Kadant Reports 2004 Fourth Quarter and Year-End Results
ACTON, Mass., Feb 16, 2005 (BUSINESS WIRE) -- For the fourth quarter of 2004, Kadant Inc. (NYSE:KAI) reported revenues of $45.9 million from continuing operations (including $1.5 million from the favorable effect of currency translation), compared with $48.7 million in the fourth quarter of 2003. Loss from continuing operations was $4.8 million, or $.34 per diluted share, in the 2004 period, compared with income from continuing operations of $3.2 million, or $.22 per diluted share, in the year-ago quarter. Excluding $.44 of after-tax restructuring and unusual charges primarily related to our operation in France, adjusted diluted earnings per share (EPS) was $.10, compared with $.22 in the 2003 period. Net loss, including the discontinued composite building products business, was $5.3 million, or $.38 per diluted share, in the 2004 quarter, compared with net income of $2.3 million, or $.16 per diluted share, in the 2003 period.
For the year, the company reported revenues from continuing operations of $195.0 million in 2004 (including $7.5 million from the favorable effect of currency translation), compared with $191.5 million in 2003. Income from continuing operations in 2004 was $5.8 million, or $.40 per diluted share, versus $13.1 million, or $.94 per diluted share, in 2003. Excluding $.42 of after-tax restructuring and unusual charges, adjusted diluted EPS was $.82 in 2004, versus $.94 in 2003. Net income in 2004, including the discontinued business, was $0.7 million, or $.05 per diluted share, versus $11.8 million, or $.85 per diluted share, in 2003.
"Although lower than last year, our revenues for the quarter were somewhat better than we expected," said William A. Rainville, chairman and chief executive officer of Kadant. "We also exceeded our EPS guidance for continuing operations, excluding the significant restructuring charge. Throughout 2004, paper companies in North America and Europe focused on reducing or postponing expenditures, and this hurt our performance. Our Kadant Lamort operation in France was particularly affected and incurred an operating loss during the fourth quarter, excluding the restructuring charge, that lowered our earnings by $.05 per share.
"That said, we've sustained our leadership as a paper industry supplier, and are working hard to position Kadant for growth as the market signals some increases in capital spending. Our actions in France should lead to profitability in that subsidiary in the latter part of 2005, and strengthen its competitive advantage going forward. We've maintained a technological edge that sets us apart in growing markets such as China, where bookings of our advanced stock-preparation equipment were $7.5 million during the fourth quarter - the best quarter for China bookings in 2004. In addition, our global presence continues to be a major asset, underscored by the recent order from Sappi Saiccor for a $3 million-plus pulp-washing system to be installed in South Africa.
"We've also improved our strong cash position, with cash flow from continuing operations of $6.6 million in the fourth quarter. Our cash balance - $82.1 million at year end - translates to approximately $5.90 per diluted share, based on our weighted average shares outstanding for the quarter. The strength of our balance sheet creates multiple opportunities for us to generate shareholder value, including investments in technology development, stock buybacks, and/or strategic acquisitions."
Mr. Rainville concluded, "With operating losses expected to continue in France, we estimate GAAP diluted EPS from continuing operations of $.13 to $.15 in the first quarter of 2005, on revenues of $47 to $49 million. Our outlook for all of 2005, which assumes a turnaround in France later in the year, is $.80 to $.90 of GAAP diluted EPS from continuing operations, on revenues of $200 to $210 million."
Kadant will hold its earnings conference call on Thursday, February 17, 2005, 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 March 18, 2005.
Kadant Inc. is a leading global supplier of a range of products that improve quality and productivity in pulp and paper production, including stock-preparation equipment, water-management systems, and paper machine accessories. Kadant, based in Acton, Massachusetts, had approximately $195 million in revenues from continuing operations in 2004 and 950 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, the future performance of our businesses, our market and technological position, our opportunities to improve shareholder value, orders from China, and the restructuring of our subsidiary in France. 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 October 2, 2004. These include risks and uncertainties relating to our dependence on the pulp and paper industry; international sales and operations; competition; ability to sell the composite building products business on favorable terms; 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 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.
Financial Highlights (unaudited) (a)
(In thousands, except per share amounts and percentages)
Three Months Ended Twelve Months Ended
------------------- -------------------
January January January January
Condensed Consolidated 1, 3, 1, 3,
Statement of Operations 2005 2004 2005 2004
----------------------------------------------------------------------
Revenues $45,931 $48,715 $194,966 $191,507
-------- -------- --------- ---------
Costs and Operating Expenses:
Cost of revenues 29,191 29,362 119,200 116,539
Selling, general and
administrative expenses 13,901 13,481 56,334 50,402
Research and development
expenses 801 1,067 3,077 4,268
Restructuring and unusual
items 9,515 - 9,515 (23)
-------- -------- --------- ---------
53,408 43,910 188,126 171,186
-------- -------- --------- ---------
Operating Income (Loss) (7,477) 4,805 6,840 20,321
Interest Income 465 272 1,468 965
Interest Expense (9) (10) (23) (49)
-------- -------- --------- ---------
Income (Loss) from Continuing
Operations Before
Income Taxes and Minority
Interest (7,021) 5,067 8,285 21,237
Provision (Benefit) for Income
Taxes (2,252) 1,925 2,524 8,070
Minority Interest Expense
(Income) - (24) 8 44
-------- -------- --------- ---------
Income (Loss) from Continuing
Operations (4,769) 3,166 5,753 13,123
Loss from Discontinued
Operation, Net of Tax (555) (896) (5,099) (1,306)
-------- -------- --------- ---------
Net Income (Loss) $(5,324) $2,270 $654 $11,817
======== ======== ========= =========
Earnings (Loss) per Share
Basic
Income (Loss) from
Continuing Operations $(.34) $.23 $.41 $.96
Loss from Discontinued
Operation (.04) (.07) (.36) (.09)
-------- -------- --------- ---------
Net Income (Loss) $(.38) $.16 $.05 $.87
======== ======== ========= =========
Diluted
Income (Loss) from
Continuing Operations $(.34) $.22 $.40 $.94
Loss from Discontinued
Operation (.04) (.06) (.35) (.09)
-------- -------- --------- ---------
Net Income (Loss) $(.38) $.16 $.05 $.85
======== ======== ========= =========
Weighted Average Shares
Basic 13,868 13,831 14,071 13,659
======== ======== ========= =========
Diluted 13,868 14,121 14,398 13,959
======== ======== ========= =========
Three Months Twelve Months
Ended Ended
----------------- -------------------
Adjusted Net Income and Diluted January January January January
EPS (b) 1, 2005 3, 2004 1, 2005 3, 2004
---------------------------------------------------------------------
Net Income (Loss) $(5,324) $2,270 $654 $11,817
Loss from Discontinued
Operation, Net of Tax 555 896 5,099 1,306
Restructuring and Unusual items,
Net of Tax 6,090 - 6,090 (14)
-------- -------- --------- ---------
Adjusted Net Income $1,321 $3,166 $11,843 $13,109
======== ======== ========= =========
Diluted Earnings (Loss) per
Share $(.38) $.16 $.05 $.85
Loss from Discontinued Operation .04 .06 .35 .09
Restructuring and Unusual Items .44 - .42 -
-------- -------- --------- ---------
Adjusted Diluted Earnings per
Share $.10 $.22 $.82 $.94
======== ======== ========= =========
Three Months Twelve Months
Ended Ended
----------------- -------------------
Business Segment Information January January January January
1, 2005 3, 2004 1, 2005 3, 2004
---------------------------------------------------------------------
Revenues:
Pulp and Papermaking
Systems $44,154 $47,454 $188,320 $185,708
Fiber-based Products 1,777 1,261 6,646 5,799
-------- -------- --------- ---------
$45,931 $48,715 $194,966 $191,507
======== ======== ========= =========
Gross Profit Margin:
Pulp and Papermaking
Systems 37% 40% 39% 39%
Fiber-based Products 33% 24% 36% 37%
-------- -------- --------- ---------
36% 40% 39% 39%
======== ======== ========= =========
Operating Income (Loss):
Pulp and Papermaking
Systems $(6,309) $5,910 $11,781 $23,440
Corporate and Other (d) (1,168) (1,105) (4,941) (3,119)
-------- -------- --------- ---------
$(7,477) $4,805 $6,840 $20,321
======== ======== ========= =========
Adjusted Operating Income
(excludes Restructuring and
Unusual Items)(b):
Pulp and Papermaking
Systems (c) $3,206 $5,910 $21,296 $23,417
Corporate and Other (d) (1,168) (1,105) (4,941) (3,119)
-------- -------- --------- ---------
$2,038 $4,805 $16,355 $20,298
======== ======== ========= =========
Three Months Twelve Months
Ended Ended
----------------- -------------------
Business Segment Information January January January January
(continued) 1, 2005 3, 2004 1, 2005 3, 2004
---------------------------------------------------------------------
Bookings from Continuing
Operations:
Pulp and Papermaking
Systems $45,438 $48,926 $185,870 $190,129
Fiber-based Products 2,031 1,469 6,786 5,973
-------- -------- --------- ---------
$47,469 $50,395 $192,656 $196,102
======== ======== ========= =========
Capital Expenditures from
Continuing Operations:
Pulp and Papermaking
Systems $842 $656 $1,968 $1,754
Corporate and Other (d) 18 116 221 252
-------- -------- --------- ---------
$860 $772 $2,189 $2,006
======== ======== ========= =========
Three Months Twelve Months
Ended Ended
----------------- -------------------
Cash Flow and Other Data from January January January January
Continuing Operations 1, 2005 3, 2004 1, 2005 3, 2004
---------------------------------------------------------------------
Cash Provided by Operations $6,630 $3,634 $12,933 $25,563
Depreciation and Amortization
Expense 870 970 3,604 3,954
Balance Sheet Data January January
1, 2005 3, 2004
---------------------------------------------------------------------
Cash and Cash Equivalents $82,089 $74,412
Short-term Debt - 598
Shareholders' Investment 212,461 211,758
(a) All prior-period information has been restated to reflect the
composite building products business as a discontinued operation.
(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 net income, 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) Excludes restructuring and unusual items of $9,515 in the three-
and twelve-month periods ended January 1, 2005 and ($23) in the
twelve-month period ended January 3, 2004.
(d) Corporate and Other includes the results from our Fiber-based
Products business and corporate.
SOURCE: Kadant Inc.
Investor contact:
Kadant Inc.
Thomas M. O'Brien, 978-776-2000
or
Media contact:
GreatPoint Communications, 978-392-6866