UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
______________________________________________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported): April 28, 2010
KADANT
INC.
(Exact
Name of Registrant as Specified in its Charter)
|
Delaware
|
1-11406
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52-1762325
|
|
(State
or Other Jurisdiction
|
(Commission
File Number)
|
(IRS
Employer
|
|
of
Incorporation)
|
Identification
No.)
|
|
One
Technology Park Drive
|
||
|
Westford,
Massachusetts
|
01886
|
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(978)
776-2000
Registrant's
telephone number, including area code
Not
Applicable
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
KADANT
INC.
Item
2.02 Results of Operations and Financial
Condition.
On April
28, 2010, Kadant Inc. (the “Company”) announced its financial results for the
fiscal quarter ended April 3, 2010. The full text of the press release issued in
connection with the announcement is furnished as Exhibit 99 to this Current
Report on Form 8-K.
The
information in this Form 8-K (including Exhibit 99) shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange
Act”) or otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933
or the Exchange Act, except as expressly set forth by specific reference in such
a filing.
Item
9.01 Financial Statements and Exhibits.
|
(c)
Exhibit
|
||
|
The
following exhibit relating to Item 2.02 shall be deemed to be furnished
and not filed.
|
||
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Exhibit
No
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Description of Exhibit
|
|
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99
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Press
Release issued by the Company on April 28, 2010
|
|
2
KADANT
INC.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
KADANT
INC.
|
||
|
Date: April
28, 2010
|
By
|
/s/ Thomas M. O’Brien
|
|
Thomas
M. O’Brien
Executive
Vice President and
Chief Financial
Officer
|
3
Exhibit
99
NEWS
[LOGO]
0;
KADANT
AN ACCENT
ON INNOVATION
One
Technology Park Drive
Westford,
MA 01886
Investor
contact: Thomas M. O’Brien,
978-776-2000
Media
contact: Wes Martz, 269-278-1715
Kadant
Reports Results for First Quarter 2010
and
Raises Full Year 2010 Guidance
WESTFORD,
Mass., April 28, 2010 – Kadant Inc. (NYSE:KAI) reported revenues from continuing
operations of $61.1 million in the first quarter of 2010, a decrease of $3.9
million, or 6 percent, compared to $65.0 million in the first quarter of 2009.
Revenues in the first quarter of 2010 included a $2.4 million, or 4 percent,
increase from foreign currency translation compared to the first quarter of
2009. Operating income from continuing operations in the first quarter of 2010
was $4.7 million compared to $0.2 million in the first quarter of 2009.
Operating income in the first quarter of 2010 included income of $0.3 million
related to a gain on the sale of real estate, while operating income in the
first quarter of 2009 included restructuring costs of $0.8 million. Net income
in the first quarter of 2010 was $3.6 million, or $.29 per diluted share, versus
a net loss of $2.9 million, or $.23 per diluted share, in the first quarter of
2009. Net income in the first quarter of 2010 included an after-tax gain on the
sale of real estate of $0.2 million, or $.02 per diluted share. Net loss in the
first quarter of 2009 included a $2.6 million incremental tax provision, or $.21
per diluted share, and a $0.5 million, or $.04 per diluted share, after-tax
restructuring charge.
“The first quarter results were
significantly stronger than we had anticipated, giving us a great start to the
year,” said Jonathan W. Painter, president and chief executive officer of
Kadant. “Diluted EPS was $.29 in the first quarter of 2010, including a $.02
gain from the sale of real estate, compared to our GAAP diluted EPS guidance of
$.06 to $.08. The improved performance was due to higher operating income and a
lower effective tax rate, the latter of which contributed $.08 to first quarter
diluted EPS compared to our guidance. Revenues of $61 million exceeded the high
end of our guidance by $3 million, largely due to higher sales in our
fluid-handling product line.
“Both bookings and revenues increased
sequentially for the third quarter in a row, with strong performances in most of
our product lines and geographic regions. Bookings of $70.2 million were up 45
percent compared to the first quarter of 2009, and increased 9 percent on a
sequential basis. We were especially pleased with our fluid-handling bookings,
which increased 58 percent over last year and 27 percent sequentially. In
addition, after the quarter ended we booked two stock preparation system orders
with a combined value of more than $7 million.
“The first quarter results were
encouraging on several other fronts. Gross margins were 44 percent, one of the
highest quarterly levels in our company’s history, a result of both a favorable
product mix and lower costs resulting from our restructuring efforts. Operating
income of $4.7 million was the highest since the third quarter of 2008, and our
backlog, which ended the quarter at $69 million, was up 50 percent over a year
ago.
“The solid first quarter results,
combined with the stronger bookings, the general increase in business activity
in our markets, and the lower effective tax rate, all suggest that the full year
results will be better than we had anticipated. We believe, however, that some
of the recent strong bookings may be the result of pent-up demand. In addition,
continued uncertainty in the sustainability of the economic recovery leads us to
maintain a cautious view of the second half of 2010. As such, we now expect to
report GAAP diluted EPS of $.38 to $.40 from continuing operations in the second
quarter of 2010, including $.01 of restructuring costs, on revenues of $67 to
$69 million. For the full year, we expect to achieve GAAP diluted EPS of $1.10
to $1.20 from continuing operations, revised from our previous estimate of $.45
to $.55, on revenues of $255 to $265 million, revised from our previous estimate
of $240 to $250 million.”
-more-
Use
of Non-GAAP Financial Measures
In
addition to the financial measures prepared in accordance with generally
accepted accounting principles (GAAP), we use certain non-GAAP financial
measures, including increases or decreases in revenues excluding the effect of
foreign currency translation, adjusted operating income, earnings before
interest, taxes, depreciation, and amortization (EBITDA), and adjusted
EBITDA.
We present increases or decreases in
revenues excluding the effect of foreign currency translation to provide
investors insight into underlying revenue trends. In addition, we exclude from
certain financial measures restructuring costs and gains on the sale of assets
to give investors additional insight into our quarterly and annual operating
performance, especially when compared to quarters in which such items had
greater or lesser effect, or no effect. In addition, these items are excluded as
they are either isolated or cannot be expected to occur again with any
regularity or predictability and we believe are not indicative of our normal
operating results.
We believe that these non-GAAP
financial measures, when taken together with the corresponding GAAP financial
measures, provide meaningful supplemental information regarding our performance
by excluding certain items that may not be indicative of our core business,
operating results, or future outlook. We believe that the inclusion of such
measures helps investors to gain a better understanding of our underlying
operating performance and future prospects, consistent with how management
measures and forecasts our performance, especially when comparing such results
to previous periods or forecasts and to the performance of our competitors. Such
measures are also used by us in our financial and operating decision-making and
for compensation purposes. We also believe this information is responsive to
investors' requests and gives them an additional measure of our
performance.
The
non-GAAP financial measures included in this press release are not meant to be
considered superior to or a substitute for the results of operations prepared in
accordance with GAAP. In addition, the non-GAAP financial measures included in
this press release have limitations associated with their use as compared to the
most directly comparable GAAP measures, in that they may be different from, and
therefore not comparable to, similar measures used by other
companies.
Adjusted EBITDA and adjusted operating
income exclude other income of $0.3 million, associated with a gain on the sale
of real estate, in the first quarter of 2010 and restructuring costs of $0.8
million in the first quarter of 2009.
Reconciliations of the non-GAAP
financial measures to the most directly comparable GAAP financial measures are
set forth in the accompanying tables.
Conference
Call
Kadant
will hold its earnings conference call on Thursday, April 29, 2010, at 11 a.m.
Eastern time. To listen, call 800-709-2159 within the U.S., or 973-582-2810
outside the U.S. Please reference Event ID number 68164953. You can also listen
to the call live on the Web by visiting www.kadant.com and clicking on
“Investors.” An audio archive of the call will be available on our Web site
until May 28, 2010.
-more-
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Financial
Highlights (unaudited)
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||||||||
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(In
thousands, except per share amounts and percentages)
|
||||||||
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Three
Months Ended
|
||||||||
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Consolidated
Statement of Operations
|
April
3, 2010
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April
4, 2009
|
||||||
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Revenues
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$ | 61,121 | $ | 64,957 | ||||
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Costs
and Operating Expenses:
|
||||||||
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Cost
of revenues
|
34,246 | 40,317 | ||||||
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Selling,
general, and administrative expenses
|
21,124 | 22,205 | ||||||
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Research
and development expenses
|
1,372 | 1,470 | ||||||
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Restructuring
costs and other income, net (a)
|
(302 | ) | 757 | |||||
| 56,440 | 64,749 | |||||||
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Operating
Income
|
4,681 | 208 | ||||||
|
Interest
Income
|
38 | 207 | ||||||
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Interest
Expense
|
(358 | ) | (813 | ) | ||||
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Income
(Loss) from Continuing Operations Before
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||||||||
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Provision
for Income Taxes
|
4,361 | (398 | ) | |||||
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Provision
for Income Taxes
|
716 | 2,464 | ||||||
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Income
(Loss) from Continuing Operations
|
3,645 | (2,862 | ) | |||||
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Loss
from Discontinued Operation, Net of Tax
|
(4 | ) | (4 | ) | ||||
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Net
Income (Loss)
|
3,641 | (2,866 | ) | |||||
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Net
Income Attributable to Noncontrolling Interest
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(30 | ) | (25 | ) | ||||
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Net
Income (Loss) Attributable to Kadant
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$ | 3,611 | $ | (2,891 | ) | |||
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Amounts
Attributable to Kadant:
|
||||||||
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Income
(Loss) from Continuing Operations
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$ | 3,615 | $ | (2,887 | ) | |||
|
Loss
from Discontinued Operation, Net of Tax
|
(4 | ) | (4 | ) | ||||
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Net
Income (Loss) Attributable to Kadant
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$ | 3,611 | $ | (2,891 | ) | |||
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Basic
and Diluted Earnings (Loss) per Share from Continuing
|
||||||||
|
Operations
Attributable to Kadant
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$ | .29 | $ | (.23 | ) | |||
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Basic
and Diluted Earnings (Loss) per Share Attributable to
|
||||||||
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Kadant
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$ | .29 | $ | (.23 | ) | |||
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Weighted
Average Shares:
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||||||||
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Basic
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12,411 | 12,506 | ||||||
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Diluted
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12,492 | 12,506 | ||||||
| Increase | ||||||||||||||||
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(Decrease)
|
||||||||||||||||
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Excluding
Effect
|
||||||||||||||||
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Three
Months Ended
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Increase
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of
Currency
|
||||||||||||||
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Revenues
by Product Line
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April
3, 2010
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April
4, 2009
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(Decrease)
|
Translation
(b,d)
|
||||||||||||
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Stock-Preparation
Equipment
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$ | 17,755 | $ | 29,174 | $ | (11,419 | ) | $ | (11,870 | ) | ||||||
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Fluid-Handling
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20,065 | 15,737 | 4,328 | 3,241 | ||||||||||||
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Accessories
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12,495 | 11,527 | 968 | 379 | ||||||||||||
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Water-Management
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6,504 | 5,135 | 1,369 | 1,146 | ||||||||||||
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Other
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650 | 414 | 236 | 164 | ||||||||||||
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Pulp
and Papermaking Systems Segment
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57,469 | 61,987 | (4,518 | ) | (6,940 | ) | ||||||||||
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Other
(c)
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3,652 | 2,970 | 682 | 682 | ||||||||||||
| $ | 61,121 | $ | 64,957 | $ | (3,836 | ) | $ | (6,258 | ) | |||||||
-more-
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Three
Months Ended
|
Increase
|
|||||||||||
|
Sequential
Revenues by Product Line
|
April
3, 2010
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Jan.
2, 2010
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(Decrease)
|
|||||||||
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Stock-Preparation
Equipment
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$ | 17,755 | $ | 20,440 | $ | (2,685 | ) | |||||
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Fluid-Handling
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20,065 | 17,296 | 2,769 | |||||||||
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Accessories
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12,495 | 11,576 | 919 | |||||||||
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Water-Management
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6,504 | 5,501 | 1,003 | |||||||||
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Other
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650 | 456 | 194 | |||||||||
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Pulp
and Papermaking Systems Segment
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57,469 | 55,269 | 2,200 | |||||||||
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Other
(c)
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3,652 | 1,491 | 2,161 | |||||||||
| $ | 61,121 | $ | 56,760 | $ | 4,361 | |||||||
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Three
Months Ended
|
||||||||||||
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Business
Segment Information (c)
|
April
3, 2010
|
April
4, 2009
|
||||||||||
|
Revenues:
|
||||||||||||
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Pulp
and Papermaking Systems
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$ | 57,469 | $ | 61,987 | ||||||||
|
Other
|
3,652 | 2,970 | ||||||||||
| $ | 61,121 | $ | 64,957 | |||||||||
|
Gross
Profit Margin:
|
||||||||||||
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Pulp
and Papermaking Systems
|
44 | % | 38 | % | ||||||||
|
Other
|
51 | % | 34 | % | ||||||||
| 44 | % | 38 | % | |||||||||
|
Operating
Income:
|
||||||||||||
|
Pulp
and Papermaking Systems
|
$ | 6,304 | $ | 2,882 | ||||||||
|
Corporate
and Other
|
(1,623 | ) | (2,674 | ) | ||||||||
| $ | 4,681 | $ | 208 | |||||||||
|
Adjusted
Operating Income (d):
|
||||||||||||
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Pulp
and Papermaking Systems
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$ | 6,002 | $ | 3,639 | ||||||||
|
Corporate
and Other
|
(1,623 | ) | (2,674 | ) | ||||||||
| $ | 4,379 | $ | 965 | |||||||||
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Bookings
from Continuing Operations:
|
||||||||||||
|
Pulp
and Papermaking Systems
|
$ | 66,968 | $ | 45,266 | ||||||||
|
Other
|
3,219 | 3,091 | ||||||||||
| $ | 70,187 | $ | 48,357 | |||||||||
|
Capital
Expenditures from Continuing Operations:
|
||||||||||||
|
Pulp
and Papermaking Systems
|
$ | 526 | $ | 1,112 | ||||||||
|
Corporate
and Other
|
13 | 45 | ||||||||||
| $ | 539 | $ | 1,157 | |||||||||
|
Three
Months Ended
|
||||||||
|
Cash
Flow and Other Data from Continuing Operations
|
April
3, 2010
|
April
4, 2009
|
||||||
|
Cash
(Used In) Provided by Operations
|
$ | (555 | ) | $ | 13,767 | |||
|
Depreciation
and Amortization Expense
|
1,658 | 1,843 | ||||||
-more-
|
Balance
Sheet Data
|
April
3, 2010
|
Jan.
2, 2010
|
||||||
|
Assets
|
||||||||
|
Cash
and Cash Equivalents
|
$ | 43,643 | $ | 45,675 | ||||
|
Accounts
Receivable, net
|
40,892 | 36,436 | ||||||
|
Inventories
|
40,270 | 37,435 | ||||||
|
Unbilled
Contract Costs and Fees
|
4,513 | 3,370 | ||||||
|
Other
Current Assets
|
9,091 | 8,355 | ||||||
|
Property,
Plant and Equipment, net
|
37,340 | 38,415 | ||||||
|
Intangible
Assets
|
27,373 | 28,071 | ||||||
|
Goodwill
|
95,490 | 97,622 | ||||||
|
Other
Assets
|
11,867 | 12,277 | ||||||
| $ | 310,479 | $ | 307,656 | |||||
|
Liabilities
and Shareholders' Investment
|
||||||||
|
Accounts
Payable
|
$ | 22,218 | $ | 17,612 | ||||
|
Short-
and Long-term Debt
|
23,125 | 23,250 | ||||||
|
Other
Liabilities
|
70,948 | 72,763 | ||||||
|
Total
Liabilities
|
$ | 116,291 | $ | 113,625 | ||||
|
Shareholders'
Investment
|
$ | 194,188 | $ | 194,031 | ||||
| $ | 310,479 | $ | 307,656 | |||||
|
Adjusted
Operating Income and Adjusted EBITDA
|
Three
Months Ended
|
|||||||
|
Reconciliation
|
April
3, 2010
|
April
4, 2009
|
||||||
|
Consolidated
|
||||||||
|
Net
Income (Loss) Attributable to Kadant
|
$ | 3,611 | $ | (2,891 | ) | |||
|
Net
Income Attributable to Noncontrolling Interest
|
30 | 25 | ||||||
|
Loss
from Discontinued Operation, Net of Tax
|
4 | 4 | ||||||
|
Provision
for Income Taxes
|
716 | 2,464 | ||||||
|
Interest
Expense, net
|
320 | 606 | ||||||
|
Restructuring
costs and other income, net (a)
|
(302 | ) | 757 | |||||
|
Adjusted
Operating Income (d)
|
4,379 | 965 | ||||||
|
Depreciation
and Amortization
|
1,658 | 1,843 | ||||||
|
Adjusted
EBITDA (d)
|
$ | 6,037 | $ | 2,808 | ||||
|
Pulp
and Papermaking Systems
|
||||||||
|
Operating
Income
|
$ | 6,304 | $ | 2,882 | ||||
|
Restructuring
costs and other income, net (a)
|
(302 | ) | 757 | |||||
|
Adjusted
Operating Income (d)
|
$ | 6,002 | $ | 3,639 | ||||
|
Depreciation
and Amortization
|
1,541 | 1,729 | ||||||
|
Adjusted
EBITDA (d)
|
$ | 7,543 | $ | 5,368 | ||||
|
Corporate
and Other (c)
|
||||||||
|
Operating
Loss
|
$ | (1,623 | ) | $ | (2,674 | ) | ||
|
Depreciation
and Amortization
|
117 | 114 | ||||||
|
EBITDA
(d)
|
$ | (1,506 | ) | $ | (2,560 | ) | ||
|
(a)
|
Represents
restructuring and other income of $302 in the three-month period ended
April 3, 2010, including restructuring income of $17 and a gain on
|
||||||
|
the
sale of real estate of $285. Represents restructuring
costs of $757 in the three-month period ended April 4,
2009.
|
|||||||
|
(b)
|
Represents
the increase (decrease) resulting from the conversion of current period
amounts reported
in local currencies into U.S. dollars at the
|
||||||
|
exchange
rate of the prior period compared to the U.S. dollar amount reported in
the current period.
|
|||||||
|
(c)
|
"Other"
includes the results from the Fiber-based Products
business.
|
||||||
|
(d)
|
Represents
a non-GAAP financial measure.
|
||||||
-more-
About
Kadant
Kadant
Inc. is a leading supplier to the global pulp and paper industry, with a range
of products and services for improving efficiency and quality in pulp and paper
production, including paper machine accessories and systems for stock
preparation, fluid handling, and water management. Our fluid-handling products
are also used to optimize production in the steel, rubber, plastics, food, and
textile industries. In addition, we produce granules from papermaking byproducts
for agricultural and lawn and garden applications. Kadant is based in Westford,
Massachusetts, with revenues of $226 million in 2009 and 1,600 employees in 16
countries worldwide. For more information, visit www.kadant.com.
The
following constitutes a “Safe Harbor” statement under the Private Securities
Litigation Reform Act of 1995: This press release contains forward-looking
statements that involve a number of risks and uncertainties, including
forward-looking statements about our expected future financial and operating
performance, demand for our products, and industry and economic outlook.
Important factors that could cause actual results to differ materially from
those indicated by such statements are set forth under the heading “Risk
Factors” in Kadant’s annual report on Form 10-K for the period ended January 2,
2010. These include risks and uncertainties relating to our dependence on the
pulp and paper industry; significance of sales and operation of manufacturing
facilities in China; international sales and operations; competition; soundness
of suppliers and customers; our debt obligations; restrictions in our credit
agreement; soundness of financial institutions; litigation and warranty costs
related to our discontinued operation; our acquisition strategy; future
restructurings; factors influencing our fiber-based products business;
protection of patents and proprietary rights; fluctuations in our share price;
and anti-takeover provisions. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
events, or otherwise.
###