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): February 25, 2015
KADANT INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 1-11406 | 52-1762325 |
(State or Other Jurisdiction | (Commission File Number) | (IRS Employer |
of Incorporation) | Identification No.) | |
One Technology Park Drive | ||
Westford, Massachusetts | 01886 | |
(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:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | 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 February 25, 2015, Kadant Inc. (the “Company”) announced its financial results for the fiscal quarter and year ended January 3, 2015. 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.
(d) 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 February 25, 2015. | |
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.
KADANT INC. | ||
Date: February 25, 2015 | By | /s/ Thomas M. O’Brien |
Thomas M. O’Brien Executive Vice President and Chief Financial Officer | ||
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 2014 Fourth Quarter and Fiscal Year Results
Achieves Record Revenue and Adjusted EPS for Q4 and FY 2014
Provides Financial Guidance for 2015
WESTFORD, Mass., February 25, 2015 - Kadant Inc. (NYSE:KAI) reported its financial results for the fourth quarter and fiscal year ended January 3, 2015.
Fourth Quarter and Fiscal Year 2014 Financial Highlights
• | GAAP diluted earnings per share (EPS) from continuing operations increased 58% to $0.82 in the fourth quarter of 2014 compared to $0.52 in the fourth quarter of 2013. Compared to the fourth quarter of 2013, diluted EPS in the fourth quarter of 2014 included expenses of $0.05 related to the unfavorable effects of foreign currency translation, $0.05 associated with a higher effective tax rate, and $0.04 of dilution from the acquisition and relocation of a screen cylinder product line in October 2014. Guidance for the fourth quarter of 2014 was $0.72 to $0.74. |
• | Net income from continuing operations increased 53% to $9 million in the fourth quarter of 2014 compared to $6 million in the fourth quarter of 2013 and increased 22% to $29 million in 2014 compared to $23 million in 2013. |
• | Adjusted diluted EPS increased 29% to a record $0.81 in the fourth quarter of 2014 compared to $0.63 in the fourth quarter of 2013. |
• | For 2014, GAAP diluted EPS from continuing operations increased 24% to $2.56 compared to $2.07 in 2013. Adjusted diluted EPS increased 24% to a record $2.78 in 2014 compared to $2.24 in 2013. |
• | Adjusted EBITDA increased 26% to a record $56 million in 2014 compared to $45 million in 2013. |
• | Revenue increased 11% to a record $105 million in the fourth quarter of 2014 compared to $95 million in the fourth quarter of 2013, including a 5% decrease from the unfavorable effects of currency translation. For 2014, revenue increased 17% to a record $402 million compared to $344 million in 2013, including an 11% increase from acquisitions. Excluding acquisitions and the foreign currency translation effects, revenue increased 16% in the fourth quarter of 2014 compared to the fourth quarter of 2013 and 6% in 2014 compared to 2013. |
• | Bookings increased 23% to $103 million in the fourth quarter of 2014 compared to $84 million in the fourth quarter of 2013, including a 4% decrease from the unfavorable effects of foreign currency translation and a 1% increase from acquisitions. For 2014, bookings increased 26% to a record $433 million compared to $343 million in 2013, including a 12% increase from acquisitions and a 1% decrease from the unfavorable effects of foreign currency translation. Excluding acquisitions and the foreign currency translation effects, bookings increased 26% in the fourth quarter of 2014 compared to the fourth quarter of 2013 and 15% in 2014 compared to 2013. |
• | Cash flows from continuing operations were $18 million in the fourth quarter of 2014, the second highest level ever achieved, and increased 22% to a record $49 million in 2014 compared to $40 million in 2013. |
Note: Revenue excluding acquisitions and the effects of foreign currency translation, adjusted diluted EPS, and adjusted EBITDA are non-GAAP measures that exclude certain items as detailed later in this press release under the heading “Use of Non-GAAP Financial Measures” and in the reconciliation tables below. The fourth quarter and fiscal year 2014 included an additional week compared with the comparable periods in fiscal 2013.
Management Commentary
“We had excellent results in fiscal year 2014 and ended the year with record-setting fourth quarter performances in revenue, adjusted EBITDA, and adjusted diluted EPS,” said Jonathan W. Painter, president and chief executive officer of Kadant. “Our record results for the fourth quarter of 2014 were achieved despite the negative effects of foreign currency translation due to a stronger U.S. dollar, which reduced revenue by $5 million and diluted EPS by $0.05 compared to the fourth quarter of 2013.
“Revenue in the fourth quarter was a record $105 million, increasing 11 percent compared to the fourth quarter of 2013, including a 35 percent increase in North America primarily due to strong performances in our Wood Processing Systems, Stock-Preparation, and Fluid-Handling product lines. For 2014, revenue increased 17 percent to a record $402 million, including 11 percent from acquisitions. Excluding acquisitions and the unfavorable impact of currency rates, revenue increased a solid six percent in 2014.
“Cash flow was excellent in the fourth quarter of 2014 at $18 million and contributed to a new record cash flow of $49 million in 2014, up 22 percent compared to 2013. We ended the year with net cash of $20 million.
“Overall, we are very pleased with the record financial performance in fiscal year 2014 that resulted from solid contributions both from our businesses acquired in 2014 and 2013 and from well-executed internal growth initiatives. Our adjusted return on invested capital increased to 12.7% in 2014. We returned more than $21 million of capital to our shareholders through share repurchases and dividends, representing 75 percent of our net income in 2014.”
Fourth Quarter 2014
Kadant reported revenue from continuing operations of $105.2 million in the fourth quarter of 2014, an increase of $10.4 million, or 11 percent, compared to $94.8 million in the fourth quarter of 2013. Revenue for the fourth quarter of 2014 included $0.4 million from acquisitions and a $4.8 million decrease from the unfavorable effects of foreign currency translation compared to the fourth quarter of 2013. Excluding acquisitions and the unfavorable effects of foreign currency translation, revenue increased $14.8 million, or 16%, to $109.6 million in the fourth quarter of 2014 compared to $94.8 million in the fourth quarter of 2013.
Operating income from continuing operations was $12.3 million in the fourth quarter of 2014 compared to $7.6 million in the fourth quarter of 2013. Operating income in the fourth quarter of 2014 includes a $0.1 million restructuring benefit. Operating income in the fourth quarter of 2013 includes $1.9 million of expense related to acquired inventory and backlog and a $0.2 million restructuring benefit. Adjusted operating income, a non-GAAP measure, was $12.2 million in the fourth quarter of 2014 compared to $9.3 million in the fourth quarter of 2013.
Net income from continuing operations was $9.1 million in the fourth quarter of 2014, or $0.82 per diluted share, compared to $5.9 million, or $0.52 per diluted share, in the fourth quarter of 2013. Net income from continuing operations in the fourth quarter of 2014 included a $0.1 million, or $0.01 per diluted share, after-tax restructuring benefit. Net income from continuing operations in the fourth quarter of 2013 included after-tax expense related to acquired inventory and backlog of $1.4 million, or $0.12 per diluted share, and a $0.1 million, or $0.01 per diluted share, after-tax restructuring benefit. Adjusted net income, a non-GAAP measure, was $9.0 million, or $0.81 per diluted share, in the fourth quarter of 2014 compared to $7.2 million, or $0.63 per diluted share, in the fourth quarter of 2013.
Adjusted Net Income and Adjusted Diluted EPS Reconciliation (non-GAAP) | Three Months Ended Jan. 3, 2015 | Three Months Ended Dec. 28, 2013 | ||||||||||||||
($ in millions) | Diluted EPS | ($ in millions) | Diluted EPS | |||||||||||||
Net Income and Diluted EPS Attributable to Kadant, as reported | $ | 9.1 | $ | 0.82 | $ | 5.9 | $ | 0.52 | ||||||||
Adjustments for the following: | ||||||||||||||||
Amortization of acquired backlog and profit in inventory, net of tax | — | — | 1.4 | 0.12 | ||||||||||||
Restructuring benefit, net of tax | (0.1 | ) | (0.01 | ) | (0.1 | ) | (0.01 | ) | ||||||||
Adjusted Net Income and Adjusted Diluted EPS | $ | 9.0 | $ | 0.81 | $ | 7.2 | $ | 0.63 | ||||||||
Fiscal Year 2014
For fiscal year 2014, Kadant reported revenue from continuing operations of $402.1 million, an increase of $57.6 million, or 17 percent, compared with $344.5 million in 2013. Revenue for 2014 included $38.1 million from acquisitions and a $2.8 million decrease from the unfavorable effects of foreign currency translation. Excluding acquisitions and the unfavorable effects of foreign currency translation, revenue increased $22.3 million, or 6%, to $366.8 million in 2014 compared to $344.5 million in 2013.
Operating income from continuing operations was $42.1 million in 2014 compared to $33.3 million in 2013. Operating income in 2014 includes $2.6 million of expense related to acquired inventory and backlog and $0.8 million of restructuring costs. Operating income in 2013 includes $2.6 million of expense related to acquired inventory and backlog and $0.1 million of restructuring costs. Adjusted operating income, a non-GAAP measure, was $45.5 million in 2014 compared to $36.0 million in 2013.
Net income from continuing operations was $28.7 million in 2014, or $2.56 per diluted share, compared to $23.5 million, or $2.07 per diluted share, in 2013. Net income from continuing operations in 2014 included after-tax expense related to acquired inventory and backlog of $1.9 million, or $0.17 per diluted share, and after-tax restructuring costs of $0.6 million, or $0.05 per diluted share. Net income from continuing operations in 2013 included after-tax expense related to acquired inventory and backlog of $1.9 million, or $0.17 per diluted share. Adjusted net income, a non-GAAP measure, was $31.2 million, or $2.78 per diluted share, in 2014 compared to $25.4 million, or $2.24 per diluted share, in 2013.
Adjusted Net Income and Adjusted Diluted EPS Reconciliation (non-GAAP) | Twelve Months Ended Jan. 3, 2015 | Twelve Months Ended Dec. 28, 2013 | ||||||||||||||
($ in millions) | Diluted EPS | ($ in millions) | Diluted EPS | |||||||||||||
Net Income and Diluted EPS Attributable to Kadant, as reported | $ | 28.7 | $ | 2.56 | $ | 23.4 | $ | 2.07 | ||||||||
Loss from discontinued operation | — | — | 0.1 | — | ||||||||||||
Income and Diluted EPS from Continuing Operations, as reported | 28.7 | 2.56 | 23.5 | 2.07 | ||||||||||||
Adjustments for the following: | ||||||||||||||||
Amortization of acquired backlog and profit in inventory, net of tax | 1.9 | 0.17 | 1.9 | 0.17 | ||||||||||||
Restructuring costs and other income, net of tax | 0.6 | 0.05 | — | — | ||||||||||||
Adjusted Net Income and Adjusted Diluted EPS | $ | 31.2 | $ | 2.78 | $ | 25.4 | $ | 2.24 | ||||||||
Guidance
“We expect to achieve GAAP diluted EPS from continuing operations of $3.05 to $3.15 in 2015 on revenue of $413 to $423 million,” Mr. Painter continued. “The 2015 guidance includes an unfavorable foreign currency translation effect of $17 million on revenue and $0.12 on diluted EPS compared to 2014. Due to the variability of order flow and shipments of capital projects, we expect the first quarter of 2015 to be weaker with stronger successive quarterly operating results for the remainder of the year. For the first
quarter of 2015, we expect to achieve GAAP diluted EPS from continuing operations of $0.57 to $0.59, including $0.01 of restructuring costs and $0.01 of expense related to acquired inventory and backlog, on revenue of $94 to $96 million.”
Conference Call
Kadant will hold a webcast with a slide presentation for investors on Thursday, February 26, 2015, at 11 a.m. eastern time to discuss its fourth quarter and fiscal year performance, as well as future expectations. To access the webcast, including the slideshow and accompanying audio, go to www.kadant.com and click on the “Investors” tab. To listen to the webcast via teleconference, call 877-703-6107 within the U.S., or +1-857-244-7306 outside the U.S., and reference participant passcode 83375884. Prior to the call, our earnings release and the slides used in the webcast presentation will be filed with the Securities and Exchange Commission and will be available at www.sec.gov. An archive of the webcast presentation will be available on our Web site until March 27, 2015.
Shortly after the webcast, Kadant will post its updated general investor presentation incorporating the fourth quarter and fiscal year results on its Web site at www.kadant.com under the “Investors” tab.
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 revenue excluding acquisitions and the effects of foreign currency translation, adjusted operating income, adjusted net income, adjusted diluted EPS, earnings before interest, taxes, depreciation, and amortization (EBITDA), and adjusted EBITDA.
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 an 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 additional measures 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.
Revenue included $0.4 million and $38.1 million from acquisitions in the fourth quarter and fiscal year 2014, respectively. Revenue included $4.8 million and $2.8 million of unfavorable foreign currency translation effects in the fourth quarter and fiscal year 2014, respectively. We present increases or decreases in revenue excluding the effects of acquisitions and foreign currency translation to provide investors insight into underlying revenue trends.
Adjusted operating income, adjusted EBITDA, adjusted net income, and adjusted diluted EPS exclude expense related to acquired inventory and backlog, restructuring costs (benefit), and other income. These items are excluded as they are not indicative of our core operating results and not comparable to other periods, which have differing levels of incremental costs or other income or none at all.
Adjusted operating income and adjusted EBITDA exclude:
• | Pre-tax restructuring benefit of $0.1 million in both the fourth quarters of 2014 and 2013 and pre-tax expense related to acquired inventory and backlog of $1.9 million in the fourth quarter of 2013. |
• | Pre-tax expense of $2.6 million related to acquired inventory and backlog and pre-tax restructuring costs of $0.8 million in 2014; and pre-tax expense of $2.6 million related to acquired inventory and backlog, pre-tax restructuring costs of $1.8 million, and a pre-tax gain of $1.7 million in 2013. |
Adjusted net income and adjusted diluted EPS exclude:
• | After-tax expense related to acquired inventory and backlog of $1.4 million ($1.9 million net of tax of $0.5 million) in the fourth quarter of 2013 and after-tax expense related to acquired inventory and backlog of $1.9 million ($2.6 million net of tax of $0.7 million) in both 2014 and 2013. |
• | Restructuring benefit of $0.1 million in both the fourth quarters of 2014 and 2013, restructuring costs of $0.6 million ($0.8 million net of tax of $0.2 million) in 2014, and restructuring costs of $1.3 million ($1.8 million net of tax of $0.5 million), net of a gain of $1.3 million ($1.7 million net of tax of $0.4 million) on the sale of assets, in 2013. |
Adjusted diluted EPS in the three-month and twelve-month periods ended January 3, 2015 and December 28, 2013 was calculated using the reported weighted average diluted shares for each period.
Adjusted return on invested capital is based on adjusted net income divided by the sum of stockholders’ equity less net cash. Net cash is the total of cash, cash equivalents, and restricted cash less short- and long-term debt.
Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release.
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Financial Highlights (unaudited) | ||||||||||||||||||
(In thousands, except per share amounts and percentages) | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
Consolidated Statement of Income | Jan. 3, 2015 | Dec. 28, 2013 | Jan. 3, 2015 | Dec. 28, 2013 | ||||||||||||||
Revenues | $ | 105,206 | $ | 94,815 | $ | 402,127 | $ | 344,499 | ||||||||||
Costs and Operating Expenses: | ||||||||||||||||||
Cost of revenues | 58,207 | 53,198 | 223,754 | 186,795 | ||||||||||||||
Selling, general, and administrative expenses | 33,377 | 32,580 | 129,319 | 117,581 | ||||||||||||||
Research and development expenses | 1,467 | 1,603 | 6,163 | 6,717 | ||||||||||||||
Restructuring costs and other income, net (a) | (123 | ) | (160 | ) | 805 | 103 | ||||||||||||
92,928 | 87,221 | 360,041 | 311,196 | |||||||||||||||
Operating Income | 12,278 | 7,594 | 42,086 | 33,303 | ||||||||||||||
Interest Income | 52 | 217 | 398 | 623 | ||||||||||||||
Interest Expense | (200 | ) | (265 | ) | (966 | ) | (900 | ) | ||||||||||
Income from Continuing Operations before Provision | ||||||||||||||||||
for Income Taxes | 12,130 | 7,546 | 41,518 | 33,026 | ||||||||||||||
Provision for Income Taxes | 2,979 | 1,530 | 12,447 | 9,316 | ||||||||||||||
Income from Continuing Operations | 9,151 | 6,016 | 29,071 | 23,710 | ||||||||||||||
Loss from Discontinued Operation, Net of Tax | (5 | ) | (7 | ) | (23 | ) | (62 | ) | ||||||||||
Net Income | 9,146 | 6,009 | 29,048 | 23,648 | ||||||||||||||
Net Income Attributable to Noncontrolling Interest | (45 | ) | (81 | ) | (389 | ) | (229 | ) | ||||||||||
Net Income Attributable to Kadant | $ | 9,101 | $ | 5,928 | $ | 28,659 | $ | 23,419 | ||||||||||
Amounts Attributable to Kadant: | ||||||||||||||||||
Income from Continuing Operations | $ | 9,106 | $ | 5,935 | $ | 28,682 | $ | 23,481 | ||||||||||
Loss from Discontinued Operation, Net of Tax | (5 | ) | (7 | ) | (23 | ) | (62 | ) | ||||||||||
Net Income Attributable to Kadant | $ | 9,101 | $ | 5,928 | $ | 28,659 | $ | 23,419 | ||||||||||
Earnings per Share from Continuing Operations | ||||||||||||||||||
Attributable to Kadant: | ||||||||||||||||||
Basic | $ | 0.84 | $ | 0.53 | $ | 2.61 | $ | 2.11 | ||||||||||
Diluted | $ | 0.82 | $ | 0.52 | $ | 2.56 | $ | 2.07 | ||||||||||
Earnings per Share Attributable to Kadant: | ||||||||||||||||||
Basic | $ | 0.84 | $ | 0.53 | $ | 2.61 | $ | 2.10 | ||||||||||
Diluted | $ | 0.82 | $ | 0.52 | $ | 2.56 | $ | 2.07 | ||||||||||
Weighted Average Shares: | ||||||||||||||||||
Basic | 10,873 | 11,117 | 10,988 | 11,153 | ||||||||||||||
Diluted | 11,146 | 11,395 | 11,210 | 11,340 | ||||||||||||||
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Increase | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Three Months Ended | of Currency | |||||||||||||||||
Revenues by Product Line | Jan. 3, 2015 | Dec. 28, 2013 | Increase | Translation (b,c) | ||||||||||||||
Stock-Preparation | $ | 33,828 | $ | 32,382 | $ | 1,446 | $ | 2,492 | ||||||||||
Doctoring, Cleaning, & Filtration | 30,497 | 30,271 | 226 | 1,697 | ||||||||||||||
Fluid-Handling | 25,346 | 24,940 | 406 | 1,676 | ||||||||||||||
Papermaking Systems | 89,671 | 87,593 | 2,078 | 5,865 | ||||||||||||||
Wood Processing Systems | 12,057 | 4,573 | 7,484 | 8,497 | ||||||||||||||
Fiber-Based Products | 3,478 | 2,649 | 829 | 829 | ||||||||||||||
$ | 105,206 | $ | 94,815 | $ | 10,391 | $ | 15,191 | |||||||||||
Increase | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Twelve Months Ended | of Currency | |||||||||||||||||
Jan. 3, 2015 | Dec. 28, 2013 | Increase | Translation (b,c) | |||||||||||||||
Stock-Preparation | $ | 127,496 | $ | 122,704 | $ | 4,792 | $ | 4,787 | ||||||||||
Doctoring, Cleaning, & Filtration | 117,389 | 112,600 | 4,789 | 5,725 | ||||||||||||||
Fluid-Handling | 103,314 | 93,404 | 9,910 | 10,799 | ||||||||||||||
Papermaking Systems | 348,199 | 328,708 | 19,491 | 21,311 | ||||||||||||||
Wood Processing Systems | 41,647 | 4,573 | 37,074 | 38,087 | ||||||||||||||
Fiber-Based Products | 12,281 | 11,218 | 1,063 | 1,063 | ||||||||||||||
$ | 402,127 | $ | 344,499 | $ | 57,628 | $ | 60,461 | |||||||||||
Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Three Months Ended | Increase | of Currency | ||||||||||||||||
Sequential Revenues by Product Line | Jan. 3, 2015 | Sept. 27, 2014 | (Decrease) | Translation (b,c) | ||||||||||||||
Stock-Preparation | $ | 33,828 | $ | 31,246 | $ | 2,582 | $ | 3,276 | ||||||||||
Doctoring, Cleaning, & Filtration | 30,497 | 31,703 | (1,206 | ) | (14 | ) | ||||||||||||
Fluid-Handling | 25,346 | 25,420 | (74 | ) | 929 | |||||||||||||
Papermaking Systems | 89,671 | 88,369 | 1,302 | 4,191 | ||||||||||||||
Wood Processing Systems | 12,057 | 8,480 | 3,577 | 4,124 | ||||||||||||||
Fiber-Based Products | 3,478 | 1,870 | 1,608 | 1,608 | ||||||||||||||
$ | 105,206 | $ | 98,719 | $ | 6,487 | $ | 9,923 | |||||||||||
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Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Three Months Ended | Increase | of Currency | ||||||||||||||||
Revenues by Geography (d) | Jan. 3, 2015 | Dec. 28, 2013 | (Decrease) | Translation (b,c) | ||||||||||||||
North America | $ | 54,755 | $ | 40,534 | $ | 14,221 | $ | 15,369 | ||||||||||
Europe | 24,741 | 27,088 | (2,347 | ) | (192 | ) | ||||||||||||
China | 12,824 | 12,371 | 453 | 748 | ||||||||||||||
South America | 6,164 | 9,926 | (3,762 | ) | (3,104 | ) | ||||||||||||
Other | 6,722 | 4,896 | 1,826 | 2,370 | ||||||||||||||
$ | 105,206 | $ | 94,815 | $ | 10,391 | $ | 15,191 | |||||||||||
Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Twelve Months Ended | Increase | of Currency | ||||||||||||||||
Jan. 3, 2015 | Dec. 28, 2013 | (Decrease) | Translation (b,c) | |||||||||||||||
North America | $ | 215,880 | $ | 156,749 | $ | 59,131 | $ | 60,583 | ||||||||||
Europe | 93,450 | 87,196 | 6,254 | 6,031 | ||||||||||||||
China | 43,867 | 50,678 | (6,811 | ) | (6,816 | ) | ||||||||||||
South America | 26,114 | 29,950 | (3,836 | ) | (2,379 | ) | ||||||||||||
Other | 22,816 | 19,926 | 2,890 | 3,042 | ||||||||||||||
$ | 402,127 | $ | 344,499 | $ | 57,628 | $ | 60,461 | |||||||||||
Increase | ||||||||||||||||||
(Decrease) | ||||||||||||||||||
Excluding Effect | ||||||||||||||||||
Three Months Ended | Increase | of Currency | ||||||||||||||||
Sequential Revenues by Geography (d) | Jan. 3, 2015 | Sept. 27, 2014 | (Decrease) | Translation (b,c) | ||||||||||||||
North America | $ | 54,755 | $ | 54,359 | $ | 396 | $ | 1,153 | ||||||||||
Europe | 24,741 | 20,932 | 3,809 | 5,356 | ||||||||||||||
China | 12,824 | 10,700 | 2,124 | 2,235 | ||||||||||||||
South America | 6,164 | 7,006 | (842 | ) | (258 | ) | ||||||||||||
Other | 6,722 | 5,722 | 1,000 | 1,437 | ||||||||||||||
$ | 105,206 | $ | 98,719 | $ | 6,487 | $ | 9,923 | |||||||||||
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Three Months Ended | Twelve Months Ended | |||||||||||||||||
Business Information | Jan. 3, 2015 | Dec. 28, 2013 | Jan. 3, 2015 | Dec. 28, 2013 | ||||||||||||||
Gross Profit Margin: | ||||||||||||||||||
Papermaking Systems | 45.6 | % | 45.0 | % | 45.4 | % | 46.1 | % | ||||||||||
Other | 39.0 | % | 30.4 | % | 37.7 | % | 38.9 | % | ||||||||||
44.7 | % | 43.9 | % | 44.4 | % | 45.8 | % | |||||||||||
Operating Income: | ||||||||||||||||||
Papermaking Systems | $ | 14,266 | $ | 11,169 | $ | 50,485 | $ | 47,144 | ||||||||||
Corporate and Other | (1,988 | ) | (3,575 | ) | (8,399 | ) | (13,841 | ) | ||||||||||
$ | 12,278 | $ | 7,594 | $ | 42,086 | $ | 33,303 | |||||||||||
Adjusted Operating Income (c) (g) | ||||||||||||||||||
Papermaking Systems | $ | 14,183 | $ | 11,295 | $ | 51,391 | $ | 48,323 | ||||||||||
Corporate and Other | (1,988 | ) | (2,009 | ) | (5,871 | ) | (12,275 | ) | ||||||||||
$ | 12,195 | $ | 9,286 | $ | 45,520 | $ | 36,048 | |||||||||||
Bookings from Continuing Operations: | ||||||||||||||||||
Stock-Preparation | $ | 36,508 | $ | 22,576 | $ | 160,163 | $ | 113,277 | ||||||||||
Doctoring, Cleaning, & Filtration | 28,591 | 28,148 | 119,026 | 113,227 | ||||||||||||||
Fluid-Handling | 25,042 | 23,304 | 103,093 | 97,801 | ||||||||||||||
Papermaking Systems | 90,141 | 74,028 | 382,282 | 324,305 | ||||||||||||||
Wood Processing Systems | 8,373 | 6,007 | 38,407 | 6,007 | ||||||||||||||
Fiber-Based Products | 4,494 | 3,956 | 12,430 | 12,725 | ||||||||||||||
$ | 103,008 | $ | 83,991 | $ | 433,119 | $ | 343,037 | |||||||||||
Capital Expenditures from Continuing Operations: | ||||||||||||||||||
Papermaking Systems | $ | 3,026 | $ | 2,018 | $ | 5,640 | $ | 5,843 | ||||||||||
Corporate and Other | 584 | 94 | 1,115 | 418 | ||||||||||||||
$ | 3,610 | $ | 2,112 | $ | 6,755 | $ | 6,261 | |||||||||||
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Three Months Ended | Twelve Months Ended | |||||||||||||||||
Cash Flow and Other Data from Continuing Operations | Jan. 3, 2015 | Dec. 28, 2013 | Jan. 3, 2015 | Dec. 28, 2013 | ||||||||||||||
Cash Provided by Operations | $ | 18,465 | $ | 9,238 | $ | 48,867 | $ | 39,935 | ||||||||||
Depreciation and Amortization Expense | 2,631 | 3,045 | 11,189 | 9,775 | ||||||||||||||
Balance Sheet Data | Jan. 3, 2015 | Dec. 28, 2013 | ||||||||||||||||
Assets | ||||||||||||||||||
Cash, Cash Equivalents, and Restricted Cash | $ | 45,793 | $ | 50,200 | ||||||||||||||
Accounts Receivable, Net | 58,508 | 70,271 | ||||||||||||||||
Inventories | 55,223 | 62,805 | ||||||||||||||||
Unbilled Contract Costs and Fees | 5,436 | 3,679 | ||||||||||||||||
Other Current Assets | 18,714 | 19,333 | ||||||||||||||||
Property, Plant and Equipment, Net | 44,965 | 44,885 | ||||||||||||||||
Intangible Assets | 46,954 | 47,850 | ||||||||||||||||
Goodwill | 127,882 | 131,915 | ||||||||||||||||
Other Assets | 10,272 | 11,230 | ||||||||||||||||
$ | 413,747 | $ | 442,168 | |||||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||
Accounts Payable | $ | 27,233 | $ | 28,388 | ||||||||||||||
Short- and Long-term Debt | 25,861 | 38,635 | ||||||||||||||||
Other Liabilities | 95,194 | 104,724 | ||||||||||||||||
Total Liabilities | 148,288 | 171,747 | ||||||||||||||||
Stockholders' Equity | 265,459 | 270,421 | ||||||||||||||||
$ | 413,747 | $ | 442,168 | |||||||||||||||
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Adjusted Operating Income and Adjusted EBITDA | Three Months Ended | Twelve Months Ended | ||||||||||||||||
Reconciliation | Jan. 3, 2015 | Dec. 28, 2013 | Jan. 3, 2015 | Dec. 28, 2013 | ||||||||||||||
Consolidated | ||||||||||||||||||
Net Income Attributable to Kadant | $ | 9,101 | $ | 5,928 | $ | 28,659 | $ | 23,419 | ||||||||||
Net Income Attributable to Noncontrolling Interest | 45 | 81 | 389 | 229 | ||||||||||||||
Loss from Discontinued Operation, Net of Tax | 5 | 7 | 23 | 62 | ||||||||||||||
Provision for Income Taxes | 2,979 | 1,530 | 12,447 | 9,316 | ||||||||||||||
Interest Expense, Net | 148 | 48 | 568 | 277 | ||||||||||||||
Operating Income | 12,278 | 7,594 | 42,086 | 33,303 | ||||||||||||||
Restructuring Costs and Other Income, Net (a) | (123 | ) | (160 | ) | 805 | 103 | ||||||||||||
Acquired Backlog Amortization (e) | 23 | 578 | 415 | 1,112 | ||||||||||||||
Acquired Profit in Inventory (f) | 17 | 1,274 | 2,214 | 1,530 | ||||||||||||||
Adjusted Operating Income (c) | 12,195 | 9,286 | 45,520 | 36,048 | ||||||||||||||
Depreciation and Amortization | 2,608 | 2,467 | 10,774 | 8,663 | ||||||||||||||
Adjusted EBITDA (c) | $ | 14,803 | $ | 11,753 | $ | 56,294 | $ | 44,711 | ||||||||||
Papermaking Systems | ||||||||||||||||||
Operating Income | $ | 14,266 | $ | 11,169 | $ | 50,485 | $ | 47,144 | ||||||||||
Restructuring Costs and Other Income, net (a) | (123 | ) | (160 | ) | 805 | 103 | ||||||||||||
Acquired Backlog Amortization (e) | 23 | 134 | 23 | 668 | ||||||||||||||
Acquired Profit in Inventory (f) | 17 | 152 | 78 | 408 | ||||||||||||||
Adjusted Operating Income (c) | 14,183 | 11,295 | 51,391 | 48,323 | ||||||||||||||
Depreciation and Amortization | 1,846 | 1,929 | 7,701 | 7,766 | ||||||||||||||
Adjusted EBITDA (c) | $ | 16,029 | $ | 13,224 | $ | 59,092 | $ | 56,089 | ||||||||||
Corporate and Other | ||||||||||||||||||
Operating Loss | $ | (1,988 | ) | $ | (3,575 | ) | $ | (8,399 | ) | $ | (13,841 | ) | ||||||
Acquired Backlog Amortization (e) | — | 444 | 392 | 444 | ||||||||||||||
Acquired Profit in Inventory (f) | — | 1,122 | 2,136 | 1,122 | ||||||||||||||
Adjusted Operating Loss (c) | (1,988 | ) | (2,009 | ) | (5,871 | ) | (12,275 | ) | ||||||||||
Depreciation and Amortization | 762 | 538 | 3,073 | 897 | ||||||||||||||
Adjusted EBITDA (c) | $ | (1,226 | ) | $ | (1,471 | ) | $ | (2,798 | ) | $ | (11,378 | ) | ||||||
(a) | Includes restructuring income of $123 and $160 in the three-month periods ended January 3, 2015 and December 28, 2013, respectively. Includes restructuring costs of $805 in the twelve-month period ended January 3, 2015 and restructuring costs of $1,843, net of a gain of $1,740 on the sale of assets, in the twelve-month period ended December 28, 2013. | |||||||||||||||||
(b) | Represents the increase (decrease) resulting from the conversion of current period amounts reported in local currencies into U.S. dollars at the exchange rate of the prior period compared to the U.S. dollar amount reported in the prior period. | |||||||||||||||||
(c) | Represents a non-GAAP financial measure. | |||||||||||||||||
(d) | Geographic revenues are attributed to regions based on customer location. | |||||||||||||||||
(e) | Represents intangible amortization expense associated with acquired backlog. | |||||||||||||||||
(f) | Represents expense within cost of revenues associated with acquired profit in inventory. | |||||||||||||||||
(g) | See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and Adjusted EBITDA Reconciliation." | |||||||||||||||||
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About Kadant
Kadant Inc. is a global supplier of high-value, critical components and engineered systems used in process industries worldwide. The Company’s products, technologies, and services play an integral role in enhancing process efficiency, optimizing energy utilization, and maximizing productivity in resource-intensive industries. Kadant is based in Westford, Massachusetts, with revenue of $402 million in fiscal year 2014 and 1,800 employees in 18 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. Our actual results may differ materially from these forward-looking statements as a result of various important factors, including those set forth under the heading "Risk Factors" in Kadant’s quarterly report on Form 10-Q for the period ended September 27, 2014. 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; the oriented strand board market and levels of residential construction activity; commodity and component price increases or shortages; dependence on certain suppliers; international sales and operations; our acquisition strategy; our internal growth strategy; fluctuations in currency exchange rates; competition; soundness of suppliers and customers; our effective tax rate; future restructurings; soundness of financial institutions; our debt obligations; restrictions in our credit agreement; loss of key personnel; reliance on third-party research; protection of patents and proprietary rights; failure of our information systems or breaches of data security; 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.
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