Kadant Inc. (KAI, Financial) filed Quarterly Report for the period ended 2010-10-02.
Kadant Inc. has a market cap of $255.2 million; its shares were traded at around $20.53 with a P/E ratio of 19 and P/S ratio of 1.1. KAI is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Revenues increased $12.8 million, or 24%, to $66.5 million in the third quarter of 2010 from $53.7 million in the third quarter of 2009. Revenues in the third quarter of 2010 include a $1.6 million decrease from the unfavorable effects of currency translation. Excluding the effects of currency translation, revenues increased $14.4 million, or 27%, in the third quarter of 2010 due to an increase in revenues in our Papermaking Systems segment s fluid-handling and stock-preparation equipment product lines. Excluding the effects of currency translation, revenues in our fluid-handling product line increased $6.3 million, or 40%, and revenues in our stock-preparation equipment product line increased $5.0 million, or 25%.
Papermaking Systems Segment. Revenues at the Papermaking Systems segment increased $12.9 million, or 25%, to $65.3 million in the third quarter of 2010 from $52.4 million in the third quarter of 2009. Revenues in the 2010 period include a $1.6 million, or 3%, decrease from the unfavorable effects of currency translation.
Revenues from the Papermaking Systems segment s stock-preparation equipment product line increased $4.2 million, or 21%, in the third quarter of 2010 compared to the third quarter of 2009, including a $0.8 million, or 4%, decrease from the unfavorable effect of currency translation. Excluding the effect of currency translation, revenues from the segment s stock-preparation equipment product line increased $5.0 million, or 25%, due to an increase in revenues in all our geographic regions. The increases in North America and China were principally driven by higher demand for our capital products, while the increase in Europe was due to higher demand for both capital and aftermarket products. Revenues from the stock-preparation equipment product line decreased $1.1 million, or 5%, sequentially, due to the decrease in demand for capital products and the timing of orders. Revenues in this product line, especially for capital products, will continue to be impacted by the timing of product shipments. We expect to see an increase in bookings in the fourth quarter, but the associated revenues will not be recognized until the products ship in 2011.
Selling, general, and administrative expenses as a percentage of revenues decreased to 34% in the third quarter of 2010 from 36% in the third quarter of 2009 due to improved operating leverage related to higher revenues in 2010 compared to the 2009 period. Selling, general, and administrative expenses increased $2.9 million, or 15%, to $22.5 million in the third quarter of 2010 from $19.6 million in the third quarter of 2009. This increase was primarily due to higher incentive and commission expenses associated with improved operating performance and higher revenues in the third quarter of 2010 compared to the 2009 period. This increase also included a $0.5 million decrease from the favorable effect of foreign currency translation and a $0.3 million increase due to acquisition expenses.
Restructuring costs and other income, net was $0.7 million of income and $0.5 million of expense in the third quarters of 2010 and 2009, respectively. We recognized a gain on the sale of real estate in the U.S. of $0.7 million in the third quarter of 2010. Restructuring costs in the third quarter of 2009 consisted of severance and associated charges of $0.3 million related to the consolidation of our water-management manufacturing facility in New York into our facilities in Massachusetts and Mexico and $0.2 million related to the reduction of 6 full-time positions in Canada and France. All of these items occurred in the Papermaking Systems segment.
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Kadant Inc. has a market cap of $255.2 million; its shares were traded at around $20.53 with a P/E ratio of 19 and P/S ratio of 1.1. KAI is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
We expect sequentially stronger capital bookings in the fourth quarter of 2010, but these expected bookings will not materially affect revenues in the fourth quarter due to the anticipated shipment dates. In addition, we anticipate some decline in gross margins from the previous three quarters, due to a higher proportion of lower-margin capital business. For the fourth quarter of 2010, we expect to report diluted earnings per share of $.26 to $.28 from continuing operations, on revenues of $64 to $66 million. For 2010, we expect to achieve diluted earnings per share of $1.33 to $1.35 from continuing operations, revised from our previous estimate of $1.20 to $1.25, on revenues of $261 to $263 million, revised from our previous estimate of $255 to $260 million.Revenues increased $12.8 million, or 24%, to $66.5 million in the third quarter of 2010 from $53.7 million in the third quarter of 2009. Revenues in the third quarter of 2010 include a $1.6 million decrease from the unfavorable effects of currency translation. Excluding the effects of currency translation, revenues increased $14.4 million, or 27%, in the third quarter of 2010 due to an increase in revenues in our Papermaking Systems segment s fluid-handling and stock-preparation equipment product lines. Excluding the effects of currency translation, revenues in our fluid-handling product line increased $6.3 million, or 40%, and revenues in our stock-preparation equipment product line increased $5.0 million, or 25%.
Papermaking Systems Segment. Revenues at the Papermaking Systems segment increased $12.9 million, or 25%, to $65.3 million in the third quarter of 2010 from $52.4 million in the third quarter of 2009. Revenues in the 2010 period include a $1.6 million, or 3%, decrease from the unfavorable effects of currency translation.
Revenues from the Papermaking Systems segment s stock-preparation equipment product line increased $4.2 million, or 21%, in the third quarter of 2010 compared to the third quarter of 2009, including a $0.8 million, or 4%, decrease from the unfavorable effect of currency translation. Excluding the effect of currency translation, revenues from the segment s stock-preparation equipment product line increased $5.0 million, or 25%, due to an increase in revenues in all our geographic regions. The increases in North America and China were principally driven by higher demand for our capital products, while the increase in Europe was due to higher demand for both capital and aftermarket products. Revenues from the stock-preparation equipment product line decreased $1.1 million, or 5%, sequentially, due to the decrease in demand for capital products and the timing of orders. Revenues in this product line, especially for capital products, will continue to be impacted by the timing of product shipments. We expect to see an increase in bookings in the fourth quarter, but the associated revenues will not be recognized until the products ship in 2011.
Selling, general, and administrative expenses as a percentage of revenues decreased to 34% in the third quarter of 2010 from 36% in the third quarter of 2009 due to improved operating leverage related to higher revenues in 2010 compared to the 2009 period. Selling, general, and administrative expenses increased $2.9 million, or 15%, to $22.5 million in the third quarter of 2010 from $19.6 million in the third quarter of 2009. This increase was primarily due to higher incentive and commission expenses associated with improved operating performance and higher revenues in the third quarter of 2010 compared to the 2009 period. This increase also included a $0.5 million decrease from the favorable effect of foreign currency translation and a $0.3 million increase due to acquisition expenses.
Restructuring costs and other income, net was $0.7 million of income and $0.5 million of expense in the third quarters of 2010 and 2009, respectively. We recognized a gain on the sale of real estate in the U.S. of $0.7 million in the third quarter of 2010. Restructuring costs in the third quarter of 2009 consisted of severance and associated charges of $0.3 million related to the consolidation of our water-management manufacturing facility in New York into our facilities in Massachusetts and Mexico and $0.2 million related to the reduction of 6 full-time positions in Canada and France. All of these items occurred in the Papermaking Systems segment.
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