Exhibit 99
[[LOGO] NEWS
KADANT
AN ACCENT ON INNOVATION
One Acton lace, Suite 202
Acton, MA 01720
Investor contact: Thomas M. O'Brien, 978-776-2000
Media contact: GreatPoint Communications, 978-392-6866
Kadant Reports 2003 Fourth Quarter and Year-End Results
ACTON, Mass., February 18, 2004 - For the fourth quarter of 2003, Kadant Inc.
(NYSE:KAI) reported GAAP diluted earnings per share (EPS) of $.16, versus $.15
in the 2002 period. The 2002 quarter included restructuring income and a loss
from the early extinguishment of debt, which had the net effect of lowering EPS
by $.01. GAAP net income in the 2003 quarter was $2.3 million, compared with
$2.1 million a year ago. Fourth quarter revenues increased to $50.5 million in
2003 (including $2.6 million from the favorable effect of currency translation),
compared with $45.9 million in 2002.
For the full year, Kadant reported GAAP diluted EPS of $.85 in 2003,
versus a loss of $2.04 a year ago. The 2002 result was affected by the
cumulative effect of a change in accounting principle and a restructuring charge
which, combined, lowered earnings by $2.66. On an adjusted basis (see attached
chart), diluted EPS was $.85 in 2003, versus $.62 in 2002. Revenues in 2003
increased to $203.5 million (including $10.2 million from the favorable effect
of currency translation), versus $185.7 million a year ago.
"We were pleased with our strong overall performance in 2003, achieving
top line growth of 10 percent, adjusted EPS growth of 37 percent, and generating
$23 million of cash flow from operations for the year," said William A.
Rainville, chairman and chief executive officer of Kadant. "Revenues in our
Papermaking Equipment segment rose 9 percent for the year, with sales of
stock-preparation products to customers in China continuing to be the major
contributor to growth. With revenues in this segment up 12 percent in the fourth
quarter over last year, and bookings for the quarter up 18 percent year to year,
we have positive momentum going into 2004.
"While solid performance in our Papermaking Equipment segment may
indicate some improvement in the paper industry, recovery is likely to be slow
and sporadic in 2004 due to ongoing cost pressures and mill downtime faced by
our customers in North America and Europe. In these mature markets, we continue
to focus on aftermarket sales of retrofit products, consumables, and services.
In Asia, we are leveraging our leading position in China to become the principal
supplier of paper-recycling systems to this expanding market.
"In our composite building products business, the operating loss of
$1.4 million for the quarter was slightly more than we expected due to higher
warranty costs related to certain decking applications. We've implemented
changes in our production process to correct the problem, and we expect this
business to return to profitability in the second half of 2004. We are seeing
solid support for our products in the marketplace as our dealer base continues
to expand and demand from end users remains strong. Bookings in 2004 to date
have already exceeded total first quarter bookings last year."
Mr. Rainville added, "Looking ahead, for the total company we expect to
report GAAP diluted EPS of $.18 to $.20 in the first quarter of 2004, on
revenues of $48 to $50 million. For the full year, our goal is to achieve GAAP
diluted EPS of $.90 to $1.00, on revenues of $205 to $215 million."
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Financial Highlights
(In thousands except per share amounts and percentages)
Three Months Ended Twelve Months Ended
------------------------------- ---------------------------------
Consolidated Statement of Operations Jan. 3, 2004 Dec. 28, 2002(a) Jan. 3, 2004 Dec. 28, 2002(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Revenues $ 50,477 $ 45,872 $ 203,542 $ 185,674
------------ ----------------------------------------------------------
Costs and Operating Expenses:
Cost of revenues 31,851 28,093 126,913 115,234
Selling, general, and administrative expenses 14,115 12,566 53,784 50,323
Research and development expenses 1,151 1,230 4,653 4,819
Restructuring and unusual items - (148) (23) 3,590
------------ --------------- ------------ ---------------
47,117 41,741 185,327 173,966
------------ --------------- ------------ ---------------
Operating Income 3,360 4,131 18,215 11,708
Interest Income 272 625 965 2,579
Interest Expense (10) (1,021) (49) (4,741)
Other Income (Expense) - (419) - 50
------------ --------------- ------------ ---------------
Income Before Provision for Income Taxes, Minority
Interest, and Cumulative Effect of Change in
Accounting Principle 3,622 3,316 19,131 9,596
Provision for Income Taxes 1,376 1,258 7,270 3,638
Minority Interest Expense (Income) (24) 1 44 4
------------ --------------- ------------ ---------------
Income Before Cumulative Effect of Change in
Accounting Principle 2,270 2,057 11,817 5,954
Cumulative Effect of Change in Accounting Principle
(net of income tax benefit of $12,420) - - - (32,756)
------------ --------------- ------------ ---------------
Net Income (Loss) $ 2,270 $ 2,057 $ 11,817 $ (26,802)
============ =============== ============ ===============
Earnings per Share Before Cumulative Effect of
Change in Accounting Principle
Basic $ .16 $ .15 $ .87 $ .46
============ =============== ============ ===============
Diluted $ .16 $ .15 $ .85 $ .45
============ =============== ============ ===============
Earnings (Loss) per Share
Basic $ .16 $ .15 $ .87 $ (2.07)
============ =============== ============ ===============
Diluted $ .16 $ .15 $ .85 $ (2.04)
============ =============== ============ ===============
Weighted Average Shares
Basic 13,831 13,548 13,659 12,945
============ =============== ============ ===============
Diluted 14,121 13,704 13,959 13,109
============ =============== ============ ===============
Three Months Ended Twelve Months Ended
------------------------------- ---------------------------------
Adjusted Diluted Earnings per Share (b) Jan. 3, 2004 Dec. 28, 2002 Jan. 3, 2004 Dec. 28, 2002
- ---------------------------------------------------------------------------------------------------------------------------------
GAAP Diluted Earnings (Loss) per Share $ .16 $ .15 $ .85 $ (2.04)
Restructuring and Unusual Items - (.01) - .17
Loss on Repurchases of Debt - .02 - -
Cumulative Effect of Change in Accounting Principle - - - 2.49
------------ ------------- ------------ -------------
$ .16 $ .16 $ .85 $ .62
============ ============= ============ =============
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Three Months Ended Twelve Months Ended
------------------------------- ---------------------------------
Business Segment Information Jan. 3, 2004 Dec. 28, 2002 Jan. 3, 2004 Dec. 28, 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Revenues:
Pulp and Papermaking Equipment and Systems $ 47,454 $ 42,300 $ 185,708 $ 171,122
Composite and Fiber-based Products 3,023 3,572 17,834 14,552
------------ ------------- ------------ -------------
$ 50,477 $ 45,872 $ 203,542 $ 185,674
============ ============= ============ =============
Gross Profit Margin:
Pulp and Papermaking Equipment and Systems 40% 40% 39% 39%
Composite and Fiber-based Products -14% 23% 21% 25%
------------ ------------- ------------ -------------
37% 39% 38% 38%
============ ============= ============ =============
Operating Income:
Pulp and Papermaking Equipment and Systems $ 5,910 $ 5,410 $ 23,440 $ 18,156
Composite and Fiber-based Products (c) (1,417) (286) (1,103) (2,933)
Corporate (1,133) (993) (4,122) (3,515)
------------ ------------- ------------ -------------
$ 3,360 $ 4,131 $ 18,215 $ 11,708
============ ============= ============ =============
Adjusted Operating Income (Excludes Restructuring
and Unusual Items) (b):
Pulp and Papermaking Equipment and Systems (d) $ 5,910 $ 5,410 $ 23,417 $ 20,255
Composite and Fiber-based Products (e) (1,417) (434) (1,103) (1,442)
Corporate (1,133) (993) (4,122) (3,515)
------------ ------------- ------------ -------------
$ 3,360 $ 3,983 $ 18,192 $ 15,298
============ ============= ============ =============
Bookings:
Pulp and Papermaking Equipment and Systems $ 48,926 $ 41,432 $ 190,129 $ 166,707
Composite and Fiber-based Products 4,913 7,655 15,376 18,830
------------ ------------- ------------ -------------
$ 53,839 $ 49,087 $ 205,505 $ 185,537
============ ============= ============ =============
Capital Expenditures:
Pulp and Papermaking Equipment and Systems $ 656 $ 536 $ 1,754 $ 1,433
Composite and Fiber-based Products 788 586 2,249 1,759
Corporate 8 7 19 152
------------ ------------- ------------ --------------
$ 1,452 $ 1,129 $ 4,022 $ 3,344
============ ============= ============ ==============
Three Months Ended Twelve Months Ended
------------------------------- ---------------------------------
Cash Flow and Other Data Jan. 3, 2004 Dec. 28, 2002 Jan. 3, 2004 Dec. 28, 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Cash Provided by Operations $ 3,031 $ 9,820 $ 23,042 $ 26,994
Depreciation and Amortization Expense 1,290 1,284 5,145 5,177
Balance Sheet Data Jan. 3, 2004 Dec. 28, 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Cash and Short-term Investments $ 74,451 $ 44,429
Short- and Long-term Debt 598 1,165
Shareholders' Investment 211,758 181,257
(a) Restated to reflect the reclassification to other income (expense) of an extraordinary item in accordance with the adoption
of SFAS No. 145, resulting from repurchases of our subordinated convertible debentures.
(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 more meaningful understanding of our operating results from period to
period, and is consistent with how we measure our performance. The non-GAAP financial measures included in this press
release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with
GAAP. In addition, the non-GAAP financial measures included in this press release may be different from, and therefore may
not be comparable to, similar measures used by other companies.
(c) Includes operating losses from the composite building products business of $1,445 and $2,106 in the three- and twelve-month
periods ended January 3, 2004, respectively; $386 in the three-month period ended December 28, 2002; and $3,671 (including
restructuring and unusual costs of $1,178) in the twelve-month period ended December 28, 2002.
(d) Excludes net restructuring and unusual income of $23 in the twelve-month period ended January 3, 2004, and restructuring and
unusual costs of $2,099 in the twelve-month period ended December 28, 2002.
(e) Excludes restructuring and unusual income of $148 and net restructuring and unusual costs of $1,491 in the three- and
twelve-month periods ended December 28, 2002, respectively.
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Kadant will hold its earnings conference call on Thursday, February 19,
2004, 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 Thursday, March 18, 2004.
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, had revenues of
approximately $204 million in 2003 and 1,000 employees 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 projected operating results
and the future performance of our businesses, particularly 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
period ended September 27, 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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