Kadant Inc. reported its financial results for the first quarter ended April 2, 2022.
First Quarter Financial Highlights
- Bookings increased 30% to a record $266 million.
- Revenue increased 31% to a record $226 million.
- Operating cash flow increased 24% to $24 million.
- Free cash flow increased 24% to $21 million.
- Net income was $41 million, including a $15 million after-tax gain on the sale of a facility.
- GAAP diluted EPS increased 147% to $3.53.
- Adjusted diluted EPS increased 49% to $2.28.
- Adjusted EBITDA increased 41% to a record $46 million and represented 20.2% of revenue.
- Backlog was a record $348 million.
Management Commentary
“We had an excellent start to 2022 with record bookings, revenue, and adjusted EBITDA in the first quarter,” said Jeffrey L. Powell, president and chief executive officer of Kadant. “Strong demand continued across all operating segments with new order activity from both parts and capital contributing to record backlog at the end of the first quarter.
“Solid execution by our operations teams led to improved operating performance and record adjusted EBITDA despite ongoing supply chain constraints and inflationary pressures. Our global workforce once again delivered exceptional value to our customers who rely on our critical technologies and engineered systems to enable Sustainable Industrial Processing.”
First Quarter 2022 compared to 2021
Revenue increased 31 percent to a record $226.5 million compared to $172.5 million in 2021. Organic revenue increased 22 percent, which excludes an 11 percent increase from acquisitions and a two percent decrease from the unfavorable effect of foreign currency translation. Gross margin was 43.4 percent compared to 43.9 percent in 2021.
GAAP diluted earnings per share (EPS) increased 147 percent to $3.53, which included a $1.30 gain on the sale of a facility, compared to $1.43 in 2021. Adjusted diluted EPS increased 49 percent to $2.28 compared to $1.53 in 2021. Adjusted diluted EPS excludes a $1.30 gain on the sale of a facility, $0.04 of acquisition-related costs, and $0.01 of impairment costs in 2022 and $0.10 of acquisition costs in 2021. Net income increased 149 percent to $41.2 million compared to $16.6 million in 2021. Adjusted EBITDA increased 41 percent to a record $45.8 million and represented 20.2 percent of revenue compared to $32.4 million and 18.8 percent of revenue in the prior year quarter. Operating cash flow increased 24 percent to $23.8 million compared to $19.1 million in 2021.
Bookings increased 30 percent to a record $266.1 million compared to $204.5 million in 2021. Organic bookings increased 22 percent, which excludes an 11 percent increase from acquisitions and a three percent decrease from the unfavorable effect of foreign currency translation.
Summary and Outlook
“We are encouraged by the strong start, and as a result, we are raising our guidance for the year,” Mr. Powell continued. “Our record backlog has us positioned well, and we expect to generate record financial results while continuing to navigate supply chain challenges, economic headwinds, and growing socio-political uncertainties.
“We now expect revenue of $885 to $905 million in 2022, revised from our previous guidance of $870 to $890 million. We now expect to achieve GAAP diluted EPS of $10.05 to $10.25, revised from our previous guidance of $8.50 to $8.70. The revised 2022 guidance includes a $1.30 gain on the sale of a facility, $0.04 of acquisition-related costs, and a $0.01 impairment charge. Excluding these items, we now expect adjusted diluted EPS of $8.80 to $9.00, revised from our previous guidance of $8.55 to $8.75. The 2022 guidance includes a negative effect from foreign currency translation, lowering revenue guidance by $14 million and adjusted diluted EPS guidance by $0.14. For the second quarter of 2022, we expect GAAP diluted EPS of $1.86 to $1.96 on revenue of $215 to $220 million.”
Conference Call
Kadant will hold a webcast with a slide presentation for investors on Wednesday, May 4, 2022, at 11:00 a.m. eastern time to discuss its first quarter performance, as well as future expectations. To access the webcast, including the slideshow and accompanying audio, go to www.kadant.com and click on “Investors.” To listen to the webcast via teleconference, call 888-326-8410 within the U.S., or +1-704-385-4884 outside the U.S. and reference participant passcode 8582925. 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. An archive of the webcast presentation will be available on our website until June 3, 2022.
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.
Note: Percent changes above are based on comparison to the prior year period. Free cash flow, 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 under the heading “Use of Non-GAAP Financial Measures.”
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