KAI - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Kadant Inc. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mike McKenney, Executive and Vice President and CFO. Thank you. sir. ahead, go Please

Mike McKenney

and Good Full and With Year today our the Gigi. Fourth me to Quarter call President Powell, Jeff and XXXX is Executive morning, you, Officer. welcome everyone, Kadant's on Chief Thank Earnings Call.

read at actual begin, year filings Private those Kadant's our purposes statement. statements about Various to of safe for annual we factors, Litigation heading prospects result for under the and the cause materially and from plans XX-K the and provisions our fiscal outlined ended the expectations, we the Before safe XX, statements forward-looking unknown to with in that and operating important our make are the results results statements slide risks December that and presentation may harbor Act Reform beginning of as our Commission. of discussed harbor me Risk of and uncertainties a report and let These these forward-looking Securities subsequent Exchange today future Factors various remarks XXXX, Form financial subject may those Securities on differ and under forward-looking XXXX. including are known

this any estimates represent forward-looking addition, make during statements as we views In and of our webcast only today.

update While our if even point in change. we views disclaim at statements to or to may so, do the any elect some forward-looking future, obligation we estimates specifically

comparable on measures conference webcast and and section are full reconciliation measures. in the call, and our non-GAAP non-GAAP the www.kadant.com. non-GAAP the GAAP fourth directly generally discussed the our slides prepared some earnings year During are in we'll the accounting at quarter accordance financial These press website contained accepted of of to available Investors which in release this measure the presented is to A refer webcast, financial most with in measures principles. not

basis. call, you on and wanted when per to we we call that give EPS to EPS the and prospects. GAAP an as or turn to Powell, calculated Jeff business these that, each to on I Kadant's update adjusted of are a share I'll this measures earnings With diluted Finally, future will over who referring note refer on

of I and the for will the will give year, we Following results Jeff? an a then Q&A overview the our and financial remarks, quarter session. have

Jeff Powell

for for quarter quarter Thanks, quarter finish capital Strong during flow results had fourth segments. quarter. record Parts by and Mike. demand led and to our Thank a operating of discuss Despite financial and project for details while this to discussing and results solid Hello, a highlights segments execution our operational our and solid safeguarding strong I'll robust activity flow Consumables provide the & activity we I our cash operating brought quarter outlook our when and by the bookings everyone. was business us to our fourth pandemic, a cash you all uncertainties the full about across this generated the morning our employees. year in more review I'll fourth The challenging fourth discuss year. begin our results. about XXXX. joining the

continue remains sheet pandemic. we healthy the year. balance of always the strength of a have effects liquidity throughout strengthened position this cash Kadant, Robust Our the flows and expect our been will from economies has and recover as

levels. turnaround notable to We weak our prior performance. now from Turning business the QX quarter's achieved a

total to a a led X% was QX revenue million, in made the XX% with Our record Total up growth. Strong up Parts compared & segment X% revenue. revenue, prior were XX% demand Industrial $XXX to Processing bookings driving compared down Consumables increase sequential a this which year, our QX to these of record cash employees how and operating of EBITDA fourth I'm margin delivered Overall, and free to in X% increased with better-than-expected fourth million adjusted flow our our the that our $XX XX.X%, to the pleased solid quarter was particularly pleased were the results. was XXXX. quarter. We quarter up

XXXX near many while the XXXX with a Cash $XX programs. full momentum, with that strengthened positive a anticipated While and began Full global million, our year measures have economies. year, to have XXXX. revenue the for the declined mix full million flow a the bottom year the along no year operations and we and was favorable government containment line free one performance product throughout from systems benefited could record from impact on flow on pandemic cost cash $XXX and fronts, was would record the XX% world

$X was EPS in basis, on adjusted of record our an diluted compared $X.XX $X.XX Our XXXX. to and to share declined X% per

and tremendous deserves a our as customers. way to continue proud Our well these talent they've of globe new to adapted and the workforce work done performed challenging they work serve of results do employees for exceptionally very of amount credit the dedicated for to our around circumstances. extremely under I'm and a

like performance I'd X segments. the Next, our to of review operating

Our benefited rebound quarter, from capital nearly led bookings the to activity in to year which Flow X% fourth in period. Control increasing compared segment a project the prior

in bookings year direction solid as the moved quarterly a for the progressed to start us well XXXX. right Our and performance positions

sequentially X% Our revenue & QX Parts made Consumables total was up and revenue. of up XX%

business, revenue. a know, improved to operating with capital combined more represented aftermarket and of in and favorable led product of XX% parts a you compared has of EBITDA mix many margin QX adjusted As increase XXXX XX% to profile the leverage compared our business to

Looking demand widely & available continue first improving businesses and strengthen and vaccine ahead, we the to as are believe will bookings reopen. We quarter fully more permitted becomes XXXX to of are conditions market stability both to Parts in COVID-XX of the show Consumables. and terms project expect for capital

Turning now Processing to our segment. Industrial

our factors. more bookings largest strong a housing single-family compared in One wood equipment segment with stock two by experience of this to December. share robust market, homebuilding, continue the for This U.S. We which the doubling prep the XX% demand year. market, our was equipment, demand largely was saw processing driven capital prior increased and in than also to for housing

in The more in our $XX margin. compared and increase to point the XX% segment same & up and significant XX% project year, America, year-over-year, Parts period quarter. Consumables other than to this and led declined Revenue capital China our last to A XX% execution North in was activity improvement but doubled prep year. prior fourth million compared sequentially. adjusted increased was the which a revenue in XX% mix the revenue made a total to favorable up product of in EBITDA XXX-basis stock good

us Parts that in relatively Handling did In we Revenue programs retain XX% revenue systems the year moderate in reduced period fourth have and helped of quarter, up talented workforce. Material to quarter segment we compared up our continue & yet total was same stable were allow down to the X% Handling to government XX% significantly segment, our While the activity. revenue. last Capital and remaining bookings some to benefit made Material $XX increased Consumables fourth sequentially. XX% in order million, see were our

encouraged us to see our customers increased these are by economic orders. We showing awarding capital the confidence larger in outlook

activity. are seeing other As market we segments, in increasing all

this the year. segment ahead XXXX, throughout will strengthen to Looking we continue to believe

increased and ahead As signs industrial to expect first the its are production project modest rebound. we quarter activity we XXXX look of continue full of and to the seeing year,

opportunities improving strengthening to capitalize sheet Our have us may balance well economy. combined global that positioned a strong on with cash flows emerge the with

be This the providing us, given ability distribution. our our for the still uncertainty, Mike? forecast I as in the to will hopeful we vaccine would at will in guidance over amount this are unevenness time. of like the is pass we how respond orders economies Europe, call to to and Mike pandemic QX there timing a pandemic a While the review of of of the worst uncertainty performance. is particularly not great regarding behind to a limits result,

Mike McKenney

quarter. and some you, from I'll XXXX quarter XX.X% The the percentage basis gross to of the were financial Consumables. key XXXX, was higher in in Parts fourth of Thank & XX.X% higher on in points. fourth & fourth increase start Consumables XXX primarily margins Jeff. Parts quarter a to margins quarter Consolidated due compared metrics of up gross with the our

Our as points to of in fourth to XXXX. overall fourth of quarter Consumables Parts SG&A expenses the XX% of to XX.X% percentage was of pandemic. in government increase $X.X approximately expense XXXX. compared the XXXX, XXXX. from to million, the in to of XXXX the fourth quarter of revenue currency margins the fourth in increased assistance increased were which and benefits the million compared the XX.X% gross of fourth of was basis in the receipt was a SG&A fourth quarter fourth XX & due in revenue contributing of XXXX quarter quarter $XX.X XX% Also total the $X.X quarter of percentage SG&A down received the benefits foreign an quarter XXXX. revenue effect, to million government million of unfavorable related in assistance of translation expenses $X.X by There we

amortization items, to backlog reduced XXXX, compared acquisition, Excluding of the or the to along expenses. these and million travel-related expenses of quarter quarter the down XXXX were our fourth SG&A SG&A with for primarily X% from $X.X fourth due

$X.XX $X.XX was in compared quarter fourth Our XXXX. diluted in fourth GAAP quarter to the EPS of the

intangible in costs Our an of acquired $X.XX includes and fourth of charge, GAAP the $X.XX quarter impairment restructuring EPS amortization. from diluted $X.XX asset backlog

retention $X.XX results quarter tax $X.X net In or to attributable included employee fourth of programs. assistance addition, our income pretax government of million

Our and previously A the in exercise tax was of items. to and benefits the tax stock following included positions, return of to associated provision rate tax fourth $X.XX reversal options XX.X% adjustments. tax approximately with quarter uncertain related employee the awarded of reserves

tax Excluding our been these have items, rate XX%. would

points the to gross XXXX. margins compared For in year XXX basis XXXX, XX.X% increased XX.X% full to

XXXX margins higher the overall points, profit basis Consumables of to & Parts Consumables. higher profit XXXX, primarily the due up and and & a government contributed gross approximately margins and were on gross points benefits, percentage to inventory margins in Parts XX gross which the of amortization XX assistance Excluding basis

XXXX. of decreased XXXX percentage XXXX in in in & $XXX.X increased $XXX.X $XX.X to revenue in X% Parts Our to compared million XX% to or million XXXX. to million expenses Consumables SG&A compared XX%

SG&A percentage XXXX million a in had of XX.X% our acquisition-related were expenses from of XXXX XX.X% and incurred We costs $X.X XXXX million to XXXX, SG&A $X revenue, million and compared acquisitions respectively. in and in XXXX. $X.X of As in

government XXXX. assistance and received million of effect addition, was currency benefits $X.X $X.X favorable in In there million a translation foreign we of

Excluding SG&A compared due $X.X primarily currency million acquisition-related X% expenses government impact decrease to a our down of in from costs. translation assistance costs, benefits, and to were SG&A or acquisition, foreign XXXX, the travel-related

Our $X.XX, in to EPS XXXX. in $X.XX GAAP up compared X% XXXX diluted was

$X.XX GAAP and costs acquisition Our $X.XX $X.XX charge, restructuring intangible in benefit. an costs, impairment of a $X.XX of from acquired from $X.XX tax of diluted amortization, includes asset EPS XXXX backlog discrete

tax the of net was XXXX included EBITDA compared revenue Material a to retention our results $XX.X On XXXX. of of of the attributable or basis, quarter million $X.X of Handling EBITDA addition, million or $X.XX fourth due in income X% revenue of In increased adjusted to XXXX, to In programs. government pretax in increased fourth our employee million XX.X% or assistance $XX.X profitability segment. sequential quarter adjusted XX.X%

was revenue. of In the revenue For year, full XX.X% of the of flow flows the million a from of of included record million in set quarter to or cash working record XXXX fourth capital EBITDA included capital in $XX.X impact which fourth $XXX.X compared positive quarter operating of impact operating million of $XXX.X compared $XX.X the XXXX, million and was $XX.X or XXXX, cash working a adjusted million to of positive million. a from $XX.X XX%

down the of several cash $XX.X $X.X and in For on million record repaid compared in cash capital million We the expenditures. $X.X notable of our XXXX. operating the stock million XXXX. common million million, of paid was X% year, fourth $XX.X had nonoperating $XX.X for debt, flow a paid We full of uses quarter to dividend

Free million XXXX. debt. sequentially increasing $XX fourth X% fourth full $XX.X a record XX% flow quarter was quarter cash the in repaid we of compared of XXXX, and million For year, the of the our to

XXXX. million, year, $X.X down to flow X% $XX.X full the or of compared free $XX.X record million was the million in For cash

asset In from backlog EPS was and share ancillary charge intangible intangible demand $X.XX of which availability of and experienced of slope which equipment in our Systems factors product closure of these resulted sawmills harvesting NII Products represents of to fees this of $X.XX of costs Western compared diluted quarter our amortization earnings $X.XX. The increase our favorable of impairment partially of to into XXXX, acquisition. The of an the several Processing the of $X.XX. diluted increases higher Canada. $X.XX our fourth quarter XXXX restructuring of EPS stock a the stumpage impairment After due of included timber, XXXX, In This the recurring diluted logging consolidated We the part revenues FPG's compared in employee currency diluted of in expenses relates gross per a timber restructuring $X.XX, in $X.XX asset Forest and to $X.XX impairment the charge plan, of including to to line, just business $X.XX in partially of and less product of exercise to remaining previously a is that business. in impairment due and effect to the I was part higher a due the to $X.XX in of a XXXX. translation softening from the due mentioned products line the to steep XXXX by used acquisition $X.XX, margins, in associated turn in weighted were last to charge offset foreign asset demand in $X.XX difference fourth charges, assistance was Wood the $X.X intangible results to pretax lower of is fourth decrease relates interest year's XXXX. due U.S. fourth our earnings fourth per the government categories which XXXX, GAAP of difference tax The million following: outstanding. with general for of $X.X offset due due charge a expense, for in XXXX continued pension XXXX, $X.XX million quarter an the related impairment $X.XX, the of tax benefit programs, lower shares the dollar. Collectively, to adjusted of in me X.X% for $X.XX lower lower some these of to awarded by $X.XX for the quarter for The resulting asset revenue the consists in diluted XXXX and $X.XX EPS These operating settlement this was is intangible to Let XXXX in fourth $X.XX with We recoverability business, intangible $X.XX quarter. to GAAP higher weakening EPS share rate, and the fourth which quarter results charge quarter than options. and of is $X.XX product average quarter a evaluated of reduced costs $X.X a million. adjusted fourth all was quarter due $X.XX. associated our line and $X.XX an was acquired adjusted of due operating $X.XX the of were $X.XX asset

higher The our of restructuring costs to was an $X.XX, $X.XX, per intangible $X. difference charge costs on the average $X.XX of of diluted $X.XX We $X.XX, following: adjusted partially stock asset were to of weighted lower XXXX $X.XX lower turning the from EPS $X.XX just awarded and translation $X.XX to $X.XX for in and of foreign the of our year assistance tax earnings to Now These rate. $X.XX impairment adjusted of $X.XX EPS interest GAAP a reported XXXX outstanding. of full costs share EPS from $X.XX from from employee an share expenses, from diluted amortization acquired results intangible consists effect $X.XX and and all benefits of of options. earnings backlog Slide from of operating Decrease a GAAP acquisition and benefit XXXX, decreases government in in for lower of diluted restructuring XX. EPS $X.XX, shares discrete revenue amortization from offset the recurring diluted adjusted and $X.XX higher profit $X.XX. unfavorable $X.XX exercise and $X.XX by $X.XX $X.XX backlog, inventory of operating excludes asset categories from of an acquisition of programs, reported charge, tax was in compared a of costs previously $X.XX XXXX from diluted $X.XX of and $X.XX expense, settlement charge in currency due of our from included margins, acquired We XXXX. I pension results $X.XX. the $X.XX, adjusted tax was impairment lower The XXXX our gross to EPS per diluted Collectively, relates mentioned, acquisition the

the inventory taking fourth Now days XX. The end the but conversion XXXX, the number subtracting a capital XXX let's activity XXX calculated at by down and measure, prior weakness receivables of in metrics, spending in the delays up liquidity in fourth by to in increase quarter in of accounts turn number plus from driven including days capital from third the days days conversion in days in lower to our quarter at of of quarter XXX payable, accounts our Slide from starting on customers. due end days of in of Cash and and higher XXXX, of was XXXX. in of project maintenance project number deliveries, delays by year a in days inventory factors, cash the days payable was

of XX.X% to ensure on noted of I've year, calls these $XX end are Working needed cash in million quarter the as customers supply of XXXX is predict generated at to debt million to in at timing net a of their $XXX.X flow has as percentage our compared Net in components of XXXX. purchases cash, compared able quarter free less the million We managed XX.X% to XXXX. was due were XXXX this that debt inventory available XX.X% lower and As $XXX.X XXXX. current the the the by that environment. debt, to the to our XXXX our end was of for the excellent critical subsidiaries and in of third in capital revenue fourth fourth been past the difficult quarter

XX% world and decreased around expense generated successfully XXXX million cash in debt to lower XXXX or due leverage our to in the $X.X million $X.X million to interest rates. down Our pay ability $XX.X to to interest compared

calculated agreement down from XXXX, quarter continue of paying in X.XX XXXX, to end the X.XX we Our make as of leverage the in was fourth at down credit of ratio defined progress fourth in our excellent debt. quarter the

Regarding guidance, make difficult. current environment forecasting our continues to

guidance be at Given the current uncertainty, for XXXX. formal we'll time providing this not

reevaluate will year. as We through providing progress the guidance we

not comments will of revenue on an provide in performance quarter like would an significant we year. for overall the quarter, second fourth outlook We stronger in XX%, be the a quarter in the guidance, the directional XXXX. and be anticipate our to second X% will We this predicated vaccination is overall the demand our and our anticipate of capital a we While increase in providing & bookings I our our half We few increase that Consumables of the would half especially rollout in XXXX. in with conditions fourth are products in strongest. XXXX. increase first had Parts business weakest the for improving anticipate on to quarter caution here I and currently COVID-XX

be in the We will XXXX. weighted capital also mix anticipate towards more

margins in programs, at the Excluding XXXX. in assistance our government XX.X% came gross

capital, towards close will For heavier to anticipate XXXX, despite gross level. mix margins be this the we

assistance percentage Overall, XXXX. be As benefit to received expect same while expense from of the the compared XX% $X.XX of SG&A to in we programs XXXX R&D a revenue, the XXXX. will we be anticipate XX%, percentage approximately government in we as will minimal

XXXX. tax XX% be in recurring XX% our will expect approximately to We rate

XXXX anticipate as remaining may anticipate a XXXX vesting of X% the be of first approximately from recurring Our spending CapEx quarters awards. quarter be of equity in in We rate benefit revenue. receiving the the will we than tax lower tax

current now approximately the operator depreciation In concludes addition, amortization Operator? That I $XX for $XX these million turn session. insight how our and will be XXXX. call we see the business will financials, in my to million the our over expect help We into review comments environment. provide Q&A hope will to of back and directional we

Operator

from Instructions] line the of comes Sidoti. [Operator Franzreb Our question John first from

John Franzreb

color. the start with for to I'd like Processing Thanks Industrial orders.

base on comparative hearing and it market a were about looks bit maybe the the back to the stronger on time a sustainability and XXXX in basis that today when little basis, maybe from you're things of a relative talk the for year? the housing customer how Just balance the frame it

Jeff Powell

Yes.

record really So industry things we quiet absorbed as little pandemic bringing that bit new down the dining home, 'XX John, as you'll to workplace, they've and now we look a they of online. the changed place for year in of they've us think, segment. 'XX the more And new in recall, and just that the I 'XX expected than capacity everything a and equipment But kind at all our kind entertainment else. the was or course, were really way, our become our a of homes, become and has

the So weeks has market. business continued experienced in strong, been very strong very very, obviously, and that's our Year that I And of first quite strong the housing progressed. year as New into has the demand would several say here,

-- what group. forecasting, pandemic, with very are look So social you age associated they're the homes. shift the that to hit at And addition starting really buying in the millennials very, to millennials now the large experts a the are where if the are

at a homes. lack get the in of availability, is several hard I reasonable I that will to be, assuming years. the downs, experts that level, stay there think the predicting and years, next to a the for And but housing interest And we're for think, demand certainly frankly, supply. get experts most rates is of mean many really building predict so several next of will problem very are I country. is facing of lack ups be labor Land a And strong. hard some parts

So big not supply, is challenge demand. I think the

John Franzreb

to costs you? little you then looking concerned. With that want as segment How the sell. better commodity it. is maybe that for to a input And bit make Does turned far with side I little finally for Got raw get just to it. bit. think outlook kind if environment? Difficulty] business about a about want And as talk I [Technical are the a shift that, the Got on the everything in materials. queue. corner it the I'll back of materials also you commodity

Jeff Powell

Yes.

You by a stainless, input buy we our commodities. our but think about being bit, broke And are sheet I is costs maybe are principal primarily asking that some sheet carbon though, at but gone it's certainly you mainly our cost, look And -- of And as huge. in steel. steel, that's price. steel, still you how up a up little were it's not not affected percentage commodity that if overall

And price so percentage the increases of But need be buyouts. materials. of we don't raw manufacture we very as implement our we is from the do content a supply a cost have of tremendous we to amount offset manufactured large -- that

when our And increase on to do customers, forced the to so that get we're typically and in we steel, price of pass that. we an

the there. probably I I But Material that maybe little second think think yes, bit shut that most not impacted up were were essential, were and some I -- and a segment you around you customers the the was our breaking as because but was from they question deemed sure, pandemic so Handling segment, of wasn't down. the

new I certainly still lot infrastructure an have And the did little the talk. of many infrastructure administration not did. with pandemic way stimulus to and -- has That being recover are the so needs been that next market, slower of we bill benefit about said, a markets being bill. the obviously there's the there, from and know, a certainly, I say, would

did, many with infrastructure. of the need labor of unions they the the the for met talk head about actually to think I President yesterday,

will increase So course, demand we U.S. that's and of certainly with, infrastructure expect that the investment be in associated the increased going with there believe forward, housing in along the

that think do that So for forward. segment will going improve we conditions market

Operator

next Research. comes Barrington question Howe Chris from Our the of line from

Chris Howe

year. So able a fiscal great flow EBITDA cash year, quarter through pandemic over from perspective this post to were the fiscal improvement you the adjusted a in free and prior

directional You the mentioned about and comments QX quarter. some being strongest outlook

margin normal expectations talk and better time, you line level? or normal about top we for and get to closer can As another it's increase to your revenues whether improvement back quarter, as that a than the QX

Mike McKenney

Yes. leverage our going improving think EBITDA we our to operating line, Chris, top specifically in get the expectation costs, that is, to will be we're as I and SG&A able margins. better, contribute growth to

Chris Howe

topic, as dynamics not certainty impact the and different us, I pandemic same nonetheless, would in infrastructure if the segments, the put being in assume came EBITDA spending of be it behind some Material gets sure that on heavily will pandemic. the how I at by look we're at XX.X%, that Material adjusted On the Handling Okay. underway, we impacted margin but assume most or for of accretion segment, benefit, the there's Handling? should segment-specific opportunity a for would

Mike McKenney

We agree would with Chris. Yes. that,

Chris Howe

Can capital to historical fiber dialogue in on current -- Okay. shortage as be region, of perhaps lastly, China an as that dialogue the in a on it update, prep comment would and relates you our And then mentioned well. orders going our that stock are you equipment outside to China update helpful. and it relates

Jeff Powell

Sure.

place. year, import now obviously, first think, of the is in ban aware of everybody I that So the the as is

China. there's no So being wastepaper imported into

as to starting processing the have other some options, been yet occurring. Asia, as embed still waste say also fiber and the in bringing And provide in that including in. they few And sorted those so investments I pulp virgin years, are X of would mills And don't it Southeast well for China the I all in to countries there. out. think actually some they've in it processing States United supply working And on they're paper last in

bring to did, Mainland would have minimal want and a we China. going the are asking country, and have out our as which of combination why to it's not X, of to you Kind before, Southeast will discussed all into do one that the Asia emerge same pulp the questions sorted ship I think countries China that all waste be they've leader. processing we as and the

or continuing options. in the to to they're customers Chinese and companies and to building the to waste negotiate companies countries are There the paper in process as think send I that to addition facilities so here. U.S. Chinese evaluate investments making those fiber And China, actually are the

found quite and to before our think have of in form Chinese cost timing customers I is customers business U.S. mentioned I things the and our China in found -- have doing from the get that different regulations done.

So with are other altered they plans. in haven't been some some for of real that, their alternatives. looking They cases, is, pleased some which

to one containerboard. importing a they cases experimenting things are in cases, some lot of still, sources fiber. fiber, with importing other these So the of they think, they're In actually it's I are where different get

it will would it's that unclear, thought be case. take I really still years I that's to last it think So year and still a stabilize. I -- we probably the mentioned And few think I think

Operator

comes [Operator from Instructions] Kurt question Our line of Davidson. the from D.A. Yinger next

Kurt Yinger

of QX activity growth I I it quantify, high we XXXX, to challenging improvements or how look in mean here terms at in and I improvement? off is year-over-year do you like watermark start capital bookings. to on the about realizing terms I this year? into registering the be increasing. maybe QX a of, part in just off of strength first it's after that impossible mean, improving demand pent-up we markets the result wanted think And the sequential are in generally sounds guess, Should equipment looking as

Jeff Powell

level also good for large not booked, capital are we growth, say, us. sequential. -- say but of had base did starting a that year-over-year see would I was I at fourth record definitely of, business very return. we kind we a the quarter Kurt, was That to would We number looking orders

I improvement, we are but So see year-over-year expecting we'll sequential improvement. think don't

Mike McKenney

don't remember, couple every you of announced orders think that quarter. a quite we I happen large

the And occasion, So that with large those quarter. I very we'll think they won't be that's helped but X projects. see on QX really every

Kurt Yinger

Right, right.

you of revenue makes versus parts And And tailwinds assumed terms Could the underlying bit X% talk outlook. capital any that FX turning a about to just the assumptions growth sense. there's range? in there whether in to little equipment? That XX% in Okay.

Jeff Powell

weakened Well, from many, XXXX. the what saw and we've Yes. as probably you reported through dollar

into we've our So outlook XXXX. that for factored

good in So the capital, us Consumables And We I in more & actually, we're -- for regards tailwind strength. Parts think will capital to and think was business be XXXX. at that really us. I parts quite for looking a the

XXXX. me, excuse -- a of kind that's think I So

think lower. where growth the on growth higher in will see rate. we'll to that really capital I It's business, So the be the be going

Kurt Yinger

front, And going it. margins of the a improving also that I you that higher was revenue forward? was that and whether And talked sustain driving Parts that of Parts Got you on from business. Okay. obviously wondering something the really what kind could had gross margin benefit helpful. on you That's gross but was about proportion

Jeff Powell

revenue been sustainable. do stream. on think & the Parts really mix -- and I product Parts margins those the & Consumables And increase by price are has achieved increases Consumables within the driven it's

Kurt Yinger

Okay.

Mike McKenney

trying you I of we also going initiatives have use to think down We our on a that to couple -- we're cost everywhere. internal remember, drive

some roll those start see So in we to as our and pickup to programs margin divisions, implement we our continue we businesses. out in And improve them that. from additional

Kurt Yinger

All right. me. it. Got And for last one

seeing where improvement? you're You perspective, type subdued geographic in touched activity still versus you a hoping on maybe rank where the seeing not was market strength through end maybe sequential or and of bit can segment us walk I it you're from that the same most and you is but commentary,

Mike McKenney

maybe without side think the or cases, at Processing levels some really Europe in Well, America North now, in Wood as back as levels. right historic almost question, well exceeding is historic I strong,

quarter. in our, the growth fourth strongest So We that's piece. I areas would say, geographic our had clearly nice all in really

And many sequentially in well year-on-year were so as as cases. -- we

pleased we So quite with were that.

it's one doesn't So not stand out. really

being American prices they're North record are at highs. all with think, lumber to to, I that right bit That's notable piece, think market I in surprise, of a back is supporting at everybody. now the the reasons I like improving that of one Wood really the a housing levels, particular, Processing think, the exception historic getting

this products So -- companies either. I to demand the weren't able forecast didn't think forest

And so didn't they really they their didn't production have the -- have this demand. to meet ready really

play mean, to really bringing trying to adding they're they're long. and really, meet so back demand. prices And shifts, hiring I sustainable quite try to up, high. are the don't record think for mills These now people that catch-up I

the see more improving probably one And out. been little prices online and Processing being that, But Wood at stands we the but I strong so year, the you'll levels. think, course brought that moderate has with a more, to expect -- probably to of bit although through every business, start see very remain we'll capacity the -- housing still really

Operator

Liptak Our next of from question line comes Seaport. from the Walt

Walt Liptak

come last a what year? still on this funnel -- the wood that of projects do read follow-on a added to The on you strong to and wanted market amount do one in during the there about a housing process. up being are have of I is capacity And going XXXX? is

Jeff Powell

Yes.

what's for idle on, some -- idle idle think believe there's do believe online. come -- a potential also few will them for out some -- some new there's that still We there's believe there we we some online. we facilities will online. to mills disclose can't And some going the come I actually come but that of probably we capacity can't

lumber is -- few last amount coming to over dimensional continue and and side there's will ordered fair a been the side, online come On capacity lumber online. that's years, that of the

is many online there sites side, of as hasn't years, but the OSB levels the last OSB right new in On brought been at planned now. record couple or

of so we is at idle good if think current chance out online. start to demand whatever possibly left new kind think that I And some -- facilities back we the come continues is there, see And level. a would you'll even capacity

some So capacity expect coming we do that see to additional online.

Walt Liptak

still there? is parts the in Great. it XXXX. paperboard, other that's Or to get early new capacity In for the process, OCC added up Okay. there and funnel? the are in the of Is prices capacity too

Jeff Powell

no and in online the some more growth after and to benefited And order their Well, conversions will that's grown China. never in and are cease still The question big fourth accelerated quarter. probably the at-home something that just bit. surprised have North more how a that in in has we many discussion ability are America. remain away. stages remember, amaze There's experts projects is have and at we -- then It's -- capacity quite retailer they it. absorb year, China, the and a about there's growth forecasting that to that more this us talk the in pandemic markets with the the goes bring announced pandemic We're

discussions and coming So packaging meet demand that about online there's conversions demand. more to for definitely

Operator

comes Hyler Capital. WDH from the Bill line question of next from Our

Bill Hyler

that Also performance was ESG list congrats from good. XXXX. thought for that making company Newsweek Responsible in I

Jeff Powell

but that in and in pleased with. got The are We're discuss of actually do of the we're what are kind we awards sustainability -- last quite to -- industries we our couple a starting recognize we focus. today, didn't couple of that quite people months

Bill Hyler

definitely. Yes,

quarter. important, it I capital on interesting addressed And XX% projects million, which fuels assume, color fourth you was capital million & from that know strong a little $XX and for great, hoping I Consumables but a Yes, is like growth that's you Parts looks get bookings, record long that. because company your $XXX these Okay. came historically. more or the term. I

you see. highlight? color Processing like So regional it's areas from It came I a great any Was of recycled can the that Industrial you of timber. Can any thing paperboard, guess provide on there specific business, the to mostly looks a which strength lot bookings? it is paper,

Jeff Powell

in the two were the largest also the prep Wood Both say, growth component would X there's of those strong then of very in million we The Well, Stock product you're that. product And was and Bill. families capital families very being being of -- $XXX the I strong. right, had Industrial that a Processing. for stronger quarter fourth in and bookings.

Mike McKenney

our is recycling Stock piece. prep paper

Bill Hyler

Right.

Jeff Powell

Control activity was say Consumables side. predominantly I on Flow driven good would also, we in business but Parts really And that the then had & our

Bill Hyler

on Okay. different follow-up a And topic. one maybe

the least last years, looks With the guys the there. very investigating? I know opportunities are free the seeing is you're on and a there Maybe cash sheet the commentary potential you that issue. have out how like multiples But what out you're flow high or are seeing always strength high, flow, been few little least market potential very acquisition in growing. an balance that's -- at

Jeff Powell

their Yes. say Right activity memory. I development is our of spends on would it's that. in been they're level group most highest that probably the now, recent business telling time focusing us

deal very, that a fit right also the level fits criteria. find kind will. strong balance disrupt companies properly And you that So of one you've And expect, the wanting cadence to one transactions was for that is think to is It's backlog, as on and out, activity now. kind very companies would the that yes, occurred in essentially little is kind year, we sheet strategies, if to addition last strategic our and deal of of there got the just always challenge you you as good first pointed then valued. very refocusing so

number that's that of is opportunities. always have so ultimate there a challenge And at in the out looking very looking But very, the we opportunities we're at at level. high

Operator

the comes from Our from Chevy. of Eubank Bobby next question line

Bobby Eubank

Congrats on a quarter. strong

several bookings? of around and bookings I How bookings, characterize of discussions would of kind some into mentioned you with discussion QX or those the word of You came kind of actual and discussions think continuing kind customers the into up clients times. momentum converting

Mike McKenney

take it? You want to

Jeff Powell

up in thus tend quarter had to quarter don't as very have Again, first front. was quarter-to-quarter. seen that we at sequentially, that happy projects very to the quarter first we far. we've as flow because activity we But this earlier, don't the record continued good the going point to reoccur some to be into see a Well, think going order the report were discussed good we Bobby, fourth we're large strength in we

Bobby Eubank

Is in the activity of last years sign That's great. of market. And see follow-up likely looking things any if contracts? some M&A particular in been I that on of you that there couple XXXX you've can more at on segment see actually Bill's converting question the for would and kind the to

Jeff Powell

there very available. for some of we given look might said, strategic X fit acquisitions segments. us, And our time, quickly tend hundred of type good narrows to of operating think we are out couple be a that a with down we've say, might be select that to any that all having I companies would in and discussions a and we group So as at

normally I segments. and opportunities X So of in our we're core at say looking at are would all looking

some So our for -- share. high of in side, Wood have we instance, Processing market our extremely

XX% Our have market there XX% businesses anywhere from to share.

Material the wouldn't pure say there, got would by where Handling say XX% fewer I share. XX% that you market maybe sector just have then so to you And we've opportunities math,

But that our at looking the of core remaining competition vary opportunities are what in X So of being depending numbers on said, segments. kind we all the normally like. looks

Operator

to questions. would further showing and I closing CEO, like Powell, I'm over call time, back remarks. for turn the this At to Jeff no President

Jeff Powell

you. Thank

I the you up few call today, wrapping wanted leave just a Before takeaways. with to

and we as of well-being the work to continue health First, will top it was our in through the and priority pandemic. our our priority top be XXXX, employees

meeting revenue focus As the our growth we beyond customers' our core we on and will immediate crisis, markets. in health seek look we ahead accelerate as to needs

was liquidity today than a Our at now ratio X.XX. and crisis leverage with our stronger is position it financial debt began, the when is health excellent,

cash Our stronger remains business of today, model, ability strong and free economies a continuing XXXX. the flow want the thank stay a to generate around to us look to forward to and we that, expect for our we world cornerstone reopening joining safe. of to With and please you

Operator

for Thanks participating. call. conference today's concludes this gentlemen, and Ladies

disconnect. now may You

Kadant (KAI) 18 Feb 212020 Q4 Earnings call transcript