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): August 3, 2005
KADANT INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-11406 52-1762325
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
One Acton Place
Acton, Massachusetts 01720
(Address of Principal Executive Offices) (Zip Code)
(978) 776-2000
Registrant's telephone number, including area code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
KADANT INC
Item 2.02 Results of Operations and Financial Condition.
On August 3, 2005, Kadant Inc. (the "Company") announced its
financial results for the fiscal quarter ended July 2, 2005. 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.
(c) Exhibit
The following exhibit relating to Item 2.02 shall be deemed to be
furnished and not filed.
Exhibit
No. Description of Exhibit
------- -------------------------------------------------------
99 Press Release issued by the Company on August 3, 2005.
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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.
KADANT INC.
Date: August 3, 2005 By: /s/ Thomas M. O'Brien
----------------------------
Thomas M. O'Brien
Executive Vice President and
Chief Financial Officer
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Exhibit 99
[LOGO]
NEWS
KADANT
AN ACCENT ON INNOVATION
One Acton Place, Suite 202
Acton, MA 01720
Investor contact: Thomas M. O'Brien, 978-776-2000
Media contact: GreatPoint Communications, 978-392-6866
Kadant Reports 2005 Second Quarter Results
ACTON, Mass., August 3, 2005 - For the second quarter of 2005, Kadant Inc.
(NYSE:KAI) reported that revenues from continuing operations increased 24
percent to $65.1 million (including 21 percent, or $11.1 million, from recently
acquired Kadant Johnson and a 2 percent benefit from currency translation),
compared with $52.7 million in the second quarter of 2004. Income from
continuing operations was $3.1 million in the 2005 quarter, or $.22 of diluted
earnings per share (EPS), versus $4.0 million, or $.27 of diluted EPS, in the
2004 period, which included a $.03 tax benefit. Including the discontinued
composite building products business, net income in the 2005 quarter was $3.4
million, or $.24 per diluted share, versus $3.7 million, or $.26 per diluted
share, in 2004.
"We had a good quarter overall, meeting our financial targets and
achieving several objectives that solidly position Kadant for growth in the long
term," said William A. Rainville, chairman and chief executive officer of
Kadant. "We closed the acquisition of Kadant Johnson in mid-May, and are pleased
to report that this business is already accretive to earnings. In addition to
extending our breadth of offerings to the global paper industry, Kadant Johnson
greatly strengthens our presence in Asia, where continued market growth is
helping to offset lingering weakness in North America and parts of Europe. Since
the end of the second quarter, we have received orders from Chinese producers
for stock-preparation systems totaling approximately $7.5 million, suggesting
strong bookings performance from China in the third quarter.
"In France, our Kadant Lamort subsidiary reported an operating loss for
the quarter as we expected, which lowered our diluted EPS by $.05. However, we
recently completed the necessary consultations with the workers' council and
have begun to implement the restructuring plan, which should enable this
business to regain profitability by the end of the year. We also continue to
make steady progress on the sale of the composite building products business,
having recently signed a letter of intent."
Mr. Rainville added, "Just a few months after making a major
acquisition, our balance sheet remains strong. With more than $46 million in
cash and $61 million in debt, our net debt position was only $15 million at
quarter end. Finally, we used $2.1 million of cash during the quarter to
repurchase our stock.
"Looking ahead to the third quarter of 2005, which will include an
operating loss from Kadant Lamort comparable to the second quarter, we expect to
report GAAP diluted EPS of $.19 to $.21 from continuing operations, on revenues
of $65 to $67 million. For the full year, we are narrowing our GAAP diluted EPS
guidance to $.92 to $1.00, on revenues of $250 to $260 million."
Kadant will hold its earnings conference call on Thursday, August 4,
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 September 2, 2005.
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Financial Highlights (unaudited) (a)
(In thousands, except per share amounts and percentages)
Three Months Ended Six Months Ended
---------------------------- ----------------------------
Consolidated Statement of Income July 2, 2005 July 3, 2004 July 2, 2005 July 3, 2004
- ------------------------------------------------------------------------------------------------------------------------------
Revenues $ 65,086 $ 52,652 $ 115,830 $ 100,152
-------- -------- --------- ---------
Costs and Operating Expenses:
Cost of revenues 40,385 32,255 72,367 60,288
Selling, general, and administrative expenses 18,497 14,575 33,391 28,346
Research and development expenses 1,247 581 2,295 1,469
-------- -------- --------- ---------
60,129 47,411 108,053 90,103
-------- -------- --------- ---------
Operating Income 4,957 5,241 7,777 10,049
Interest Income 379 318 851 647
Interest Expense (473) (4) (475) (12)
-------- -------- --------- ---------
Income from Continuing Operations Before Provision for Income
Taxes and Minority Interest 4,863 5,555 8,153 10,684
Provision for Income Taxes 1,654 1,558 1,857 3,353
Minority Interest Expense 62 14 62 14
-------- -------- --------- ---------
Income from Continuing Operations 3,147 3,983 6,234 7,317
Income (Loss) from Discontinued Operation, Net of Tax 207 (240) (156) (846)
-------- -------- --------- ---------
Net Income $ 3,354 $ 3,743 $ 6,078 $ 6,471
======== ======== ========= =========
Basic Earnings per Share
Income from Continuing Operations $ .23 $ .28 $ .45 $ .51
Income (Loss) from Discontinued Operation .01 (.02) (.01) (.05)
-------- -------- --------- ---------
Net Income $ .24 $ .26 $ .44 $ .46
======== ======== ========= =========
Diluted Earnings per Share
Income from Continuing Operations $ .22 $ .27 $ .44 $ .50
Income (Loss) from Discontinued Operation .02 (.01) (.01) (.06)
-------- -------- --------- ---------
Net Income $ .24 $ .26 $ .43 $ .44
======== ======== ========= =========
Weighted Average Shares
Basic 13,891 14,218 13,909 14,220
======== ======== ========= =========
Diluted 14,181 14,555 14,196 14,579
======== ======== ========= =========
Three Months Ended Six Months Ended
---------------------------- ----------------------------
Adjusted Net Income and Diluted EPS (b) July 2, 2005 July 3, 2004 July 2, 2005 July 3, 2004
- ------------------------------------------------------------------------------------------------------------------------------
Net Income $ 3,354 $ 3,743 $ 6,078 $ 6,471
(Income) Loss from Discontinued Operation, Net of Tax (207) 240 156 846
Royalty Gain (c) - - - (631)
Income Taxes (d) - (386) (882) (386)
-------- -------- --------- ---------
Adjusted Net Income $ 3,147 $ 3,597 $ 5,352 $ 6,300
======== ======== ========= =========
Diluted Earnings per Share $ .24 $ .26 $ .43 $ .44
(Income) Loss from Discontinued Operation (.02) .01 .01 .06
Royalty Gain (c) - - - (.04)
Income Taxes (d) - (.03) (.06) (.03)
-------- -------- --------- ---------
Adjusted Diluted Earnings per Share $ .22 $ .24 $ .38 $ .43
======== ======== ========= =========
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Three Months Ended Six Months Ended
---------------------------- ----------------------------
Business Segment Information July 2, 2005 July 3, 2004 July 2, 2005 July 3, 2004
- ------------------------------------------------------------------------------------------------------------------------------
Revenues:
Pulp and Papermaking Systems $ 62,528 $ 50,933 $ 110,099 $ 96,497
Other (e) 2,558 1,719 5,731 3,655
-------- -------- --------- ---------
$ 65,086 $ 52,652 $ 115,830 $ 100,152
======== ======== ========= =========
Gross Profit Margin:
Pulp and Papermaking Systems 38% 38% 37% 40%
Other (e) 37% 45% 40% 39%
-------- -------- --------- ---------
38% 39% 38% 40%
======== ======== ========= =========
Operating Income:
Pulp and Papermaking Systems $ 5,934 $ 6,152 $ 9,310 $ 12,495
Corporate and Other (e) (977) (911) (1,533) (2,446)
-------- -------- --------- ---------
$ 4,957 $ 5,241 $ 7,777 $ 10,049
======== ======== ========= =========
Adjusted Operating Income: (b)
Pulp and Papermaking Systems (c) $ 5,934 $ 6,152 $ 9,310 $ 11,525
Corporate and Other (e) (977) (911) (1,533) (2,446)
-------- -------- --------- ---------
$ 4,957 $ 5,241 $ 7,777 $ 9,079
======== ======== ========= =========
Bookings:
Pulp and Papermaking Systems $ 49,103 $ 48,897 $ 105,545 $ 100,040
Other (e) 2,090 1,823 5,468 3,690
-------- -------- --------- ---------
$ 51,193 $ 50,720 $ 111,013 $ 103,730
======== ======== ========= =========
Capital Expenditures:
Pulp and Papermaking Systems $ 612 $ 505 $ 752 $ 835
Corporate and Other (e) 97 50 123 82
-------- -------- --------- ---------
$ 709 $ 555 $ 875 $ 917
======== ======== ========= =========
Three Months Ended Six Months Ended
---------------------------- ----------------------------
Cash Flow and Other Data from Continuing Operations July 2, 2005 July 3, 2004 July 2, 2005 July 3, 2004
- ------------------------------------------------------------------------------------------------------------------------------
Cash Provided by Operations $ 4,435 $ 5,977 $ 4,883 $ 8,262
Depreciation and Amortization Expense $ 1,703 $ 900 $ 2,719 $ 1,833
Balance Sheet Data July 2, 2005 Jan. 1, 2005
- ------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents $ 46,221 $ 82,089
Short and Long-term Debt $ 61,017 $ -
Shareholders' Investment $ 213,564 $ 212,461
(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 certain
non-recurring items. We exclude these items because they are outside our normal operations. We believe that providing such
non-GAAP measures helps investors 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) Represents a pre-tax gain of $970 in the six-month period ended July 3, 2004, which resulted from renegotiating a series of
agreements with one of our licensees, excluded from adjusted operating income.
(d) Represents effect of a tax benefit of $882 in the six-month period ended July 2, 2005, received from our former parent company
under a tax agreement and the effect of a reduction in tax reserves of $386 in the three- and six-month periods ended
July 3, 2004.
(e) Other includes the results from the Fiber-based Products business and Kadant Johnson's Specialty Castings business.
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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 Acton, Massachusetts, and, with the addition of Kadant
Johnson in May 2005, has annual revenues of approximately $270 million and
approximately 1,500 employees 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 regarding our growth opportunities, our
expected future business and financial performance, sale of our composite
building products business, impact and timing of the restructuring of our Kadant
Lamort subsidiary, our market position, and orders and business outlook for
China. 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 April 2,
2005. These include risks and uncertainties relating to our dependence on the
pulp and paper industry; international sales and operations; competition;
increase in our debt; restrictions in our credit agreement; our ability to
successfully integrate Kadant Johnson; our acquisition strategy; our ability to
complete the proposed restructuring of our French subsidiary; ability to sell
the composite building products business on favorable terms; ability to
manufacture and distribute composite building products, and the economic
conditions, 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;
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.
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