Kadant Announces Second Quarter Results and Provides Guidance for 2001 and 2002
WALTHAM, Mass., July 19 /PRNewswire/ -- Kadant Inc. (Amex: KAI - news), formerly known as Thermo Fibertek Inc., today reported net income of $2.4 million, or $.20 per diluted share, for the quarter ended June 30, 2001, compared with $3.9 million, or $.32 per diluted share, for the same period last year. Results for the second quarter of 2000 include a pretax gain of $1.0 million from the sale of an investment. Excluding this item from the 2000 period, net income would have been $3.3 million, or $.27 per diluted share. Included in the net income results for the 2001 and 2000 periods are $0.6 million and $0.2 million, respectively, of net losses from the company's new composite building products startup.
Revenues for the quarter ended June 30, 2001, were $56.7 million, compared with $60.6 million in the same period last year. Excluding unfavorable currency effects of $1.0 million, revenues decreased 5 percent compared to the second quarter of 2000. Revenues from the composite building products business in the 2001 quarter were approximately $0.4 million.
``The past few months have been both exhilarating and challenging as we prepare to be spun off from Thermo Electron,'' said William A. Rainville, president and chief executive officer of K?dant. ``While we are looking forward to the many advantages of being an independent public company, there is much we need to do to capitalize on the opportunities at hand in both our core pulp and paper systems business and our new composites startup.
``Our customers in the pulp and paper industry continue to respond to weak market and economic conditions by cutting costs and consolidating operations, curbing demand for our products for the balance of 2001 and likely into 2002. We believe, however, that these actions being taken by our customers will create a stronger industry long term that we are ideally positioned to serve through our well-regarded global franchise.
``In our new composites business, we are lowering expectations as we work to expand our distribution network for these fiber-based building materials. Although startups are difficult to forecast, our estimate of revenues from this business for each of the remaining quarters in 2001 is $300,000 to $500,000, and for the year just below $2 million. We have made considerable progress in the technology and production phases of our composite products launch, and now need to build our marketing and distribution channels to take advantage of this growth market.
``In light of these factors, we expect earnings in the third quarter of 2001 for the company overall to be in the range of $.15 to $.20 per share, on revenues of $55 to $60 million. For the year, we expect earnings per share of $.80 to $.90, on revenues of $225 to $230 million.
``Looking ahead to 2002, we estimate earnings for the year to increase to $.90 to $1.05 per share by focusing on a more favorable product mix that includes higher-margin aftermarket sales and reducing operating expenses in our businesses that serve the pulp and paper industry, as well as lowering operating losses in the composites business. Revenues in 2002 are expected to be between $225 and $230 million, including $4 to $6 million from sales of composites.''
Mr. Rainville concluded, ``We finished the second quarter of 2001 with a healthy balance sheet -- $167 million in cash -- which will help us fund our plans for future growth. The spinoff from Thermo Electron marks a new beginning for us. Our long history of leadership in the pulp and paper industry gives us a solid foundation from which to build on K?dant's new position as an independent public company.''
A pre-recorded company update will be available from 5 p.m. EDT today until August 8, 2001. To listen to the recording, call 877-519-4471 within the U.S., or 973-341-3080 outside the U.S., passcode: 2711685. An audio archive will also be available on the Internet until August 8, 2001. Click on ``Audio Archives'' under ``Investors'' at www.thermo.com.
Kadant Inc. is a leading supplier of a range of products for the global papermaking and paper-recycling industries, including de-inking systems, stock-preparation equipment, water-management systems, and papermaking accessories. Through its majority-owned Thermo Fibergen subsidiary, the company also develops and commercializes composite building materials produced from natural fiber and recycled plastic. Kadant is a public subsidiary of Thermo Electron Corporation that will be spun off as a dividend to Thermo Electron shareholders on August 8, 2001.
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. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are set forth under the heading ``Risk Factors'' in Exhibit 99.3 to the company's current report on Form 8-K filed with the Securities and Exchange Commission on July 12, 2001. These include risks and uncertainties relating to: the company's dependence on the paper industry and pulp and paper prices, international operations, competition, ability to enter the composite building products market, acquisition strategy, dependence on patents and proprietary rights, fluctuations in quarterly operating results, and the proposed spinoff of the company.
Financial Highlights (unaudited)
(In thousands except per share amounts)
Consolidated Statement of Income
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
2001 2000 2001 2000
Revenues $56,732 $60,565 $115,632 $118,487
Costs and Operating Expenses:
Cost of revenues 36,084 37,930 72,280 72,537
Selling, general, and administrative
expenses (a) 14,585 15,749 30,441 31,580
Research and development expenses 1,871 1,953 3,663 3,816
Gain on sale of property - (971) - (971)
52,540 54,661 106,384 106,962
Operating Income (b) 4,192 5,904 9,248 11,525
Interest Income 1,812 2,691 3,953 5,194
Interest Expense (1,871) (1,865) (3,744) (3,755)
Income Before Provision for Income
Taxes and Minority Interest 4,133 6,730 9,457 12,964
Provision for Income Taxes 1,736 2,775 3,955 5,300
Minority Interest (Income) Expense (50) 45 (74) 194
Income Before Cumulative Effect of
Change in Accounting Principle 2,447 3,910 5,576 7,470
Cumulative Effect of Change in
Accounting Principle - - - (870)
Net Income 2,447 3,910 5,576 6,600
Basic and Diluted Earnings per Share
Before Cumulative Effect
of Change in Accounting Principle $.20 $.32 $.45 $.61
Basic and Diluted Earnings per Share $.20 $.32 $.45 $.54
Weighted Average Shares:
Basic 12,277 12,257 12,277 12,253
Diluted 12,294 12,301 12,292 12,310
Other Financial Data
Adjusted EBITDA (c) $6,531 $7,375 $13,968 $15,396
Cash Flow from Operations 11,187 10,903 13,298 10,523
Pro Forma Data (d)
Net Income $2,447 $3,327 $5,576 $6,887
Diluted Earnings per Share .20 .27 .45 .56
Balance Sheet Data As of
June 30, 2001 July 1, 2000
Cash, Cash Equivalents, Advance to
Affiliates, and Available-for-Sale
Investments $166,687 $185,006
Short- and Long-term Debt 154,703 155,212
Shareholders' Investment 175,762 165,606
(a) Includes a $0.6 million charge to provide for a customer dispute in
the 2000 periods.
(b) Includes operating losses from our startup composite building
products business of $1,054, $487, $1,638, and $869 in the three months
ended June 30, 2001, the three months ended July 1, 2000, the six months
ended June 30, 2001, and the six months ended July 1, 2000, respectively.
(c) Adjusted EBITDA is calculated as earnings before interest, income
taxes, depreciation, amortization, and gain on the sale of property.
(d) Excludes gain on the sale of property in the 2000 periods and the
cumulative effect of a change in accounting principle in the six months
ended July 1, 2000.