Cover
Cover - shares | 9 Months Ended | |
Oct. 01, 2022 | Oct. 28, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 01, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-11406 | |
Entity Registrant Name | KADANT INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 52-1762325 | |
Entity Address, Address Line One | One Technology Park Drive | |
Entity Address, City or Town | Westford | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 01886 | |
City Area Code | 978 | |
Local Phone Number | 776-2000 | |
Title of 12(b) Security | Common Stock, $.01 par value | |
Trading Symbol | KAI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,663,601 | |
Entity Central Index Key | 0000886346 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet (Unaudited) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 72,936 | $ 91,186 |
Restricted cash (Note 1) | 2,178 | 2,975 |
Accounts receivable, net of allowances of $3,038 and $2,735 | 128,253 | 117,209 |
Inventories | 156,567 | 134,356 |
Contract assets | 16,064 | 8,626 |
Other current assets | 24,995 | 29,530 |
Total Current Assets | 400,993 | 383,882 |
Property, Plant, and Equipment, net of accumulated depreciation of $116,292 and $114,032 | 105,439 | 107,989 |
Other Assets | 53,748 | 44,111 |
Intangible Assets, Net | 173,707 | 199,343 |
Goodwill | 372,966 | 396,887 |
Total Assets | 1,106,853 | 1,132,212 |
Current Liabilities: | ||
Short-term obligations and current maturities of long-term obligations (Note 5) | 1,553 | 5,356 |
Accounts payable | 53,495 | 59,250 |
Accrued payroll and employee benefits | 35,912 | 37,203 |
Customer deposits | 69,394 | 59,262 |
Advanced billings | 7,958 | 11,894 |
Other current liabilities | 44,688 | 48,532 |
Total Current Liabilities | 213,000 | 221,497 |
Long-Term Obligations (Note 5) | 208,114 | 264,158 |
Long-Term Deferred Income Taxes | 34,926 | 34,944 |
Other Long-Term Liabilities | 41,309 | 45,997 |
Commitments and Contingencies (Note 11) | ||
Stockholders' Equity: | ||
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued | 0 | 0 |
Common stock, $.01 par value, 150,000,000 shares authorized; 14,624,159 shares issued | 146 | 146 |
Capital in excess of par value | 116,807 | 115,888 |
Retained earnings | 637,601 | 551,848 |
Treasury stock at cost, 2,960,558 and 3,003,419 shares | (72,546) | (73,596) |
Accumulated other comprehensive items (Note 7) | (73,959) | (30,350) |
Total Kadant Stockholders' Equity | 608,049 | 563,936 |
Noncontrolling interest | 1,455 | 1,680 |
Total Stockholders' Equity | 609,504 | 565,616 |
Total Liabilities and Stockholders' Equity | $ 1,106,853 | $ 1,132,212 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Stockholders' Equity: | ||
Allowance for credit losses | $ 3,038 | $ 2,735 |
Accumulated depreciation | $ 116,292 | $ 114,032 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, issued (in shares) | 14,624,159 | 14,624,159 |
Treasury stock (in shares) | 2,960,558 | 3,003,419 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Income Statement [Abstract] | ||||
Revenue (Notes 1 and 10) | $ 224,510 | $ 199,789 | $ 672,639 | $ 568,063 |
Costs and Operating Expenses: | ||||
Cost of revenue | 129,154 | 116,096 | 383,034 | 323,337 |
Selling, general, and administrative expenses | 53,153 | 52,316 | 167,640 | 151,014 |
Research and development expenses | 3,245 | 2,649 | 9,574 | 8,547 |
Gain on sale and other costs, net (Note 2) | 72 | 0 | (19,936) | 0 |
Total Costs and Operating Expenses | 185,624 | 171,061 | 540,312 | 482,898 |
Operating Income | 38,886 | 28,728 | 132,327 | 85,165 |
Interest Income | 271 | 55 | 650 | 176 |
Interest Expense | (1,721) | (1,320) | (4,321) | (3,497) |
Other Expense, Net | (19) | (23) | (60) | (71) |
Income Before Provision for Income Taxes | 37,417 | 27,440 | 128,596 | 81,773 |
Provision for Income Taxes (Note 4) | 9,746 | 6,742 | 33,075 | 21,252 |
Net Income | 27,671 | 20,698 | 95,521 | 60,521 |
Net Income Attributable to Noncontrolling Interest | (184) | (237) | (672) | (635) |
Net Income Attributable to Kadant | $ 27,487 | $ 20,461 | $ 94,849 | $ 59,886 |
Earnings per Share Attributable to Kadant (Note 3) | ||||
Basic (in dollars per share) | $ 2.36 | $ 1.77 | $ 8.14 | $ 5.18 |
Diluted (in dollars per share) | $ 2.35 | $ 1.75 | $ 8.12 | $ 5.14 |
Weighted Average Shares (Note 3) | ||||
Basic (in shares) | 11,662 | 11,580 | 11,651 | 11,571 |
Diluted (in shares) | 11,700 | 11,668 | 11,681 | 11,644 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 27,671 | $ 20,698 | $ 95,521 | $ 60,521 |
Other Comprehensive Items: | ||||
Foreign currency translation adjustment | (22,798) | (7,326) | (44,446) | (7,987) |
Post-retirement liability adjustments, net (net of tax provision of $8, $9, $21 and $21) | 24 | 24 | 64 | 57 |
Deferred gain on cash flow hedges (net of tax provision of $27, $20, $141 and $60) | 83 | 66 | 506 | 244 |
Other comprehensive items | (22,691) | (7,236) | (43,876) | (7,686) |
Comprehensive Income | 4,980 | 13,462 | 51,645 | 52,835 |
Comprehensive Income Attributable to Noncontrolling Interest | (73) | (201) | (405) | (546) |
Comprehensive Income Attributable to Kadant | $ 4,907 | $ 13,261 | $ 51,240 | $ 52,289 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Other Comprehensive Items: | ||||
Post-retirement liability adjustments, net, tax | $ 8 | $ 9 | $ 21 | $ 21 |
Deferred gain on cash flow hedges, tax | $ 27 | $ 20 | $ 141 | $ 60 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Operating Activities | ||
Net Income Attributable to Kadant | $ 94,849 | $ 59,886 |
Net income attributable to noncontrolling interest | 672 | 635 |
Net Income | 95,521 | 60,521 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 26,387 | 24,597 |
Stock-based compensation expense | 6,576 | 6,230 |
Provision for losses on accounts receivable | 685 | 116 |
Gain on the sale of assets (Note 2) | (20,190) | 0 |
Noncash impairment costs (Note 2) | 182 | 0 |
Other items, net | 8,260 | 2,262 |
Changes in assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | (20,700) | (22,305) |
Unbilled revenue | (8,528) | (487) |
Inventories | (33,784) | (10,553) |
Other assets | (4,560) | (10,209) |
Accounts payable | (262) | 19,822 |
Customer deposits | 16,163 | 19,613 |
Other liabilities | 1,712 | 11,803 |
Net cash provided by operating activities | 67,462 | 101,410 |
Investing Activities | ||
Acquisitions, net of cash acquired | 138 | (141,538) |
Purchases of property, plant, and equipment | (16,191) | (7,688) |
Proceeds from sale of property, plant, and equipment | 2,091 | 102 |
Other | 39 | 537 |
Net cash used in investing activities | (13,923) | (148,587) |
Financing Activities | ||
Repayment of short- and long-term obligations | (69,460) | (72,723) |
Proceeds from issuance of short- and long-term obligations | 21,554 | 151,944 |
Tax withholding payments related to stock-based compensation | (4,607) | (3,388) |
Dividends paid | (8,969) | (8,559) |
Dividend paid to noncontrolling interest | (630) | (560) |
Net cash (used in) provided by financing activities | (62,112) | 66,714 |
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash | (10,474) | (2,513) |
(Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash | (19,047) | 17,024 |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 94,161 | 66,640 |
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ 75,114 | $ 83,664 |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Capital in Excess of Par Value | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Items | Noncontrolling Interest |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Treasury stock (in shares) | 3,081,919 | ||||||
Common stock, beginning balance (in shares) at Jan. 02, 2021 | 14,624,159 | ||||||
Beginning balance at Jan. 02, 2021 | $ 496,905 | $ 146 | $ 110,824 | $ 479,400 | $ (75,519) | $ (19,492) | $ 1,546 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income | 60,521 | 59,886 | 635 | ||||
Dividend declared – common stock | (8,690) | (8,690) | |||||
Activity under stock plans (in shares) | (43,290) | ||||||
Activity under stock plans | 2,929 | 1,869 | $ 1,060 | ||||
Dividend paid to noncontrolling interest | (560) | (560) | |||||
Noncontrolling interest acquired | 653 | 653 | |||||
Purchase of shares of noncontrolling interest | (686) | (686) | |||||
Other comprehensive items | (7,686) | (7,597) | (89) | ||||
Common stock, ending balance (in shares) at Oct. 02, 2021 | 14,624,159 | ||||||
Treasury stock, ending balance (in shares) at Oct. 02, 2021 | 3,038,629 | ||||||
Ending balance at Oct. 02, 2021 | 543,386 | $ 146 | 112,693 | 530,596 | $ (74,459) | (27,089) | 1,499 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Treasury stock (in shares) | 3,043,854 | ||||||
Common stock, beginning balance (in shares) at Jul. 03, 2021 | 14,624,159 | ||||||
Beginning balance at Jul. 03, 2021 | 531,126 | $ 146 | 110,529 | 513,036 | $ (74,587) | (19,889) | 1,891 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income | 20,698 | 20,461 | 237 | ||||
Dividend declared – common stock | (2,901) | (2,901) | |||||
Activity under stock plans (in shares) | (5,225) | ||||||
Activity under stock plans | 2,292 | 2,164 | $ 128 | ||||
Dividend paid to noncontrolling interest | (560) | (560) | |||||
Noncontrolling interest acquired | 653 | 653 | |||||
Purchase of shares of noncontrolling interest | (686) | (686) | |||||
Other comprehensive items | (7,236) | (7,200) | (36) | ||||
Common stock, ending balance (in shares) at Oct. 02, 2021 | 14,624,159 | ||||||
Treasury stock, ending balance (in shares) at Oct. 02, 2021 | 3,038,629 | ||||||
Ending balance at Oct. 02, 2021 | $ 543,386 | $ 146 | 112,693 | 530,596 | $ (74,459) | (27,089) | 1,499 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Treasury stock (in shares) | 3,038,629 | ||||||
Treasury stock (in shares) | 3,003,419 | 3,003,419 | |||||
Common stock, beginning balance (in shares) at Jan. 01, 2022 | 14,624,159 | ||||||
Beginning balance at Jan. 01, 2022 | $ 565,616 | $ 146 | 115,888 | 551,848 | $ (73,596) | (30,350) | 1,680 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income | 95,521 | 94,849 | 672 | ||||
Dividend declared – common stock | (9,096) | (9,096) | |||||
Activity under stock plans (in shares) | (42,861) | ||||||
Activity under stock plans | 1,969 | 919 | $ 1,050 | ||||
Dividend paid to noncontrolling interest | (630) | (630) | |||||
Other comprehensive items | $ (43,876) | (43,609) | (267) | ||||
Common stock, ending balance (in shares) at Oct. 01, 2022 | 14,624,159 | ||||||
Treasury stock, ending balance (in shares) at Oct. 01, 2022 | 2,960,558 | 2,960,558 | |||||
Ending balance at Oct. 01, 2022 | $ 609,504 | $ 146 | 116,807 | 637,601 | $ (72,546) | (73,959) | 1,455 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Treasury stock (in shares) | 2,962,186 | ||||||
Common stock, beginning balance (in shares) at Jul. 02, 2022 | 14,624,159 | ||||||
Beginning balance at Jul. 02, 2022 | 606,164 | $ 146 | 114,825 | 613,146 | $ (72,586) | (51,379) | 2,012 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income | 27,671 | 27,487 | 184 | ||||
Dividend declared – common stock | (3,032) | (3,032) | |||||
Activity under stock plans (in shares) | (1,628) | ||||||
Activity under stock plans | 2,022 | 1,982 | $ 40 | ||||
Dividend paid to noncontrolling interest | (630) | (630) | |||||
Other comprehensive items | $ (22,691) | (22,580) | (111) | ||||
Common stock, ending balance (in shares) at Oct. 01, 2022 | 14,624,159 | ||||||
Treasury stock, ending balance (in shares) at Oct. 01, 2022 | 2,960,558 | 2,960,558 | |||||
Ending balance at Oct. 01, 2022 | $ 609,504 | $ 146 | $ 116,807 | $ 637,601 | $ (72,546) | $ (73,959) | $ 1,455 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Treasury stock (in shares) | 2,960,558 | 2,960,558 |
Condensed Consolidated Statem_6
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||||
Dividend declared – common stock (in dollars per share) | $ 0.26 | $ 0.25 | $ 0.78 | $ 0.75 |
Nature of Operations and Summar
Nature of Operations and Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 01, 2022 | |
Accounting Policies [Abstract] | |
Nature of Operations and Summary of Significant Accounting Policies | Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Kadant Inc. was incorporated in Delaware in November 1991 and trades on the New York Stock Exchange under the ticker symbol "KAI." Kadant Inc. (together with its subsidiaries, the Company) is a global supplier of technologies and engineered systems that drive Sustainable Industrial Processing. Its products and services play an integral role in enhancing efficiency, optimizing energy utilization, and maximizing productivity in process industries while helping customers advance their sustainability initiatives with products that reduce waste or generate more yield with fewer inputs, particularly fiber, energy, and water. Producing more while consuming less is a core aspect of Sustainable Industrial Processing and a major element of the strategic focus of the Company's three reportable operating segments: Flow Control, Industrial Processing, and Material Handling. Interim Financial Statements The interim condensed consolidated financial statements and related notes presented have been prepared by the Company, are unaudited, and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the Company's financial position at October 1, 2022, its results of operations, comprehensive income, and stockholders' equity for the three- and nine-month periods ended October 1, 2022 and October 2, 2021 and its cash flows for the nine-month periods ended October 1, 2022 and October 2, 2021. Interim results are not necessarily indicative of results for a full year or for any other interim period. The condensed consolidated balance sheet presented as of January 1, 2022 has been derived from the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2022 (the Annual Report). The condensed consolidated financial statements and related notes are presented as permitted by the rules and regulations of the Securities and Exchange Commission (SEC) for Form 10-Q and do not contain certain information included in the annual consolidated financial statements and related notes of the Company. The condensed consolidated financial statements and notes included herein should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report. Financial Statement Presentation Certain reclassifications have been made to prior periods to conform with the current period presentation. Specifically, the Company reclassified the change in customer deposits within operating activities from other liabilities to a separate line item and the changes in long-term assets and liabilities from other items, net to other assets and other liabilities, respectively, in the Condensed Consolidated Statement of Cash Flows. Use of Estimates and Critical Accounting Policies The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Although the Company makes every effort to ensure the accuracy of the estimates and assumptions used in the preparation of its condensed consolidated financial statements or in the application of accounting policies, if business conditions were different, or if the Company were to use different estimates and assumptions, it is possible that materially different amounts could be reported in the Company's condensed consolidated financial statements. Note 1 to the consolidated financial statements in the Annual Report describes the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the Company’s significant accounting policies during the nine months ended October 1, 2022. Supplemental Cash Flow Information Nine Months Ended (In thousands) October 1, October 2, Cash Paid for Interest $ 3,907 $ 3,091 Cash Paid for Income Taxes, Net of Refunds $ 28,692 $ 19,320 Nine Months Ended (In thousands) October 1, October 2, Non-Cash Investing Activities: Fair value of assets (adjusted) acquired $ (1,768) $ 185,424 Cash received (paid) for acquired businesses 138 (149,961) Liabilities (adjusted) assumed of acquired businesses $ (1,630) $ 35,463 Purchase of property with outstanding loan receivable $ 1,397 $ — Purchases of property, plant, and equipment in accounts payable $ 36 $ 914 Non-Cash Financing Activities: Issuance of Company common stock upon vesting of restricted stock units $ 5,295 $ 3,841 Dividends declared but unpaid $ 3,032 $ 2,901 Restricted Cash The Company's restricted cash generally serves as collateral for certain banker's acceptance drafts issued to vendors and for bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business. The majority of the bank guarantees will expire over the next twelve months. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's condensed consolidated balance sheet that are shown in aggregate in the accompanying condensed consolidated statement of cash flows: (In thousands) October 1, October 2, January 1, January 2, Cash and cash equivalents $ 72,936 $ 82,600 $ 91,186 $ 65,682 Restricted cash 2,178 1,064 2,975 958 Total Cash, Cash Equivalents, and Restricted Cash $ 75,114 $ 83,664 $ 94,161 $ 66,640 Inventories The components of inventories are as follows: October 1, January 1, (In thousands) Raw Materials $ 65,529 $ 59,177 Work in Process 38,520 29,448 Finished Goods 52,518 45,731 $ 156,567 $ 134,356 Intangible Assets, Net Gross intangible assets were $340,947,000 at October 1, 2022 and January 1, 2022. Intangible assets are recorded at fair value at the date of acquisition. Subsequent impairment charges are reflected as a reduction in the gross balance, as applicable. Definite-lived intangible assets are stated net of accumulated amortization and currency translation in the accompanying condensed consolidated balance sheet. The Company amortizes definite-lived intangible assets over lives that have been determined based on the anticipated cash flow benefits of the intangible asset. Accumulated amortization was $151,001,000 at October 1, 2022 and $135,327,000 at January 1, 2022. Goodwill The changes in the carrying amount of goodwill by segment are as follows: (In thousands) Flow Control Industrial Processing Material Handling Total Balance at January 1, 2022 Gross balance $ 123,589 $ 214,982 $ 143,825 $ 482,396 Accumulated impairment losses — (85,509) — (85,509) Net balance 123,589 129,473 143,825 396,887 2022 Activity Acquisitions (a) (33) — (502) (535) Currency translation (10,203) (7,953) (5,230) (23,386) Total 2022 activity (10,236) (7,953) (5,732) (23,921) Balance at October 1, 2022 Gross balance 113,353 207,029 138,093 458,475 Accumulated impairment losses — (85,509) — (85,509) Net balance $ 113,353 $ 121,520 $ 138,093 $ 372,966 (a) Relates to adjustments to the purchase price allocation for acquisitions completed in 2021, principally for inventory, machinery and equipment, and deferred taxes. Measurement period adjustments in 2022 were not material to the Company's results of operations. Warranty Obligations The Company's contracts covering the sale of its products include warranty provisions that provide assurance to its customers that the products will comply with agreed-upon specifications during a defined period of time. The Company provides for the estimated cost of product warranties at the time of sale based on historical occurrence rates and repair costs, as well as knowledge of any specific warranty problems that indicate projected warranty costs may vary from historical patterns. The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications. The Company's liability for warranties is included in other current liabilities in the accompanying condensed consolidated balance sheet. The changes in the carrying amount of product warranty obligations are as follows: Nine Months Ended (In thousands) October 1, October 2, Balance at Beginning of Year $ 7,298 $ 7,064 Provision charged to expense 3,637 3,289 Usage (3,361) (3,106) Acquisitions — 429 Currency translation (877) (210) Balance at End of Period $ 6,697 $ 7,466 Revenue Recognition Most of the Company’s revenue relates to products and services that require minimal customization and is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. The remaining portion of the Company’s revenue is recognized over time based on an input method that compares the costs incurred to date to the total expected costs required to satisfy the performance obligation. Contracts are accounted for on an over time basis when they include products which have no alternative use and an enforceable right to payment over time. Most of the contracts recognized on an over time basis are for large capital projects. These projects are highly customized for the customer and, as a result, would include a significant cost to rework in the event of cancellation. The following table presents revenue by revenue recognition method: Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, (In thousands) 2022 2021 2022 2021 Point in Time $ 201,557 $ 181,407 $ 603,117 $ 511,303 Over Time 22,953 18,382 69,522 56,760 $ 224,510 $ 199,789 $ 672,639 $ 568,063 The Company disaggregates its revenue from contracts with customers by reportable operating segment, product type and geography as this best depicts how its revenue is affected by economic factors. The following table presents the disaggregation of revenue by product type and geography: Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, (In thousands) 2022 2021 2022 2021 Revenue by Product Type: Parts and consumables $ 141,857 $ 131,225 $ 433,781 $ 374,307 Capital 82,653 68,564 238,858 193,756 $ 224,510 $ 199,789 $ 672,639 $ 568,063 Revenue by Geography (based on customer location): North America $ 126,699 $ 105,384 375,115 307,243 Europe 57,409 58,813 174,264 159,281 Asia 26,953 25,504 87,916 72,046 Rest of world 13,449 10,088 35,344 29,493 $ 224,510 $ 199,789 $ 672,639 $ 568,063 See Note 10 , Business Segment Information, for information on the disaggregation of revenue by reportable operating segment. The following table presents contract balances from contracts with customers: October 1, January 1, (In thousands) Contract Assets $ 16,064 $ 8,626 Contract Liabilities $ 80,950 $ 77,004 Contract assets represent unbilled revenue associated with revenue recognized on contracts accounted for on an over time basis, which will be billed in future periods based on the contract terms. Contract liabilities consist of short- and long-term customer deposits, advanced billings, and deferred revenue. Deferred revenue is included in other current liabilities and long-term customer deposits are included in other long-term liabilities in the accompanying condensed consolidated balance sheet. Contract liabilities will be recognized as revenue in future periods once the revenue recognition criteria are met. The majority of the contract liabilities relate to advance payments on contracts accounted for at a point in time. These advance payments will be recognized as revenue when the Company's performance obligations have been satisfied, which typically occurs when the product has shipped and control of the asset has transferred to the customer. The Company recognized revenue of $11,912,000 in the third quarter of 2022 and $3,973,000 in the third quarter of 2021, $59,813,000 in the first nine months of 2022 and $31,183,000 in the first nine months of 2021 that was included in the contract liabilities balance at the beginning of 2022 and 2021, respectively. The majority of the Company's contracts for capital equipment have an original expected duration of one year or less. Certain capital contracts require long lead times and could take up to 24 months to complete. For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining unsatisfied or partially unsatisfied performance obligations as of October 1, 2022 was $48,976,000. The Company will recognize revenue for these performance obligations as they are satisfied, approximately 64% of which is expected to occur within the next twelve months and the remaining 36% after the third quarter of 2023. Banker's Acceptance Drafts Included in Accounts Receivable The Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are non-interest bearing obligations of the issuing bank and generally mature within six months of the origination date. The Company's Chinese subsidiaries may sell the drafts at a discount to a third-party financial institution or transfer the drafts to vendors in settlement of current accounts payable prior to the scheduled maturity date. These drafts, which totaled $6,755,000 at October 1, 2022 and $8,049,000 at January 1, 2022, are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date. Recent Accounting Pronouncements Not Yet Adopted Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of reference rates, such as the London Interbank Offered Rate (LIBOR), if certain criteria are met. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. The guidance in this ASU is applicable to the Company's existing contracts and hedging relationships that reference LIBOR and may be adopted prospectively through December 31, 2022. The Company does not expect that the adoption of this ASU will have an impact on its consolidated financial statements. Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In October 2021, the FASB issued ASU No. 2021-08, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The guidance in this ASU will generally result in the Company recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. This new guidance is effective on a prospective basis in fiscal 2023, with early adoption permitted. The impact of the adoption of this ASU on the Company’s consolidated financial statements will be dependent on the contract assets and liabilities acquired in future business combinations. |
Gain on Sale and Other Costs, N
Gain on Sale and Other Costs, Net | 9 Months Ended |
Oct. 01, 2022 | |
Property, Plant and Equipment [Abstract] | |
Gain on Sale and Other Costs, Net | Gain on Sale and Other Costs, Net Gain on Sale of Assets The Company entered into several agreements with the local government in China to sell the existing manufacturing building and land use rights of one of its subsidiaries in China for approximately $25,159,000. This subsidiary, which is part of the stock-preparation product line within the Company's Industrial Processing segment, will continue to occupy its current facility until construction of a new facility is complete. The agreements became effective in the first quarter of 2022 after a 31% down payment was received, including 25% in 2021 and 6% in the first quarter of 2022, and a land use right in a new location was secured. As a result, the Company recognized a gain on the sale of these assets of $20,190,000, or $15,143,000, net of deferred taxes of $5,047,000, in the first quarter of 2022. A receivable of $16,082,000 was recognized for the present value of the remaining amount of the sale proceeds, which is due the earlier of when the government sells the property or within two years from the effective date of the agreements. The receivable outstanding at October 1, 2022 was $14,646,000. This receivable is included in other assets in the accompanying condensed consolidated balance sheet. Other Costs During the first quarter of 2022, the Company recognized an impairment charge of $182,000 associated with the write-down of certain fixed assets that will not be moved to the new manufacturing facility in China as discussed above. During the third quarter of 2022, the Company recorded restructuring costs within its Flow Control segment of $72,000, which consisted of severance costs related to the termination of two employees. This restructuring plan was initiated in the fourth quarter of 2021 to eliminate a redundant ceramic blade manufacturing operation that resulted from the Company's acquisition of The Clouth Group of Companies (Clouth) in the third quarter of 2021. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Oct. 01, 2022 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic and diluted earnings per share (EPS) were calculated as follows: Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, (In thousands, except per share amounts) Net Income Attributable to Kadant $ 27,487 $ 20,461 $ 94,849 $ 59,886 Basic Weighted Average Shares 11,662 11,580 11,651 11,571 Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares 38 88 30 73 Diluted Weighted Average Shares 11,700 11,668 11,681 11,644 Basic Earnings per Share $ 2.36 $ 1.77 $ 8.14 $ 5.18 Diluted Earnings per Share $ 2.35 $ 1.75 $ 8.12 $ 5.14 The effect of outstanding and unvested restricted stock units (RSUs) of the Company's common stock totaling 4,000 shares in the third quarter of 2022 and 3,000 shares in the third quarter of 2021, 10,000 shares in the first nine months of 2022 and 19,000 in the first nine months of 2021 were not included in the computation of diluted EPS for the respective periods as the effect would have been antidilutive or, for unvested performance-based RSUs, the performance conditions had not been met as of the end of the reporting periods. |
Provision for Income Taxes
Provision for Income Taxes | 9 Months Ended |
Oct. 01, 2022 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | Provision for Income Taxes The provision for income taxes was $33,075,000 in the first nine months of 2022 and $21,252,000 in the first nine months of 2021. The effective tax rate of 26% in the first nine months of 2022 was higher than the Company's statutory rate of 21% primarily due to the distribution of the Company's worldwide earnings, nondeductible expenses, and state taxes. The effective tax rate of 26% in the first nine months of 2021 was higher than the Company's statutory rate of 21% primarily due to the distribution of the Company's worldwide earnings, nondeductible expenses, state taxes, and tax expense associated with the Global Intangible Low-Taxed Income provisions. These increases in tax expenses in the first nine months of 2021 were offset in part by a decrease in tax related to the net excess income tax benefits from stock-based compensation arrangements. |
Short- and Long-Term Obligation
Short- and Long-Term Obligations | 9 Months Ended |
Oct. 01, 2022 | |
Debt Disclosure [Abstract] | |
Short- and Long-Term Obligations | Short- and Long-Term Obligations Short- and long-term obligations are as follows: October 1, January 1, (In thousands) Revolving Credit Facility, due 2023 $ 195,036 $ 250,267 Senior Promissory Notes, due 2023 to 2028 10,000 10,000 Finance Leases, due 2022 to 2026 1,760 1,610 Other Borrowings, due 2022 to 2028 2,871 7,637 Total 209,667 269,514 Less: Short-term Obligations and Current Maturities of Long-Term Obligations (1,553) (5,356) Long-Term Obligations $ 208,114 $ 264,158 See Note 9 , Fair Value Measurements and Fair Value of Financial Instruments, for the fair value information related to the Company's long-term obligations. Revolving Credit Facility The Company entered into an unsecured multi-currency revolving credit facility, dated as of March 1, 2017 (as amended and restated to date, the Credit Agreement), which matures on December 14, 2023. Pursuant to the Credit Agreement, the Company has a borrowing capacity of $400,000,000, with an uncommitted, unsecured incremental borrowing facility of $150,000,000. Interest on borrowings outstanding accrues and is payable in arrears calculated at one of the following rates selected by the Company: (i) the Base Rate, as defined, plus an applicable margin of 0% to 1.25%, or (ii) Eurocurrency Rate, CDOR Rate and RFR (with a zero percent floor), as applicable and as defined, plus an applicable margin of 1% to 2.25%. The margin is determined based upon the ratio of the Company's total debt, net of unrestricted cash up to $30,000,000 and certain debt obligations, to earnings before interest, taxes, depreciation, and amortization as defined in the Credit Agreement. The obligations under the Credit Agreement may be accelerated upon the occurrence of an event of default, which includes customary events of default under such financing arrangements. In addition, the Credit Agreement contains negative covenants applicable to the Company and its subsidiaries, including financial covenants requiring the Company to maintain a maximum consolidated leverage ratio of 3.75 to 1.00, or, if the Company elects, for the quarter during which a material acquisition occurs and for the three fiscal quarters thereafter, 4.00 to 1.00, and limitations on making certain restricted payments (including dividends and stock repurchases). Loans under the Credit Agreement are guaranteed by certain domestic subsidiaries of the Company. As of October 1, 2022, the outstanding balance under the Credit Agreement was $195,036,000, which included $71,036,000 of euro-denominated borrowings. As of October 1, 2022, the Company had $206,284,000 of borrowing capacity available under its Credit Agreement, which was calculated by translating its foreign-denominated borrowings using the administrative agent's borrowing date foreign exchange rates. The weighted average interest rate for the outstanding balance under the Credit Agreement was 3.50% as of October 1, 2022. See Note 8 , Derivatives, under the heading Interest Rate Swap Agreement, for information relating to the swap agreement. Senior Promissory Notes In 2018, the Company entered into an uncommitted, unsecured Multi-Currency Note Purchase and Private Shelf Agreement (Note Purchase Agreement). Simultaneous with the execution of the Note Purchase Agreement, the Company issued senior promissory notes (Initial Notes) in an aggregate principal amount of $10,000,000, with a per annum interest rate of 4.90% payable semiannually, and a maturity date of December 14, 2028. The Company is required to prepay a portion of the principal of the Initial Notes beginning on December 14, 2023 and each year thereafter, and may optionally prepay the principal on the Initial Notes, together with any prepayment premium, at any time in accordance with the Note Purchase Agreement. The obligations of the Initial Notes may be accelerated upon an event of default as defined in the Note Purchase Agreement, which includes customary events of default under such financing arrangements. The Initial Notes are pari passu with the Company’s indebtedness under the Credit Agreement, and any other senior debt of the Company, subject to certain specified exceptions, and participate in a sharing agreement with respect to the obligations of the Company and its subsidiaries under the Credit Agreement. The Senior Promissory Notes are guaranteed by certain of the Company’s domestic subsidiaries. Debt Compliance As of October 1, 2022, the Company was in compliance with the covenants related to its debt obligations. Finance Leases The Company's finance leases primarily relate to contracts for vehicles. Other Borrowings Prior to August 2022, the Company's other borrowings included a sale-leaseback financing arrangement for a manufacturing facility in Germany. This arrangement provided for a fixed price purchase option of the facility from the landlord at the end of the lease term in August 2022. The Company exercised this option and acquired the facility from the landlord for 2,722,000 euros, or approximately $2,730,000. The Company applied its outstanding loan receivable due from the landlord of 1,393,000 euros, or approximately $1,397,000, towards the purchase of the facility. Other borrowings also include $637,000 of short-term obligations and $2,212,000 of debt obligations outstanding at October 1, 2022 assumed in the acquisition of Clouth, which mature on various dates ranging from 2022 through 2028. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Oct. 01, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company recognized stock-based compensation expense of $2,040,000 in the third quarter of 2022 and $2,204,000 in the third quarter of 2021, $6,576,000 in the first nine months of 2022, and $6,230,000 in the first nine months of 2021 within selling, general, and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income. The Company recognizes compensation expense for all stock-based awards granted to employees and directors based on the grant date estimate of fair value for those awards. The fair value of RSUs is based on the grant date price of the Company's common stock, reduced by the present value of estimated dividends foregone during the requisite service period. For time-based RSUs, compensation expense is recognized ratably over the requisite service period for the entire award based on the grant date fair value, and net of actual forfeitures recorded when they occur. For performance-based RSUs, compensation expense is recognized ratably over the requisite service period for each separately vesting portion of the award based on the grant date fair value, net of actual forfeitures recorded when they occur, and remeasured each reporting period until the total number of RSUs to be issued is known. Unrecognized compensation expense related to stock-based compensation totaled approximately $8,366,000 at October 1, 2022, which will be recognized over a weighted average period of 1.7 years. In May 2022, the Company granted an aggregate of 5,175 RSUs to its non-employee directors with a grant date fair value of $935,000. Of these 5,175 RSUs, 4,705 were granted to its incumbent non-employee directors with the remaining 470 RSUs granted to the Company's new non-employee director who became a director effective as of May 1, 2022. For the incumbent non-employee directors, 50% of these RSUs vested on June 1, 2022, 25% of these RSUs vested on the last day of the third fiscal quarter of 2022 and the remaining 25% are to vest on the last day of the fourth fiscal quarter of 2022. For the new non-employee director, 50% of the RSUs vested on the last day of the third fiscal quarter of 2022 and the other half are to vest on the last day of the fourth fiscal quarter of 2022. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Items | 9 Months Ended |
Oct. 01, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Items | Accumulated Other Comprehensive Items Comprehensive income combines net income and other comprehensive items, which represent certain amounts that are reported as components of stockholders' equity in the accompanying condensed consolidated balance sheet. Changes in each component of accumulated other comprehensive items (AOCI), net of tax, are as follows: (In thousands) Foreign Post-Retirement Benefit Liability Adjustments Deferred Gain (Loss) on Cash Flow Hedges Total Balance at January 1, 2022 $ (29,096) $ (792) $ (462) $ (30,350) Other comprehensive items before reclassifications (44,179) 45 334 (43,800) Reclassifications from AOCI — 19 172 191 Net current period other comprehensive items (44,179) 64 506 (43,609) Balance at October 1, 2022 $ (73,275) $ (728) $ 44 $ (73,959) Amounts reclassified from AOCI are as follows: Three Months Ended Nine Months Ended (In thousands) October 1, October 2, October 1, October 2, Statement of Income Line Item Post-retirement Benefit Plans Recognized net actuarial loss $ (6) $ (11) $ (19) $ (33) Other expense, net Amortization of prior service cost (2) (3) (7) (9) Other expense, net Total expense before income taxes (8) (14) (26) (42) Income tax benefit 2 4 7 12 Provision for income taxes (6) (10) (19) (30) Cash Flow Hedges (a) Interest rate swap agreements (33) (114) (227) (336) Interest expense Income tax benefit 8 27 55 80 Provision for income taxes (25) (87) (172) (256) Total Reclassifications $ (31) $ (97) $ (191) $ (286) (a) See Note 8 , Derivatives, for additional information. |
Derivatives
Derivatives | 9 Months Ended |
Oct. 01, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives Interest Rate Swap Agreement In 2018, the Company entered into an interest rate swap agreement (2018 Swap Agreement) with Citizens Bank to hedge its exposure to movements in USD LIBOR on its U.S. dollar-denominated debt. The 2018 Swap Agreement has a $15,000,000 notional value and expires on June 30, 2023. On a quarterly basis, the Company receives three-month USD LIBOR, which is subject to a zero percent floor, and pays a fixed rate of interest of 3.15% plus an applicable margin as defined in the Credit Agreement. The Company designated its 2018 Swap Agreement as a cash flow hedge and structured it to be 100% effective. Unrealized gains and losses related to the fair value of the 2018 Swap Agreement are recorded to AOCI, net of tax. In the event of early termination, the Company will receive from or pay to the counterparty the fair value of the 2018 Swap Agreement, and the unrealized gain or loss outstanding will be recognized in earnings. The counterparty to the 2018 Swap Agreement could demand an early termination of that agreement if the Company were to be in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and if it were to be unable to cure the default. See Note 5 , Short- and Long-Term Obligations, for further details. Forward Currency-Exchange Contracts The Company uses forward currency-exchange contracts that generally have maturities of twelve months or less to hedge exposures resulting from fluctuations in currency exchange rates. Such exposures result from assets and liabilities that are denominated in currencies other than the functional currencies of the Company's subsidiaries. Forward currency-exchange contracts that hedge forecasted accounts receivable or accounts payable are designated as cash flow hedges and unrecognized gains and losses are recorded to AOCI, net of tax. Deferred gains and losses are recognized in the statement of income in the period in which the underlying transaction occurs. The fair values of forward currency-exchange contracts that are designated as fair value hedges and forward currency-exchange contracts that are not designated as hedges are recognized currently in earnings. Gains and losses reported within SG&A expenses in the accompanying condensed consolidated statement of income associated with the Company's forward currency-exchange contracts that were not designated as hedges were not material for the three- and nine-month periods ended October 1, 2022 and October 2, 2021. The following table summarizes the fair value of derivative instruments in the accompanying condensed consolidated balance sheet: October 1, 2022 January 1, 2022 Balance Sheet Location Asset (Liability) (a) Notional Amount (b) Asset (Liability) (a) Notional Amount (In thousands) Derivatives Designated as Hedging Instruments: Derivative in an Asset Position: 2018 Swap Agreement Other Current Assets $ 140 $ 15,000 $ — $ — Derivatives in a Liability Position: 2018 Swap Agreement Other Long-Term Liabilities $ — $ — $ (550) $ 15,000 Forward currency-exchange contracts Other Current Liabilities $ (82) $ 430 $ (44) $ 842 Derivatives Not Designated as Hedging Instruments: Derivatives in an Asset Position: Forward currency-exchange contracts Other Current Assets $ — $ — $ 14 $ 1,200 Derivative in a Liability Position: Forward currency-exchange contract Other Current Liabilities $ (14) $ 189 $ — $ — (a) See Note 9 , Fair Value Measurements and Fair Value of Financial Instruments, for the fair value measurements relating to these financial instruments. (b) The 2022 notional amounts are indicative of the level of the Company's recurring derivative activity. The following table summarizes the activity in AOCI associated with the Company's derivative instruments designated as cash flow hedges as of and for the nine months ended October 1, 2022: (In thousands) Interest Rate Swap Forward Currency- Total Unrealized Loss, Net of Tax, at January 1, 2022 $ (429) $ (33) $ (462) Loss reclassified to earnings (a) 172 — 172 Gain (loss) recognized in AOCI 363 (29) 334 Unrealized Gain (Loss), Net of Tax, at October 1, 2022 $ 106 $ (62) $ 44 (a) See Note 7 , Accumulated Other Comprehensive Items, for the income statement classification. As of October 1, 2022, the Company expects to reclassify gains of $44,000 from AOCI to earnings over the next twelve months based on the estimated cash flows of the 2018 Swap Agreement and the maturity date of the forward currency-exchange contract. |
Fair Value Measurements and Fai
Fair Value Measurements and Fair Value of Financial Instruments | 9 Months Ended |
Oct. 01, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Fair Value of Financial Instruments | Fair Value Measurements and Fair Value of Financial Instruments Fair value measurement is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. • Level 3—Unobservable inputs based on the Company's own assumptions. The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis: Fair Value as of October 1, 2022 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits $ 13,520 $ — $ — $ 13,520 Banker's acceptance drafts (a) $ — $ 6,755 $ — $ 6,755 2018 Swap Agreement $ — $ 140 $ — $ 140 Liabilities: Forward currency-exchange contracts (b) $ — $ 96 $ — $ 96 Fair Value as of January 1, 2022 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits $ 13,458 $ — $ — $ 13,458 Banker's acceptance drafts (a) $ — $ 8,049 $ — $ 8,049 Forward currency-exchange contracts $ — $ 14 $ — $ 14 Liabilities: 2018 Swap Agreement $ — $ 550 $ — $ 550 Forward currency-exchange contract $ — $ 44 $ — $ 44 (a) Included in accounts receivable in the accompanying condensed consolidated balance sheet. (b) Includes derivatives designated as hedging instruments of $82,000 and derivatives not designated as hedging instruments of $14,000. The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first nine months of 2022. Banker's acceptance drafts are carried at face value, which approximates their fair value due to the short-term nature of the negotiable instrument. The fair values of the forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The fair value of the 2018 Swap Agreement is based on USD LIBOR yield curves at the reporting date. The forward currency-exchange contracts and the 2018 Swap Agreement are hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above. The carrying value and fair value of debt obligations, excluding lease obligations, are as follows: October 1, 2022 January 1, 2022 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Debt Obligations: Revolving credit facility $ 195,036 $ 195,036 $ 250,267 $ 250,267 Senior promissory notes 10,000 9,740 10,000 10,947 Other 2,849 2,849 4,331 4,331 $ 207,885 $ 207,625 $ 264,598 $ 265,545 The carrying value of the Company's revolving credit facility approximates the fair value as the obligation bears variable rates of interest, which adjust frequently, based on prevailing market rates. The fair value of the senior promissory notes is primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period end, which represent Level 2 measurements. |
Business Segment Information
Business Segment Information | 9 Months Ended |
Oct. 01, 2022 | |
Segment Reporting [Abstract] | |
Business Segment Information | Business Segment Information The Company has three reportable operating segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment consists of the fluid-handling and doctoring, cleaning, & filtration product lines; the Industrial Processing segment consists of the wood processing and stock-preparation product lines; and the Material Handling segment consists of the conveying and vibratory, baling, and fiber-based product lines. A description of each segment follows. • Flow Control – Custom-engineered products, systems, and technologies that control the flow of fluids used in industrial and commercial applications to keep critical processes running efficiently in the packaging, tissue, food, metals, and other industrial sectors. The Company's primary products include rotary sealing devices, steam systems, expansion joints, doctor systems, roll and fabric cleaning devices, and filtration and fiber recovery systems. • Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber for use in the packaging, tissue, wood products and alternative fuel industries, among others. The Company's primary products include stock-preparation systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers, and logging machinery. In addition, the Company provides industrial automation and digitization solutions to process industries. • Material Handling – Products and engineered systems used to handle bulk and discrete materials for secondary processing or transport in the aggregates, mining, food, and waste management industries, among others. The Company's primary products include conveying and vibratory equipment and balers. In addition, the Company manufactures and sells biodegradable, absorbent granules used as carriers in agricultural applications and for oil and grease absorption. The following table presents financial information for the Company's reportable operating segments: Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, (In thousands) 2022 2021 2022 2021 Revenue Flow Control (a) $ 86,880 $ 76,253 $ 257,926 $ 210,769 Industrial Processing 86,085 81,620 263,572 233,455 Material Handling (b) 51,545 41,916 151,141 123,839 $ 224,510 $ 199,789 $ 672,639 $ 568,063 Income Before Provision for Income Taxes Flow Control (a,c) $ 22,874 $ 17,129 $ 67,306 $ 51,899 Industrial Processing (d) 17,550 16,095 70,994 44,449 Material Handling (b,e) 6,945 3,491 21,490 12,941 Corporate (f) (8,483) (7,987) (27,463) (24,124) Total operating income 38,886 28,728 132,327 85,165 Interest expense, net (g) (1,450) (1,265) (3,671) (3,321) Other expense, net (g) (19) (23) (60) (71) $ 37,417 $ 27,440 $ 128,596 $ 81,773 Capital Expenditures Flow Control $ 868 $ 1,128 $ 2,424 $ 1,830 Industrial Processing (h) 4,654 1,725 11,679 4,720 Material Handling 854 505 2,081 1,121 Corporate — 12 7 17 $ 6,376 $ 3,370 $ 16,191 $ 7,688 (a) Includes results from Clouth, which was acquired between July 19, 2021 and August 10, 2021. (b) Includes results from East Chicago Machine Tool Corporation (Balemaster), which was acquired on August 23, 2021. (c) Includes acquisition-related expenses of $410,000 and $254,000 in the three and nine months ended October 1, 2022, respectively, and $2,706,000 and $3,942,000 in the three and nine months ended October 2, 2021, respectively. Acquisition-related expenses include acquisition costs and amortization expense associated with acquired profit in inventory and backlog. Includes restructuring costs of $72,000 in the three and nine months ended October 1, 2022, respectively. (d) Includes a gain on the sale of a facility of $20,190,000 (see Note 2 , Gain on Sale and Other Costs, Net) and non-cash charges for the write-off of an indemnification asset of $575,000 and the write-down of machinery and equipment of $182,000 in the nine months ended October 1, 2022. (e) Includes acquisition-related expenses of $717,000 in the nine months ended October 1, 2022 and $799,000 and $1,411,000 in the three and nine months ended October 2, 2021, respectively. (f) Represents general and administrative expenses. (g) The Company does not allocate interest and other expense, net to its segments. (h) Includes capital expenditures of $2,155,000 and $5,397,000 in the three and nine months ended October 1, 2022, respectively, associated with the construction of a manufacturing facility in China. See Note 2 , Gain on Sale and Other Costs, Net. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 01, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Right of Recourse In the ordinary course of business, the Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are non-interest bearing obligations of the issuing bank and generally mature within six months of the origination date. The Company's Chinese subsidiaries may use these banker's acceptance drafts prior to the scheduled maturity date to settle outstanding accounts payable with vendors. Banker's acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity dates. The Company had $9,793,000 at October 1, 2022 and $9,593,000 at January 1, 2022 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached their scheduled maturity dates. Historically, the banker's acceptance drafts have settled upon maturity without any claim of recourse against the Company. Litigation From time to time, the Company is subject to various claims and legal proceedings covering a range of matters that arise in the ordinary course of business. Such litigation may include, but is not limited to, claims and counterclaims by and against the Company for breach of contract or warranty, canceled contracts, product liability, or bankruptcy-related claims. For legal proceedings in which a loss is probable and estimable, the Company accrues a loss based on the low end of the range of estimated loss when there is no better estimate within the range. If the Company were found to be liable for any of the claims or counterclaims against it, the Company would incur a charge against earnings for amounts in excess of legal accruals. |
Nature of Operations and Summ_2
Nature of Operations and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 01, 2022 | |
Accounting Policies [Abstract] | |
Use of Estimates and Critical Accounting Policies | Use of Estimates and Critical Accounting PoliciesThe preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Although the Company makes every effort to ensure the accuracy of the estimates and assumptions used in the preparation of its condensed consolidated financial statements or in the application of accounting policies, if business conditions were different, or if the Company were to use different estimates and assumptions, it is possible that materially different amounts could be reported in the Company's condensed consolidated financial statements. |
Restricted Cash | Restricted Cash The Company's restricted cash generally serves as collateral for certain banker's acceptance drafts issued to vendors and for bank guarantees associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business. The majority of the bank guarantees will expire over the next twelve months. |
Intangible Assets, Net | Intangible assets are recorded at fair value at the date of acquisition. Subsequent impairment charges are reflected as a reduction in the gross balance, as applicable. Definite-lived intangible assets are stated net of accumulated amortization and currency translation in the accompanying condensed consolidated balance sheet. The Company amortizes definite-lived intangible assets over lives that have been determined based on the anticipated cash flow benefits of the intangible asset. |
Warranty Obligations | Warranty Obligations The Company's contracts covering the sale of its products include warranty provisions that provide assurance to its customers that the products will comply with agreed-upon specifications during a defined period of time. The Company provides for the estimated cost of product warranties at the time of sale based on historical occurrence rates and repair costs, as well as knowledge of any specific warranty problems that indicate projected warranty costs may vary from historical patterns. The Company negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications. |
Revenue Recognition | Revenue Recognition Most of the Company’s revenue relates to products and services that require minimal customization and is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. The remaining portion of the Company’s revenue is recognized over time based on an input method that compares the costs incurred to date to the total expected costs required to satisfy the performance obligation. Contracts are accounted for on an over time basis when they include products which have no alternative use and an enforceable right to payment over time. Most of the contracts recognized on an over time basis are for large capital projects. These projects are highly customized for the customer and, as a result, would include a significant cost to rework in the event of cancellation. |
Banker's Acceptance Drafts Included in Accounts Receivable | Banker's Acceptance Drafts Included in Accounts ReceivableThe Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are non-interest bearing obligations of the issuing bank and generally mature within six months of the origination date. The Company's Chinese subsidiaries may sell the drafts at a discount to a third-party financial institution or transfer the drafts to vendors in settlement of current accounts payable prior to the scheduled maturity date. These drafts, which totaled $6,755,000 at October 1, 2022 and $8,049,000 at January 1, 2022, are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of reference rates, such as the London Interbank Offered Rate (LIBOR), if certain criteria are met. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. The guidance in this ASU is applicable to the Company's existing contracts and hedging relationships that reference LIBOR and may be adopted prospectively through December 31, 2022. The Company does not expect that the adoption of this ASU will have an impact on its consolidated financial statements. Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In October 2021, the FASB issued ASU No. 2021-08, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The guidance in this ASU will generally result in the Company recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. This new guidance is effective on a prospective basis in fiscal 2023, with early adoption permitted. The impact of the adoption of this ASU on the Company’s consolidated financial statements will be dependent on the contract assets and liabilities acquired in future business combinations. |
Stock-Based Compensation | The Company recognizes compensation expense for all stock-based awards granted to employees and directors based on the grant date estimate of fair value for those awards. The fair value of RSUs is based on the grant date price of the Company's common stock, reduced by the present value of estimated dividends foregone during the requisite service period. For time-based RSUs, compensation expense is recognized ratably over the requisite service period for the entire award based on the grant date fair value, and net of actual forfeitures recorded when they occur. For performance-based RSUs, compensation expense is recognized ratably over the requisite service period for each separately vesting portion of the award based on the grant date fair value, net of actual forfeitures recorded when they occur, and remeasured each reporting period until the total number of RSUs to be issued is known. |
Forward Currency-Exchange Contracts | Forward Currency-Exchange Contracts The Company uses forward currency-exchange contracts that generally have maturities of twelve months or less to hedge exposures resulting from fluctuations in currency exchange rates. Such exposures result from assets and liabilities that are denominated in currencies other than the functional currencies of the Company's subsidiaries. |
Fair Value Measurement | Fair value measurement is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. • Level 3—Unobservable inputs based on the Company's own assumptions. |
Litigation | Litigation From time to time, the Company is subject to various claims and legal proceedings covering a range of matters that arise in the ordinary course of business. Such litigation may include, but is not limited to, claims and counterclaims by and against the Company for breach of contract or warranty, canceled contracts, product liability, or bankruptcy-related claims. For legal proceedings in which a loss is probable and estimable, the Company accrues a loss based on the low end of the range of estimated loss when there is no better estimate within the range. If the Company were found to be liable for any of the claims or counterclaims against it, the Company would incur a charge against earnings for amounts in excess of legal accruals. |
Nature of Operations and Summ_3
Nature of Operations and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Accounting Policies [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Nine Months Ended (In thousands) October 1, October 2, Cash Paid for Interest $ 3,907 $ 3,091 Cash Paid for Income Taxes, Net of Refunds $ 28,692 $ 19,320 Nine Months Ended (In thousands) October 1, October 2, Non-Cash Investing Activities: Fair value of assets (adjusted) acquired $ (1,768) $ 185,424 Cash received (paid) for acquired businesses 138 (149,961) Liabilities (adjusted) assumed of acquired businesses $ (1,630) $ 35,463 Purchase of property with outstanding loan receivable $ 1,397 $ — Purchases of property, plant, and equipment in accounts payable $ 36 $ 914 Non-Cash Financing Activities: Issuance of Company common stock upon vesting of restricted stock units $ 5,295 $ 3,841 Dividends declared but unpaid $ 3,032 $ 2,901 |
Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's condensed consolidated balance sheet that are shown in aggregate in the accompanying condensed consolidated statement of cash flows: (In thousands) October 1, October 2, January 1, January 2, Cash and cash equivalents $ 72,936 $ 82,600 $ 91,186 $ 65,682 Restricted cash 2,178 1,064 2,975 958 Total Cash, Cash Equivalents, and Restricted Cash $ 75,114 $ 83,664 $ 94,161 $ 66,640 |
Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's condensed consolidated balance sheet that are shown in aggregate in the accompanying condensed consolidated statement of cash flows: (In thousands) October 1, October 2, January 1, January 2, Cash and cash equivalents $ 72,936 $ 82,600 $ 91,186 $ 65,682 Restricted cash 2,178 1,064 2,975 958 Total Cash, Cash Equivalents, and Restricted Cash $ 75,114 $ 83,664 $ 94,161 $ 66,640 |
Inventories | The components of inventories are as follows: October 1, January 1, (In thousands) Raw Materials $ 65,529 $ 59,177 Work in Process 38,520 29,448 Finished Goods 52,518 45,731 $ 156,567 $ 134,356 |
Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill by segment are as follows: (In thousands) Flow Control Industrial Processing Material Handling Total Balance at January 1, 2022 Gross balance $ 123,589 $ 214,982 $ 143,825 $ 482,396 Accumulated impairment losses — (85,509) — (85,509) Net balance 123,589 129,473 143,825 396,887 2022 Activity Acquisitions (a) (33) — (502) (535) Currency translation (10,203) (7,953) (5,230) (23,386) Total 2022 activity (10,236) (7,953) (5,732) (23,921) Balance at October 1, 2022 Gross balance 113,353 207,029 138,093 458,475 Accumulated impairment losses — (85,509) — (85,509) Net balance $ 113,353 $ 121,520 $ 138,093 $ 372,966 (a) Relates to adjustments to the purchase price allocation for acquisitions completed in 2021, principally for inventory, machinery and equipment, and deferred taxes. Measurement period adjustments in 2022 were not material to the Company's results of operations. |
Changes in the Carrying Amount of Product Warranty Obligations | The changes in the carrying amount of product warranty obligations are as follows: Nine Months Ended (In thousands) October 1, October 2, Balance at Beginning of Year $ 7,298 $ 7,064 Provision charged to expense 3,637 3,289 Usage (3,361) (3,106) Acquisitions — 429 Currency translation (877) (210) Balance at End of Period $ 6,697 $ 7,466 |
Revenue Recognition Method and Disaggregation of Revenue by Product Type and Geography | The following table presents revenue by revenue recognition method: Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, (In thousands) 2022 2021 2022 2021 Point in Time $ 201,557 $ 181,407 $ 603,117 $ 511,303 Over Time 22,953 18,382 69,522 56,760 $ 224,510 $ 199,789 $ 672,639 $ 568,063 The following table presents the disaggregation of revenue by product type and geography: Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, (In thousands) 2022 2021 2022 2021 Revenue by Product Type: Parts and consumables $ 141,857 $ 131,225 $ 433,781 $ 374,307 Capital 82,653 68,564 238,858 193,756 $ 224,510 $ 199,789 $ 672,639 $ 568,063 Revenue by Geography (based on customer location): North America $ 126,699 $ 105,384 375,115 307,243 Europe 57,409 58,813 174,264 159,281 Asia 26,953 25,504 87,916 72,046 Rest of world 13,449 10,088 35,344 29,493 $ 224,510 $ 199,789 $ 672,639 $ 568,063 |
Contract Balances From Contracts With Customers | The following table presents contract balances from contracts with customers: October 1, January 1, (In thousands) Contract Assets $ 16,064 $ 8,626 Contract Liabilities $ 80,950 $ 77,004 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings Per Share | Basic and diluted earnings per share (EPS) were calculated as follows: Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, (In thousands, except per share amounts) Net Income Attributable to Kadant $ 27,487 $ 20,461 $ 94,849 $ 59,886 Basic Weighted Average Shares 11,662 11,580 11,651 11,571 Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares 38 88 30 73 Diluted Weighted Average Shares 11,700 11,668 11,681 11,644 Basic Earnings per Share $ 2.36 $ 1.77 $ 8.14 $ 5.18 Diluted Earnings per Share $ 2.35 $ 1.75 $ 8.12 $ 5.14 |
Short- and Long-Term Obligati_2
Short- and Long-Term Obligations (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Short- and Long-Term Obligations | Short- and long-term obligations are as follows: October 1, January 1, (In thousands) Revolving Credit Facility, due 2023 $ 195,036 $ 250,267 Senior Promissory Notes, due 2023 to 2028 10,000 10,000 Finance Leases, due 2022 to 2026 1,760 1,610 Other Borrowings, due 2022 to 2028 2,871 7,637 Total 209,667 269,514 Less: Short-term Obligations and Current Maturities of Long-Term Obligations (1,553) (5,356) Long-Term Obligations $ 208,114 $ 264,158 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Items (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Components of Accumulated Other Comprehensive Items | Changes in each component of accumulated other comprehensive items (AOCI), net of tax, are as follows: (In thousands) Foreign Post-Retirement Benefit Liability Adjustments Deferred Gain (Loss) on Cash Flow Hedges Total Balance at January 1, 2022 $ (29,096) $ (792) $ (462) $ (30,350) Other comprehensive items before reclassifications (44,179) 45 334 (43,800) Reclassifications from AOCI — 19 172 191 Net current period other comprehensive items (44,179) 64 506 (43,609) Balance at October 1, 2022 $ (73,275) $ (728) $ 44 $ (73,959) |
Reclassification Out of Accumulated Other Comprehensive Items | Amounts reclassified from AOCI are as follows: Three Months Ended Nine Months Ended (In thousands) October 1, October 2, October 1, October 2, Statement of Income Line Item Post-retirement Benefit Plans Recognized net actuarial loss $ (6) $ (11) $ (19) $ (33) Other expense, net Amortization of prior service cost (2) (3) (7) (9) Other expense, net Total expense before income taxes (8) (14) (26) (42) Income tax benefit 2 4 7 12 Provision for income taxes (6) (10) (19) (30) Cash Flow Hedges (a) Interest rate swap agreements (33) (114) (227) (336) Interest expense Income tax benefit 8 27 55 80 Provision for income taxes (25) (87) (172) (256) Total Reclassifications $ (31) $ (97) $ (191) $ (286) (a) See Note 8 , Derivatives, for additional information. |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value of Derivative Instruments | The following table summarizes the fair value of derivative instruments in the accompanying condensed consolidated balance sheet: October 1, 2022 January 1, 2022 Balance Sheet Location Asset (Liability) (a) Notional Amount (b) Asset (Liability) (a) Notional Amount (In thousands) Derivatives Designated as Hedging Instruments: Derivative in an Asset Position: 2018 Swap Agreement Other Current Assets $ 140 $ 15,000 $ — $ — Derivatives in a Liability Position: 2018 Swap Agreement Other Long-Term Liabilities $ — $ — $ (550) $ 15,000 Forward currency-exchange contracts Other Current Liabilities $ (82) $ 430 $ (44) $ 842 Derivatives Not Designated as Hedging Instruments: Derivatives in an Asset Position: Forward currency-exchange contracts Other Current Assets $ — $ — $ 14 $ 1,200 Derivative in a Liability Position: Forward currency-exchange contract Other Current Liabilities $ (14) $ 189 $ — $ — (a) See Note 9 , Fair Value Measurements and Fair Value of Financial Instruments, for the fair value measurements relating to these financial instruments. |
Activity in Accumulated Other Comprehensive Items (AOCI) | The following table summarizes the activity in AOCI associated with the Company's derivative instruments designated as cash flow hedges as of and for the nine months ended October 1, 2022: (In thousands) Interest Rate Swap Forward Currency- Total Unrealized Loss, Net of Tax, at January 1, 2022 $ (429) $ (33) $ (462) Loss reclassified to earnings (a) 172 — 172 Gain (loss) recognized in AOCI 363 (29) 334 Unrealized Gain (Loss), Net of Tax, at October 1, 2022 $ 106 $ (62) $ 44 (a) See Note 7 , Accumulated Other Comprehensive Items, for the income statement classification. |
Fair Value Measurements and F_2
Fair Value Measurements and Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities Measured on a Recurring Basis | The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis: Fair Value as of October 1, 2022 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits $ 13,520 $ — $ — $ 13,520 Banker's acceptance drafts (a) $ — $ 6,755 $ — $ 6,755 2018 Swap Agreement $ — $ 140 $ — $ 140 Liabilities: Forward currency-exchange contracts (b) $ — $ 96 $ — $ 96 Fair Value as of January 1, 2022 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits $ 13,458 $ — $ — $ 13,458 Banker's acceptance drafts (a) $ — $ 8,049 $ — $ 8,049 Forward currency-exchange contracts $ — $ 14 $ — $ 14 Liabilities: 2018 Swap Agreement $ — $ 550 $ — $ 550 Forward currency-exchange contract $ — $ 44 $ — $ 44 (a) Included in accounts receivable in the accompanying condensed consolidated balance sheet. (b) Includes derivatives designated as hedging instruments of $82,000 and derivatives not designated as hedging instruments of $14,000. |
Carrying Value and Fair Value of Debt Obligations | The carrying value and fair value of debt obligations, excluding lease obligations, are as follows: October 1, 2022 January 1, 2022 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Debt Obligations: Revolving credit facility $ 195,036 $ 195,036 $ 250,267 $ 250,267 Senior promissory notes 10,000 9,740 10,000 10,947 Other 2,849 2,849 4,331 4,331 $ 207,885 $ 207,625 $ 264,598 $ 265,545 |
Business Segment Information (T
Business Segment Information (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Segment Reporting [Abstract] | |
Business Segment Reporting Information | The following table presents financial information for the Company's reportable operating segments: Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, (In thousands) 2022 2021 2022 2021 Revenue Flow Control (a) $ 86,880 $ 76,253 $ 257,926 $ 210,769 Industrial Processing 86,085 81,620 263,572 233,455 Material Handling (b) 51,545 41,916 151,141 123,839 $ 224,510 $ 199,789 $ 672,639 $ 568,063 Income Before Provision for Income Taxes Flow Control (a,c) $ 22,874 $ 17,129 $ 67,306 $ 51,899 Industrial Processing (d) 17,550 16,095 70,994 44,449 Material Handling (b,e) 6,945 3,491 21,490 12,941 Corporate (f) (8,483) (7,987) (27,463) (24,124) Total operating income 38,886 28,728 132,327 85,165 Interest expense, net (g) (1,450) (1,265) (3,671) (3,321) Other expense, net (g) (19) (23) (60) (71) $ 37,417 $ 27,440 $ 128,596 $ 81,773 Capital Expenditures Flow Control $ 868 $ 1,128 $ 2,424 $ 1,830 Industrial Processing (h) 4,654 1,725 11,679 4,720 Material Handling 854 505 2,081 1,121 Corporate — 12 7 17 $ 6,376 $ 3,370 $ 16,191 $ 7,688 (a) Includes results from Clouth, which was acquired between July 19, 2021 and August 10, 2021. (b) Includes results from East Chicago Machine Tool Corporation (Balemaster), which was acquired on August 23, 2021. (c) Includes acquisition-related expenses of $410,000 and $254,000 in the three and nine months ended October 1, 2022, respectively, and $2,706,000 and $3,942,000 in the three and nine months ended October 2, 2021, respectively. Acquisition-related expenses include acquisition costs and amortization expense associated with acquired profit in inventory and backlog. Includes restructuring costs of $72,000 in the three and nine months ended October 1, 2022, respectively. (d) Includes a gain on the sale of a facility of $20,190,000 (see Note 2 , Gain on Sale and Other Costs, Net) and non-cash charges for the write-off of an indemnification asset of $575,000 and the write-down of machinery and equipment of $182,000 in the nine months ended October 1, 2022. (e) Includes acquisition-related expenses of $717,000 in the nine months ended October 1, 2022 and $799,000 and $1,411,000 in the three and nine months ended October 2, 2021, respectively. (f) Represents general and administrative expenses. (g) The Company does not allocate interest and other expense, net to its segments. (h) Includes capital expenditures of $2,155,000 and $5,397,000 in the three and nine months ended October 1, 2022, respectively, associated with the construction of a manufacturing facility in China. See Note 2 , Gain on Sale and Other Costs, Net. |
Nature of Operations and Summ_4
Nature of Operations and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2022 USD ($) | Oct. 02, 2021 USD ($) | Oct. 01, 2022 USD ($) segment | Oct. 02, 2021 USD ($) | Jan. 01, 2022 USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Number of reportable operating segments | segment | 3 | ||||
Bank guarantees, expiration period (in months) | 12 months | ||||
Gross intangible assets | $ 340,947 | $ 340,947 | $ 340,947 | ||
Accumulated amortization | 151,001 | 151,001 | 135,327 | ||
Revenue recognized | 11,912 | $ 3,973 | 59,813 | $ 31,183 | |
Revenue, remaining performance obligation, amount | 48,976 | $ 48,976 | |||
Banker's acceptance drafts, maturity period (in months) | 6 months | ||||
Banker's acceptance drafts | $ 6,755 | $ 6,755 | $ 8,049 | ||
Certain Capital Contracts | |||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Lead time for for certain capital contracts (up to) (in months) | 24 months | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-02 | |||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Revenue, remaining performance obligation, percent | 64% | 64% | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months | 12 months | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | |||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Revenue, remaining performance obligation, percent | 36% | 36% | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period |
Nature of Operations and Summ_5
Nature of Operations and Summary of Significant Accounting Policies - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Accounting Policies [Abstract] | ||
Cash Paid for Interest | $ 3,907 | $ 3,091 |
Cash Paid for Income Taxes, Net of Refunds | 28,692 | 19,320 |
Non-Cash Investing Activities: | ||
Fair value of assets (adjusted) acquired | (1,768) | 185,424 |
Cash received (paid) for acquired businesses | 138 | (149,961) |
Liabilities (adjusted) assumed of acquired businesses | (1,630) | 35,463 |
Purchase of property with outstanding loan receivable | 1,397 | 0 |
Purchases of property, plant, and equipment in accounts payable | 36 | 914 |
Non-Cash Financing Activities: | ||
Issuance of Company common stock upon vesting of restricted stock units | 5,295 | 3,841 |
Dividends declared but unpaid | $ 3,032 | $ 2,901 |
Nature of Operations and Summ_6
Nature of Operations and Summary of Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 | Oct. 02, 2021 | Jan. 02, 2021 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 72,936 | $ 91,186 | $ 82,600 | $ 65,682 |
Restricted cash | 2,178 | 2,975 | 1,064 | 958 |
Total Cash, Cash Equivalents, and Restricted Cash | $ 75,114 | $ 94,161 | $ 83,664 | $ 66,640 |
Nature of Operations and Summ_7
Nature of Operations and Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Accounting Policies [Abstract] | ||
Raw Materials | $ 65,529 | $ 59,177 |
Work in Process | 38,520 | 29,448 |
Finished Goods | 52,518 | 45,731 |
Total Inventories | $ 156,567 | $ 134,356 |
Nature of Operations and Summ_8
Nature of Operations and Summary of Significant Accounting Policies - Goodwill (Details) $ in Thousands | 9 Months Ended |
Oct. 01, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Gross balance, beginning balance | $ 482,396 |
Accumulated impairment losses | (85,509) |
Net balance, beginning balance | 396,887 |
Acquisitions | (535) |
Currency translation | (23,386) |
Total 2022 activity | (23,921) |
Gross balance, ending balance | 458,475 |
Accumulated impairment losses | (85,509) |
Net balance, ending balance | 372,966 |
Operating Segment | Flow Control | |
Goodwill [Roll Forward] | |
Gross balance, beginning balance | 123,589 |
Accumulated impairment losses | 0 |
Net balance, beginning balance | 123,589 |
Acquisitions | (33) |
Currency translation | (10,203) |
Total 2022 activity | (10,236) |
Gross balance, ending balance | 113,353 |
Accumulated impairment losses | 0 |
Net balance, ending balance | 113,353 |
Operating Segment | Industrial Processing | |
Goodwill [Roll Forward] | |
Gross balance, beginning balance | 214,982 |
Accumulated impairment losses | (85,509) |
Net balance, beginning balance | 129,473 |
Acquisitions | 0 |
Currency translation | (7,953) |
Total 2022 activity | (7,953) |
Gross balance, ending balance | 207,029 |
Accumulated impairment losses | (85,509) |
Net balance, ending balance | 121,520 |
Operating Segment | Material Handling | |
Goodwill [Roll Forward] | |
Gross balance, beginning balance | 143,825 |
Accumulated impairment losses | 0 |
Net balance, beginning balance | 143,825 |
Acquisitions | (502) |
Currency translation | (5,230) |
Total 2022 activity | (5,732) |
Gross balance, ending balance | 138,093 |
Accumulated impairment losses | 0 |
Net balance, ending balance | $ 138,093 |
Nature of Operations and Summ_9
Nature of Operations and Summary of Significant Accounting Policies - Warranty Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Changes in the carrying amount of accrued warranty costs [Roll Forward] | ||
Balance at Beginning of Year | $ 7,298 | $ 7,064 |
Provision charged to expense | 3,637 | 3,289 |
Usage | (3,361) | (3,106) |
Acquisitions | 0 | 429 |
Currency translation | (877) | (210) |
Balance at End of Period | $ 6,697 | $ 7,466 |
Nature of Operations and Sum_10
Nature of Operations and Summary of Significant Accounting Policies - Revenue Recognition Method and Disaggregation of Revenue by Product Type and Geography (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 224,510 | $ 199,789 | $ 672,639 | $ 568,063 |
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 126,699 | 105,384 | 375,115 | 307,243 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 57,409 | 58,813 | 174,264 | 159,281 |
Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 26,953 | 25,504 | 87,916 | 72,046 |
Rest of world | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 13,449 | 10,088 | 35,344 | 29,493 |
Parts and consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 141,857 | 131,225 | 433,781 | 374,307 |
Capital | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 82,653 | 68,564 | 238,858 | 193,756 |
Point in Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 201,557 | 181,407 | 603,117 | 511,303 |
Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 22,953 | $ 18,382 | $ 69,522 | $ 56,760 |
Nature of Operations and Sum_11
Nature of Operations and Summary of Significant Accounting Policies - Revenue from Contract with Customers (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Accounting Policies [Abstract] | ||
Contract Assets | $ 16,064 | $ 8,626 |
Contract Liabilities | $ 80,950 | $ 77,004 |
Gain on Sale and Other Costs,_2
Gain on Sale and Other Costs, Net (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | 15 Months Ended | ||
Oct. 01, 2022 USD ($) employee | Apr. 02, 2022 USD ($) | Oct. 01, 2022 USD ($) | Oct. 02, 2021 USD ($) | Jan. 01, 2022 | Apr. 02, 2022 USD ($) | |
Property, Plant and Equipment [Line Items] | ||||||
Proceeds from sale of property, plant, and equipment | $ 2,091 | $ 102 | ||||
Gross gain on sale of assets | 20,190 | $ 0 | ||||
Impairment charge | $ 182 | |||||
Number of positions eliminated related to restructuring (employee) | employee | 2 | |||||
Flow Control | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Restructuring costs | $ 72 | 72 | ||||
CHINA | Land and Building | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Proceeds from sale of property, plant, and equipment | 25,159 | |||||
Down payment percentage | 6% | 25% | 31% | |||
Gross gain on sale of assets | $ 20,190 | |||||
Net gain on sale of assets | 15,143 | |||||
Deferred taxes | 5,047 | |||||
Receivable recorded at present value for remaining amount of sale proceeds | $ 14,646 | $ 16,082 | $ 14,646 | $ 16,082 | ||
Period of recognition of gain on sale and a receivable for remaining amount of sales proceeds (in years) | 2 years |
Earnings per Share - Basic and
Earnings per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Income Amounts Attributable to Parent, Disclosures [Abstract] | ||||
Net Income Attributable to Kadant | $ 27,487 | $ 20,461 | $ 94,849 | $ 59,886 |
Basic Weighted Average Shares | 11,662 | 11,580 | 11,651 | 11,571 |
Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares | 38 | 88 | 30 | 73 |
Diluted Weighted Average Shares | 11,700 | 11,668 | 11,681 | 11,644 |
Basic Earnings per Share (in dollars per share) | $ 2.36 | $ 1.77 | $ 8.14 | $ 5.18 |
Diluted Earnings per Share (in dollars per share) | $ 2.35 | $ 1.75 | $ 8.12 | $ 5.14 |
Earnings per Share - Narrative
Earnings per Share - Narrative (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Amount of antidilutive securities excluded from computation of EPS (in shares) | 4 | 3 | 10 | 19 |
Provision for Income Taxes (Det
Provision for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 9,746 | $ 6,742 | $ 33,075 | $ 21,252 |
Effective tax rate | 26% | 26% |
Short- and Long-Term Obligati_3
Short- and Long-Term Obligations - Schedule of Short- and Long-Term Obligations (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Debt Instrument [Line Items] | ||
Finance Leases, due 2022 to 2026 | $ 1,760 | $ 1,610 |
Total | 209,667 | 269,514 |
Less: Short-term Obligations and Current Maturities of Long-Term Obligations | (1,553) | (5,356) |
Long-Term Obligations | 208,114 | 264,158 |
Revolving Credit Facility, due 2023 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 195,036 | 250,267 |
Senior Promissory Notes, due 2023 to 2028 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 10,000 | 10,000 |
Other Borrowings, due 2022 to 2028 | ||
Debt Instrument [Line Items] | ||
Other Borrowings, due 2022 to 2028 | $ 2,871 | $ 7,637 |
Short- and Long-Term Obligati_4
Short- and Long-Term Obligations - Narrative (Details) € in Thousands | 1 Months Ended | 9 Months Ended | |||
Aug. 31, 2022 USD ($) | Aug. 31, 2022 EUR (€) | Oct. 01, 2022 USD ($) | Oct. 02, 2021 USD ($) | Jan. 01, 2022 USD ($) | |
Debt Instrument [Line Items] | |||||
Outstanding loan receivable | $ 1,397,000 | $ 0 | |||
Facility | |||||
Debt Instrument [Line Items] | |||||
Asset acquired | $ 2,730,000 | € 2,722 | |||
Outstanding loan receivable | $ 1,397,000 | € 1,393 | |||
Clouth | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 2,212,000 | ||||
Short-term debt | 637,000 | ||||
Revolving Credit Facility, due 2023 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 195,036,000 | $ 250,267,000 | |||
Remaining borrowing capacity | $ 206,284,000 | ||||
Weighted average interest rate for revolving credit facility (as a percentage) | 3.50% | ||||
Revolving Credit Facility, due 2023 | 2017 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Borrowing capacity available under committed portion | $ 400,000,000 | ||||
Additional borrowing capacity under uncommitted portion | 150,000,000 | ||||
Maximum amount of unrestricted U.S. cash | $ 30,000,000 | ||||
Maximum leverage ratio | 3.75 | ||||
Maximum leverage ratio after an acquisition | 4 | ||||
Revolving Credit Facility, due 2023 | Euro-Denominated Borrowing | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 71,036,000 | ||||
Revolving Credit Facility, due 2023 | Base Rate | Minimum | 2017 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percentage) | 0% | ||||
Revolving Credit Facility, due 2023 | Base Rate | Maximum | 2017 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percentage) | 1.25% | ||||
Revolving Credit Facility, due 2023 | Eurocurrency Rate, CDOR Rate and RFR | 2017 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate floor (as a percentage) | 0% | ||||
Revolving Credit Facility, due 2023 | LIBOR | Minimum | 2017 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percentage) | 1% | ||||
Revolving Credit Facility, due 2023 | LIBOR | Maximum | 2017 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percentage) | 2.25% | ||||
Senior Promissory Notes, due 2023 to 2028 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 10,000,000 | $ 10,000,000 | |||
Senior Promissory Notes, due 2023 to 2028 | Note Purchase Agreement | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 10,000,000 | ||||
Fixed interest rate | 4.90% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Dec. 31, 2022 | Oct. 01, 2022 | Jun. 01, 2022 | May 31, 2022 | Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock-based compensation expense | $ 2,040 | $ 2,204 | $ 6,576 | $ 6,230 | ||||
Unrecognized compensation expense related to stock awards | $ 8,366 | $ 8,366 | $ 8,366 | |||||
Weighted average period (in years) | 1 year 8 months 12 days | |||||||
Restricted Stock Units (RSUs) | Non-Employee Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares granted in period to non-employee directors (in shares) | 5,175 | |||||||
Grant date fair value of shares granted to non-employee directors | $ 935 | |||||||
Restricted Stock Units (RSUs) | Incumbent Non-Employee Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares granted in period to non-employee directors (in shares) | 4,705 | |||||||
Restricted Stock Units (RSUs) | Incumbent Non-Employee Director | Share-Based Payment Arrangement, Tranche One | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentages | 50% | |||||||
Restricted Stock Units (RSUs) | Incumbent Non-Employee Director | Share-Based Payment Arrangement, Tranche Two | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentages | 25% | |||||||
Restricted Stock Units (RSUs) | Incumbent Non-Employee Director | Share-Based Payment Arrangement, Tranche Three | Forecast | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentages | 25% | |||||||
Restricted Stock Units (RSUs) | New Non-Employee Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares granted in period to non-employee directors (in shares) | 470 | |||||||
Restricted Stock Units (RSUs) | New Non-Employee Director | Share-Based Payment Arrangement, Tranche One | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentages | 50% | |||||||
Restricted Stock Units (RSUs) | New Non-Employee Director | Share-Based Payment Arrangement, Tranche Two | Forecast | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentages | 50% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Items - Components of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 606,164 | $ 531,126 | $ 565,616 | $ 496,905 |
Other comprehensive items | (22,691) | (7,236) | (43,876) | (7,686) |
Ending balance | 609,504 | 543,386 | 609,504 | 543,386 |
Total | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (51,379) | (19,889) | (30,350) | (19,492) |
Other comprehensive items before reclassifications | (43,800) | |||
Reclassifications from AOCI | 191 | |||
Other comprehensive items | (22,580) | (7,200) | (43,609) | (7,597) |
Ending balance | (73,959) | $ (27,089) | (73,959) | $ (27,089) |
Foreign Currency Translation Adjustment | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (29,096) | |||
Other comprehensive items before reclassifications | (44,179) | |||
Reclassifications from AOCI | 0 | |||
Other comprehensive items | (44,179) | |||
Ending balance | (73,275) | (73,275) | ||
Post-Retirement Benefit Liability Adjustments | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (792) | |||
Other comprehensive items before reclassifications | 45 | |||
Reclassifications from AOCI | 19 | |||
Other comprehensive items | 64 | |||
Ending balance | (728) | (728) | ||
Deferred Gain (Loss) on Cash Flow Hedges | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (462) | |||
Other comprehensive items before reclassifications | 334 | |||
Reclassifications from AOCI | 172 | |||
Other comprehensive items | 506 | |||
Ending balance | $ 44 | $ 44 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Items - Reclassification Out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Other expense, net | $ (19) | $ (23) | $ (60) | $ (71) |
Total expense before income taxes | 37,417 | 27,440 | 128,596 | 81,773 |
Provision for income taxes | (9,746) | (6,742) | (33,075) | (21,252) |
Interest expense | (1,721) | (1,320) | (4,321) | (3,497) |
Net Income | 27,671 | 20,698 | 95,521 | 60,521 |
Reclassification out of Accumulated Other Comprehensive Items | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Net Income | (31) | (97) | (191) | (286) |
Reclassification out of Accumulated Other Comprehensive Items | Post-retirement Benefit Plans | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Total expense before income taxes | (8) | (14) | (26) | (42) |
Provision for income taxes | 2 | 4 | 7 | 12 |
Net Income | (6) | (10) | (19) | (30) |
Reclassification out of Accumulated Other Comprehensive Items | Recognized net actuarial loss | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Other expense, net | (6) | (11) | (19) | (33) |
Reclassification out of Accumulated Other Comprehensive Items | Amortization of prior service cost | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Other expense, net | (2) | (3) | (7) | (9) |
Reclassification out of Accumulated Other Comprehensive Items | Cash Flow Hedges | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Provision for income taxes | 8 | 27 | 55 | 80 |
Net Income | (25) | (87) | (172) | (256) |
Reclassification out of Accumulated Other Comprehensive Items | Cash Flow Hedges | Interest rate swap agreements | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Interest expense | $ (33) | $ (114) | $ (227) | $ (336) |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) | 9 Months Ended | |
Oct. 01, 2022 USD ($) | Dec. 29, 2018 USD ($) | |
Derivatives, Fair Value [Line Items] | ||
Net unrealized gains included in AOCI expected to be reclassified to earnings over the next 12 months | $ 44,000 | |
Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Rate of effectiveness of derivative agreement | 100% | |
Cash Flow Hedging | 2018 Swap Agreement | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, notional amount | $ 15,000,000 | |
Derivative, floor rate | 0 | |
Fixed rate of interest | 3.15% | |
Cash Flow Hedging | Forward Currency- Exchange Contract | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Period over which entity manages its level of exposure of risk | 12 months |
Derivatives - Fair Value of Der
Derivatives - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Designated as Hedging Instrument | 2018 Swap Agreement | Other Current Assets | ||
Derivative in an Asset Position: | ||
Derivative asset, fair value, gross asset | $ 140 | $ 0 |
Derivative asset, notional amount | 15,000 | 0 |
Designated as Hedging Instrument | 2018 Swap Agreement | Other Long-Term Liabilities | ||
Derivatives in a Liability Position: | ||
Derivative liability, fair value, gross liability | 0 | (550) |
Derivative liability, notional amount | 0 | 15,000 |
Designated as Hedging Instrument | Forward currency-exchange contracts | Other Current Liabilities | ||
Derivatives in a Liability Position: | ||
Derivative liability, fair value, gross liability | (82) | (44) |
Derivative liability, notional amount | 430 | 842 |
Not Designated as Hedging Instrument | Forward currency-exchange contracts | Other Current Assets | ||
Derivative in an Asset Position: | ||
Derivative asset, fair value, gross asset | 0 | 14 |
Derivative asset, notional amount | 0 | 1,200 |
Not Designated as Hedging Instrument | Forward currency-exchange contracts | Other Current Liabilities | ||
Derivatives in a Liability Position: | ||
Derivative liability, fair value, gross liability | (14) | 0 |
Derivative liability, notional amount | $ 189 | $ 0 |
Derivatives - Activity in Accum
Derivatives - Activity in Accumulated Other Comprehensive Items (OCI) (Details) $ in Thousands | 9 Months Ended |
Oct. 01, 2022 USD ($) | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | $ 565,616 |
Ending balance | 609,504 |
Cash Flow Hedges | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (462) |
Loss reclassified to earnings | 172 |
Gain (loss) recognized in AOCI | 334 |
Ending balance | 44 |
Cash Flow Hedges | Interest Rate Swap Agreement | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (429) |
Loss reclassified to earnings | 172 |
Gain (loss) recognized in AOCI | 363 |
Ending balance | 106 |
Cash Flow Hedges | Forward Currency- Exchange Contract | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (33) |
Loss reclassified to earnings | 0 |
Gain (loss) recognized in AOCI | (29) |
Ending balance | $ (62) |
Fair Value Measurements and F_3
Fair Value Measurements and Fair Value of Financial Instruments - Fair Value of Assets and Liabilities Measured on a Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Assets: | ||
Money market funds and time deposits | $ 13,520 | $ 13,458 |
Banker's acceptance drafts | 6,755 | 8,049 |
2018 Swap Agreement | 140 | |
Forward currency-exchange contracts | 14 | |
Liabilities: | ||
2018 Swap Agreement | 550 | |
Forward currency-exchange contract | 96 | 44 |
Designated as Hedging Instrument | ||
Liabilities: | ||
Forward currency-exchange contract | 82 | |
Not Designated as Hedging Instrument | ||
Liabilities: | ||
Forward currency-exchange contract | 14 | |
Level 1 | ||
Assets: | ||
Money market funds and time deposits | 13,520 | 13,458 |
Banker's acceptance drafts | 0 | 0 |
2018 Swap Agreement | 0 | |
Forward currency-exchange contracts | 0 | |
Liabilities: | ||
2018 Swap Agreement | 0 | |
Forward currency-exchange contract | 0 | 0 |
Level 2 | ||
Assets: | ||
Money market funds and time deposits | 0 | 0 |
Banker's acceptance drafts | 6,755 | 8,049 |
2018 Swap Agreement | 140 | |
Forward currency-exchange contracts | 14 | |
Liabilities: | ||
2018 Swap Agreement | 550 | |
Forward currency-exchange contract | 96 | 44 |
Level 3 | ||
Assets: | ||
Money market funds and time deposits | 0 | 0 |
Banker's acceptance drafts | 0 | 0 |
2018 Swap Agreement | 0 | |
Forward currency-exchange contracts | 0 | |
Liabilities: | ||
2018 Swap Agreement | 0 | |
Forward currency-exchange contract | $ 0 | $ 0 |
Fair Value Measurements and F_4
Fair Value Measurements and Fair Value of Financial Instruments - Carrying Value and Fair Value of Debt Obligations (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Carrying Value | ||
Debt Obligations: | ||
Debt obligations | $ 207,885 | $ 264,598 |
Carrying Value | Revolving credit facility | ||
Debt Obligations: | ||
Debt obligations | 195,036 | 250,267 |
Carrying Value | Senior promissory notes | ||
Debt Obligations: | ||
Debt obligations | 10,000 | 10,000 |
Carrying Value | Other | ||
Debt Obligations: | ||
Debt obligations | 2,849 | 4,331 |
Fair Value | ||
Debt Obligations: | ||
Debt obligations | 207,625 | 265,545 |
Fair Value | Revolving credit facility | ||
Debt Obligations: | ||
Debt obligations | 195,036 | 250,267 |
Fair Value | Senior promissory notes | ||
Debt Obligations: | ||
Debt obligations | 9,740 | 10,947 |
Fair Value | Other | ||
Debt Obligations: | ||
Debt obligations | $ 2,849 | $ 4,331 |
Business Segment Information (D
Business Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2022 USD ($) | Apr. 02, 2022 USD ($) | Oct. 02, 2021 USD ($) | Oct. 01, 2022 USD ($) segment | Oct. 02, 2021 USD ($) | |
Segment Reporting [Abstract] | |||||
Number of reportable operating segments | segment | 3 | ||||
Revenue | |||||
Revenues | $ 224,510 | $ 199,789 | $ 672,639 | $ 568,063 | |
Income Before Provision for Income Taxes | |||||
Total operating income | 38,886 | 28,728 | 132,327 | 85,165 | |
Interest expense, net | (1,450) | (1,265) | (3,671) | (3,321) | |
Other expense, net | (19) | (23) | (60) | (71) | |
Income Before Provision for Income Taxes | 37,417 | 27,440 | 128,596 | 81,773 | |
Capital Expenditures | |||||
Capital expenditures | 6,376 | 3,370 | 16,191 | 7,688 | |
Gain on the sale of assets | 20,190 | 0 | |||
Machinery and equipment write-down | $ 182 | ||||
CHINA | Land and Building | |||||
Capital Expenditures | |||||
Gain on the sale of assets | $ 20,190 | ||||
Flow Control | |||||
Capital Expenditures | |||||
Acquisition transaction costs | 410 | 2,706 | 254 | 3,942 | |
Restructuring costs | 72 | 72 | |||
Industrial Processing | |||||
Capital Expenditures | |||||
Gain on the sale of assets | 20,190 | ||||
Write-off of indemnification asset | 575 | ||||
Machinery and equipment write-down | 182 | ||||
Industrial Processing | CHINA | Land and Building | |||||
Capital Expenditures | |||||
Capital expenditures | 2,155 | 5,397 | |||
Material Handling | |||||
Capital Expenditures | |||||
Acquisition transaction costs | 799 | 717 | 1,411 | ||
Operating Segment | Flow Control | |||||
Revenue | |||||
Revenues | 86,880 | 76,253 | 257,926 | 210,769 | |
Income Before Provision for Income Taxes | |||||
Total operating income | 22,874 | 17,129 | 67,306 | 51,899 | |
Capital Expenditures | |||||
Capital expenditures | 868 | 1,128 | 2,424 | 1,830 | |
Operating Segment | Industrial Processing | |||||
Revenue | |||||
Revenues | 86,085 | 81,620 | 263,572 | 233,455 | |
Income Before Provision for Income Taxes | |||||
Total operating income | 17,550 | 16,095 | 70,994 | 44,449 | |
Capital Expenditures | |||||
Capital expenditures | 4,654 | 1,725 | 11,679 | 4,720 | |
Operating Segment | Material Handling | |||||
Revenue | |||||
Revenues | 51,545 | 41,916 | 151,141 | 123,839 | |
Income Before Provision for Income Taxes | |||||
Total operating income | 6,945 | 3,491 | 21,490 | 12,941 | |
Capital Expenditures | |||||
Capital expenditures | 854 | 505 | 2,081 | 1,121 | |
Corporate | |||||
Income Before Provision for Income Taxes | |||||
Total operating income | (8,483) | (7,987) | (27,463) | (24,124) | |
Capital Expenditures | |||||
Capital expenditures | $ 0 | $ 12 | $ 7 | $ 17 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Jan. 01, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Banker's acceptance drafts, maturity period (in months) | 6 months | |
Banker's acceptance drafts with recourse | $ 9,793 | $ 9,593 |