On this page of StockholderLetter.com we present the latest annual shareholder letter from KADANT INC — ticker symbol KAI. Reading current and past KAI letters to shareholders can bring important insights into the investment thesis.

 •  3/26/2025 Letter Continued (Full PDF)
 •  3/28/2023 KAI Stockholder Letter
 •  3/27/2024 KAI Stockholder Letter
 •  More "Industrial Machinery & Equipment" Category Stockholder Letters
 •  KAI Benford's Law Stock Score = 63

KAI Shareholder/Stockholder Letter Transcript:

2 0 2 4
A N N U A L
R E P O R T

OUR M ISSION IS TO ENABLE OUR CUSTOMERS TO IMPROVE EFFICIENCY AND
R E D U C E I N P U T C O S T S T H R O U G H I N N O VAT I V E P R O D U C T S , T E C H N O L O G I E S ,
AND PROCESS EXPERTISE.
Kadant Inc. (NYSE: KAI) is a global supplier of technologies and engineered systems that drive
Sustainable Industrial Processing  . Our products and services play an integral role in enhancing efficiency,
optimizing energy utilization, and maximizing productivity in process industries. Kadant is based in
Westford, Massachusetts, with approximately 3,500 employees in 20 countries worldwide.
Revenue
Earnings Per Share
(in millions)
$905
$958
$1,053
$11.00
$10.35
$10.00
$9.24
$9.00
$787
$7.00
$6.00
$9.90
$10.28
$9.48
$7.83
$8.00
$635
$10.04
$7.21
$5.00
$5.00
$4.00
$4.77
$3.00
$2.00
2020
2021
2022
2023
2024
$1.00
2020
2021
2022
ADJUSTED DILUTED EPS*
Operating Cash Flow and Free Cash Flow*
(in millions)
$166
$162
$150
$134
2024
DILUTED EPS
Net Income and Adjusted EBITDA*
(in millions)
$155
$189
$134
$201
$230
$159
$103
$93
2023
$121
$116
$85
$116
$112
2023
2024
$84
$74
$55
2020
2021
2022
OPERATING CASH FLOW
2023
2024
FREE CASH FLOW*
2020
2021
2022
ADJUSTED EBITDA*
NET INCOME
*Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation, and amortization), adjusted diluted EPS (adjusted diluted earnings per share), and free cash flow
are Non-GAAP financial measures that exclude certain items. A reconciliation of these financial measures to the most directly comparable GAAP number appears on page (ii)
under the heading    Reconciliation of GAAP to Non-GAAP Financial Measures.   

DE AR STOCKHOLDER:
Fiscal 2024 was another record-setting year for Kadant. This marks the fourth consecutive year
of record financial performance, and our employees once again delivered for our customers
and our stockholders.
We began 2024 with two strategic acquisitions: Key Knife, a manufacturer of engineered
knife systems used in wood processing applications, and KWS Manufacturing, the leading U.S.
manufacturer of screw conveyors. Later in the year, we acquired Dynamic Sealing Technologies,
a leader in engineered fluid sealing and transfer solutions for rotating applications serving
numerous industries including defense, energy, medical, and factory automation. All three
businesses expanded our product portfolio in our core markets and provided entry into
adjacent markets. We look forward to building upon their established successes as we
complete the integration of these businesses into the Kadant family.
Stable demand and a strong backlog fueled record revenue performance of $1.05 billion in
2024, with aftermarket parts making up 66 percent of our total revenue. The stability of our
aftermarket business provided a solid growth platform for Kadant to make further gains in
customer share, leveraging our strong customer relationships and offering customer-focused
product and service innovations.
Our full-year adjusted EBITDA* was a record $230 million and a record 21.8 percent of
revenue. Our strategic focus on improving our margin performance through internal initiatives
delivered record results across a variety of metrics, including record adjusted diluted EPS* of
$10.28, exceeding the record set last year at $10.04 per share.
As we look ahead to 2025, project activity is looking more favorable as the year progresses and
demand for aftermarket parts has been stable as we entered the year. Our ability to generate
robust cash flows and our healthy balance sheet have us well-positioned to capitalize on
opportunities that may emerge as the year unfolds.
As always, I would like to thank our stockholders for their continued support and confidence in
Kadant and our employees for making 2024 a record-setting year.
We look forward to delivering another year of solid performance in 2025.
Jeffrey L. Powell
President and Chief Executive Officer
March 26, 2025
*Adjusted EBITDA, adjusted EBITDA margin, and adjusted diluted EPS are non-GAAP financial measures that exclude certain items. A reconciliation of these
financial measures to the most directly comparable GAAP number appears on the following page under the heading    Reconciliation of GAAP to Non-GAAP
Financial Measures.   

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
Adjusted Diluted EPS Reconciliation
Diluted EPS attributable to Kadant, as reported
Adjustments, net of tax:
Acquired profit in inventory and backlog amortization
Acquisition costs
Restructuring and impairment costs
Gain on sale and other (income) costs, net (a)
Discrete tax items
Adjusted diluted EPS (b) (non-GAAP measure)
2020
$ 4.77
2021
$ 7.21
2022
$ 10.35
2023
$ 9.90
2024
$ 9.48
0.04
0.03
0.19
(0.03)
$ 5.00
0.34
0.26
0.08
(0.03)
(0.04)
$ 7.83
0.03
0.04
0.11
(1.30)
$ 9.24

0.10
0.04

$ 10.04
0.54
0.20
0.06
$ 10.28
Adjusted EBITDA Reconciliation (in millions)
Net income attributable to Kadant
Net income attributable to noncontrolling interests
Provision for income taxes
Interest expense, net
Other expense, net
Operating income
Acquired profit in inventory and backlog amortization
Acquisition costs
Indemnification asset reversals (c)
Restructuring and impairment costs
Gain on sale and other (income) costs, net
Adjusted operating income (non-GAAP measure)
Depreciation and amortization
Adjusted EBITDA (non-GAAP measure)
Adjusted EBITDA margin (d) (non-GAAP measure)
2020
$ 55.2
0.5
17.9
7.2
0.3
81.1
0.5
0.5
3.0
85.1
30.8
$ 115.9
18.3%
2021
$ 84.0
0.8
27.2
4.6
0.1
116.7
5.6
3.6
1.0
(0.5)
126.4
33.0
$159.4
20.3%
2022
$ 120.9
0.8
43.9
5.6
0.1
171.3
0.5
0.7
1.3
1.3
(20.2)
154.9
34.2
$189.1
20.9%
2023
$ 116.1
0.7
42.2
6.7
0.1
165.8
1.4
0.1
0.8
(0.1)
168.0
33.3
$ 201.3
21.0%
2024
$ 111.6
1.0
40.5
18.1
0.1
171.3
8.4
2.9
0.1
0.7
183.4
46.3
$ 229.7
21.8%
Free Cash Flow Reconciliation (in millions)
Operating cash flow
Capital expenditures (e)
Free cash flow (non-GAAP measure)
2020
$ 92.9
(7.6)
$ 85.3
2021
$162.4
(12.8)
$149.6
2022
$102.6
(28.2)
$ 74.4
2023
$165.5
(31.8)
$133.7
2024
$155.3
(21.0)
$134.3
(a) Includes a $20.2 million pre-tax ($15.1 million after tax) gain on the sale of a building in 2022 related to the sale of a facility in China
pursuant to a relocation plan.
(b) Adjusted diluted EPS was calculated using the weighted average diluted shares as reported in each of the fiscal years presented.
(c) Represents net indemnification asset reversals related to the release of tax reserves associated with uncertain tax positions.
(d) Calculated as adjusted EBITDA divided by revenue in each year.
(e) Includes $10.4 million in 2022 and $7.4 million in 2023 and related to the construction of a new manufacturing facility in China.
Adjusted diluted EPS, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, and free cash flow are nonGAAP financial measures. Our non-GAAP financial measures exclude amortization expense related to acquired profit in
inventory and backlog, acquisition costs, restructuring and impairment costs, discrete tax items, and other income or
expense, as indicated. Collectively, these items are excluded as they are not indicative of our core operating results and are
not comparable to other periods, which have differing levels of incremental costs, expenditures or income, or none at all.
Additionally, we use free cash flow in order to provide insight on our ability to generate cash for acquisitions and debt
repayments, as well as for other investing and financing activities.
We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial
measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not
be indicative of our core business, operating results, or future outlook. We believe that the inclusion of such measures helps
investors to gain an understanding of our underlying operations and future prospects, consistent with how management
measures and forecasts our performance, especially when comparing such results to previous periods or forecasts and to
the performance of our competitors. Such measures are also used by us in our financial and operating decision-making and
for compensation purposes. We also believe this information is responsive to investors' requests and gives them additional
measures of our performance.
Non-GAAP financial measures are not meant to be considered superior to or a substitute for the results of operations or
cash flows prepared in accordance with GAAP. In addition, the non-GAAP financial measures have limitations associated
with their use as compared to the most directly comparable GAAP measures, in that they may be different from, and
therefore not comparable to, similar measures used by other companies.
[ii]

FOR M 10 - K
Kadant Inc.
2 0 24 A N N UA L R E P O R T



 3/26/2025 Letter Continued (Full PDF)