Kadant Inc. (KAI, Financial) filed Quarterly Report for the period ended 2010-04-03.
Kadant Inc. has a market cap of $262.2 million; its shares were traded at around $21.13 with a P/E ratio of 57.1 and P/S ratio of 1.1. KAI is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Papermaking Systems Segment. Revenues in the Papermaking Systems segment decreased $4.5 million, or 7%, to $57.5 million in the first quarter of 2010 from $62.0 million in the first quarter of 2009, including a $2.4 million, or 4%, increase from the favorable effects of currency translation. Excluding the effects of currency translation, revenues in the Papermaking Systems segment decreased $6.9 million, or 11%, due to a decrease of $11.9 million, or 41%, in our stock-preparation equipment product line in the first quarter of 2010 compared to the first quarter of 2009, offset partly by increases of $3.2 million in our fluid-handling product line and $1.2 million in our water-management product line. The decrease in revenues in our stock-preparation equipment product line was primarily due to higher revenues in the first quarter of 2009 resulting from a large system order for $11.7 million from a customer in Vietnam.
Revenues from the segment s stock-preparation equipment product line decreased $11.4 million, or 39%, in the first quarter of 2010 compared to the first quarter of 2009, including a $0.5 million, or 2%, increase from the favorable effect of currency translation. Excluding the effect of currency translation, our stock-preparation equipment product line decreased $11.9 million, or 41%, in the first quarter of 2010 compared to the first quarter of 2009. The decrease was primarily due to higher revenues in the first quarter of 2009 resulting from a large system order for $11.7 million from a customer in Vietnam.
Selling, general, and administrative expenses as a percentage of revenues was 34% in both the first quarter of 2010 and 2009. Selling, general, and administrative expenses decreased $1.1 million, or 5%, to $21.1 million in the first quarter of 2010 from $22.2 million in the first quarter of 2009. This decrease includes a $0.7 million increase from the unfavorable effect of foreign currency translation offset by a $1.8 million decrease primarily due to expense reductions throughout our Company. These expense reductions were due in part to our restructuring efforts in 2008 and 2009 that reduced the number of employees and combined our sales forces in certain markets.
Our provision for income taxes was $0.7 million and $2.5 million in the first quarters of 2010 and 2009, respectively, and represented 16% of pre-tax income and (619%) of pre-tax loss. The effective tax rate of 16% in the first quarter of 2010 consisted of our 20% recurring tax rate, offset by a 4% non-recurring tax benefit associated with our foreign operations. The 20% recurring rate was lower than our statutory rate principally due to the expected utilization of foreign tax credits that had been fully reserved for in prior periods. The effective tax rate of (619%) in the first quarter of 2009 included a $1.1 million tax provision associated with earnings from our foreign operations and a $1.2 million tax provision associated with applying a valuation allowance to certain deferred tax assets. The change in effective tax rates between the first quarter of 2010 and 2009 was primarily due to our profitability in the first quarter of 2010 and our projected profitability for the full year, which resulted in the reversal of a valuation allowance related to certain foreign tax credits that had been recorded in prior periods. We expect our effective tax rate to be between 20% and 22% in 2010 due to anticipated profitability in the U.S. and certain foreign tax jurisdictions.
Consolidated working capital, including the discontinued operation, was $70.3 million at April 3, 2010, compared with $66.9 million at January 2, 2010. Included in working capital are cash and cash equivalents of $43.6 million at April 3, 2010, compared with $45.7 million at January 2, 2010. At April 3, 2010, $33.5 million of cash and cash equivalents were held by our foreign subsidiaries.
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Kadant Inc. has a market cap of $262.2 million; its shares were traded at around $21.13 with a P/E ratio of 57.1 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:
The sequential increases in revenues and bookings in the first quarter of 2010 combined with the general increase in business activity in our markets and the lower effective tax rate projected for the year, all suggest that the full year results will be better than we had previously anticipated. We believe, however, that some of the recent strong bookings may be partly due to pent-up demand. The level and pace of this demand may moderate or diminish in future quarters depending on market conditions. In addition, continued uncertainty about the sustainability of the economic recovery leads us to maintain a cautious view of the second half of 2010. For 2010, we expect revenues and earnings per share from continuing operations, which exclude the results from our discontinued operation, as follows: For the second quarter of 2010, we expect to report diluted earnings per share of $.38 to $.40 from continuing operations, including $.01 of restructuring costs, on revenues of $67 to $69 million. For 2010, we expect to report diluted earnings per share of $1.10 to $1.20 from continuing operations, on revenues of $255 to $265 million, revised from our previous guidance of diluted earnings per share of $.45 to $.55, on revenues of $240 to $250 million.Papermaking Systems Segment. Revenues in the Papermaking Systems segment decreased $4.5 million, or 7%, to $57.5 million in the first quarter of 2010 from $62.0 million in the first quarter of 2009, including a $2.4 million, or 4%, increase from the favorable effects of currency translation. Excluding the effects of currency translation, revenues in the Papermaking Systems segment decreased $6.9 million, or 11%, due to a decrease of $11.9 million, or 41%, in our stock-preparation equipment product line in the first quarter of 2010 compared to the first quarter of 2009, offset partly by increases of $3.2 million in our fluid-handling product line and $1.2 million in our water-management product line. The decrease in revenues in our stock-preparation equipment product line was primarily due to higher revenues in the first quarter of 2009 resulting from a large system order for $11.7 million from a customer in Vietnam.
Revenues from the segment s stock-preparation equipment product line decreased $11.4 million, or 39%, in the first quarter of 2010 compared to the first quarter of 2009, including a $0.5 million, or 2%, increase from the favorable effect of currency translation. Excluding the effect of currency translation, our stock-preparation equipment product line decreased $11.9 million, or 41%, in the first quarter of 2010 compared to the first quarter of 2009. The decrease was primarily due to higher revenues in the first quarter of 2009 resulting from a large system order for $11.7 million from a customer in Vietnam.
Selling, general, and administrative expenses as a percentage of revenues was 34% in both the first quarter of 2010 and 2009. Selling, general, and administrative expenses decreased $1.1 million, or 5%, to $21.1 million in the first quarter of 2010 from $22.2 million in the first quarter of 2009. This decrease includes a $0.7 million increase from the unfavorable effect of foreign currency translation offset by a $1.8 million decrease primarily due to expense reductions throughout our Company. These expense reductions were due in part to our restructuring efforts in 2008 and 2009 that reduced the number of employees and combined our sales forces in certain markets.
Our provision for income taxes was $0.7 million and $2.5 million in the first quarters of 2010 and 2009, respectively, and represented 16% of pre-tax income and (619%) of pre-tax loss. The effective tax rate of 16% in the first quarter of 2010 consisted of our 20% recurring tax rate, offset by a 4% non-recurring tax benefit associated with our foreign operations. The 20% recurring rate was lower than our statutory rate principally due to the expected utilization of foreign tax credits that had been fully reserved for in prior periods. The effective tax rate of (619%) in the first quarter of 2009 included a $1.1 million tax provision associated with earnings from our foreign operations and a $1.2 million tax provision associated with applying a valuation allowance to certain deferred tax assets. The change in effective tax rates between the first quarter of 2010 and 2009 was primarily due to our profitability in the first quarter of 2010 and our projected profitability for the full year, which resulted in the reversal of a valuation allowance related to certain foreign tax credits that had been recorded in prior periods. We expect our effective tax rate to be between 20% and 22% in 2010 due to anticipated profitability in the U.S. and certain foreign tax jurisdictions.
Consolidated working capital, including the discontinued operation, was $70.3 million at April 3, 2010, compared with $66.9 million at January 2, 2010. Included in working capital are cash and cash equivalents of $43.6 million at April 3, 2010, compared with $45.7 million at January 2, 2010. At April 3, 2010, $33.5 million of cash and cash equivalents were held by our foreign subsidiaries.
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