UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
______________________________________________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported): July 23, 2008
KADANT
INC.
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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1-11406
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52-1762325
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(State
or Other Jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
Incorporation)
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Identification
No.)
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One
Technology Park Drive
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||
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Westford,
Massachusetts
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01886
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(978)
776-2000
Registrant's
telephone number, including area code
Not
Applicable
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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KADANT
INC.
Item
2.02 Results of Operations and Financial Condition.
On July 23, 2008, Kadant Inc. (the “Company”) announced its financial results
for the fiscal quarter ended June 28, 2008. The full text of the press release
issued in connection with the announcement is furnished as Exhibit 99 to this
Current Report on Form 8-K.
The
information in this Form 8-K (including Exhibit 99) shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange
Act”) or otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933
or the Exchange Act, except as expressly set forth by specific reference in such
a filing.
Item
9.01 Financial Statements and Exhibits.
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(c)
Exhibit
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||
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The
following exhibit relating to Item 2.02 shall be deemed to be furnished
and not filed.
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Exhibit
No
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Description of Exhibit
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99
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Press
Release issued by the Company on July 23, 2008
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2
KADANT
INC.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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KADANT
INC.
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||
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Date: July
23, 2008
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By
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/s/ Thomas M. O’Brien
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Thomas
M. O’Brien
Executive
Vice President and
Chief
Financial Officer
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3
Exhibit
99
[LOGO]
NEWS
KADANT
AN ACCENT
ON INNOVATION
One
Technology Park Drive
Westford,
MA 01886
Investor
contact: Thomas M. O’Brien, 978-776-2000
Media
contact: Wes Martz, 269-278-1715
Kadant
Reports Results for Second Quarter 2008 and
Lowers
Full Year 2008 Guidance
WESTFORD,
Mass., July 23, 2008 – Kadant Inc. (NYSE:KAI) reported revenues from continuing
operations of $92.4 million in the second quarter of 2008, an increase of $3.3
million, or 4 percent, compared to $89.1 million in the second quarter of 2007.
The 2008 period included a $6.1 million, or 7 percent, increase from foreign
currency translation and the 2007 period included $0.3 million in revenues from
the Casting Products business that was sold in April 2007. Excluding these
items, revenues decreased $2.5 million, or 3 percent, in the second quarter of
2008 compared to the 2007 period. Operating income from continuing operations in
the 2008 quarter increased 11 percent to $10.1 million versus $9.2 million in
the second quarter of 2007. Income from continuing operations (after-tax) was
$6.9 million in the second quarter of 2008, or $.50 of diluted earnings per
share (EPS), versus income of $5.9 million, or $.42 of diluted EPS, a year ago.
Including the discontinued operation, net income in the second quarter of 2008
was $6.9 million, or $.50 per diluted share, versus $4.9 million, or $.35 per
diluted share, in the 2007 quarter.
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Three
Months Ended
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||||||||||||||||
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($
in millions)
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June
28, 2008
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June
30, 2007
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Change
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%
Change
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||||||||||||
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Revenues,
as reported
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$ | 92.4 | $ | 89.1 | $ | 3.3 | 4 | % | ||||||||
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Adjustments
to revenues for the following:
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||||||||||||||||
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Favorable
foreign currency effect
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(6.1 | ) | - | (6.1 | ) | (7 | ) | |||||||||
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Sale
of Casting Products business
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- | (.3 | ) | .3 | - | |||||||||||
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Revenues,
as adjusted
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$ | 86.3 | $ | 88.8 | $ | (2.5 | ) | (3 | )% | |||||||
“We had a
number of notable achievements in the second quarter,” said William A.
Rainville, chairman and chief executive officer of Kadant. “Diluted EPS from our
continuing operations was $.50, which exceeded the top end of our guidance by
$.07. Operating income in our Papermaking Systems segment set a quarterly record
of $14.7 million and represented 16.3 percent of revenues. Within this segment,
our fluid-handling product line set another quarterly record, contributing
revenues of $28 million, a 31 percent increase over the second quarter of 2007.
In addition, cash flows from continuing operations were $4.6 million in the
second quarter of 2008, or $7.3 million higher than the second quarter of
2007.
“Nevertheless,
the current economic climate leads us to believe that the remainder of 2008 will
be more challenging than we previously envisioned, particularly in the market
for large stock preparation systems in China and Southeast Asia. Several large
projects for stock preparation equipment, on which we had expected to recognize
revenue in 2008, have been delayed into 2009, and a few prospective projects
have been cancelled, although none were in our backlog. Despite these
challenges, we are seeing encouraging developments in Europe and Latin America.
For example, we recently received notification that we had been awarded a
contract for over $5 million to deliver a system that will produce tissue from
recycled fiber in South America.
-more-
“With the
slowdown of capital equipment business in China, we now expect to report, for
the full year, GAAP diluted EPS of $1.65 to $1.70 from continuing operations,
revised from our previous estimate of $1.85 to $1.90, on revenues of $365 to
$370 million, revised from our previous estimate of $385 to $395 million. For
the third quarter of 2008, we expect to report GAAP diluted EPS of $.36 to $.38
from continuing operations on revenues of $86 to $88 million. The third quarter
EPS includes a net gain of approximately $.04 primarily from the sale of real
estate.”
Use
of Non-GAAP Financial Measures
In
addition to the financial measures prepared in accordance with U.S. generally
accepted accounting principles (GAAP), we use certain non-GAAP financial
measures, including earnings before interest, taxes, depreciation, and
amortization (EBITDA) and revenues adjusted to exclude both the results from the
sale of our Casting Products business and the effects of foreign currency
translation. We believe that the inclusion of such measures helps investors to
gain a better understanding of our underlying operations and future prospects,
consistent with how management measures and forecasts our performance,
especially when comparing such results to previous periods or forecasts. We also
believe this information is responsive to investors' requests and gives them an
additional measure of our performance.
We use non-GAAP financial measures, in
addition to GAAP financial measures, as the basis for measuring our underlying
operating performance and comparing such performance to that of prior 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.
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.
Reconciliations of the non-GAAP
financial measures to the most directly comparable GAAP financial measures are
set forth in this press release and in the accompanying tables.
-more-
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Financial
Highlights (unaudited)
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||||||||||||||||
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(In
thousands, except per share amounts and percentages)
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||||||||||||||||
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Three
Months Ended
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Six
Months Ended
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|||||||||||||||
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Consolidated
Statement of Income
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June
28, 2008
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June
30, 2007
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June
28, 2008
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June
30, 2007
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||||||||||||
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Revenues
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$ | 92,406 | $ | 89,107 | $ | 178,270 | $ | 177,348 | ||||||||
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Costs
and Operating Expenses:
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||||||||||||||||
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Cost
of revenues
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53,843 | 54,964 | 105,647 | 110,658 | ||||||||||||
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Selling,
general, and administrative expenses
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26,924 | 23,087 | 52,293 | 46,583 | ||||||||||||
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Research
and development expenses
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1,497 | 1,493 | 3,105 | 3,160 | ||||||||||||
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Loss
on sale of subsidiary (a)
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- | 388 | - | 388 | ||||||||||||
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Restructuring
costs and other expense (income), net (b)
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- | - | (473 | ) | - | |||||||||||
| 82,264 | 79,932 | 160,572 | 160,789 | |||||||||||||
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Operating
Income
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10,142 | 9,175 | 17,698 | 16,559 | ||||||||||||
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Interest
Income
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511 | 342 | 1,052 | 693 | ||||||||||||
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Interest
Expense
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(640 | ) | (789 | ) | (1,235 | ) | (1,595 | ) | ||||||||
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Income
from Continuing Operations Before Provision for
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||||||||||||||||
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Income
Taxes and Minority Interest Expense
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10,013 | 8,728 | 17,515 | 15,657 | ||||||||||||
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Provision
for Income Taxes
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2,977 | 2,705 | 5,265 | 4,895 | ||||||||||||
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Minority
Interest Expense
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143 | 87 | 240 | 135 | ||||||||||||
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Income
from Continuing Operations
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6,893 | 5,936 | 12,010 | 10,627 | ||||||||||||
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Loss
from Discontinued Operation, Net of Tax
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(5 | ) | (1,022 | ) | (9 | ) | (1,414 | ) | ||||||||
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Net
Income
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$ | 6,888 | $ | 4,914 | $ | 12,001 | $ | 9,213 | ||||||||
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Basic
Earnings per Share
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||||||||||||||||
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Income
from Continuing Operations
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$ | .50 | $ | .42 | $ | .86 | $ | .76 | ||||||||
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Loss
from Discontinued Operation
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- | (.07 | ) | - | (.10 | ) | ||||||||||
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Net
Income
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$ | .50 | $ | .35 | $ | .86 | $ | .66 | ||||||||
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Diluted
Earnings per Share
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||||||||||||||||
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Income
from Continuing Operations
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$ | .50 | $ | .42 | $ | .85 | $ | .75 | ||||||||
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Loss
from Discontinued Operation
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- | (.07 | ) | - | (.10 | ) | ||||||||||
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Net
Income
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$ | .50 | $ | .35 | $ | .85 | $ | .65 | ||||||||
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Weighted
Average Shares
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||||||||||||||||
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Basic
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13,703 | 14,012 | 13,935 | 14,010 | ||||||||||||
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Diluted
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13,822 | 14,202 | 14,048 | 14,208 | ||||||||||||
-more-
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Three
Months Ended
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Six
Months Ended
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|||||||||||||||
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Business
Segment Information (c)
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June 28, 2008
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June 30, 2007
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June 28, 2008
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June 30, 2007
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||||||||||||
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Revenues:
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||||||||||||||||
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Pulp
and Papermaking Systems
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$ | 90,453 | $ | 86,609 | $ | 173,711 | $ | 170,643 | ||||||||
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Other
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1,953 | 2,498 | 4,559 | 6,705 | ||||||||||||
| $ | 92,406 | $ | 89,107 | $ | 178,270 | $ | 177,348 | |||||||||
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Gross
Profit Margin:
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||||||||||||||||
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Pulp
and Papermaking Systems
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42 | % | 38 | % | 41 | % | 38 | % | ||||||||
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Other
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29 | % | 34 | % | 35 | % | 34 | % | ||||||||
| 42 | % | 38 | % | 41 | % | 38 | % | |||||||||
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Operating
Income:
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||||||||||||||||
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Pulp
and Papermaking Systems
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$ | 14,740 | $ | 12,238 | $ | 25,618 | $ | 21,808 | ||||||||
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Corporate
and Other
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(4,598 | ) | (3,063 | ) | (7,920 | ) | (5,249 | ) | ||||||||
| $ | 10,142 | $ | 9,175 | $ | 17,698 | $ | 16,559 | |||||||||
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Bookings
from Continuing Operations:
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||||||||||||||||
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Pulp
and Papermaking Systems
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$ | 82,041 | $ | 89,310 | $ | 169,373 | $ | 185,517 | ||||||||
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Other
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1,647 | 2,343 | 3,999 | 6,360 | ||||||||||||
| $ | 83,688 | $ | 91,653 | $ | 173,372 | $ | 191,877 | |||||||||
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Capital
Expenditures from Continuing Operations:
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||||||||||||||||
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Pulp
and Papermaking Systems
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$ | 1,282 | $ | 846 | $ | 2,707 | $ | 1,621 | ||||||||
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Corporate
and Other
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257 | 40 | 442 | 103 | ||||||||||||
| $ | 1,539 | $ | 886 | $ | 3,149 | $ | 1,724 | |||||||||
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Three
Months Ended
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Six
Months Ended
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|||||||||||||||
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Cash
Flow and Other Data from Continuing Operations
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June 28, 2008
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June 30, 2007
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June 28, 2008
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June
30, 2007
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||||||||||||
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Cash
Provided by (Used in) Operations
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$ | 4,615 | $ | (2,684 | ) | $ | 10,943 | $ | 3,768 | |||||||
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Depreciation
and Amortization Expense
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1,918 | 1,891 | 3,776 | 3,648 | ||||||||||||
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Balance
Sheet Data
|
June 28, 2008
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Dec. 29, 2007
|
||||||||||||||
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Cash
and Cash Equivalents
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$ | 53,888 | $ | 61,553 | ||||||||||||
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Short-
and Long-term Debt
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42,961 | 40,700 | ||||||||||||||
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Shareholders'
Investment
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282,836 | 278,751 | ||||||||||||||
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Three
Months Ended
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Six
Months Ended
|
|||||||||||||||
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EBITDA
Data
|
June 28, 2008
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June 30, 2007
|
June 28, 2008
|
June
30, 2007
|
||||||||||||
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Consolidated
|
||||||||||||||||
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GAAP
Operating Income
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$ | 10,142 | $ | 9,175 | $ | 17,698 | $ | 16,559 | ||||||||
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Depreciation
and Amortization
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1,918 | 1,891 | 3,776 | 3,648 | ||||||||||||
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Loss
on sale of subsidiary (a)
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- | 388 | - | 388 | ||||||||||||
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EBITDA
(b)
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$ | 12,060 | $ | 11,454 | $ | 21,474 | $ | 20,595 | ||||||||
|
Pulp
and Papermaking Systems
|
||||||||||||||||
|
GAAP
Operating Income
|
$ | 14,740 | $ | 12,238 | $ | 25,618 | $ | 21,808 | ||||||||
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Depreciation
and Amortization
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1,786 | 1,762 | 3,516 | 3,386 | ||||||||||||
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EBITDA
(b)
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$ | 16,526 | $ | 14,000 | $ | 29,134 | $ | 25,194 | ||||||||
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Corporate
and Other (c)
|
||||||||||||||||
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GAAP
Operating Loss
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$ | (4,598 | ) | $ | (3,063 | ) | $ | (7,920 | ) | $ | (5,249 | ) | ||||
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Depreciation
and Amortization
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132 | 129 | 260 | 262 | ||||||||||||
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Loss
on sale of subsidiary (a)
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- | 388 | - | 388 | ||||||||||||
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EBITDA
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$ | (4,466 | ) | $ | (2,546 | ) | $ | (7,660 | ) | $ | (4,599 | ) | ||||
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(a)
|
Reflects
a pre-tax loss on the sale of the Casting Products business on April 30,
2007 in the three- and six-month periods ended June 30,
2007.
|
||||||||
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(b)
|
Includes
net restructuring costs and other income of $473 in the six-month period
ended June 28, 2008 related to restructuring costs of $121 and a gain from
the sale of
|
||||||||
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assets
of $594.
|
|||||||||
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(c)
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"Other"
includes the results from the Fiber-based Products business in all periods
and the Casting Products business in the 2007 periods through its sale on
April 30, 2007.
|
||||||||
-more-
Conference
Call
Kadant
will hold its earnings conference call on Thursday, July 24, 2008, at 11 a.m.
Eastern time. To listen, call 800-709-2159 within the U.S., or 973-582-2810
outside the U.S. Please reference Event ID number 42165462. 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 August 22, 2008.
About
Kadant
Kadant
Inc. is a leading supplier to the global pulp and paper industry, with a range
of products and services for improving efficiency and quality in pulp and paper
production, including paper machine accessories and systems for stock
preparation, fluid handling, and water management. Our fluid-handling products
are also used to optimize production in the steel, rubber, plastics, food, and
textile 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 $366 million in 2007 and 2,000 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, the effect of economic conditions on our business, demand for our
products, and pending and potential future orders. 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 March 29, 2008. These include risks and
uncertainties relating to our dependence on the pulp and paper industry;
significance of sales and operation of manufacturing facilities in China;
international sales and operations; competition; our debt obligations;
restrictions in our credit agreement; 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 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.
###