 WESTFORD, Mass., July 28, 2020 GLOBE NEWSWIRE -- Kadant Inc. NYSE: KAI reported its financial results for the second quarter ended June 27, 2020. Second Quarter 2020 Financial Highlights Bookings decreased 24 to 133 million. Revenue decreased 14 to 153 million. GAAP diluted EPS decreased 30 to 1.00. Adjusted diluted EPS decreased 25 to 1.06. Net income decreased 29 to 12 million. Adjusted EBITDA decreased 19 to 27 million and represented 17.4 of revenue. Operating cash flow was 22 million. Our balance sheet remains healthy and our liquidity position is solid.Note: Adjusted diluted EPS, adjusted EBITDA, adjusted EBITDA margin, free cash flow, and changes in organic revenue are non-GAAP financial measures that exclude certain items as detailed later in this press release under the heading Use of Non-GAAP Financial Measures.Management Commentary Despite challenging circumstances, our workforce around the world continues to perform exceptionally well to meet the needs and expectations of our customers, said Jeffrey L. Powell, president and chief executive officer of Kadant. While second quarter revenue was weaker year-over-year, especially given a difficult comparable period and pandemic-related challenges, our cash flow and healthy balance sheet continue to be a source of strength. Our operating cash flow was 22 million for the second quarter, down three percent from the prior year, while our free cash flow increased to 21 million.Our parts and consumables revenue made up 64 percent of our second quarter revenue and that aspect of our business continues to provide a relatively stable revenue stream. Our parts and consumables support the production of essential items found in health care facilities and grocery stores and in packaging shipped directly to consumers and businesses. They also support the requirements of critical infrastructure such as housing, highway construction and road repair, and other basic societal needs.Strategic acquisitions continue to be an important part of our growth strategy and today we announced our acquisition of a leading North American industrial automation and controls solution provider completed in the second quarter. This acquisition will help us enhance and expand our smart connected product offerings around the world.Second Quarter 2020 compared to 2019 Revenue decreased 14 percent to 152.9 million compared to 177.2 million in 2019. Organic revenue was down 12 percent, which excludes an acquisition and a two percent decrease from the unfavorable effect of foreign currency translation. Gross margin was 43.5 percent compared to 42.0 percent in 2019.GAAP diluted earnings per share EPS decreased 30 percent to 1.00 compared to 1.42 in 2019. Adjusted diluted EPS decreased 25 percent to 1.06 compared to 1.42 in 2019. Adjusted diluted EPS in 2020 excludes 0.03 of restructuring costs and 0.03 of acquisition costs. Adjusted diluted EPS in 2019 excludes 0.10 of amortization expense from acquired profit in inventory and backlog and an 0.11 discrete tax benefit related to the exercise of employee stock options. Adjusted EBITDA decreased 19 percent to 26.6 million compared to 32.7 million in 2019. Cash flow from operations decreased three percent to 22.0 million compared to 22.6 million in 2019.Bookings decreased 24 percent to 133.0 million compared to 174.0 million in 2019. Organic bookings were down 21 percent, which excludes an acquisition and a two percent decrease from the unfavorable effect of foreign currency translation.Summary and Outlook Our decentralized structure and global footprint combined with our strong aftermarket business have provided stability in this environment, Mr. Powell continued. We were pleased with the solid execution by our divisions, resulting in 21 million of free cash flow for the second quarter further strengthening our liquidity position. Looking ahead, we expect the third quarter will be our weakest quarter of the year and are anticipating an improvement in business activity in the fourth quarter assuming economies continue to re-open and consumer demand strengthens. However, given the current uncertainty surrounding the timing of the recovery in markets around the world, we will not be providing guidance at this time. Despite this, the underlying fundamentals of our markets and our business remain strong.Conference Call Kadant will hold a webcast with a slide presentation for investors on Wednesday, July 29, 2020, at 11:00 a.m. eastern time to discuss its second quarter performance, as well as future expectations. To access the webcast, including the slideshow and accompanying audio, go to and click on Investors. To listen to the webcast via teleconference, call 888-326-8410 within the U.S., or 1-704-385-4884 outside the U.S. and reference participant passcode 4880692. Prior to the call, our earnings release and the slides used in the webcast presentation will be filed with the Securities and Exchange Commission and will be available at An archive of the webcast presentation will be available on our website until August 28, 2020.Shortly after the webcast, Kadant will post its updated general investor presentation incorporating the second quarter results on its website at under the Investors section.Use of Non-GAAP Financial Measures In addition to the financial measures prepared in accordance with generally accepted accounting principles GAAP, we use certain non-GAAP financial measures, including increases or decreases in revenue excluding the effect of acquisitions and foreign currency translation organic revenue, adjusted operating income, adjusted net income, adjusted diluted EPS, earnings before interest, taxes, depreciation, and amortization EBITDA, adjusted EBITDA, adjusted EBITDA margin, and free cash flow.We believe 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 gain an understanding of our underlying operating performance 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 an additional measure of our performance.The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for the results of operations prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release 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.Revenue in the second quarter of 2020 included a 4.0 million unfavorable foreign currency translation effect and 0.2 million from an acquisition. Revenue in the first six months of 2020 included a 6.5 million unfavorable foreign currency translation effect and 0.2 million from an acquisition. We present increases or decreases in organic revenue, which excludes the effect of acquisitions and foreign currency translation, to provide investors insight into underlying revenue trends. Our non-GAAP financial measures exclude restructuring costs, acquisition costs, amortization expense related to acquired profit in inventory and backlog, and discrete tax items. 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, or none at all.Second QuarterAdjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude: Pre-tax acquisition costs of 0.4 million in 2020. Pre-tax restructuring costs of 0.5 million in 2020. Pre-tax expense related to amortization of acquired profit in inventory and backlog of 1.5 million in 2019.Adjusted net income and adjusted diluted EPS exclude: After-tax acquisition costs of 0.3 million 0.4 million net of tax of 0.1 million in 2020. After-tax restructuring costs of 0.3 million 0.5 million net of tax of 0.2 million in 2020. After-tax expense related to amortization of acquired profit in inventory and backlog of 1.2 million 1.5 million net of tax of 0.3 million in 2019. A discrete tax benefit of 1.2 million in 2019.Free cash flow is calculated as cash flow from operations less: Capital expenditures of 0.9 million in 2020 and 2.0 million in 2019.First Six MonthsAdjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude: Pre-tax acquisition costs of 0.4 million in 2020 and 0.8 million in 2019. Pre-tax restructuring costs of 0.5 million in 2020. Pre-tax expense related to amortization of acquired profit in inventory and backlog of 4.8 million in 2019.Adjusted net income and adjusted diluted EPS exclude: After-tax acquisition costs of 0.3 million 0.4 million net of tax of 0.1 million in 2020 and 0.7 million 0.8 million net of tax of 0.1 million in 2019. After-tax restructuring costs of 0.3 million 0.5 million net of tax of 0.2 million in 2020. After-tax expense related to amortization of acquired profit in inventory and backlog of 3.7 million 4.8 million net of tax of 1.1 million in 2019. 