EXHIBIT 99
[LOGO] KADANT NEWS
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 2003 Second Quarter Results
ACTON, Mass., July 23, 2003 - For the second quarter of 2003, Kadant Inc.
(NYSE:KAI) reported GAAP net income of $3.9 million, or $.28 per diluted share,
versus $2.5 million, or $.20 per diluted share, in the 2002 period. Earnings per
diluted share in 2003 included a net gain of $.01 due to restructuring and
unusual items and, in 2002, a gain of $.02 from the repurchase of debt. Revenues
in the second quarter of 2003 increased 20 percent to $55.8 million (including
$3.3 million from the favorable effect of currency translation), compared with
$46.4 million a year ago.
"We are pleased to report another solid quarter, especially at a time
when we see little relief from economic and industry pressures in North America
and Europe," said William A. Rainville, chairman and chief executive officer of
Kadant. "Net income for the quarter rose more than 50 percent over last year on
the 20 percent increase in revenues. The driving force behind this performance
continues to be strong sales of our stock-preparation systems in China, coupled
with tight spending controls and a shift to net interest income.
"China is the fastest-growing market in the world, and one where we
have maintained a leading position in our industry. High demand for our
systems that recover and process usable fiber from wastepaper has resulted in
more than $17 million in orders from China in the first half of 2003. We expect
to receive additional orders from China during the balance of the year, although
not at this level.
"In our composite building products business, revenues for the quarter
grew better than 50 percent to $3.4 million from $2.2 million a year ago,
resulting in breakeven operating performance. While decking products have been
our primary source of revenues for this business, we expect to begin seeing
modest sales of our composite slate roof tiles later in the year."
Mr. Rainville added, "As we stated previously, we anticipated a
stronger first half due to the timing of orders from China. Therefore, we are
maintaining our earnings guidance of $.84 to $.92 per diluted share (on a GAAP
basis) for the full year, and expect to generate revenues of $195 to $200
million. For the third quarter of 2003, we expect to earn from $.17 to $.19 per
diluted share (on a GAAP basis), on revenues of $44 to $46 million."
-more-
Financial Highlights (unaudited)
(In thousands except per share amounts and percentages)
Three Months Ended Six Months Ended
--------------------------------- --------------------------------
Consolidated Statement of Operations June 28, 2003 June 29, 2002(a) June 28, 2003 June 29, 2002(a)
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Revenues $ 55,784 $ 46,378 $ 107,159 $ 89,718
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Costs and Operating Expenses:
Cost of revenues 35,086 28,378 67,294 55,565
Selling, general, and administrative expenses 13,382 12,576 26,894 25,267
Research and development expenses 1,310 1,152 2,353 2,440
Restructuring and unusual items (180) - (180) 3,637
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49,598 42,106 96,361 86,909
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Operating Income 6,186 4,272 10,798 2,809
Interest Income 214 623 450 1,278
Interest Expense (11) (1,207) (28) (2,636)
Other Income - 414 - 461
------------- ---------------- ------------- ---------------
Income Before Provision for Income Taxes, Minority
Interest, and Cumulative Effect of Change in
Accounting Principle 6,389 4,102 11,220 1,912
Provision for Income Taxes 2,428 1,552 4,264 720
Minority Interest Expense 72 1 72 2
------------- ---------------- ------------- ---------------
Income Before Cumulative Effect of Change in
Accounting Principle 3,889 2,549 6,884 1,190
Cumulative Effect of Change in Accounting Principle
(net of income tax benefit of $12,420) - - - (32,756)
------------- ---------------- ------------- ---------------
Net Income (Loss) $ 3,889 $ 2,549 $ 6,884 $ (31,566)
============= ================ ============= ===============
Earnings per Share Before Cumulative Effect of Change
in Accounting Principle
Basic $ .29 $ .20 $ .51 $ .10
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Diluted $ .28 $ .20 $ .50 $ .10
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Earnings (Loss) per Share
Basic $ .29 $ .20 $ .51 $ (2.56)
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Diluted $ .28 $ .20 $ .50 $ (2.52)
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Weighted Average Shares
Basic 13,601 12,446 13,588 12,343
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Diluted 13,908 12,661 13,837 12,508
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Three Months Ended Six Months Ended
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Adjusted Diluted Earnings per Share (b) June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
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GAAP Diluted Earnings (Loss) per Share $ .28 $ .20 $ .50 $ (2.52)
Restructuring and Unusual Items (.01) - (.01) .18
Gain on Repurchases of Debt - (.02) - (.02)
Cumulative Effect of Change in Accounting Principle - - - 2.61
------------- ---------------- ------------- ---------------
$ .27 $ .18 $ .49 $ .25
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Three Months Ended Six Months Ended
--------------------------------- --------------------------------
Business Segment Information June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
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Revenues:
Pulp and Papermaking Equipment and Systems $ 50,674 $ 41,923 $ 96,231 $ 82,500
Composite and Fiber-based Products 5,110 4,455 10,928 7,218
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$ 55,784 $ 46,378 $ 107,159 $ 89,718
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Gross Profit Margin:
Pulp and Papermaking Equipment and Systems 37% 40% 38% 39%
Composite and Fiber-based Products 37% 32% 35% 26%
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37% 39% 37% 38%
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Operating Income:
Pulp and Papermaking Equipment and Systems $ 6,691 $ 5,024 $ 11,931 $ 6,907
Composite and Fiber-based Products (c) 571 98 983 (2,375)
Corporate (1,076) (850) (2,116) (1,723)
------------- ---------------- ------------- ----------------
$ 6,186 $ 4,272 $ 10,798 $ 2,809
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Adjusted Operating Income (Excludes Restructuring
and Unusual Items) (b):
Pulp and Papermaking Equipment and Systems (d) $ 6,511 $ 5,024 $ 11,751 $ 8,905
Composite and Fiber-based Products (e) 571 98 983 (736)
Corporate (1,076) (850) (2,116) (1,723)
------------- ---------------- ------------- ---------------
$ 6,006 $ 4,272 $ 10,618 $ 6,446
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-more-
Three Months Ended Six Months Ended
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Business Segment Information (continued) June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
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Bookings:
Pulp and Papermaking Equipment and Systems $ 38,516 $ 42,548 $ 96,644 $ 86,292
Composite and Fiber-based Products 4,886 6,268 7,825 9,256
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$ 43,402 $ 48,816 $ 104,469 $ 95,548
============= ================ ============= ===============
Capital Expenditures:
Pulp and Papermaking Equipment and Systems $ 359 $ 419 $ 561 $ 631
Composite and Fiber-based Products 228 327 876 590
Corporate 8 7 11 127
------------- ---------------- ------------- ---------------
$ 595 $ 753 $ 1,448 $ 1,348
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Three Months Ended Six Months Ended
--------------------------------- --------------------------------
Cash Flow and Other Data June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
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Cash Provided by Operations $ 4,098 $ 9,371 $ 3,058 $ 12,617
Depreciation and Amortization Expense 1,322 1,245 2,607 2,587
Balance Sheet Data June 28, 2003 Dec. 28, 2002
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Cash and Short-term Investments $ 52,482 $ 44,429
Short- and Long-term Debt 598 1,165
Shareholders' Investment 197,726 181,257
(a) Restated to reflect the reclassification to other income of an extraordinary item in accordance with the adoption of SFAS No.
145, resulting from repurchases of our subordinated convertible debentures. In addition, the six-month period ended
June 29, 2002, was restated to include a transitional goodwill impairment charge recorded as a cumulative effect of change in
accounting principle in accordance with the adoption of SFAS No. 142.
(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 diluted EPS and adjusted operating income, which exclude restructuring and other
non-recurring items. We exclude these items because they are outside our normal operations. We believe that providing such
non-GAAP measures helps investors to gain a better understanding of our operating results from period to period, and is
consistent with how we measure our performance.
(c) Includes operating income of $26 and $110 in the three- and six-month periods ended June 28, 2003, respectively, and operating
losses of $677 in the three-month period ended June 29, 2002, and $2,847 (including restructuring and unusual costs of $1,116)
in the six-month period ended June 29, 2002, from the composite building products business.
(d) Excludes net restructuring costs and unusual income of $180 in the three- and six-month periods ended June 28, 2003, and
restructuring and unusual costs of $1,998 in the six-month period ended June 29, 2002.
(e) Excludes restructuring and unusual costs of $1,639 in the six-month period ended June 29, 2002.
Kadant will hold its earnings conference call on Thursday, July 24,
2003, 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 August 21, 2003.
Kadant Inc. is a leading supplier of a range of products for the global
papermaking and paper recycling industries, including stock-preparation
equipment, water-management systems, and papermaking accessories. We also
develop and manufacture composite building materials produced from recycled
fiber and plastic. Kadant, based in Acton, Massachusetts, reported $186 million
in revenues in 2002 and employs approximately 1,100 people worldwide. For more
information, please 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 future financial and
operating performance, our sales prospects and market position in China, and
performance of our composite building products business. 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 fiscal quarter ended March 29, 2003. These include
risks and uncertainties relating to our dependence on the pulp and paper
industry; international sales and operations; competition; ability to
manufacture and distribute composite building products, and the 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; acquisition strategy;
protection of patents and proprietary rights; fluctuations in quarterly
operating results; and obligations or other consequences arising from our
spinoff from Thermo Electron Corporation. 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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