Kadant Inc. - SEC Filing

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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): May 23, 2012

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:

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 7.01 Regulation FD Disclosure.

On May 23, 2012, Kadant Inc. (the “Company”) will hold a webcast of its 2012 Annual Meeting of Stockholders. A copy of the slides that will be presented on the webcast and discussed on the call is being 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 7.01 shall be deemed to be furnished and not filed.

	Exhibit No	Description of Exhibit

	99	Slides to be presented by the Company on May 23, 2012

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: May 23, 2012	By	/s/ Thomas M. O’Brien
		Thomas M. O’Brien Executive Vice President and Chief Financial Officer

kaiform8kexhibit995232012.htm

Annual Meeting of Stockholders

May 23, 2012

Westford, Massachusetts

William A. Rainville

Chairman of the Board

ITEMS OF BUSINESS

Sandra L. Lambert

Vice President, General Counsel, and Secretary

Safe Harbor

The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of
1995: This slide presentation contains forward-looking statements that involve a number of risks and
uncertainties, including forward-looking statements about our expected future financial and operating
performance, our market opportunities and demand for our products, our views of the trends in the
industries we serve, and our capabilities and technological position in the market. 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
31, 2012. 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; our ability to adjust
operating costs and manufacturing sufficiently in China to meet demand; commodity and component
price increases or shortages; international sales and operations; competition; soundness of suppliers and
customers; our effective tax rate; future restructurings; soundness of financial institutions; our debt
obligations; restrictions in our credit agreement; litigation costs related to our discontinued operation;
our acquisition strategy; 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.

Items of Business

PROPOSAL 1

•Elect two directors constituting the entire class of directors to be elected
for a three-year term expiring in May 2015

– Mr. Francis L. McKone

– Dr. William P. Tully

Items of Business (cont.)

PROPOSAL 1

•Elect two directors constituting the entire class of directors to be elected
for a three-year term expiring in May 2015

– Mr. Francis L. McKone

– Dr. William P. Tully

PROPOSAL 2

•Non-binding advisory vote on executive compensation

– Resolved, that the compensation paid to our company’s named executive officers,
as disclosed pursuant to the compensation disclosure rules of the Securities and
Exchange Commission, including the compensation discussion and analysis, the
compensation tables, and any related material disclosed in our proxy statement, is
hereby approved.

Items of Business (cont.)

PROPOSAL 3

•Re-approval of our annual cash incentive plan

Items of Business (cont.)

PROPOSAL 3

•Re-approval of our annual cash incentive plan

PROPOSAL 4

•Ratify the selection of Ernst & Young LLP as our independent registered
public accounting firm for FY 2012

BUSINESS REVIEW

Jonathan W. Painter

President & CEO

About Kadant

$335 million in revenues (2011)

1,700 employees worldwide

14 manufacturing sites

Revenues and Adjusted Diluted EPS

Adjusted Diluted EPS

	2007	2008	2009	2010	2011
Diluted EPS, as reported	$ 1.59	$ (1.67)	$ (0.48)	$ 1.48	$ 2.74
Loss from Discontinued Operation, net of tax	$ 0.19	$ -	$ -	$ -	$ -
Diluted EPS from Continuing Operations	$ 1.78	$ (1.67)	$ (0.48)	$ 1.48	$ 2.74
Loss on Sale of Subsidiary, net of tax	$ 0.02	$ -	$ -	$ -	$ -
Goodwill Impairment Charge, net of tax	$ -	$ 1.98	$ -	$ -	$ -
Restructuring Costs and Other Income, net of tax	$ -	$ 0.11	$ 0.24	$ (0.07)	$ (0.13)
Discrete tax items	$ -	$ 1.14	$ 0.37	$ -	$ (0.51)
Adjusted Diluted EPS from Continuing Operations*	$ 1.80	$ 1.56	$ 0.13	$ 1.41	$ 2.10

*Adjusted Diluted EPS is a non-GAAP financial measure.

Financial Summary

(In millions, except per share amounts and %)	FY 2011	FY 2010	% Change
Revenues	$ 335.5	$ 270.0	24%
Gross Profit Margin	43.3%	43.9%
SG&A, R&D expenses	$ 108.4	$ 94.5
Restructuring costs and other income, net	$ (1.9)	$ (1.0)
Operating Income	$ 38.7	$ 24.9	55%
Net Income	$ 33.6	$ 18.5
Diluted Earnings per Share2	$ 2.74	$ 1.48	85%
Adjusted Diluted Earnings per Share1,2	$ 2.10	$ 1.41	49%
Adjusted EBITDA1	$ 44.8	$ 31.2	44%
Adjusted EBITDA/Sales1	13.3%	11.5%
Bookings	$ 345.6	$ 302.7	14%
Cash Provided by Operations2	$ 34.4	$ 28.3	22%
Adjusted Return on Total Capital1,3	13.7%	10.4%

1 Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted net income and adjusted diluted earnings per share are
non-GAAP financial measures that exclude certain items as detailed in our 2011 fourth quarter earnings press release issued February 22, 2012.

2 From continuing operations.

3 Adjusted return on total capital is based on adjusted net income divided by the sum of shareholders’ investment and net debt.

First Quarter 2012 Financial Summary

1 EBITDA (earnings before interest, taxes, depreciation, and amortization) is a non-GAAP financial measure as detailed in our 2012 first
quarter earnings press release issued April 25, 2012.

2 From continuing operations.

(In millions, except per share amounts and %)	1Q12	1Q11	% Change
Revenues	$ 84.1	$ 71.7	17%
Gross Profit Margin	45.6%	47.6%
Operating Expenses:
SG&A, R&D expenses	$ 27.7	$ 25.8
Restructuring costs and other expense, net	$0.3	-
Operating Income	$ 10.4	$ 8.3	25%
Net Income	$ 7.1	$ 5.8
Diluted Earnings per Share2	$ 0.61	$ 0.47	30%
EBITDA1	$ 12.6	$ 10.2	24%
EBITDA/Sales1	15.0%	14.2%
Bookings	$ 77.6	$ 84.3	-8%
Cash (Used in) Provided by Operations2	$ (4.0)	$ 0.4
Backlog	$ 102.8	$ 109.3

First Quarter 2012 Balance Sheet

(In millions)	1Q12	1Q11
Cash, Cash Equivalents, and Restricted Cash	$ 43.1	$ 57.7
Accounts Receivable, net	59.9	52.3
Inventories	51.9	51.5
Property, Plant, and Equipment, net	39.2	37.5
Intangible Assets	28.6	26.5
Goodwill	107.6	100.6
Other Assets	31.7	23.4
Total Assets	$362.0	$349.5

Accounts Payable	$ 28.8	$ 26.0
Short- and Long-term Debt	12.1	17.6
Other Liabilities	87.2	86.7
Total Liabilities	$128.1	$130.3
Shareholders’ Investment	$233.9	$219.2
Total Liabilities and Shareholders’ Investment	$362.0	$349.5

Global Platform Serving Customers Worldwide

Major manufacturing site

Manufacturing licensee

2011 Revenues by Geography and Product Line

Geographic data is attributed to countries based on customer location.

2011 Revenues by Geography and Parts vs. Capital

Geographic data is attributed to countries based on customer location.

● Capital (45%) ● Parts & Consumables (55%)

Percentage estimated by Company using 2011 revenue

Source: RISI World Pulp & Recovered Paper Forecast, 2011

PRODUCT REVIEW

Stock Preparation

• Pulpers

• Screens

• Cleaners

• De-inking

• Recycling systems

• Heat transfer products

Separation and cleaning products and
systems to convert waste paper into clean
pulp.

39%

% of 2011 Revenue

2011 Stock-Preparation Revenue

Parts

Water Management

• Shower systems

• Spray nozzles

• Fabric and roll cleaning systems

• Filters

• Wear surfaces and Formation systems

Products and systems for delivering,
filtering, and recycling process water.

FORMING & PRESSING

% of 2011 Revenue

2011 Water-Management Revenue

41%

Parts

Doctoring

• Doctor blades

• Blade holders

• Doctoring systems

Consumable products used to clean roll
surfaces and remove contaminants.

PRESSING & DRYING

17%

% of 2011 Revenue

2011 Doctoring Revenue

78%

Parts

Fluid Handling

• Rotary joints

• Syphon systems

• Steam and condensate systems

• Dryer systems control software

Fluid handling products and systems
used in process industries worldwide.

DRYING

30%

% of 2011 Revenue

66%

Parts

Technology & Innovation Centers

STOCK
PREPARATION

Vitry, France

FLUID HANDLING

Michigan, USA

WATER
MANAGEMENT

Husqvarna, Sweden

DOCTORING

Massachusetts, USA

INDUSTRY REVIEW

Pulp & Paper Industry Outlook

DEVELOPED REGIONS

•Containerboard and Tissue grades show modest growth

•Demand growth for Printing & Writing papers is flat to negative

•Projects are driven by ROI focused on input costs

•Rebuild projects are primary contributor to capacity growth

EMERGING REGIONS

•Relatively strong growth forecasted for next five years

•Urbanization and increasing literacy rates expected to increase per capita paper
consumption

•Containerboard and Tissue expected to lead growth

•New installations are primary contributor to capacity growth

World Demand for Paper & Paperboard

2006

2016F

383 million tons

459 million tons (projected)

Source: RISI World Pulp & Recovered Paper Forecast, November 2011

Asia

36%

Asia

48%

Per Capita Consumption of Paper

Source: RISI, Inc. World Production and Trade by Country (2011)

Kilograms, 2010

World Paper and Board Capacity: All Grades

Source: RISI World Pulp & Recovered Paper Forecast, November 2011

2010-16

CAGR = 2.6%

World Paper and Board Capacity
Less Newsprint and Printing & Writing Papers

Source: RISI World Pulp & Recovered Paper Forecast, November 2011

2010-16

CAGR = 3.7%

Production in Emerging Markets (Less China)

Source: RISI World Forecast, March 2012. Emerging markets include Brazil, India, Indonesia, Malaysia, Mexico, Eastern Europe, Russia, Taiwan, Thailand, and Other Asia.

2010-16

CAGR = 5.0%

INVESTING FOR GROWTH

Our Strategy for Growth

1. Focus on emerging markets

2. Increase spare parts and consumables revenue

3. Leverage low cost manufacturing

4. Continue to develop innovative products

5. Seek opportunities outside paper industry

6. Pursue acquisitions that complement our business

Investing in Operational Efficiencies

• New equipment investments and
advanced training programs in China

• Expanded operations in Mexico to
produce wider range of products

• Working to expand global sourcing to
leverage investments in low cost areas

• Focusing investments in IT to improve
cross-border communications and
customer support

• Implementing lean manufacturing
techniques to maximize margins

Gross Margin Performance

Maximizing Aftermarket Potential

• Launching targeted programs to grow
parts and consumables business in China

• FibreWall™ screen cylinder parts
business is a major focus in 2012

• Penetrating deeper into non-paper
markets with existing products

• Strategic pricing programs in USA and
Europe to derive optimal pricing for
parts and consumables

New Product Innovations

• Nano-blades for extended blade life

• Detrasher contaminant removal

• VeriLite and VeriKleen doctoring

• MultiJet™ Twin S cleaning device

• High-efficiency corrugator steam system

• FibreWall™ screen cylinders

HELPING OUR CUSTOMERS GROW

Strategies in Action

Reducing Freshwater Use in Thailand

• Petax™ filtration system provides fresh
water usage to benefit mill and local
community

• Energy savings with reclaimed and
reused process water

• Higher wastewater treatment efficiency

• Local farmers are supplied with quality,
filtered water from the mill

Maximizing Energy Utilization

• Major rebuild of a dryer section to improve
energy utilization at US paper mill

• Supplied steam system and related
hardware to optimize machine
performance

• Water demand reduced due to high-
efficiency system and components

• Energy efficiency improved significantly

• Mill will shut-down its coal-fired boiler due
to major reduction in steam demand
following the rebuild

Addressing the “Ministickies” Challenge

• Increased recycled content results in more
contaminants to remove from the sheet

• Lower basis weights also require new approaches
to remove adhesives and contaminants

• Kadant’s technologies address the problem

– FIBREWALL™ screen cylinders designed to remove
ministickies effectively

– MULTIJET™ cleaning systems remove contaminants from
paper machine fabrics

– ABRASITEK™ doctor blades remove build-up from dryers

– DMS® control software minimizes stickies in lead-in
paper dryers with advanced control strategy

Summary

• Record performance in 2011

– EPS

– Operating income, net income

– Return on Capital

• Investing in the future for sustainable growth

– Focus on faster growth emerging markets

– Focus on parts and consumables

– Upgrades to facilities in China, Mexico

• 2012 off to a good start

– Strong cash flows to invest and return capital to shareholders

– Well-positioned for growth in aftermarket

– Seeking strategic acquisitions to enhance shareholder value

Questions & Answers

To ask a question, please call 866-804-6926 within the U.S. or
+1-857-350-1672 outside the U.S. and reference 83375884.

Please mute the audio on your computer.

Annual Meeting of Stockholders

May 23, 2012

Westford, Massachusetts