Kadant (KAI) Tops Q4 EPS by 4c, Revenues Beat; Offers EPS/Revenues Guidance Below Consensus

Kadant (NYSE: KAI) reported Q4 EPS of $1.32, $0.04 better than the analyst estimate of $1.28. Revenue for the quarter came in at $183 million versus the consensus estimate of $173.42 million.

Fourth Quarter Financial Highlights

• Revenue increased 11% to $183 million
• GAAP diluted EPS decreased to $0.76 compared to $1.61 in 2018
• Adjusted diluted EPS decreased 20% to $1.32
• Net income decreased to $8.7 million compared to $18.4 million in 2018
• Adjusted EBITDA increased 1% to $32 million
• Bookings increased 9% to $160 million
• Cash flows from operations were a record $39 million

Management Commentary“The fourth quarter was a solid finish to another record-setting year,” said Jeffrey L. Powell, president and chief executive officer. “Kadant’s full-year organic revenue increased for the third consecutive year and contributed to strong performance in a number of key financial metrics, including adjusted diluted EPS and adjusted EBITDA. We were particularly pleased with our record cash flows from operations for the year of $97 million, up 55 percent from 2018, and record free cash flows of $87 million, up 88 percent from 2018.

“A strong backlog entering 2019 and favorable market conditions during the first half of the year coupled with excellent operating execution led to our highest level of revenue and bookings despite the weakness in global demand that emerged in the second half of 2019.

“Parts and consumables revenue increased 18 percent to a record $441 million for the year and represented 63 percent of our total revenue compared to 59 percent in 2018. Parts and consumables demand was strong in the fourth quarter comprising 70 percent of our total fourth quarter bookings. For the full-year, parts and consumables bookings increased 17 percent compared to 2018.”

GUIDANCE:

Kadant sees FY2020 EPS of $5.00-$5.10, versus the consensus of $5.97. Kadant sees FY2020 revenue of $690-700 million, versus the consensus of $716.32 million.

“Overall, our healthy balance sheet and strong operating cash flows position us well for what looks to be a somewhat challenging environment for industrial markets in 2020,” Mr. Powell continued. “We expect to report full year GAAP diluted EPS of $4.98 to $5.08 in 2020 on revenue of $690 to $700 million. The 2020 guidance includes pre-tax amortization expense associated with acquired backlog of $0.4 million, or $0.02 per diluted share, and excluding this item, we expect adjusted diluted EPS of $5.00 to $5.10. For the first quarter of 2020, we expect GAAP diluted EPS of $0.80 to $1.08 on revenue of $153 to $163 million. The wide guidance range for the quarter is due to the uncertainty surrounding the impact of the coronavirus in China and the government-mandated business closures, which have impacted employees of our subsidiaries in China. Our subsidiaries received permission to re-open with significant restrictions earlier this week; however, if these restrictions are extended or if there is a broader impact on our customers or suppliers, such impact could affect the timing of shipments and our financial results in the first quarter of 2020.”

For earnings history and earnings-related data on Kadant (KAI) click here.

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