Kadant Reports Fourth Quarter and Fiscal Year 2024 Results

WESTFORD, Mass., Feb. 12, 2025 (GLOBE NEWSWIRE) -- Kadant Inc. (NYSE: KAI) reported its financial results for the fourth quarter and fiscal year ended December 28, 2024.

Fourth Quarter Financial Highlights

• Revenue increased 8% to $258 million
• Gross margin was 43.4%
• Net income decreased 12% to $24 million
• GAAP EPS decreased 12% to $2.04
• Adjusted EPS decreased 7% to $2.25
• Adjusted EBITDA increased 8% to $52 million and represented 20.3% of revenue
• Operating cash flow decreased 12% to $52 million
• Bookings increased 10% to $241 million

• Revenue increased 10% to a record $1.05 billion
• Gross margin was 44.3%
• Net income decreased 4% to $112 million
• GAAP EPS decreased 4% to $9.48
• Adjusted EPS increased 2% to a record $10.28
• Adjusted EBITDA increased 14% to a record $230 million and represented a record 21.8% of revenue
• Operating cash flow decreased 6% to $155 million
• Bookings increased 7% to a record $981 million

Management Commentary

"The fourth quarter was a good finish to a record-setting year,” said Jeffrey L. Powell, president and chief executive officer of Kadant Inc. "Excellent execution by our businesses led to solid margin performance and strong cash flows. Despite continued economic headwinds in many regions, industrial activity was relatively stable both year-over-year and sequentially.

"Our recent acquisitions made strong contributions not only to our fourth quarter performance, but to our full-year 2024 results, including record revenue of $1.05 billion, record adjusted EPS of $10.28 per share, and record adjusted EBITDA of $230 million at a record 21.8 percent of revenue. Overall, we achieved solid performance across our key financial metrics.”

Fourth Quarter 2024 Compared to 2023

Revenue increased eight percent to $258.0 million compared to $238.7 million in 2023. Organic revenue decreased five percent, which excludes a 14 percent increase from acquisitions and a one percent decrease from the unfavorable effect of foreign currency translation. Gross margin was 43.4 percent, including a 40 basis point decrease from acquisition-related costs, compared to 42.7 percent in 2023.

Net income was $24.0 million, decreasing 12 percent compared to $27.4 million in 2023. GAAP EPS decreased 12 percent to $2.04 compared to $2.33 in 2023. Adjusted EPS decreased seven percent to $2.25 compared to $2.41 in 2023. Adjusted EPS excludes $0.16 of acquisition-related costs and $0.06 of other costs in 2024. Adjusted EPS excludes $0.10 of acquisition costs, $0.04 of other income, and $0.02 of restructuring costs in 2023.

Adjusted EBITDA increased eight percent to $52.4 million compared to $48.5 million in 2023 and was 20.3 percent of revenue in both periods. Operating cash flow decreased 12 percent to $51.9 million compared to $59.2 million in 2023. Free cash flow decreased six percent to $46.3 million compared to $49.5 million in 2023.

Bookings increased 10 percent to $240.6 million compared to $218.0 million in 2023. Organic bookings decreased three percent, which excludes a 14 percent increase from acquisitions and a one percent decrease from the unfavorable effect of foreign currency translation.

Fiscal Year 2024 Compared to 2023

Revenue increased 10 percent to a record $1.053 billion compared to $957.7 million in 2023. Organic revenue decreased two percent, which excludes a 12 percent increase from acquisitions. Gross margin was 44.3 percent, including a 40 basis point decrease from acquisition-related costs, compared to 43.5 percent in 2023.

Net income was $111.6 million, decreasing four percent compared to $116.1 million in 2023. GAAP EPS decreased four percent to $9.48 compared to $9.90 in 2023. Adjusted EPS increased two percent to a record $10.28 compared to $10.04 in 2023. Adjusted EPS excludes $0.74 of acquisition-related costs and $0.06 of other costs in 2024. Adjusted EPS excludes $0.10 of acquisition costs and $0.04 of restructuring costs in 2023.

Adjusted EBITDA increased 14 percent to a record $229.7 million and represented a record 21.8 percent of revenue compared to $201.3 million and 21.0 percent of revenue in the prior year. Operating cash flow decreased six percent to $155.3 million compared to $165.5 million in 2023. Free cash flow was $134.3 million compared to $133.7 million in 2023.

Bookings increased seven percent to a record $981.1 million compared to $917.4 million in 2023. Organic bookings decreased five percent, which excludes a 13 percent increase from acquisitions and a one percent decrease from the unfavorable effect of foreign currency translation.

Summary and Outlook

"As we look ahead to the first quarter of 2025 and the full year, project activity is looking more favorable and demand for aftermarket parts has been stable as we entered the year,” continued Mr. Powell. "We expect an increase in demand for our capital equipment products benefiting our revenue in the second half of 2025. Despite macroeconomic uncertainty, we remain committed to maximizing the value we create for our customers and shareholders while accelerating our internal initiatives that have proven to drive value across our operations. For 2025, we expect revenue of $1.040 to $1.065 billion, GAAP EPS of $9.63 to $9.98 and, after excluding $0.07 of acquisition-related costs, adjusted EPS of $9.70 to $10.05. The 2025 guidance includes a negative effect from foreign currency translation compared to 2024, which is lowering revenue by $23 million and adjusted EPS by $0.32. For the first quarter of 2025, we expect revenue of $235 to $242 million, GAAP EPS of $1.81 to $2.01 and, after excluding $0.04 of acquisition-related costs, adjusted EPS of $1.85 to $2.05. Our 2025 guidance does not include any estimates related to the impact of the newly issued or proposed tariffs by the U.S. government.”

Conference Call

Kadant will hold a webcast with a slide presentation for investors on Thursday, February 13, 2025, at 11:00 a.m. Eastern Standard 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 kadant.com. Participants interested in joining the call's live question and answer session are required to register by clicking here 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 14, 2025.

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 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 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 2024 included $33.1 million from acquisitions and an unfavorable foreign currency translation effect of $2.2 million compared to the fourth quarter of 2023. Revenue in 2024 included $115.4 million from acquisitions and an unfavorable foreign currency translation effect of $4.6 million compared to 2023. Our other non-GAAP financial measures exclude amortization expense related to acquired profit in inventory and backlog, acquisition costs, restructuring and impairment costs, relocation costs, 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 additional measures 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 or cash flows 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 amortization of acquired profit in inventory and backlog of $2.2 million in 2024.
• Pre-tax acquisition costs of $0.3 million in 2024 and $1.4 million in 2023.
• Pre-tax indemnification asset reversal of $0.3 million in 2024.
• Pre-tax restructuring and impairment costs of $0.3 million in 2023.
• Pre-tax other costs of $0.7 million in 2024 and other income of $0.7 million in 2023.

• After-tax amortization of acquired profit in inventory and backlog of $1.7 million ($2.2 million net of tax of $0.5 million) in 2024.
• After-tax acquisition costs of $0.2 million ($0.3 million net of tax of $0.1 million) in 2024 and $1.2 million ($1.4 million net of tax of $0.2 million) in 2023.
• After-tax restructuring and impairment costs of $0.2 million ($0.3 million net of tax of $0.1 million) in 2023.
• After-tax other costs of $0.7 million in 2024 and other income of $0.5 million ($0.7 million net of tax of $0.2 million) in 2023.

• Capital expenditures of $5.6 million in 2024 and $9.8 million in 2023.

Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:

• Pre-tax amortization of acquired profit in inventory and backlog of $8.4 million in 2024.
• Pre-tax acquisition costs of $2.9 million in 2024 and $1.4 million in 2023.
• Pre-tax indemnification asset reversal of $0.2 million in 2024 and $0.1 million in 2023.
• Pre-tax restructuring and impairment costs of $0.8 million in 2023.
• Pre-tax other costs of $0.7 million in 2024.

• After-tax amortization of acquired profit in inventory and backlog of $6.4 million ($8.4 million net of tax of $2.0 million) in 2024.
• After-tax acquisition costs of $2.3 million ($2.9 million net of tax of $0.6 million) in 2024 and $1.2 million ($1.4 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.
• After-tax other costs of $0.7 million in 2024.

• Capital expenditures of $21.0 million in 2024 and $31.9 million in 2023.