KADANT INCKAI

KADANT INC Leases Disclosure

10-KFiled Feb 25, 20253 min read
Leases
The Company enters into operating and finance lease commitments primarily for its manufacturing and office space, vehicles, and equipment that expire on various dates over the next 17 years, some of which include assumed options to extend the lease term for up to 10 years. In addition, the Company leases land associated with certain of its buildings in Canada and China under long-term leases expiring in 2032 to 2071. The lease in Canada also includes an assumed option to extend the term for up to 10 years.
The components of lease expense are as follows:
(In thousands)December 28, 2024December 30, 2023December 31, 2022
Operating Lease Cost (a)
$8,153 $6,355 $5,870 
Short-Term Lease Cost810 698 697 
(In thousands)December 28, 2024December 30, 2023December 31, 2022
Finance Lease Cost:
ROU asset amortization$1,168 $1,103 $1,026 
Interest on lease liabilities100 74 52 
Total Finance Lease Cost1,268 1,177 1,078 
Total Lease Costs$10,231 $8,230 $7,645 
(a) Includes variable lease costs of $747,000 in 2024, $961,000 in 2023, and $478,000 in 2022.
    
Supplemental cash flow information related to leases is as follows:
(In thousands)December 28, 2024December 30, 2023December 31, 2022
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating cash flows from operating leases$8,282 $6,475 $6,159 
Operating cash flows from finance leases$100 $74 $51 
Financing cash flows from finance leases$1,169 $1,100 $1,002 
ROU Assets Obtained in Exchange for Lease Obligations:
Operating leases (a)
$17,496 $8,120 $4,002 
Finance leases$1,598 $989 $1,468 
(a) Includes ROU assets of $10,847,000 in 2024 obtained in connection with the Company's acquisitions.

Supplemental balance sheet information related to leases is as follows:
(In thousands)Balance Sheet Line ItemDecember 28, 2024December 30, 2023
Operating Leases:
ROU assetsOther assets$36,484 $25,129 
Total operating lease assets$36,484 $25,129 
Short-term liabilitiesOther current liabilities$6,548 $5,389 
Long-term liabilitiesOther long-term liabilities27,768 19,350 
Total operating lease liabilities$34,316 $24,739 
Finance Leases:
ROU assets, at costProperty, plant, and equipment, at cost$4,077 $4,037 
ROU assets accumulated amortizationAccumulated depreciation and amortization(2,094)(2,288)
ROU assets, netProperty, plant, and equipment, net$1,983 $1,749 
Short-term obligations
Current maturities of long-term obligations
$1,075 $983 
Long-term obligationsLong-term obligations948 806 
Total finance lease liabilities$2,023 $1,789 
  December 28, 2024December 30, 2023
Weighted Average Remaining Lease Term (in years):
Operating leases8.06.8
Finance leases2.12.0
Weighted Average Discount Rate:
Operating leases4.52 %4.08 %
Finance leases5.11 %4.71 %
As of December 28, 2024, future lease payments for lease liabilities are as follows:
OperatingFinance
(In thousands)LeasesLeases
2025$7,824 $1,148 
20266,775 752 
20275,527 202 
20283,842 24 
20292,831 2 
2030 and Thereafter
14,637 — 
Total Future Lease Payments41,436 2,128 
Less: Imputed Interest(7,120)(105)
Present Value of Lease Payments$34,316 $2,023 

As of December 28, 2024, the Company had no significant operating and finance leases that had not yet commenced.
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About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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