Kadant Reports 2003 First Quarter Results and Raises Guidance for the Year
ACTON, Mass.--(BUSINESS WIRE)--April 30, 2003--For the first quarter of 2003, Kadant Inc. (AMEX:KAI) reported GAAP net income of $3.0 million, or $.22 per diluted share, versus a net loss of $34.1 million, or a loss of $2.79 per diluted share, in the 2002 period. Adjusted per share earnings in 2002, which exclude $.18 of restructuring and unusual charges and a charge of $2.68 for the cumulative effect of a change in accounting principle, were $.07. Revenues in the first quarter of 2003 increased 19 percent to $51.4 million (including $2.1 million from the favorable effect of currency translation), compared with $43.3 million a year ago.
"We're pleased to begin the year with significant increases in earnings and revenues," said William A. Rainville, chairman and chief executive officer of Kadant. "Even without the currency exchange benefit, our revenues grew 14 percent over the same period last year - all internal growth. Furthermore, our operating income rose to $4.6 million, compared with adjusted operating income of $2.2 million in 2002, and quarterly bookings reached a three-year high of $61.1 million, up 25 percent from last year (excluding the favorable effect of currency exchange).
"The biggest contributor to our top-line performance was strong demand in China for our stock-preparation systems used to produce recycled containerboard. In our composite building products business, we reached a milestone by achieving profitability during the quarter, with record sales of our decking systems.
"We are particularly pleased with the increase in first quarter bookings, which came entirely from our Papermaking Equipment segment. Orders for stock-prep systems were strong due to nearly $16 million in equipment bookings from China. We are also encouraged by increased orders for our papermaking accessories and water-management products, primarily from customers in North America and Europe.
"Based on our first quarter bookings, we expect to earn - on a GAAP basis - from $.24 to $.26 per diluted share, on revenues of $53 to $55 million in the second quarter of 2003. For the full year, we are raising our earlier EPS and revenue guidance of $.80 to $.90 and $185 to $195 million, respectively. We now expect to earn from $.84 to $.92 per diluted share, on revenues of $190 to $200 million for all of 2003, based on what we believe will be a strong first half, but taking into account ongoing uncertainty in global markets."
Mr. Rainville added, "The changes we made last year to our operating and financial structure are also contributing to our solid performance. We believe that these actions, combined with our ongoing commitment to reinvest in the business for long-term growth, are beginning to pay off."
Financial Highlights (unaudited)
(In thousands except per share amounts and percentages)
Three Months Ended
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Consolidated Statement of Operations March 29, March 30,
2003 2002(a)
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Revenues $51,375 $43,340
-------- ---------
Costs and Operating Expenses:
Cost of revenues 32,208 27,187
Selling, general, and administrative expenses 13,512 12,691
Research and development expenses 1,043 1,288
Restructuring and unusual costs - 3,637
-------- ---------
46,763 44,803
-------- ---------
Operating Income (Loss) 4,612 (1,463)
Interest Income 236 655
Interest Expense (17) (1,429)
Other Income - 47
-------- ---------
Income (Loss) Before Income Taxes and Cumulative
Effect of Change
in Accounting Principle 4,831 (2,190)
Income Tax (Provision) Benefit (1,836) 831
-------- ---------
Income (Loss) Before Cumulative Effect of Change in
Accounting Principle 2,995 (1,359)
Cumulative Effect of Change in Accounting Principle
(net of income
tax benefit of $12,420) - (32,756)
-------- ---------
Net Income (Loss) $2,995 $(34,115)
======== =========
Basic and Diluted Earnings (Loss) per Share Before
Cumulative Effect of
Change in Accounting Principle $.22 $(.11)
======== =========
Basic and Diluted Earnings (Loss) per Share $.22 $(2.79)
======== =========
Weighted Average Shares
Basic 13,574 12,239
======== =========
Diluted 13,767 12,239
======== =========
Three Months Ended
------------------
Adjusted Diluted Earnings per Share March 29, March 30,
2003 2002
----------------------------------------------------------------------
GAAP Diluted Earnings (Loss) per Share $.22 $(2.79)
Restructuring and Unusual Costs - .18
Cumulative Effect of Change in Accounting Principle - 2.68
-------- ---------
$.22 $.07
======== =========
Three Months Ended
------------------
Business Segment Information March 29, March 30,
2003 2002
----------------------------------------------------------------------
Revenues:
Pulp and Papermaking Equipment and Systems $45,557 $40,577
Composite and Fiber-based Products 5,818 2,763
-------- ---------
$51,375 $43,340
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Gross Profit Margin:
Pulp and Papermaking Equipment and Systems 38% 39%
Composite and Fiber-based Products 32% 16%
-------- ---------
37% 37%
======== =========
Operating Income (Loss):
Pulp and Papermaking Equipment and Systems $5,240 $1,883
Composite and Fiber-based Products 412 (2,473)
Corporate (1,040) (873)
-------- ---------
$4,612 $(1,463)
======== =========
Adjusted Operating Income (Excludes Restructuring
and Unusual Costs):
Pulp and Papermaking Equipment and Systems (b) $5,240 $3,881
Composite and Fiber-based Products (c)(d) 412 (834)
Corporate (1,040) (873)
-------- ---------
$4,612 $2,174
======== =========
Three Months Ended
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Business Segment Information (continued) March 29, March 30,
2003 2002
----------------------------------------------------------------------
Bookings:
Pulp and Papermaking Equipment and Systems $58,128 $43,744
Composite and Fiber-based Products 2,939 2,988
-------- ---------
$61,067 $46,732
======== =========
Capital Expenditures:
Pulp and Papermaking Equipment and Systems $202 $332
Composite and Fiber-based Products 648 263
Corporate 3 -
-------- ---------
$853 $595
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Three Months Ended
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Cash Flow and Other Data March 29, March 30,
2003 2002
----------------------------------------------------------------------
Cash (Used in) Provided by Operations $(1,040) $3,246
Depreciation and Amortization Expense 1,285 1,342
Balance Sheet Data March 29, Dec. 28,
2003 2002
----------------------------------------------------------------------
Cash and Short-term Investments $44,977 $44,429
Short- and Long-term Debt 961 1,165
Net Cash 44,016 43,264
Shareholders' Investment 188,336 181,257
(a) Restated to reflect a transitional goodwill impairment charge
recorded as a cumulative effect of change in accounting principle in
accordance with the adoption of SFAS No. 142, and the reclassification
to other nonoperating income of an extraordinary item resulting from
repurchases of our subordinated convertible debentures in accordance
with the adoption of SFAS No. 145.
(b) Excludes restructuring and unusual costs of $1,998 in the 2002
period.
(c) Excludes restructuring and unusual costs of $1,639 in the 2002
period.
(d) Includes operating income of $84 in the 2003 period and an
operating loss of $1,054 in the 2002 period from the composite
building products business.
Kadant will hold its earnings conference call on Thursday, May 1, 2003, at 11 a.m. Eastern time. To listen, call 800-709-2159 within the U.S., or 973-582-2810 outside the U.S. 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 15, 2003.
Kadant Inc. is a leading supplier of a range of products for the global papermaking and paper recycling industries, including stock-preparation equipment, water-management systems, and papermaking accessories. We also develop and manufacture composite building materials produced from recycled fiber and plastic. Kadant, based in Acton, Massachusetts, reported $186 million in revenues in 2002 and employs approximately 1,100 people worldwide. For more information, please 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 regarding our projected operating results, the future performance of our businesses, and our use of cash in the future. 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 fiscal year ended December 28, 2002. These include risks and uncertainties relating to our dependence on the pulp and paper industry; international sales and operations; competition; ability to manufacture and distribute composite building products, and the seasonality in sales and the long-term performance of such products; availability of raw materials and exposure to commodity price fluctuations related to the manufacture of composite and fiber-based products; acquisition strategy; protection of patents and proprietary rights; fluctuations in quarterly operating results; and obligations or other consequences arising from our spinoff from Thermo Electron Corporation. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
CONTACT:
Kadant Inc.
Investor contact:
Thomas M. O'Brien, 978/776-2000
or
GreatPoint Communications
Media contact, 978/392-6866
SOURCE: Kadant Inc.