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kai-20240214
0000886346false00008863462024-02-142024-02-14

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): February 14, 2024

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 February 14, 2024, Kadant Inc. (the “Company”) announced its financial results for the fiscal quarter and year ended December 30, 2023. 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 February 15, 2024, the Company will hold a webcast and conference call to discuss its financial results for the fiscal quarter and year ended December 30, 2023. 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: February 14, 2024
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 Fourth Quarter and Fiscal Year 2023 Results
Record Revenue and Cash Flow in FY 2023

WESTFORD, Mass., February 14, 2024 - Kadant Inc. (NYSE: KAI) reported its financial results for the fourth quarter and fiscal year ended December 30, 2023.

Fourth Quarter Financial Highlights
•Revenue increased 3% to $239 million
•Operating cash flow increased 68% to $59 million
•Free cash flow increased 114% to $49 million
•Net income increased 5% to $27 million
•GAAP EPS increased 4% to $2.33
•Adjusted EPS increased 3% to $2.41
•Adjusted EBITDA decreased 2% to $48 million and represented 20.3% of revenue
•Bookings increased 1% to $218 million

Fiscal Year Financial Highlights
•Revenue increased 6% to a record $958 million
•Operating cash flow increased 61% to a record $166 million
•Free cash flow increased 80% to $134 million
•Net income decreased 4% to $116 million
•GAAP EPS decreased 4% to $9.90 compared to 2022 which included a $1.30 gain on sale of a facility
•Adjusted EPS increased 9% to a record $10.04
•Adjusted EBITDA increased 6% to a record $201 million and represented a record 21.0% of revenue
•Bookings decreased 4% to $917 million
•Ending backlog was $310 million

Note: Percent changes above are based on comparison to the prior year period. All references to earnings per share (EPS) are to our EPS as calculated on a diluted basis. Free cash flow, adjusted 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
“The fourth quarter was a solid finish to a record-setting year,” said Jeffrey L. Powell, president and chief executive officer for Kadant. “Despite macroeconomic headwinds in certain regions, we had another well-executed quarter. Growth in our material handling segment was particularly notable led by record capital equipment revenue. This contributed to strong adjusted EBITDA performance and healthy cash flow in the fourth quarter.

“Strong capital project activity in the first half of the year and sustained high aftermarket demand led to the record-setting revenue for the year. For the full year 2023, our adjusted EPS reached a record $10.04, our adjusted EBITDA was a record $201 million, and our operating cash flow was a record $166 million.”

Fourth Quarter 2023 Compared to 2022
Revenue increased three percent to $238.7 million compared to $232.1 million in 2022. Organic revenue increased one percent, which excludes a two percent increase from the favorable effect of foreign currency translation. Gross profit margin decreased to 42.7 percent compared to 43.1 percent in 2022.


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Net income increased five percent to $27.4 million compared to $26.1 million in 2022. GAAP EPS increased four percent to $2.33 compared to $2.23 in 2022. Adjusted EPS increased three percent to $2.41 compared to $2.33 in 2022. Adjusted EPS excludes $0.10 of acquisition costs, $0.05 of other income related to the manufacturing facility project in China, $0.02 of restructuring costs, and $0.01 of relocation costs in 2023. Adjusted EPS excludes $0.09 of restructuring and impairment costs and $0.01 of acquisition costs in 2022.

Adjusted EBITDA decreased two percent to $48.5 million and represented 20.3 percent of revenue compared to $49.5 million and 21.3 percent of revenue in the prior year quarter. Operating cash flow increased 68 percent to $59.2 million compared to $35.2 million in 2022. Free cash flow increased 114 percent to $49.5 million compared to $23.2 million in 2022.

Bookings increased one percent to $218.0 million compared to $215.3 million in 2022, including a one percent increase from the favorable effect of foreign currency translation.

Fiscal Year 2023 Compared to 2022
Revenue increased six percent to a record $957.7 million compared to $904.7 million in 2022 and organic revenue also increased six percent. Gross profit margin increased to 43.5 percent compared to 43.1 percent in 2022.

Net income was $116.1 million decreasing four percent compared to $120.9 million in 2022. GAAP EPS decreased four percent to $9.90 compared to $10.35 in 2022. Adjusted EPS increased nine percent to a record $10.04 compared to $9.24 in 2022. Adjusted EPS excludes $0.10 of acquisition costs, $0.05 of relocation costs and $0.05 of other income both related to the manufacturing facility project in China, and $0.04 of restructuring costs in 2023. Adjusted EPS excludes a $1.30 gain on the sale of a Chinese facility, $0.11 of restructuring and impairment costs, and $0.08 of acquisition-related costs in 2022.

Adjusted EBITDA increased six percent to a record $201.3 million and represented a record 21.0 percent of revenue compared to $189.1 million and 20.9 percent of revenue in the prior year. Operating cash flow increased 61 percent to a record $165.5 million compared to $102.6 million in 2022. Free cash flow increased 80 percent to $133.7 million compared to $74.4 million in 2022.

Bookings decreased four percent to $917.4 million compared to $958.2 million in 2022.

Summary and Outlook
“While still facing economic uncertainties around the world, we expect to achieve record revenue, cash flow, and adjusted EBITDA in 2024,” continued Mr. Powell. “Our earnings performance will be affected by increased borrowing costs and non-cash intangible amortization expense associated with our recently announced acquisitions. We are experiencing healthy demand in our key end markets, however, our first quarter will be weaker than the remaining quarters of 2024 due to the timing of capital projects. For 2024, we expect revenue of $1.040 billion to $1.065 billion, GAAP EPS of $9.55 to $9.85, and adjusted EPS of $9.75 to $10.05. The 2024 adjusted EPS guidance excludes $0.20 of amortization expense associated with acquired inventory and backlog. For the first quarter of 2024, we expect revenue of $238 to $246 million, GAAP EPS of $1.76 to $1.86, and, after excluding $0.14 of amortization expense associated with acquired inventory and backlog, adjusted EPS of $1.90 to $2.00.”

Conference Call
Kadant will hold a webcast with a slide presentation for investors on Thursday, February 15, 2024, at 11:00 a.m. eastern time to discuss its fourth quarter and full-year financial 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 visiting https://register.vevent.com/register/BI50d2e44d5fa54a28abfcf070796a4696 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 March 15, 2024.


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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 fourth quarter and full-year 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 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 fourth quarter of 2023 included a favorable foreign currency translation effect of $3.7 million. Revenue in 2023 included an unfavorable foreign currency translation effect of $2.0 million. Our other non-GAAP financial measures exclude relocation costs, restructuring and impairment costs, acquisition costs, amortization expense related to acquired profit in inventory and backlog, and other income or expense, 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 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.

Fourth Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
•Pre-tax other income of $0.8 million in 2023.
•Pre-tax acquisition costs of $1.4 million in 2023 and $0.2 million in 2022.
•Pre-tax indemnification asset reversal of $0.7 million in 2022.
•Pre-tax relocation costs of $0.2 million in 2023.
•Pre-tax restructuring and impairment costs of $0.3 million in 2023 and $1.1 million in 2022.

Adjusted net income and adjusted EPS exclude:
•After-tax other income of $0.6 million ($0.8 million net of tax of $0.2 million) in 2023.
•After-tax acquisition costs of $1.2 million ($1.4 million net of tax of $0.2 million) in 2023 and $0.2 million in 2022.
•After-tax relocation costs of $0.1 million ($0.2 million net of tax of $0.1 million) in 2023.


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•After-tax restructuring and impairment costs of $0.2 million ($0.3 million net of tax of $0.1 million) in 2023 and $1.1 million in 2022.

Free cash flow is calculated as operating cash flow less:
•Capital expenditures of $9.8 million in 2023 and $12.0 million in 2022.

Fiscal Year
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:
•Pre-tax other income of $0.8 million in 2023.
•Pre-tax gain on the sale of a facility of $20.2 million in 2022.
•Pre-tax acquisition-related costs of $1.4 million in 2023 and $1.2 million in 2022.
•Pre-tax indemnification asset reversals of $0.1 million in 2023 and $1.3 million in 2022.
•Pre-tax relocation costs of $0.8 million in 2023.
•Pre-tax restructuring and impairment costs of $0.8 million in 2023 and $1.3 million in 2022.

Adjusted net income and adjusted EPS exclude:
•After-tax other income of $0.6 million ($0.8 million net of tax of $0.2 million) in 2023.
•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-related costs of $1.2 million ($1.4 million net of tax of $0.2 million) in 2023 and $0.9 million ($1.2 million net of tax of $0.3 million) in 2022.
•After-tax relocation costs of $0.6 million ($0.8 million net of tax of $0.2 million) in 2023.
•After-tax restructuring and impairment costs of $0.5 million ($0.8 million net of tax of $0.3 million) in 2023 and $1.3 million in 2022.

Free cash flow is calculated as operating cash flow less:
•Capital expenditures of $31.9 million in 2023 and $28.2 million in 2022.

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 EndedTwelve Months Ended
Consolidated Statement of IncomeDecember 30,
2023		December 31,
2022		December 30,
2023		December 31,
2022
Revenue$238,679 $232,100 $957,672 $904,739 
Costs and Operating Expenses:
Cost of revenue136,695 132,150 541,366 515,184 
Selling, general, and administrative expenses59,823 56,765 236,264 224,405 
Research and development expenses3,460 3,150 13,562 12,724 
Gain on sale and other (income) costs, net (b)
(320)1,080 723 (18,856)
199,658 193,145 791,915 733,457 
Operating Income39,021 38,955 165,757 171,282 
Interest Income705 254 1,758 904 
Interest Expense(1,676)(2,157)(8,398)(6,478)
Other Expense, Net(39)(12)(101)(72)
Income Before Provision for Income Taxes38,011 37,040 159,016 165,636 
Provision for Income Taxes10,449 10,831 42,210 43,906 
Net Income27,562 26,209 116,806 121,730 
Net Income Attributable to Noncontrolling Interest(166)(130)(737)(802)
Net Income Attributable to Kadant$27,396 $26,079 $116,069 $120,928 
Earnings per Share Attributable to Kadant:
Basic$2.34 $2.24 $9.92 $10.38 
Diluted$2.33 $2.23 $9.90 $10.35 
Weighted Average Shares:
Basic11,707 11,664 11,700 11,654 
Diluted11,759 11,708 11,729 11,688 
Three Months EndedThree Months Ended
Adjusted Net Income and Adjusted Diluted EPS (a)
December 30,
2023		December 30,
2023		December 31,
2022		December 31,
2022
Net Income and Diluted EPS Attributable to Kadant, as Reported$27,396 $2.33 $26,079 $2.23 
Adjustments, Net of Tax:
 
Other Income
(631)(0.05)— — 
Acquisition Costs1,194 0.10 159 0.01 
Relocation Costs
142 0.01 — — 
Restructuring and Impairment Costs
226 0.02 1,080 0.09 
Adjusted Net Income and Adjusted Diluted EPS (a)$28,327 $2.41 $27,318 $2.33 
Twelve Months EndedTwelve Months Ended
December 30,
2023		December 30,
2023		December 31,
2022		December 31,
2022
Net Income and Diluted EPS Attributable to Kadant, as Reported$116,069 $9.90 $120,928 $10.35 
Adjustments, Net of Tax:
Gain on Sale and Other Income (b)
(631)(0.05)(15,143)(1.30)
Acquisition-Related Costs1,194 0.10 881 0.08 
Relocation Costs
599 0.05 — — 
Restructuring and Impairment Costs
521 0.04 1,287 0.11 
Adjusted Net Income and Adjusted Diluted EPS (a)$117,752 $10.04 $107,953 $9.24 
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Three Months Ended
Increase (Decrease)
Excluding Acquisition and FX (a,e)
Revenue by Segment December 30,
2023		December 31,
2022
Increase (Decrease)
Flow Control$87,403 $91,181 $(3,778)$(5,806)
Industrial Processing86,974 90,126 (3,152)(3,894)
Material Handling64,302 50,793 13,509 12,539 
 $238,679 $232,100 $6,579 $2,839 
Percentage of Parts and Consumables Revenue
60%
60%
Twelve Months Ended
Increase
Increase
Excluding Acquisition and FX (a,e)
December 30,
2023		December 31,
2022
Flow Control$363,451 $349,107 $14,344 $12,375 
Industrial Processing354,703 353,698 1,005 6,419 
Material Handling239,518 201,934 37,584 36,173 
 $957,672 $904,739 $52,933 $54,967 
Percentage of Parts and Consumables Revenue
62%
63%
Three Months Ended
Increase (Decrease)
Increase (Decrease)
Excluding Acquisition and FX (e)
Bookings by SegmentDecember 30,
2023		December 31,
2022
Flow Control$85,354 $78,753 $6,601 $4,785 
Industrial Processing84,130 84,081 49 (419)
Material Handling 48,535 52,507 (3,972)(4,656)
$218,019 $215,341 $2,678 $(290)
Percentage of Parts and Consumables Bookings
64%
62%
Twelve Months Ended
 
Increase (Decrease)
Increase (Decrease)
Excluding Acquisition and FX (e)
 December 30,
2023		December 31,
2022
Flow Control$361,216 $361,113 $103 $(685)
Industrial Processing330,136 378,186 (48,050)(41,564)
Material Handling226,017 218,915 7,102 6,194 
$917,369 $958,214 $(40,845)$(36,055)
Percentage of Parts and Consumables Bookings
64%
62%
Three Months Ended
Twelve Months Ended
Business Segment InformationDecember 30,
2023		December 31,
2022		December 30,
2023		December 31,
2022
Gross Profit Margin:
Flow Control
50.4%
51.3%
51.8%
52.0%
Industrial Processing
41.2%
40.3%
40.2%
39.2%
Material Handling
34.4%
33.1%
35.7%
34.4%
Consolidated
42.7%
43.1%
43.5%
43.1%
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Three Months EndedTwelve Months Ended
Business Segment Information (continued)December 30,
2023		December 31,
2022		December 30,
2023		December 31,
2022
Operating Income:
Flow Control$20,993 $22,636 $95,249 $89,942 
Industrial Processing (b)17,313 18,760 69,281 89,754 
Material Handling10,686 6,154 40,692 27,644 
Corporate(9,971)(8,595)(39,465)(36,058)
$39,021 $38,955 $165,757 $171,282 
Adjusted Operating Income (a,f):
Flow Control$21,301 $23,873 $95,991 $91,505 
Industrial Processing17,727 19,344 70,304 70,905 
Material Handling11,061 6,336 41,194 28,543 
Corporate(9,971)(8,595)(39,465)(36,058)
$40,118 $40,958 $168,024 $154,895 
Capital Expenditures:
Flow Control$2,031 $2,001 $5,920 $4,425 
Industrial Processing (h)
6,061 8,458 22,068 20,137 
Material Handling1,664 1,494 3,834 3,575 
Corporate—  55 28 62 
$9,756  $12,008 $31,850 $28,199 
Three Months EndedTwelve Months Ended
Cash Flow and Other DataDecember 30,
2023		December 31,
2022		December 30,
2023		December 31,
2022
Operating Cash Flow$59,234 $35,163 $165,545 $102,625 
Less: Capital Expenditures (h)
(9,756)(12,008)(31,850)(28,199)
Free Cash Flow (a)$49,478 $23,155 $133,695 $74,426 
Depreciation and Amortization Expense$8,380 $8,549 $33,297 $34,936 
Balance Sheet Data  December 30,
2023		December 31,
2022
Assets
Cash, Cash Equivalents, and Restricted Cash $106,453 $79,725 
Accounts Receivable, net133,929 130,297 
Inventories152,677 163,672 
Contract Assets8,366 14,898 
Property, Plant, and Equipment, net140,504 118,855 
Intangible Assets159,286 175,645 
Goodwill392,084 385,455 
Other Assets82,366 81,334 
$1,175,665 $1,149,881 
Liabilities and Stockholders' Equity
Accounts Payable$42,104 $58,060 
Debt Obligations109,086 199,219 
Other Borrowings1,789 1,942 
Other Liabilities246,446 235,089 
Total Liabilities399,425 494,310 
Stockholders' Equity776,240 655,571 
$1,175,665 $1,149,881 
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Three Months EndedTwelve Months Ended
Adjusted Operating Income and Adjusted EBITDA Reconciliation (a)
December 30,
2023		December 31,
2022		December 30,
2023		December 31,
2022
Consolidated
Net Income Attributable to Kadant$27,396 $26,079 $116,069 $120,928 
Net Income Attributable to Noncontrolling Interest166 130 737 802 
Provision for Income Taxes10,449 10,831 42,210 43,906 
Interest Expense, Net971 1,903 6,640 5,574 
Other Expense, Net39 12 101 72 
Operating Income39,021 38,955 165,757 171,282 
Gain on Sale and Other Income (b)
(841)— (841)(20,190)
Acquisition Costs1,442 182 1,442 668 
Indemnification Asset (Provision) Reversal (g)
(25)741 102 1,316 
Relocation Costs
189 — 798 — 
Restructuring and Impairment Costs
332 1,080 766 1,334 
Acquired Backlog Amortization (c)— — — 703 
Acquired Profit in Inventory Amortization (d)— — — (218)
Adjusted Operating Income (a)40,118 40,958 168,024 154,895 
Depreciation and Amortization8,380 8,549 33,297 34,233 
Adjusted EBITDA (a)$48,498 $49,507 $201,321 $189,128 
Adjusted EBITDA Margin (a,i)
20.3%
21.3%
21.0%
20.9%
Flow Control
 Operating Income$20,993 $22,636 $95,249 $89,942 
Acquisition Costs— — — 472 
Indemnification Asset (Provision) Reversal (g)
(24)741 (24)741 
Restructuring and Impairment Costs
332 496 766 568 
Acquired Profit in Inventory Amortization (d)— — — (218)
Adjusted Operating Income (a)21,301 23,873 95,991 91,505 
Depreciation and Amortization2,262 2,306 9,047 9,179 
Adjusted EBITDA (a)$23,563 $26,179 $105,038 $100,684 
Adjusted EBITDA Margin (a,i)
27.0%
28.7%
28.9%
28.8%
Industrial Processing
Operating Income $17,313 $18,760 $69,281 $89,754 
Gain on Sale and Other Income (b)
(841)— (841)(20,190)
Acquisition Costs
1,066 — 1,066 — 
Indemnification Asset Reversal (g)
— — — 575 
Relocation Costs
189 — 798 — 
Restructuring and Impairment Costs
— 584 — 766 
Adjusted Operating Income (a)17,727 19,344 70,304 70,905 
Depreciation and Amortization2,975 3,099 11,798 12,575 
Adjusted EBITDA (a)$20,702 $22,443 $82,102 $83,480 
Adjusted EBITDA Margin (a,i)
23.8%
24.9%
23.1%
23.6%
-more-

Kadant Reports Fourth Quarter and Fiscal 2023 Results
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Three Months EndedTwelve Months Ended
Adjusted Operating Income and Adjusted EBITDA Reconciliation (continued) (a)
December 30,
2023		December 31,
2022		December 30,
2023		December 31,
2022
Material Handling
Operating Income $10,686 $6,154 $40,692 $27,644 
Acquisition Costs376 182 376 196 
Indemnification Asset (Provision) Reversal (g)
(1)— 126 — 
Acquired Backlog Amortization (c)— — — 703 
Adjusted Operating Income (a)11,061 6,336 41,194 28,543 
Depreciation and Amortization3,125 3,120 12,379 12,382 
Adjusted EBITDA (a)$14,186 $9,456 $53,573 $40,925 
Adjusted EBITDA Margin (a,i)
22.1%
18.6%
22.4%
20.3%
Corporate
Operating Loss$(9,971)$(8,595)$(39,465)$(36,058)
Depreciation and Amortization18 24 73 97 
EBITDA (a)$(9,953)$(8,571)$(39,392)$(35,961)
(a) Represents a non-GAAP financial measure.
(b)
Includes a $20.2 million pre-tax gain on the sale of a manufacturing facility in China in the twelve months ended December 31, 2022 in our Industrial Processing segment pursuant to a relocation plan.
(c) Represents intangible amortization expense associated with acquired backlog.
(d)Represents income within cost of revenue associated with amortization of acquired profit in inventory.
(e)
Represents the increase (decrease) excluding an acquisition and resulting from the conversion of current period amounts reported in local currencies into U.S. dollars at the exchange rate of the prior period compared to the U.S. dollar amount reported in the prior period.
(f)See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and Adjusted EBITDA Reconciliation."
(g)
Represents the provision for or reversal of indemnification assets related to tax reserves associated with uncertain tax positions.
(h)
Includes $1.6 million and $7.4 million in the three and twelve months ended December 30, 2023, respectively, and $5.0 million and $10.4 million in the three and twelve months ended December 31, 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 3,400 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,
-more-
Kadant Reports Fourth Quarter and Fiscal 2023 Results
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including those set forth under the heading "Risk Factors" in Kadant’s annual report on Form 10-K for the fiscal year ended December 31, 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 and pandemics; 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; 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; 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
###

kaiform8kex992q423
Fourth Quarter and FY 2023 Business Review February 15, 2024 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 February 15, 2024. 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 December 31, 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 and pandemics; 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; 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; soundness of financial institutions; fluctuations in our share price; and anti-takeover provisions. 2KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 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 EPS, adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA), adjusted EBITDA margin, adjusted operating income, and free cash flow. All references to EPS (earnings per share) are to our EPS as calculated on a diluted basis. 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 fourth quarter and fiscal year 2023 earnings press release issued February 14, 2024, 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. 3 KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED.

 
BUSINESS REVIEW Jeffrey L. Powell, President & CEO 4 KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED.

 
Operational Highlights • Excellent execution by our businesses led to strong financial performance in Q4 • Solid demand for aftermarket parts continued while capital activity softened in the quarter • Named by Newsweek as one of America's Most Responsible Companies for the fourth consecutive year KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. . 5

 
Q4 2023 Performance 6 ($ in millions, except per share amounts) Q4 23 Q4 22 Change Revenue $238.7 $232.1 +2.8% Net Income $27.4 $26.1 +5.1% Adjusted EBITDA* $48.5 $49.5 -2.0% Adjusted EBITDA Margin* 20.3% 21.3% -100 bps EPS $2.33 $2.23 +4.5% Adjusted EPS* $2.41 $2.33 +3.4% Operating Cash Flow $59.2 $35.2 +68.5% Free Cash Flow* $49.5 $23.2 +113.7% Bookings $218.0 $215.3 +1.2% HIGHLIGHTS • Solid revenue performance driven largely by aftermarket parts business • Excellent operating execution led to strong adjusted EPS* and adjusted EBITDA* • Second highest operating cash flow achieved in the fourth quarter • Strong finish to a record-setting year KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED.

 
FY 2023 Performance 7 ($ in millions, except per share amounts) FY 23 FY 22 Change Revenue $957.7 $904.7 +5.9% Net Income $116.1 $120.9 -4.0% Adjusted EBITDA* $201.3 $189.1 +6.4% Adjusted EBITDA Margin* 21.0 % 20.9 % +10 bps EPS $9.90 $10.35 -4.3% Adjusted EPS* $10.04 $9.24 +8.7% Operating Cash Flow $165.5 $102.6 +61.3% Free Cash Flow* $133.7 $74.4 +79.6% Bookings $917.4 $958.2 -4.3% HIGHLIGHTS • Record revenue achieved across all operating segments • Strong operating performance led to record adjusted EPS* and adjusted EBITDA* • Internal initiatives continue to deliver meaningful margin improvements KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED.

 
$78.8 $104.6 $88.3 $83.0 $85.4 4Q22 1Q23 2Q23 3Q23 4Q23 8 ($ in millions) Q4 23 Q4 22 Change Revenue $87.4 $91.2 -4.1% Bookings $85.4 $78.8 +8.4% Adjusted EBITDA* $23.6 $26.2 -10.0% Adjusted EBITDA Margin* 27.0% 28.7% -170 bps HIGHLIGHTS • Strong demand for capital and aftermarket parts led to bookings increase of 8% • Product mix negatively affected gross margin • End markets remain healthy despite persistent economic headwinds ($ in millions) KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. BOOKINGS Flow Control

 
9 ($ in millions) Q4 23 Q4 22 Change Revenue $87.0 $90.1 -3.5% Bookings $84.1 $84.1 +0.1% Adjusted EBITDA* $20.7 $22.4 -7.8% Adjusted EBITDA Margin* 23.8% 24.9% -110 bps HIGHLIGHTS • Strong aftermarket parts revenue offset by decline in capital revenue • Aftermarket parts revenue represented 64% of total revenue • Project activity remains healthy KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. Industrial Processing $84.1 $96.3 $79.3 $70.4 $84.1 4Q22 1Q23 2Q23 3Q23 4Q23 BOOKINGS ($ in millions)

 
10 ($ in millions) Q4 23 Q4 22 Change Revenue $64.3 $50.8 +26.6% Bookings $48.5 $52.5 -7.6% Adjusted EBITDA* $14.2 $9.5 +50.0% Adjusted EBITDA Margin* 22.1% 18.6% +350 bps HIGHLIGHTS • Record revenue performance led by our conveying product line • Capital equipment represented 55% of total Q4 revenue • Excellent operating leverage led to record adjusted EBITDA* • Growth trends in recycling and infrastructure investments expected to continue in 2024 KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. Material Handling $52.5 $73.7 $47.6 $56.2 $48.5 4Q22 1Q23 2Q23 3Q23 4Q23 BOOKINGS ($ in millions)

 
Business Outlook • Industrial demand expected to stabilize around current levels • Macroeconomic headwinds create uncertainty with capital project timing • Our healthy balance sheet positions us well for new opportunities and growth • Expecting to generate solid financial results in 2024 11KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED.

 
FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 12

 
Q4 2023 Financial Performance ($ in millions, except per share amounts) Q4 23 Q4 22 Gross Margin 42.7% 43.1% SG&A % of Revenue 25.1% 24.5% Operating Income $39.0 $39.0 Net Income $27.4 $26.1 Adjusted EBITDA* $48.5 $49.5 EPS $2.33 $2.23 Adjusted EPS* $2.41 $2.33 HIGHLIGHTS • Adjusted EBITDA margin* of 20.3% • Operating cash flow of $59.2 million • Free cash flow* of $49.5 million • Net debt of $4.4 million; leverage ratio1 of 0.27 KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 13

 
FY 2023 Financial Performance ($ in millions, except per share amounts) FY 23 FY 22 Gross Margin 43.5% 43.1% SG&A % of Revenue 24.7% 24.8% Operating Income $165.8 $171.3 Net Income $116.1 $120.9 Adjusted EBITDA* $201.3 $189.1 Diluted EPS $9.90 $10.35 Adjusted EPS* $10.04 $9.24 HIGHLIGHTS • Adjusted EBITDA margin* of 21.0% • Operating cash flow of $165.5 million • Free cash flow* of $133.7 million KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 14

 
$127.1 $115.9 $159.4 $189.1 $201.3 $52.1 $55.2 $84.0 $120.9 $116.1 18.0% 18.3% 20.3% 20.9% 21.0% NET INCOME ADJUSTED EBITDA* ADJ. EBITDA MARGIN* 2019 2020 2021 2022 2023 Adjusted EBITDA* and Cash Flow Metrics KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 15 FY ADJUSTED EBITDA* ($ in millions) $35.2 $36.9 $22.5 $47.0 $59.2 $23.2 $23.2 $13.7 $38.1 $49.5 FREE CASH FLOW* OPERATING CASH FLOW 4Q22 1Q23 2Q23 3Q23 4Q23 CASH FLOW ($ in millions) $97.4 $92.9 $162.4 $102.6 $165.5 $87.5 $85.3 $149.6 $74.4 $133.7 FREE CASH FLOW* OPERATING CASH FLOW 2019 2020 2021 2022 2023 FY CASH FLOW ($ in millions)($ in millions) $49.5 $48.6 $51.6 $52.7 $48.5 $26.1 $28.1 $29.7 $30.9 $27.4 21.3% 21.1% 21.0% 21.6% 20.3% NET INCOME ADJUSTED EBITDA* ADJ. EBITDA MARGIN* 4Q22 1Q23 2Q23 3Q23 4Q23 ADJUSTED EBITDA* ($ in millions)

 
2Q21 ADJ EPS* 2Q22 ADJ EPS* KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 4Q22 to 4Q23 Adjusted EPS* 16 $2.33 $0.17 $0.09 $0.05 $(0.17) $(0.05) $(0.01) $2.41 4Q22 ADJ EPS* REVENUE TAX PROVISION INTEREST EXPENSE OPERATING EXPENSES GROSS MARGIN CHANGE IN SHARES 4Q23 ADJ EPS*

 
2Q21 ADJ EPS* 2Q22 ADJ EPS* KAI 4Q22 BUSINESS REVIEW–FEBRUARY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. FY 2022 to FY 2023 Adjusted EPS* 17 $9.24 $1.41 $0.26 $0.08 $0.01 $(0.86) $(0.07) $(0.03) $10.04 2022 ADJ EPS* REVENUE GROSS MARGIN TAX PROVISION NONCONTROLLING INTEREST OPERATING EXPENSES INTEREST EXPENSE CHANGE IN SHARES 2023 ADJ EPS*

 
Key Liquidity Metrics KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 18 ($ in millions) Q4 23 Q3 23 Q4 22 Cash, cash equivalents, and restricted cash $106.5 $79.1 $79.7 Debt $109.1 $127.5 $199.2 Lease obligations $1.8 $1.7 $1.9 Net Debt $4.4 $50.2 $121.4 Leverage ratio1 0.27 0.38 0.74 Working capital % LTM revenue2 12.8% 15.4% 13.9% Cash conversion days3 130 138 126

 
Guidance KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 19 • FY 2024 revenue of $1.040 to $1.065 billion • FY 2024 GAAP EPS of $9.55 to $9.85 • FY 2024 adjusted EPS* of $9.75 to $10.05 • Q1 2024 revenue of $238 to $246 million • Q1 2024 GAAP EPS of $1.76 to $1.86 • Q1 2024 adjusted EPS* of $1.90 to $2.00

 
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 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 20

 
2024 Key Priorities 21 ENABLE SUSTAINABLE INDUSTRIAL PROCESSING DELIVER EXCEPTIONAL STAKEHOLDER VALUE PROVIDE STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 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 February 15, 2024

 
APPENDIX Fourth Quarter and FY 2023 Business Review KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 23

 
Revenue by Customer Location ($ in thousands) Q4 23 Q4 22 Change Change Excluding Acquisition and FX* North America $137,040 $133,784 $3,256 $3,072 Europe 63,881 59,526 4,355 1,386 Asia 25,481 26,016 (535) (608) Rest of World 12,277 12,774 (497) (1,011) Total $238,679 $232,100 $6,579 $2,839 KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 24 ($ in thousands) FY 23 FY 22 Change Change Excluding Acquisition and FX* North America $538,658 $508,899 $29,759 $33,083 Europe 245,154 233,790 11,364 6,891 Asia 113,511 113,932 (421) 3,453 Rest of World 60,349 48,118 12,231 11,540 Total $957,672 $904,739 $52,933 $54,967

 
Percentage of Parts and Consumables Revenue KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 25 Q4 23 Q4 22 FY 23 FY 22 Flow Control 68 % 66 % 69 % 70 % Industrial Processing 64 % 58 % 62 % 61 % Material Handling 45 % 53 % 53 % 57 % Consolidated 60 % 60 % 62 % 63 %

 
Gross Margin and SG&A KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 26 24.5% 25.5% 24.5% 23.7% 25.1% 4Q22 1Q23 2Q23 3Q23 4Q23 43.1% 44.4% 43.5% 43.3% 42.7% 4Q22 1Q23 2Q23 3Q23 4Q23 SG&A (as a % of revenue) GROSS MARGIN 41.7% 43.7% 42.9% 43.1% 43.5% 2019 2020 2021 2022 2023 27.3% 28.6% 26.5% 24.8% 24.7% 2019 2020 2021 2022 2023 FY GROSS MARGIN FY SG&A (as a % of revenue)

 
Adjusted EPS* Reconciliation Q4 23 Q4 22 FY 23 FY 22 EPS, as Reported $2.33 $2.23 $9.90 $10.35 Adjustments, Net of Tax Gain on Sale and Other Income (0.05) — (0.05) (1.30) Acquisition-Related Costs 0.10 0.01 0.10 0.08 Relocation Costs 0.01 — 0.05 — Restructuring and Impairment Costs 0.02 0.09 0.04 0.11 Adjusted EPS* $2.41 $2.33 $10.04 $9.24 KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 27 ($ in thousands) Q4 23 Q4 22 FY 23 FY 22 Operating Cash Flow $59,234 $35,163 $165,545 $102,625 Less Capital Expenditures (9,756) (12,008) (31,850) (28,199) Free Cash Flow* $49,478 $23,155 $133,695 $74,426 Free Cash Flow* Reconciliation

 
Adjusted EBITDA* Reconciliation ($ in thousands) Q4 23 Q4 22 FY 23 FY 22 Net Income Attributable to Kadant $27,396 $26,079 $116,069 $120,928 Net Income Attributable to Noncontrolling Interest 166 130 737 802 Provision for Income Taxes 10,449 10,831 42,210 43,906 Interest Expense, Net 971 1,903 6,640 5,574 Other Expense, Net 39 12 101 72 Gain on Sale and Other Income (841) — (841) (20,190) Acquisition Costs 1,442 182 1,442 668 Indemnification Asset (Provision) Reversal (25) 741 102 1,316 Relocation Costs 189 — 798 — Restructuring and Impairment Costs 332 1,080 766 1,334 Acquired Backlog Amortization — — — 703 Acquired Profit in Inventory Amortization — — — (218) Depreciation and Amortization 8,380 8,549 33,297 34,233 Adjusted EBITDA* $48,498 $49,507 $201,321 $189,128 Adjusted EBITDA Margin* 20.3% 21.3% 21.0% 20.9% KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 28

 
Notes PRESENTATION NOTES • All references to EPS (earnings per share) are to our EPS as calculated on a diluted basis. • Percent change in slides 6-10 is calculated using actual numbers reported in our press release dated February 14, 2024. 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 $50 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 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 29