KADANT INC. First Quarter 2024 Business Review
May 1, 2024
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 April 30, 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 30, 2023 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; 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 to tax laws and regulations; 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.
KAI 1Q24 BUSINESS REVIEW- MAY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. | 2 |
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 gross margin, 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 first quarter 2024 earnings press release issued April 30, 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 or cash flows 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.
KAI 1Q24 BUSINESS REVIEW- MAY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. | 3 |
Business Review
Jeffrey L. Powell, President & CEO
KAI 1Q24 BUSINESS REVIEW- MAY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. | 4 |
Operational Highlights
- Completed the integration of two acquisitions
- Strong demand for aftermarket parts contributed to record revenue and a solid start to 2024
- Operational execution was very good and contributed to excellent adjusted EBITDA*
KAI 1Q24 BUSINESS REVIEW- MAY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. . | 5 |
Q1 2024 Performance
($ in millions, except per share amounts) | Q1 24 | Q1 23 | Change |
Revenue | $249.0 | $229.8 | +8.4% |
Net Income | $24.7 | $28.1 | -12.1% |
Adjusted EBITDA* | $52.2 | $48.6 | +7.5% |
Adjusted EBITDA Margin* | 21.0% | 21.1% | -10 bps |
EPS | $2.10 | $2.40 | -12.5% |
Adjusted EPS* | $2.38 | $2.40 | -0.8% |
Operating Cash Flow | $22.8 | $36.9 | -38.1% |
Free Cash Flow* | $16.6 | $32.4 | -48.9% |
Bookings | $248.4 | $274.5 | -9.5% |
HIGHLIGHTS
- Record revenue driven by recent acquisitions and strong aftermarket parts business
- Excellent operating performance contributed to strong adjusted EPS* and adjusted EBITDA*
- Industrial demand, particularly for capital equipment, impacted by economic headwinds and sluggish manufacturing activity in Europe and Asia
KAI 1Q24 BUSINESS REVIEW- MAY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. | 6 |
Flow Control
($ in millions) | Q1 24 | Q1 23 | Change |
Revenue | $86.7 | $89.5 | -3.2% |
Bookings | $94.7 | $104.6 | -9.5% |
Adjusted EBITDA* | $24.1 | $26.5 | -8.8% |
Adjusted EBITDA Margin* | 27.8% | 29.6% | -180 bps |
($ in millions) | BOOKINGS | |
$104.6 | $94.7 | |
$88.3 | ||
$83.0 | $85.4 | |
1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 |
HIGHLIGHTS
- Strong aftermarket parts demand contributed to solid revenue performance
- Demand for capital equipment was exceptionally strong in North America
- Ongoing project activity although timing somewhat uncertain
KAI 1Q24 BUSINESS REVIEW- MAY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. | 7 |
Industrial Processing
($ in millions) | Q1 24 | Q1 23 | Change |
Revenue | $105.9 | $83.5 | +26.7% |
Bookings | $89.9 | $96.3 | -6.6% |
Adjusted EBITDA* | $27.0 | $18.9 | +42.3% |
Adjusted EBITDA Margin* | 25.5% | 22.7% | +280 bps |
($ in millions) | BOOKINGS | ||
$96.3 | $89.9 | ||
$84.1 | |||
$79.3 | |||
$70.4 |
1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 |
HIGHLIGHTS
- Record revenue performance driven by all product lines
- Improved operating leverage and recent acquisition contributed to excellent adjusted EBITDA margin*
- Capital project activity remains relatively strong across all product lines
KAI 1Q24 BUSINESS REVIEW- MAY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. | 8 |
Material Handling
($ in millions) | Q1 24 | Q1 23 | Change |
Revenue | $56.4 | $56.7 | -0.5% |
Bookings | $63.9 | $73.7 | -13.3% |
Adjusted EBITDA* | $11.4 | $12.5 | -8.2% |
Adjusted EBITDA Margin* | 20.3% | 22.0% | -170 bps |
($ in millions) | BOOKINGS |
$73.7 | |
$63.9 | |
$56.2 | |
$47.6 | $48.5 |
1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 |
HIGHLIGHTS
- Solid demand for aftermarket parts across all product lines
- Customer-requesteddelays in shipments negatively impacted margin performance
- Integration of recent acquisition is progressing well; outlook for growth remains positive
KAI 1Q24 BUSINESS REVIEW- MAY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. | 9 |
Business Outlook
- Industrial demand expected to strengthen in certain regions, remain stable in others
- Economic uncertainty continues to impact the timing of capital orders
- Our strong cash flow and healthy balance sheet position us well for growth
KAI 1Q24 BUSINESS REVIEW- MAY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. | 10 |
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Kadant Inc. published this content on 01 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 10:07:33 UTC.
