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 13, 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
|
|
of
Incorporation)
|
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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|
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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
|
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
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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))
|
KADANT
INC.
Item
2.02 Results of Operations and Financial Condition.
On
February 13, 2008, Kadant Inc. (the “Company”) announced its financial results
for the fiscal quarter and year ended December 29, 2007. 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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The
following exhibit relating to Item 2.02 shall be deemed to be furnished
and not filed.
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||
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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 February 13, 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: February
13, 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
NEWS
[LOGO]
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 2007 Fourth Quarter and Full-Year Results
and
Gives Financial Guidance for 2008
Announces
Record Quarterly Cash Flows from Continuing Operations of $26
Million
WESTFORD,
Mass., February 13, 2008 – Kadant Inc. (NYSE:KAI) reported record revenues from
continuing operations of $96.5 million in the fourth quarter of 2007, an
increase of $10.6 million, or 12 percent, compared with $85.9 million in the
fourth quarter of 2006. The 2007 period included a $4.9 million increase from
foreign currency translation, a $2.8 million decrease due to an additional month
of revenue from Kadant Lamort recognized in the 2006 period to conform to the
Company’s fiscal year end, and a $0.9 million decrease resulting from the sale
of our Casting Products business in April 2007. Excluding these items, revenue
growth was 11 percent in the fourth quarter of 2007 over the 2006 period.
Operating income from continuing operations in the 2007 quarter increased 59
percent to $10.6 million, versus $6.6 million in 2006. Income from continuing
operations (after-tax) was $7.8 million in the fourth quarter of 2007, or $.54
of diluted earnings per share (EPS), versus $4.1 million, or $.29 of diluted EPS
a year ago. Including the discontinued operation, net income in the fourth
quarter of 2007 was $7.7 million, or $.53 per diluted share, versus $3.8
million, or $.27 per diluted share, in the fourth quarter of 2006.
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Three
Months Ended
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||||||||||||||||
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($
in millions)
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Dec. 29, 2007
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Dec. 30, 2006
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Change
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%
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||||||||||||
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Revenues,
as reported
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$ | 96.5 | $ | 85.9 | $ | 10.6 | 12 | % | ||||||||
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Adjustment
to revenues for the following:
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||||||||||||||||
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Favorable
foreign currency effect
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(4.9 | ) | - | (4.9 | ) | (6 | ) | |||||||||
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Additional
month for Kadant Lamort to conform to fiscal year end
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- | (2.8 | ) | 2.8 | 4 | |||||||||||
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Sale
of Casting Products business
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- | (0.9 | ) | 0.9 | 1 | |||||||||||
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Revenues,
as adjusted
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$ | 91.6 | $ | 82.2 | $ | 9.4 | 11 | % | ||||||||
For
full-year 2007, Kadant reported record revenues of $366.5 million from
continuing operations, an increase of $24.9 million, or 7 percent, compared with
$341.6 million in 2006. The 2007 revenues included a $13.0 million increase from
foreign currency translation, a $4.5 million increase from Kadant Jining
acquired in June 2006, a $2.8 million decrease for the additional month of
revenue recognized in 2006 at Kadant Lamort, and a $2.4 million decrease from
the sale of our Casting Products business in April 2007. Excluding these items,
revenue growth was 4 percent in 2007 over 2006. Operating income from continuing
operations in 2007 increased 26 percent to $37.0 million from $29.4 million in
2006. Income from continuing operations (after-tax) was $25.4 million in 2007,
or $1.78 of diluted EPS, versus $18.3 million, or $1.30 per diluted share in
2006. Including the discontinued operation, net income in 2007 was $22.7
million, or $1.59 per diluted share, versus $17.1 million, or $1.21 per diluted
share, in 2006.
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Twelve
Months Ended
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||||||||||||||||
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($
in millions)
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Dec. 29, 2007
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Dec. 30, 2006
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Change
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%
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||||||||||||
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Revenues,
as reported
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$ | 366.5 | $ | 341.6 | $ | 24.9 | 7 | % | ||||||||
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Adjustment
to revenues for the following:
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||||||||||||||||
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Favorable
foreign currency effect
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(13.0 | ) | - | (13.0 | ) | (4 | ) | |||||||||
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Kadant
Jining acquisition
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(10.5 | ) | (6.0 | ) | (4.5 | ) | (1 | ) | ||||||||
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Additional
month for Kadant Lamort to conform to fiscal year end
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- | (2.8 | ) | 2.8 | 1 | |||||||||||
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Sale
of Casting Products business
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(1.5 | ) | (3.9 | ) | 2.4 | 1 | ||||||||||
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Revenues,
as adjusted
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$ | 341.5 | $ | 328.9 | $ | 12.6 | 4 | % | ||||||||
-more-
The
Company announced that it entered into a new five-year credit agreement with a
group of banks, led by JPMorgan Chase, for a committed unsecured revolving
credit facility of $75 million, along with an uncommitted unsecured facility of
up to an additional $75 million. The Company also announced that it signed a
letter of intent with Prudential Capital Group to enter into a three-year
uncommitted unsecured facility under which the Company may issue up to $100
million of senior unsecured notes. The new credit arrangements do not restrict
the Company’s ability to repurchase its common stock, as long as it is in
compliance with the financial covenants contained in the
agreements.
“We ended
an exceptional year in 2007 with an unprecedented number of record breaking
performances in the fourth quarter,” said William A. Rainville, chairman and
chief executive officer of Kadant. “We set new quarterly records for
consolidated revenues ($96.5 million), Stock Prep revenues ($43.8 million),
Fluid-Handling revenues ($27.4 million), backlog ($109.5 million), and cash
flows from continuing operations ($25.8 million). In addition, we set a
quarterly record for operating income from continuing operations ($10.6 million)
and EPS from continuing operations ($.54), since our spin-off from Thermo Fisher
Scientific Inc. in 2001. The cash flow performance was particularly noteworthy,
tripling from one of our best cash flow quarters a year ago. As a result of the
cash flows in the fourth quarter, we were able to end the year with
approximately $62 million in cash, which exceeds our total debt by $21 million.
In addition, the credit arrangements we announced today should provide us with
the capital resources, if needed, to invest in our business, repurchase our
common stock, and make strategic acquisitions.
“We’re
entering 2008 with our largest backlog ever, and we continue to see encouraging
opportunities for several of our product lines as our customers focus on
reducing their energy costs. During 2007, we strengthened our position in China,
in all our product lines, and we set the foundation for building the
accessories, water-management, and aftermarket businesses there. These actions,
including our efforts to secure more products from lower cost sources, both
internally and externally, will help us to continue to grow our profitability in
2008. Nevertheless, the worldwide economy is showing some signs of weakness and
we need to temper our outlook in these uncertain economic times in light of the
overall conditions in the world economy.
“We
expect to report GAAP diluted EPS of $.30 to $.32 from continuing operations in
the first quarter of 2008, including a $.02 gain from the sale of assets, on
revenues of $88 to $90 million. For the full year, we expect to achieve GAAP
diluted EPS of $1.85 to $1.90 from continuing operations on revenues of $385 to
$395 million. The full year 2008 guidance includes approximately $.18 of
estimated non-cash employee equity expense, compared to $.07 in 2007. In
addition, an expected increase in the tax rate in 2008 will have the effect of
decreasing the 2008 results by approximately $.07 as compared to
2007.”
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 earnings before interest, taxes, depreciation, and
amortization (EBITDA) and revenues adjusted to exclude the impact from Kadant
Lamort conforming to our fiscal year end, results from our acquisition and
disposition, 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 Kadant's 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
Kadant's 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.
Conference
Call
Kadant
will hold its earnings conference call on Thursday, February 14, 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. You can also listen to the conference 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 March 13, 2008.
-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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Twelve
Months Ended
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|||||||||||||||
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Consolidated
Statement of Income
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Dec.
29, 2007
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Dec.
30, 2006
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Dec.
29, 2007
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Dec.
30, 2006
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||||||||||||
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Revenues
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$ | 96,453 | $ | 85,869 | $ | 366,496 | $ | 341,613 | ||||||||
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Costs
and Operating Expenses:
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||||||||||||||||
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Cost
of revenues
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59,701 | 52,732 | 227,716 | 214,919 | ||||||||||||
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Selling,
general, and administrative expenses
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25,029 | 24,081 | 95,616 | 90,236 | ||||||||||||
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Research
and development expenses
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1,367 | 1,731 | 5,957 | 6,201 | ||||||||||||
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Restructuring
costs (income), net
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(219 | ) | 677 | (219 | ) | 815 | ||||||||||
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Loss
on sale of subsidiary (a)
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- | - | 388 | - | ||||||||||||
| 85,878 | 79,221 | 329,458 | 312,171 | |||||||||||||
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Operating
Income
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10,575 | 6,648 | 37,038 | 29,442 | ||||||||||||
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Interest
Income
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537 | 378 | 1,570 | 1,121 | ||||||||||||
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Interest
Expense
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(732 | ) | (849 | ) | (3,086 | ) | (3,328 | ) | ||||||||
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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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10,380 | 6,177 | 35,522 | 27,235 | ||||||||||||
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Provision
for Income Taxes
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2,513 | 2,011 | 9,784 | 8,688 | ||||||||||||
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Minority
Interest Expense
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89 | 71 | 320 | 266 | ||||||||||||
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Income
from Continuing Operations
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7,778 | 4,095 | 25,418 | 18,281 | ||||||||||||
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Loss
from Discontinued Operation, Net of Tax
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(104 | ) | (260 | ) | (2,750 | ) | (1,184 | ) | ||||||||
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Net
Income
|
$ | 7,674 | $ | 3,835 | $ | 22,668 | $ | 17,097 | ||||||||
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Basic
Earnings per Share
|
||||||||||||||||
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Income
from Continuing Operations
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$ | .54 | $ | .29 | $ | 1.80 | $ | 1.32 | ||||||||
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Loss
from Discontinued Operation
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- | (.02 | ) | (.19 | ) | (.08 | ) | |||||||||
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Net
Income
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$ | .54 | $ | .27 | $ | 1.61 | $ | 1.24 | ||||||||
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Diluted
Earnings per Share
|
||||||||||||||||
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Income
from Continuing Operations
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$ | .54 | $ | .29 | $ | 1.78 | $ | 1.30 | ||||||||
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Loss
from Discontinued Operation
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(.01 | ) | (.02 | ) | (.19 | ) | (.09 | ) | ||||||||
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Net
Income
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$ | .53 | $ | .27 | $ | 1.59 | $ | 1.21 | ||||||||
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Weighted
Average Shares
|
||||||||||||||||
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Basic
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14,273 | 14,037 | 14,116 | 13,816 | ||||||||||||
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Diluted
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14,426 | 14,277 | 14,290 | 14,097 | ||||||||||||
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Three
Months Ended
|
Twelve
Months Ended
|
|||||||||||||||
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Business
Segment Information (b)
|
Dec.
29, 2007
|
Dec.
30, 2006
|
Dec.
29, 2007
|
Dec.
30, 2006
|
||||||||||||
|
Revenues:
|
||||||||||||||||
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Pulp
and Papermaking Systems
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$ | 94,598 | $ | 82,900 | $ | 356,334 | $ | 327,501 | ||||||||
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Other
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1,855 | 2,969 | 10,162 | 14,112 | ||||||||||||
| $ | 96,453 | $ | 85,869 | $ | 366,496 | $ | 341,613 | |||||||||
|
Gross
Profit Margin:
|
||||||||||||||||
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Pulp
and Papermaking Systems
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38 | % | 39 | % | 38 | % | 37 | % | ||||||||
|
Other
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35 | % | 26 | % | 32 | % | 28 | % | ||||||||
| 38 | % | 39 | % | 38 | % | 37 | % | |||||||||
|
Operating
Income:
|
||||||||||||||||
|
Pulp
and Papermaking Systems
|
$ | 13,828 | $ | 9,186 | $ | 49,128 | $ | 38,604 | ||||||||
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Corporate
and Other
|
(3,253 | ) | (2,538 | ) | (12,090 | ) | (9,162 | ) | ||||||||
| $ | 10,575 | $ | 6,648 | $ | 37,038 | $ | 29,442 | |||||||||
|
Bookings
from Continuing Operations:
|
||||||||||||||||
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Pulp
and Papermaking Systems
|
$ | 99,339 | $ | 75,160 | $ | 389,541 | $ | 339,422 | ||||||||
|
Other
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2,517 | 3,139 | 10,242 | 14,244 | ||||||||||||
| $ | 101,856 | $ | 78,299 | $ | 399,783 | $ | 353,666 | |||||||||
|
Capital
Expenditures from Continuing Operations:
|
||||||||||||||||
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Pulp
and Papermaking Systems
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$ | 1,571 | $ | 1,265 | $ | 4,436 | $ | 3,579 | ||||||||
|
Corporate
and Other
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336 | 282 | 472 | 518 | ||||||||||||
| $ | 1,907 | $ | 1,547 | $ | 4,908 | $ | 4,097 | |||||||||
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Three
Months Ended
|
Twelve
Months Ended
|
|||||||||||||||
|
Cash
Flow and Other Data from Continuing Operations
|
Dec.
29, 2007
|
Dec.
30, 2006
|
Dec.
29, 2007
|
Dec.
30, 2006
|
||||||||||||
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Cash
Provided by Operations
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$ | 25,831 | $ | 8,580 | $ | 33,509 | $ | 12,333 | ||||||||
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Depreciation
and Amortization Expense
|
1,888 | 2,144 | 7,363 | 7,758 | ||||||||||||
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Balance
Sheet Data
|
Dec.
29, 2007
|
Dec.
30, 2006
|
||||||||||||||
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Cash
and Cash Equivalents
|
$ | 61,553 | $ | 39,634 | ||||||||||||
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Short-
and Long-term Debt
|
40,700 | 53,982 | ||||||||||||||
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Shareholders'
Investment
|
278,751 | 237,965 | ||||||||||||||
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Three
Months Ended
|
Twelve
Months Ended
|
|||||||||||||||
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EBITDA
Data
|
Dec.
29, 2007
|
Dec.
30, 2006
|
Dec.
29, 2007
|
Dec.
30, 2006
|
||||||||||||
|
Consolidated
|
||||||||||||||||
|
GAAP
Operating Income
|
$ | 10,575 | $ | 6,648 | $ | 37,038 | $ | 29,442 | ||||||||
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Depreciation
and Amortization
|
1,888 | 2,144 | 7,363 | 7,758 | ||||||||||||
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Loss
on sale of subsidiary (a)
|
- | - | 388 | - | ||||||||||||
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EBITDA
(c)
|
$ | 12,463 | $ | 8,792 | $ | 44,789 | $ | 37,200 | ||||||||
|
Pulp
and Papermaking Systems
|
||||||||||||||||
|
GAAP
Operating Income
|
$ | 13,828 | $ | 9,186 | $ | 49,128 | $ | 38,604 | ||||||||
|
Depreciation
and Amortization
|
1,759 | 2,007 | 6,845 | 7,171 | ||||||||||||
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EBITDA
(c)
|
$ | 15,587 | $ | 11,193 | $ | 55,973 | $ | 45,775 | ||||||||
|
Corporate
and Other (b)
|
||||||||||||||||
|
GAAP
Operating Loss
|
$ | (3,253 | ) | $ | (2,538 | ) | $ | (12,090 | ) | $ | (9,162 | ) | ||||
|
Depreciation
and Amortization
|
129 | 137 | 518 | 587 | ||||||||||||
|
Loss
on sale of subsidiary (a)
|
- | - | 388 | - | ||||||||||||
|
EBITDA
|
$ | (3,124 | ) | $ | (2,401 | ) | $ | (11,184 | ) | $ | (8,575 | ) | ||||
|
(a)
|
Reflects
a pre-tax loss on the sale of the Casting Products business on April 30,
2007.
|
||||||||
|
(b)
|
"Other"
includes the results from the Fiber-based Products business and the
Casting Products business through its sale on April
30, 2007.
|
||||||||
|
(c)
|
Includes
restructuring income of $219 in the three- and twelve-month periods ended
December 29, 2007 and restructuring costs of $677
|
||||||||
|
and
$815 in the three- and twelve-month periods ended December 30, 2006,
respectively.
|
|||||||||
-more-
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, demand for our products, growth opportunities and strategies, and
the terms and restrictions in our credit agreements. There can be no assurance
that we will be able to complete the uncommitted unsecured facility with
Prudential Capital Group described in this release at all or on terms favorable
to us. Additionally, 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 September 29, 2007. 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; protection of patents and proprietary rights; fluctuations in
quarterly operating results; and anti-takeover provisions.
###