News Release

WESTFORD, Mass., Feb 23, 2011 (BUSINESS WIRE) --

Kadant Inc. (NYSE:KAI) reported revenues from continuing operations of $73.3 million in the fourth quarter of 2010, an increase of $16.5 million, or 29 percent, compared with $56.8 million in the fourth quarter of 2009. Revenues for the fourth quarter of 2010 included a $1.1 million, or 2 percent, decrease from foreign currency translation. Operating income from continuing operations was $6.7 million in the fourth quarter of 2010, which included a $0.1 million restructuring charge. Operating loss from continuing operations was $0.3 million in the fourth quarter of 2009, which included a $2.1 million restructuring charge. Net income from continuing operations was $5.1 million in the fourth quarter of 2010, or $.41 per diluted share, compared to a net loss of $1.7 million, or $.14 per diluted share, in the fourth quarter of 2009. Net loss from continuing operations in the fourth quarter of 2009 included a $1.4 million charge related to discrete tax items and a $1.4 million after-tax restructuring charge.

For full-year 2010, Kadant reported revenues from continuing operations of $270.0 million, an increase of $44.4 million, or 20 percent, compared with $225.6 million in 2009. Revenues for 2010 included a $0.9 million decrease from foreign currency translation. Operating income from continuing operations was $24.9 million in 2010, including a $1.0 million gain, compared to an operating loss of $0.5 million in 2009, which included a $4.4 million restructuring charge. Net income from continuing operations was $18.4 million in 2010, or $1.48 per diluted share, compared to a net loss of $5.9 million, or $.48 per diluted share, in 2009. Net income from continuing operations in 2010 included a $0.9 million after-tax gain. Net loss from continuing operations in 2009 included a $4.6 million charge related to discrete tax items and a $2.9 million after-tax restructuring charge.

"Our full year results represent an extraordinary rebound from 2009, capped off by a strong fourth quarter," said Jonathan W. Painter, president and chief executive officer of Kadant. "Diluted EPS from continuing operations was $.41 in the fourth quarter of 2010, compared to our guidance of $.26 to $.28. The increase was primarily due to higher revenues, especially in our stock preparation product line, and to better operating leverage.

"Revenues of $73.3 million in the fourth quarter of 2010 were up 29 percent compared to last year and increased 10 percent compared to the third quarter of 2010. The increases were broadly based across all our major geographic territories and were especially strong in China, where revenues of $12.3 million nearly doubled over the fourth quarter of 2009. Operating income of $6.7 million was 9 percent of revenues, and operating cash flows were $13.8 million, one of the highest quarterly results in the Company's history. We ended the quarter with $61.8 million in cash and $22.7 million in total debt for a net cash position of $39.1 million.

"Importantly, we had an exceptionally strong quarter in bookings. Consolidated bookings of nearly $100 million were up 55 percent over last year's fourth quarter, and improved 71 percent on a sequential basis. The bookings increases were also broadly based and included an outstanding performance in China, where bookings of $35.9 million more than quadrupled over the fourth quarter of 2009. Worldwide stock preparation bookings of $53.0 million were one of the highest we've ever achieved in this product line.

"The backlog at the end of the year was $94.3 million, an increase of 53 percent over last year, giving us an excellent start to 2011. Nevertheless, some of this backlog represents larger stock-preparation systems, particularly in China, which are scheduled to ship in the second half of the year and typically carry lower than average gross margins. As such, we are expecting GAAP diluted EPS of $1.65 to $1.75 in 2011 on revenues of $300 to $310 million. For the first quarter of 2011, we expect to achieve GAAP diluted EPS of $.35 to $.37 on revenues of $71 to $73 million."

Conference Call

Kadant will hold a webcast with a slide presentation for investors on Thursday, February 24, 2011, at 11 a.m. eastern time to discuss its fourth quarter and full-year performance, as well as future expectations. To view the webcast, go to www.kadant.com and click on the "Investors" tab. To listen to the webcast via teleconference, call 866-510-0708 within the U.S., or +1-617-597-5377 outside the U.S. and reference participant passcode 83375884. An archive of the webcast presentation will be available on our Web site until March 25, 2011.

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 certain gains and losses 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 pre-tax restructuring costs of $0.1 million and $2.1 million in the three-month periods ended January 1, 2011 and January 2, 2010, respectively. Adjusted EBITDA and adjusted operating income exclude pre-tax gains of $1.0 million in the twelve-month period ended January 1, 2011 and pre-tax restructuring costs of $4.4 million in the twelve-month period ended January 2, 2010.

Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release.

About Kadant

Kadant Inc. is a leading supplier to the global pulp and paper industry, with a range of products and systems for improving efficiency and quality in pulp and paper production, including stock preparation, fluid handling, paper machine accessories, and water management equipment. Our fluid-handling products are also used to optimize production in the steel, rubber, plastics, food, chemical, and other process 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 $270 million in 2010 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 economic and industry outlook. Important factors that could cause actual results to differ materially from those indicated by such statements include risks and uncertainties set forth under the heading "Risk Factors" in Kadant's quarterly report on Form 10-Q for the period ended October 2, 2010 and risks and uncertainties relating to our dependence on the pulp and paper industry; poor relations with a major paper producer in China; significance of sales and operation of manufacturing facilities in China; our ability to expand capacity in China to meet demand; 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.

SOURCE: Kadant

Investor contact:
Kadant Inc.
Thomas M. O'Brien, 978-776-2000
or
Media contact:
Wes Martz, 269-278-1715