Kadant Inc (KAI) 2022 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Kadant's Fourth Quarter 2022 Earnings Conference Call. (Operator Instructions)

美好的一天，謝謝你的支持。歡迎來到凱登 2022 年第四季度收益電話會議。 （操作員說明）

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael McKenney, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

請注意，今天的會議正在錄製中。我現在想把會議交給今天的演講者，執行副總裁兼首席財務官 Michael McKenney。請繼續，先生。

Thank you, Norma. Good morning, everyone, and welcome to Kadant's Fourth Quarter and Full Year 2022 Earnings Call. With me on the call today is Jeff Powell, our President and Chief Executive Officer.

謝謝你，諾瑪。大家早上好，歡迎來到 Kadant 的第四季度和 2022 年全年收益電話會議。今天與我通話的是我們的總裁兼首席執行官傑夫鮑威爾。

Before we begin, let me read our safe harbor statement. Various remarks that we may make today about Kadant's future plans and expectations, financial and operating results and prospects are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements as a result of various important factors, including those outlined at the beginning of our slide presentation and those discussed under the heading Risk Factors in our annual report on Form 10-K for the fiscal year ended January 1, 2022, and subsequent filings with the Securities and Exchange Commission.

在我們開始之前，讓我閱讀我們的安全港聲明。我們今天可能就 Kadant 的未來計劃和預期、財務和運營結果以及前景發表的各種評論是根據 1995 年《私人證券訴訟改革法案》的安全港條款的前瞻性陳述。這些前瞻性陳述受已知和未知的風險和不確定性可能導致我們的實際結果與這些前瞻性陳述因各種重要因素而產生重大差異，這些因素包括我們幻燈片演示開始時概述的那些以及我們年度報告中風險因素標題下討論的那些報告截至 2022 年 1 月 1 日的財政年度的 10-K 表格，以及隨後向美國證券交易委員會提交的文件。

In addition, any forward-looking statements we make during the webcast represent our views and estimates only as of today. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views or estimates change. During this webcast, we will refer to some non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is contained in our fourth quarter and full year earnings press release and the slides presented on the webcast and discussed in the conference call, which are available in the Investors section of our website at www.kadant.com.

此外，我們在網絡廣播中所做的任何前瞻性陳述僅代表我們截至今天的觀點和估計。雖然我們可能會選擇在未來的某個時候更新前瞻性陳述，但我們明確表示不承擔任何這樣做的義務，即使我們的觀點或估計發生變化。在此網絡廣播中，我們將提及一些非 GAAP 財務指標。這些非 GAAP 措施不是根據公認的會計原則編制的。非 GAAP 財務指標與最直接可比的 GAAP 指標的對賬包含在我們的第四季度和全年收益新聞稿中，以及在網絡廣播中展示並在電話會議中討論的幻燈片，可在我們的網站 www.kadant.com。

Finally, I wanted to note that when we refer to GAAP earnings per share or EPS and adjusted EPS on this call, we are referring to each of these measures as calculated on a diluted basis.

最後，我想指出，當我們在本次電話會議上提及 GAAP 每股收益或每股收益和調整後的每股收益時，我們指的是在稀釋基礎上計算的每一項指標。

With that, I'll turn the call over to Jeff Powell, who will give you an update on Kadant's business and future prospects. Following Jeff's remarks, I'll give an overview of our financial results for the quarter and the year, and we will then have a Q&A session. Jeff?

有了這個，我會把電話轉給 Jeff Powell，他會向您介紹 Kadant 的業務和未來前景的最新情況。在 Jeff 的發言之後，我將概述我們本季度和本年度的財務業績，然後我們將舉行問答環節。傑夫？

Thanks, Mike. Hello, everyone. Thank you for joining us this morning to review our fourth quarter and full year results and discuss our business outlook for 2023. I'm pleased to report that fourth quarter was a strong finish to a record-setting year for Kadant. Despite the challenges brought about by macroeconomic headwinds and lingering supply chain constraints, we had another well-executed quarter. We generated record adjusted EBITDA, which contributed to solid cash flow in the fourth quarter.

謝謝，邁克。大家好。感謝您今天早上加入我們，回顧我們的第四季度和全年業績，並討論我們 2023 年的業務展望。我很高興地報告，第四季度是凱登創紀錄的一年的強勁收官。儘管宏觀經濟逆風和揮之不去的供應鏈限制帶來了挑戰，但我們還有一個執行良好的季度。我們產生了創紀錄的調整後 EBITDA，這為第四季度的穩健現金流做出了貢獻。

Strong capital project activity in the first half of the year and robust aftermarket demand led to record revenue in the fourth quarter and the full year. We continue to deliver on our mission to provide technologies and engineered solutions to help our customers advance their operational performance with product innovations that reduce waste or generate more yield with fewer inputs. At the end of 2022, we were honored to be named by Newsweek Magazine as one of America's Most Responsible Companies for the third consecutive year. It's rewarding to be recognized for our efforts in this area.

今年上半年強勁的資本項目活動和強勁的售後市場需求導致第四季度和全年的收入創下歷史新高。我們繼續履行我們的使命，提供技術和工程解決方案，幫助我們的客戶通過產品創新提高運營績效，減少浪費或以更少的投入產生更多的收益。 2022 年底，我們很榮幸連續第三年被《新聞周刊》雜誌評為美國最具責任感的公司之一。我們在這一領域的努力得到認可是值得的。

Next, I'd like to review our Q4 financial performance. Q4 revenue was up 6% compared to the fourth quarter of 2021 to a record $232 million. Organic revenue, which excludes acquisitions and the impact of foreign currency translation, was up 13% compared to the same period last year. Despite a larger portion of our Q4 revenue being capital shipments, excellent execution drove our EBITDA margin to a record 21.3%. This record-setting performance was led by our Flow Control segment, and I'll provide more detail on the operating segments in a few minutes.

接下來，我想回顧一下我們第四季度的財務表現。與 2021 年第四季度相比，第四季度收入增長 6%，達到創紀錄的 2.32 億美元。不包括收購和外幣換算影響的有機收入與去年同期相比增長了 13%。儘管我們第四季度的收入中有很大一部分是資本出貨，但出色的執行力使我們的 EBITDA 利潤率達到創紀錄的 21.3%。這一創紀錄的業績是由我們的流量控制部門引領的，我將在幾分鐘內提供有關運營部門的更多詳細信息。

Our strong quarterly earnings performance contributed to exceptional full year performance, which I'll review next on Slide 7.

我們強勁的季度收益表現促成了出色的全年表現，我將在接下來的幻燈片 7 中對此進行回顧。

Strong demand we experienced in the first half of 2022 moderated in the second half as Central Bank's fiscal policies began to soften demand in some sectors. That said, our full year revenue increased 15% to a record $905 million, which included a $41 million negative impact from FX. Adjusted diluted EPS increased to $9.24 per share, exceeding the prior record set last year at $7.83 per share, despite a negative currency translation effect of $0.46 per share.

隨著中央銀行的財政政策開始削弱某些行業的需求，我們在 2022 年上半年經歷的強勁需求在下半年有所緩和。也就是說，我們的全年收入增長了 15%，達到創紀錄的 9.05 億美元，其中包括 4100 萬美元的外匯負面影響。調整後的攤薄後每股收益增加至每股 9.24 美元，超過了去年創下的每股 7.83 美元的紀錄，儘管受到了每股 0.46 美元的負面貨幣換算影響。

Our full year adjusted EBITDA was up 19% to a record $189 million or 20.9% of revenue. This record margin performance surpasses our prior record set last year when we achieved 20.3%. We have had a strong strategic focus on improving our margin performance, and we are pleased to see these results. As we have previously discussed, a number of our businesses have been implementing our 80/20 program, which is designed to serve our customers even better while strengthening our financial performance.

我們全年調整後的 EBITDA 增長了 19%，達到創紀錄的 1.89 億美元，佔收入的 20.9%。這一創紀錄的利潤率表現超過了我們去年創下的 20.3% 的紀錄。我們將戰略重點放在提高利潤率表現上，我們很高興看到這些結果。正如我們之前所討論的，我們的許多企業一直在實施我們的 80/20 計劃，該計劃旨在為我們的客戶提供更好的服務，同時加強我們的財務業績。

The collective results have been very encouraging, and we look forward to continuing to pursue these customer-focused initiatives to create even more value in the coming years.

集體成果非常令人鼓舞，我們期待繼續推行這些以客戶為中心的舉措，以在未來幾年創造更多價值。

Next, I'd like to review our performance in our 3 operating segments. Our Flow Control segment continued to show strength in the fourth quarter with revenue up 17% to a record $91 million. Excluding the unfavorable impact of FX, revenue was up 24%. Aftermarket parts revenue made up 66% of total revenue and helped boost adjusted EBITDA to a record $26 million in the fourth quarter. We believe the fundamental drivers of our end markets remain healthy, though business activity continues to be influenced by geopolitical and macroeconomic challenges around the globe.

接下來，我想回顧一下我們在 3 個運營部門的表現。我們的流量控制部門在第四季度繼續表現強勁，收入增長 17% 至創紀錄的 9100 萬美元。排除外彙的不利影響，收入增長了 24%。售後零件收入佔總收入的 66%，並幫助將調整後的 EBITDA 在第四季度推高至創紀錄的 2600 萬美元。我們相信，儘管商業活動繼續受到全球地緣政治和宏觀經濟挑戰的影響，但我們終端市場的基本驅動力依然健康。

Turning now to our Industrial Processing segment. Our performance in the fourth quarter was solid despite the softening in some of our core end markets. Organic revenue performance was slightly higher than last year's record Q4 revenue performance. Adjusted EBITDA margin declined 130 basis points compared to the prior year, but remained strong at 24.9% of revenue. This decline was largely attributed to market mix and the timing of shipments in our Wood Processing product line.

現在轉向我們的工業加工部門。儘管我們的一些核心終端市場出現疲軟，但我們在第四季度的表現依然穩健。有機收入表現略高於去年創紀錄的第四季度收入表現。調整後的 EBITDA 利潤率與上一年相比下降了 130 個基點，但仍保持強勁，佔收入的 24.9%。這種下降主要歸因於我們的木材加工產品線的市場組合和發貨時間。

Looking ahead to 2023, we expect demand in this segment to soften compared to the record demand we experienced over the last couple of years, particularly in our Wood Processing product line. In our Material Handling segment, demand was solid across all product lines and project activity was relatively strong. Revenue increased 12% to $51 million, and parts revenue in the fourth quarter made up 53% of total revenue. Capital shipments were strong in the quarter and benefited from record demand in the first half of the year.

展望 2023 年，與過去幾年我們經歷的創紀錄需求相比，我們預計該領域的需求將會減弱，尤其是在我們的木材加工產品線中。在我們的物料搬運部門，所有產品線的需求都很強勁，項目活動也相對強勁。收入增長 12% 至 5100 萬美元，第四季度零部件收入佔總收入的 53%。本季度資本出貨量強勁，受益於上半年創紀錄的需求。

Organic bookings in our Material Handling segment increased 5% due largely to strong demand for our bulk Material Handling equipment in all markets. Looking ahead to 2023, we believe this segment will continue to see good business activity, particularly as new infrastructure projects are executed following the passage of the infrastructure bill in the U.S. Inquiries from our construction aggregate producers for our bulk Material Handling equipment are increasing as infrastructure projects begin to gain traction.

我們的物料搬運部門的有機預訂量增長了 5%，這主要是由於所有市場對我們的散裝物料搬運設備的強勁需求。展望 2023 年，我們相信該細分市場將繼續保持良好的業務活動，尤其是在美國基礎設施法案通過後執行新的基礎設施項目。我們的建築骨料生產商對我們的散裝物料搬運設備的詢價隨著基礎設施的增加而增加項目開始獲得牽引力。

As we look ahead to the first quarter of 2023 and the full year, ongoing project activity is healthy, and demand has been solid as we entered the year. However, economic headwinds are building, which makes the second half of the year less certain. Our backlog and strong balance sheet have us well positioned to capitalize on opportunities that may emerge as the year unfolds, and we expect to deliver a solid financial performance for the year.

展望 2023 年第一季度和全年，正在進行的項目活動是健康的，並且在我們進入這一年時需求一直很穩定。然而，經濟逆風正在形成，這使得今年下半年的不確定性降低。我們積壓的訂單和強勁的資產負債表使我們能夠很好地利用隨著這一年的展開可能出現的機會，我們預計今年將實現穩健的財務業績。

With that, I'd like to pass the call over to Mike now for his review of our financial performance and outlook for 2023. Mike?

有了這個，我現在想把電話轉給邁克，讓他審查我們的財務業績和 2023 年的展望。邁克？

Thank you, Jeff. I'll start with some key financial metrics from our fourth quarter, which includes some notable records. Gross margin increased 70 basis points to 43.1% in the fourth quarter of '22 compared to 42.4% in the fourth quarter of '21. Our gross margin in the fourth quarter of '21 was negatively affected by the amortization of acquired profit and inventory, which lowered gross margin by 90 basis points. Excluding this impact in the prior year's quarter, gross margin was down 20 basis points due to a higher mix of capital revenue.

謝謝你，傑夫。我將從我們第四季度的一些關鍵財務指標開始，其中包括一些值得注意的記錄。 22 年第四季度毛利率增長 70 個基點至 43.1%，而 21 年第四季度為 42.4%。我們在 21 年第四季度的毛利率受到收購利潤和存貨攤銷的負面影響，這使毛利率降低了 90 個基點。排除上一年季度的這一影響，毛利率下降了 20 個基點，原因是資本收入組合較高。

Our overall percentage of parts and consumables revenue decreased to 60% of total revenue in the fourth quarter of '22 compared to 63% in the fourth quarter of '21 due to significantly higher capital revenue at our Flow Control segment. As a percentage of revenue, SG&A expenses decreased to 24.5% in the fourth quarter '22 compared to 26.4% in the prior year period. SG&A expense decreased $1 million to $56.8 million in the fourth quarter of $22 million compared to $57.8 million in the fourth quarter '21.

由於我們的流量控制部門的資本收入顯著增加，我們零件和消耗品收入的總體百分比從 21 年第四季度的 63% 下降到 22 年第四季度總收入的 60%。作為收入的百分比，SG&A 費用在 2022 年第四季度下降至 24.5%，而去年同期為 26.4%。 SG&A 費用在第四季度減少 100 萬美元至 5680 萬美元，為 2200 萬美元，而 2021 年第四季度為 5780 萬美元。

The fourth quarter '22 included a $3.3 million favorable foreign currency translation effect and a $1.5 million decrease in acquisition-related costs compared to the fourth quarter of '21. Partially offsetting these favorable effects was $0.7 million of expense from an indemnification asset reversal related to the release of tax reserves. Excluding all these items, SG&A expense increased $2.1 million due to additional headcount within selling and increased travel costs related to sales and service.

與 21 年第四季度相比，22 年第四季度產生了 330 萬美元的有利外幣換算效應，收購相關成本減少了 150 萬美元。部分抵消了這些有利影響的是 70 萬美元的費用，這些費用來自與釋放稅收儲備有關的賠償資產逆轉。排除所有這些項目，SG&A 費用增加了 210 萬美元，原因是銷售人員增加以及與銷售和服務相關的差旅成本增加。

Our effective tax rate in the fourth quarter was 29.2%, slightly higher than our forecasted rate of 28% due to the timing of certain incentive compensation payments. Our GAAP diluted EPS increased 8% to $2.23 in the fourth quarter compared to $2.07 in the fourth quarter '21, and our adjusted diluted EPS was up 1% to $2.33. Our fourth quarter '22 adjusted diluted EPS of $2.33 exceeded the high end of our guidance range by $0.26 due to higher-than-anticipated revenue, especially at our Flow Control segment and to a lesser extent, higher gross margins.

我們第四季度的實際稅率為 29.2%，略高於我們預測的 28%，這是由於某些激勵薪酬支付的時間安排所致。與 2021 年第四季度的 2.07 美元相比，我們的 GAAP 稀釋後每股收益在第四季度增長了 8% 至 2.23 美元，我們調整後的稀釋後每股收益增長了 1% 至 2.33 美元。由於收入高於預期，我們的 22 年第四季度調整後攤薄每股收益為 2.33 美元，超出我們指導範圍的上限 0.26 美元，尤其是在我們的流量控制部門，毛利率在較小程度上更高。

For the full year '22, gross margin was 43.1% compared to 42.9% in '21. Excluding the amortization of profit and inventory in both periods and government assistance benefits in '21, gross margin was down 30 basis points to 43% compared to 43.3% in the prior year due to a higher mix of capital revenue. Our percentage of parts and consumables revenue was 63% in '22 compared to 65% in '21.

對於 22 年全年，毛利率為 43.1%，而 21 年為 42.9%。排除兩個時期的利潤和存貨攤銷以及 21 年的政府援助福利，毛利率下降 30 個基點至 43%，而去年同期為 43.3%，原因是資本收入組合較高。我們的零件和消耗品收入百分比在 22 年為 63%，而 21 年為 65%。

As a percentage of revenue, SG&A expenses decreased to 24.8% in '22 compared to 26.8% -- excuse me, 26.5% in '21. SG&A expenses were $224.4 million in '22, an increase of $15.6 million or 7% compared to $208.8 million in '21. We had a favorable foreign currency translation effect of $9.8 million and a $3.6 million reduction in acquisition-related costs, which lowered SG&A expenses in '22. This was offset by $11.7 million of SG&A from our acquisitions, a reduction in government assistance benefits of $1.4 million and $1.3 million of expense from indemnification asset reversals, which are offset by a corresponding tax benefit within provisions for income taxes.

作為收入的百分比，SG&A 費用從 26.8% 下降到 22 年的 24.8%——對不起，21 年為 26.5%。 22 年的 SG&A 費用為 2.244 億美元，與 21 年的 2.088 億美元相比增加了 1560 萬美元或 7%。我們獲得了 980 萬美元的有利外幣換算效果，並減少了 360 萬美元的收購相關成本，從而降低了 22 年的 SG&A 費用。這被我們收購產生的 1170 萬美元 SG&A、政府援助福利減少 140 萬美元和賠償資產逆轉產生的 130 萬美元費用所抵消，這些費用被所得稅規定中的相應稅收優惠所抵消。

Excluding all these items, SG&A expenses were up $14.5 million or 7% compared to '21, primarily due to increased compensation expense related to wages and additional headcount as well as increased travel-related costs. Our GAAP diluted EPS was a record $10.35 in '22, up 44% compared to $7.21 in '21. Our adjusted diluted EPS was also a record at $9.24, up 18% compared to $7.83 last year.

排除所有這些項目，與 21 年相比，SG&A 費用增加了 1450 萬美元或 7%，這主要是由於與工資和額外員工相關的補償費用增加以及與差旅相關的費用增加。我們的 GAAP 稀釋每股收益在 22 年達到創紀錄的 10.35 美元，與 21 年的 7.21 美元相比增長了 44%。我們調整後的攤薄每股收益也創下了 9.24 美元的歷史新高，比去年的 7.83 美元增長了 18%。

In the fourth quarter of '22, adjusted EBITDA increased 10% to a record $49.5 million or 21.3% of revenue compared to $44.8 million or 20.5% of revenue in the fourth quarter of '21, led by our Flow Control segment. For the full year, adjusted EBITDA was a record $189.1 million and a record 20.9% of revenue compared to adjusted EBITDA of $159.4 million or 20.3% of revenue in '21 due to strong performance in our Flow Control and Material Handling segments.

在 22 年第四季度，調整後的 EBITDA 增長了 10%，達到創紀錄的 4950 萬美元，佔收入的 21.3%，而 21 年第四季度的收入為 4480 萬美元，佔收入的 20.5%，這主要是我們的流量控制部門。全年，調整後的 EBITDA 達到創紀錄的 1.891 億美元，佔收入的 20.9%，而 21 年調整後的 EBITDA 為 1.594 億美元，佔收入的 20.3%，這是由於我們的流量控制和材料處理部門的強勁表現。

Operating cash flow was $35.2 million in the fourth quarter of '22, up 41% sequentially, but down 42% compared to $61 million in the fourth quarter '21. For the full year, operating cash flow was $102.6 million, down 37% from '21 due to the timing of working capital increases. Operating cash flow was a record in '21 due in part to a $44.5 million benefit from working capital as customer deposits and accounts payable growth outpaced the growth in inventory and accounts receivable.

22 年第四季度的運營現金流為 3520 萬美元，環比增長 41%，但與 21 年第四季度的 6100 萬美元相比下降了 42%。全年，由於營運資金增加的時間，經營現金流為 1.026 億美元，比 21 年下降 37%。經營現金流在 21 年創下歷史新高，部分原因是由於客戶存款和應付賬款的增長超過了存貨和應收賬款的增長，營運資金帶來了 4450 萬美元的收益。

In 2022, our operating cash flow was impacted by a $50.6 million use of cash for working capital related in large part to inventory purchases to support our record backlog and an increase in accounts receivable as a result of revenue growth. I would add here that considering our guidance for 2023, we do not anticipate continued growth in working capital requirements.

2022 年，我們的運營現金流受到 5,060 萬美元現金用於營運資金的影響，這在很大程度上與庫存採購相關，以支持我們創紀錄的積壓訂單，以及收入增長導致的應收賬款增加。我想在這裡補充一點，考慮到我們對 2023 年的指導，我們預計營運資金需求不會持續增長。

We had several notable nonoperating uses of cash in the fourth quarter of '22. We repaid $15.5 million of debt and paid $12 million for capital expenditures, which included $5 million for our facility project in China and paid a $3 million dividend on our common stock. In addition, we paid $3.6 million for the acquisition of a Material Handling business in Canada and a $1.3 million related to the renewal of our credit facility, which I'll discuss in more detail as part of my liquidity review.

在 2022 年第四季度，我們有幾筆值得注意的非經營性現金使用。我們償還了 1550 萬美元的債務並支付了 1200 萬美元的資本支出，其中包括 500 萬美元用於我們在中國的設施項目，並支付了 300 萬美元的普通股股息。此外，我們還支付了 360 萬美元用於收購加拿大的物料搬運業務，並支付了 130 萬美元用於更新我們的信貸額度，我將在流動性審查中更詳細地討論這一點。

For the full year, we repaid $63.5 million of our debt and paid $28.2 million for capital expenditures, which included $10.4 million for our facility project in China. Construction for this project is well underway with remaining estimated construction costs of $8 million to $9 million and a projected move date in the middle of $23 million.

全年，我們償還了 6350 萬美元的債務並支付了 2820 萬美元的資本支出，其中包括 1040 萬美元用於我們在中國的設施項目。該項目的施工進展順利，剩餘估計施工成本為 800 萬至 900 萬美元，預計搬遷日期為 2300 萬美元。

I wanted to mention on the CapEx front in regards to the facility project in China that as you may recall, the local government had asked us to relocate. They purchased our existing facility, and we received a down payment of 31% in the first quarter of '22, with the remaining proceeds from the sale of the facility due the earlier when the government sells the property or the first quarter of '24. Proceeds from selling the facility will pay for the new facility and the relocation costs that will be incurred.

關於中國設施項目的資本支出，我想提一下，您可能還記得，當地政府要求我們搬遷。他們購買了我們現有的設施，我們在 22 年第一季度收到了 31% 的首付款，出售該設施的剩餘收益將在政府出售房產時或 24 年第一季度到期。出售該設施的收益將用於支付新設施和將發生的搬遷費用。

Let me turn to our EPS results for the quarter. In the fourth quarter '22, GAAP diluted earnings per share was $2.23 and our adjusted diluted EPS was $2.33. The $0.10 difference relates to $0.09 of impairment and restructuring costs and $0.01 of acquisition costs. The $0.09 in impairment and restructuring cost has 2 components: the first component relates to additional restructuring costs associated with the consolidation of our ceramic blade manufacturing in Europe into our recently acquired (inaudible) business, the second component relates to an asset impairment charge and other costs associated with exiting our business in Russia.

讓我談談我們本季度的每股收益結果。 22 年第四季度，GAAP 攤薄後每股收益為 2.23 美元，我們調整後的攤薄後每股收益為 2.33 美元。 0.10 美元的差異與 0.09 美元的減值和重組成本以及 0.01 美元的收購成本有關。 0.09 美元的減值和重組成本有兩個部分：第一個部分與將我們在歐洲的陶瓷刀片製造合併到我們最近收購的（聽不清）業務相關的額外重組成本有關，第二個部分與資產減值費用和其他相關與退出我們在俄羅斯的業務相關的成本。

We have a small subsidiary in Russia with a few employees, which was part of our NII acquisition in 2017. Local business transactions by foreign-owned companies have been severely restricted due to Russian sanctions, and as a result, we've been winding down this small operation. In the fourth quarter '21, GAAP diluted earnings per share was $2.07, and adjusted diluted EPS was $2.31. $0.24 difference relates to $0.23 of acquisition-related costs, $0.08 of impairment and restructuring costs, a $0.04 discrete tax benefit and a $0.03 gain on the sale of building.

我們在俄羅斯有一家擁有幾名員工的小型子公司，這是我們 2017 年收購 NII 的一部分。由於俄羅斯的製裁，外資公司在當地的業務交易受到嚴格限制，因此，我們一直在縮減規模這個小手術。 21 年第四季度，GAAP 攤薄後每股收益為 2.07 美元，調整後攤薄後每股收益為 2.31 美元。 0.24 美元的差異涉及 0.23 美元的收購相關成本、0.08 美元的減值和重組成本、0.04 美元的離散稅收優惠和 0.03 美元的建築物銷售收益。

The increase of $0.02 in adjusted diluted EPS in the fourth quarter of '22 compared to the fourth quarter '21 consists of the following: $0.40 due to higher revenue, partially offset by $0.29 due to a higher recurring tax rate; $0.05 due to higher interest expense; and $0.04 due to lower gross margins. The $0.29 impact from the increase in our recurring tax rate was primarily due to a lower tax rate in the fourth quarter '21 due to tax benefits related to a reversal of tax reserves associated with uncertain tax positions and the exercise of previously awarded employee stock options.

與 21 年第四季度相比，22 年第四季度調整後的攤薄每股收益增加 0.02 美元，其中包括：由於收入增加而增加 0.40 美元，由於經常性稅率較高而被 0.29 美元部分抵消；利息支出增加 0.05 美元；和 0.04 美元，因為毛利率較低。我們的經常性稅率增加帶來的 0.29 美元的影響主要是由於 21 年第四季度的較低稅率，原因是與不確定的稅收狀況相關的稅收儲備的逆轉和先前授予的員工股票期權的行使有關的稅收優惠.

Collectively, included in all the categories I just mentioned, was an unfavorable foreign currency translation effect of $0.16 in the fourth quarter of '22 compared to the fourth quarter of last year due to the strengthening of the U.S. dollar.

總的來說，在我剛才提到的所有類別中，由於美元走強，與去年第四季度相比，22 年第四季度不利的外幣換算效應為 0.16 美元。

Now turning to our EPS results for the full year on Slide 17. We reported GAAP diluted earnings per share of $10.35 in '22 and our adjusted diluted EPS was $9.24. $1.11 difference relates to $1.30 gain on sale related to one of our Chinese facilities, impairment and restructuring costs of $0.11 and acquisition-related costs of $0.07.

現在轉向我們在幻燈片 17 上的全年每股收益結果。我們報告 22 年的 GAAP 稀釋每股收益為 10.35 美元，我們調整後的稀釋每股收益為 9.24 美元。 1.11 美元的差額涉及與我們的一個中國設施相關的 1.30 美元的銷售收益、0.11 美元的減值和重組成本以及 0.07 美元的收購相關成本。

We reported GAAP diluted earnings per share of $7.21 in '21 and our adjusted diluted EPS was $7.83. The $0.62 difference relates to acquisition-related costs of $0.60, impairment and restructuring costs of $0.08, a discrete tax benefit of $0.04 and a gain on sale of $0.03.

我們報告 21 年的 GAAP 攤薄每股收益為 7.21 美元，調整後的攤薄每股收益為 7.83 美元。 0.62 美元的差異涉及 0.60 美元的收購相關成本、0.08 美元的減值和重組成本、0.04 美元的離散稅收優惠和 0.03 美元的銷售收益。

The increase of $1.41 in adjusted diluted EPS from '21 to '22 consists of the following: $2.19 from higher revenue and $0.36 from the operating results of our acquisitions. These increases were partially offset by $0.39 from higher operating expenses, $0.33 from a higher recurring tax rate, $0.22 from lower gross margins, $0.16 from reduction in benefits from government assistance programs, $0.03 due to higher weighted average shares outstanding and $0.01 from higher interest expense.

從 21 年到 22 年，調整後的稀釋每股收益增加了 1.41 美元，其中包括：2.19 美元來自更高的收入，0.36 美元來自我們收購的經營業績。這些增長部分被更高的運營費用 0.39 美元、更高的經常性稅率 0.33 美元、較低的毛利率 0.22 美元、政府援助計劃的福利減少 0.16 美元、更高的加權平均流通股 0.03 美元和更高的利息支出 0.01 美元部分抵消.

Collectively, included in all the categories I just mentioned was unfavorable foreign currency translation effect of $0.46 in '22 compared to '21.

總的來說，在我剛才提到的所有類別中，與 21 年相比，22 年不利的外幣換算影響為 0.46 美元。

Now let's turn to our liquidity metrics on Slide 18. Our cash conversion days measure calculated by taking days in receivables plus days in inventory and subtracting days in accounts payable, was 126 at the end of the fourth quarter '22, down from 130 at the end of the third quarter '22, but up from 106 days at the end of '21. The increase in conversion days from the prior year was principally driven by a higher number of days in inventory as we have purchased material to support our record backlog.

現在讓我們來看看我們在幻燈片 18 上的流動性指標。我們的現金轉換天數是通過計算應收賬款天數加上庫存天數並減去應付賬款天數計算得出的，到 22 年第四季度末為 126，低於 2020 年第四季度末的 130。 22 年第三季度末，但比 21 年末的 106 天有所增加。與上一年相比，轉換天數的增加主要是由於庫存天數增加，因為我們購買了材料來支持我們創紀錄的積壓訂單。

Working capital as a percentage of revenue increased to 13.9% in the fourth quarter '22 compared to 12.8% in the third quarter of '22 and 9.4% in the fourth quarter of '21. Net debt, that is debt less cash, at the end of '22 was $121.4 million, a decrease of $54 million compared to $175.4 million at the end of '21. Our interest expense increased 34% to $6.5 million in '22 compared to $4.8 million in '21 due to the increase in borrowing rates in the second half of '22.

營運資金佔收入的百分比在 22 年第四季度增至 13.9%，而 22 年第三季度和 21 年第四季度分別為 12.8% 和 9.4%。 22 年底的淨債務（即債務減去現金）為 1.214 億美元，與 21 年底的 1.754 億美元相比減少了 5400 萬美元。由於 22 年下半年借款利率的提高，我們的利息支出在 22 年增加了 34% 至 650 萬美元，而 21 年為 480 萬美元。

Our leverage ratio, calculated as defined in our credit agreement, decreased to 0.74 at the end of '22 from 1.34 at the end of '21. We renewed our $400 million credit facility in November for another 5-year term and increased our incremental uncommitted borrowing facility from $150 million to $200 million. Our low leverage ratio and increased borrowing capacity has us well positioned to act on future investment opportunities.

我們的槓桿率（根據我們的信貸協議中的定義計算）從 21 年底的 1.34 降至 22 年底的 0.74。我們在 11 月將 4 億美元的信貸額度再延長 5 年，並將增量未承諾借款額度從 1.5 億美元增加到 2 億美元。我們的低杠桿率和增加的借貸能力使我們能夠很好地把握未來的投資機會。

Now I'll review our guidance for '23. Our revenue guidance for the first quarter of '23 is $217 million to $223 million, and our adjusted diluted EPS guidance for the first quarter is $2.08 to $2.20. For the full year, our revenue guidance is $900 million to $925 million, and our adjusted diluted EPS guidance is $8.80 to $9.05 and excludes $0.08 an estimated moving costs associated with the relocation of the facility in China, which should occur in the middle of '23.

現在我將回顧我們對 23 年的指導。我們對 23 年第一季度的收入指引為 2.17 億美元至 2.23 億美元，我們對第一季度調整後的攤薄每股收益指引為 2.08 美元至 2.20 美元。對於全年，我們的收入指引為 9 億美元至 9.25 億美元，我們調整後的攤薄後每股收益指引為 8.80 美元至 9.05 美元，不包括 0.08 美元與中國設施搬遷相關的估計搬遷成本，這應該發生在“ 23.

I should caution here that there could be some variability in our quarterly results due to several factors, including the variability of order flow and the timing of capital shipments. In addition, other risks that could impact our guidance include Central Bank's policy responses to inflation, geopolitical tensions, strengthening of the U.S. dollar and lingering supply chain issues. The 2023 guidance includes an unfavorable foreign currency translation impact of approximately $6.7 million on revenue and $0.11 on adjusted diluted EPS due to the strength of the U.S. dollar.

我在這裡要提醒的是，由於多種因素，包括訂單流的變化和資本出貨的時間安排，我們的季度業績可能會有一些變化。此外，可能影響我們指引的其他風險包括中央銀行對通脹的政策反應、地緣政治緊張局勢、美元走強和揮之不去的供應鏈問題。由於美元走強，2023 年的指引包括對收入約 670 萬美元和調整後攤薄每股收益 0.11 美元的不利外幣換算影響。

We anticipate gross margins for '23 will be approximately 42% to 43%. As a percentage of revenue, we anticipate SG&A will be approximately 24% to 25%, and R&D expense will be approximately 1.5% of revenue in '23. We anticipate net interest expense of approximately $9 million, and we expect our recurring tax rate will be approximately 27% to 28% in '23.

我們預計 23 年的毛利率約為 42% 至 43%。作為收入的百分比，我們預計 SG&A 將約為 24% 至 25%，而研發費用將約為 23 年收入的 1.5%。我們預計淨利息支出約為 900 萬美元，我們預計 23 年的經常性稅率將約為 27% 至 28%。

We expect depreciation and amortization will be approximately $34 million to $35 million in '23, and we anticipate CapEx spending in '23 will be approximately $32 million to $34 million, which includes $8 million to $9 million related to our facility project in China. Excluding the facility project, we are a little bit above our normal CapEx as a percent of revenue metric due to a facility expansion project of approximately $5 million related to our Wood Processing product line.

我們預計 23 年的折舊和攤銷將約為 3400 萬至 3500 萬美元，我們預計 23 年的資本支出將約為 3200 萬至 3400 萬美元，其中包括與我們在中國的設施項目相關的 800 萬至 900 萬美元。不包括設施項目，由於與我們的木材加工產品線相關的約 500 萬美元的設施擴建項目，我們略高於正常資本支出佔收入指標的百分比。

That concludes my review of the financials, and I'll now turn the call back over to the operator for our Q&A session. Operator?

我對財務狀況的審查到此結束，現在我將把電話轉回接線員進行我們的問答環節。操作員？

(Operator Instructions)

（操作員說明）

And our first question comes from Kurt Yinger with D.A. Davidson.

我們的第一個問題來自 D.A. 的 Kurt Yinger。戴維森。

I just wanted to start out on aftermarket demand, which looks like it continued to perform pretty well in Q4. And if I look at North America, you have the containerboard guys taking some pretty significant market-related downtime with demand challenge. And on the Wood Processing side, it's kind of a similar story, including a growing list of curtailment. So would just love to hear your thoughts as to why that hasn't seemed to have much impact on the aftermarket business, recognizing you service a lot more customers than those I just mentioned?

我只想從售後市場需求開始，看起來它在第四季度繼續表現良好。如果我看看北美，你會看到箱板紙製造商因需求挑戰而承受了一些與市場相關的相當大的停機時間。在木材加工方面，情況有點類似，包括越來越多的削減清單。所以很想听聽您的想法，為什麼這似乎對售後市場業務沒有太大影響，認識到您服務的客戶比我剛才提到的要多得多？

Yes. I mean you're right, Kurt, that there has been some softening, and there's been some lower utilization rates. But as you're also aware, in the last couple of years, many of those customers were running full out, not taking normal scheduled downtime or outages and they ran the equipment pretty hard, and there wore a lot of it out. So I think what we're seeing a little bit right now is they made a lot of money during those periods of time. They ran the equipment hard and cut back on some of the typical maintenance, and now they're taking the opportunity with a little bit of a slowdown to repair and maintain their equipment and get ready for the next big increase that likely come as the interest rates start to drop off again. So I think we're just seeing a little bit of neglected repair and maintenance during the very busy times, and they're trying to catch up now.

是的。我的意思是你是對的，庫爾特，已經有所軟化，並且利用率有所降低。但正如你也知道的那樣，在過去的幾年裡，許多客戶都用完了，沒有按計劃進行正常的停機或停機，他們非常努力地運行設備，並且磨損了很多。所以我認為我們現在看到的是他們在那段時間賺了很多錢。他們努力運行設備並減少了一些典型的維護，現在他們正抓住機會，稍微放慢速度來修理和維護他們的設備，並為下一次可能出現的大幅增長做好準備利率再次開始下降。所以我認為我們只是在非常繁忙的時期看到了一些被忽視的維修和維護，他們現在正在努力趕上。

Right. Okay. That makes sense. And it kind of ties into my next question, and I mean you look at CapEx budgets, at least here in North America, and they're still at relatively high levels, which I suspect gives you some confidence. Do you think that's a testament to the windfall that some of the -- your customers have seen in the past few years and their financial strength? Or do you get the sense that your customers expect this downturn in demand to be pretty short-lived. Then, if that doesn't come to fruition, they may look to reassess?

正確的。好的。這就說得通了。這有點關係到我的下一個問題，我的意思是你看看資本支出預算，至少在北美這裡，它們仍然處於相對較高的水平，我懷疑這會給你一些信心。您是否認為這證明了您的一些客戶在過去幾年中看到的橫財以及他們的財務實力？或者您是否感覺到您的客戶希望這種需求低迷是短暫的？然後，如果這沒有實現，他們可能會重新評估？

So as I mentioned a moment ago, they ran the equipment pretty hard. They made a lot of money. I do think that they -- most people expect this recession to be short and maybe not as severe as certainly the crisis that we've had in the past. And the underlying fundamentals of their business and of our business are strong. If you look out the next many years, the fundamentals and the forecast are for good activity levels. So I think they're getting prepared for that.

所以正如我剛才提到的，他們非常努力地運行設備。他們賺了很多錢。我確實認為他們——大多數人預計這次衰退是短暫的，而且可能不會像我們過去經歷的危機那樣嚴重。他們的業務和我們的業務的基本面都很強大。如果您展望未來許多年，基本面和預測都將保持良好的活動水平。所以我認為他們正在為此做好準備。

And you're right, if the recession is longer or deeper, then there could be some further slowdown. But as you know, these projects tend to be large and they take a while, and so they're not quick to shut these things down once they get started. But I think there -- if you look at most of the companies that are indicating their outlook over the next, say, 5 years, it's pretty positive.

你是對的，如果衰退時間更長或更深，那麼經濟放緩可能會進一步加劇。但如您所知，這些項目往往很大，而且需要一段時間，因此一旦開始，他們就不會很快關閉這些項目。但我認為——如果你看看大多數表示未來（比如 5 年）前景的公司，你會發現它們非常樂觀。

Right. Okay. And then just lastly for me. You touched on 80/20 and some of the success you were having there. I was hoping you could just give a few examples of maybe where that's been particularly successful in different divisions? And beyond 80/20, are there any other kind of notable margin initiatives you're looking at here in 2023?

正確的。好的。最後對我來說。你談到了 80/20 以及你在那裡取得的一些成功。我希望您能舉幾個例子，說明在不同部門中哪些地方特別成功？除了 80/20，您在 2023 年是否還有其他值得注意的保證金計劃？

Well, I'd say, Kurt, right now, we have about -- if you look at it on a revenue basis, about half of our revenue is in the program. And some, of course, are in the earlier stages and some in the -- have had in place for a few years, and we've seen very good benefits. And I'd say, in particular, when I look across the segments, one of the first operations was in Flow Control. We've had a few more in Flow Control that have also joined in. So we've seen some very good progress on the -- in Flow Control, and also, we're starting to see some nice traction in Industrial Processing.

好吧，我想說，庫爾特，現在，如果你從收入的角度來看，我們大約有一半的收入來自這個項目。當然，有些處於早期階段，有些處於 - 已經實施了幾年，我們已經看到了非常好的收益。我要說的是，特別是當我查看各個細分市場時，第一個操作是在流量控制中。我們在 Flow Control 方面也加入了一些。因此，我們在 Flow Control 方面看到了一些非常好的進展，而且，我們開始在工業加工方面看到一些不錯的牽引力。

As far as the other programs, we always have kind of ongoing continuous improvement. Lean is a big focus of ours that you never kind of finished there. So we always have other programs going on trying to optimize our operations, but 80/20 has certainly been the -- probably the biggest investment, and probably, we've seen the most encouraging results from that over the last few years.

至於其他程序，我們總是有持續不斷的改進。精益是我們的一大重點，你永遠不會在那裡完成。因此，我們總是有其他計劃在嘗試優化我們的運營，但 80/20 肯定是 - 可能是最大的投資，並且可能，我們在過去幾年中看到了最令人鼓舞的結果。

(Operator Instructions)

（操作員說明）

And at this time, I'd like to turn the conference back over to Mr. Powell for any closing remarks.

此時，我想將會議轉回給鮑威爾先生，聽取任何閉幕詞。

Thank you, Norma. Before we wrap up the call today, I just want to leave you with a few takeaways. 2022 was a record-setting year for Kadant, and our employees deserve a lot of credit for achieving these excellent results. I really want to thank our employees around the world for the dedicated efforts to serve our customers' needs. In 2023, we will continue to seek new opportunities to create value as we focus on meeting our customers' needs with innovative technologies and solutions that drive sustainable industrial processing.

謝謝你，諾瑪。在我們結束今天的電話會議之前，我只想給你一些要點。 2022 年對凱登來說是創紀錄的一年，我們的員工取得這些優異成績值得稱讚。我真的要感謝我們在世界各地的員工為滿足客戶需求所做的不懈努力。 2023 年，我們將繼續尋找新的機會來創造價值，因為我們專注於通過推動可持續工業加工的創新技術和解決方案來滿足客戶的需求。

Our financial health is excellent, and our ability to generate strong free cash flow remains a cornerstone of our business model. We expect to deliver exceptional value for our stakeholders again in 2023. We want to thank you for joining the call today, and stay safe.

我們的財務狀況非常好，我們產生強大自由現金流的能力仍然是我們商業模式的基石。我們希望在 2023 年再次為我們的利益相關者提供卓越的價值。我們要感謝您今天加入電話會議，並註意安全。

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。每個人，祝你有美好的一天。