Kadant(KAI) - 2024 Q4 - Annual Report

Financial Performance - Record bookings of $981.1 million in 2024, a 7$1,053.4 million, including a 12% increase from acquisitions; organic revenue decreased by 2% primarily due to weak demand in the Material Handling segment [200]. - Net income decreased to $112.6 million in 2024 from$116.8 million in 2023, mainly due to an $11.6 million increase in interest expense [212]. - Adjusted EBITDA increased to$229.7 million in 2024, up from $201.3 million in 2023, with an adjusted EBITDA margin of 21.8$134.3 million, slightly up from $133.7 million in 2023 [220]. Segment Performance - Industrial Processing segment bookings rose by 15$153.4 million, KWS for $79.4 million, and DSTI for$53.6 million in 2024, enhancing its product offerings and market position [194][195][196]. - Cash used in investing activities surged to $319.1 million in 2024, primarily due to$300.3 million for acquisitions [228]. - Planned capital expenditures for 2025 are approximately $24.0 to$26.0 million for property, plant, and equipment [239]. Expenses and Costs - Consolidated SG&A expenses increased by $43.7 million, or 18$279.9 million in 2024, primarily due to $35.6 million from acquisitions and$4.7 million in acquisition-related costs [205]. - SG&A expenses as a percentage of revenue increased to 27% in 2024 from 25% in 2023, mainly due to acquisition-related costs [205]. - Interest expense rose to $20.0 million in 2024 from$8.4 million in 2023, attributed to increased borrowings for acquisitions [210]. Cash Flow and Financing - Cash provided by operating activities decreased to $155.3 million in 2024 from$165.5 million in 2023, primarily due to increased cash used for working capital [225]. - Cash provided by financing activities was $159.9 million in 2024, compared to cash used of$111.1 million in 2023 [229]. - Borrowings under the revolving credit facility were $305.2 million in 2024, primarily used for acquisitions [234]. - Outstanding balance under the Credit Agreement was$278.4 million as of December 28, 2024, with a leverage ratio of 0.99, compliant with debt covenants [235]. Tax and Foreign Earnings - The effective tax rate remained at 26.5% in both 2024 and 2023, higher than the statutory rate of 21% [211]. - Total unremitted foreign earnings amounted to approximately $296.1 million, with$255.3 million intended for indefinite reinvestment [240]. - The company recorded a tax valuation allowance of $7.6 million at year-end 2024 due to uncertainties in future profitability [247]. - The company plans to repatriate$0.6 million of tax expense associated with foreign earnings in 2025 [249]. Currency and Interest Rate Sensitivity - Approximately 50% of sales are to international customers, making the company susceptible to currency exchange rate fluctuations [191]. - A 10% decrease in functional currencies relative to the U.S. dollar would have reduced stockholders' equity by $62.8 million at year-end 2024 [264]. - At year-end 2024, the company had$71.4 million of euro-denominated borrowings, with a 10% increase in the euro against the U.S. dollar potentially decreasing borrowing capacity by approximately $7.1 million [265]. - The fair value of forward currency-exchange contracts is sensitive to fluctuations in foreign currency exchange rates, but any adverse changes will largely be offset by corresponding changes in the fair value of the underlying hedged items [266].