kai-20220802
0000886346false00008863462022-08-022022-08-02

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 2, 2022

KADANT INC.
(Exact name of registrant as specified in its charter)

Commission file number 001-11406
Delaware52-1762325
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
One Technology Park Drive
Westford, Massachusetts 01886
(Address of principal executive offices, including zip code)
(978) 776-2000
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueKAINew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨




KADANT INC.
Item 2.02 Results of Operations and Financial Condition.

On August 2, 2022, Kadant Inc. (the “Company”) announced its financial results for the fiscal quarter ended July 2, 2022. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 7.01 Regulation FD Disclosure.

On August 3, 2022, the Company will hold a webcast and conference call to discuss its financial results for the fiscal quarter ended July 2, 2022. A copy of the slides that will be presented on the webcast and discussed in the conference call is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

The information in Item 2.02 and Item 7.01 of this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits
The following exhibits relating to Item 2.02 and Item 7.01 shall be deemed to be furnished and not filed.
Exhibit
No.
Description of Exhibits
99.1
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document).

2



KADANT INC.
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
KADANT INC.
Date: August 2, 2022
By
/s/ Michael J. McKenney
Michael J. McKenney
Executive Vice President and Chief Financial Officer
3

Document

Exhibit 99.1
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PRESS RELEASE
KADANT INC.
One Technology Park Drive
Westford, MA 01886 USA
Tel: +1 978-776-2000
www.kadant.com

Kadant Reports Second Quarter 2022 Results

WESTFORD, Mass., August 2, 2022 - Kadant Inc. (NYSE: KAI) reported its financial results for the second quarter ended July 2, 2022.

Second Quarter Financial Highlights
Bookings increased 25% to $266 million.
Revenue increased 13% to $222 million.
Net income increased 14% to $26 million.
GAAP diluted EPS increased 14% to $2.24.
Adjusted diluted EPS increased 11% to $2.24.
Adjusted EBITDA increased 11% to a record $46 million and represented 20.7% of revenue.
Operating cash flow decreased 58% to $19 million.
Backlog was a record $379 million.

Note: Percent changes above are based on comparison to the prior year period. Adjusted diluted EPS, adjusted EBITDA, adjusted EBITDA margin, and changes in organic revenue are non-GAAP financial measures that exclude certain items as detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.”

Management Commentary
“Our strong performance continued into the second quarter with outstanding bookings and record adjusted EBITDA,” said Jeffrey L. Powell, president and chief executive officer of Kadant. “In the second quarter we delivered solid margins and revenue growth of 13 percent led by our Flow Control segment. Our global workforce once again navigated through supply chain constraints and inflationary pressures to deliver remarkable value to our customers. New order activity from both aftermarket parts and capital contributed to a sixth consecutive record quarterly backlog placing us in an excellent position to finish the year strong.”

Second Quarter 2022 compared to 2021
Revenue increased 13 percent to $221.6 million compared to $195.8 million in 2021. Organic revenue increased eight percent, which excludes a 10 percent increase from acquisitions and a five percent decrease from the unfavorable effect of foreign currency translation. Gross margin was 43.3 percent compared to 43.6 percent in 2021.

GAAP diluted earnings per share (EPS) increased 14 percent to $2.24 compared to $1.96 in 2021. Adjusted diluted EPS increased 11 percent to $2.24 compared to $2.01 in 2021. Adjusted diluted EPS excludes $0.05 of acquisition costs in 2021. Net income increased 14 percent to $26.2 million compared to $22.9 million in 2021. Adjusted EBITDA increased 11 percent to a record $46.0 million and represented 20.7 percent of revenue compared to $41.3 million and 21.1 percent of revenue in the prior year quarter. Operating cash flow decreased 58 percent to $18.8 million compared to $44.4 million in 2021 due to an increase in working capital to support shipments in the second half of 2022.

Bookings increased 25 percent to $265.9 million compared to $213.2 million in 2021. Organic bookings increased 17 percent, which excludes a 12 percent increase from acquisitions and a four percent decrease from the unfavorable effect of foreign currency translation.



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Summary and Outlook
"We are pleased with the exceptionally strong first half of 2022 and our record backlog has us positioned well for the year,” Mr. Powell continued. "As we look ahead to the second half of 2022, we continue to see good levels of project activity despite the ongoing macroeconomic challenges. However, we expect industrial demand to moderate as consumer demand slows in response to actions taken by governments and central banks to control inflation.

"We are raising the lower end of our revenue guidance and we now expect revenue of $890 to $905 million in 2022, revised from our previous guidance of $885 to $905 million. We are maintaining our GAAP diluted EPS guidance of $10.05 to $10.25, which includes a $1.30 gain on the sale of a facility, $0.04 of acquisition-related costs, and a $0.01 impairment charge. Excluding these items, we expect adjusted diluted EPS of $8.80 to $9.00. The 2022 guidance includes a negative effect from foreign currency translation, lowering revenue guidance by $45 million and adjusted diluted EPS guidance by $0.49. For the third quarter of 2022, we expect GAAP diluted EPS of $1.99 to $2.09 on revenue of $211 to $218 million."

Conference Call
Kadant will hold a webcast with a slide presentation for investors on Wednesday, August 3, 2022, at 11:00 a.m. eastern time to discuss its second quarter performance, as well as future expectations. Please note that there is a new process to access the webcast. To listen to the webcast, go to the “Investors” section of the Company’s website at www.kadant.com to access the webcast link. Participants interested in joining the call’s live question and answer session are required to register by either visiting https://register.vevent.com/register/BI405e5e1786334c5f899ed7e6388f2e11 or clicking the Q&A link on our website to receive a dial-in number and unique PIN. It is recommended that you join the call 10 minutes prior to the start of the event. A replay of the webcast presentation will be available on our website through September 2, 2022.

Prior to the call, our earnings release and the slides used in the webcast presentation will be filed with the Securities and Exchange Commission and will be available at www.sec.gov. After the webcast, Kadant will post its updated general investor presentation incorporating the second quarter results on its website at www.kadant.com under the “Investors” section.

Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including increases or decreases in revenue excluding the effect of acquisitions and foreign currency translation (organic revenue), adjusted operating income, adjusted net income, adjusted diluted EPS, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, adjusted EBITDA margin, and free cash flow.

We use organic revenue to understand our trends and to forecast and evaluate our financial performance and compare revenue to prior periods. Revenue in the second quarter of 2022 included $19.9 million from acquisitions and a $9.1 million unfavorable foreign currency translation effect. Revenue in the first six months of 2022 included $39.9 million from acquisitions and a $12.9 million unfavorable foreign currency translation effect. Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude impairment costs, acquisition costs, amortization expense related to acquired profit in inventory and backlog, and certain gains or losses. Collectively, these items are excluded as they are not indicative of our core operating results and are not comparable to other periods, which have differing levels of incremental costs, expenditures or income, or none at all. Additionally, we use free cash flow in order to provide insight on our ability to generate cash for acquisitions and debt repayments, as well as for other investing and financing activities.

We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook. We believe that the inclusion of such measures helps investors gain an understanding of our underlying operating performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts and to the



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performance of our competitors. Such measures are also used by us in our financial and operating decision-making and for compensation purposes. We also believe this information is responsive to investors' requests and gives them an additional measure of our performance.
    
The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for the results of operations prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release have limitations associated with their use as compared to the most directly comparable GAAP measures, in that they may be different from, and therefore not comparable to, similar measures used by other companies.

Second Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
Pre-tax acquisition costs of $0.6 million in 2021.

Adjusted net income and adjusted diluted EPS exclude:
After-tax acquisition costs of $0.6 million in 2021.

Free cash flow is calculated as operating cash flow less:
Capital expenditures of $6.9 million in 2022 and $2.1 million in 2021.

First Six Months
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
Pre-tax gain on the sale of a facility of $20.2 million in 2022.
Pre-tax acquisition costs of $0.1 million in 2022 and $1.9 million in 2021.
Pre-tax indemnification asset reversal of $0.6 million in 2022.
Pre-tax impairment costs of $0.2 million in 2022.
Pre-tax expense related to amortization of acquired profit in inventory and backlog of $0.5 million in 2022 and $0.1 million in 2021.

Adjusted net income and adjusted diluted EPS exclude:
After-tax gain on the sale of a facility of $15.1 million ($20.2 million net of tax of $5.1 million) in 2022.
After-tax acquisition costs of $0.1 million in 2022 and $1.7 million ($1.9 million net of tax of $0.2 million) in 2021.
After-tax impairment costs of $0.1 million ($0.2 million net of tax of $0.1 million) in 2022.
After-tax expense related to amortization of acquired profit in inventory and backlog of $0.4 million ($0.5 million net of tax of $0.1 million) in 2022 and $0.1 million in 2021.

Free cash flow is calculated as operating cash flow less:
Capital expenditures of $9.8 million in 2022 and $4.3 million in 2021.

Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release.



Kadant Reports Second Quarter 2022 Results
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Financial Highlights (unaudited)
(In thousands, except per share amounts and percentages)
 
Three Months EndedSix Months Ended
Consolidated Statement of IncomeJuly 2,
2022
July 3,
2021
July 2,
2022
July 3,
2021
Revenue$221,649 $195,811 $448,129 $368,274 
Costs and Operating Expenses:
Cost of revenue125,611 110,493 253,880 207,241 
Selling, general, and administrative expenses55,319 49,267 114,487 98,698 
Research and development expenses3,251 3,041 6,329 5,898 
Gain on sale and other expense, net (b)— — (20,008)— 
184,181 162,801 354,688 311,837 
Operating Income37,468 33,010 93,441 56,437 
Interest Income277 56 379 121 
Interest Expense(1,366)(1,066)(2,600)(2,177)
Other Expense, Net(19)(24)(41)(48)
Income Before Provision for Income Taxes36,360 31,976 91,179 54,333 
Provision for Income Taxes9,951 8,949 23,329 14,510 
Net Income26,409 23,027 67,850 39,823 
Net Income Attributable to Noncontrolling Interest(239)(163)(488)(398)
Net Income Attributable to Kadant$26,170 $22,864 $67,362 $39,425 
Earnings per Share Attributable to Kadant:
Basic$2.24 $1.97 $5.78 $3.41 
Diluted$2.24 $1.96 $5.77 $3.39 
Weighted Average Shares:
Basic11,660 11,579 11,645 11,566 
Diluted11,689 11,650 11,672 11,631 
Three Months EndedThree Months Ended
Adjusted Net Income and Adjusted Diluted EPS (a)
July 2,
2022
July 2,
2022
July 3,
2021
July 3,
2021
Net Income and Diluted EPS Attributable to Kadant, as Reported$26,170 $2.24 $22,864 $1.96 
Adjustments for the Following, Net of Tax:
Acquisition Costs— — 557 0.05 
Acquired Profit in Inventory and Backlog Amortization (c,d)— — 21 — 
Adjusted Net Income and Adjusted Diluted EPS (a)$26,170 $2.24 $23,442 $2.01 

Six Months EndedSix Months Ended
Adjusted Net Income and Adjusted Diluted EPS (a)
July 2,
2022
July 2,
2022
July 3,
2021
July 3,
2021
Net Income and Diluted EPS Attributable to Kadant, as Reported$67,362 $5.77 $39,425 $3.39 
Adjustments for the Following, Net of Tax:
Gain on Sale (b)(15,143)(1.30)— — 
Acquisition Costs59 0.01 1,730 0.15 
Impairment Costs135 0.01 — — 
Acquired Profit in Inventory and Backlog Amortization (c,d)387 0.03 65 0.01 
Adjusted Net Income and Adjusted Diluted EPS (a)$52,800 $4.52 $41,220 $3.54 
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Kadant Reports Second Quarter 2022 Results
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Three Months EndedIncrease Excluding Acquisitions and FX (a,e)
Revenue by Segment July 2,
2022
July 3,
2021
 Increase
Flow Control$85,220 $70,762 $14,458 $5,458 
Industrial Processing84,402 82,681 1,721 5,219 
Material Handling52,027 42,368 9,659 4,312 
 $221,649 $195,811 $25,838 $14,989 
Percentage of Parts and Consumables Revenue66%64%
Six Months EndedIncreaseIncrease Excluding Acquisitions and FX (a,e)
July 2,
2022
July 3,
2021
Flow Control$171,046 $134,516 $36,530 $16,685 
Industrial Processing177,487 151,835 25,652 30,405 
Material Handling99,596 81,923 17,673 5,796 
 $448,129 $368,274 $79,855 $52,886 
Percentage of Parts and Consumables Revenue65%66%
Three Months EndedIncrease Increase Excluding Acquisitions and FX (e)
Bookings by SegmentJuly 2,
2022
July 3,
2021
Flow Control$97,347 $71,819 $25,528 $15,187 
Industrial Processing109,883 101,899 7,984 11,946 
Material Handling 58,675 39,447 19,228 9,610 
$265,905 $213,165 $52,740 $36,743 
Percentage of Parts and Consumables Bookings 59%60%
Six Months EndedIncrease Increase Excluding Acquisitions and FX (e)
 July 2,
2022
July 3,
2021
Flow Control$197,458 $147,818 $49,640 $28,565 
Industrial Processing216,227 188,505 27,722 33,095 
Material Handling118,315 81,331 36,984 19,077 
$532,000 $417,654 $114,346 $80,737 
Percentage of Parts and Consumables Bookings59%62%
Three Months EndedSix Months Ended
Business Segment InformationJuly 2,
2022
July 3,
2021
July 2,
2022
July 3,
2021
Gross Margin:
Flow Control52.8%52.8%52.6%53.0%
Industrial Processing38.4%40.1%38.5%40.3%
Material Handling35.9%34.9%36.1%34.8%
43.3%43.6%43.3%43.7%
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Kadant Reports Second Quarter 2022 Results
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Three Months EndedSix Months Ended
Business Segment Information (continued)July 2,
2022
July 3,
2021
July 2,
2022
July 3,
2021
Operating Income:
Flow Control$22,707 $19,324 $44,432 $34,770 
Industrial Processing (i) 15,285 17,248 53,444 28,354 
Material Handling (i)8,701 5,281 14,545 9,450 
Corporate (i)(9,225)(8,843)(18,980)(16,137)
$37,468 $33,010 $93,441 $56,437 
Adjusted Operating Income (a,f):
Flow Control$22,707 $19,563 $44,276 $36,006 
Industrial Processing15,285 17,301 34,011 28,494 
Material Handling8,701 5,619 15,262 10,062 
Corporate(9,225)(8,843)(18,980)(16,137)
$37,468 $33,640 $74,569 $58,425 
Capital Expenditures:
Flow Control$1,031 $368 $1,556 $702 
Industrial Processing (h)5,073 1,191 7,025 2,995 
Material Handling843 495 1,227 616 
Corporate— 
$6,947 $2,059 $9,815 $4,318 
Three Months EndedSix Months Ended
Cash Flow and Other DataJuly 2,
2022
July 3,
2021
July 2,
2022
July 3,
2021
Operating Cash Flow$18,797 $44,386 $42,565 $63,478 
Less: Capital Expenditures (h)(6,947)(2,059)(9,815)(4,318)
Free Cash Flow (a)$11,850 $42,327 $32,750 $59,160 
Depreciation and Amortization Expense$8,486 $7,716 $17,931 $15,402 
Balance Sheet Data  July 2,
2022
January 1,
2022
Assets
Cash, Cash Equivalents, and Restricted Cash $78,026 $94,161 
Accounts Receivable, net124,704 117,209 
Inventories156,426 134,356 
Contract Assets11,861 8,626 
Property, Plant, and Equipment, net105,919 107,989 
Intangible Assets183,317 199,343 
Goodwill384,109 396,887 
Other Assets79,641 73,641 
$1,124,003 $1,132,212 
Liabilities and Stockholders' Equity
Accounts Payable$55,924 $59,250 
Debt Obligations223,817 264,597 
Other Borrowings4,495 4,917 
Other Liabilities233,603 237,832 
Total Liabilities517,839 566,596 
Stockholders' Equity606,164 565,616 
$1,124,003 $1,132,212 
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Kadant Reports Second Quarter 2022 Results
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Three Months EndedSix Months Ended
Adjusted Operating Income and Adjusted EBITDA Reconciliation (a)
July 2,
2022
July 3,
2021
July 2,
2022
July 3,
2021
Consolidated
Net Income Attributable to Kadant$26,170 $22,864 $67,362 $39,425 
Net Income Attributable to Noncontrolling Interest239 163 488 398 
Provision for Income Taxes9,951 8,949 23,329 14,510 
Interest Expense, Net1,089 1,010 2,221 2,056 
Other Expense, Net19 24 41 48 
Operating Income37,468 33,010 93,441 56,437 
Gain on Sale (b)— — (20,190)— 
Acquisition Costs— 603 76 1,901 
Indemnification Asset Reversal (g)— — 575 — 
Impairment Costs— — 182 — 
Acquired Backlog Amortization (c)— 27 703 87 
Acquired Profit in Inventory Amortization (d)— — (218)— 
Adjusted Operating Income (a)37,468 33,640 74,569 58,425 
Depreciation and Amortization8,486 7,689 17,228 15,315 
Adjusted EBITDA (a)$45,954 $41,329 $91,797 $73,740 
Adjusted EBITDA Margin (a,j)20.7%21.1%20.5%20.0%
Flow Control
 Operating Income$22,707 $19,324 $44,432 $34,770 
Acquisition Costs— 239 62 1,236 
Acquired Profit in Inventory Amortization (d)— — (218)— 
Adjusted Operating Income (a)22,707 19,563 44,276 36,006 
Depreciation and Amortization2,297 1,568 4,644 3,140 
Adjusted EBITDA (a)$25,004 $21,131 $48,920 $39,146 
Adjusted EBITDA Margin (a,j)29.3%29.9%28.6%29.1%
Industrial Processing
Operating Income (i)$15,285 $17,248 $53,444 $28,354 
Gain on Sale (b)— — (20,190)— 
Indemnification Asset Reversal (g)— — 575 — 
Impairment Costs— — 182 — 
Acquisition Costs— 53 — 80 
Acquired Backlog Amortization (c)— — — 60 
Adjusted Operating Income (a)15,285 17,301 34,011 28,494 
Depreciation and Amortization3,080 3,403 6,354 6,741 
Adjusted EBITDA (a)$18,365 $20,704 $40,365 $35,235 
Adjusted EBITDA Margin (a,j)21.8%25.0%22.7%23.2%
Material Handling
Operating Income (i)$8,701 $5,281 $14,545 $9,450 
Acquisition Costs— 311 14 585 
Acquired Backlog Amortization (c)— 27 703 27 
Adjusted Operating Income (a)8,701 5,619 15,262 10,062 
Depreciation and Amortization3,083 2,682 6,179 5,368 
Adjusted EBITDA (a)$11,784 $8,301 $21,441 $15,430 
Adjusted EBITDA Margin (a,j)22.6%19.6%21.5%18.8%
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Kadant Reports Second Quarter 2022 Results
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Three Months EndedSix Months Ended
Adjusted Operating Income and Adjusted EBITDA Reconciliation (continued) (a)
July 2,
2022
July 3,
2021
July 2,
2022
July 3,
2021
Corporate
Operating Loss (i)$(9,225)$(8,843)$(18,980)$(16,137)
Depreciation and Amortization26 36 51 66 
EBITDA (a)$(9,199)$(8,807)$(18,929)$(16,071)
 
(a) Represents a non-GAAP financial measure.
(b)Includes a $20.2 million gain on the sale of a Chinese facility in our Industrial Processing segment pursuant to a relocation plan.
(c) Represents intangible amortization expense associated with acquired backlog.
(d) Represents income within the cost of revenue associated with amortization of acquired profit in inventory.
(e) Represents the increase (decrease) resulting from the exclusion of acquisitions and from the conversion of current period amounts reported in local currencies into U.S. dollars at the exchange rate of the prior period compared to the U.S. dollar amount reported in the prior period.
(f)See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and Adjusted EBITDA Reconciliation."
(g)Represents an indemnification asset reversal related to the release of tax reserves associated with uncertain tax positions.
(h)Includes $3.1 million and $3.2 million in the three and six months ended July 2, 2022, respectively, related to the construction of a new manufacturing facility in China.
(i)Operating income by segment has been recast in the first six months of 2021 to include acquisition costs of $0.5 million and $0.1 million in our Material Handling and Industrial Processing segments, respectively, which were previously included in Corporate.
(j) Calculated as adjusted EBITDA divided by revenue in each period.

About Kadant
Kadant Inc. is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing. The Company’s products and services play an integral role in enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries. Kadant is based in Westford, Massachusetts, with approximately 3,000 employees in 20 countries worldwide. For more information, visit www.kadant.com.

Safe Harbor Statement
The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our future financial and operating performance, demand for our products, and economic and industry outlook. These forward-looking statements represent our expectations as of the date of this press release. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements as a result of various important factors, including those set forth under the heading "Risk Factors" in Kadant’s annual report on Form 10-K for the fiscal year ended January 1, 2022 and subsequent filings with the Securities and Exchange Commission. These include risks and uncertainties relating to adverse changes in global and local economic conditions; the variability and difficulty in accurately predicting revenues from large capital equipment and systems projects; health epidemics; our acquisition strategy; levels of residential construction activity; reductions by our wood processing customers of their capital spending or production of oriented strand board; changes to the global timber supply; development and use of digital media; cyclical economic conditions affecting the global mining industry; demand for coal, including economic and environmental risks associated with coal; failure of our information systems or breaches of data security and cybertheft; implementation of our internal growth strategy; supply chain constraints, inflationary pressure, price increases and shortages in raw materials;
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Kadant Reports First Quarter 2022 Results
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August 2, 2022
Page 9
competition; changes in our tax provision or exposure to additional tax liabilities; our ability to successfully manage our manufacturing operations; disruption in production; future restructurings; loss of key personnel and effective succession planning; protection of intellectual property; climate change; adequacy of our insurance coverage; global operations; policies of the Chinese government; the variability and uncertainties in sales of capital equipment in China; currency fluctuations; economic conditions and regulatory changes caused by the United Kingdom’s exit from the European Union; changes to government regulations and policies around the world; compliance with government regulations and policies and compliance with laws; environmental laws and regulations; environmental, health and safety laws and regulations impacting the mining industry; our debt obligations; restrictions in our credit agreement and note purchase agreement; substitution of an alternative index for LIBOR; soundness of financial institutions; fluctuations in our share price; and anti-takeover provisions.

Contacts
Investor Contact Information:
Michael McKenney, 978-776-2000
IR@kadant.com
or
Media Contact Information:
Wes Martz, 269-278-1715
media@kadant.com

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Second Quarter 2022 Business Review August 3, 2022 Exhibit 99.2


 
Forward-Looking Statements The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our future financial and operating performance, demand for our products, and economic and industry outlook. These forward-looking statements represent our expectations as of August 2, 2022. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements as a result of various important factors, including those set forth under the heading "Risk Factors" in Kadant’s annual report on Form 10-K for the fiscal year ended January 1, 2022 and subsequent filings with the Securities and Exchange Commission. These include risks and uncertainties relating to adverse changes in global and local economic conditions; the variability and difficulty in accurately predicting revenues from large capital equipment and systems projects; health epidemics; our acquisition strategy; levels of residential construction activity; reductions by our wood processing customers of their capital spending or production of oriented strand board; changes to the global timber supply; development and use of digital media; cyclical economic conditions affecting the global mining industry; demand for coal, including economic and environmental risks associated with coal; failure of our information systems or breaches of data security and cybertheft; implementation of our internal growth strategy; supply chain constraints, inflationary pressure, price increases and shortages in raw materials; competition; changes in our tax provision or exposure to additional tax liabilities; our ability to successfully manage our manufacturing operations; disruption in production; future restructurings; loss of key personnel and effective succession planning; protection of intellectual property; climate change; adequacy of our insurance coverage; global operations; policies of the Chinese government; the variability and uncertainties in sales of capital equipment in China; currency fluctuations; economic conditions and regulatory changes caused by the United Kingdom’s exit from the European Union; changes to government regulations and policies around the world; compliance with government regulations and policies and compliance with laws; environmental laws and regulations; environmental, health and safety laws and regulations impacting the mining industry; our debt obligations; restrictions in our credit agreement and note purchase agreement; substitution of an alternative index for LIBOR; soundness of financial institutions; fluctuations in our share price; and anti-takeover provisions. 2KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
Use of Non-GAAP Financial Measures In addition to the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including increases or decreases in revenue excluding the effect of acquisitions and foreign currency translation (organic revenue), adjusted diluted EPS (earnings per share), adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA), adjusted EBITDA margin, adjusted operating income, and free cash flow. Specific non-GAAP financial measures have been marked with an * (asterisk) within this presentation. A reconciliation of those numbers to the most directly comparable GAAP financial measures is shown in the Appendix and in our second quarter 2022 earnings press release issued August 2, 2022, which is available in the Investors section of our website at investor.kadant.com under the heading News Releases. We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook. We believe the inclusion of such measures helps investors gain an understanding of our underlying operating performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts and to the performance of our competitors. Such measures are also used by us in our financial and operating decision- making and for compensation purposes. We also believe this information is responsive to investors' requests and gives them an additional measure of our performance. The non-GAAP financial measures included in this presentation are not meant to be considered superior to or a substitute for the results of operations prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this presentation have limitations associated with their use as compared to the most directly comparable GAAP measures, in that they may be different from, and therefore not comparable to, similar measures used by other companies. 3KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
BUSINESS REVIEW Jeffrey L. Powell, President & CEO 4KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
Operational Highlights • Strong demand continued through the second quarter • Capital project activity was robust across all operating segments despite macroeconomic headwinds • Solid execution by our businesses led to record adjusted EBITDA* 5KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
Q2 2022 Performance 6 Q2 22 Q2 21 Change Revenue $221.6 $195.8 +13.2% Net Income $26.2 $22.9 +14.5% Adjusted EBITDA* $46.0 $41.3 +11.2% Adjusted EBITDA Margin* 20.7% 21.1% -40 bps Diluted EPS $2.24 $1.96 +14.3% Adjusted Diluted EPS* $2.24 $2.01 +11.4% Operating Cash Flow $18.8 $44.4 -57.7% Bookings $265.9 $213.2 +24.7% HIGHLIGHTS • Demand remained strong in the second quarter following a record first quarter bookings • Aftermarket parts were up 17% and represented 66% of total Q2 revenue • Strong operating performance led to record adjusted EBITDA* ($ in millions, except per share amounts) KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
$71.8 $76.7 $83.7 $100.1 $97.3 2Q21 3Q21 4Q21 1Q22 2Q22 Flow Control 7 $ in millions Q2 22 Q2 21 Change Revenue $85.2 $70.8 +20.4% Bookings $97.3 $71.8 +35.5% Adjusted EBITDA* $25.0 $21.1 +18.3% Adjusted EBITDA Margin* 29.3% 29.9% -60 bps HIGHLIGHTS • Strong aftermarket demand and capital project activity • High energy prices and CO2 reduction targets in Europe are driving capital project activity in the region • Strong adjusted EBITDA* performance continued in the second quarter • Supply chain constraints continue to present challenges ($ in millions) KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. BOOKINGS


 
$101.9 $118.9 $94.9 $106.3 $109.9 2Q21 3Q21 4Q21 1Q22 2Q22 Industrial Processing 8 $ in millions Q2 22 Q2 21 Change Revenue $84.4 $82.7 +2.1% Bookings $109.9 $101.9 +7.8% Adjusted EBITDA* $18.4 $20.7 -11.3% Adjusted EBITDA Margin* 21.8% 25.0% -320 bps HIGHLIGHTS • Strong end-market demand drove bookings for both parts and capital • Aftermarket parts revenue represented 65% of total Q2 revenue • High level of project activity continued through the second quarter • Record backlog positions us well for strong performance in 2022 BOOKINGS ($ in millions) KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
$39.4 $49.1 $52.2 $59.6 $58.7 2Q21 3Q21 4Q21 1Q22 2Q22 Material Handling 9 $ in millions Q2 22 Q2 21 Change Revenue $52.0 $42.4 +22.8% Bookings $58.7 $39.4 +48.7% Adjusted EBITDA* $11.8 $8.3 +42.0% Adjusted EBITDA Margin* 22.6% 19.6% +300 bps HIGHLIGHTS • Demand was exceptionally strong for our bulk material handling equipment • Business activity remains healthy with organic bookings up 24% • Recent acquisition and improved operating leverage led to record adjusted EBITDA margin* BOOKINGS ($ in millions) KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
Business Outlook • Demand expected to remain solid but softening as macroeconomic headwinds strengthen • Record backlog has us well positioned for the remainder of the year • Expecting to generate record earnings in fiscal 2022 10KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 11


 
Q2 2022 Financial Performance Q2 22 Q2 21 Gross Margin 43.3% 43.6% SG&A % of Revenue 25.0% 25.2% Operating Income $37.5 $33.0 Net Income $26.2 $22.9 Adjusted EBITDA* $46.0 $41.3 Diluted EPS $2.24 $1.96 Adjusted Diluted EPS* $2.24 $2.01 HIGHLIGHTS • Adjusted EBITDA margin* of 20.7% • Operating cash flow of $18.8 million • Free cash flow* of $11.9 million • Net debt of $150 million; leverage ratio1 of 1.05 ($ in millions, except per share amounts) KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 12


 
$42.3 $34.6 $55.9 $20.9 $11.9 2Q21 3Q21 4Q21 1Q22 2Q22 FREE CASH FLOW* OPERATING CASH FLOW 21.1% 20.5% 20.5% 20.2% 20.7% 2Q21 3Q21 4Q21 1Q22 2Q22 25.2% 26.2% 26.4% 26.1% 25.0% 2Q21 3Q21 4Q21 1Q22 2Q22 43.6% 41.9% 42.4% 43.4% 43.3% 2Q21 3Q21 4Q21 1Q22 2Q22 Key Consolidated Financial Metrics CASH FLOW $44.4 $37.9 $61.0 GROSS MARGIN $23.8 ($ in millions) SG&A ADJUSTED EBITDA MARGIN* $18.8 (as a % of revenue) KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 13


 
$2.01 $0.20 $0.16 $0.02 ($0.10) ($0.04) ($0.01) $2.24 2Q21 to 2Q22 Adjusted Diluted EPS* KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 14 2Q21 ADJ EPS* 2Q22 ADJ EPS* REVENUE ACQUISTIONS INTEREST EXPENSE OPERATING EXPENSE GOV’T PROGRAMS GROSS MARGIN


 
Key Liquidity Metrics $ in millions Q2 22 Q1 22 Q2 21 Cash, cash equivalents, and restricted cash $78.0 $89.0 $158.1 Debt $223.8 $243.4 $268.7 Lease obligations $4.5 $4.5 $5.0 Net Debt $150.3 $158.9 $115.6 Leverage ratio1 1.05 1.16 1.71 Working capital % LTM revenue2 12.4% 10.8% 12.7% Cash conversion days3 123 104 109 KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 15


 
Guidance 16KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. • FY 2022 GAAP diluted EPS of $10.05 to $10.25 • FY 2022 adjusted diluted EPS* of $8.80 to $9.00 • FY 2022 revenue of $890 to $905 million • Q3 2022 GAAP diluted EPS of $1.99 to $2.09 • Q3 2022 revenue of $211 to $218 million


 
Questions & Answers To participate in the live Q&A session, please go to investor.kadant.com and click on the Q&A session link to receive a dial-in number and unique PIN. Please mute the audio on your computer. KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 17


 
2022 Key Priorities 18 ACCELERATE SUSTAINABLE INDUSTRIAL PROCESSING DELIVER EXCEPTIONAL STAKEHOLDER VALUE MAINTAIN STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
INVESTOR RELATIONS CONTACT Michael McKenney, 978-776-2000 IR@kadant.com MEDIA RELATIONS CONTACT Wes Martz, 269-278-1715 media@kadant.com August 3, 2022


 
APPENDIX Second Quarter 2022 Business Review KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 20


 
Revenue by Customer Location $ in thousands Q2 22 Q2 21 Change Change Excl. Acquisitions and FX* North America $123,964 $106,767 $17,197 9,352 Europe 52,249 55,827 (3,578) (5,082) Asia 30,851 24,729 6,122 4,877 Rest of World 14,585 8,488 6,097 5,788 TOTAL $221,649 $195,811 $25,838 $14,989 KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 21


 
Adjusted Diluted EPS Reconciliation Q2 22 Q2 21 Diluted EPS, as reported $2.24 $1.96 Acquisition Costs, Net of Tax - 0.05 Adjusted Diluted EPS* $2.24 $2.01 Free Cash Flow Reconciliation $ in thousands Q2 22 Q2 21 Operating Cash Flow $18,797 $44,386 Less Capital Expenditures 6,947 2,059 Free Cash Flow* $11,850 $42,327 Adjusted diluted EPS (earnings per share) is a non-GAAP financial measure. Free cash flow is a non-GAAP financial measure. KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 22


 
Adjusted EBITDA Reconciliation Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA in a given period by revenue in the same period. $ in thousands Q2 22 Q2 21 Net Income Attributable to Kadant $26,170 $22,864 Net Income Attributable to Noncontrolling Interest 239 163 Provision for Income Taxes 9,951 8,949 Interest Expense, Net 1,089 1,010 Other Expense, Net 19 24 Acquisition Costs - 603 Acquired Backlog Amortization - 27 Depreciation and Amortization 8,486 7,689 Adjusted EBITDA* $45,954 $41,329 Adjusted EBITDA Margin* 20.7% 21.1% KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 23


 
Notes PRESENTATION NOTES • All references to EPS (earnings per share) are to our EPS as calculated on a diluted basis. • Percent change in slides 6-9 is calculated using actual numbers reported in our press release dated August 2, 2022. FOOTNOTES 1) Leverage ratio is calculated by dividing total debt by EBITDA. For purposes of this calculation, EBITDA is calculated by adding or subtracting certain items from Adjusted EBITDA, as required by our amended and restated credit facility (“Credit Facility”). Our Credit Facility defines total debt as debt less worldwide cash of up to $30 million. 2) Working capital is defined as current assets less current liabilities, excluding cash and debt. LTM is defined as last 12 months. 3) Cash conversion days is based on days in receivables plus days in inventory less days in accounts payable. KAI 2Q22 BUSINESS REVIEW–AUGUST 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 24