Back to top

Image: Bigstock

Kadant (KAI) Q4 Earnings & Revenues Beat Estimates, Up Y/Y

Read MoreHide Full Article

Kadant Inc.(KAI - Free Report) reported better-than-expected fourth-quarter 2018 results wherein earnings surpassed estimates by 22.1%.

The company’s adjusted earnings in the reported quarter were $1.66 per share, surpassing the Zacks Consensus Estimate of $1.36. Moreover, the bottom line increased 45.6% from the year-ago quarter figure of $1.14. The upside can be primarily attributed to impressive sales growth and improved operating income.

For 2018, Kadant’s adjusted earnings came in at $5.34 per share, up 19% on a year-over-year basis.

Segmental Details

In the reported quarter, Kadant’s revenues totaled $163.9 million, reflecting year-over-year growth of 9.9%. Also, the top line surpassed the Zacks Consensus Estimate of $161 million by 1.8%.

For 2018, Kadant reported revenues of $633.8 million, up 23.1% on a year-over-year basis.

Kadant Inc Price, Consensus and EPS Surprise

Kadant Inc Price, Consensus and EPS Surprise | Kadant Inc Quote

Bookings in the quarter under review totaled $147.1 million, increasing 0.3% from the year-ago quarter. The improvement was driven by as solid growth in bookings, particularly in North America and Europe, partially offset by weak bookings generated in South America and Asia.

On a geographical basis, revenues from North America increased 14.8% year over year to $78.5 million while that from Asia expanded 26% to $31.2 million. Revenues generated from Europe declined 3.6% to $43.2 million while that from the Rest of World operations totaled $11 million, decreasing 1.3% year over year.

The company has two reportable segments — Papermaking Systems and Wood Processing Systems. In addition, it also generates revenues from Fiber-Based Products business. The information on these three sources of revenues for the quarter under review is given below:

Revenues from the Papermaking Systems segment were approximately $119.1 million, increasing 6.1% from the year-ago quarter. Organic revenues, excluding the impact of foreign currency translations, grew 9.2% year over year. Bookings in the quarter under review declined 2.4% to $105.2 million.

Of the segmental revenues, roughly $57.1 million was sourced from Stock-Preparation product line. It reflected growth of 5% from the year-ago quarter. Revenues from Doctoring, Cleaning & Filtration product-line were $28.7 million, and from Fluid-Handling product-line was $33.3 million, reflecting increase of 7.5% and 7.4% from the respective tallies in the year-ago quarter.

Revenues from the Wood Processing Systems segment totaled $42 million, significantly surpassing $34 million generated a year ago. Excluding the impact of foreign currency translations, the segment’s revenues increased 28.4%. Bookings in the reported quarter jumped 11.1% to $38.9 million.

Revenues from the Fiber-Based Products business totaled $2.8 million, declining 4.5% year over year. Bookings in the quarter under review fell 21.6% to $2.9 million.

Margin Details

In the quarter, Kadant’s cost of revenues increased 10.1% year over year to about $93 million. It was 56.7% of revenues in the quarter. Gross margin was 43.3%, same as recorded in the year-ago quarter.

Selling, general and administrative expenses, which was roughly 26.6% of revenues, decreased 0.5% year over year to approximately $43.6 million. Research and development expenses in the were $2.5 million compared with $2.6 million in the year-ago quarter.

Adjusted operating income increased 24.9% year over year to $26.1 million while adjusted margin slipped 190 basis points (bps) to 15.9%.

Balance Sheet and Cash Flow

Exiting 2018, Kadant had cash, cash equivalents and restricted cash of $46.1 million, down from $76.8 million at the end of the 2017. Long-term debt balance decreased 27.7% to $171.4 million.

In the quarter under review, the company’s net cash generation from operating activities totaled $10.4 million, down from $32.8 million. Capital spending totaled $3.7 million compared with $8.6 million a year ago.


The company has given bullish 2019 guidance. Notably, adjusted earnings are currently anticipated to lie within the $5.20-$5.35 per share range. Additionally, the company has given revenue guidance for 2019 between $700 million and $710 million.

For first-quarter 2019, adjusted earnings per share are predicted to be $1.11-$1.17. Revenues are anticipated to be $160-$165 million.

Zacks Rank & Stocks to Consider

Kadant currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are Chart Industries, Inc. (GTLS - Free Report) , Roper Technologies, Inc. (ROP - Free Report) and Dover Corporation (DOV - Free Report) . While Chart Industries sports a Zacks Rank #1 (Strong Buy), Roper and Dover carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chart Industries surpassed estimates in each of the trailing four quarters, the average beat being 31.30%.

Roper exceeded estimates in each of the trailing four quarters, the average beat being 4.96%.

Dover surpassed estimates in each of the trailing four quarters, the average beat being 6.59%.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>