Kadant Reports 2011 Fourth Quarter And Full-Year Results

Kadant Inc. (NYSE:KAI) reported its financial results for the fourth quarter and year ended December 31, 2011.

Fourth Quarter and Full-Year 2011 Financial Highlights
  • Record GAAP diluted earnings per share (EPS) from continuing operations was $0.90 in the fourth quarter of 2011, including restructuring costs and a benefit from discrete tax items, compared to $0.41 in the fourth quarter of 2010. For the full year, GAAP diluted EPS was $2.74, compared to $1.48 in 2010.
  • Adjusted diluted EPS was $0.59 in the fourth quarter and $2.10 for the year, up 40% and 49%, respectively, over the corresponding prior periods.
  • Revenues were a record $97 million in the quarter, increasing 32% over the fourth quarter of 2010.
  • Operating income was $9 million in the fourth quarter of 2011, up 36% over the prior period, and a record $39 million for the full-year 2011, up 55% over 2010.
  • Cash flow from continuing operations was $15 million in the fourth quarter of 2011, one of the highest quarterly performances in the Company’s history.
  • Repurchases of common stock were $7 million in the fourth quarter of 2011 and $16 million for full-year 2011.

Adjusted diluted EPS is a non-GAAP measure that excludes certain items as detailed later in this press release under the heading “Use of Non-GAAP Financial Measures” and in the reconciliation tables below.

Management Commentary

“Our financial performance in 2011 was outstanding and ended with one of the best quarters in our Company’s history,” said Jonathan W. Painter, president and chief executive officer of Kadant. “Diluted EPS from continuing operations was a record $0.90 in the fourth quarter of 2011 compared to last year’s $0.41. Excluding restructuring costs and a benefit from discrete tax items, adjusted diluted EPS was $0.59 in the fourth quarter of 2011, increasing 40 percent over last year’s $0.42. This compares to our GAAP guidance of $0.56 to $0.58 for the quarter.

“Revenues in the fourth quarter of 2011 were a record $97 million, up 32 percent over last year, and exceeded our guidance of $92 to $94 million largely due to higher stock-preparation revenues. Encouragingly, we saw significant increases in all our major product lines with the exception of doctoring. In our stock-preparation product line, revenues were up 49 percent compared to the fourth quarter of 2010, and included particularly strong capital revenues in both North America and China. Fluid-handling revenues in the fourth quarter of 2011 were $28 million, up 31 percent over last year, the highest quarterly performance since we acquired this business in 2005.

“Adjusted EBITDA was $11.5 million in the fourth quarter of 2011, 32 percent higher than the fourth quarter of 2010. For the full year 2011, adjusted EBITDA was $45 million, or a record 13.3 percent of revenues, and increased 44 percent from $31 million in 2010.

“Further, we had another excellent quarter in operating cash flows. Cash flows from continuing operations were $15 million in the fourth quarter of 2011, one of the highest performances we’ve ever achieved. Moreover, for the full year 2011, cash flows were $34 million, up 22 percent over a solid performance in 2010. We ended the quarter with $48 million in cash and our net cash position, that is, cash less debt, was $35 million, up $5 million from the third quarter of 2011, despite having purchased $7 million of our common stock in the fourth quarter. For the full year 2011, we purchased $16 million in common stock, which represented approximately 748,000 shares at an average purchase price of $21.52 per share.”

Fourth Quarter 2011

Kadant reported record revenues from continuing operations of $97.0 million in the fourth quarter of 2011, an increase of $23.7 million, or 32 percent, compared with $73.3 million in the fourth quarter of 2010. Revenues for the fourth quarter of 2011 included $1.1 million from acquisitions and a $0.2 million increase from foreign currency translation compared to the fourth quarter of 2010. Operating income from continuing operations was $9.1 million in the fourth quarter of 2011, including a $0.4 million restructuring charge, compared to $6.7 million in the fourth quarter of 2010, including a $0.1 million restructuring charge.

Net income from continuing operations was a record $10.7 million in the fourth quarter of 2011, or $0.90 per diluted share, compared to $5.1 million, or $0.41 per diluted share, in the fourth quarter of 2010. Net income from continuing operations in the fourth quarter of 2011 included a $4.1 million, or $0.34 per diluted share, benefit from discrete tax items and a $0.4 million, or $0.03 per diluted share, after-tax restructuring charge. Income from the discontinued operation was $1.1 million, or $0.10 per diluted share, primarily due to tax benefits associated with the reversal of a valuation allowance. Net income from continuing operations in the fourth quarter of 2010 included a $0.1 million, or $0.01 per diluted share, after-tax restructuring charge. Adjusted net income, a non-GAAP measure, was $7.0 million, or $0.59 per diluted share, in the fourth quarter of 2011, increasing 35 percent compared to $5.2 million, or $0.42 per diluted share, in the fourth quarter of 2010.

Adjusted Net Income and Adjusted Diluted EPS Reconciliation (non-GAAP)
 

Three Months Ended Dec. 31, 2011
 

Three Months Ended Jan. 1, 2011

($ in millions)
 

Diluted EPS

($ in millions)
 

Diluted EPS
Net Income and Diluted EPS Attributable to Kadant, as reported

$

11.8

$

1.00

$

5.2

$

0.42
Income from discontinued operation   (1.1 )   (0.10 )   (0.1 )   (0.01 )
Income and Diluted EPS from Continuing Operations, as reported

10.7

0.90

5.1

0.41
Adjustments for the following:
Restructuring costs 0.4 0.03 0.1 0.01
Benefit from discrete tax items   (4.1 )   (0.34 )   -     -  
Adjusted Net Income and Adjusted Diluted EPS $ 7.0   $ 0.59   $ 5.2   $ 0.42  

Full-Year 2011

For full-year 2011, Kadant reported revenues from continuing operations of $335.5 million, an increase of $65.5 million, or 24 percent, compared with $270.0 million in 2010. Revenues for 2011 included $2.9 million from acquisitions and a $9.8 million increase from foreign currency translation. Operating income from continuing operations was a record $38.7 million in 2011, including a $1.9 million gain, net of restructuring costs, compared to $24.9 million in 2010, including a $1.0 million gain, net of restructuring costs.

Net income from continuing operations was a record $33.6 million in 2011, or $2.74 per diluted share, compared to $18.4 million, or $1.48 per diluted share, in 2010. Net income from continuing operations in 2011 included a $6.2 million, or $0.51 per diluted share, benefit from discrete tax items and a $1.7 million, or $0.13 per diluted share, after-tax gain, net of restructuring costs. Net income from continuing operations in 2010 included a $0.9 million, or $0.07 per diluted share, after-tax gain, net of restructuring costs. Adjusted net income, a non-GAAP measure, was a record $25.7 million or $2.10 per diluted share in 2011, increasing 47 percent compared to $17.5 million, or $1.41 per diluted share, in 2010.

Adjusted Net Income and Adjusted Diluted EPS Reconciliation (non-GAAP)
 

Twelve Months Ended Dec. 31, 2011
 

Twelve Months Ended Jan. 1, 2011

($ in millions)
 

Diluted EPS

($ in millions)
 

Diluted EPS
Net Income and Diluted EPS Attributable to Kadant, as reported

$

33.6

$

2.74

$

18.5

$

1.48
Loss (income) from discontinued operation   -     -     (0.1 )   -  
Income and Diluted EPS from Continuing Operations, as reported

33.6

2.74

18.4

1.48
Adjustments for the following:
Restructuring costs and other income, net (1.7 ) (0.13 ) (0.9 ) (0.07 )
Benefit from discrete tax items   (6.2 )   (0.51 )   -     -  
Adjusted Net Income and Adjusted Diluted EPS $ 25.7   $ 2.10   $ 17.5   $ 1.41  

Guidance

“We ended the quarter with a healthy backlog position of $108 million, 14 percent higher than the backlog at the end of 2010,” Jonathan W. Painter continued. “However, our bookings of $79 million in the fourth quarter of 2011 were at the lowest quarterly level of the year. Although we see good project activity to start 2012 in some of our markets, we are concerned about the macroeconomic environment, particularly in Europe and China, where we have seen softening of demand in some product lines. As a result, we expect to achieve GAAP diluted EPS from continuing operations of $1.95 to $2.05 in 2012 on revenues of $330 to $340 million. Our full-year diluted EPS guidance includes an unfavorable effect of $0.06 from the stronger U.S. dollar and $0.06 from a higher effective tax rate compared to 2011. For the first quarter of 2012, we expect to achieve diluted EPS from continuing operations of $0.41 to $0.43 on revenues of $82 to $84 million.”

Conference Call

Kadant will hold a webcast with a slide presentation for investors on Thursday, February 23, 2012, at 11 a.m. eastern time to discuss its fourth quarter and full-year performance, as well as future expectations. To view the webcast, go to www.kadant.com and click on the “Investors” tab. To listen to the webcast via teleconference, call 866-804-6926 within the U.S., or +1-857-350-1672 outside the U.S. and reference participant passcode 83375884. Prior to the call, our earnings release and the slides used in the webcast presentation will be filed with the Securities and Exchange Commission and will be available at www.sec.gov. An archive of the webcast presentation will be available on our Web site until March 23, 2012.

Shortly after the webcast, Kadant will post its updated general investor presentation incorporating the fourth quarter and full-year results on its Web site at www.kadant.com under the “Investors” tab.

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, adjusted net income, adjusted diluted EPS, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

We present increases or decreases in revenues excluding the effect of foreign currency translation to provide investors insight into underlying revenue trends. In addition, we exclude from certain financial measures restructuring costs and certain gains and losses to give investors additional insight into our quarterly and annual operating performance, especially when compared to quarters in which such items had greater or lesser effect, or no effect. In addition, these items are excluded as they are either isolated or cannot be expected to occur again with any regularity or predictability and we believe are not indicative of our normal operating results.

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook. We believe that the inclusion of such measures helps investors to gain a better understanding of our underlying operating performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous 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. We also believe this information is responsive to investors' requests and gives them an additional measure of our performance.

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.

Adjusted diluted EPS in the three-month and twelve-month periods ended December 31, 2011 and January 1, 2011 was calculated using the reported weighted average diluted shares for each period.

Adjusted net income and adjusted diluted EPS exclude:
  • Restructuring costs of $0.4 million and $0.1 million in the fourth quarter of 2011 and 2010, respectively, and other income, net, of $1.7 million and $0.9 million in the twelve-month periods ended December 31, 2011 and January 1, 2011, respectively. Other income, net, includes gains on the sale of assets of $2.0 million, net of tax of $0.3 million, and restructuring costs of $0.3 million, net of tax of $0.1 million, in the twelve-month period ended December 31, 2011. Other income, net, includes gains on the sale of assets and pension curtailment of $1.1 million, net of tax of $0.2 million, and restructuring costs of $0.2 million, net of tax of $0.1 million, in the twelve-month period ended January 1, 2011. We believe that the restructuring costs and other income are not indicative of our core operating results and not comparable to other periods, which have differing levels of incremental costs and other income or none at all.
  • A benefit from discrete tax items of $4.1 million and $6.2 million, in the three-month and twelve-month periods ended December 31, 2011, respectively. These tax benefits were primarily due to the reversal of valuation allowances on certain deferred tax assets in the U.S. and China. We believe that these tax benefits are not comparable to other periods, which may have differing levels of discrete tax items or none at all.

Adjusted EBITDA and adjusted operating income exclude pre-tax restructuring costs of $0.4 million and $0.1 million in the three-month periods ended December 31, 2011 and January 1, 2011, respectively. Adjusted EBITDA and adjusted operating income exclude pre-tax gains of $2.3 million and $1.3 million, net of restructuring costs of $0.4 million and $0.3 million, in the twelve-month periods ended December 31, 2011 and January 1, 2011, respectively. These items are excluded as they are not indicative of our core operating results and not comparable to other periods, which have differing levels of incremental costs or other income or none at all.

Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release.

Financial Highlights (unaudited)
(In thousands, except per share amounts and percentages)
         
Three Months Ended Twelve Months Ended
Consolidated Statement of Income   Dec. 31, 2011   Jan. 1, 2011   Dec. 31, 2011   Jan. 1, 2011
 
Revenues $ 96,965   $ 73,256   $ 335,460   $ 270,029  
 
Costs and Operating Expenses:
Cost of revenues 59,562 42,176 190,247 151,604
Selling, general, and administrative expenses 26,286 22,942 102,660 89,212
Research and development expenses 1,594 1,365 5,717 5,269
Restructuring costs and other income, net (a)   408     66     (1,874 )   (1,005 )
  87,850     66,549     296,750     245,080  
 
Operating Income 9,115 6,707 38,710 24,949
Interest Income 156 90 499 214
Interest Expense   (256 )   (307 )   (1,066 )   (1,315 )
 
Income from Continuing Operations before Income Taxes 9,015 6,490 38,143 23,848
 
Income Tax (Benefit) Provision   (1,689 )   1,334     4,285     5,198  
 
Income from Continuing Operations 10,704 5,156 33,858 18,650
 
Income (Loss) from Discontinued Operation, Net of Tax (b)   1,156     112     (9 )   98  
 
Net Income 11,860 5,268 33,849 18,748
 
Net Income Attributable to Noncontrolling Interest   (28 )   (89 )   (274 )   (241 )
 
Net Income Attributable to Kadant $ 11,832   $ 5,179   $ 33,575   $ 18,507  
 
Amounts Attributable to Kadant:
Income from Continuing Operations $ 10,676 $ 5,067 $ 33,584 $ 18,409
Income (Loss) from Discontinued Operation, Net of Tax (b)   1,156     112     (9 )   98  
Net Income Attributable to Kadant $ 11,832   $ 5,179   $ 33,575   $ 18,507  
 
Earnings per Share from Continuing Operations
Attributable to Kadant:
Basic $ 0.91   $ 0.42   $ 2.77   $ 1.49  
Diluted $ 0.90   $ 0.41   $ 2.74   $ 1.48  
 
Earnings per Share Attributable to Kadant:
Basic $ 1.01   $ 0.42   $ 2.77   $ 1.50  
Diluted $ 1.00   $ 0.42   $ 2.74   $ 1.48  
 
Weighted Average Shares:
Basic   11,751     12,186     12,124     12,339  
 
Diluted   11,884     12,335     12,261     12,466  
 
Increase
(Decrease)
Excluding Effect
Three Months Ended Increase of Currency
Revenues by Product Line   Dec. 31, 2011   Jan. 1, 2011   (Decrease)   Translation (c,d)
 
Stock-Preparation $ 43,240 $ 28,928 $ 14,312 $ 13,728
Fluid-Handling 28,204 21,570 6,634 6,710
Doctoring 13,504 13,812 (308 ) (165 )
Water-Management 9,202 6,584 2,618 2,721
Other   677     603     74     142  
 

 
Papermaking Systems Segment 94,827 71,497 23,330 23,136
Fiber-based Products   2,138     1,759     379     379  
 
$ 96,965   $ 73,256   $ 23,709   $ 23,515  
 
Increase
Excluding Effect
Twelve Months Ended of Currency
Dec. 31, 2011   Jan. 1, 2011   Increase   Translation (c,d)
 
Stock-Preparation $ 131,914 $ 95,542 $ 36,372 $ 32,349
Fluid-Handling 100,618 83,302 17,316 13,530
Doctoring 55,278 51,290 3,988 2,722
Water-Management 34,465 28,570 5,895 5,258
Other   2,590     2,484     106     67  
 

 
Papermaking Systems Segment 324,865 261,188 63,677 53,926
Fiber-based Products   10,595     8,841     1,754     1,754  
 
$ 335,460   $ 270,029   $ 65,431   $ 55,680  
 
Increase
(Decrease)
Excluding Effect
Three Months Ended Increase of Currency
Sequential Revenues by Product Line   Dec. 31, 2011   Oct. 1, 2011   (Decrease)   Translation (c,d)
 
Stock-Preparation $ 43,240 $ 33,031 $ 10,209 $ 10,302
Fluid-Handling 28,204 25,310 2,894 3,136
Doctoring 13,504 14,017 (513 ) (154 )
Water-Management 9,202 9,933 (731 ) (510 )
Other   677     592     85     163  
 

 
Papermaking Systems Segment 94,827 82,883 11,944 12,937
Fiber-based Products   2,138     1,475     663     663  
 
$ 96,965   $ 84,358   $ 12,607   $ 13,600  
 
Increase
Excluding Effect
Three Months Ended of Currency
Revenues by Geography (e)   Dec. 31, 2011   Jan. 1, 2011   Increase   Translation (c,d)
 
North America $ 45,458 $ 35,151 $ 10,307 $ 10,722
Europe 29,879 22,998 6,881 7,046
China 18,747 12,339 6,408 5,499
South America 2,396 2,317 79 226
Australia   485     451     34     22  
 
$ 96,965   $ 73,256   $ 23,709   $ 23,515  
 
Increase
Excluding Effect
Twelve Months Ended of Currency
Dec. 31, 2011   Jan. 1, 2011   Increase   Translation (c,d)
 
North America $ 157,747 $ 138,339 $ 19,408 $ 18,766
Europe 104,927 85,474 19,453 14,138
China 61,929 37,087 24,842 21,663
South America 8,401 7,152 1,249 918
Australia   2,456     1,977     479     195  
 
$ 335,460   $ 270,029   $ 65,431   $ 55,680  
 
Increase
(Decrease)
Excluding Effect
Three Months Ended

Increase(Decrease)
of Currency
Sequential Revenues by Geography (e)   Dec. 31, 2011   Oct. 1, 2011     Translation (c,d)
 
North America $ 45,458 $ 34,875 $ 10,583 $ 11,188
Europe 29,879 28,497 1,382 1,909
China 18,747 18,716 31 (161 )
South America 2,396 1,741 655 688
Australia   485     529     (44 )   (24 )
 
$ 96,965   $ 84,358   $ 12,607   $ 13,600  
 
Three Months Ended Twelve Months Ended
Business Segment Information   Dec. 31, 2011   Jan. 1, 2011   Dec. 31, 2011   Jan. 1, 2011
 
Gross Profit Margin:
Papermaking Systems 38.3 % 42.4 % 43.1 % 43.8 %
Fiber-based Products   49.9 %   41.8 %   50.2 %   45.8 %
 
  38.6 %   42.4 %   43.3 %   43.9 %
 
Operating Income:
Papermaking Systems $ 12,526 $ 9,981 $ 50,869 $ 37,281
Corporate and Fiber-based Products   (3,411 )   (3,274 )   (12,159 )   (12,332 )
 
$ 9,115   $ 6,707   $ 38,710   $ 24,949  
 
Adjusted Operating Income (d,f):
Papermaking Systems $ 12,934 $ 10,047 $ 48,995 $ 36,276
Corporate and Fiber-based Products   (3,411 )   (3,274 )   (12,159 )   (12,332 )
 
$ 9,523   $ 6,773   $ 36,836   $ 23,944  
 
Bookings from Continuing Operations:
Papermaking Systems $ 75,181 $ 97,037 $ 334,978 $ 293,749
Fiber-based Products   3,487     2,799     10,599     8,932  
 
$ 78,668   $ 99,836   $ 345,577   $ 302,681  
 
Capital Expenditures from Continuing Operations:
Papermaking Systems $ 2,470 $ 1,312 $ 7,751 $ 3,022
Corporate and Fiber-based Products   87     61     279     386  
 
$ 2,557   $ 1,373   $ 8,030   $ 3,408  
 
Three Months Ended Twelve Months Ended
Cash Flow and Other Data from Continuing Operations   Dec. 31, 2011   Jan. 1, 2011   Dec. 31, 2011   Jan. 1, 2011
 
Cash Provided by Operations $ 14,863 $ 13,843 $ 34,362 $ 28,263
Depreciation and Amortization Expense 1,989 1,947 7,936 7,228
 
 
Balance Sheet Data           Dec. 31, 2011   Jan. 1, 2011
 
Assets
Cash and Cash Equivalents $ 46,950 $ 61,805
Restricted Cash 700 -
Accounts Receivable, net 59,492 49,897
Inventories 50,527 41,628
Unbilled Contract Costs and Fees 3,244 875
Other Current Assets 13,378 9,402
Property, Plant and Equipment, net 40,095 36,911
Intangible Assets 29,053 26,793
Goodwill 105,959 97,988
Other Assets   9,000     11,473  
 
$ 358,398   $ 336,772  
Liabilities and Shareholders' Investment
Accounts Payable $ 28,624 $ 23,756
Short- and Long-term Debt 12,250 22,750
Other Liabilities   93,894     82,965  
 
Total Liabilities $ 134,768 $ 129,471
Shareholders' Investment $ 223,630   $ 207,301  
 
$ 358,398   $ 336,772  
 
Adjusted Operating Income and Adjusted EBITDA Three Months Ended Twelve Months Ended
Reconciliation   Dec. 31, 2011   Jan. 1, 2011   Dec. 31, 2011   Jan. 1, 2011
 
Consolidated
Net Income Attributable to Kadant $ 11,832 $ 5,179 $ 33,575 $ 18,507
Net Income Attributable to Noncontrolling Interest 28 89 274 241
(Income) Loss from Discontinued Operation, Net of Tax (b) (1,156 ) (112 ) 9 (98 )
Income Tax (Benefit) Provision (1,689 ) 1,334 4,285 5,198
Interest Expense, net 100 217 567 1,101
Restructuring costs and other income, net (a)   408     66     (1,874 )   (1,005 )
 
Adjusted Operating Income (d) 9,523 6,773 36,836 23,944
Depreciation and Amortization   1,989     1,947     7,936     7,228  
 
Adjusted EBITDA (d) $ 11,512   $ 8,720   $ 44,772   $ 31,172  
 
Papermaking Systems
Operating Income $ 12,526 $ 9,981 $ 50,869 $ 37,281
Restructuring costs and other income, net (a)   408     66     (1,874 )   (1,005 )
 
Adjusted Operating Income (d) 12,934 10,047 48,995 36,276
Depreciation and Amortization   1,866     1,820     7,455     6,750  
 
Adjusted EBITDA (d) $ 14,800   $ 11,867   $ 56,450   $ 43,026  
 
Corporate and Fiber-based Products
Operating Loss $ (3,411 ) $ (3,274 ) $ (12,159 ) $ (12,332 )
Depreciation and Amortization   123     127     481     478  
 
Adjusted EBITDA (d) $ (3,288 ) $ (3,147 ) $ (11,678 ) $ (11,854 )
(a)   Includes restructuring costs of $408 and $66 in the three-month periods ended December 31, 2011 and January 1, 2011, respectively. Includes a gain from the sale of assets of $2,282, offset by restructuring costs of $408 in the twelve-month period ended December 31, 2011. Includes gains from the sale of assets and pension curtailment of $1,252, offset by restructuring costs of $247 in the twelve-month period ended January 1, 2011.
 
 
(b)

Includes tax benefits of $1,282 and $157 in the three-month periods ended December 31, 2011 and January 1, 2011, respectively, and $1,511 and $164 in the twelve-month periods ended December 31, 2011 and January 1, 2011, respectively.
 
(c)

Represents the increase (decrease) resulting from the conversion of current period amounts reported in local currencies into U.S. dollars at the exchange rate of the prior period compared to the U.S. dollar amount reported in the prior period.
 
(d) Represents a non-GAAP financial measure.
 
(e)

Geographic revenues data is attributed to regions based on selling locations. For North America and China, this usually approximates revenues based on where the equipment is shipped to and installed. Our European geographic data, however, includes revenues shipped to and installed outside of Europe, including South America, Africa, the Middle East, and certain countries in Asia (excluding China).
 
(f) See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and Adjusted EBITDA Reconciliation."

About Kadant

Kadant Inc. is a leading supplier to the global pulp and paper industry. Our stock-preparation, fluid-handling, doctoring, and water-management equipment and systems are designed to increase efficiency and improve quality in pulp and paper production. Many of our products, particularly in our fluid-handling product line, are also used to optimize production in other process 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 $335 million in 2011 and 1,700 employees in 17 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, and economic and industry outlook. Our actual results may differ materially from these forward-looking statements as a result of various important factors, including those set forth under the heading “Risk Factors” in Kadant’s quarterly report on Form 10-Q for the period ended October 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 and the court approval of the recently filed settlement; our acquisition strategy; protection of patents and proprietary rights; failure of our information systems or breaches of data security; 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.

Copyright Business Wire 2010

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