WESTFORD, Mass., April 30, 2024 (GLOBE NEWSWIRE) -- Kadant Inc. (NYSE:KAI) reported its financial results for the first quarter ended March 30, 2024. First Quarter Financial Highlights Revenue increased 8% to a record $249 million Gross margin was 44.6% Adjusted gross margin was 45.5% excluding acquisition-related costs Operating cash flow decreased 38% to $23 million Net income decreased 12% to $25 million GAAP EPS decreased 13% to $2.10 Adjusted EPS decreased 1% to $2.38 Adjusted EBITDA increased 8% to $52 million and represented 21.0% of revenue Bookings decreased 10% to $248 million from an unprecedented record $275 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. Adjusted gross margin, 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"We had a solid start to 2024 with record revenue and strong adjusted EBITDA and adjusted EPS in the first quarter," said Jeffrey L. Powell, president and chief executive officer of Kadant Inc. "Our most recent acquisitions are performing well and contributed to our record revenue, as did a notably strong performance by our Industrial Processing segment. "Our aftermarket parts revenue was up 13 percent in the first quarter and comprised 69 percent of our total revenue. The strength in aftermarket parts enabled us to offset flat capital equipment revenue caused by the general slowdown of manufacturing activity in some regions of the world, including Europe and Asia." First Quarter 2024 Compared to 2023Revenue increased eight percent to a record $249.0 million compared to $229.8 million in 2023. Organic revenue decreased three percent, which excludes an 11 percent increase from acquisitions. Gross margin was 44.6 percent, including a 90 basis point decrease from acquisition-related costs, compared to 44.4 percent in 2023. GAAP EPS decreased 13 percent to $2.10 compared to $2.40 in 2023. Adjusted EPS decreased one percent to $2.38 compared to $2.40 in 2023. Adjusted EPS in 2024 excludes $0.28 of acquisition-related costs. Net income was $24.7 million, decreasing 12 percent compared to $28.1 million in 2023. Adjusted EBITDA increased eight percent to $52.2 million and represented 21.0 percent of revenue compared to $48.6 million and 21.1 percent of revenue in the prior year. Operating cash flow decreased 38 percent to $22.8 million compared to $36.9 million in 2023. Free cash flow decreased 49 percent to $16.6 million compared to $32.4 million in 2023. Bookings decreased 10 percent to $248.4 million compared to a record $274.5 million in 2023. Organic bookings decreased 18 percent, which excludes an eight percent increase from acquisitions. Summary and Outlook"Our backlog and ability to generate robust cash flows have us well positioned for the year," continued Mr. Powell. "We expect industrial demand to strengthen in certain regions, such as Europe and Asia, and remain stable in others as the year progresses. We are maintaining our revenue and adjusted EPS guidance for the full year and expect revenue of $1.040 to $1.065 billion in 2024 and adjusted EPS of $9.75 to $10.05. The 2024 adjusted EPS guidance excludes $0.36 of acquisition-related costs, revised from $0.20 of acquisition-related costs in our previous guidance. We expect GAAP EPS of $9.39 to $9.69 in 2024, revised from our previous GAAP EPS guidance of $9.55 to $9.85. For the second quarter of 2024, we expect revenue of $258 to $266 million, GAAP EPS of $2.34 to $2.44 and, after excluding $0.06 of acquisition-related costs, adjusted EPS of $2.40 to $2.50." Conference Call Kadant will hold a webcast with a slide presentation for investors on Wednesday, May 1, 2024, at 11:00 a.m. eastern time to discuss its first quarter 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 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 May 31, 2024. 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 first quarter results on its website at www.kadant.com under the "Investors" section. Use of Non-GAAP Financial MeasuresIn 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 gross margin, 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 first quarter of 2024 included $24.4 million from acquisitions and a favorable foreign currency translation effect of $0.8 million compared to the first quarter of 2023. Our other non-GAAP financial measures exclude 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 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. First Quarter Adjusted gross margin excludes: Pre-tax amortization of acquired profit in inventory of $2.3 million in 2024, representing a 90 basis point impact on gross margin. Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude: Pre-tax acquisition costs of $1.1 million in 2024. Pre-tax amortization of acquired profit in inventory and backlog of $3.1 million in 2024. Pre-tax indemnification asset reversals of $0.1 million in 2024. Adjusted net income and adjusted EPS exclude: After-tax acquisition costs of $0.9 million ($1.1 million net of tax of $0.2 million) in 2024. After-tax amortization of acquired profit in inventory and backlog of $2.4 million ($3.1 million net of tax of $0.7 million) in 2024. Free cash flow is calculated as operating cash flow less: Capital expenditures of $6.3 million in 2024 and $4.5 million in 2023. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release. Financial Highlights (unaudited)         (In thousands, except per share amounts and percentages)                       Three Months Ended Consolidated Statement of Income   March 30,2024   April 1,2023 Revenue   $ 248,975     $ 229,758   Costs and Operating Expenses:           Cost of revenue   138,013       127,712     Selling, general, and administrative expenses   70,305       58,562     Research and development expenses   3,730       3,370           212,048       189,644   Operating Income     36,927       40,114   Interest Income     611       299   Interest Expense     (4,669 )     (2,370 ) Other Expense, Net     (30 )     (21 ) Income Before Provision for Income Taxes     32,839       38,022   Provision for Income Taxes     7,854       9,763   Net Income     24,985       28,259   Net Income Attributable to Noncontrolling Interests     (296 )     (184 ) Net Income Attributable to Kadant   $ 24,689     $ 28,075                 Earnings per Share Attributable to Kadant:             Basic   $ 2.11     $ 2.40       Diluted   $ 2.10     $ 2.40                 Weighted Average Shares:             Basic     11,724       11,681       Diluted     11,744       11,694                         Three Months Ended   Three Months Ended Adjusted Net Income and Adjusted Diluted EPS (a) March 30,2024   March 30,2024   April 1,2023   April 1,2023 Net Income and Diluted EPS Attributable to Kadant, as Reported   $ 24,689   $ 2.10   $ 28,075   $ 2.40 Adjustments, Net of Tax:                   Acquisition Costs     930     0.08     —     —   Amortization of Acquired Profit in Inventory and Backlog     2,369     0.20     —     — Adjusted Net Income and Adjusted Diluted EPS (a)   $ 27,988   $ 2.38   $ 28,075   $ 2.40                             Three Months Ended       Increase (Decrease) Excluding Acquisitions and FX (a,d) Revenue by Segment March 30,2024   April 1,2023   Increase (Decrease)   Flow Control $ 86,682     $ 89,521     $ (2,839 )   $ (3,573 ) Industrial Processing   105,861       83,542       22,319       5,825   Material Handling