WESTFORD, MA,
Oct. 22, 2008
(Business Wire) -
Kadant Inc. reported revenues from continuing operations of $83.7 million in the third quarter of 2008, a decrease of $9.0 million, or 10 percent, compared to $92.7 million in the third quarter of 2007. Revenues for the third quarter of 2008 included a $3.8 million, or 4 percent, increase from foreign currency translation. Operating income from continuing operations in the third quarter of 2008 was $9.0 million, a $0.9 million, or 10 percent, decrease compared to $9.9 million in the third quarter of 2007. After-tax income from continuing operations was $6.8 million in the third quarter of 2008, or $.50 of diluted earnings per share (EPS), versus income of $7.0 million, or $.49 of diluted EPS, during the same period last year. Including the discontinued operation, net income in the third quarter of 2008 was $6.9 million, or $.50 per diluted share, versus $5.8 million, or $.40 per diluted share, in the third quarter of 2007.
“We had encouraging performances in a number of key areas in the third quarter,” said William A. Rainville, chairman and chief executive officer of Kadant. “Diluted EPS from continuing operations was $.50, one of our highest quarterly performances ever, and exceeded the high end of our guidance by $.12. For the second consecutive quarter, we achieved product gross margins in excess of 41 percent in our Pulp and Papermaking Systems segment, resulting primarily from a favorable product mix as well as the benefits of our efforts to manufacture and source more products from lower cost countries. We also had solid cash flows from continuing operations in the quarter -- $6.2 million, up 58 percent over last year’s quarter. Our cash flows from continuing operations for the first nine months of 2008 were $17.1 million, more than double the amount for the same period last year.
“In addition, we repurchased 945,600 shares of our common stock for an aggregate of $22.2 million in the third quarter of 2008. As announced in a separate news release issued today, our board of directors authorized the repurchase of up to an additional $30 million of our equity securities, effective through October 22, 2009.
“Without question, the global economic uncertainty has adversely affected our customers’ short term outlook and purchasing patterns. Our bookings were weaker than we expected in the third quarter, totaling $64 million, down 39 percent from last year’s record-setting performance. Stock preparation capital bookings in Asia and North America were particularly weak. Nevertheless, we continue to see encouraging activity in areas such as Eastern Europe and Russia, as well as Latin America.
“We now expect to report GAAP diluted EPS of $.18 to $.20 from continuing operations in the fourth quarter of 2008, on revenues of $75 to $77 million. We expect to achieve, for the full year, GAAP diluted EPS of $1.54 to $1.56 from continuing operations, revised from our previous estimate of $1.65 to $1.70, on revenues of $337 to $339 million, revised from our previous estimate of $365 to $370 million. This revised guidance excludes projected revenues of approximately $15 million and diluted EPS of $.09 associated with a large systems order for a new customer in Vietnam. On our July earnings call, we noted that the customer had been unable to open the confirmed letter of credit which we require in this transaction before making any shipments. The customer has made significant progress in arranging financing for this project, including providing a 30 percent down payment and a letter of credit for a portion of the remaining amounts. However, partly due to the worldwide credit crisis, we do not believe that the customer will complete all of the steps necessary for us to recognize revenue and income on this order in the fourth quarter of 2008. We now expect to recognize revenue and income on this project in early 2009.
“Despite the current economic turbulence, we believe Kadant is well-positioned to withstand the global slowdown. Our spare parts and consumables sales are relatively stable, even during sluggish economic periods, and we will continue to focus on our after-market business as well as products that provide compelling returns to our customers.”
