Kadant Reports 2003 Fourth Quarter and Year-End Results
ACTON, Mass.--(BUSINESS WIRE)--Feb. 18, 2004--For the fourth quarter of 2003, Kadant Inc. (NYSE:KAI) reported GAAP diluted earnings per share (EPS) of $.16, versus $.15 in the 2002 period. The 2002 quarter included restructuring income and a loss from the early extinguishment of debt, which had the net effect of lowering EPS by $.01. GAAP net income in the 2003 quarter was $2.3 million, compared with $2.1 million a year ago. Fourth quarter revenues increased to $50.5 million in 2003 (including $2.6 million from the favorable effect of currency translation), compared with $45.9 million in 2002.
For the full year, Kadant reported GAAP diluted EPS of $.85 in 2003, versus a loss of $2.04 a year ago. The 2002 result was affected by the cumulative effect of a change in accounting principle and a restructuring charge which, combined, lowered earnings by $2.66. On an adjusted basis (see attached chart), diluted EPS was $.85 in 2003, versus $.62 in 2002. Revenues in 2003 increased to $203.5 million (including $10.2 million from the favorable effect of currency translation), versus $185.7 million a year ago.
"We were pleased with our strong overall performance in 2003, achieving top line growth of 10 percent, adjusted EPS growth of 37 percent, and generating $23 million of cash flow from operations for the year," said William A. Rainville, chairman and chief executive officer of Kadant. "Revenues in our Papermaking Equipment segment rose 9 percent for the year, with sales of stock-preparation products to customers in China continuing to be the major contributor to growth. With revenues in this segment up 12 percent in the fourth quarter over last year, and bookings for the quarter up 18 percent year to year, we have positive momentum going into 2004.
"While solid performance in our Papermaking Equipment segment may indicate some improvement in the paper industry, recovery is likely to be slow and sporadic in 2004 due to ongoing cost pressures and mill downtime faced by our customers in North America and Europe. In these mature markets, we continue to focus on aftermarket sales of retrofit products, consumables, and services. In Asia, we are leveraging our leading position in China to become the principal supplier of paper-recycling systems to this expanding market.
"In our composite building products business, the operating loss of $1.4 million for the quarter was slightly more than we expected due to higher warranty costs related to certain decking applications. We've implemented changes in our production process to correct the problem, and we expect this business to return to profitability in the second half of 2004. We are seeing solid support for our products in the marketplace as our dealer base continues to expand and demand from end users remains strong. Bookings in 2004 to date have already exceeded total first quarter bookings last year."
Mr. Rainville added, "Looking ahead, for the total company we expect to report GAAP diluted EPS of $.18 to $.20 in the first quarter of 2004, on revenues of $48 to $50 million. For the full year, our goal is to achieve GAAP diluted EPS of $.90 to $1.00, on revenues of $205 to $215 million."
Financial Highlights
(In thousands except per share amounts and percentages)
Three Months
Ended Twelve Months Ended
----------------- -------------------
Consolidated Statement of Jan. 3, Dec. 28, Jan. 3, Dec. 28,
Operations 2004 2002 (a) 2004 2002 (a)
----------------------------------------------------------------------
Revenues $50,477 $45,872 $203,542 $185,674
-------- -------- --------- ---------
Costs and Operating Expenses:
Cost of revenues 31,851 28,093 126,913 115,234
Selling, general, and
administrative expenses 14,115 12,566 53,784 50,323
Research and development
expenses 1,151 1,230 4,653 4,819
Restructuring and unusual
items - (148) (23) 3,590
-------- -------- --------- ---------
47,117 41,741 185,327 173,966
-------- -------- --------- ---------
Operating Income 3,360 4,131 18,215 11,708
Interest Income 272 625 965 2,579
Interest Expense (10) (1,021) (49) (4,741)
Other Income (Expense) - (419) - 50
-------- -------- --------- ---------
Income Before Provision for Income Taxes,
Minority Interest, and
Cumulative Effect of Change
in Accounting Principle 3,622 3,316 19,131 9,596
Provision for Income Taxes 1,376 1,258 7,270 3,638
Minority Interest Expense(Income) (24) 1 44 4
-------- -------- --------- ---------
Income Before Cumulative Effect
of Change in Accounting Principle 2,270 2,057 11,817 5,954
Cumulative Effect of Change in Accounting
Principle (net of income
tax benefit of $12,420) - - - (32,756)
-------- -------- --------- ---------
Net Income (Loss) $2,270 $2,057 $11,817 $(26,802)
======== ======== ========= =========
Earnings per Share Before
Cumulative Effect of Change in
Accounting Principle
Basic $.16 $.15 $.87 $.46
======== ======== ========= =========
Diluted $.16 $.15 $.85 $.45
======== ======== ========= =========
Earnings (Loss) per Share
Basic $.16 $.15 $.87 $(2.07)
======== ======== ========= =========
Diluted $.16 $.15 $.85 $(2.04)
======== ======== ========= =========
Weighted Average Shares
Basic 13,831 13,548 13,659 12,945
======== ======== ========= =========
Diluted 14,121 13,704 13,959 13,109
======== ======== ========= =========
Three Months
Ended Twelve Months Ended
----------------- -------------------
Adjusted Diluted Earnings per Jan. 3, Dec. 28, Jan. 3, Dec. 28,
Share (b) 2004 2002 2004 2002
----------------------------------------------------------------------
GAAP Diluted Earnings (Loss) per
Share $.16 $.15 $.85 $(2.04)
Restructuring and Unusual Items - (.01) - .17
Loss on Repurchases of Debt - .02 - -
Cumulative Effect of Change in
Accounting Principle - - - 2.49
-------- -------- --------- ---------
$.16 $.16 $.85 $.62
======== ======== ========= =========
Three Months
Ended Twelve Months Ended
----------------- -------------------
Jan. 3, Dec. 28, Jan. 3, Dec. 28,
Business Segment Information 2004 2002 2004 2002
----------------------------------------------------------------------
Revenues:
Pulp and Papermaking
Equipment and Systems $47,454 $42,300 $185,708 $171,122
Composite and Fiber-based
Products 3,023 3,572 17,834 14,552
-------- -------- --------- ---------
$50,477 $45,872 $203,542 $185,674
======== ======== ========= =========
Gross Profit Margin:
Pulp and Papermaking
Equipment and Systems 40% 40% 39% 39%
Composite and Fiber-based
Products -14% 23% 21% 25%
-------- -------- --------- ---------
37% 39% 38% 38%
======== ======== ========= =========
Operating Income:
Pulp and Papermaking
Equipment and Systems $5,910 $5,410 $23,440 $18,156
Composite and Fiber-based
Products (c) (1,417) (286) (1,103) (2,933)
Corporate (1,133) (993) (4,122) (3,515)
-------- -------- --------- ---------
$3,360 $4,131 $18,215 $11,708
======== ======== ========= =========
Adjusted Operating Income (Excludes
Restructuring and Unusual Items) (b):
Pulp and Papermaking
Equipment and Systems (d) $5,910 $5,410 $23,417 $20,255
Composite and Fiber-based
Products (e) (1,417) (434) (1,103) (1,442)
Corporate (1,133) (993) (4,122) (3,515)
-------- -------- --------- ---------
$3,360 $3,983 $18,192 $15,298
======== ======== ========= =========
Three Months
Ended Twelve Months Ended
----------------- -------------------
Business Segment Information Jan. 3, Dec. 28, Jan. 3, Dec. 28,
(continued) 2004 2002 2004 2002
----------------------------------------------------------------------
Bookings:
Pulp and Papermaking
Equipment and Systems $48,926 $41,432 $190,129 $166,707
Composite and Fiber-based
Products 4,913 7,655 15,376 18,830
-------- -------- --------- ---------
$53,839 $49,087 $205,505 $185,537
======== ======== ========= =========
Capital Expenditures:
Pulp and Papermaking
Equipment and Systems $656 $536 $1,754 $1,433
Composite and Fiber-based
Products 788 586 2,249 1,759
Corporate 8 7 19 152
-------- -------- --------- ---------
$1,452 $1,129 $4,022 $3,344
======== ======== ========= =========
Three Months Twelve Months
Ended Ended
--------------- -----------------
Jan. 3, Dec. 28, Jan. 3, Dec. 28,
Cash Flow and Other Data 2004 2002 2004 2002
----------------------------------------------------------------------
Cash Provided by Operations $3,031 $9,820 $23,042 $26,994
Depreciation and Amortization Expense 1,290 1,284 5,145 5,177
Jan. 3, Dec. 28,
Balance Sheet Data 2004 2002
----------------------------------------------------------------------
Cash and Short-term Investments $74,451 $44,429
Short- and Long-term Debt 598 1,165
Shareholders' Investment 211,758 181,257
(a) Restated to reflect the reclassification to other income (expense)
of an extraordinary item in accordance with the adoption of SFAS
No. 145, resulting from repurchases of our subordinated
convertible debentures.
(b) In addition to the financial measures prepared in accordance with
generally accepted accounting principles (GAAP), we use the
non-GAAP financial measures of adjusted diluted EPS and adjusted
operating income, which exclude restructuring and other
non-recurring items. We exclude these items because they are
outside our normal operations. We believe that providing such
non-GAAP measures helps investors to gain a more meaningful
understanding of our operating results from period to period, and
is consistent with how we measure our performance. The non-GAAP
financial measures included in this press release are not meant to
be considered superior to or a substitute for results of
operations prepared in accordance with GAAP. In addition, the
non-GAAP financial measures included in this press release may be
different from, and therefore may not be comparable to, similar
measures used by other companies.
(c) Includes operating losses from the composite building products
business of $1,445 and $2,106 in the three- and twelve-month
periods ended January 3, 2004, respectively; $386 in the
three-month period ended December 28, 2002; and $3,671 (including
restructuring and unusual costs of $1,178) in the twelve-month
period ended December 28, 2002.
(d) Excludes net restructuring and unusual income of $23 in the
twelve-month period ended January 3, 2004, and restructuring and
unusual costs of $2,099 in the twelve-month period ended December
28, 2002.
(e) Excludes restructuring and unusual income of $148 and net
restructuring and unusual costs of $1,491 in the three- and
twelve-month periods ended December 28, 2002, respectively.
Kadant will hold its earnings conference call on Thursday, February 19, 2004, 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 Thursday, March 18, 2004.
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, had revenues of approximately $204 million in 2003 and 1,000 employees 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 and the future performance of our businesses, particularly our composite building products business. 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 quarterly report on Form 10-Q for the period ended September 27, 2003. 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.
Investors:
Thomas M. O'Brien, 978-776-2000
or
GreatPoint Communications
Media: 978-392-6866
SOURCE: Kadant Inc.