fee	1.00%

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 02, 2020	Mar. 28, 2020	Mar. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense		$ 1,639	$ 1,553
Unrecognized compensation expense related to stock awards		$ 9,588
Recognition period		2 years 1 month 6 days
Executive Officers \| Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of units granted (in shares)	35,808
Aggregate grant date fair value	$ 3,184
Actual adjusted EBITDA, forfeiture threshold		50.00%
Executive Officers And Employees \| Time Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of units granted (in shares)	33,600
Aggregate grant date fair value	$ 2,988
Share-Based Compensation Award, Performance Metric, Actual Adjusted EBITDA Between 50 Percent And 100 Percent \| Executive Officers \| Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of adjustment of award amount		100.00%
Share-Based Compensation Award, Performance Metric, Actual Adjusted EBITDA Between 50 Percent And 100 Percent \| Executive Officers \| Performance Based Restricted Stock Units \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of adjustment of award amount		50.00%
Share-Based Compensation Award, Performance Metric, Actual Adjusted EBITDA Between 100 Percent And 115 Percent \| Executive Officers \| Performance Based Restricted Stock Units \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of adjustment of award amount		100.00%
Share-Based Compensation Award, Performance Metric, Actual Adjusted EBITDA Between 100 Percent And 115 Percent \| Executive Officers \| Performance Based Restricted Stock Units \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of adjustment of award amount		150.00%
Share-Based Compensation Award, Performance Metric, Actual Adjusted EBITDA In Excess of 150 Percent \| Executive Officers \| Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of adjustment of award amount		150.00%
Share-based Payment Arrangement, Tranche One \| Executive Officers \| Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		33.33%
Share-based Payment Arrangement, Tranche One \| Executive Officers And Employees \| Time Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		33.33%
Share-based Payment Arrangement, Tranche Two \| Executive Officers \| Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		33.33%
Share-based Payment Arrangement, Tranche Two \| Executive Officers And Employees \| Time Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		33.33%
Share-based Payment Arrangement, Tranche Three \| Executive Officers \| Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		33.33%
Share-based Payment Arrangement, Tranche Three \| Executive Officers And Employees \| Time Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		33.33%

Retirement Benefit Plans - Narrative (Details) $ in Thousands	3 Months Ended
	Mar. 28, 2020 USD ($)
Retirement Benefits [Abstract]
Defined benefit plan, payment for settlement	$ 2,427

Retirement Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Pension Benefits \| U.S.
Defined Benefit Plan Disclosure [Line Items]
Service Cost		$ 0
Interest Cost		283
Expected Return on Plan Assets		(249)
Recognized Net Actuarial Loss		8
Amortization of Prior Service Cost		0
Net Periodic Benefit Cost		$ 42
The weighted average assumptions used to determine net periodic benefit cost are as follows:
Discount Rate (as a percentage)		4.10%
Expected Long-Term Return on Plan Assets (as a percentage)		4.10%
Rate of Compensation Increase (as a percentage)		0.00%
Pension Benefits \| Non-U.S.
Defined Benefit Plan Disclosure [Line Items]
Service Cost	$ 44	$ 43
Interest Cost	23	29
Expected Return on Plan Assets	(16)	(17)
Recognized Net Actuarial Loss	11	5
Amortization of Prior Service Cost	2	0
Net Periodic Benefit Cost	$ 64	$ 60
The weighted average assumptions used to determine net periodic benefit cost are as follows:
Discount Rate (as a percentage)	2.25%	2.80%
Expected Long-Term Return on Plan Assets (as a percentage)	7.21%	9.22%
Rate of Compensation Increase (as a percentage)	3.23%	2.98%
Other Postretirement Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Service Cost	$ 2	$ 1
Interest Cost	9	38
Expected Return on Plan Assets	(1)	(1)
Recognized Net Actuarial Loss	4	3
Amortization of Prior Service Cost	0	0
Net Periodic Benefit Cost	$ 14	$ 41
The weighted average assumptions used to determine net periodic benefit cost are as follows:
Discount Rate (as a percentage)	3.92%	4.44%
Expected Long-Term Return on Plan Assets (as a percentage)	7.21%	9.22%
Rate of Compensation Increase (as a percentage)	5.57%	5.57%

Accumulated Other Comprehensive Items - Components of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Total Stockholders' Equity [Roll Forward]
Beginning balance	$ 427,079	$ 374,571
Net current period other comprehensive items	(12,945)	(681)
Ending balance	424,272	381,996
Foreign Currency Translation Adjustment
Total Stockholders' Equity [Roll Forward]
Beginning balance	(36,145)
Other comprehensive (loss) income before reclassifications	(12,563)
Reclassifications from AOCI	0
Net current period other comprehensive items	(12,563)
Ending balance	(48,708)
Pension and Other Post-Retirement Benefit Liability Adjustments
Total Stockholders' Equity [Roll Forward]
Beginning balance	(831)
Other comprehensive (loss) income before reclassifications	38
Reclassifications from AOCI	(107)
Net current period other comprehensive items	(69)
Ending balance	(900)
Deferred Loss on Cash Flow Hedges
Total Stockholders' Equity [Roll Forward]
Beginning balance	(644)
Other comprehensive (loss) income before reclassifications	(345)
Reclassifications from AOCI	43
Net current period other comprehensive items	(302)
Ending balance	(946)
Accumulated Other Comprehensive Items
Total Stockholders' Equity [Roll Forward]
Beginning balance	(37,620)	(39,376)
Other comprehensive (loss) income before reclassifications	(12,870)
Reclassifications from AOCI	(64)
Net current period other comprehensive items	(12,934)	(648)
Ending balance	$ (50,554)	$ (40,024)

Accumulated Other Comprehensive Items - Reclassification Out of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Mar. 30, 2019
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Other expense, net	$ (32)	$ (99)
Interest expense	(2,459)	(3,504)
Cost of revenues	(90,804)	(100,801)
Total (expense) income before income taxes	17,215	15,028
Income tax benefit (provision)	(4,559)	(3,963)
Net Income	12,656	11,065
Reclassification out of Accumulated Other Comprehensive Items
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Net Income	64	3
Reclassification out of Accumulated Other Comprehensive Items \| Pension and Other Post-retirement Plans [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Total (expense) income before income taxes	(17)	(16)
Income tax benefit (provision)	124	4
Net Income	107	(12)
Reclassification out of Accumulated Other Comprehensive Items \| Recognized net actuarial loss
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Other expense, net	(15)	(16)
Reclassification out of Accumulated Other Comprehensive Items \| Amortization of prior service cost
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Other expense, net	(2)	0
Reclassification out of Accumulated Other Comprehensive Items \| Cash Flow Hedges
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Total (expense) income before income taxes	(57)	20
Income tax benefit (provision)	14	(5)
Net Income	(43)	15
Reclassification out of Accumulated Other Comprehensive Items \| Cash Flow Hedges \| Interest rate swap agreements
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Interest expense	(34)	20
Reclassification out of Accumulated Other Comprehensive Items \| Cash Flow Hedges \| Forward currency-exchange contracts
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Cost of revenues	$ (23)	$ 0

Derivatives - Narrative (Details) - USD ($)	3 Months Ended
Derivatives - Narrative (Details) - USD ($)	Mar. 28, 2020	Mar. 30, 2019	Dec. 29, 2018	Jan. 02, 2016
Forward Currency-Exchange Contracts [Abstract]
Recognized losses	$ (34,000)	$ (37,000)
Net unrealized losses included in AOCI expected to be reclassified to earnings over the next 12 months	$ 268,000
Cash Flow Hedging \| Designated as Hedging Instrument \| 2018 Swap Agreement
Interest Rate Swaps [Abstract]
Derivative, notional amount			$ 15,000,000
Fixed rate of interest (in hundredths)			3.15%
Cash Flow Hedging \| Designated as Hedging Instrument \| 2015 Swap Agreement
Interest Rate Swaps [Abstract]
Derivative, notional amount				$ 10,000,000
Fixed rate of interest (in hundredths)				1.50%

Derivatives - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands	Mar. 28, 2020	Dec. 28, 2019
Designated as Hedging Instrument \| Forward currency-exchange contracts \| Other Current Assets
Derivatives in an Asset Position:
Derivatives in an asset position	$ 72	$ 0
Notional amount, Derivative asset	1,328	0
Designated as Hedging Instrument \| Forward currency-exchange contracts \| Other Current Liabilities
Derivatives in a Liability Position:
Derivatives in a liability position	(52)	(75)
Notional amount, Derivative liability	842	4,825
Designated as Hedging Instrument \| 2015 Swap Agreement \| Other Current Assets
Derivatives in an Asset Position:
Derivatives in an asset position	0	11
Notional amount, Derivative asset	0	10,000
Designated as Hedging Instrument \| 2018 Swap Agreement \| Other Long-Term Liabilities
Derivatives in a Liability Position:
Derivatives in a liability position	(1,275)	(770)
Notional amount, Derivative liability	15,000	15,000
Not Designated as Hedging Instrument \| Forward currency-exchange contracts \| Other Current Assets
Derivatives in an Asset Position:
Derivatives in an asset position	0	3
Notional amount, Derivative asset	0	387
Not Designated as Hedging Instrument \| Forward currency-exchange contracts \| Other Current Liabilities
Derivatives in a Liability Position:
Derivatives in a liability position	(8)	(43)
Notional amount, Derivative liability	$ 1,032	$ 2,545

Derivatives - Activity in Accumulated Other Comprehensive Items (OCI) (Details) $ in Thousands	3 Months Ended
	Mar. 28, 2020 USD ($)
Total Stockholders' Equity [Roll Forward]
Beginning balance	$ 427,079
Ending balance	424,272
Cash Flow Hedges
Total Stockholders' Equity [Roll Forward]
Beginning balance	(644)
Loss reclassified to earnings	43
(Loss) gain recognized in AOCI	(345)
Ending balance	(946)
Cash Flow Hedges \| Interest Rate Swap Agreements
Total Stockholders' Equity [Roll Forward]
Beginning balance	(589)
Loss reclassified to earnings	26
(Loss) gain recognized in AOCI	(403)
Ending balance	(966)
Cash Flow Hedges \| Forward currency-exchange contracts
Total Stockholders' Equity [Roll Forward]
Beginning balance	(55)
Loss reclassified to earnings	17
(Loss) gain recognized in AOCI	58
Ending balance	$ 20

Fair Value Measurements and Fair Value of Financial Instruments - Fair Value of Assets and Liabilities Measured on a Recurring Basis (Details) - Recurring - USD ($) $ in Thousands	Mar. 28, 2020	Dec. 28, 2019
Assets:
Money market funds and time deposits	$ 6,689	$ 9,920
Banker's acceptance drafts	3,329	5,230
2015 Swap Agreement		11
Forward currency-exchange contract(s)	72	3
Liabilities:
2018 Swap Agreement	1,275	770
Forward currency-exchange contracts	60	118
Level 1
Assets:
Money market funds and time deposits	6,689	9,920
Banker's acceptance drafts	0	0
2015 Swap Agreement		0
Forward currency-exchange contract(s)	0	0
Liabilities:
2018 Swap Agreement	0	0
Forward currency-exchange contracts	0	0
Level 2
Assets:
Money market funds and time deposits	0	0
Banker's acceptance drafts	3,329	5,230
2015 Swap Agreement		11
Forward currency-exchange contract(s)	72	3
Liabilities:
2018 Swap Agreement	1,275	770
Forward currency-exchange contracts	60	118
Level 3
Assets:
Money market funds and time deposits	0	0
Banker's acceptance drafts	0	0
2015 Swap Agreement		0
Forward currency-exchange contract(s)	0	0
Liabilities:
2018 Swap Agreement	0	0
Forward currency-exchange contracts	$ 0	$ 0

Fair Value Measurements and Fair Value of Financial Instruments - Carrying Value and Fair Value of Debt Obligations (Details) - USD ($) $ in Thousands	Mar. 28, 2020	Dec. 28, 2019
Carrying Value
Debt Obligations:
Revolving credit facility	$ 260,485	$ 265,419
Commercial real estate loan	19,163	19,425
Senior promissory notes	10,000	10,000
Debt obligations	289,648	294,844
Fair Value
Debt Obligations:
Revolving credit facility	260,485	265,419
Commercial real estate loan	21,656	20,541
Senior promissory notes	10,662	10,803
Debt obligations	$ 292,803	$ 296,763

Business Segment Information - Summary of Segment Information (Details) $ in Thousands	3 Months Ended
	Mar. 28, 2020 USD ($) Segment	Mar. 30, 2019 USD ($)
Segment Reporting [Abstract]
Number of reportable segments \| Segment	3
Revenue
Revenues	$ 159,127	$ 171,316
Income Before Provision for Income Taxes
Total operating income	19,655	18,575
Interest expense, net	(2,408)	(3,448)
Other expense, net	(32)	(99)
Income Before Provision for Income Taxes	17,215	15,028
Capital Expenditures
Capital expenditures	2,686	2,168
Operating Segment \| Flow Control
Revenue
Revenues	57,149	61,144
Income Before Provision for Income Taxes
Total operating income	13,330	12,984
Capital Expenditures
Capital expenditures	821	471
Operating Segment \| Industrial Processing
Revenue
Revenues	64,709	72,274
Income Before Provision for Income Taxes
Total operating income	9,436	11,854
Capital Expenditures
Capital expenditures	1,464	1,363
Operating Segment \| Material Handling Systems
Revenue
Revenues	37,269	37,898
Income Before Provision for Income Taxes
Total operating income	4,134	731
Capital Expenditures
Capital expenditures	398	333
Acquisition transaction costs		4,151
Corporate
Income Before Provision for Income Taxes
Total operating income	(7,245)	(6,994)
Capital Expenditures
Capital expenditures	$ 3	$ 1

Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 28, 2020	Dec. 28, 2019
Commitments and Contingencies Disclosure [Abstract]
Banker's acceptance drafts, maturity period	6 months
Banker's acceptance drafts with recourse	$ 5,307	$ 7,003