kai-20221101
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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): November 1, 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 November 1, 2022, Kadant Inc. (the “Company”) announced its financial results for the fiscal quarter ended October 1, 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 November 2, 2022, the Company will hold a webcast and conference call to discuss its financial results for the fiscal quarter ended October 1, 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: November 1, 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 Third Quarter 2022 Results

WESTFORD, Mass., November 1, 2022 - Kadant Inc. (NYSE: KAI) reported its financial results for the third quarter ended October 1, 2022.

Third Quarter Financial Highlights
Revenue increased 12% to $225 million.
Bookings decreased 14% to $211 million.
Net income increased 34% to $27 million.
GAAP diluted EPS increased 34% to $2.35.
Adjusted diluted EPS increased 21% to a record $2.38.
Adjusted EBITDA increased 17% to a record $48 million and represented 21.3% of revenue.
Operating cash flow decreased 34% to $25 million.
Backlog was $350 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
“We delivered strong revenue and earnings performance in the third quarter despite the challenging macroeconomic environment,” said Jeffrey L. Powell, president and chief executive officer of Kadant Inc. “Organic revenue growth was 19 percent in the third quarter with excellent contributions across all operating segments. Solid execution led to a fourth consecutive quarterly record for adjusted EBITDA and record adjusted earnings per share.

“Throughout the quarter we successfully navigated increasingly complex market conditions fueled by inflationary pressures, the strengthening U.S. dollar, lingering global supply chain constraints, and China's zero-COVID policy. Our operations teams around the globe continued to do an excellent job proactively managing these challenges.”

Third Quarter 2022 compared to 2021
Revenue increased 12 percent to $224.5 million compared to $199.8 million in 2021. Organic revenue increased 19 percent, which excludes a seven percent decrease from the unfavorable effect of foreign currency translation. Gross margin was 42.5 percent compared to 41.9 percent in 2021. Gross margin in 2021 included a negative 110 basis point impact from the amortization of acquired profit in inventory.

GAAP diluted earnings per share (EPS) increased 34 percent to $2.35 compared to $1.75 in 2021. Adjusted diluted EPS increased 21 percent to a record $2.38 compared to $1.97 in 2021. Adjusted diluted EPS excludes $0.02 of acquisition costs and $0.01 of restructuring costs in 2022. Adjusted diluted EPS excludes $0.22 of acquisition-related costs in 2021. Net income increased 34 percent to $27.5 million compared to $20.5 million in 2021. Adjusted EBITDA increased 17 percent to a record $47.8 million and represented a record 21.3 percent of revenue compared to $40.9 million and 20.5 percent of revenue in the prior year quarter. Operating cash flow decreased 34 percent to $24.9 million compared to $37.9 million in 2021 due to an increase in working capital.




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Bookings decreased 14 percent to $210.9 million compared to $244.7 million in 2021. Organic bookings decreased ten percent, which excludes a five percent decrease from the unfavorable effect of foreign currency translation and a one percent increase from an acquisition.

Summary and Outlook
“As we look ahead to the remainder of 2022, we are well positioned to finish the year strong,” Mr. Powell continued. “We have a significant amount of capital projects to deliver in the upcoming quarter, and our backlog remains at a near-record level. However, we expect macroeconomic headwinds to strengthen and order activity to continue to moderate through the remainder of the year.

"We are narrowing our revenue and adjusted diluted EPS guidance and we now expect revenue of $890 to $896 million in 2022, revised from our previous guidance of $890 to $905 million. Our GAAP diluted EPS guidance is now $10.02 to $10.19 revised from our previous guidance of $10.05 to $10.25. This guidance includes a $1.30 gain on the sale of a facility, $0.06 of acquisition-related costs, and $0.02 of impairment and restructuring costs. Excluding these items, we expect adjusted diluted EPS of $8.80 to $8.97, revised from our previous guidance of $8.80 to $9.00. For the fourth quarter of 2022, we expect GAAP diluted EPS of $1.90 to $2.07 on revenue of $217 to $223 million."

Conference Call
Kadant will hold a webcast with a slide presentation for investors on Wednesday, November 2, 2022, at 11:00 a.m. eastern time to discuss its third quarter performance, as well as future expectations. To listen to the call live and view the webcast, go to the “Investors” section of the Company’s website at www.kadant.com. Participants interested in joining the call’s live question and answer session are required to register by clicking https://register.vevent.com/register/BIed70b6d3e5a94b4995fefb0445031a26 or selecting 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 December 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 third 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. Organic revenue excludes revenue from acquisitions for the four quarterly reporting periods following the date of the acquisition and the effect of foreign currency translation. Revenue in the third quarter of 2022 included $0.2 million from an acquisition and a $14.1 million unfavorable foreign currency translation effect. Revenue in the first nine months of 2022 included $40.1 million from acquisitions and a $27.0 million unfavorable foreign currency translation effect. Our other non-GAAP financial measures exclude impairment and restructuring costs, acquisition costs, amortization expense related to acquired profit in inventory and backlog, and certain gains or losses, as indicated. 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



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

Third Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
Pre-tax expense related to amortization of acquired profit in inventory and backlog of $2.8 million in 2021.
Pre-tax acquisition costs of $0.4 million in 2022 and $0.7 million in 2021.
Pre-tax restructuring costs of $0.1 million in 2022.

Adjusted net income and adjusted diluted EPS exclude:
After-tax expense related to amortization of acquired profit in inventory and backlog of $2.0 million ($2.8 million net of tax of $0.8 million) in 2021.
After-tax acquisition costs of $0.3 million ($0.4 million net of tax of $0.1 million) in 2022 and $0.6 million ($0.7 million net of tax of $0.1 million) in 2021.
After-tax restructuring costs of $0.1 million in 2022.

Free cash flow is calculated as operating cash flow less:
Capital expenditures of $6.4 million in 2022 and $3.4 million in 2021.

First Nine 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 $0.5 million in 2022 and $2.6 million in 2021.
Pre-tax indemnification asset reversal of $0.6 million in 2022.
Pre-tax impairment and restructuring costs of $0.3 million in 2022.
Pre-tax expense related to amortization of acquired profit in inventory and backlog of $0.5 in 2022 and $2.9 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 $0.3 million ($0.5 million net of tax of $0.2 million) in 2022 and $2.3 million ($2.6 million net of tax of $0.3 million) in 2021.
After-tax impairment and restructuring costs of $0.2 million ($0.3 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 $2.0 ($2.9 million net of tax of $0.9 million) in 2021.

Free cash flow is calculated as operating cash flow less:
Capital expenditures of $16.2 million in 2022 and $7.7 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.



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Financial Highlights (unaudited)
(In thousands, except per share amounts and percentages)
 
Three Months EndedNine Months Ended
Consolidated Statement of IncomeOctober 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Revenue$224,510 $199,789 $672,639 $568,063 
Costs and Operating Expenses:
Cost of revenue129,154 116,096 383,034 323,337 
Selling, general, and administrative expenses53,153 52,316 167,640 151,014 
Research and development expenses3,245 2,649 9,574 8,547 
Gain on sale and other costs, net (b)72 — (19,936)— 
185,624 171,061 540,312 482,898 
Operating Income38,886 28,728 132,327 85,165 
Interest Income271 55 650 176 
Interest Expense(1,721)(1,320)(4,321)(3,497)
Other Expense, Net(19)(23)(60)(71)
Income Before Provision for Income Taxes37,417 27,440 128,596 81,773 
Provision for Income Taxes9,746 6,742 33,075 21,252 
Net Income27,671 20,698 95,521 60,521 
Net Income Attributable to Noncontrolling Interest(184)(237)(672)(635)
Net Income Attributable to Kadant$27,487 $20,461 $94,849 $59,886 
Earnings per Share Attributable to Kadant:
Basic$2.36 $1.77 $8.14 $5.18 
Diluted$2.35 $1.75 $8.12 $5.14 
Weighted Average Shares:
Basic11,662 11,580 11,651 11,571 
Diluted11,700 11,668 11,681 11,644 
Three Months EndedThree Months Ended
Adjusted Net Income and Adjusted Diluted EPS (a)
October 1,
2022
October 1,
2022
October 2,
2021
October 2,
2021
Net Income and Diluted EPS Attributable to Kadant, as Reported$27,487 $2.35 $20,461 $1.75 
Adjustments for the Following, Net of Tax:
Acquisition Costs276 0.02 595 0.05 
Restructuring Costs72 0.01 — — 
Acquired Profit in Inventory and Backlog Amortization (c,d)— — 1,978 0.17 
Adjusted Net Income and Adjusted Diluted EPS (a)$27,835 $2.38 $23,034 $1.97 
Nine Months EndedNine Months Ended
October 1,
2022
October 1,
2022
October 2,
2021
October 2,
2021
Net Income and Diluted EPS Attributable to Kadant, as Reported$94,849 $8.12 $59,886 $5.14 
Adjustments for the Following, Net of Tax:
Gain on Sale (b)(15,143)(1.30)— — 
Acquisition Costs335 0.03 2,325 0.20 
Impairment and Restructuring Costs207 0.02 — — 
Acquired Profit in Inventory and Backlog Amortization (c,d)387 0.03 2,043 0.17 
Adjusted Net Income and Adjusted Diluted EPS (a)$80,635 $6.90 $64,254 $5.52 
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Three Months EndedIncrease Excluding Acquisitions and FX (a,e)
Revenue by Segment October 1,
2022
October 2,
2021
 Increase
Flow Control$86,880 $76,253 $10,627 $16,913 
Industrial Processing86,085 81,620 4,465 9,179 
Material Handling51,545 41,916 9,629 12,493 
 $224,510 $199,789 $24,721 $38,585 
Percentage of Parts and Consumables Revenue63%66%
Nine Months EndedIncreaseIncrease Excluding Acquisitions and FX (a,e)
October 1,
2022
October 2,
2021
Flow Control$257,926 $210,769 $47,157 $33,598 
Industrial Processing263,572 233,455 30,117 39,584 
Material Handling151,141 123,839 27,302 18,289 
 $672,639 $568,063 $104,576 $91,471 
Percentage of Parts and Consumables Revenue64%66%
Three Months EndedIncrease (Decrease) Increase (Decrease) Excluding Acquisitions and FX (e)
Bookings by SegmentOctober 1,
2022
October 2,
2021
Flow Control$84,902 $76,661 $8,241 $14,294 
Industrial Processing77,878 118,896 (41,018)(39,200)
Material Handling 48,093 49,137 (1,044)1,250 
$210,873 $244,694 $(33,821)$(23,656)
Percentage of Parts and Consumables Bookings 68%53%
Nine Months EndedIncrease (Decrease) Increase (Decrease) Excluding Acquisitions and FX (e)
 October 1,
2022
October 2,
2021
Flow Control$282,360 $224,479 $57,881 $42,859 
Industrial Processing294,105 307,401 (13,296)(6,105)
Material Handling166,408 130,468 35,940 20,327 
$742,873 $662,348 $80,525 $57,081 
Percentage of Parts and Consumables Bookings62%59%

Three Months EndedNine Months Ended
Business Segment InformationOctober 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Gross Margin:
Flow Control51.6%49.7%52.3%51.8%
Industrial Processing39.3%39.7%38.8%40.1%
Material Handling32.3%31.9%34.8%33.8%
42.5%41.9%43.1%43.1%
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Three Months EndedNine Months Ended
Business Segment Information (continued)October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Operating Income:
Flow Control$22,874 $17,129 $67,306 $51,899 
Industrial Processing17,550 16,095 70,994 44,449 
Material Handling6,945 3,491 21,490 12,941 
Corporate(8,483)(7,987)(27,463)(24,124)
$38,886 $28,728 $132,327 $85,165 
Adjusted Operating Income (a,f):
Flow Control$23,356 $19,835 $67,632 $55,841 
Industrial Processing17,550 16,128 51,561 44,622 
Material Handling6,945 4,290 22,207 14,352 
Corporate(8,483)(7,987)(27,463)(24,124)
$39,368 $32,266 $113,937 $90,691 
Capital Expenditures:
Flow Control$868 $1,128 $2,424 $1,830 
Industrial Processing (h)4,654 1,725 11,679 4,720 
Material Handling854 505 2,081 1,121 
Corporate— 12 17 
$6,376 $3,370 $16,191 $7,688 
Three Months EndedNine Months Ended
Cash Flow and Other DataOctober 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Operating Cash Flow$24,897 $37,932 $67,462 $101,410 
Less: Capital Expenditures (h)(6,376)(3,370)(16,191)(7,688)
Free Cash Flow (a)$18,521 $34,562 $51,271 $93,722 
Depreciation and Amortization Expense$8,456 $9,195 $26,387 $24,597 
Balance Sheet Data  October 1,
2022
January 1,
2022
Assets
Cash, Cash Equivalents, and Restricted Cash $75,114 $94,161 
Accounts Receivable, net128,253 117,209 
Inventories156,567 134,356 
Contract Assets16,064 8,626 
Property, Plant, and Equipment, net105,439 107,989 
Intangible Assets173,707 199,343 
Goodwill372,966 396,887 
Other Assets78,743 73,641 
$1,106,853 $1,132,212 
Liabilities and Stockholders' Equity
Accounts Payable$53,495 $59,250 
Debt Obligations207,885 264,597 
Other Borrowings1,782 4,917 
Other Liabilities234,187 237,832 
Total Liabilities497,349 566,596 
Stockholders' Equity609,504 565,616 
$1,106,853 $1,132,212 
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Three Months EndedNine Months Ended
Adjusted Operating Income and Adjusted EBITDA Reconciliation (a)
October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Consolidated
Net Income Attributable to Kadant$27,487 $20,461 $94,849 $59,886 
Net Income Attributable to Noncontrolling Interest184 237 672 635 
Provision for Income Taxes9,746 6,742 33,075 21,252 
Interest Expense, Net1,450 1,265 3,671 3,321 
Other Expense, Net19 23 60 71 
Operating Income38,886 28,728 132,327 85,165 
Gain on Sale (b)— — (20,190)— 
Acquisition Costs410 718 486 2,619 
Indemnification Asset Reversal (g)— — 575 — 
Impairment and Restructuring Costs72 — 254 — 
Acquired Backlog Amortization (c)— 604 703 691 
Acquired Profit in Inventory Amortization (d)— 2,216 (218)2,216 
Adjusted Operating Income (a)39,368 32,266 113,937 90,691 
Depreciation and Amortization8,456 8,591 25,684 23,906 
Adjusted EBITDA (a)$47,824 $40,857 $139,621 $114,597 
Adjusted EBITDA Margin (a,i)21.3%20.5%20.8%20.2%
Flow Control
 Operating Income$22,874 $17,129 $67,306 $51,899 
Acquisition Costs410 507 472 1,743 
Restructuring Costs72 — 72 — 
Acquired Backlog Amortization (c)— 353 — 353 
Acquired Profit in Inventory Amortization (d)— 1,846 (218)1,846 
Adjusted Operating Income (a)23,356 19,835 67,632 55,841 
Depreciation and Amortization2,229 2,333 6,873 5,473 
Adjusted EBITDA (a)$25,585 $22,168 $74,505 $61,314 
Adjusted EBITDA Margin (a,i)29.4%29.1%28.9%29.1%
Industrial Processing
Operating Income $17,550 $16,095 $70,994 $44,449 
Gain on Sale (b)— — (20,190)— 
Indemnification Asset Reversal (g)— — 575 — 
Impairment Costs— — 182 — 
Acquisition Costs— 33 — 113 
Acquired Backlog Amortization (c)— — — 60 
Adjusted Operating Income (a)17,550 16,128 51,561 44,622 
Depreciation and Amortization3,122 3,341 9,476 10,082 
Adjusted EBITDA (a)$20,672 $19,469 $61,037 $54,704 
Adjusted EBITDA Margin (a,i)24.0%23.9%23.2%23.4%
Material Handling
Operating Income $6,945 $3,491 $21,490 $12,941 
Acquisition Costs— 178 14 763 
Acquired Backlog Amortization (c)— 251 703 278 
Acquired Profit in Inventory Amortization (d)— 370 — 370 
Adjusted Operating Income (a)6,945 4,290 22,207 14,352 
Depreciation and Amortization3,083 2,885 9,262 8,253 
Adjusted EBITDA (a)$10,028 $7,175 $31,469 $22,605 
Adjusted EBITDA Margin (a,i)19.5%17.1%20.8%18.3%
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Three Months EndedNine Months Ended
Adjusted Operating Income and Adjusted EBITDA Reconciliation (continued) (a)
October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
Corporate
Operating Loss$(8,483)$(7,987)$(27,463)$(24,124)
Depreciation and Amortization22 32 73 98 
EBITDA (a)$(8,461)$(7,955)$(27,390)$(24,026)
 
(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 expense (income) within 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 $2.2 million and $5.4 million in the three and nine months ended October 1, 2022, respectively, related to the construction of a new manufacturing facility in China.
(i) 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; 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
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Kadant Reports Third Quarter 2022 Results
https://cdn.kscope.io/e62c5c5ca8734a31c3b132993ef638f1-kadantlogo_jpga.jpg
November 1, 2022
Page 9
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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Third Quarter 2022 Business Review November 2, 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 November 1, 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 3Q22 BUSINESS REVIEW–NOVEMBER 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 third quarter 2022 earnings press release issued November 1, 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 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
BUSINESS REVIEW Jeffrey L. Powell, President & CEO 4KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
Operational Highlights • Solid execution by our businesses led to record adjusted EPS* and adjusted EBITDA* • Strong aftermarket parts demand continued into Q3 • Capital project activity moderated across certain segments and product lines KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. . 5


 
Q3 2022 Performance 6 ($ in millions, except per share amounts) Q3 22 Q3 21 Change Revenue $224.5 $199.8 +12.4% Net Income $27.5 $20.5 +34.3% Adjusted EBITDA* $47.8 $40.9 +17.1% Adjusted EBITDA Margin* 21.3% 20.5% +80 bps Diluted EPS $2.35 $1.75 +34.3% Adjusted Diluted EPS* $2.38 $1.97 +20.8% Operating Cash Flow $24.9 $37.9 -34.4% Bookings $210.9 $244.7 -13.8% HIGHLIGHTS • Strong revenue performance despite unfavorable FX impact • Aftermarket parts were up 8% and represented 63% of total Q3 revenue • Strong operating performance led to record adjusted EPS* and adjusted EBITDA* KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
7 ($ in millions) Q3 22 Q3 21 Change Revenue $86.9 $76.3 +13.9% Bookings $84.9 $76.7 +10.7% Adjusted EBITDA* $25.6 $22.2 +15.4% Adjusted EBITDA Margin* 29.4% 29.1% +30 bps HIGHLIGHTS • Strong aftermarket demand and capital project activity • Organic bookings up 19% • Record adjusted EBITDA* performance in the third quarter • Supply chain constraints continue to present challenges ($ in millions) KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. BOOKINGS Flow Control


 
8 ($ in millions) Q3 22 Q3 21 Change Revenue $86.1 $81.6 +5.5% Bookings $77.9 $118.9 -34.5% Adjusted EBITDA* $20.7 $19.5 +6.2% Adjusted EBITDA Margin* 24.0% 23.9% +10 bps HIGHLIGHTS • Capital bookings down from a record Q3 21 • Strong demand for aftermarket parts • Aftermarket parts revenue represented 61% of total Q3 revenue • Mill operating rates remained strong KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. Industrial Processing BOOKINGS ($ in millions)


 
9 ($ in millions) Q3 22 Q3 21 Change Revenue $51.5 $41.9 +23.0% Bookings $48.1 $49.1 -2.1% Adjusted EBITDA* $10.0 $7.2 +39.8% Adjusted EBITDA Margin* 19.5% 17.1% +240 bps HIGHLIGHTS • Demand was exceptionally strong for our bulk material handling equipment for both parts and capital, offset by softening demand for balers in Europe • Business activity remains healthy with organic revenue up 30% • Improved operating leverage led to strong adjusted EBITDA* performance KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. Material Handling BOOKINGS ($ in millions)


 
Business Outlook • Demand expected to moderate as macroeconomic headwinds strengthen • Supply chain constraints and inflationary pressures continue to be a challenge • Expecting to generate record earnings in fiscal 2022 10KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED.


 
FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 11


 
Q3 2022 Financial Performance ($ in millions, except per share amounts) Q3 22 Q3 21 Gross Margin 42.5% 41.9% SG&A % of Revenue 23.7% 26.2% Operating Income $38.9 $28.7 Net Income $27.5 $20.5 Adjusted EBITDA* $47.8 $40.9 Diluted EPS $2.35 $1.75 Adjusted Diluted EPS* $2.38 $1.97 HIGHLIGHTS • Adjusted EBITDA margin* of 21.3% • Operating cash flow of $24.9 million • Free cash flow* of $18.5 million • Net debt of $134.6 million; leverage ratio1 of 0.94 KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 12


 
Key Consolidated Financial Metrics KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 13 SG&A (as a % of revenue) GROSS MARGIN ADJUSTED EBITDA MARGIN* CASH FLOW ($ in millions)


 
2Q21 ADJ EPS* 2Q22 ADJ EPS* KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 3Q21 to 3Q22 Adjusted Diluted EPS* 14


 
Key Liquidity Metrics KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 15 ($ in millions) Q3 22 Q2 22 Q3 21 Cash, cash equivalents, and restricted cash $75.1 $78.0 $83.7 Debt $207.9 $223.8 $309.4 Lease obligations $1.8 $4.5 $5.1 Net Debt $134.6 $150.3 $230.8 Leverage ratio1 0.94 1.05 1.69 Working capital % LTM revenue2 12.8% 12.4% 13.5% Cash conversion days3 130 123 113


 
Guidance KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 16 • FY 2022 GAAP diluted EPS of $10.02 to $10.19 • FY 2022 adjusted diluted EPS* of $8.80 to $8.97 • FY 2022 revenue of $890 to $896 million • Q4 2022 GAAP diluted EPS of $1.90 to $2.07 • Q4 2022 revenue of $217 to $223 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 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 17


 
2022 Key Priorities 18 ACCELERATE SUSTAINABLE INDUSTRIAL PROCESSING DELIVER EXCEPTIONAL STAKEHOLDER VALUE PROVIDE STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES KAI 3Q22 BUSINESS REVIEW–NOVEMBER 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 November 2, 2022


 
APPENDIX Third Quarter 2022 Business Review KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 20


 
Revenue by Customer Location ($ in thousands) Q3 22 Q3 21 Change Change Excluding Acquisitions and FX* North America $126,699 $105,384 $21,315 $22,577 Europe 57,409 58,813 (1,404) 8,308 Asia 26,953 25,504 1,449 3,585 Rest of World 13,449 10,088 3,361 4,115 TOTAL $224,510 $199,789 $24,721 $38,585 KAI 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 21 ($ in thousands) Q3 22 YTD Q3 21 YTD Change Change Excluding Acquisitions and FX* North America $375,115 $307,243 $67,872 $52,484 Europe 174,264 159,281 14,983 20,440 Asia 87,916 72,046 15,870 13,425 Rest of World 35,344 29,493 5,851 5,122 TOTAL $672,639 $568,063 $104,576 $91,471


 
Adjusted Diluted EPS Reconciliation Q3 22 Q3 21 Diluted EPS, as reported $2.35 $1.75 Acquisition Costs, Net of Tax 0.02 0.05 Restructuring Costs, Net of Tax 0.01 — Acquired Backlog Amortization, Net of Tax — 0.04 Acquired Profit in Inventory Amortization, Net of Tax — 0.13 Adjusted Diluted EPS* $2.38 $1.97 Free Cash Flow Reconciliation ($ in thousands) Q3 22 Q3 21 Operating Cash Flow $24,897 $37,932 Less Capital Expenditures (6,376) (3,370) Free Cash Flow* $18,521 $34,562 Adjusted diluted EPS (earnings per share) is a non-GAAP financial measure. Free cash flow is a non-GAAP financial measure. KAI 3Q22 BUSINESS REVIEW–NOVEMBER 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) Q3 22 Q3 21 Net Income Attributable to Kadant $27,487 $20,461 Net Income Attributable to Noncontrolling Interest 184 237 Provision for Income Taxes 9,746 6,742 Interest Expense, Net 1,450 1,265 Other Expense, Net 19 23 Acquisition Costs 410 718 Restructuring Costs 72 — Acquired Backlog Amortization — 604 Acquired Profit in Inventory Amortization — 2,216 Depreciation and Amortization 8,456 8,591 Adjusted EBITDA* $47,824 $40,857 Adjusted EBITDA Margin* 21.3% 20.5% KAI 3Q22 BUSINESS REVIEW–NOVEMBER 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 November 1, 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 3Q22 BUSINESS REVIEW–NOVEMBER 2022 | © 2022 KADANT INC. ALL RIGHTS RESERVED. 24