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): April 28, 2011

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 2.02 Results of Operations and Financial Condition.

On April 28, 2011, Kadant Inc. (the “Company”) will hold a webcast and conference call to discuss its financial results for the fiscal quarter ended April 2, 2011. A copy of the slides that will be presented on the webcast and discussed in the conference 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 2.02 shall be deemed to be furnished and not filed.

	Exhibit No	Description of Exhibit

	99	Slides to be presented by the Company on April 28, 2011

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.

		KADANT INC.

Date: April 28, 2011	By	/s/ Thomas M. O’Brien
		Thomas M. O’Brien Executive Vice President and Chief Financial Officer

kaiform8kexhibit994282011.htm

First Quarter 2011 Business Review

Jonathan W. Painter, President & CEO

Thomas M. O’Brien, Executive Vice President & CFO

Forward-Looking Statements

The following constitutes a “Safe Harbor” statement under the Private Securities Litigation
Reform Act of 1995: This 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, demand for our products, and industry and
economic outlook. 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 annual report on Form 10-K for the period ended January 1, 2011. 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 expand
capacity 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 and warranty costs
related to our discontinued operation; our acquisition strategy; protection of patents and
proprietary rights; 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.

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
increases or decreases in revenues excluding the effect of foreign currency translation,
adjusted operating income, earnings before interest, taxes, depreciation, and amortization
(EBITDA), and adjusted EBITDA.

A reconciliation of those numbers to the most directly comparable U.S. GAAP financial
measures is shown in our 2011 first quarter earnings press release issued April 27, 2011,
which is available in the Investors section of our website at www.kadant.com under the
heading Investors News.

Financial Classifications

All geographic revenues and bookings data are attributed to regions based on selling
locations. For North America and China, this also approximates revenues and bookings
based on where the equipment is shipped to and installed. Our European geographic data,
however, includes revenues and bookings that may be shipped to and installed outside
Europe, including South America, Africa, the Middle East, and certain countries in Asia
(excluding China).

Prior period amounts for Parts and Consumables revenues and bookings have been
reclassified to include amounts from our “other” category within the Papermaking Systems
segment and Fiber-based products.

Our Accessories product line is now being reported as Doctoring.

Business Review

Jonathan W. Painter

President & CEO

Q1 2011 Financial Highlights: Revenues

• $71.7 million, up 17% compared to Q1 2010

• All product lines saw increases compared to Q1 2010

– Stock-Preparation up 31%

– Fluid-Handling up 13%

– Doctoring up 13%

– Water-Management up 5%

– Fiber-based Products up 14%

• All product lines except Stock-Preparation were up
sequentially over Q4 2010

Financial Highlights

Q1 2011 Q1 2010

Revenues $71.7 million $61.1 million

Gross margins 47.6% 44.0%

Diluted EPS $0.47 $0.29

Adjusted EBITDA $10.2 million $6.0 million

Adjusted EBITDA/Sales 14% 10%

Q1 2011 Financial Highlights: Bookings

• $84.3 million, up 20% compared to Q1 2010

• Q1 booking performance

– Stock-Preparation up 37%

– Fluid-Handling up 15%

– Water-Management up 15%

– Doctoring up 4%

– Fiber-based Products up 25%

Quarterly Bookings Trend

Capital Bookings

Parts and Consumables Bookings

Market Review

North America Paper Industry Trends

• Q1 operating rates remained high in Containerboard

• Printing & Writing grades continue to be under pressure

• Rising energy, freight, and fiber cost

• Capital spending up from 2010, energy-driven projects
high on project list

North America Bookings

$42.4 million, up 16% compared to Q1 2010

Highlighted Q1 North America Bookings

• OCC system upgrade for
containerboard producer in the
Southeastern U.S.

• Steam system rebuild for
packaging producer in Ontario,
Canada

• Multiple doctor systems sold to
a leading U.S. steel producer in
the Midwest

Europe Paper Industry Trends

• Containerboard inventories remained at historically low levels

• Pricing remains relatively high

• Demand for packaging grades still strong, but could weaken
if industrial production or exports soften

• Operating rates expected to be negatively impacted by
proactive supply side management

European Bookings

$22.7 million, down 9% compared to Q1 2010

Highlighted Q1 European Bookings

• Creping blade holders order for six
tissue machines from a Europe-
based OEM

• Steam system and related drying
hardware for a corrugated board
machine in Finland

• Dryer system rebuild and drying
equipment for a corrugated board
mill in Ukraine

China Paper Industry Trends

• Price movements are mixed due to oversupply and input costs

• Demand has weakened, but outlook remains relatively strong

• Machine start-ups being “strategically” delayed by a few months

• Capacity additions continue to be announced

China Bookings

$16.3 million, up 146% compared to Q1 2010

Highlighted Q1 China Bookings

• Eight stock prep systems orders from
China with a combined value of $11.5
million for OCC and approach flow
equipment

• Drying and showering equipment for five
new paper machines from China-based
paper machine OEM

• 13 doctor systems for a boxboard
producer in Jiangsu Province in
eastern China

Guidance for Continuing Operations

• FY 2011 revenues of $315 to $325 million

• FY 2011 GAAP diluted EPS of $2.15 to $2.25

• Q2 2011 revenues of $78 to $80 million

• Q2 2011 GAAP diluted EPS of $0.54 to $0.56

Financial Review

Thomas M. O’Brien

Executive Vice President and
Chief Financial Officer

1Q11 Revenues Summary

• Consolidated Revenues = $71.7 million

– 17% increase vs. 1Q10

– Includes 2% favorable foreign currency translation

• Revenue Guidance = $71 to $73 million

– Higher Doctoring, Fiber-based Products and Fluid-Handling
revenues

– Lower Stock-Preparation and Water-Management revenues

1Q11 and 1Q10 Revenues by Product Line

* Percent change excluding the effect of currency translation

			% Change
			Qtr to	Excl.
($ Millions)	1Q11	1Q10	Qtr	FX*
Stock-Preparation	$ 23.3	$ 17.8	31%	30%

Doctoring	14.1	12.5	13%	11%
Water-Management	6.8	6.5	5%	3%
Other	0.7	0.6	8%	2%
Papermaking Systems Segment	67.5	57.5	18%	16%
Fiber-based Products	4.2	3.6	14%	14%
Total	$ 71.7	$ 61.1	17%	16%

1Q11 and 4Q10 Revenues by Product Line

* Percent change excluding the effect of currency translation

			% Change
			Qtr to	Excl.
($ Millions)	1Q11	4Q10	Qtr	FX*
Stock-Preparation	$ 23.3	$ 28.9	-19%	-19%

Doctoring	14.1	13.8	2%	1%
Water-Management	6.8	6.6	4%	3%
Other	0.7	0.6	16%	13%
Papermaking Systems Segment	67.5	71.5	-6%	-6%
Fiber-based Products	4.2	1.8	136%	136%
Total	$ 71.7	$ 73.3	-2%	-3%

Revenues by Geography
(Papermaking Systems Segment Only)

* Percent change excluding the effect of currency translation

				% Change
						Excl.
						FX*
($ Millions)	1Q11	4Q10	1Q10	4Q10	1Q10	1Q10
North America	$ 35.1	$ 33.4	$ 29.7	5%	18%	17%
Europe	21.2	23.0	21.0	-8%	1%	1%
China	8.8	12.3	5.4	-29%	64%	56%

Australia	0.8	0.5	0.3	71%	122%	99%
Total	$ 67.5	$ 71.5	$ 57.5	-6%	18%	16%

Revenue Detail

				% Change
($ Millions)	1Q11	4Q10	1Q10	4Q10	1Q10
Parts & Consumables	$ 47.3	$ 43.0	$ 40.1	10%	18%
Capital	24.4	30.3	21.0	-19%	17%
Total	$ 71.7	$ 73.3	$ 61.1	-2%	17%

Gross Margin Percentages

					% Point
					Change
Quarter		1Q11	4Q10	1Q10	4Q10	1Q10
	Papermaking Systems Segment	47.4	42.4	43.5	5.0%	3.9%
	Fiber-based Products	50.8	41.8	50.7	9.0%	0.1%
	Total	47.6	42.4	44.0	5.2%	3.6%

SG&A

Quarter					Change
	($ Millions)	1Q11	4Q10	1Q10	4Q10	1Q10
	SG&A	$ 24.5	$ 22.9	$ 21.1	$ 1.6	$ 3.4
	% Revenues	34.1%	31.3%	34.6%	2.8%	-0.5%

1Q11 to 1Q10 Diluted EPS

Cash Flow

($ Millions)	1Q11	1Q10
Income from Continuing Operations	$ 5.9	$ 3.6
Depreciation and Amortization	1.9	1.6
Stock-Based Compensation	0.8	0.5
Other Items	0.5	(0.7)
Change in Current Assets &
Liabilities, Excluding Acquisitions	(8.7)	(5.6)
Cash from Continuing Operations	$ 0.4	$ (0.6)

Key Working Capital Metrics

($ Millions)	1Q11	4Q10	1Q10
Days in Receivables	68	62	67
Days in Payables	62	51	58
Days in Inventory	112	90	102

Cash and Debt

($ Millions)	1Q11	4Q10	1Q10
Cash *	$ 57.6	$ 61.8	$ 43.6
Debt	(17.6)	(22.7)	(23.1)
Net Cash	$ 40.0	$ 39.1	$ 20.5

Leverage Ratio

* Calculated by adding or subtracting certain items, as defined in our Credit Facility, from Adjusted EBITDA reported externally.

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.

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First Quarter 2011 Business Review

Jonathan W. Painter, President & CEO

Thomas M. O’Brien, Executive Vice President & CFO