0000886346-21-000117 | 10-Q | XBRL Viewer

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Cover - shares	6 Months Ended
Cover - shares	Jul. 03, 2021	Jul. 30, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jul. 03, 2021
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		11,580,305
Entity Central Index Key	0000886346
Current Fiscal Year End Date	--01-01
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Balance Sheet (Unaudited) - USD ($) $ in Thousands	Jul. 03, 2021	Jan. 02, 2021
Current Assets:
Cash and cash equivalents	$ 73,436	$ 65,682
Restricted cash (Notes 1 and 11)	84,708	958
Accounts receivable, net of allowances of $2,654 and $2,977	106,791	91,540
Inventories	114,316	106,814
Unbilled revenue	6,481	7,576
Other current assets	19,764	17,250
Total Current Assets	405,496	289,820
Property, Plant, and Equipment, net of accumulated depreciation of $112,428 and $107,832	81,757	84,642
Other Assets	40,370	40,391
Intangible Assets, Net	151,582	160,965
Goodwill	350,271	351,753
Total Assets	1,029,476	927,571
Current Liabilities:
Current maturities of long-term obligations (Note 4)	1,355	1,474
Accounts payable	44,087	32,264
Accrued payroll and employee benefits	28,915	31,168
Customer deposits	40,617	29,433
Advanced billings	9,110	8,513
Other current liabilities	37,096	31,836
Total Current Liabilities	161,180	134,688
Long-Term Obligations (Note 4)	272,370	232,000
Other Long-Term Liabilities	64,800	63,978
Commitments and Contingencies (Note 10)
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	110,529	110,824
Retained earnings	513,036	479,400
Treasury stock at cost, 3,043,854 and 3,081,919 shares	(74,587)	(75,519)
Accumulated other comprehensive items (Note 6)	(19,889)	(19,492)
Total Kadant Stockholders' Equity	529,235	495,359
Noncontrolling interest	1,891	1,546
Total Stockholders' Equity	531,126	496,905
Total Liabilities and Stockholders' Equity	$ 1,029,476	$ 927,571

Condensed Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jul. 03, 2021	Jan. 02, 2021
Stockholders' Equity:
Allowance for credit losses	$ 2,654	$ 2,977
Accumulated depreciation	$ 112,428	$ 107,832
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)	3,043,854	3,081,919

Condensed Consolidated Statement of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Income Statement [Abstract]
Revenue (Notes 1 and 9)	$ 195,811	$ 152,860	$ 368,274	$ 311,987
Costs and Operating Expenses:
Cost of revenue	110,493	86,412	207,241	177,216
Selling, general, and administrative expenses	49,267	45,073	98,698	90,665
Research and development expenses	3,041	2,798	5,898	5,874
Restructuring costs	0	456	0	456
Total Costs and Operating Expenses	162,801	134,739	311,837	274,211
Operating Income	33,010	18,121	56,437	37,776
Interest Income	56	37	121	88
Interest Expense	(1,066)	(1,931)	(2,177)	(4,390)
Other Expense, Net	(24)	(31)	(48)	(63)
Income Before Provision for Income Taxes	31,976	16,196	54,333	33,411
Provision for Income Taxes (Note 3)	8,949	4,474	14,510	9,033
Net Income	23,027	11,722	39,823	24,378
Net Income Attributable to Noncontrolling Interest	(163)	(115)	(398)	(240)
Net Income Attributable to Kadant	$ 22,864	$ 11,607	$ 39,425	$ 24,138
Earnings per Share Attributable to Kadant (Note 2)
Basic (in dollars per share)	$ 1.97	$ 1.01	$ 3.41	$ 2.11
Diluted (in dollars per share)	$ 1.96	$ 1.00	$ 3.39	$ 2.09
Weighted Average Shares (Note 2)
Basic (in shares)	11,579	11,482	11,566	11,457
Diluted (in shares)	11,650	11,552	11,631	11,530

Condensed Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Statement of Comprehensive Income [Abstract]
Net Income	$ 23,027	$ 11,722	$ 39,823	$ 24,378
Other Comprehensive Items:
Foreign currency translation adjustment	4,089	4,742	(661)	(7,832)
Post-retirement liability adjustments, net (net of tax provision of $2, $0, $12 and $20)	5	(2)	33	48
Effect of post-retirement plan settlement	0	0	0	(119)
Deferred gain (loss) on cash flow hedges (net of tax provision (benefit) of $21, $(3), $40 and $(122))	65	(24)	178	(326)
Other comprehensive items	4,159	4,716	(450)	(8,229)
Comprehensive Income	27,186	16,438	39,373	16,149
Comprehensive Income Attributable to Noncontrolling Interest	(171)	(140)	(345)	(254)
Comprehensive Income Attributable to Kadant	$ 27,015	$ 16,298	$ 39,028	$ 15,895

Condensed Consolidated Statement of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Other Comprehensive Items:
Post-retirement liability adjustments, net, tax	$ 2	$ 0	$ 12	$ 20
Deferred gain (loss) on cash flow hedges, tax	$ 21	$ (3)	$ 40	$ (122)

Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020
Operating Activities
Net Income Attributable to Kadant	$ 39,425	$ 24,138
Net income attributable to noncontrolling interest	398	240
Net income	39,823	24,378
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	15,402	15,174
Stock-based compensation expense	4,026	3,516
(Benefit) provision for losses on accounts receivable	(241)	303
Loss on sale of property, plant, and equipment	91	0
Other items, net	(1,054)	(565)
Changes in current assets and liabilities, net of effects of acquisitions:
Accounts receivable	(15,321)	4,761
Unbilled revenue	1,005	2,706
Inventories	(7,312)	(9,372)
Other current assets	(1,780)	1,572
Accounts payable	12,904	(5,032)
Other current liabilities	15,935	(9,233)
Net cash provided by operating activities	63,478	28,208
Investing Activities
Acquisitions, net of cash acquired	(159)	(7,066)
Purchases of property, plant, and equipment	(4,318)	(3,597)
Proceeds from sale of property, plant, and equipment	71	11
Other	537	0
Net cash used in investing activities	(3,869)	(10,652)
Financing Activities
Repayment of long-term obligations	(47,138)	(24,160)
Proceeds from issuance of long-term obligations (Note 4)	88,888	7,000
Tax withholding payments related to stock-based compensation	(3,388)	(2,318)
Dividends paid	(5,664)	(5,381)
Proceeds from issuance of Company common stock	0	1,445
Net cash provided by (used in) financing activities	32,698	(23,414)
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash	(803)	(1,466)
Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	91,504	(7,324)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	66,640	68,273
Cash, Cash Equivalents, and Restricted Cash at End of Period	$ 158,144	$ 60,949

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
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	24,378			24,138			240
Dividend declared – Common Stock	(5,513)			(5,513)
Activity under stock plans	2,644		504		$ 2,140
Activity under stock plans (in shares)					(87,323)
Other comprehensive items	(8,229)					(8,243)	14
Ending balance (in shares) at Jun. 27, 2020		14,624,159			3,127,565
Ending balance at Jun. 27, 2020	440,359	$ 146	107,202	453,874	$ (76,638)	(45,863)	1,638
Beginning balance (in shares) at Mar. 28, 2020		14,624,159			3,154,644
Beginning balance at Mar. 28, 2020	424,272	$ 146	105,457	445,027	$ (77,302)	(50,554)	1,498
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	11,722			11,607			115
Dividend declared – Common Stock	(2,760)			(2,760)
Activity under stock plans	2,409		1,745		$ 664
Activity under stock plans (in shares)					(27,079)
Other comprehensive items	4,716					4,691	25
Ending balance (in shares) at Jun. 27, 2020		14,624,159			3,127,565
Ending balance at Jun. 27, 2020	440,359	$ 146	107,202	453,874	$ (76,638)	(45,863)	1,638
Beginning balance (in shares) at Jan. 02, 2021		14,624,159			3,081,919
Beginning balance at Jan. 02, 2021	496,905	$ 146	110,824	479,400	$ (75,519)	(19,492)	1,546
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	39,823			39,425			398
Dividend declared – Common Stock	(5,789)			(5,789)
Activity under stock plans	637		(295)		$ 932
Activity under stock plans (in shares)					(38,065)
Other comprehensive items	(450)					(397)	(53)
Ending balance (in shares) at Jul. 03, 2021		14,624,159			3,043,854
Ending balance at Jul. 03, 2021	531,126	$ 146	110,529	513,036	$ (74,587)	(19,889)	1,891
Beginning balance (in shares) at Apr. 03, 2021		14,624,159			3,046,379
Beginning balance at Apr. 03, 2021	504,308	$ 146	108,064	493,067	$ (74,649)	(24,040)	1,720
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	23,027			22,864			163
Dividend declared – Common Stock	(2,895)			(2,895)
Activity under stock plans	2,527		2,465		$ 62
Activity under stock plans (in shares)					(2,525)
Other comprehensive items	4,159					4,151	8
Ending balance (in shares) at Jul. 03, 2021		14,624,159			3,043,854
Ending balance at Jul. 03, 2021	$ 531,126	$ 146	$ 110,529	$ 513,036	$ (74,587)	$ (19,889)	$ 1,891

- Definition

Amount after tax and reclassification adjustments of other comprehensive income (loss).

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+ Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

- Definition

Amount of stockholders' equity (deficit), net of receivables from officers, directors, owners, and affiliates of the entity, attributable to both the parent and noncontrolling interests. Amount excludes temporary equity. Alternate caption for the concept is permanent equity.

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+ Details

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - Parenthetical - $ / shares	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Statement of Stockholders' Equity [Abstract]
Dividend declared – Common Stock (in dollars per share)	$ 0.25	$ 0.24	$ 0.50	$ 0.48

Nature of Operations and Summary of Significant Accounting Policies

6 Months Ended

Jul. 03, 2021

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.

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 July 3, 2021, its results of operations, comprehensive income, and stockholders' equity for the three- and six-month periods ended July 3, 2021 and June 27, 2020 and its cash flows for the six-month periods ended July 3, 2021 and June 27, 2020. 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 January 2, 2021 has been derived from the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2021. The condensed consolidated financial statements and related notes are presented as permitted by the rules and regulations of the Securities and Exchange Commission (SEC) 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 January 2, 2021, filed with the SEC.

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.

Note 1 to the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2021 describes 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 six months ended July 3, 2021.

Supplemental Cash Flow Information


	Six Months Ended
(In thousands)	July 3, 2021		June 27, 2020




Cash Paid for Interest	$	1,968	$	4,186
Cash Paid for Income Taxes, Net of Refunds	$	12,475	$	7,036

Non-Cash Investing Activities:
Fair value of assets acquired	$	197	$	9,164
Cash paid for acquired businesses	(159)		(7,537)
Liabilities Assumed of Acquired Businesses	$	38	$	1,627

Purchases of property, plant, and equipment in accounts payable	$	169	$	150

Non-Cash Financing Activities:
Issuance of Company common stock upon vesting of restricted stock units	$	3,628	$	4,027
Dividends declared but unpaid	$	2,895	$	2,760

Restricted Cash

The Company's restricted cash generally serves as collateral for certain banker's acceptance drafts issued to vendors and for 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. Restricted cash at July 3, 2021 also included $84,249,000 related to funds held in escrow for an acquisition that occurred in the third quarter of 2021. See Not e 11, Subsequent Event, for further details.

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)	July 3, 2021		June 27, 2020		January 2, 2021		December 28, 2019
Cash and cash equivalents	$	73,436	$	57,499	$	65,682	$	66,786
Restricted cash	84,708		3,450		958		1,487
Total Cash, Cash Equivalents, and Restricted Cash	$	158,144	$	60,949	$	66,640	$	68,273

Inventories

The components of inventories are as follows:


	July 3, 2021		January 2, 2021
(In thousands)
Raw Materials	$	48,879	$	46,413
Work in Process	24,189		17,692
Finished Goods	41,248		42,709
	$	114,316	$	106,814

Intangible Assets, Net

Acquired intangible assets by major asset class are as follows:


(In thousands)	Gross		Accumulated Amortization		Currency Translation		Net
July 3, 2021
Definite-Lived
Customer relationships	$	173,728	$	(72,364)	$	(1,279)	$	100,085
Product technology	56,111		(33,465)		(1,093)		21,553
Tradenames	6,027		(3,162)		(310)		2,555
Other	18,248		(14,727)		(536)		2,985
	254,114		(123,718)		(3,218)		127,178
Indefinite-Lived
Tradenames	24,100		—		304		24,404
Acquired Intangible Assets	$	278,214	$	(123,718)	$	(2,914)	$	151,582

January 2, 2021
Definite-Lived
Customer relationships	$	173,728	$	(65,488)	$	(1,316)	$	106,924
Product technology	56,111		(31,655)		(1,005)		23,451
Tradenames	6,027		(2,946)		(282)		2,799
Other	18,248		(14,369)		(515)		3,364
	254,114		(114,458)		(3,118)		136,538
Indefinite-Lived
Tradenames	24,100		—		327		24,427
Acquired Intangible Assets	$	278,214	$	(114,458)	$	(2,791)	$	160,965

Intangible assets are 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 January 2, 2021
Gross balance	$	101,437	$	215,881	$	119,944	$	437,262
Accumulated impairment losses	—		(85,509)		—		(85,509)
Net balance	101,437		130,372		119,944		351,753
2021 Adjustments
Currency translation	(858)		432		(1,253)		(1,679)
Acquisition	197		—		—		197
Total 2021 adjustments	(661)		432		(1,253)		(1,482)
Balance at July 3, 2021
Gross balance	100,776		216,313		118,691		435,780
Accumulated impairment losses	—		(85,509)		—		(85,509)
Net balance	$	100,776	$	130,804	$	118,691	$	350,271

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 provides for the estimated cost of product warranties at the time of sale based on historical occurrence rates and repair costs, as well as knowledge of any specific warranty problems that indicate projected warranty costs may vary from historical patterns. The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications.

The Company's liability for warranties is included in other current liabilities in the accompanying condensed consolidated balance sheet.

The changes in the carrying amount of product warranty obligations are as follows:


	Six Months Ended
(In thousands)	July 3, 2021		June 27, 2020
Balance at Beginning of Year	$	7,064	$	6,467
Provision charged to expense	2,709		2,675
Usage	(2,255)		(2,721)

Currency translation	(74)		(67)
Balance at End of Period	$	7,444	$	6,354

Revenue Recognition

Most of the Company’s revenue relates to products and services that require minimal customization and is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. 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				Six Months Ended
	July 3,		June 27,		July 3,		June 27,
(In thousands)	2021		2020		2021		2020
Point in Time	$	175,479	$	129,797	$	329,896	$	265,889
Over Time	20,332		23,063		38,378		46,098
	$	195,811	$	152,860	$	368,274	$	311,987

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				Six Months Ended
	July 3,		June 27,		July 3,		June 27,
(In thousands)	2021		2020		2021		2020
Revenue by Product Type:
Parts and Consumables	$	124,975	$	97,261	$	243,082	$	202,358
Capital	70,836		55,599		125,192		109,629
	$	195,811	$	152,860	$	368,274	$	311,987
Revenue by Geography (based on customer location):
North America	$	106,767	$	88,718	201,859		182,541
Europe	55,827		37,916		100,468		73,930
Asia	24,729		16,237		46,542		32,145
Rest of World	8,488		9,989		19,405		23,371
	$	195,811	$	152,860	$	368,274	$	311,987

See Note 9, Business Segment Information, for information on the disaggregation of revenue by reportable operating segment.

The following table presents contract balances from contracts with customers:


	July 3, 2021		January 2, 2021
(In thousands)
Accounts Receivable	$	106,791	$	91,540
Contract Assets	$	6,481	$	7,576
Contract Liabilities	$	52,031	$	39,269

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 $10,070,000 in the second quarter of 2021, $7,158,000 in the second quarter of 2020, $27,210,000 in the first six months of 2021 and $26,866,000 in the first six months of 2020 that was included in the contract liabilities balance at the beginning of 2021 and 2020. The majority of the Company's contracts for capital equipment have an original expected duration of one year or less. Certain capital contracts require long lead times and could take up to 24 months to complete. For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining unsatisfied or partially unsatisfied performance obligations as of July 3, 2021 was $12,994,000. The Company will recognize revenue for these performance obligations as they are satisfied, approximately 39% of which is expected to occur within the next twelve months and the remaining 61% within the following twelve months.

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 non-interest 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 $10,793,000 at July 3, 2021 and $9,445,000 at January 2, 2021, 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

Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 in fiscal 2021, and the transition requirements are primarily prospective. The Company adopted this ASU prospectively at the beginning of fiscal 2021 and its adoption did not have an impact on the condensed consolidated financial statements.

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 prospectively through December 31, 2022. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.

Earnings per Share

6 Months Ended

Jul. 03, 2021

Earnings Per Share [Abstract]

Earnings per Share

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


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
(In thousands, except per share amounts)

Net Income Attributable to Kadant	$	22,864	$	11,607	$	39,425	$	24,138

Basic Weighted Average Shares	11,579		11,482		11,566		11,457
Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares	71		70		65		73
Diluted Weighted Average Shares	11,650		11,552		11,631		11,530

Basic Earnings per Share	$	1.97	$	1.01	$	3.41	$	2.11

Diluted Earnings per Share	$	1.96	$	1.00	$	3.39	$	2.09

The effect of outstanding and unvested restricted stock units (RSUs) of the Company's common stock totaling 9,000 shares in the second quarter of 2021, 36,000 shares in the second quarter of 2020, 27,000 in the first six months of 2021, and 39,000 in the first six months of 2020 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	6 Months Ended
Provision for Income Taxes	Jul. 03, 2021
Income Tax Disclosure [Abstract]
Provision for Income Taxes	Provision for Income Taxes The provision for income taxes was $14,510,000 in the first six months of 2021 and $9,033,000 in the first six months of 2020. The effective tax rate of 27% in the first six months of 2021 was higher than the Company's statutory rate of 21% primarily due to the distribution of the Company's worldwide earnings, nondeductible expenses, state taxes, and tax expense associated with the Global Intangible Low-Taxed Income (GILTI) provisions. These increases in tax expense were offset in part by a decrease in tax related to the net excess income tax benefits from stock-based compensation arrangements. The effective tax rate of 27% in the first six months of 2020 was higher than the Company's statutory rate of 21% primarily due to nondeductible expenses, the distribution of the Company's worldwide earnings, state taxes, and tax expense associated with GILTI provisions. These increases in tax expense were offset in part by a decrease in tax related to the net excess income tax benefits from stock-based compensation arrangements.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

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+ Details

Long-Term Obligations

6 Months Ended

Jul. 03, 2021

Debt Disclosure [Abstract]

Long-Term Obligations

Long-term obligations are as follows:


	July 3, 2021		January 2, 2021
(In thousands)
Revolving Credit Facility, due 2023	$	258,722	$	217,963
Senior Promissory Notes, due 2023 to 2028	10,000		10,000
Finance Leases, due 2021 to 2025	1,395		1,631
Other Borrowings, due 2021 to 2023	3,608		3,880
Total	273,725		233,474
Less: Current Maturities of Long-Term Obligations	(1,355)		(1,474)
Long-Term Obligations	$	272,370	$	232,000

See Note 8, Fair Value Measurements and Fair Value of Financial Instruments, for the fair value information related to the Company's long-term obligations.

Revolving Credit Facility

The Company entered into an unsecured multi-currency revolving credit facility, dated as of March 1, 2017 (as amended and restated to date, the Credit Agreement). Pursuant to the Credit Agreement, the Company has a borrowing capacity of $400,000,000, with an uncommitted, unsecured incremental borrowing facility of $150,000,000, 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 Bank) 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 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, if the Company elects, 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 the first six months of 2021, the Company borrowed an aggregate of $88,888,000 under the Credit Agreement, including $85,888,000 of euro-denominated borrowings, which was primarily used to fund an acquisition that closed in the third quarter of 2021. See Note 11, Subsequent Event, for further details. As of July 3, 2021, the outstanding balance under the Credit Agreement was $258,722,000, which included $113,722,000 of euro-denominated borrowings. As of July 3, 2021, the Company had $140,546,000 of borrowing capacity available under its Credit Agreement, which was calculated by translating its foreign-denominated borrowings using borrowing date foreign exchange rates.

The weighted average interest rate for the outstanding balance under the Credit Agreement was 1.48% as of July 3, 2021.

See Note 7, Derivatives, under the heading Interest Rate Swap Agreement, for information relating to the swap agreement 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.

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 July 3, 2021, 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 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 $1,339,000 at July 3, 2021. The lease arrangement provides for a fixed price purchase option, net of the projected loan receivable, of $1,576,000 at the end of the lease term in August 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 July 3, 2021, $3,573,000 was outstanding under this obligation.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

Stock-Based Compensation	6 Months Ended
Stock-Based Compensation	Jul. 03, 2021
Share-based Payment Arrangement [Abstract]
Stock-Based Compensation	Stock-Based Compensation The Company recognized stock-based compensation expense of $2,527,000 in the second quarter of 2021, $1,877,000 in the second quarter of 2020, $4,026,000 in the first six months of 2021, and $3,516,000 in the first six months of 2020 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 $11,872,000 at July 3, 2021 and will be recognized over a weighted average period of 1.9 years. On May 19, 2021, the Company granted an aggregate of 5,045 RSUs to its non-employee directors with a grant date fair value of $850,000. Half of these RSUs vested on June 1, 2021 and the remaining RSUs will vest ratably on the last day of the third and fourth fiscal quarters of 2021.

Accumulated Other Comprehensive Items

6 Months Ended

Jul. 03, 2021

Equity [Abstract]

Accumulated Other Comprehensive Items

Comprehensive 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		Post-Retirement Benefit Liability Adjustments		Deferred Loss on Cash Flow Hedges		Total
Balance at January 2, 2021	$	(17,894)	$	(770)	$	(828)	$	(19,492)
Other comprehensive items before reclassifications	(608)		13		9		(586)
Reclassifications from AOCI	—		20		169		189
Net current period other comprehensive items	(608)		33		178		(397)
Balance at July 3, 2021	$	(18,502)	$	(737)	$	(650)	$	(19,889)

Amounts reclassified from AOCI are as follows:


	Three Months Ended				Six Months Ended
(In thousands)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020		Statement of Income Line Item
Post-retirement Benefit Plans
Recognized net actuarial loss	$	(11)	$	(14)	$	(22)	$	(29)	Other expense, net
Amortization of prior service cost	(3)		(1)		(6)		(3)		Other expense, net
Total expense before income taxes	(14)		(15)		(28)		(32)
Income tax benefit	4		4		8		128		Provision for income taxes
	(10)		(11)		(20)		96
Cash Flow Hedges (a)
Interest rate swap agreements	(113)		(72)		(222)		(106)		Interest expense
Forward currency-exchange contracts	—		—		—		(23)		Cost of revenue
Total expense before income taxes	(113)		(72)		(222)		(129)
Income tax benefit	27		17		53		31		Provision for income taxes
	(86)		(55)		(169)		(98)
Total Reclassifications	$	(96)	$	(66)	$	(189)	$	(2)

(a)See Note 7, Derivatives, for additional information.

Derivatives

6 Months Ended

Jul. 03, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Interest Rate Swap Agreement

In 2018, the Company entered into an interest rate swap agreement (2018 Swap Agreement) with Citizens Bank to hedge its exposure to movements in USD LIBOR on its U.S. dollar-denominated debt. The 2018 Swap Agreement 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.

The Company designated its 2018 Swap Agreement as a cash flow hedge and structured it to be 100% effective. Unrealized gains and losses related to the fair value of the 2018 Swap Agreement are recorded to AOCI, net of tax. In the event of early termination, the Company will receive from or pay to the counterparty the fair value of the 2018 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 it were to be unable to cure the default. See Note 4, Long-Term Obligations, for further details.

Forward Currency-Exchange Contracts

The Company uses forward currency-exchange contracts that generally 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 of the Company's subsidiaries.

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.

Gains and losses reported within SG&A expenses in the accompanying condensed consolidated statement of income associated with the Company's forward currency-exchange contracts that were not designated as hedges were not material for the three-and six-month periods ended July 3, 2021 and June 27, 2020.

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


		July 3, 2021				January 2, 2021
	Balance Sheet Location	Asset (Liability) (a)		Notional Amount (b)		Asset (Liability) (a)		Notional Amount
(In thousands)
Derivatives Designated as Hedging Instruments:
Derivatives in an Asset Position:
Forward currency-exchange contract	Other Current Assets	$	—	$	—	$	25	$	842
Derivatives in a Liability Position:
Forward currency-exchange contract	Other Current Liabilities	$	(6)	$	842	$	—	$	—
2018 Swap Agreement	Other Long-Term Liabilities	$	(850)	$	15,000	$	(1,099)	$	15,000

Derivatives Not Designated as Hedging Instruments:
Derivatives in an Asset Position:
Forward currency-exchange contracts	Other Current Assets	$	—	$	—	$	12	$	582
Derivatives in a Liability Position:
Forward currency-exchange contracts	Other Current Liabilities	$	—	$	—	$	(7)	$	825

(a) See Note 8, Fair Value Measurements and Fair Value of Financial Instruments, for the fair value measurements relating to these financial instruments.

(b) The 2021 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 six months ended July 3, 2021:


(In thousands)	Interest Rate Swap Agreement		Forward Currency- Exchange Contract		Total
Unrealized (Loss) Gain, Net of Tax, at January 2, 2021	$	(846)	$	18	$	(828)
Loss reclassified to earnings (a)	169		—		169
Gain (loss) recognized in AOCI	32		(23)		9
Unrealized Loss, Net of Tax, at July 3, 2021	$	(645)	$	(5)	$	(650)

(a) See Note 6, Accumulated Other Comprehensive Items, for the income statement classification.

As of July 3, 2021, the Company expects to reclassify losses of $348,000 from AOCI to earnings over the next twelve months based on the estimated cash flows of the 2018 Swap Agreement and the maturity date of the forward currency-exchange contract.

Fair Value Measurements and Fair Value of Financial Instruments

6 Months Ended

Jul. 03, 2021

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 July 3, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds and time deposits	$	11,250	$	—	$	—	$	11,250

Banker's acceptance drafts (a)	$	—	$	10,793	$	—	$	10,793

Liabilities:
2018 Swap Agreement	$	—	$	850	$	—	$	850
Forward currency-exchange contract	$	—	$	6	$	—	$	6


	Fair Value as of January 2, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds and time deposits	$	8,054	$	—	$	—	$	8,054
Banker's acceptance drafts (a)	$	—	$	9,445	$	—	$	9,445
Forward currency-exchange contracts	$	—	$	37	$	—	$	37
Liabilities:
2018 Swap Agreement	$	—	$	1,099	$	—	$	1,099
Forward currency-exchange contracts	$	—	$	7	$	—	$	7

(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 six months of 2021. 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 forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The fair value of the 2018 Swap Agreement is based on USD LIBOR yield curves at the reporting date. The forward currency-exchange contracts and the 2018 Swap Agreement 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 debt obligations, excluding lease obligations and other borrowings, are as follows:


	July 3, 2021				January 2, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
(In thousands)
Debt Obligations:
Revolving credit facility	$	258,722	$	258,722	$	217,963	$	217,963
Senior promissory notes	10,000		11,095		10,000		11,157
	$	268,722	$	269,817	$	227,963	$	229,120

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 value of the senior promissory notes is 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

6 Months Ended

Jul. 03, 2021

Segment Reporting [Abstract]

Business Segment Information

The Company has combined its operating entities into three reportable operating segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment consists of the fluid-handling and doctoring, cleaning, & filtration product lines; the Industrial Processing segment consists of the wood processing and stock-preparation product lines; and the Material Handling segment consists of the conveying and screening, baling, and fiber-based product lines. 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, metals, and other industrial sectors. The Company's primary 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, wood products and alternative fuel industries, among others. The Company's primary products include stock-preparation systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers, and logging machinery. In addition, the Company provides industrial automation and digitization solutions to process industries.

•Material Handling – Products and engineered systems used to handle bulk and discrete materials for secondary processing or transport in the aggregates, mining, food, and waste management 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				Six Months Ended
	July 3,		June 27,		July 3,		June 27,
(In thousands)	2021		2020		2021		2020
Revenue
Flow Control	$	70,762	$	51,365	$	134,516	$	108,514
Industrial Processing	82,681		65,673		151,835		130,382
Material Handling	42,368		35,822		81,923		73,091
	$	195,811	$	152,860	$	368,274	$	311,987

Income Before Provision for Income Taxes
Flow Control (a)	$	19,324	$	10,260	$	34,770	$	23,590
Industrial Processing (b)	17,301		10,639		28,434		20,075
Material Handling	5,592		3,593		10,035		7,727
Corporate (c)	(9,207)		(6,371)		(16,802)		(13,616)
Total operating income	33,010		18,121		56,437		37,776
Interest expense, net (d)	(1,010)		(1,894)		(2,056)		(4,302)
Other expense, net (d)	(24)		(31)		(48)		(63)
	$	31,976	$	16,196	$	54,333	$	33,411

Capital Expenditures
Flow Control	$	368	$	337	$	702	$	1,158
Industrial Processing	1,191		211		2,995		1,675
Material Handling	495		283		616		681
Corporate	5		80		5		83
	$	2,059	$	911	$	4,318	$	3,597

(a) Includes acquisition costs of $239,000 in the three months ended July 3, 2021 and $1,236,000 in the six months ended July 3, 2021 and restructuring costs of $456,000 in the three- and six-month periods ended June 27, 2020.

(b) Includes $435,000 of acquisition-related expense in the three- and six-month periods ended June 27, 2020. Acquisition-related expenses include amortization expense associated with backlog and acquisition costs.

(d) The Company does not allocate interest and other expense, net to its segments.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 21
-Subparagraph (a)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 32
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 21
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

+ Details

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jul. 03, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Right of Recourse In the ordinary course of business, the Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are non-interest bearing obligations of the issuing bank and mature within six months of the origination date. The Company's Chinese subsidiaries 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 $9,723,000 at July 3, 2021 and $7,568,000 at January 2, 2021 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.

Subsequent Event

6 Months Ended

Jul. 03, 2021

Subsequent Events [Abstract]

Subsequent Event

Acquisition

In the third quarter of 2021, Kadant Germany Holding GmbH, a subsidiary of the Company, acquired all partnership interests and shares in The Clouth Group of Companies (Clouth), for approximately 78,000,000 euros, or $92,000,000, net of cash acquired and debt assumed. The majority of the Clouth companies were acquired on July 19, 2021 and the acquisition of the last legal entity occurred on August 10, 2021. The Company funded the purchase price with existing cash and borrowings of approximately $82,877,000 of euro-denominated funds under the Credit Agreement, of which $78,749,000 was borrowed in the second quarter of 2021. At July 3, 2021, $84,249,000 of the purchase price was held in escrow and was classified as restricted cash in the accompanying condensed consolidated balance sheet. Clouth is a leading manufacturer of doctor blades and related equipment used in the production of paper, packaging, and tissue and will be included within the Company's Flow Control segment. The Company expects several synergies in connection with this acquisition, including deepening the Company's presence in the growing ceramic blade market and expansion of sales at its existing businesses by leveraging Clouth's complementary global geographic footprint. Clouth has two manufacturing facilities in Germany and one in Poland and generated revenue of approximately 41,000,000 euros in 2020. The excess of the purchase price for the acquisition of Clouth over the net assets acquired will be recorded as goodwill. The purchase price allocation for this acquisition is not presented as the preliminary valuation of Clouth has not been completed.

Unaudited Supplemental Pro Forma Information

Had the acquisition of Clouth been completed as of the beginning of 2020, the Company’s pro forma results of operations for the three- and six-month periods ended July 3, 2021 and June 27, 2020 would have been as follows:


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
(In thousands, except per share amounts)
Revenue	$	207,740	$	164,248	$	392,128	$	334,796
Net Income Attributable to Kadant	$	23,663	$	10,276	$	41,522	$	20,147
Earnings per Share Attributable to Kadant
Basic	$	2.04	$	0.89	$	3.59	$	1.76
Diluted	$	2.03	$	0.89	$	3.57	$	1.75

The historical consolidated financial information of the Company and Clouth has been adjusted in the pro forma information above to give effect to pro forma events that are directly attributable to the acquisition and related financing arrangements, are expected to have a continuing impact on the Company, and are factually supportable.

Pro forma results include the following non-recurring pro forma adjustments that were directly attributable to the acquisition:

•Estimated pre-tax charge to cost of revenue of $1,753,000 in the three months ended June 27, 2020 and $3,505,000 in the six months ended June 27, 2020, for the sale of inventory revalued at the date of acquisition.

•Estimated pre-tax charge to SG&A expenses of $239,000 in the three months ended June 27, 2020 and $1,673,000 in the six months ended June 27, 2020 and reversal of $239,000 in the three months ended July 3, 2021 and $1,236,000 in the six months ended July 3, 2021, for acquisition costs and intangible asset amortization related to acquired backlog.

•Estimated tax effects related to the pro forma adjustments.

These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that would have resulted had the acquisition of Clouth occurred as of the beginning of 2020, or that may result in the future.

Nature of Operations and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jul. 03, 2021
Accounting Policies [Abstract]
Use of Estimates and Critical Accounting Policies	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.
Restricted Cash	The Company's restricted cash generally serves as collateral for certain banker's acceptance drafts issued to vendors and for 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.
Intangible Assets, Net	Intangible assets are 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.
Warranty Obligations	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 provides for the estimated cost of product warranties at the time of sale based on historical occurrence rates and repair costs, as well as knowledge of any specific warranty problems that indicate projected warranty costs may vary from historical patterns. The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications. The Company's liability for warranties is included in other current liabilities in the accompanying condensed consolidated balance sheet.
Revenue Recognition	Revenue Recognition Most of the Company’s revenue relates to products and services that require minimal customization and is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. 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 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. 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 $10,070,000 in the second quarter of 2021, $7,158,000 in the second quarter of 2020, $27,210,000 in the first six months of 2021 and $26,866,000 in the first six months of 2020 that was included in the contract liabilities balance at the beginning of 2021 and 2020. The majority of the Company's contracts for capital equipment have an original expected duration of one year or less. Certain capital contracts require long lead times and could take up to 24 months to complete. For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining unsatisfied or partially unsatisfied performance obligations as of July 3, 2021 was $12,994,000. The Company will recognize revenue for these performance obligations as they are satisfied, approximately 39% of which is expected to occur within the next twelve months and the remaining 61% within the following twelve months.
Banker's Acceptance Drafts Included in Accounts Receivable	Banker's Acceptance Drafts Included in Accounts ReceivableThe Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are non-interest 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 $10,793,000 at July 3, 2021 and $9,445,000 at January 2, 2021, 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 Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 in fiscal 2021, and the transition requirements are primarily prospective. The Company adopted this ASU prospectively at the beginning of fiscal 2021 and its adoption did not have an impact on the condensed consolidated financial statements. 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 prospectively through December 31, 2022. 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 generally 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 of the Company's subsidiaries. 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.
Fair Value Measurement	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 six months of 2021. 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 forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The fair value of the 2018 Swap Agreement is based on USD LIBOR yield curves at the reporting date. The forward currency-exchange contracts and the 2018 Swap Agreement 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 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 value of the senior promissory notes is 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.

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

6 Months Ended

Jul. 03, 2021

Accounting Policies [Abstract]

Supplemental Cash Flow Information


	Six Months Ended
(In thousands)	July 3, 2021		June 27, 2020




Cash Paid for Interest	$	1,968	$	4,186
Cash Paid for Income Taxes, Net of Refunds	$	12,475	$	7,036

Non-Cash Investing Activities:
Fair value of assets acquired	$	197	$	9,164
Cash paid for acquired businesses	(159)		(7,537)
Liabilities Assumed of Acquired Businesses	$	38	$	1,627

Purchases of property, plant, and equipment in accounts payable	$	169	$	150

Non-Cash Financing Activities:
Issuance of Company common stock upon vesting of restricted stock units	$	3,628	$	4,027
Dividends declared but unpaid	$	2,895	$	2,760

Cash and Cash Equivalents


(In thousands)	July 3, 2021		June 27, 2020		January 2, 2021		December 28, 2019
Cash and cash equivalents	$	73,436	$	57,499	$	65,682	$	66,786
Restricted cash	84,708		3,450		958		1,487
Total Cash, Cash Equivalents, and Restricted Cash	$	158,144	$	60,949	$	66,640	$	68,273

Restricted Cash


(In thousands)	July 3, 2021		June 27, 2020		January 2, 2021		December 28, 2019
Cash and cash equivalents	$	73,436	$	57,499	$	65,682	$	66,786
Restricted cash	84,708		3,450		958		1,487
Total Cash, Cash Equivalents, and Restricted Cash	$	158,144	$	60,949	$	66,640	$	68,273

Inventories

The components of inventories are as follows:


	July 3, 2021		January 2, 2021
(In thousands)
Raw Materials	$	48,879	$	46,413
Work in Process	24,189		17,692
Finished Goods	41,248		42,709
	$	114,316	$	106,814

Acquired Intangible Assets

Acquired intangible assets by major asset class are as follows:


(In thousands)	Gross		Accumulated Amortization		Currency Translation		Net
July 3, 2021
Definite-Lived
Customer relationships	$	173,728	$	(72,364)	$	(1,279)	$	100,085
Product technology	56,111		(33,465)		(1,093)		21,553
Tradenames	6,027		(3,162)		(310)		2,555
Other	18,248		(14,727)		(536)		2,985
	254,114		(123,718)		(3,218)		127,178
Indefinite-Lived
Tradenames	24,100		—		304		24,404
Acquired Intangible Assets	$	278,214	$	(123,718)	$	(2,914)	$	151,582

January 2, 2021
Definite-Lived
Customer relationships	$	173,728	$	(65,488)	$	(1,316)	$	106,924
Product technology	56,111		(31,655)		(1,005)		23,451
Tradenames	6,027		(2,946)		(282)		2,799
Other	18,248		(14,369)		(515)		3,364
	254,114		(114,458)		(3,118)		136,538
Indefinite-Lived
Tradenames	24,100		—		327		24,427
Acquired Intangible Assets	$	278,214	$	(114,458)	$	(2,791)	$	160,965

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 January 2, 2021
Gross balance	$	101,437	$	215,881	$	119,944	$	437,262
Accumulated impairment losses	—		(85,509)		—		(85,509)
Net balance	101,437		130,372		119,944		351,753
2021 Adjustments
Currency translation	(858)		432		(1,253)		(1,679)
Acquisition	197		—		—		197
Total 2021 adjustments	(661)		432		(1,253)		(1,482)
Balance at July 3, 2021
Gross balance	100,776		216,313		118,691		435,780
Accumulated impairment losses	—		(85,509)		—		(85,509)
Net balance	$	100,776	$	130,804	$	118,691	$	350,271

Warranty Obligations

The changes in the carrying amount of product warranty obligations are as follows:


	Six Months Ended
(In thousands)	July 3, 2021		June 27, 2020
Balance at Beginning of Year	$	7,064	$	6,467
Provision charged to expense	2,709		2,675
Usage	(2,255)		(2,721)

Currency translation	(74)		(67)
Balance at End of Period	$	7,444	$	6,354

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

The following table presents revenue by revenue recognition method:


	Three Months Ended				Six Months Ended
	July 3,		June 27,		July 3,		June 27,
(In thousands)	2021		2020		2021		2020
Point in Time	$	175,479	$	129,797	$	329,896	$	265,889
Over Time	20,332		23,063		38,378		46,098
	$	195,811	$	152,860	$	368,274	$	311,987

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


	Three Months Ended				Six Months Ended
	July 3,		June 27,		July 3,		June 27,
(In thousands)	2021		2020		2021		2020
Revenue by Product Type:
Parts and Consumables	$	124,975	$	97,261	$	243,082	$	202,358
Capital	70,836		55,599		125,192		109,629
	$	195,811	$	152,860	$	368,274	$	311,987
Revenue by Geography (based on customer location):
North America	$	106,767	$	88,718	201,859		182,541
Europe	55,827		37,916		100,468		73,930
Asia	24,729		16,237		46,542		32,145
Rest of World	8,488		9,989		19,405		23,371
	$	195,811	$	152,860	$	368,274	$	311,987

Balances from Contracts with Customers

The following table presents contract balances from contracts with customers:


	July 3, 2021		January 2, 2021
(In thousands)
Accounts Receivable	$	106,791	$	91,540
Contract Assets	$	6,481	$	7,576
Contract Liabilities	$	52,031	$	39,269

Earnings per Share (Tables)

6 Months Ended

Jul. 03, 2021

Earnings Per Share [Abstract]

Basic and Diluted Earnings Per Share

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


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
(In thousands, except per share amounts)

Net Income Attributable to Kadant	$	22,864	$	11,607	$	39,425	$	24,138

Basic Weighted Average Shares	11,579		11,482		11,566		11,457
Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares	71		70		65		73
Diluted Weighted Average Shares	11,650		11,552		11,631		11,530

Basic Earnings per Share	$	1.97	$	1.01	$	3.41	$	2.11

Diluted Earnings per Share	$	1.96	$	1.00	$	3.39	$	2.09

Long-Term Obligations (Tables)

6 Months Ended

Jul. 03, 2021

Debt Disclosure [Abstract]

Schedule of Long-Term Obligations

Long-term obligations are as follows:


	July 3, 2021		January 2, 2021
(In thousands)
Revolving Credit Facility, due 2023	$	258,722	$	217,963
Senior Promissory Notes, due 2023 to 2028	10,000		10,000
Finance Leases, due 2021 to 2025	1,395		1,631
Other Borrowings, due 2021 to 2023	3,608		3,880
Total	273,725		233,474
Less: Current Maturities of Long-Term Obligations	(1,355)		(1,474)
Long-Term Obligations	$	272,370	$	232,000

Accumulated Other Comprehensive Items (Tables)

6 Months Ended

Jul. 03, 2021

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		Post-Retirement Benefit Liability Adjustments		Deferred Loss on Cash Flow Hedges		Total
Balance at January 2, 2021	$	(17,894)	$	(770)	$	(828)	$	(19,492)
Other comprehensive items before reclassifications	(608)		13		9		(586)
Reclassifications from AOCI	—		20		169		189
Net current period other comprehensive items	(608)		33		178		(397)
Balance at July 3, 2021	$	(18,502)	$	(737)	$	(650)	$	(19,889)

Reclassification Out of Accumulated Other Comprehensive Items

Amounts reclassified from AOCI are as follows:


	Three Months Ended				Six Months Ended
(In thousands)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020		Statement of Income Line Item
Post-retirement Benefit Plans
Recognized net actuarial loss	$	(11)	$	(14)	$	(22)	$	(29)	Other expense, net
Amortization of prior service cost	(3)		(1)		(6)		(3)		Other expense, net
Total expense before income taxes	(14)		(15)		(28)		(32)
Income tax benefit	4		4		8		128		Provision for income taxes
	(10)		(11)		(20)		96
Cash Flow Hedges (a)
Interest rate swap agreements	(113)		(72)		(222)		(106)		Interest expense
Forward currency-exchange contracts	—		—		—		(23)		Cost of revenue
Total expense before income taxes	(113)		(72)		(222)		(129)
Income tax benefit	27		17		53		31		Provision for income taxes
	(86)		(55)		(169)		(98)
Total Reclassifications	$	(96)	$	(66)	$	(189)	$	(2)

(a)See Note 7, Derivatives, for additional information.

Derivatives (Tables)

6 Months Ended

Jul. 03, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Instruments

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


		July 3, 2021				January 2, 2021
	Balance Sheet Location	Asset (Liability) (a)		Notional Amount (b)		Asset (Liability) (a)		Notional Amount
(In thousands)
Derivatives Designated as Hedging Instruments:
Derivatives in an Asset Position:
Forward currency-exchange contract	Other Current Assets	$	—	$	—	$	25	$	842
Derivatives in a Liability Position:
Forward currency-exchange contract	Other Current Liabilities	$	(6)	$	842	$	—	$	—
2018 Swap Agreement	Other Long-Term Liabilities	$	(850)	$	15,000	$	(1,099)	$	15,000

Derivatives Not Designated as Hedging Instruments:
Derivatives in an Asset Position:
Forward currency-exchange contracts	Other Current Assets	$	—	$	—	$	12	$	582
Derivatives in a Liability Position:
Forward currency-exchange contracts	Other Current Liabilities	$	—	$	—	$	(7)	$	825

(a) See Note 8, Fair Value Measurements and Fair Value of Financial Instruments, for the fair value measurements relating to these financial instruments.

(b) The 2021 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 six months ended July 3, 2021:


(In thousands)	Interest Rate Swap Agreement		Forward Currency- Exchange Contract		Total
Unrealized (Loss) Gain, Net of Tax, at January 2, 2021	$	(846)	$	18	$	(828)
Loss reclassified to earnings (a)	169		—		169
Gain (loss) recognized in AOCI	32		(23)		9
Unrealized Loss, Net of Tax, at July 3, 2021	$	(645)	$	(5)	$	(650)

(a) See Note 6, Accumulated Other Comprehensive Items, for the income statement classification.

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

6 Months Ended

Jul. 03, 2021

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 July 3, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds and time deposits	$	11,250	$	—	$	—	$	11,250

Banker's acceptance drafts (a)	$	—	$	10,793	$	—	$	10,793

Liabilities:
2018 Swap Agreement	$	—	$	850	$	—	$	850
Forward currency-exchange contract	$	—	$	6	$	—	$	6


	Fair Value as of January 2, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds and time deposits	$	8,054	$	—	$	—	$	8,054
Banker's acceptance drafts (a)	$	—	$	9,445	$	—	$	9,445
Forward currency-exchange contracts	$	—	$	37	$	—	$	37
Liabilities:
2018 Swap Agreement	$	—	$	1,099	$	—	$	1,099
Forward currency-exchange contracts	$	—	$	7	$	—	$	7

(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 debt obligations, excluding lease obligations and other borrowings, are as follows:


	July 3, 2021				January 2, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
(In thousands)
Debt Obligations:
Revolving credit facility	$	258,722	$	258,722	$	217,963	$	217,963
Senior promissory notes	10,000		11,095		10,000		11,157
	$	268,722	$	269,817	$	227,963	$	229,120

Business Segment Information (Tables)

6 Months Ended

Jul. 03, 2021

Segment Reporting [Abstract]

Business Segment Reporting Information

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


	Three Months Ended				Six Months Ended
	July 3,		June 27,		July 3,		June 27,
(In thousands)	2021		2020		2021		2020
Revenue
Flow Control	$	70,762	$	51,365	$	134,516	$	108,514
Industrial Processing	82,681		65,673		151,835		130,382
Material Handling	42,368		35,822		81,923		73,091
	$	195,811	$	152,860	$	368,274	$	311,987

Income Before Provision for Income Taxes
Flow Control (a)	$	19,324	$	10,260	$	34,770	$	23,590
Industrial Processing (b)	17,301		10,639		28,434		20,075
Material Handling	5,592		3,593		10,035		7,727
Corporate (c)	(9,207)		(6,371)		(16,802)		(13,616)
Total operating income	33,010		18,121		56,437		37,776
Interest expense, net (d)	(1,010)		(1,894)		(2,056)		(4,302)
Other expense, net (d)	(24)		(31)		(48)		(63)
	$	31,976	$	16,196	$	54,333	$	33,411

Capital Expenditures
Flow Control	$	368	$	337	$	702	$	1,158
Industrial Processing	1,191		211		2,995		1,675
Material Handling	495		283		616		681
Corporate	5		80		5		83
	$	2,059	$	911	$	4,318	$	3,597

(d) The Company does not allocate interest and other expense, net to its segments.

Subsequent Event (Tables)

6 Months Ended

Jul. 03, 2021

Subsequent Events [Abstract]

Unaudited Supplemental Pro Forma Information


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
(In thousands, except per share amounts)
Revenue	$	207,740	$	164,248	$	392,128	$	334,796
Net Income Attributable to Kadant	$	23,663	$	10,276	$	41,522	$	20,147
Earnings per Share Attributable to Kadant
Basic	$	2.04	$	0.89	$	3.59	$	1.76
Diluted	$	2.03	$	0.89	$	3.57	$	1.75

Nature of Operations and Summary of Significant Accounting Policies - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020
Accounting Policies [Abstract]
Cash Paid for Interest	$ 1,968	$ 4,186
Cash Paid for Income Taxes, Net of Refunds	12,475	7,036
Non-Cash Investing Activities:
Fair value of assets acquired	197	9,164
Cash paid for acquired businesses	(159)	(7,537)
Liabilities Assumed of Acquired Businesses	38	1,627
Purchases of property, plant, and equipment in accounts payable	169	150
Non-Cash Financing Activities:
Issuance of Company common stock upon vesting of restricted stock units	3,628	4,027
Dividends declared but unpaid	$ 2,895	$ 2,760

Nature of Operations and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020	Jan. 02, 2021
Accounting Policies [Abstract]
Bank guarantees, expiration period			12 months
Funds held in escrow	$ 84,249		$ 84,249
Revenue recognized	10,070	$ 7,158	27,210	$ 26,866
Revenue, remaining performance obligation, amount	12,994		$ 12,994
Banker's acceptance drafts, maturity period			6 months
Banker's acceptance drafts	$ 10,793		$ 10,793		$ 9,445

Nature of Operations and Summary of Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Jan. 02, 2021	Jun. 27, 2020	Dec. 28, 2019
Accounting Policies [Abstract]
Cash and cash equivalents	$ 73,436	$ 65,682	$ 57,499	$ 66,786
Restricted cash	84,708	958	3,450	1,487
Total Cash, Cash Equivalents, and Restricted Cash	$ 158,144	$ 66,640	$ 60,949	$ 68,273

Nature of Operations and Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Jan. 02, 2021
Accounting Policies [Abstract]
Raw Materials	$ 48,879	$ 46,413
Work in Process	24,189	17,692
Finished Goods	41,248	42,709
Total Inventories	$ 114,316	$ 106,814

Nature of Operations and Summary of Significant Accounting Policies - Intangible Assets By Major Asset Class (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jul. 03, 2021	Jan. 02, 2021
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	$ 254,114	$ 254,114
Accumulated Amortization	(123,718)	(114,458)
Currency Translation	(3,218)	(3,118)
Net	127,178	136,538
Acquired Intangible Assets [Abstract]
Gross	278,214	278,214
Currency Translation	(2,914)	(2,791)
Net	151,582	160,965
Tradenames
Acquired Indefinite-Lived Intangible Assets [Line Items]
Gross	24,100	24,100
Currency Translation	304	327
Net	24,404	24,427
Customer relationships
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	173,728	173,728
Accumulated Amortization	(72,364)	(65,488)
Currency Translation	(1,279)	(1,316)
Net	100,085	106,924
Product technology
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	56,111	56,111
Accumulated Amortization	(33,465)	(31,655)
Currency Translation	(1,093)	(1,005)
Net	21,553	23,451
Tradenames
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	6,027	6,027
Accumulated Amortization	(3,162)	(2,946)
Currency Translation	(310)	(282)
Net	2,555	2,799
Other
Acquired Definite-Lived Intangible Assets [Line Items]
Gross	18,248	18,248
Accumulated Amortization	(14,727)	(14,369)
Currency Translation	(536)	(515)
Net	$ 2,985	$ 3,364

Nature of Operations and Summary of Significant Accounting Policies - Goodwill (Details) $ in Thousands	6 Months Ended
	Jul. 03, 2021 USD ($)
Goodwill [Roll Forward]
Gross Balance, Beginning Balance	$ 437,262
Accumulated impairment losses	(85,509)
Net Balance, Beginning Balance	351,753
Currency translation	(1,679)
Acquisition	197
Total 2021 adjustments	(1,482)
Gross Balance, Ending Balance	435,780
Accumulated impairment losses	(85,509)
Net Balance, Ending Balance	350,271
Operating Segment \| Flow Control
Goodwill [Roll Forward]
Gross Balance, Beginning Balance	101,437
Accumulated impairment losses	0
Net Balance, Beginning Balance	101,437
Currency translation	(858)
Acquisition	197
Total 2021 adjustments	(661)
Gross Balance, Ending Balance	100,776
Accumulated impairment losses	0
Net Balance, Ending Balance	100,776
Operating Segment \| Industrial Processing
Goodwill [Roll Forward]
Gross Balance, Beginning Balance	215,881
Accumulated impairment losses	(85,509)
Net Balance, Beginning Balance	130,372
Currency translation	432
Acquisition	0
Total 2021 adjustments	432
Gross Balance, Ending Balance	216,313
Accumulated impairment losses	(85,509)
Net Balance, Ending Balance	130,804
Operating Segment \| Material Handling
Goodwill [Roll Forward]
Gross Balance, Beginning Balance	119,944
Accumulated impairment losses	0
Net Balance, Beginning Balance	119,944
Currency translation	(1,253)
Acquisition	0
Total 2021 adjustments	(1,253)
Gross Balance, Ending Balance	118,691
Accumulated impairment losses	0
Net Balance, Ending Balance	$ 118,691

Nature of Operations and Summary of Significant Accounting Policies - Warranty Obligations (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020
Changes in the carrying amount of accrued warranty costs [Roll Forward]
Balance at Beginning of Year	$ 7,064	$ 6,467
Provision charged to expense	2,709	2,675
Usage	(2,255)	(2,721)
Currency translation	(74)	(67)
Balance at End of Period	$ 7,444	$ 6,354

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		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Disaggregation of Revenue [Line Items]
Revenues	$ 195,811	$ 152,860	$ 368,274	$ 311,987
Parts and Consumables
Disaggregation of Revenue [Line Items]
Revenues	124,975	97,261	243,082	202,358
Capital
Disaggregation of Revenue [Line Items]
Revenues	70,836	55,599	125,192	109,629
Point in Time
Disaggregation of Revenue [Line Items]
Revenues	175,479	129,797	329,896	265,889
Over Time
Disaggregation of Revenue [Line Items]
Revenues	20,332	23,063	38,378	46,098
North America
Disaggregation of Revenue [Line Items]
Revenues	106,767	88,718	201,859	182,541
Europe
Disaggregation of Revenue [Line Items]
Revenues	55,827	37,916	100,468	73,930
Asia
Disaggregation of Revenue [Line Items]
Revenues	24,729	16,237	46,542	32,145
Rest of World
Disaggregation of Revenue [Line Items]
Revenues	$ 8,488	$ 9,989	$ 19,405	$ 23,371

Nature of Operations and Summary of Significant Accounting Policies - Revenue from Contract with Customers (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Jan. 02, 2021
Accounting Policies [Abstract]
Accounts Receivable	$ 106,791	$ 91,540
Contract Assets	6,481	7,576
Contract Liabilities	$ 52,031	$ 39,269

Nature of Operations and Summary of Significant Accounting Policies - Performance Obligations Narrative (Details)	Jul. 03, 2021
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-04
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percent	39.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-04
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percent	61.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months

Earnings per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Income Amounts Attributable to Parent, Disclosures [Abstract]
Net Income Attributable to Kadant	$ 22,864	$ 11,607	$ 39,425	$ 24,138
Basic Weighted Average Shares (in shares)	11,579	11,482	11,566	11,457
Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares (in shares)	71	70	65	73
Diluted Weighted Average Shares (in shares)	11,650	11,552	11,631	11,530
Basic Earnings per Share (in dollars per share)	$ 1.97	$ 1.01	$ 3.41	$ 2.11
Diluted Earnings per Share (in dollars per share)	$ 1.96	$ 1.00	$ 3.39	$ 2.09

- Definition

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

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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.

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- Definition

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

+ References

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+ Details

Earnings per Share - Narrative (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
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)	9	36	27	39

Provision for Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 8,949	$ 4,474	$ 14,510	$ 9,033
Effective tax rate			27.00%	27.00%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Long-Term Obligations - Schedule of Long-Term Obligations (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Jan. 02, 2021
Debt Instrument [Line Items]
Finance Leases, due 2021 to 2025	$ 1,395	$ 1,631
Total	273,725	233,474
Less: Current Maturities of Long-Term Obligations	(1,355)	(1,474)
Long-Term Obligations	272,370	232,000
Revolving Credit Facility, due 2023
Debt Instrument [Line Items]
Long-term debt	258,722	217,963
Senior Promissory Notes, due 2023 to 2028
Debt Instrument [Line Items]
Long-term debt	10,000	10,000
Other Borrowings, due 2021 to 2023
Debt Instrument [Line Items]
Other Borrowings, due 2021 to 2023	$ 3,608	$ 3,880

Long-Term Obligations - Narrative (Details) - USD ($)	3 Months Ended	6 Months Ended
Long-Term Obligations - Narrative (Details) - USD ($)	Jul. 03, 2021	Jul. 03, 2021	Jun. 27, 2020	Jan. 02, 2021
Debt Instrument [Line Items]
Proceeds from issuance of long-term obligations		$ 88,888,000	$ 7,000,000
Secured loan receivable	$ 1,339,000	1,339,000
Present Value of Lease Payments	1,395,000	1,395,000		$ 1,631,000
Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt	258,722,000	258,722,000		217,963,000
Remaining borrowing capacity	140,546,000	140,546,000
Revolving Credit Facility \| Credit Agreement
Debt Instrument [Line Items]
Borrowing capacity available under committed portion	400,000,000	400,000,000
Additional borrowing capacity under uncommitted portion	150,000,000	$ 150,000,000
Basis spread on variable rate floor (as a percentage)		0.00%
Maximum amount of unrestricted U.S. cash	30,000,000	$ 30,000,000
Proceeds from issuance of long-term obligations		88,888,000
Long-term debt	$ 258,722,000	$ 258,722,000
Weighted average interest rate for revolving credit facility (in hundredths)	1.48%	1.48%
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]
Proceeds from issuance of long-term obligations		$ 85,888,000
Long-term debt	$ 113,722,000	113,722,000
Revolving Credit Facility \| Euro-Denominated Borrowing \| The Clouth Group of Companies
Debt Instrument [Line Items]
Proceeds from issuance of long-term obligations	78,749,000
Senior Promissory Notes, due 2023 to 2028
Debt Instrument [Line Items]
Long-term debt	10,000,000	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	115,000,000
Principal amount	$ 10,000,000	$ 10,000,000
Fixed interest rate	4.90%	4.90%
Senior Promissory Notes, due 2023 to 2028 \| Note Purchase Agreement \| Minimum
Debt Instrument [Line Items]
Prepayment penalty		$ 1,000,000
Other Borrowings, due 2021 to 2023 \| Sale Leaseback Arrangement
Debt Instrument [Line Items]
Effective interest rate	1.79%	1.79%
Net purchase option	$ 1,576,000	$ 1,576,000
Present Value of Lease Payments	$ 3,573,000	$ 3,573,000
Debt Covenant Period One \| Revolving Credit Facility \| Credit Agreement
Debt Instrument [Line Items]
Maximum consolidated leverage ratio after acquisition		3.75
Debt Covenant Period Two \| Revolving Credit Facility \| Credit Agreement
Debt Instrument [Line Items]
Maximum consolidated leverage ratio after acquisition		4.00

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	May 19, 2021	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense		$ 2,527	$ 1,877	$ 4,026	$ 3,516
Unrecognized compensation expense related to stock awards		$ 11,872		$ 11,872
Recognition period				1 year 10 months 24 days
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of units granted (in shares)	5,045
Aggregate grant date fair value	$ 850

Accumulated Other Comprehensive Items - Components of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	$ 504,308	$ 424,272	$ 496,905	$ 427,079
Other comprehensive items	4,159	4,716	(450)	(8,229)
Ending balance	531,126	440,359	531,126	440,359
Accumulated Other Comprehensive Items
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(24,040)	(50,554)	(19,492)	(37,620)
Other comprehensive items before reclassifications			(586)
Reclassifications from AOCI			189
Other comprehensive items	4,151	4,691	(397)	(8,243)
Ending balance	(19,889)	$ (45,863)	(19,889)	$ (45,863)
Foreign Currency Translation Adjustment
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance			(17,894)
Other comprehensive items before reclassifications			(608)
Reclassifications from AOCI			0
Other comprehensive items			(608)
Ending balance	(18,502)		(18,502)
Post-Retirement Benefit Liability Adjustments
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance			(770)
Other comprehensive items before reclassifications			13
Reclassifications from AOCI			20
Other comprehensive items			33
Ending balance	(737)		(737)
Deferred Loss on Cash Flow Hedges
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance			(828)
Other comprehensive items before reclassifications			9
Reclassifications from AOCI			169
Other comprehensive items			178
Ending balance	$ (650)		$ (650)

- Definition

Amount after tax and reclassification adjustments of other comprehensive income (loss).

Accumulated Other Comprehensive Items - Reclassification Out of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Other expense, net	$ (24)	$ (31)	$ (48)	$ (63)
Interest expense	(1,066)	(1,931)	(2,177)	(4,390)
Cost of revenue	(110,493)	(86,412)	(207,241)	(177,216)
Total expense before income taxes	31,976	16,196	54,333	33,411
Income tax benefit	(8,949)	(4,474)	(14,510)	(9,033)
Net Income	23,027	11,722	39,823	24,378
Reclassification out of Accumulated Other Comprehensive Items
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Net Income	(96)	(66)	(189)	(2)
Reclassification out of Accumulated Other Comprehensive Items \| Post-retirement Benefit Plans
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Total expense before income taxes	(14)	(15)	(28)	(32)
Income tax benefit	4	4	8	128
Net Income	(10)	(11)	(20)	96
Reclassification out of Accumulated Other Comprehensive Items \| Recognized net actuarial loss
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Other expense, net	(11)	(14)	(22)	(29)
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	(3)	(1)	(6)	(3)
Reclassification out of Accumulated Other Comprehensive Items \| Cash Flow Hedges
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Total expense before income taxes	(113)	(72)	(222)	(129)
Income tax benefit	27	17	53	31
Net Income	(86)	(55)	(169)	(98)
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	(113)	(72)	(222)	(106)
Reclassification out of Accumulated Other Comprehensive Items \| Cash Flow Hedges \| Forward currency-exchange contract
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items]
Cost of revenue	$ 0	$ 0	$ 0	$ (23)

Derivatives - Narrative (Details) - USD ($)	6 Months Ended
Derivatives - Narrative (Details) - USD ($)	Jul. 03, 2021	Dec. 29, 2018
Derivatives, Fair Value [Line Items]
Net unrealized losses included in AOCI expected to be reclassified to earnings over the next 12 months	$ 348,000
Cash Flow Hedging \| Designated as Hedging Instrument \| 2018 Swap Agreement
Derivatives, Fair Value [Line Items]
Derivative, notional amount		$ 15,000,000
Fixed rate of interest		3.15%
Rate of effectiveness of derivative agreement	100.00%
Cash Flow Hedging \| Designated as Hedging Instrument \| Forward currency-exchange contract
Derivatives, Fair Value [Line Items]
Period over which entity manages its level of exposure of risk	12 months

Derivatives - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Jan. 02, 2021
Designated as Hedging Instrument \| Forward currency-exchange contract \| Other Current Assets
Derivatives in an Asset Position:
Derivatives in an asset position	$ 0	$ 25
Notional amount, Derivative asset	0	842
Designated as Hedging Instrument \| Forward currency-exchange contract \| Other Current Liabilities
Derivatives in a Liability Position:
Derivatives in a liability position	(6)	0
Notional amount, Derivative liability	842	0
Designated as Hedging Instrument \| 2018 Swap Agreement \| Other Long-Term Liabilities
Derivatives in a Liability Position:
Derivatives in a liability position	(850)	(1,099)
Notional amount, Derivative liability	15,000	15,000
Not Designated as Hedging Instrument \| Forward currency-exchange contract \| Other Current Assets
Derivatives in an Asset Position:
Derivatives in an asset position	0	12
Notional amount, Derivative asset	0	582
Not Designated as Hedging Instrument \| Forward currency-exchange contract \| Other Current Liabilities
Derivatives in a Liability Position:
Derivatives in a liability position	0	(7)
Notional amount, Derivative liability	$ 0	$ 825

Derivatives - Activity in Accumulated Other Comprehensive Items (OCI) (Details) $ in Thousands	6 Months Ended
	Jul. 03, 2021 USD ($)
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	$ 496,905
Ending balance	531,126
Cash Flow Hedges
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(828)
Loss reclassified to earnings	169
Gain (loss) recognized in AOCI	9
Ending balance	(650)
Cash Flow Hedges \| Interest Rate Swap Agreement
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(846)
Loss reclassified to earnings	169
Gain (loss) recognized in AOCI	32
Ending balance	(645)
Cash Flow Hedges \| Forward currency-exchange contract
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	18
Loss reclassified to earnings	0
Gain (loss) recognized in AOCI	(23)
Ending balance	$ (5)

- Definition

+ References

+ Details

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	Jul. 03, 2021	Jan. 02, 2021
Assets:
Money market funds and time deposits	$ 11,250	$ 8,054
Banker's acceptance drafts	10,793	9,445
Forward currency-exchange contracts		37
Liabilities:
2018 Swap Agreement	850	1,099
Forward currency-exchange contract	6	7
Level 1
Assets:
Money market funds and time deposits	11,250	8,054
Banker's acceptance drafts	0	0
Forward currency-exchange contracts		0
Liabilities:
2018 Swap Agreement	0	0
Forward currency-exchange contract	0	0
Level 2
Assets:
Money market funds and time deposits	0	0
Banker's acceptance drafts	10,793	9,445
Forward currency-exchange contracts		37
Liabilities:
2018 Swap Agreement	850	1,099
Forward currency-exchange contract	6	7
Level 3
Assets:
Money market funds and time deposits	0	0
Banker's acceptance drafts	0	0
Forward currency-exchange contracts		0
Liabilities:
2018 Swap Agreement	0	0
Forward currency-exchange contract	$ 0	$ 0

Fair Value Measurements and Fair Value of Financial Instruments - Carrying Value and Fair Value of Debt Obligations (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Jan. 02, 2021
Carrying Value
Debt Obligations:
Revolving credit facility	$ 258,722	$ 217,963
Senior promissory notes	10,000	10,000
Debt obligations	268,722	227,963
Fair Value
Debt Obligations:
Revolving credit facility	258,722	217,963
Senior promissory notes	11,095	11,157
Debt obligations	$ 269,817	$ 229,120

Business Segment Information - Summary of Segment Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021 USD ($)	Jun. 27, 2020 USD ($)	Jul. 03, 2021 USD ($) Segment	Jun. 27, 2020 USD ($)
Segment Reporting [Abstract]
Number of reportable segments \| Segment			3
Revenue
Revenues	$ 195,811	$ 152,860	$ 368,274	$ 311,987
Income Before Provision for Income Taxes
Total operating income	33,010	18,121	56,437	37,776
Interest expense, net	(1,010)	(1,894)	(2,056)	(4,302)
Other expense, net	(24)	(31)	(48)	(63)
Income Before Provision for Income Taxes	31,976	16,196	54,333	33,411
Capital Expenditures
Capital expenditures	2,059	911	4,318	3,597
Restructuring costs	0	456	0	456
Flow Control
Capital Expenditures
Acquisition transaction costs	239		1,236
Restructuring costs		456		456
Industrial Processing
Capital Expenditures
Acquisition transaction costs		435		435
Operating Segment \| Flow Control
Revenue
Revenues	70,762	51,365	134,516	108,514
Income Before Provision for Income Taxes
Total operating income	19,324	10,260	34,770	23,590
Capital Expenditures
Capital expenditures	368	337	702	1,158
Operating Segment \| Industrial Processing
Revenue
Revenues	82,681	65,673	151,835	130,382
Income Before Provision for Income Taxes
Total operating income	17,301	10,639	28,434	20,075
Capital Expenditures
Capital expenditures	1,191	211	2,995	1,675
Operating Segment \| Material Handling
Revenue
Revenues	42,368	35,822	81,923	73,091
Income Before Provision for Income Taxes
Total operating income	5,592	3,593	10,035	7,727
Capital Expenditures
Capital expenditures	495	283	616	681
Corporate
Income Before Provision for Income Taxes
Total operating income	(9,207)	(6,371)	(16,802)	(13,616)
Capital Expenditures
Capital expenditures	$ 5	$ 80	$ 5	$ 83

Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 03, 2021	Jan. 02, 2021
Commitments and Contingencies Disclosure [Abstract]
Banker's acceptance drafts, maturity period	6 months
Banker's acceptance drafts with recourse	$ 9,723	$ 7,568

Subsequent Event - Narrative (Details) € in Thousands, $ in Thousands	3 Months Ended			4 Months Ended	6 Months Ended		12 Months Ended
	Oct. 02, 2021 USD ($)	Oct. 02, 2021 EUR (€)	Jul. 03, 2021 USD ($) facility	Aug. 10, 2021 USD ($)	Jul. 03, 2021 USD ($) facility	Jun. 27, 2020 USD ($)	Jan. 02, 2021 EUR (€)
Subsequent Event [Line Items]
Proceeds from issuance of long-term obligations					$ 88,888	$ 7,000
Funds held in escrow			$ 84,249		$ 84,249
The Clouth Group of Companies
Subsequent Event [Line Items]
Revenues \| €							€ 41,000
The Clouth Group of Companies \| Germany
Subsequent Event [Line Items]
Number of manufacturing facilities \| facility			2		2
The Clouth Group of Companies \| Poland
Subsequent Event [Line Items]
Number of manufacturing facilities \| facility			1		1
Euro-Denominated Borrowing \| Revolving Credit Facility, due 2023
Subsequent Event [Line Items]
Proceeds from issuance of long-term obligations					$ 85,888
The Clouth Group of Companies
Subsequent Event [Line Items]
Funds held in escrow			$ 84,249		$ 84,249
The Clouth Group of Companies \| Forecast
Subsequent Event [Line Items]
Consideration transferred	$ 92,000	€ 78,000
The Clouth Group of Companies \| Euro-Denominated Borrowing \| Revolving Credit Facility, due 2023
Subsequent Event [Line Items]
Proceeds from issuance of long-term obligations			$ 78,749
Subsequent Event \| The Clouth Group of Companies \| Euro-Denominated Borrowing \| Revolving Credit Facility, due 2023
Subsequent Event [Line Items]
Proceeds from issuance of long-term obligations				$ 82,877

Subsequent Event - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Pro Forma Information
Cost of revenue	$ 110,493	$ 86,412	$ 207,241	$ 177,216
Selling, general, and administrative expenses	49,267	45,073	98,698	90,665
The Clouth Group of Companies
Subsequent Event [Line Items]
Revenues	207,740	164,248	392,128	334,796
Net Income Attributable to Kadant	$ 23,663	$ 10,276	$ 41,522	$ 20,147
Earnings per Share Attributable to Kadant:
Basic (in dollars per share)	$ 2.04	$ 0.89	$ 3.59	$ 1.76
Diluted (in dollars per share)	$ 2.03	$ 0.89	$ 3.57	$ 1.75
The Clouth Group of Companies \| Fair Value Adjustment to Inventory
Pro Forma Information
Cost of revenue		$ 1,753		$ 3,505
The Clouth Group of Companies \| Acquisition-related Costs
Pro Forma Information
Selling, general, and administrative expenses		$ 239		$ 1,673
Amortization	$ 239		$ 1,236