Cover
Cover - shares | 9 Months Ended | |
Sep. 26, 2020 | Oct. 23, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 26, 2020 | |
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, $.01 par value | |
Trading Symbol | KAI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,509,560 | |
Entity Central Index Key | 0000886346 | |
Current Fiscal Year End Date | --01-02 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet (Unaudited) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 53,554 | $ 66,786 |
Restricted cash | 2,650 | 1,487 |
Accounts receivable, net of allowances of $3,113 and $2,698 | 94,145 | 95,740 |
Inventories | 108,715 | 102,715 |
Unbilled revenue | 9,095 | 13,162 |
Other current assets | 15,382 | 17,686 |
Total Current Assets | 283,541 | 297,576 |
Property, Plant, and Equipment, net of accumulated depreciation of $103,664 and $95,309 | 82,427 | 86,032 |
Other Assets | 40,565 | 45,851 |
Intangible Assets, Net (Note 1) | 164,359 | 173,896 |
Goodwill (Note 1) | 342,999 | 336,032 |
Total Assets | 913,891 | 939,387 |
Current Liabilities: | ||
Current maturities of long-term obligations (Note 6) | 1,538 | 2,851 |
Accounts payable | 32,588 | 45,852 |
Accrued payroll and employee benefits | 27,946 | 31,968 |
Customer deposits | 25,834 | 24,012 |
Advanced billings | 4,520 | 11,280 |
Other current liabilities | 35,436 | 30,206 |
Total Current Liabilities | 127,862 | 146,169 |
Long-Term Obligations (Note 6) | 259,049 | 298,174 |
Other Long-Term Liabilities | 64,735 | 67,965 |
Commitments and Contingencies (Note 13) | ||
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 | 108,384 | 106,698 |
Retained earnings | 465,963 | 435,249 |
Treasury stock at cost, 3,114,599 and 3,214,888 shares | (76,320) | (78,778) |
Accumulated other comprehensive items (Note 9) | (37,232) | (37,620) |
Total Kadant Stockholders' Equity | 460,941 | 425,695 |
Noncontrolling interest | 1,304 | 1,384 |
Total Stockholders' Equity | 462,245 | 427,079 |
Total Liabilities and Stockholders' Equity | $ 913,891 | $ 939,387 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Stockholders' Equity: | ||
Allowance for credit losses | $ 3,113 | $ 2,698 |
Accumulated depreciation | $ 103,664 | $ 95,309 |
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) | 3,114,599 | 3,214,888 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Income Statement [Abstract] | ||||
Revenue (Notes 1 and 12) | $ 154,610 | $ 173,504 | $ 466,597 | $ 521,985 |
Costs and Operating Expenses: | ||||
Cost of revenue | 86,294 | 99,257 | 263,510 | 302,852 |
Selling, general, and administrative expenses | 43,853 | 47,097 | 134,518 | 144,883 |
Research and development expenses | 2,658 | 2,597 | 8,532 | 7,980 |
Restructuring costs (Note 3) | 470 | 0 | 926 | 0 |
Total Costs and Operating Expenses | 133,275 | 148,951 | 407,486 | 455,715 |
Operating Income | 21,335 | 24,553 | 59,111 | 66,270 |
Interest Income | 52 | 43 | 140 | 158 |
Interest Expense | (1,670) | (3,066) | (6,060) | (10,143) |
Other Expense, Net | (32) | (98) | (95) | (296) |
Income Before Provision for Income Taxes | 19,685 | 21,432 | 53,096 | 55,989 |
Provision for Income Taxes (Note 5) | 4,705 | 5,219 | 13,738 | 12,310 |
Net Income | 14,980 | 16,213 | 39,358 | 43,679 |
Net Income Attributable to Noncontrolling Interest | (129) | (98) | (369) | (360) |
Net Income Attributable to Kadant | $ 14,851 | $ 16,115 | $ 38,989 | $ 43,319 |
Earnings per Share Attributable to Kadant (Note 4) | ||||
Basic (in dollars per share) | $ 1.29 | $ 1.43 | $ 3.40 | $ 3.87 |
Diluted (in dollars per share) | $ 1.28 | $ 1.41 | $ 3.38 | $ 3.79 |
Weighted Average Shares (Note 4) | ||||
Basic (in shares) | 11,504 | 11,267 | 11,472 | 11,198 |
Diluted (in shares) | 11,589 | 11,469 | 11,550 | 11,434 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 14,980 | $ 16,213 | $ 39,358 | $ 43,679 |
Other Comprehensive Items: | ||||
Foreign currency translation adjustment | 8,656 | (9,091) | 824 | (7,603) |
Pension and other post-retirement liability adjustments, net (net of tax (benefit) provision of $(6), $12, $14 and $22) | (14) | 31 | 34 | 59 |
Effect of other post-retirement plan settlement | 0 | 0 | (119) | 0 |
Deferred gain (loss) on cash flow hedges (net of tax provision (benefit) of $19, $(47), $(103) and $(190)) | 51 | (123) | (275) | (524) |
Net current period other comprehensive items | 8,693 | (9,183) | 464 | (8,068) |
Comprehensive Income | 23,673 | 7,030 | 39,822 | 35,611 |
Comprehensive Income Attributable to Noncontrolling Interest | (191) | (24) | (445) | (276) |
Comprehensive Income Attributable to Kadant | $ 23,482 | $ 7,006 | $ 39,377 | $ 35,335 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Other Comprehensive Items: | ||||
Pension and other post-retirement liability adjustments, tax effect | $ (6) | $ 12 | $ 14 | $ 22 |
Deferred gain (loss) on cash flow hedges, tax effect | $ (19) | $ 47 | $ 103 | $ 190 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 26, 2020 | Sep. 28, 2019 | |
Operating Activities | ||
Net Income Attributable to Kadant | $ 38,989 | $ 43,319 |
Net income attributable to noncontrolling interest | 369 | 360 |
Net income | 39,358 | 43,679 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 23,260 | 24,304 |
Stock-based compensation expense | 5,126 | 5,125 |
Provision for losses on accounts receivable | 505 | 170 |
Gain on sale of property, plant, and equipment | (4) | (139) |
Other items, net | (250) | 954 |
Changes in current assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | 1,306 | (1,124) |
Unbilled revenue | 4,332 | 1,957 |
Inventories | (6,229) | (10,294) |
Other current assets | 2,840 | (4,093) |
Accounts payable | (13,183) | 2,798 |
Other current liabilities | (4,460) | (5,171) |
Net cash provided by operating activities | 52,601 | 58,166 |
Investing Activities | ||
Acquisitions, net of cash acquired (Note 2) | (7,095) | (177,058) |
Purchases of property, plant, and equipment | (5,419) | (6,236) |
Proceeds from sale of property, plant, and equipment | 55 | 527 |
Net cash used in investing activities | (12,459) | (182,767) |
Financing Activities | ||
Repayment of short- and long-term obligations | (69,034) | (108,272) |
Proceeds from issuance of short- and long-term obligations | 26,000 | 247,090 |
Dividends paid | (8,141) | (7,604) |
Tax withholding payments related to stock-based compensation | (2,596) | (2,670) |
Proceeds from issuance of Company common stock | 1,614 | 2,006 |
Dividend paid to noncontrolling interest | (525) | 0 |
Other financing activities | (189) | (52) |
Net cash (used in) provided by financing activities | (52,871) | 130,498 |
Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash | 660 | (2,043) |
(Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash | (12,069) | 3,854 |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 68,273 | 46,117 |
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ 56,204 | $ 49,971 |
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 | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, AdjustmentRetained Earnings |
Beginning balance (in shares) at Dec. 29, 2018 | 14,624,159 | 3,514,163 | |||||||
Beginning balance at Dec. 29, 2018 | $ 374,571 | $ 146 | $ 104,731 | $ 393,578 | $ (86,111) | $ (39,376) | $ 1,603 | $ (17) | $ (17) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net Income | 43,679 | 43,319 | 360 | ||||||
Dividends declared – Common Stock | (7,753) | (7,753) | |||||||
Activity under stock plans | 4,461 | 488 | $ 3,973 | ||||||
Activity under stock plans (in shares) | (162,129) | ||||||||
Other comprehensive items | (8,068) | (7,984) | (84) | ||||||
Ending balance (in shares) at Sep. 28, 2019 | 14,624,159 | 3,352,034 | |||||||
Ending balance at Sep. 28, 2019 | 406,873 | $ 146 | 105,219 | 429,127 | $ (82,138) | (47,360) | 1,879 | ||
Beginning balance (in shares) at Jun. 29, 2019 | 14,624,159 | 3,369,304 | |||||||
Beginning balance at Jun. 29, 2019 | 400,560 | $ 146 | 103,767 | 415,605 | $ (82,562) | (38,251) | 1,855 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net Income | 16,213 | 16,115 | 98 | ||||||
Dividends declared – Common Stock | (2,593) | (2,593) | |||||||
Activity under stock plans | 1,876 | 1,452 | $ 424 | ||||||
Activity under stock plans (in shares) | (17,270) | ||||||||
Other comprehensive items | (9,183) | (9,109) | (74) | ||||||
Ending balance (in shares) at Sep. 28, 2019 | 14,624,159 | 3,352,034 | |||||||
Ending balance at Sep. 28, 2019 | 406,873 | $ 146 | 105,219 | 429,127 | $ (82,138) | (47,360) | 1,879 | ||
Beginning balance (in shares) at Dec. 28, 2019 | 14,624,159 | 3,214,888 | |||||||
Beginning balance at Dec. 28, 2019 | 427,079 | $ 146 | 106,698 | 435,249 | $ (78,778) | (37,620) | 1,384 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net Income | 39,358 | 38,989 | 369 | ||||||
Dividends declared – Common Stock | (8,275) | (8,275) | |||||||
Dividend paid to noncontrolling interest | (525) | (525) | |||||||
Activity under stock plans | 4,144 | 1,686 | $ 2,458 | ||||||
Activity under stock plans (in shares) | (100,289) | ||||||||
Other comprehensive items | 464 | 388 | 76 | ||||||
Ending balance (in shares) at Sep. 26, 2020 | 14,624,159 | 3,114,599 | |||||||
Ending balance at Sep. 26, 2020 | 462,245 | $ 146 | 108,384 | 465,963 | $ (76,320) | (37,232) | 1,304 | ||
Beginning balance (in shares) at Jun. 27, 2020 | 14,624,159 | 3,127,565 | |||||||
Beginning balance at Jun. 27, 2020 | 440,359 | $ 146 | 107,202 | 453,874 | $ (76,638) | (45,863) | 1,638 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net Income | 14,980 | 14,851 | 129 | ||||||
Dividends declared – Common Stock | (2,762) | (2,762) | |||||||
Dividend paid to noncontrolling interest | (525) | (525) | |||||||
Activity under stock plans | 1,500 | 1,182 | $ 318 | ||||||
Activity under stock plans (in shares) | (12,966) | ||||||||
Other comprehensive items | 8,693 | 8,631 | 62 | ||||||
Ending balance (in shares) at Sep. 26, 2020 | 14,624,159 | 3,114,599 | |||||||
Ending balance at Sep. 26, 2020 | $ 462,245 | $ 146 | $ 108,384 | $ 465,963 | $ (76,320) | $ (37,232) | $ 1,304 |
Condensed Consolidated Statem_6
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - Parenthetical - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends declared per common share (in dollars per share) | $ 0.24 | $ 0.23 | $ 0.72 | $ 0.69 |
Nature of Operations and Summar
Nature of Operations and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 26, 2020 | |
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 high-value, critical components and engineered systems used in process industries worldwide. Its products, technologies, and services play an integral role in enhancing process efficiency, optimizing energy utilization, and maximizing productivity in resource-intensive industries. COVID-19 On March 11, 2020, the World Health Organization designated the novel coronavirus (COVID-19) a global pandemic, and a national emergency was subsequently declared by the U.S. government. The pandemic has negatively affected the global economy, disrupted global supply chains, and resulted in significant travel and transport restrictions, which have adversely affected the Company’s bookings and financial results. The impact of the COVID-19 pandemic, including the resulting economic impact, continues to evolve and the Company is closely monitoring its impact on all aspects of its business. 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 September 26, 2020, its results of operations, comprehensive income, and stockholders' equity for the three- and nine-month periods ended September 26, 2020 and September 28, 2019, and its cash flows for the nine-month periods ended September 26, 2020 and September 28, 2019. 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 December 28, 2019 has been derived from the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019. 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 Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019, filed with the SEC. Financial Statement Presentation In the first quarter of 2020, the Company realigned its business segments into three new reportable operating segments: Flow Control, Industrial Processing, and Material Handling. The Company previously reported its financial results by combining its operating entities into three reportable operating segments: Papermaking Systems, Wood Processing Systems, and Material Handling Systems, and a separate product line, Fiber-based Products. Financial information for 2019 has been recast to conform to the new segment presentation. See Note 12 , Business Segment Information, for further detail regarding the Company's segments. 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. Notes 1 and 3 to the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019 describe 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 September 26, 2020, except that the Company no longer considers its policy with respect to accounting for pension benefits to be a critical accounting policy due to the settlement of its U.S. pension plan in December 2019. Supplemental Cash Flow Information Nine Months Ended (In thousands) September 26, September 28, Cash Paid for Interest $ 5,518 $ 9,711 Cash Paid for Income Taxes, Net of Refunds $ 9,953 $ 18,037 Non-Cash Investing Activities: Fair value of assets acquired $ 9,295 $ 208,558 Cash paid for acquired businesses (7,565) (179,489) Liabilities Assumed of Acquired Businesses $ 1,730 $ 29,069 Non-cash additions to property, plant, and equipment $ 101 $ 304 Non-Cash Financing Activities: Issuance of Company common stock upon vesting of restricted stock units $ 4,557 $ 3,908 Dividends declared but unpaid $ 2,762 $ 2,593 Restricted Cash The Company's restricted cash 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) September 26, September 28, December 28, December 29, Cash and cash equivalents $ 53,554 $ 48,650 $ 66,786 $ 45,830 Restricted cash 2,650 1,321 1,487 287 Total Cash, Cash Equivalents, and Restricted Cash $ 56,204 $ 49,971 $ 68,273 $ 46,117 Inventories The components of inventories are as follows: September 26, December 28, (In thousands) Raw Materials $ 47,918 $ 49,332 Work in Process 17,089 15,344 Finished Goods 43,708 38,039 $ 108,715 $ 102,715 Intangible Assets, Net Acquired intangible assets by major asset class are as follows: (In thousands) Gross Accumulated Currency Net September 26, 2020 Definite-Lived Customer relationships $ 174,423 $ (62,018) $ (3,741) $ 108,664 Product technology 56,568 (30,674) (1,520) 24,374 Tradenames 6,753 (2,811) (362) 3,580 Other 18,248 (14,036) (565) 3,647 255,992 (109,539) (6,188) 140,265 Indefinite-Lived Tradenames 24,100 — (6) 24,094 Acquired Intangible Assets $ 280,092 $ (109,539) $ (6,194) $ 164,359 December 28, 2019 Definite-Lived Customer relationships $ 171,583 $ (51,798) $ (4,141) $ 115,644 Product technology 56,011 (27,819) (1,709) 26,483 Tradenames 6,527 (2,421) (427) 3,679 Other 17,964 (13,295) (593) 4,076 252,085 (95,333) (6,870) 149,882 Indefinite-Lived Tradenames 24,100 — (86) 24,014 Acquired Intangible Assets $ 276,185 $ (95,333) $ (6,956) $ 173,896 Gross intangible assets include $3,907,000 for acquired intangible assets from acquisitions that occurred in the second quarter of 2020. See Note 2 , Acquisitions, for further details. Intangible assets are initially 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. 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 December 28, 2019 (a) Gross balance $ 97,680 $ 207,536 $ 116,325 $ 421,541 Accumulated impairment losses — (85,509) — (85,509) Net balance 97,680 122,027 116,325 336,032 2020 Adjustments Acquisition (Note 2) — 3,985 — 3,985 Currency translation 804 493 1,685 2,982 Total 2020 adjustments 804 4,478 1,685 6,967 Balance at September 26, 2020 Gross balance 98,484 212,014 118,010 428,508 Accumulated impairment losses — (85,509) — (85,509) Net balance $ 98,484 $ 126,505 $ 118,010 $ 342,999 (a) Goodwill balances as of December 28, 2019 have been recast to conform to the current period presentation. See Note 12 , Business Segment Information, for further details regarding the Company's change in reportable operating segments. Impairment of Indefinite-Lived Assets The Company evaluates the recoverability of goodwill and indefinite-lived intangible assets as of the end of each fiscal year or more frequently if events or changes in circumstances indicate that it is more likely than not that the carrying value of an asset might be impaired. Potential impairment indicators include a significant decline in sales, earnings, or cash flows, material adverse changes in the business climate, and a significant decline in the Company's market capitalization due to a sustained decrease in its stock price. In March 2020, the Company experienced a significant decrease in market capitalization due to a decline in the Company’s stock price. During that time, the overall U.S. stock market also declined significantly amid market volatility driven by the uncertainty surrounding the COVID-19 pandemic. Based on these occurrences, the Company concluded that a triggering event had occurred related to the indefinite-lived assets within its material handling reporting unit. As a result, the Company prepared a quantitative impairment analysis (Step 1) for its material handling reporting unit, which indicated that its fair value exceeded its carrying value and the indefinite-lived assets were not impaired. In the second and third quarters of 2020, the Company’s market capitalization and the overall stock market, which are potential impairment indicators, recovered from their decreased levels that existed at the end of the first quarter of 2020. No other events that would trigger an impairment analysis were identified during the second and third quarters of 2020. The Company will continue to monitor for impairment indicators and will conduct its annual period impairment analysis as of the end of the fiscal year. 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 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) September 26, September 28, Balance at Beginning of Year $ 6,467 $ 5,726 Provision charged to expense 3,960 3,332 Usage (3,809) (2,778) Acquisition — 303 Currency translation 114 (175) Balance at End of Period $ 6,732 $ 6,408 Revenue Recognition The Company recognizes revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers . Most of the Company’s revenue is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. Most of the Company’s parts and consumables products and its capital products with minimal customization are accounted for at a point in time. The Company has made a policy election to not treat the obligation to ship as a separate performance obligation under the contract and, as a result, the associated shipping costs are reflected in cost of revenue when revenue is recognized. The remaining portion of the Company’s revenue is recognized on an over time basis 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 September 26, September 28, September 26, September 28, (In thousands) 2020 2019 2020 2019 Point in Time $ 137,679 $ 151,101 $ 403,568 $ 457,093 Over Time 16,931 22,403 63,029 64,892 $ 154,610 $ 173,504 $ 466,597 $ 521,985 The transaction price includes estimated variable consideration where applicable. Such variable consideration relates to certain performance guarantees and rights to return the product. The Company estimates variable consideration as the most likely amount to which it expects to be entitled based on the terms of the contracts with customers and historical experience, where relevant. For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation based on the relative stand-alone selling price. 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 September 26, September 28, September 26, September 28, (In thousands) 2020 2019 2020 2019 Revenue by Product Type: Parts and Consumables $ 102,729 $ 105,513 $ 305,087 $ 330,280 Capital 51,881 67,991 161,510 191,705 $ 154,610 $ 173,504 $ 466,597 $ 521,985 Revenue by Geography (based on customer location): North America $ 87,366 $ 92,041 269,907 291,584 Europe 38,951 49,146 112,881 131,944 Asia 18,847 20,971 50,992 61,745 Rest of World 9,446 11,346 32,817 36,712 $ 154,610 $ 173,504 $ 466,597 $ 521,985 See Note 12 , Business Segment Information, for information on the disaggregation of revenue by reportable operating segment. The following table presents contract balances from contracts with customers: September 26, December 28, (In thousands) Accounts Receivable $ 94,145 $ 95,740 Contract Assets $ 9,095 $ 13,162 Contract Liabilities $ 31,847 $ 37,216 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 customer deposits, advanced billings, and deferred revenue. Deferred revenue is included in other current 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 $1,656,000 in the third quarter of 2020, $4,780,000 in the third quarter of 2019, $28,522,000 in the first nine months of 2020, and $28,302,000 in the first nine months of 2019 that was included in the contract liabilities balance at the beginning of 2020 and 2019, respectively. The majority of the Company's contracts for capital equipment have an original expected duration of one year or less. For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining partially unsatisfied performance obligations as of September 26, 2020 was $5,295,000. The Company will recognize revenue for these performance obligations as they are satisfied, all of which is expected to be recognized within the next twelve months. Customers in China will often settle their accounts receivable with banker's acceptance drafts, in which case cash settlement will be delayed until the drafts mature or are settled prior to maturity. For customers outside of China, final payment for the majority of the Company's products is received in the quarter following the product shipment. Certain of the Company's contracts include a longer period before final payment is due, which is typically within one year of final shipment or transfer of control to the customer. The Company includes in revenue amounts invoiced for shipping and handling with the corresponding costs reflected in cost of revenue. Provisions for discounts, warranties, returns and other adjustments are provided for in the period in which the related sale was recorded. Sales taxes, value-added taxes, and certain excise taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue. Accounts Receivable and Allowance for Credit Losses The Company's accounts receivable arise from sales on credit to customers, are recorded at the invoiced amount, and do not bear interest. The Company establishes an allowance for credit losses to reduce accounts receivable to the net amount expected to be collected. The Company exercises judgment in determining its allowance for credit losses, which is based on its historical collection and write-off experience, adjusted for current macroeconomic trends and conditions, credit policies, specific customer collection issues, and accounts receivable aging. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and each customer's current creditworthiness. The Company continuously monitors collections and payments from its customers. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. In some instances, the Company utilizes letters of credit to mitigate its credit exposure. The changes in the allowance for credit losses are as follows: Nine Months Ended (In thousands) September 26, September 28, Balance at Beginning of Period $ 2,698 $ 2,897 Provision charged to expense 505 170 Accounts written off (133) (138) Currency translation 43 (103) Balance at End of Period $ 3,113 $ 2,826 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 noninterest-bearing obligations of the issuing bank and 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 $4,423,000 at September 26, 2020 and $5,230,000 at December 28, 2019, 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. Recently Adopted Accounting Pronouncements Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, which changes the way entities recognize impairment of financial assets, such as accounts receivable, by requiring immediate recognition of estimated credit losses expected to occur over their remaining lives. During 2018 and 2019, the FASB issued additional guidance and clarification. The Company adopted this ASU using a modified retrospective method at the beginning of fiscal 2020 and its adoption did not have a material impact on the condensed consolidated financial statements. See Accounts Receivable and Allowance for Credit Losses in this section for information on the Company's allowance for credit losses. 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 FASB issued 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 is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued ASU No. 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance, including the recognition of franchise tax, the treatment of a step up in the tax basis of goodwill, and the timing for recognition of enacted changes in tax laws or rates in the interim period annual effective tax rate computation. This new guidance is effective in fiscal 2021, with early adoption permitted. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 26, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions The Company’s acquisitions have been accounted for using the purchase method of accounting and the results of the acquired businesses are included in its condensed consolidated financial statements from the date of acquisition. Historically, acquisitions have been made at prices above the fair value of identifiable net assets, resulting in goodwill. Acquisition costs are included in selling, general, and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income as incurred. The Company recorded acquisition costs of $485,000 in the first nine months of 2020 and $843,000 in the first nine months of 2019. On June 1, 2020, the Company’s Industrial Processing segment acquired Cogent Industrial Technologies Ltd. (Cogent) for approximately $6,866,000, net of cash acquired. The Company funded the acquisition through borrowings under its revolving credit facility. Intangible assets acquired totaled $3,350,000 and are primarily related to customer relationships. Cogent, based in British Columbia, Canada, is an industrial automation and controls solution provider that offers expertise in process technology integration, industrial automation and controls, industrial safety, project management, and operational performance management systems. In the second quarter of 2020, the Company’s Industrial Processing segment also acquired certain intellectual property from a company in Austria for $416,000, of which $229,000 was paid in the second quarter of 2020. The Company expects to pay the remaining amount no later than the first quarter of 2022. |
Restructuring Costs
Restructuring Costs | 9 Months Ended |
Sep. 26, 2020 | |
Restructuring Costs [Abstract] | |
Restructuring Costs | Restructuring Costs The Company recorded restructuring costs of $470,000, consisting of $276,000 in its Flow Control segment and $194,000 in its Industrial Processing segment, in the third quarter of 2020 for severance associated with headcount reductions of four employees within its Flow Control segment and 20 employees in its Industrial Processing segment. The Company took these additional cost-containment actions to reduce future payroll-related overhead and operating costs in response to the slowdown in the global economy, largely driven by the COVID-19 pandemic. The Company recorded total restructuring costs of $926,000, consisting of $732,000 in its Flow Control segment and $194,000 in its Industrial Processing segment, in the first nine months of 2020 for severance associated with headcount reductions of 34 employees within its Flow Control segment and 20 employees in its Industrial Processing segment. The Company also reduced its workforce by 21 employees within its Industrial Processing segment with no associated severance costs. A summary of the changes in accrued restructuring costs related to the 2020 restructuring plan included in other accrued expenses in the accompanying condensed consolidated balance sheet are as follows: (In thousands) Severance Provision $ 926 Usage (430) Currency translation (11) Balance at September 26, 2020 $ 485 The Company expects to pay the remaining accrued restructuring costs primarily in the fourth quarter of 2020. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 26, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic and diluted earnings per share (EPS) are calculated as follows: Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, (In thousands, except per share amounts) Net Income Attributable to Kadant $ 14,851 $ 16,115 $ 38,989 $ 43,319 Basic Weighted Average Shares 11,504 11,267 11,472 11,198 Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares 85 202 78 236 Diluted Weighted Average Shares 11,589 11,469 11,550 11,434 Basic Earnings per Share $ 1.29 $ 1.43 $ 3.40 $ 3.87 Diluted Earnings per Share $ 1.28 $ 1.41 $ 3.38 $ 3.79 The effect of outstanding and unvested restricted stock units (RSUs) of the Company's common stock totaling 11,000 shares in the third quarter of 2020, 8,000 shares in the third quarter of 2019, 30,000 shares in the first nine months of 2020, and 32,000 shares in the first nine months of 2019 was 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 |
Sep. 26, 2020 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | Provision for Income Taxes The provision for income taxes was $13,738,000 in the first nine months of 2020 and $12,310,000 in the first nine months of 2019. The effective tax rate of 26% in the first nine months of 2020 was higher than the Company's statutory rate of 21% primarily due to nondeductible expenses, the distribution of worldwide earnings, and state taxes. This incremental tax expense was offset in part by a decrease in tax related to the net excess income tax benefits from stock-based compensation arrangements. The effective tax rate of 22% in the first nine months of 2019 was higher than the Company's statutory rate of 21% primarily due to the distribution of the Company’s worldwide earnings, nondeductible expenses, tax expense associated with the Global Intangible Low-Taxed Income (GILTI) provisions of the Tax Cuts and Jobs Act of 2017, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries. This incremental tax expense was offset in part by a decrease in tax related to the net excess income tax benefits from stock-based compensation arrangements, a net tax benefit associated with foreign exchange losses and tax costs recognized upon the Company’s repatriation of certain previously taxed foreign earnings, and the reversal of tax reserves associated with uncertain tax positions. |
Long-Term Obligations
Long-Term Obligations | 9 Months Ended |
Sep. 26, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Obligations | Long-Term Obligations Long-term obligations are as follows: September 26, December 28, (In thousands) Revolving Credit Facility, due 2023 $ 245,010 $ 265,419 Commercial Real Estate Loan — 19,425 Senior Promissory Notes, due 2023 to 2028 10,000 10,000 Finance Leases, due 2020 to 2025 1,775 2,308 Other Borrowings, due 2020 to 2023 3,802 4,000 Unamortized Debt Issuance Costs — (127) Total 260,587 301,025 Less: Current Maturities of Long-Term Obligations (1,538) (2,851) Long-Term Obligations $ 259,049 $ 298,174 See Note 10 , Derivatives, for the fair value information related to the Company's long-term obligations. Revolving Credit Facility The Company entered into a five-year, unsecured multi-currency revolving credit facility, dated as of March 1, 2017 (as amended and restated to date, the Credit Agreement). 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, and a maturity date of December 14, 2023. 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, plus an applicable margin of 0% to 1.25%, or (ii) LIBOR (with a zero percent floor), as defined, plus an applicable margin of 1% to 2.25%. The Base Rate is calculated as the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as published by Citizens Bank, N.A. (Citizens) and (c) thirty-day U.S. dollar LIBOR (USD LIBOR), as defined, plus 0.50%. The applicable 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. 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 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. In addition, one of the Company’s foreign subsidiaries entered into a separate guarantee agreement limited to certain obligations of two foreign subsidiary borrowers. As of September 26, 2020, the outstanding balance under the Credit Agreement was $245,010,000, and included $50,656,000 of euro-denominated borrowings and $14,354,000 of Canadian dollar-denominated borrowings. As of September 26, 2020, the Company had $154,790,000 of borrowing capacity available under the Credit Agreement, which was calculated by translating its foreign-denominated borrowings using borrowing date foreign exchange rates. See Note 10 , Derivatives, under the heading Interest Rate Swap Agreements , for information relating to the swap agreements used to hedge the Company’s exposure to movements in the three-month USD LIBOR on its U.S. dollar-denominated debt borrowed under the Credit Agreement. The weighted average interest rate for the outstanding balance under the Credit Agreement was 1.82% as of September 26, 2020. Commercial Real Estate Loan In 2018, the Company and certain domestic subsidiaries borrowed $21,000,000 under a ten-year promissory note (Real Estate Loan), which was repayable in quarterly principal installments of $262,500 with the remaining principal balance of $10,500,000 due July 6, 2028. Interest accrued and was payable quarterly in arrears at a fixed rate of 4.45% per annum. In July 2020, the Company prepaid the outstanding principal balance on the Real Estate Loan of $18,900,000, together with accrued interest and a prepayment fee of 1.00% of the outstanding principal balance, resulting in a loss on the extinguishment of debt of $189,000, which is included in selling, general, and administrative expenses in the accompanying condensed consolidated statement of income. To prepay the Real Estate Loan, the Company used $19,000,000 of borrowings available under the Credit 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 a minimum amount of $1,000,000, or the foreign currency equivalent thereof, if applicable) 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. In accordance with the Note Purchase Agreement, the Company may also issue additional senior promissory notes (together with the Initial Notes, the Senior Promissory Notes) up to an additional $115,000,000 until the earlier of December 14, 2021 or the thirtieth day after written notice to terminate the issuance and sale of additional notes pursuant to the Note Purchase Agreement. The Senior Promissory Notes are pari passu with the Company’s indebtedness under the Credit Agreement, and any other senior debt, 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 September 26, 2020, 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 its vehicles. Other Borrowings |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 26, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based CompensationThe Company recognized stock-based compensation expense of $1,610,000 in the third quarter of 2020, $1,658,000 in the third quarter of 2019, $5,126,000 in the first nine months of 2020, and $5,125,000 in the first nine months of 2019 within 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 $6,913,000 at September 26, 2020 and will be recognized over a weighted average period of 1.7 years. |
Retirement Benefit Plans
Retirement Benefit Plans | 9 Months Ended |
Sep. 26, 2020 | |
Retirement Benefits [Abstract] | |
Retirement Benefit Plans | Retirement Benefit Plans The Company includes the service cost component of net periodic benefit cost in operating income and all other components are included in other expense, net in the accompanying condensed consolidated statement of income. In 2018, the Company's board of directors and its compensation committee approved amendments to freeze and terminate its U.S. pension plan (Retirement Plan) and its restoration plan (Restoration Plan). In the fourth quarter of 2019, the Company settled its Retirement Plan obligation. In the first quarter of 2020, the Company settled its Restoration Plan obligation of $2,427,000 by paying a lump sum to its plan participants. No benefit costs were incurred related to these plans in 2020. The components of net periodic benefit cost are as follows: Three Months Ended Three Months Ended (In thousands, except percentages) Non-U.S. Pension Other Post-Retirement U.S. Pension Non-U.S. Pension Other Post-Retirement Service Cost $ 45 $ 2 $ — $ 43 $ 1 Interest Cost 22 9 283 27 37 Expected Return on Plan Assets (14) (1) (248) (16) (1) Recognized Net Actuarial Loss 10 4 8 5 3 Amortization of Prior Service Cost 2 — — — — $ 65 $ 14 $ 43 $ 59 $ 40 The weighted average assumptions used to determine net periodic benefit cost are as follows: Discount Rate 2.05 % 3.80 % 4.10 % 2.82 % 4.44 % Expected Long-Term Return on Plan Assets 7.21 % 7.21 % 4.10 % 9.22 % 9.22 % Rate of Compensation Increase 3.14 % 5.57 % — % 2.99 % 5.57 % Nine Months Ended Nine Months Ended (In thousands, except percentages) Non-U.S. Pension Other Post-Retirement U.S. Pension Non-U.S. Pension Other Post-Retirement Service Cost $ 131 $ 5 $ — $ 129 $ 3 Interest Cost 66 29 850 84 112 Expected Return on Plan Assets (45) (3) (745) (50) (3) Recognized Net Actuarial Loss 31 12 24 15 9 Amortization of Prior Service Cost 5 — — — — $ 188 $ 43 $ 129 $ 178 $ 121 The weighted average assumptions used to determine net periodic benefit cost are as follows: Discount Rate 2.12 % 3.83 % 4.10 % 2.81 % 4.44 % Expected Long-Term Return on Plan Assets 7.21 % 7.21 % 4.10 % 9.22 % 9.22 % Rate of Compensation Increase 3.17 % 5.57 % — % 2.99 % 5.57 % Other than the payment made for the settlement of the Restoration Plan obligation in January 2020, the Company does not plan to make any material cash contributions to its other pension and post-retirement plans in 2020. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Items | 9 Months Ended |
Sep. 26, 2020 | |
Equity [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 Pension and Other Post-Retirement Benefit Liability Adjustments Deferred Loss on Cash Flow Hedges Total Balance at December 28, 2019 $ (36,145) $ (831) $ (644) $ (37,620) Other comprehensive income (loss) before reclassifications 748 (1) (420) 327 Reclassifications from AOCI — (84) 145 61 Net current period other comprehensive items 748 (85) (275) 388 Balance at September 26, 2020 $ (35,397) $ (916) $ (919) $ (37,232) Amounts reclassified from AOCI are as follows: Three Months Ended Nine Months Ended (In thousands) September 26, September 28, September 26, September 28, Statement of Income Retirement Benefit Plans (a) Recognized net actuarial loss $ (14) $ (16) $ (43) $ (48) Other expense, net Amortization of prior service cost (2) — (5) — Other expense, net Total expense before income taxes (16) (16) (48) (48) Income tax benefit 4 4 132 12 Provision for income taxes (12) (12) 84 (36) Cash Flow Hedges (b) Interest rate swap agreements (109) (10) (215) 17 Interest expense Forward currency-exchange contracts 47 — 24 (129) Cost of revenue Total expense before income taxes (62) (10) (191) (112) Income tax benefit 15 2 46 35 Provision for income taxes (47) (8) (145) (77) Total Reclassifications $ (59) $ (20) $ (61) $ (113) (a) Included in the computation of net periodic benefit cost. See Note 8 , Retirement Benefit Plans, for additional information. (b) See Note 10 , Derivatives, for additional information. |
Derivatives
Derivatives | 9 Months Ended |
Sep. 26, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives Interest Rate Swap Agreements The Company has entered into interest rate swap agreements to hedge its exposure to movements in USD LIBOR on its U.S. dollar-denominated debt. In 2018, the Company entered into an interest rate swap agreement (2018 Swap Agreement) with Citizens, which 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. In 2015, the Company entered into an interest rate swap agreement (2015 Swap Agreement) with Citizens which had a $10,000,000 notional value and expired on March 27, 2020. Under the 2015 Swap Agreement, the Company received three-month USD LIBOR and paid a fixed rate of interest of 1.5% plus an applicable margin as defined in the Credit Agreement. The interest rate swap agreements have been designated as cash flow hedges and are structured to be 100% effective. Unrealized gains and losses related to the fair values of the swap agreements are recorded to AOCI, net of tax. In the event of early termination of the 2018 Swap Agreement, the Company will receive from or pay to the counterparty the fair value of the interest rate 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 6 , Long-Term Obligations, for further details. Forward Currency-Exchange Contracts The Company uses forward currency-exchange contracts that 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. 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. The Company recognized within SG&A expenses in the accompanying condensed consolidated statement of income gains of $27,000 in the third quarter of 2020, losses of $14,000 in the third quarter of 2019, losses of $1,000 in the first nine months of 2020, and losses of $46,000 in the first nine months of 2019 associated with forward currency-exchange contracts that were not designated as hedges. The following table summarizes the fair value of derivative instruments in the accompanying condensed consolidated balance sheet: September 26, 2020 December 28, 2019 Balance Sheet Location Asset (Liability) (a) Notional Amount (b) Asset (Liability) (a) Notional Amount (In thousands) Derivatives Designated as Hedging Instruments: Derivatives in an Asset Position: Forward currency-exchange contract Other Current Assets $ 4 $ 1,311 $ — $ — 2015 Swap Agreement Other Current Assets $ — $ — $ 11 $ 10,000 Derivatives in a Liability Position: Forward currency-exchange contracts Other Current Liabilities $ (14) $ 842 $ (75) $ 4,825 2018 Swap Agreement Other Long-Term Liabilities $ (1,202) $ 15,000 $ (770) $ 15,000 Derivatives Not Designated as Hedging Instruments: Derivatives in an Asset Position: Forward currency-exchange contracts Other Current Assets $ 25 $ 713 $ 3 $ 387 Derivatives in a Liability Position: Forward currency-exchange contracts Other Current Liabilities $ (5) $ 686 $ (43) $ 2,545 (a) See Note 11 , Fair Value Measurements and Fair Value of Financial Instruments, for the fair value measurements relating to these financial instruments. (b) The total 2020 notional amounts are indicative of the level of the Company's recurring derivative activity. The following table summarizes the activity in AOCI associated with derivative instruments designated as cash flow hedges as of and for the nine months ended September 26, 2020: (In thousands) Interest Rate Swap Forward Currency- Total Unrealized Loss, Net of Tax, at December 28, 2019 $ (589) $ (55) $ (644) Loss (gain) reclassified to earnings (a) 163 (18) 145 (Loss) gain recognized in AOCI (487) 67 (420) Unrealized Loss, Net of Tax, at September 26, 2020 $ (913) $ (6) $ (919) (a) See N ote 9 , Accumulated Other Comprehensive Items, for the income statement classification. As of September 26, 2020, the Company expects to reclassify losses of $351,000 from AOCI to earnings over the next twelve months based on the estimated cash flows of the 2018 Swap Agreement and the maturity dates of the forward currency-exchange contracts. |
Fair Value Measurements and Fai
Fair Value Measurements and Fair Value of Financial Instruments | 9 Months Ended |
Sep. 26, 2020 | |
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 September 26, 2020 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits $ 10,561 $ — $ — $ 10,561 Banker's acceptance drafts (a) $ — $ 4,423 $ — $ 4,423 Forward currency-exchange contracts $ — $ 29 $ — $ 29 Liabilities: 2018 Swap Agreement $ — $ 1,202 $ — $ 1,202 Forward currency-exchange contracts $ — $ 19 $ — $ 19 Fair Value as of December 28, 2019 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits $ 9,920 $ — $ — $ 9,920 Banker's acceptance drafts (a) $ — $ 5,230 $ — $ 5,230 2015 Swap Agreement $ — $ 11 $ — $ 11 Forward currency-exchange contracts $ — $ 3 $ — $ 3 Liabilities: 2018 Swap Agreement $ — $ 770 $ — $ 770 Forward currency-exchange contracts $ — $ 118 $ — $ 118 (a) Included in accounts receivable in the accompanying condensed consolidated balance sheet. 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 2020. 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 forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The fair values of interest rate swap agreements are based on LIBOR yield curves at the reporting date. The forward currency-exchange contracts and interest rate swap agreements 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 and other borrowings, are as follows: September 26, 2020 December 28, 2019 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Debt Obligations: Revolving credit facility $ 245,010 $ 245,010 $ 265,419 $ 265,419 Commercial real estate loan — — 19,425 20,541 Senior promissory notes 10,000 10,916 10,000 10,803 $ 255,010 $ 255,926 $ 294,844 $ 296,763 |
Business Segment Information
Business Segment Information | 9 Months Ended |
Sep. 26, 2020 | |
Segment Reporting [Abstract] | |
Business Segment Information | Business Segment Information The Company previously reported its financial results by combining its operating entities into three reportable operating segments: Papermaking Systems, Wood Processing Systems, and Material Handling Systems, and a separate product line, Fiber-based Products. During the first quarter of 2020, the Company changed its reportable operating segments to better align with its strategic initiatives to grow both organically and through acquisitions. Such growth and diversification resulted in a change in the internal organization of the Company and how its chief operating decision maker makes operating decisions, assesses the performance of the business, and allocates resources. Accordingly, the Company's financial results are reported in three new reportable operating segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment consists of the Company’s fluid-handling and doctoring, cleaning, & filtration product lines; the Industrial Processing segment consists of the Company’s wood processing and stock-preparation product lines (excluding baling products); and the Material Handling segment consists of the Company’s conveying and screening, baling, and fiber-based product lines. Financial information for 2019 has been recast to conform to the new segment presentation. 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 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 September 26, September 28, September 26, September 28, (In thousands) 2020 2019 2020 2019 Revenue Flow Control $ 56,815 $ 62,375 $ 165,329 $ 188,792 Industrial Processing 62,086 74,229 192,468 222,899 Material Handling 35,709 36,900 108,800 110,294 $ 154,610 $ 173,504 $ 466,597 $ 521,985 Income Before Provision for Income Taxes Flow Control (a) $ 13,770 $ 15,103 $ 37,360 $ 43,220 Industrial Processing (b) 12,072 13,107 32,147 38,830 Material Handling (c) 2,614 3,525 10,341 5,515 Corporate (d) (7,121) (7,182) (20,737) (21,295) Total operating income 21,335 24,553 59,111 66,270 Interest expense, net (e) (1,618) (3,023) (5,920) (9,985) Other expense, net (e) (32) (98) (95) (296) $ 19,685 $ 21,432 $ 53,096 $ 55,989 Capital Expenditures Flow Control $ 509 $ 636 $ 1,667 $ 1,814 Industrial Processing 785 1,053 2,460 3,223 Material Handling 486 397 1,167 1,145 Corporate 42 7 125 54 $ 1,822 $ 2,093 $ 5,419 $ 6,236 (a) Includes restructuring costs of $265,000 in the three-month period ended September 26, 2020 and $721,000 in the nine-month period ended September 26, 2020. (b) Includes restructuring costs of $205,000 in the three- and nine-month periods ended September 26, 2020. Includes acquisition-related expenses of $161,000 in the three-month period ended September 26, 2020 and $596,000 in the nine-month period ended September 26, 2020. Acquisition-related expenses include amortization expense associated with backlog and acquisition costs. (c) Includes acquisition-related expenses of $248,000 in the three-month period ended September 26, 2020 and $256,000 in the nine-month period ended September 26, 2020. Includes acquisition-related expenses of $21,000 in the three-month period ended September 28, 2019 and $5,695,000 in the nine-month period ended September 28, 2019. Acquisition-related expenses include amortization expense associated with acquired profit in inventory and backlog, and acquisition costs. (d) Corporate primarily includes general and administrative expenses. (e) The Company does not allocate interest and other expense, net to its segments. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 26, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Right of Recourse In the ordinary course of business, the Company's subsidiaries in China may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The drafts are noninterest-bearing obligations of the issuing bank and mature within six months of the origination date. The Company's subsidiaries in China 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 $7,702,000 at September 26, 2020 and $7,003,000 at December 28, 2019 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 |
Sep. 26, 2020 | |
Accounting Policies [Abstract] | |
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. |
Use of Estimates | 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 | The Company's restricted cash 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 initially 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. |
Impairment of Long-Lived Assets | Impairment of Indefinite-Lived Assets The Company evaluates the recoverability of goodwill and indefinite-lived intangible assets as of the end of each fiscal year or more frequently if events or changes in circumstances indicate that it is more likely than not that the carrying value of an asset might be impaired. Potential impairment indicators include a significant decline in sales, earnings, or cash flows, material adverse changes in the business climate, and a significant decline in the Company's market capitalization due to a sustained decrease in its stock price. In March 2020, the Company experienced a significant decrease in market capitalization due to a decline in the Company’s stock price. During that time, the overall U.S. stock market also declined significantly amid market volatility driven by the uncertainty surrounding the COVID-19 pandemic. Based on these occurrences, the Company concluded that a triggering event had occurred related to the indefinite-lived assets within its material handling reporting unit. As a result, the Company prepared a quantitative impairment analysis (Step 1) for its material handling reporting unit, which indicated that its fair value exceeded its carrying value and the indefinite-lived assets were not impaired. In the second and third quarters of 2020, the Company’s market capitalization and the overall stock market, which are potential impairment indicators, recovered from their decreased levels that existed at the end of the first quarter of 2020. No other events that would trigger an impairment analysis were identified during the second and third quarters of 2020. The Company will continue to monitor for impairment indicators and will conduct its annual period impairment analysis as of the end of the fiscal year. |
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 negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers . Most of the Company’s revenue is recognized at a point in time for each performance obligation under the contract when the customer obtains control of the goods or service. Most of the Company’s parts and consumables products and its capital products with minimal customization are accounted for at a point in time. The Company has made a policy election to not treat the obligation to ship as a separate performance obligation under the contract and, as a result, the associated shipping costs are reflected in cost of revenue when revenue is recognized. The remaining portion of the Company’s revenue is recognized on an over time basis 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 transaction price includes estimated variable consideration where applicable. Such variable consideration relates to certain performance guarantees and rights to return the product. The Company estimates variable consideration as the most likely amount to which it expects to be entitled based on the terms of the contracts with customers and historical experience, where relevant. For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation based on the relative stand-alone selling price. 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. 2020 was $5,295,000. The Company will recognize revenue for these performance obligations as they are satisfied, all of which is expected to be recognized within the next twelve months. Customers in China will often settle their accounts receivable with banker's acceptance drafts, in which case cash settlement will be delayed until the drafts mature or are settled prior to maturity. For customers outside of China, final payment for the majority of the Company's products is received in the quarter following the product shipment. Certain of the Company's contracts include a longer period before final payment is due, which is typically within one year of final shipment or transfer of control to the customer. The Company includes in revenue amounts invoiced for shipping and handling with the corresponding costs reflected in cost of revenue. Provisions for discounts, warranties, returns and other adjustments are provided for in the period in which the related sale was recorded. Sales taxes, value-added taxes, and certain excise taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses The Company's accounts receivable arise from sales on credit to customers, are recorded at the invoiced amount, and do not bear interest. The Company establishes an allowance for credit losses to reduce accounts receivable to the net amount expected to be collected. The Company exercises judgment in determining its allowance for credit losses, which is based on its historical collection and write-off experience, adjusted for current macroeconomic trends and conditions, credit policies, specific customer collection issues, and accounts receivable aging. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and each customer's current creditworthiness. The Company continuously monitors collections and payments from its customers. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. In some instances, the Company utilizes letters of credit to mitigate its credit exposure. |
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 noninterest-bearing obligations of the issuing bank and 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 $4,423,000 at September 26, 2020 and $5,230,000 at December 28, 2019, 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 | Recently Adopted Accounting Pronouncements Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, which changes the way entities recognize impairment of financial assets, such as accounts receivable, by requiring immediate recognition of estimated credit losses expected to occur over their remaining lives. During 2018 and 2019, the FASB issued additional guidance and clarification. The Company adopted this ASU using a modified retrospective method at the beginning of fiscal 2020 and its adoption did not have a material impact on the condensed consolidated financial statements. See Accounts Receivable and Allowance for Credit Losses in this section for information on the Company's allowance for credit losses. 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 FASB issued 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 is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued ASU No. 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance, including the recognition of franchise tax, the treatment of a step up in the tax basis of goodwill, and the timing for recognition of enacted changes in tax laws or rates in the interim period annual effective tax rate computation. This new guidance is effective in fiscal 2021, with early adoption permitted. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. |
Derivatives | The Company has entered into interest rate swap agreements to hedge its exposure to movements in USD LIBOR on its U.S. dollar-denominated debt.The Company uses forward currency-exchange contracts that 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. 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. |
Fair Value Measurement | 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 2020. 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 forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date. The fair values of interest rate swap agreements are based on LIBOR yield curves at the reporting date. The forward currency-exchange contracts and interest rate swap agreements 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 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 values of the commercial real estate loan, which was repaid in July 2020, and senior promissory notes are primarily calculated based on quoted market rates plus an applicable margin available to the Company at the respective period ends, which represent Level 2 measurements. |
Nature of Operations and Summ_3
Nature of Operations and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Accounting Policies [Abstract] | |
Supplemental Cash Flow Information | Nine Months Ended (In thousands) September 26, September 28, Cash Paid for Interest $ 5,518 $ 9,711 Cash Paid for Income Taxes, Net of Refunds $ 9,953 $ 18,037 Non-Cash Investing Activities: Fair value of assets acquired $ 9,295 $ 208,558 Cash paid for acquired businesses (7,565) (179,489) Liabilities Assumed of Acquired Businesses $ 1,730 $ 29,069 Non-cash additions to property, plant, and equipment $ 101 $ 304 Non-Cash Financing Activities: Issuance of Company common stock upon vesting of restricted stock units $ 4,557 $ 3,908 Dividends declared but unpaid $ 2,762 $ 2,593 |
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) September 26, September 28, December 28, December 29, Cash and cash equivalents $ 53,554 $ 48,650 $ 66,786 $ 45,830 Restricted cash 2,650 1,321 1,487 287 Total Cash, Cash Equivalents, and Restricted Cash $ 56,204 $ 49,971 $ 68,273 $ 46,117 |
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) September 26, September 28, December 28, December 29, Cash and cash equivalents $ 53,554 $ 48,650 $ 66,786 $ 45,830 Restricted cash 2,650 1,321 1,487 287 Total Cash, Cash Equivalents, and Restricted Cash $ 56,204 $ 49,971 $ 68,273 $ 46,117 |
Inventories | The components of inventories are as follows: September 26, December 28, (In thousands) Raw Materials $ 47,918 $ 49,332 Work in Process 17,089 15,344 Finished Goods 43,708 38,039 $ 108,715 $ 102,715 |
Acquired Intangible Assets | Acquired intangible assets by major asset class are as follows: (In thousands) Gross Accumulated Currency Net September 26, 2020 Definite-Lived Customer relationships $ 174,423 $ (62,018) $ (3,741) $ 108,664 Product technology 56,568 (30,674) (1,520) 24,374 Tradenames 6,753 (2,811) (362) 3,580 Other 18,248 (14,036) (565) 3,647 255,992 (109,539) (6,188) 140,265 Indefinite-Lived Tradenames 24,100 — (6) 24,094 Acquired Intangible Assets $ 280,092 $ (109,539) $ (6,194) $ 164,359 December 28, 2019 Definite-Lived Customer relationships $ 171,583 $ (51,798) $ (4,141) $ 115,644 Product technology 56,011 (27,819) (1,709) 26,483 Tradenames 6,527 (2,421) (427) 3,679 Other 17,964 (13,295) (593) 4,076 252,085 (95,333) (6,870) 149,882 Indefinite-Lived Tradenames 24,100 — (86) 24,014 Acquired Intangible Assets $ 276,185 $ (95,333) $ (6,956) $ 173,896 |
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 December 28, 2019 (a) Gross balance $ 97,680 $ 207,536 $ 116,325 $ 421,541 Accumulated impairment losses — (85,509) — (85,509) Net balance 97,680 122,027 116,325 336,032 2020 Adjustments Acquisition (Note 2) — 3,985 — 3,985 Currency translation 804 493 1,685 2,982 Total 2020 adjustments 804 4,478 1,685 6,967 Balance at September 26, 2020 Gross balance 98,484 212,014 118,010 428,508 Accumulated impairment losses — (85,509) — (85,509) Net balance $ 98,484 $ 126,505 $ 118,010 $ 342,999 (a) Goodwill balances as of December 28, 2019 have been recast to conform to the current period presentation. See Note 12 , Business Segment Information, for further details regarding the Company's change in reportable operating segments. |
Warranty Obligations | The changes in the carrying amount of product warranty obligations are as follows: Nine Months Ended (In thousands) September 26, September 28, Balance at Beginning of Year $ 6,467 $ 5,726 Provision charged to expense 3,960 3,332 Usage (3,809) (2,778) Acquisition — 303 Currency translation 114 (175) Balance at End of Period $ 6,732 $ 6,408 |
Revenue by Product Line, Product Type, Geography, and Revenue Recognition Method | The following table presents revenue by revenue recognition method: Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, (In thousands) 2020 2019 2020 2019 Point in Time $ 137,679 $ 151,101 $ 403,568 $ 457,093 Over Time 16,931 22,403 63,029 64,892 $ 154,610 $ 173,504 $ 466,597 $ 521,985 The following table presents the disaggregation of revenue by product type and geography: Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, (In thousands) 2020 2019 2020 2019 Revenue by Product Type: Parts and Consumables $ 102,729 $ 105,513 $ 305,087 $ 330,280 Capital 51,881 67,991 161,510 191,705 $ 154,610 $ 173,504 $ 466,597 $ 521,985 Revenue by Geography (based on customer location): North America $ 87,366 $ 92,041 269,907 291,584 Europe 38,951 49,146 112,881 131,944 Asia 18,847 20,971 50,992 61,745 Rest of World 9,446 11,346 32,817 36,712 $ 154,610 $ 173,504 $ 466,597 $ 521,985 |
Balances from Contracts with Customers | The following table presents contract balances from contracts with customers: September 26, December 28, (In thousands) Accounts Receivable $ 94,145 $ 95,740 Contract Assets $ 9,095 $ 13,162 Contract Liabilities $ 31,847 $ 37,216 |
Accounts Receivable, Allowance for Credit Loss | The changes in the allowance for credit losses are as follows: Nine Months Ended (In thousands) September 26, September 28, Balance at Beginning of Period $ 2,698 $ 2,897 Provision charged to expense 505 170 Accounts written off (133) (138) Currency translation 43 (103) Balance at End of Period $ 3,113 $ 2,826 |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Restructuring Costs [Abstract] | |
Restructuring and Related Costs | A summary of the changes in accrued restructuring costs related to the 2020 restructuring plan included in other accrued expenses in the accompanying condensed consolidated balance sheet are as follows: (In thousands) Severance Provision $ 926 Usage (430) Currency translation (11) Balance at September 26, 2020 $ 485 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings Per Share | Basic and diluted earnings per share (EPS) are calculated as follows: Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, (In thousands, except per share amounts) Net Income Attributable to Kadant $ 14,851 $ 16,115 $ 38,989 $ 43,319 Basic Weighted Average Shares 11,504 11,267 11,472 11,198 Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares 85 202 78 236 Diluted Weighted Average Shares 11,589 11,469 11,550 11,434 Basic Earnings per Share $ 1.29 $ 1.43 $ 3.40 $ 3.87 Diluted Earnings per Share $ 1.28 $ 1.41 $ 3.38 $ 3.79 |
Long-Term Obligations (Tables)
Long-Term Obligations (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Obligations | Long-term obligations are as follows: September 26, December 28, (In thousands) Revolving Credit Facility, due 2023 $ 245,010 $ 265,419 Commercial Real Estate Loan — 19,425 Senior Promissory Notes, due 2023 to 2028 10,000 10,000 Finance Leases, due 2020 to 2025 1,775 2,308 Other Borrowings, due 2020 to 2023 3,802 4,000 Unamortized Debt Issuance Costs — (127) Total 260,587 301,025 Less: Current Maturities of Long-Term Obligations (1,538) (2,851) Long-Term Obligations $ 259,049 $ 298,174 |
Retirement Benefit Plans (Table
Retirement Benefit Plans (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost and Assumptions Used | The components of net periodic benefit cost are as follows: Three Months Ended Three Months Ended (In thousands, except percentages) Non-U.S. Pension Other Post-Retirement U.S. Pension Non-U.S. Pension Other Post-Retirement Service Cost $ 45 $ 2 $ — $ 43 $ 1 Interest Cost 22 9 283 27 37 Expected Return on Plan Assets (14) (1) (248) (16) (1) Recognized Net Actuarial Loss 10 4 8 5 3 Amortization of Prior Service Cost 2 — — — — $ 65 $ 14 $ 43 $ 59 $ 40 The weighted average assumptions used to determine net periodic benefit cost are as follows: Discount Rate 2.05 % 3.80 % 4.10 % 2.82 % 4.44 % Expected Long-Term Return on Plan Assets 7.21 % 7.21 % 4.10 % 9.22 % 9.22 % Rate of Compensation Increase 3.14 % 5.57 % — % 2.99 % 5.57 % Nine Months Ended Nine Months Ended (In thousands, except percentages) Non-U.S. Pension Other Post-Retirement U.S. Pension Non-U.S. Pension Other Post-Retirement Service Cost $ 131 $ 5 $ — $ 129 $ 3 Interest Cost 66 29 850 84 112 Expected Return on Plan Assets (45) (3) (745) (50) (3) Recognized Net Actuarial Loss 31 12 24 15 9 Amortization of Prior Service Cost 5 — — — — $ 188 $ 43 $ 129 $ 178 $ 121 The weighted average assumptions used to determine net periodic benefit cost are as follows: Discount Rate 2.12 % 3.83 % 4.10 % 2.81 % 4.44 % Expected Long-Term Return on Plan Assets 7.21 % 7.21 % 4.10 % 9.22 % 9.22 % Rate of Compensation Increase 3.17 % 5.57 % — % 2.99 % 5.57 % |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Items (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Equity [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 Pension and Other Post-Retirement Benefit Liability Adjustments Deferred Loss on Cash Flow Hedges Total Balance at December 28, 2019 $ (36,145) $ (831) $ (644) $ (37,620) Other comprehensive income (loss) before reclassifications 748 (1) (420) 327 Reclassifications from AOCI — (84) 145 61 Net current period other comprehensive items 748 (85) (275) 388 Balance at September 26, 2020 $ (35,397) $ (916) $ (919) $ (37,232) |
Reclassification Out of Accumulated Other Comprehensive Items | Amounts reclassified from AOCI are as follows: Three Months Ended Nine Months Ended (In thousands) September 26, September 28, September 26, September 28, Statement of Income Retirement Benefit Plans (a) Recognized net actuarial loss $ (14) $ (16) $ (43) $ (48) Other expense, net Amortization of prior service cost (2) — (5) — Other expense, net Total expense before income taxes (16) (16) (48) (48) Income tax benefit 4 4 132 12 Provision for income taxes (12) (12) 84 (36) Cash Flow Hedges (b) Interest rate swap agreements (109) (10) (215) 17 Interest expense Forward currency-exchange contracts 47 — 24 (129) Cost of revenue Total expense before income taxes (62) (10) (191) (112) Income tax benefit 15 2 46 35 Provision for income taxes (47) (8) (145) (77) Total Reclassifications $ (59) $ (20) $ (61) $ (113) (a) Included in the computation of net periodic benefit cost. See Note 8 , Retirement Benefit Plans, for additional information. (b) See Note 10 , Derivatives, for additional information. |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
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: September 26, 2020 December 28, 2019 Balance Sheet Location Asset (Liability) (a) Notional Amount (b) Asset (Liability) (a) Notional Amount (In thousands) Derivatives Designated as Hedging Instruments: Derivatives in an Asset Position: Forward currency-exchange contract Other Current Assets $ 4 $ 1,311 $ — $ — 2015 Swap Agreement Other Current Assets $ — $ — $ 11 $ 10,000 Derivatives in a Liability Position: Forward currency-exchange contracts Other Current Liabilities $ (14) $ 842 $ (75) $ 4,825 2018 Swap Agreement Other Long-Term Liabilities $ (1,202) $ 15,000 $ (770) $ 15,000 Derivatives Not Designated as Hedging Instruments: Derivatives in an Asset Position: Forward currency-exchange contracts Other Current Assets $ 25 $ 713 $ 3 $ 387 Derivatives in a Liability Position: Forward currency-exchange contracts Other Current Liabilities $ (5) $ 686 $ (43) $ 2,545 (a) See Note 11 , 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 (OCI) | The following table summarizes the activity in AOCI associated with derivative instruments designated as cash flow hedges as of and for the nine months ended September 26, 2020: (In thousands) Interest Rate Swap Forward Currency- Total Unrealized Loss, Net of Tax, at December 28, 2019 $ (589) $ (55) $ (644) Loss (gain) reclassified to earnings (a) 163 (18) 145 (Loss) gain recognized in AOCI (487) 67 (420) Unrealized Loss, Net of Tax, at September 26, 2020 $ (913) $ (6) $ (919) (a) See N ote 9 , 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 |
Sep. 26, 2020 | |
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 September 26, 2020 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits $ 10,561 $ — $ — $ 10,561 Banker's acceptance drafts (a) $ — $ 4,423 $ — $ 4,423 Forward currency-exchange contracts $ — $ 29 $ — $ 29 Liabilities: 2018 Swap Agreement $ — $ 1,202 $ — $ 1,202 Forward currency-exchange contracts $ — $ 19 $ — $ 19 Fair Value as of December 28, 2019 (In thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds and time deposits $ 9,920 $ — $ — $ 9,920 Banker's acceptance drafts (a) $ — $ 5,230 $ — $ 5,230 2015 Swap Agreement $ — $ 11 $ — $ 11 Forward currency-exchange contracts $ — $ 3 $ — $ 3 Liabilities: 2018 Swap Agreement $ — $ 770 $ — $ 770 Forward currency-exchange contracts $ — $ 118 $ — $ 118 (a) Included in accounts receivable in the accompanying condensed consolidated balance sheet. |
Carrying Value and Fair Value of Debt Obligations | The carrying value and fair value of debt obligations, excluding lease obligations and other borrowings, are as follows: September 26, 2020 December 28, 2019 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Debt Obligations: Revolving credit facility $ 245,010 $ 245,010 $ 265,419 $ 265,419 Commercial real estate loan — — 19,425 20,541 Senior promissory notes 10,000 10,916 10,000 10,803 $ 255,010 $ 255,926 $ 294,844 $ 296,763 |
Business Segment Information (T
Business Segment Information (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
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 September 26, September 28, September 26, September 28, (In thousands) 2020 2019 2020 2019 Revenue Flow Control $ 56,815 $ 62,375 $ 165,329 $ 188,792 Industrial Processing 62,086 74,229 192,468 222,899 Material Handling 35,709 36,900 108,800 110,294 $ 154,610 $ 173,504 $ 466,597 $ 521,985 Income Before Provision for Income Taxes Flow Control (a) $ 13,770 $ 15,103 $ 37,360 $ 43,220 Industrial Processing (b) 12,072 13,107 32,147 38,830 Material Handling (c) 2,614 3,525 10,341 5,515 Corporate (d) (7,121) (7,182) (20,737) (21,295) Total operating income 21,335 24,553 59,111 66,270 Interest expense, net (e) (1,618) (3,023) (5,920) (9,985) Other expense, net (e) (32) (98) (95) (296) $ 19,685 $ 21,432 $ 53,096 $ 55,989 Capital Expenditures Flow Control $ 509 $ 636 $ 1,667 $ 1,814 Industrial Processing 785 1,053 2,460 3,223 Material Handling 486 397 1,167 1,145 Corporate 42 7 125 54 $ 1,822 $ 2,093 $ 5,419 $ 6,236 (a) Includes restructuring costs of $265,000 in the three-month period ended September 26, 2020 and $721,000 in the nine-month period ended September 26, 2020. (b) Includes restructuring costs of $205,000 in the three- and nine-month periods ended September 26, 2020. Includes acquisition-related expenses of $161,000 in the three-month period ended September 26, 2020 and $596,000 in the nine-month period ended September 26, 2020. Acquisition-related expenses include amortization expense associated with backlog and acquisition costs. (c) Includes acquisition-related expenses of $248,000 in the three-month period ended September 26, 2020 and $256,000 in the nine-month period ended September 26, 2020. Includes acquisition-related expenses of $21,000 in the three-month period ended September 28, 2019 and $5,695,000 in the nine-month period ended September 28, 2019. Acquisition-related expenses include amortization expense associated with acquired profit in inventory and backlog, and acquisition costs. (d) Corporate primarily includes general and administrative expenses. (e) The Company does not allocate interest and other expense, net to its segments. |
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 | ||||
Sep. 26, 2020USD ($) | Jun. 27, 2020USD ($) | Sep. 28, 2019USD ($) | Sep. 26, 2020USD ($)Segment | Sep. 28, 2019USD ($) | Dec. 28, 2019USD ($) | |
Accounting Policies [Abstract] | ||||||
Number of reportable segments | Segment | 3 | |||||
Bank guarantees, expiration period | 12 months | |||||
Intangible assets acquired | $ 3,907 | |||||
Revenue recognized | $ 1,656 | $ 4,780 | $ 28,522 | $ 28,302 | ||
Revenue, remaining performance obligation, amount | 5,295 | $ 5,295 | ||||
Banker's acceptance drafts, maturity period | 6 months | |||||
Banker's acceptance drafts | $ 4,423 | $ 4,423 | $ 5,230 |
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 | |
Sep. 26, 2020 | Sep. 28, 2019 | |
Accounting Policies [Abstract] | ||
Cash Paid for Interest | $ 5,518 | $ 9,711 |
Cash Paid for Income Taxes, Net of Refunds | 9,953 | 18,037 |
Non-Cash Investing Activities: | ||
Fair value of assets acquired | 9,295 | 208,558 |
Cash paid for acquired businesses | (7,565) | (179,489) |
Liabilities Assumed of Acquired Businesses | 1,730 | 29,069 |
Non-cash additions to property, plant, and equipment | 101 | 304 |
Non-Cash Financing Activities: | ||
Issuance of Company common stock upon vesting of restricted stock units | 4,557 | 3,908 |
Dividends declared but unpaid | $ 2,762 | $ 2,593 |
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 | Sep. 26, 2020 | Dec. 28, 2019 | Sep. 28, 2019 | Dec. 29, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 53,554 | $ 66,786 | $ 48,650 | $ 45,830 |
Restricted cash | 2,650 | 1,487 | 1,321 | 287 |
Total Cash, Cash Equivalents, and Restricted Cash | $ 56,204 | $ 68,273 | $ 49,971 | $ 46,117 |
Nature of Operations and Summ_7
Nature of Operations and Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Accounting Policies [Abstract] | ||
Raw Materials | $ 47,918 | $ 49,332 |
Work in Process | 17,089 | 15,344 |
Finished Goods | 43,708 | 38,039 |
Total Inventories | $ 108,715 | $ 102,715 |
Nature of Operations and Summ_8
Nature of Operations and Summary of Significant Accounting Policies - Intangible Assets By Major Asset Class (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 26, 2020 | Dec. 28, 2019 | |
Acquired Definite-Lived Intangible Assets [Line Items] | ||
Gross | $ 255,992 | $ 252,085 |
Accumulated Amortization | (109,539) | (95,333) |
Currency Translation | (6,188) | (6,870) |
Net | 140,265 | 149,882 |
Acquired Intangible Assets [Abstract] | ||
Gross | 280,092 | 276,185 |
Currency Translation | (6,194) | (6,956) |
Net | 164,359 | 173,896 |
Tradenames | ||
Acquired Indefinite-Lived Intangible Assets [Line Items] | ||
Gross | 24,100 | 24,100 |
Currency Translation | (6) | (86) |
Net | 24,094 | 24,014 |
Customer relationships | ||
Acquired Definite-Lived Intangible Assets [Line Items] | ||
Gross | 174,423 | 171,583 |
Accumulated Amortization | (62,018) | (51,798) |
Currency Translation | (3,741) | (4,141) |
Net | 108,664 | 115,644 |
Product technology | ||
Acquired Definite-Lived Intangible Assets [Line Items] | ||
Gross | 56,568 | 56,011 |
Accumulated Amortization | (30,674) | (27,819) |
Currency Translation | (1,520) | (1,709) |
Net | 24,374 | 26,483 |
Tradenames | ||
Acquired Definite-Lived Intangible Assets [Line Items] | ||
Gross | 6,753 | 6,527 |
Accumulated Amortization | (2,811) | (2,421) |
Currency Translation | (362) | (427) |
Net | 3,580 | 3,679 |
Other | ||
Acquired Definite-Lived Intangible Assets [Line Items] | ||
Gross | 18,248 | 17,964 |
Accumulated Amortization | (14,036) | (13,295) |
Currency Translation | (565) | (593) |
Net | $ 3,647 | $ 4,076 |
Nature of Operations and Summ_9
Nature of Operations and Summary of Significant Accounting Policies - Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 26, 2020USD ($) | |
Goodwill [Roll Forward] | |
Gross Balance, Beginning Balance | $ 421,541 |
Accumulated impairment losses | (85,509) |
Net Balance, Beginning Balance | 336,032 |
Acquisition (Note 2) | 3,985 |
Currency translation | 2,982 |
Total 2020 adjustments | 6,967 |
Gross Balance, Ending Balance | 428,508 |
Accumulated impairment losses | (85,509) |
Net Balance, Ending Balance | 342,999 |
Operating Segment | Flow Control | |
Goodwill [Roll Forward] | |
Gross Balance, Beginning Balance | 97,680 |
Accumulated impairment losses | 0 |
Net Balance, Beginning Balance | 97,680 |
Acquisition (Note 2) | 0 |
Currency translation | 804 |
Total 2020 adjustments | 804 |
Gross Balance, Ending Balance | 98,484 |
Accumulated impairment losses | 0 |
Net Balance, Ending Balance | 98,484 |
Operating Segment | Industrial Processing | |
Goodwill [Roll Forward] | |
Gross Balance, Beginning Balance | 207,536 |
Accumulated impairment losses | (85,509) |
Net Balance, Beginning Balance | 122,027 |
Acquisition (Note 2) | 3,985 |
Currency translation | 493 |
Total 2020 adjustments | 4,478 |
Gross Balance, Ending Balance | 212,014 |
Accumulated impairment losses | (85,509) |
Net Balance, Ending Balance | 126,505 |
Operating Segment | Material Handling Systems | |
Goodwill [Roll Forward] | |
Gross Balance, Beginning Balance | 116,325 |
Accumulated impairment losses | 0 |
Net Balance, Beginning Balance | 116,325 |
Acquisition (Note 2) | 0 |
Currency translation | 1,685 |
Total 2020 adjustments | 1,685 |
Gross Balance, Ending Balance | 118,010 |
Accumulated impairment losses | 0 |
Net Balance, Ending Balance | $ 118,010 |
Nature of Operations and Sum_10
Nature of Operations and Summary of Significant Accounting Policies - Warranty Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 26, 2020 | Sep. 28, 2019 | |
Changes in the carrying amount of accrued warranty costs [Roll Forward] | ||
Balance at Beginning of Year | $ 6,467 | $ 5,726 |
Provision charged to expense | 3,960 | 3,332 |
Usage | (3,809) | (2,778) |
Acquisition | 0 | 303 |
Currency translation | 114 | (175) |
Balance at End of Period | $ 6,732 | $ 6,408 |
Nature of Operations and Sum_11
Nature of Operations and Summary of Significant Accounting Policies - Revenue Recognition by Product Line, Product Type, Geography and Revenue Recognition Method (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 154,610 | $ 173,504 | $ 466,597 | $ 521,985 |
Parts and Consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 102,729 | 105,513 | 305,087 | 330,280 |
Capital | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 51,881 | 67,991 | 161,510 | 191,705 |
Point in Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 137,679 | 151,101 | 403,568 | 457,093 |
Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16,931 | 22,403 | 63,029 | 64,892 |
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 87,366 | 92,041 | 269,907 | 291,584 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 38,951 | 49,146 | 112,881 | 131,944 |
Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 18,847 | 20,971 | 50,992 | 61,745 |
Rest of World | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 9,446 | $ 11,346 | $ 32,817 | $ 36,712 |
Nature of Operations and Sum_12
Nature of Operations and Summary of Significant Accounting Policies - Revenue from Contract with Customers (Details) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Accounting Policies [Abstract] | ||
Accounts Receivable | $ 94,145 | $ 95,740 |
Contract Assets | 9,095 | 13,162 |
Contract Liabilities | $ 31,847 | $ 37,216 |
Nature of Operations and Sum_13
Nature of Operations and Summary of Significant Accounting Policies - Performance Obligation Narrative (Details) | Sep. 26, 2020 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-09-27 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Nature of Operations and Sum_14
Nature of Operations and Summary of Significant Accounting Policies - Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 26, 2020 | Sep. 28, 2019 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at Beginning of Period | $ 2,698 | $ 2,897 |
Provision charged to expense | 505 | 170 |
Accounts written off | (133) | (138) |
Currency translation | 43 | (103) |
Balance at End of Period | $ 3,113 | $ 2,826 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Thousands | Jun. 01, 2020 | Jun. 27, 2020 | Sep. 26, 2020 | Sep. 28, 2019 |
Business Acquisition [Line Items] | ||||
Acquisition transaction costs | $ 485 | $ 843 | ||
Payments to acquire business, net of cash acquired | $ 7,095 | $ 177,058 | ||
Cogent Industrial Technologies | ||||
Business Acquisition [Line Items] | ||||
Payments to acquire business, net of cash acquired | $ 6,866 | |||
Customer Relationships | Cogent Industrial Technologies | ||||
Business Acquisition [Line Items] | ||||
Finite-lived Intangible Assets Acquired | $ 3,350 | |||
Technology | Company in Austria | ||||
Business Acquisition [Line Items] | ||||
Payments to acquire business, net of cash acquired | $ 229 | |||
Intangible assets other than goodwill acquired | $ 416 |
Restructuring Costs - Narrative
Restructuring Costs - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020USD ($)Employee | Sep. 28, 2019USD ($) | Sep. 26, 2020USD ($)Employee | Sep. 28, 2019USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring | $ 470,000 | $ 0 | $ 926,000 | $ 0 |
Employee Severance | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring | $ 470,000 | $ 926,000 | ||
Flow Control | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of positions eliminated related to restructuring (employee) | Employee | 4 | 34 | ||
Flow Control | Employee Severance | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring | $ 276,000 | $ 732,000 | ||
Industrial Processing | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of positions eliminated related to restructuring (employee) | Employee | 20 | 20 | ||
Severance costs | $ 0 | |||
Industrial Processing | Employee Severance | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring | $ 194,000 | $ 194,000 | ||
Number of positions eliminated related to restructuring (employee) | Employee | 21 |
Restructuring Costs - Summary o
Restructuring Costs - Summary of Changes in Accrued Restructuring Costs (Details) - Employee Severance $ in Thousands | 9 Months Ended |
Sep. 26, 2020USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Beginning balance | $ 926 |
Usage | (430) |
Currency translation | (11) |
Ending balance | $ 485 |
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 | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Income Amounts Attributable to Parent, Disclosures [Abstract] | ||||
Net Income Attributable to Kadant | $ 14,851 | $ 16,115 | $ 38,989 | $ 43,319 |
Basic Weighted Average Shares (in shares) | 11,504 | 11,267 | 11,472 | 11,198 |
Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares (in shares) | 85 | 202 | 78 | 236 |
Diluted Weighted Average Shares (in shares) | 11,589 | 11,469 | 11,550 | 11,434 |
Basic Earnings per Share (in dollars per share) | $ 1.29 | $ 1.43 | $ 3.40 | $ 3.87 |
Diluted Earnings per Share (in dollars per share) | $ 1.28 | $ 1.41 | $ 3.38 | $ 3.79 |
Earnings per Share - Narrative
Earnings per Share - Narrative (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
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) | 11 | 8 | 30 | 32 |
Provision for Income Taxes - Na
Provision for Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 4,705 | $ 5,219 | $ 13,738 | $ 12,310 |
Effective tax rate | 26.00% | 22.00% |
Long-Term Obligations - Schedul
Long-Term Obligations - Schedule of Long-Term Obligations (Details) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Debt Instrument [Line Items] | ||
Finance Leases, due 2020 to 2025 | $ 1,775 | $ 2,308 |
Unamortized Debt Issuance Expense | 0 | (127) |
Total | 260,587 | 301,025 |
Less: Current Maturities of Long-Term Obligations | (1,538) | (2,851) |
Long-Term Obligations | 259,049 | 298,174 |
Revolving Credit Facility, due 2023 | ||
Debt Instrument [Line Items] | ||
Outstanding balance | 245,010 | 265,419 |
Commercial Real Estate Loan | ||
Debt Instrument [Line Items] | ||
Outstanding balance | 0 | 19,425 |
Senior Promissory Notes, due 2023 to 2028 | ||
Debt Instrument [Line Items] | ||
Outstanding balance | 10,000 | 10,000 |
Other Borrowings, due 2020 to 2023 | ||
Debt Instrument [Line Items] | ||
Other Borrowings, due 2020 to 2023 | $ 3,802 | $ 4,000 |
Long-Term Obligations - Narrati
Long-Term Obligations - Narrative (Details) - USD ($) | Mar. 01, 2017 | Jul. 31, 2020 | Dec. 29, 2018 | Sep. 26, 2020 | Jun. 18, 2020 | Dec. 28, 2019 |
Debt Instrument [Line Items] | ||||||
Weighted average interest rate for revolving credit facility (in hundredths) | 1.82% | |||||
Loan receivable | $ 1,127,000 | |||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 245,010,000 | $ 265,419,000 | ||||
Remaining borrowing capacity | 154,790,000 | |||||
Revolving Credit Facility | Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, term | 5 years | |||||
Borrowing capacity available under committed portion | $ 400,000,000 | |||||
Additional borrowing capacity under uncommitted portion | $ 150,000,000 | |||||
Basis spread on variable rate floor (as a percentage) | 0.00% | |||||
Maximum amount of unrestricted U.S. cash | $ 30,000,000 | |||||
Long-term line of credit | $ 19,000,000 | |||||
Revolving Credit Facility | Credit Agreement | Base Rate | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percentage) | 0.00% | |||||
Revolving Credit Facility | Credit Agreement | Base Rate | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percentage) | 1.25% | |||||
Revolving Credit Facility | Credit Agreement | LIBOR | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percentage) | 1.00% | |||||
Revolving Credit Facility | Credit Agreement | LIBOR | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percentage) | 2.25% | |||||
Revolving Credit Facility | Credit Agreement | Federal Funds Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percentage) | 0.50% | |||||
Revolving Credit Facility | Credit Agreement | Thirty-Day LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percentage) | 0.50% | |||||
Revolving Credit Facility | Euro-Denominated Borrowing | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 50,656,000 | |||||
Revolving Credit Facility | Canadian Denominated Borrowing | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 14,354,000 | |||||
Secured Debt | Commercial Real Estate Loan | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, term | 10 years | |||||
Principal amount | $ 21,000,000 | |||||
Quarterly installment amount | 262,500 | |||||
Final payment amount | $ 10,500,000 | |||||
Fixed interest rate | 4.45% | |||||
Outstanding principal balance | $ 18,900,000 | |||||
Prepayment fee, percent | 1.00% | |||||
Prepayment penalty | $ 189,000 | |||||
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] | ||||||
Additional borrowing capacity under uncommitted portion | $ 115,000,000 | |||||
Principal amount | $ 10,000,000 | |||||
Fixed interest rate | 4.90% | |||||
Senior Promissory Notes, due 2023 to 2028 | Note Purchase Agreement | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Prepayment penalty | $ 1,000,000 | |||||
Capital Lease Obligations | Sale Leaseback Arrangement | ||||||
Debt Instrument [Line Items] | ||||||
Effective interest rate | 1.79% | |||||
Net purchase option | $ 1,549,000 | |||||
Outstanding balance | $ 3,704,000 | |||||
Debt Covenant Period One | Revolving Credit Facility | Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum consolidated leverage ratio after acquisition | 3.75 | |||||
Debt Covenant Period Two | Revolving Credit Facility | Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum consolidated leverage ratio after acquisition | 4 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Share-based Payment Arrangement [Abstract] | ||||
Stock-based compensation expense | $ 1,610 | $ 1,658 | $ 5,126 | $ 5,125 |
Unrecognized compensation expense related to stock awards | $ 6,913 | $ 6,913 | ||
Recognition period | 1 year 8 months 12 days |
Retirement Benefit Plans - Narr
Retirement Benefit Plans - Narrative (Details) $ in Thousands | 3 Months Ended |
Mar. 28, 2020USD ($) | |
Retirement Benefits [Abstract] | |
Defined benefit plan, payment for settlement | $ 2,427 |
Retirement Benefit Plans - Comp
Retirement Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Pension Benefits | U.S. | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service Cost | $ 0 | $ 0 | ||
Interest Cost | 283 | 850 | ||
Expected Return on Plan Assets | (248) | (745) | ||
Recognized Net Actuarial Loss | 8 | 24 | ||
Amortization of Prior Service Cost | 0 | 0 | ||
Net periodic benefit cost | $ 43 | $ 129 | ||
The weighted average assumptions used to determine net periodic benefit cost are as follows: | ||||
Discount Rate (as a percentage) | 4.10% | 4.10% | ||
Expected Long-Term Return on Plan Assets (as a percentage) | 4.10% | 4.10% | ||
Rate of Compensation Increase (as a percentage) | 0.00% | 0.00% | ||
Pension Benefits | Non-U.S. | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service Cost | $ 45 | $ 43 | $ 131 | $ 129 |
Interest Cost | 22 | 27 | 66 | 84 |
Expected Return on Plan Assets | (14) | (16) | (45) | (50) |
Recognized Net Actuarial Loss | 10 | 5 | 31 | 15 |
Amortization of Prior Service Cost | 2 | 0 | 5 | 0 |
Net periodic benefit cost | $ 65 | $ 59 | $ 188 | $ 178 |
The weighted average assumptions used to determine net periodic benefit cost are as follows: | ||||
Discount Rate (as a percentage) | 2.05% | 2.82% | 2.12% | 2.81% |
Expected Long-Term Return on Plan Assets (as a percentage) | 7.21% | 9.22% | 7.21% | 9.22% |
Rate of Compensation Increase (as a percentage) | 3.14% | 2.99% | 3.17% | 2.99% |
Other Postretirement Benefits Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service Cost | $ 2 | $ 1 | $ 5 | $ 3 |
Interest Cost | 9 | 37 | 29 | 112 |
Expected Return on Plan Assets | (1) | (1) | (3) | (3) |
Recognized Net Actuarial Loss | 4 | 3 | 12 | 9 |
Amortization of Prior Service Cost | 0 | 0 | 0 | 0 |
Net periodic benefit cost | $ 14 | $ 40 | $ 43 | $ 121 |
The weighted average assumptions used to determine net periodic benefit cost are as follows: | ||||
Discount Rate (as a percentage) | 3.80% | 4.44% | 3.83% | 4.44% |
Expected Long-Term Return on Plan Assets (as a percentage) | 7.21% | 9.22% | 7.21% | 9.22% |
Rate of Compensation Increase (as a percentage) | 5.57% | 5.57% | 5.57% | 5.57% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Items - Components of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Total Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 440,359 | $ 400,560 | $ 427,079 | $ 374,571 |
Net current period other comprehensive items | 8,693 | (9,183) | 464 | (8,068) |
Ending balance | 462,245 | 406,873 | 462,245 | 406,873 |
Foreign Currency Translation Adjustment | ||||
Total Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (36,145) | |||
Other comprehensive income (loss) before reclassifications | 748 | |||
Reclassifications from AOCI | 0 | |||
Net current period other comprehensive items | 748 | |||
Ending balance | (35,397) | (35,397) | ||
Pension and Other Post-Retirement Benefit Liability Adjustments | ||||
Total Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (831) | |||
Other comprehensive income (loss) before reclassifications | (1) | |||
Reclassifications from AOCI | (84) | |||
Net current period other comprehensive items | (85) | |||
Ending balance | (916) | (916) | ||
Deferred Loss on Cash Flow Hedges | ||||
Total Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (644) | |||
Other comprehensive income (loss) before reclassifications | (420) | |||
Reclassifications from AOCI | 145 | |||
Net current period other comprehensive items | (275) | |||
Ending balance | (919) | (919) | ||
Accumulated Other Comprehensive Items | ||||
Total Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (45,863) | (38,251) | (37,620) | (39,376) |
Other comprehensive income (loss) before reclassifications | 327 | |||
Reclassifications from AOCI | 61 | |||
Net current period other comprehensive items | 8,631 | (9,109) | 388 | (7,984) |
Ending balance | $ (37,232) | $ (47,360) | $ (37,232) | $ (47,360) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Items - Reclassification Out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Other expense, net | $ (32) | $ (98) | $ (95) | $ (296) |
Interest expense | (1,670) | (3,066) | (6,060) | (10,143) |
Cost of revenues | (86,294) | (99,257) | (263,510) | (302,852) |
Total expense before income taxes | 19,685 | 21,432 | 53,096 | 55,989 |
Income tax benefit | (4,705) | (5,219) | (13,738) | (12,310) |
Net Income | 14,980 | 16,213 | 39,358 | 43,679 |
Reclassification out of Accumulated Other Comprehensive Items | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Net Income | (59) | (20) | (61) | (113) |
Reclassification out of Accumulated Other Comprehensive Items | Pension and Other Post-retirement Plans [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Total expense before income taxes | (16) | (16) | (48) | (48) |
Income tax benefit | 4 | 4 | 132 | 12 |
Net Income | (12) | (12) | 84 | (36) |
Reclassification out of Accumulated Other Comprehensive Items | Recognized net actuarial loss | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Other expense, net | (14) | (16) | (43) | (48) |
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) | 0 | (5) | 0 |
Reclassification out of Accumulated Other Comprehensive Items | Cash Flow Hedges | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Total expense before income taxes | (62) | (10) | (191) | (112) |
Income tax benefit | 15 | 2 | 46 | 35 |
Net Income | (47) | (8) | (145) | (77) |
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 | (109) | (10) | (215) | 17 |
Reclassification out of Accumulated Other Comprehensive Items | Cash Flow Hedges | Forward currency-exchange contracts | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Items [Line Items] | ||||
Cost of revenues | $ 47 | $ 0 | $ 24 | $ (129) |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | Dec. 29, 2018 | Jan. 02, 2016 | |
Forward Currency-Exchange Contracts [Abstract] | ||||||
Recognized gains (losses) | $ 27,000 | $ (14,000) | $ (1,000) | $ (46,000) | ||
Net unrealized losses included in AOCI expected to be reclassified to earnings over the next 12 months | $ 351,000 | |||||
Cash Flow Hedging | Designated as Hedging Instrument | 2018 Swap Agreement | ||||||
Interest Rate Swaps [Abstract] | ||||||
Derivative, notional amount | $ 15,000,000 | |||||
Fixed rate of interest (in hundredths) | 3.15% | |||||
Cash Flow Hedging | Designated as Hedging Instrument | 2015 Swap Agreement | ||||||
Interest Rate Swaps [Abstract] | ||||||
Derivative, notional amount | $ 10,000,000 | |||||
Fixed rate of interest (in hundredths) | 1.50% |
Derivatives - Fair Value of Der
Derivatives - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Designated as Hedging Instrument | Forward currency-exchange contracts | Other Current Assets | ||
Derivatives in an Asset Position: | ||
Derivatives in an asset position | $ 4 | $ 0 |
Notional amount, Derivative asset | 1,311 | 0 |
Designated as Hedging Instrument | Forward currency-exchange contracts | Other Current Liabilities | ||
Derivatives in a Liability Position: | ||
Derivatives in a liability position | (14) | (75) |
Notional amount, Derivative liability | 842 | 4,825 |
Designated as Hedging Instrument | 2015 Swap Agreement | Other Current Assets | ||
Derivatives in an Asset Position: | ||
Derivatives in an asset position | 0 | 11 |
Notional amount, Derivative asset | 0 | 10,000 |
Designated as Hedging Instrument | 2018 Swap Agreement | Other Long-Term Liabilities | ||
Derivatives in a Liability Position: | ||
Derivatives in a liability position | (1,202) | (770) |
Notional amount, Derivative liability | 15,000 | 15,000 |
Not Designated as Hedging Instrument | Forward currency-exchange contracts | Other Current Assets | ||
Derivatives in an Asset Position: | ||
Derivatives in an asset position | 25 | 3 |
Notional amount, Derivative asset | 713 | 387 |
Not Designated as Hedging Instrument | Forward currency-exchange contracts | Other Current Liabilities | ||
Derivatives in a Liability Position: | ||
Derivatives in a liability position | (5) | (43) |
Notional amount, Derivative liability | $ 686 | $ 2,545 |
Derivatives - Activity in Accum
Derivatives - Activity in Accumulated Other Comprehensive Items (OCI) (Details) $ in Thousands | 9 Months Ended |
Sep. 26, 2020USD ($) | |
Total Stockholders' Equity [Roll Forward] | |
Beginning balance | $ 427,079 |
Ending balance | 462,245 |
Cash Flow Hedges | |
Total Stockholders' Equity [Roll Forward] | |
Beginning balance | (644) |
Loss reclassified to earnings | 145 |
(Loss) gain recognized in AOCI | (420) |
Ending balance | (919) |
Cash Flow Hedges | Interest Rate Swap Agreements | |
Total Stockholders' Equity [Roll Forward] | |
Beginning balance | (589) |
Loss reclassified to earnings | 163 |
(Loss) gain recognized in AOCI | (487) |
Ending balance | (913) |
Cash Flow Hedges | Forward currency-exchange contracts | |
Total Stockholders' Equity [Roll Forward] | |
Beginning balance | (55) |
Loss reclassified to earnings | (18) |
(Loss) gain recognized in AOCI | 67 |
Ending balance | $ (6) |
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 | Sep. 26, 2020 | Dec. 28, 2019 |
Assets: | ||
Money market funds and time deposits | $ 10,561 | $ 9,920 |
Banker's acceptance drafts | 4,423 | 5,230 |
2015 Swap Agreement | 11 | |
Forward currency-exchange contract(s) | 29 | 3 |
Liabilities: | ||
2018 Swap Agreement | 1,202 | 770 |
Forward currency-exchange contracts | 19 | 118 |
Level 1 | ||
Assets: | ||
Money market funds and time deposits | 10,561 | 9,920 |
Banker's acceptance drafts | 0 | 0 |
2015 Swap Agreement | 0 | |
Forward currency-exchange contract(s) | 0 | 0 |
Liabilities: | ||
2018 Swap Agreement | 0 | 0 |
Forward currency-exchange contracts | 0 | 0 |
Level 2 | ||
Assets: | ||
Money market funds and time deposits | 0 | 0 |
Banker's acceptance drafts | 4,423 | 5,230 |
2015 Swap Agreement | 11 | |
Forward currency-exchange contract(s) | 29 | 3 |
Liabilities: | ||
2018 Swap Agreement | 1,202 | 770 |
Forward currency-exchange contracts | 19 | 118 |
Level 3 | ||
Assets: | ||
Money market funds and time deposits | 0 | 0 |
Banker's acceptance drafts | 0 | 0 |
2015 Swap Agreement | 0 | |
Forward currency-exchange contract(s) | 0 | 0 |
Liabilities: | ||
2018 Swap Agreement | 0 | 0 |
Forward currency-exchange contracts | $ 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 | Sep. 26, 2020 | Dec. 28, 2019 |
Carrying Value | ||
Debt Obligations: | ||
Revolving credit facility | $ 245,010 | $ 265,419 |
Commercial real estate loan | 0 | 19,425 |
Senior promissory notes | 10,000 | 10,000 |
Debt obligations | 255,010 | 294,844 |
Fair Value | ||
Debt Obligations: | ||
Revolving credit facility | 245,010 | 265,419 |
Commercial real estate loan | 0 | 20,541 |
Senior promissory notes | 10,916 | 10,803 |
Debt obligations | $ 255,926 | $ 296,763 |
Business Segment Information -
Business Segment Information - Summary of Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020USD ($) | Sep. 28, 2019USD ($) | Sep. 26, 2020USD ($)Segment | Sep. 28, 2019USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | Segment | 3 | |||
Revenue | ||||
Revenues | $ 154,610 | $ 173,504 | $ 466,597 | $ 521,985 |
Income Before Provision for Income Taxes | ||||
Total operating income | 21,335 | 24,553 | 59,111 | 66,270 |
Interest expense, net | (1,618) | (3,023) | (5,920) | (9,985) |
Other expense, net | (32) | (98) | (95) | (296) |
Income Before Provision for Income Taxes | 19,685 | 21,432 | 53,096 | 55,989 |
Capital Expenditures | ||||
Capital expenditures | 1,822 | 2,093 | 5,419 | 6,236 |
Acquisition transaction costs | 485 | 843 | ||
Operating Segment | Flow Control | ||||
Revenue | ||||
Revenues | 56,815 | 62,375 | 165,329 | 188,792 |
Income Before Provision for Income Taxes | ||||
Total operating income | 13,770 | 15,103 | 37,360 | 43,220 |
Capital Expenditures | ||||
Capital expenditures | 509 | 636 | 1,667 | 1,814 |
Restructuring costs | 265 | 721 | ||
Operating Segment | Industrial Processing | ||||
Revenue | ||||
Revenues | 62,086 | 74,229 | 192,468 | 222,899 |
Income Before Provision for Income Taxes | ||||
Total operating income | 12,072 | 13,107 | 32,147 | 38,830 |
Capital Expenditures | ||||
Capital expenditures | 785 | 1,053 | 2,460 | 3,223 |
Restructuring costs | 205 | 205 | ||
Acquisition transaction costs | 161 | 596 | ||
Operating Segment | Material Handling Systems | ||||
Revenue | ||||
Revenues | 35,709 | 36,900 | 108,800 | 110,294 |
Income Before Provision for Income Taxes | ||||
Total operating income | 2,614 | 3,525 | 10,341 | 5,515 |
Capital Expenditures | ||||
Capital expenditures | 486 | 397 | 1,167 | 1,145 |
Acquisition transaction costs | 248 | 21 | 256 | 5,695 |
Corporate, Non-Segment | ||||
Income Before Provision for Income Taxes | ||||
Total operating income | (7,121) | (7,182) | (20,737) | (21,295) |
Capital Expenditures | ||||
Capital expenditures | $ 42 | $ 7 | $ 125 | $ 54 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 26, 2020 | Dec. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Banker's acceptance drafts, maturity period | 6 months | |
Banker's acceptance drafts with recourse | $ 7,702 | $ 7,003 |
Uncategorized Items - kai-20200
Label | Element | Value |
Accounting Standards Update [Extensible List] | us-gaap_AccountingStandardsUpdateExtensibleList | us-gaap:AccountingStandardsUpdate201602Member |