Exhibit 99
[LOGO]
NEWS
KADANT
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 2004 Fourth Quarter and Year-End Results
ACTON, Mass., February 16, 2005 - For the fourth quarter of 2004, Kadant Inc.
(NYSE:KAI) reported revenues of $45.9 million from continuing operations
(including $1.5 million from the favorable effect of currency translation),
compared with $48.7 million in the fourth quarter of 2003. Loss from continuing
operations was $4.8 million, or $.34 per diluted share, in the 2004 period,
compared with income from continuing operations of $3.2 million, or $.22 per
diluted share, in the year-ago quarter. Excluding $.44 of after-tax
restructuring and unusual charges primarily related to our operation in France,
adjusted diluted earnings per share (EPS) was $.10, compared with $.22 in the
2003 period. Net loss, including the discontinued composite building products
business, was $5.3 million, or $.38 per diluted share, in the 2004 quarter,
compared with net income of $2.3 million, or $.16 per diluted share, in the 2003
period.
For the year, the company reported revenues from continuing operations
of $195.0 million in 2004 (including $7.5 million from the favorable effect of
currency translation), compared with $191.5 million in 2003. Income from
continuing operations in 2004 was $5.8 million, or $.40 per diluted share,
versus $13.1 million, or $.94 per diluted share, in 2003. Excluding $.42 of
after-tax restructuring and unusual charges, adjusted diluted EPS was $.82 in
2004, versus $.94 in 2003. Net income in 2004, including the discontinued
business, was $0.7 million, or $.05 per diluted share, versus $11.8 million, or
$.85 per diluted share, in 2003.
"Although lower than last year, our revenues for the quarter were
somewhat better than we expected," said William A. Rainville, chairman and chief
executive officer of Kadant. "We also exceeded our EPS guidance for continuing
operations, excluding the significant restructuring charge. Throughout 2004,
paper companies in North America and Europe focused on reducing or postponing
expenditures, and this hurt our performance. Our Kadant Lamort operation in
France was particularly affected and incurred an operating loss during the
fourth quarter, excluding the restructuring charge, that lowered our earnings by
$.05 per share.
"That said, we've sustained our leadership as a paper industry
supplier, and are working hard to position Kadant for growth as the market
signals some increases in capital spending. Our actions in France should lead to
profitability in that subsidiary in the latter part of 2005, and strengthen its
competitive advantage going forward. We've maintained a technological edge that
sets us apart in growing markets such as China, where bookings of our advanced
stock-preparation equipment were $7.5 million during the fourth quarter - the
best quarter for China bookings in 2004. In addition, our global presence
continues to be a major asset, underscored by the recent order from Sappi
Saiccor for a $3 million-plus pulp-washing system to be installed in South
Africa.
"We've also improved our strong cash position, with cash flow from
continuing operations of $6.6 million in the fourth quarter. Our cash balance -
$82.1 million at year end - translates to approximately $5.90 per diluted share,
based on our weighted average shares outstanding for the quarter. The strength
of our balance sheet creates multiple opportunities for us to generate
shareholder value, including investments in technology development, stock
buybacks, and/or strategic acquisitions."
Mr. Rainville concluded, "With operating losses expected to continue in
France, we estimate GAAP diluted EPS from continuing operations of $.13 to $.15
in the first quarter of 2005, on revenues of $47 to $49 million. Our outlook for
all of 2005, which assumes a turnaround in France later in the year, is $.80 to
$.90 of GAAP diluted EPS from continuing operations, on revenues of $200 to $210
million."
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Financial Highlights (unaudited) (a)
(In thousands, except per share amounts and percentages)
Three Months Ended Twelve Months Ended
--------------------------------- ---------------------------------
Condensed Consolidated Statement of Operations January 1, 2005 January 3, 2004 January 1, 2005 January 3, 2004
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Revenues $ 45,931 $ 48,715 $ 194,966 $ 191,507
--------------- --------------- --------------- ---------------
Costs and Operating Expenses:
Cost of revenues 29,191 29,362 119,200 116,539
Selling, general and administrative expenses 13,901 13,481 56,334 50,402
Research and development expenses 801 1,067 3,077 4,268
Restructuring and unusual items 9,515 - 9,515 (23)
--------------- --------------- --------------- ---------------
53,408 43,910 188,126 171,186
--------------- --------------- --------------- ---------------
Operating Income (Loss) (7,477) 4,805 6,840 20,321
Interest Income 465 272 1,468 965
Interest Expense (9) (10) (23) (49)
--------------- --------------- --------------- ---------------
Income (Loss) from Continuing Operations Before
Income Taxes and Minority Interest (7,021) 5,067 8,285 21,237
Provision (Benefit) for Income Taxes (2,252) 1,925 2,524 8,070
Minority Interest Expense (Income) - (24) 8 44
--------------- --------------- --------------- ---------------
Income (Loss) from Continuing Operations (4,769) 3,166 5,753 13,123
Loss from Discontinued Operation, Net of Tax (555) (896) (5,099) (1,306)
--------------- --------------- --------------- ---------------
Net Income (Loss) $ (5,324) $ 2,270 $ 654 $ 11,817
=============== =============== =============== ===============
Earnings (Loss) per Share
Basic
Income (Loss) from Continuing Operations $ (.34) $ .23 $ .41 $ .96
Loss from Discontinued Operation (.04) (.07) (.36) (.09)
--------------- --------------- --------------- ----------------
Net Income (Loss) $ (.38) $ .16 $ .05 $ .87
=============== =============== =============== ===============
Diluted
Income (Loss) from Continuing Operations $ (.34) $ .22 $ .40 $ .94
Loss from Discontinued Operation (.04) (.06) (.35) (.09)
--------------- --------------- --------------- ---------------
Net Income (Loss) $ (.38) $ .16 $ .05 $ .85
=============== =============== =============== ===============
Weighted Average Shares
Basic 13,868 13,831 14,071 13,659
=============== =============== =============== ===============
Diluted 13,868 14,121 14,398 13,959
=============== =============== =============== ===============
Three Months Ended Twelve Months Ended
--------------------------------- ---------------------------------
Adjusted Net Income and Diluted EPS (b) January 1, 2005 January 3, 2004 January 1, 2005 January 3, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) $ (5,324) $ 2,270 $ 654 $ 11,817
Loss from Discontinued Operation, Net of Tax 555 896 5,099 1,306
Restructuring and Unusual items, Net of Tax 6,090 - 6,090 (14)
--------------- --------------- --------------- ---------------
Adjusted Net Income $ 1,321 $ 3,166 $ 11,843 $ 13,109
=============== =============== =============== ===============
Diluted Earnings (Loss) per Share $ (.38) $ .16 $ .05 $ .85
Loss from Discontinued Operation .04 .06 .35 .09
Restructuring and Unusual Items .44 - .42 -
--------------- --------------- --------------- ---------------
Adjusted Diluted Earnings per Share $ .10 $ .22 $ .82 $ .94
=============== =============== =============== ===============
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Three Months Ended Twelve Months Ended
--------------------------------- ---------------------------------
Business Segment Information January 1, 2005 January 3, 2004 January 1, 2005 January 3, 2004
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Revenues:
Pulp and Papermaking Systems $ 44,154 $ 47,454 $ 188,320 $ 185,708
Fiber-based Products 1,777 1,261 6,646 5,799
--------------- --------------- --------------- ---------------
$ 45,931 $ 48,715 $ 194,966 $ 191,507
=============== =============== =============== ===============
Gross Profit Margin:
Pulp and Papermaking Systems 37% 40% 39% 39%
Fiber-based Products 33% 24% 36% 37%
--------------- --------------- --------------- ---------------
36% 40% 39% 39%
=============== =============== =============== ===============
Operating Income (Loss):
Pulp and Papermaking Systems $ (6,309) $ 5,910 $ 11,781 $ 23,440
Corporate and Other (d) (1,168) (1,105) (4,941) (3,119)
--------------- --------------- --------------- ---------------
$ (7,477) $ 4,805 $ 6,840 $ 20,321
=============== =============== =============== ===============
Adjusted Operating Income (excludes Restructuring
and Unusual Items) (b):
Pulp and Papermaking Systems (c) $ 3,206 $ 5,910 $ 21,296 $ 23,417
Corporate and Other (d) (1,168) (1,105) (4,941) (3,119)
--------------- --------------- --------------- ---------------
$ 2,038 $ 4,805 $ 16,355 $ 20,298
=============== =============== =============== ===============
Three Months Ended Twelve Months Ended
--------------------------------- ---------------------------------
Business Segment Information (continued) January 1, 2005 January 3, 2004 January 1, 2005 January 3, 2004
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Bookings from Continuing Operations:
Pulp and Papermaking Systems $ 45,438 $ 48,926 $ 185,870 $ 190,129
Fiber-based Products 2,031 1,469 6,786 5,973
--------------- --------------- --------------- ---------------
$ 47,469 $ 50,395 $ 192,656 $ 196,102
=============== =============== =============== ===============
Capital Expenditures from Continuing Operations:
Pulp and Papermaking Systems $ 842 $ 656 $ 1,968 $ 1,754
Corporate and Other (d) 18 116 221 252
--------------- --------------- --------------- ---------------
$ 860 $ 772 $ 2,189 $ 2,006
=============== =============== =============== ===============
Three Months Ended Twelve Months Ended
--------------------------------- ----------------------------------
Cash Flow and Other Data from Continuing Operations January 1, 2005 January 3, 2004 January 1, 2005 January 3, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Provided by Operations $ 6,630 $ 3,634 $ 12,933 $ 25,563
Depreciation and Amortization Expense 870 970 3,604 3,954
Balance Sheet Data January 1, 2005 January 3, 2004
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Cash and Cash Equivalents $ 82,089 $ 74,412
Short-term Debt - 598
Shareholders' Investment 212,461 211,758
(a) All prior-period information has been restated to reflect the composite building products business as a discontinued operation.
(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 net income, 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) Excludes restructuring and unusual items of $9,515 in the three- and twelve-month periods ended January 1, 2005 and ($23)
in the twelve-month period ended January 3, 2004.
(d) Corporate and Other includes the results from our Fiber-based Products business and corporate.
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Kadant will hold its earnings conference call on Thursday, February 17,
2005, 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 March 18, 2005.
Kadant Inc. is a leading global supplier of a range of products that
improve quality and productivity in pulp and paper production, including
stock-preparation equipment, water-management systems, and paper machine
accessories. Kadant, based in Acton, Massachusetts, had approximately $195
million in revenues from continuing operations in 2004 and 950 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,
the future performance of our businesses, our market and technological position,
our opportunities to improve shareholder value, orders from China, and the
restructuring of our subsidiary in France. 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 October 2, 2004. These include risks and uncertainties
relating to our dependence on the pulp and paper industry; international sales
and operations; competition; ability to sell the composite building products
business on favorable terms; 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 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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