Kadant Inc · NYSE:KAI

Kadant — FY2020 Earnings Presentation

30 slides from Kadant's earnings presentation, Feb 17, 2021

  1. Slide 1: Fourth Quarter and Fiscal Year 2020 Business Review

    Fourth Quarter and Fiscal Year 2020 Business Review FEBRUARY 18, 2021 Exhibit 99.2

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements 2KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. 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

  3. Slide 3: Use of Non-GAAP Financial Measures

    Use of Non-GAAP Financial Measures In addition to the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including increases or decreases in revenue excluding the effect of acquisitions and foreign currency

  4. Slide 4: Business Review

    BUSINESS REVIEW Jeffrey L. Powell | President & CEO 4 KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved.

  5. Slide 5: Operational Highlights

    Operational Highlights • Solid execution by our businesses led to strong margin performance and record cash flow from operations in the fourth quarter • Capital project activity and increased demand for parts and consumables led to record bookings in the fourth quarter • Our balance sheet remains he

  6. Slide 6: Q4 2020 Performance

    Q4 2020 Performance 6 Q4 20 Q4 19 Change Revenue $168.4 $182.7 -7.8% Net Income $16.2 $8.7 +85.2% Adjusted EBITDA* $32.1 $32.2 -0.1% Adjusted EBITDA Margin* 19.1% 17.6% +150 bps Diluted EPS $1.40 $0.76 +84.2% Adjusted Diluted EPS* $1.54 $1.32 +16.7% Operating Cash Flow $40.3 $39.2 +2.6% Free Cash Fl

  7. Slide 7: FY 2020 Performance

    FY 2020 Performance 7 FY 20 FY 19 Change Revenue $635.0 $704.6 -9.9% Net Income $55.2 $52.1 +6.0% Adjusted EBITDA* $115.9 $127.1 -8.8% Adjusted EBITDA Margin* 18.3% 18.0% +30 bps Diluted EPS $4.77 $4.54 +5.1% Adjusted Diluted EPS* $5.00 $5.36 -6.7% Operating Cash Flow $92.9 $97.4 -4.6% Free Cash Flo

  8. Slide 8: Flow Control

    Flow Control 8 $ in millions Q4 20 Q4 19 Change Revenue $60.1 $61.5 -2.3% Bookings $61.9 $57.0 +8.6% Adjusted EBITDA* $15.7 $13.9 +13.0% Adjusted EBITDA Margin* 26.1% 22.6% +350 bps HIGHLIGHTS • Solid rebound in Q4 capital project activity in all regions • Parts and consumables revenue made up 68% o

  9. Slide 9: Industrial Processing

    Industrial Processing 9 $ in millions Q4 20 Q4 19 Change Revenue $69.1 $79.0 -12.6% Bookings $94.8 $61.9 +53.1% Adjusted EBITDA* $16.2 $16.6 -2.2% Adjusted EBITDA Margin* 23.5% 21.0% +250 bps HIGHLIGHTS • Strong demand for wood products continued in Q4 as U.S. housing starts remained near all-time h

  10. Slide 10: Material Handling

    Material Handling 10 $ in millions Q4 20 Q4 19 Change Revenue $39.2 $42.1 -6.8% Bookings $39.9 $40.9 -2.5% Adjusted EBITDA* $7.2 $9.1 -20.8% Adjusted EBITDA Margin* 18.3% 21.5% -320 bps HIGHLIGHTS • Stable demand and business activity throughout Q4 • Capital orders up 23% from Q419 and 18% sequentia

  11. Slide 11: Business Outlook

    Business Outlook • Demand expected to improve as industrial activity strengthens • Uncertainty as to how markets will respond to the pandemic given the variability around vaccine distribution • Our strong cash flow position enables us to capitalize on new opportunities 11KAI Q420 Business Review–Feb

  12. Slide 12: Financial Review

    FINANCIAL REVIEW Michael J. McKenney | EVP & CFO 12 KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved.

  13. Slide 13: Q4 2020 Financial Performance

    Q4 2020 Financial Performance 13 Q4 20 Q4 19 Gross Margin 44.1% 40.9% SG&A % of Revenue 28.1% 26.1% Operating Income $22.0 $21.6 Net Income $16.2 $8.7 Adjusted EBITDA* $32.1 $32.2 Diluted EPS $1.40 $0.76 Adjusted Diluted EPS* $1.54 $1.32 HIGHLIGHTS • Adjusted EBITDA margin* of 19.1% • Operating cash

  14. Slide 14: FY 2020 Financial Performance

    FY 2020 Financial Performance 14 FY 20 FY 19 Gross Margin 43.7% 41.7% SG&A % of Revenue 28.6% 27.3% Operating Income $81.1 $87.8 Net Income $55.2 $52.1 Adjusted EBITDA* $115.9 $127.1 Diluted EPS $4.77 $4.54 Adjusted Diluted EPS* $5.00 $5.36 HIGHLIGHTS • Adjusted EBITDA margin* of 18.3% • Operating c

  15. Slide 15: Adjusted EBITDA and Cash Flow Metrics

    15KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. 17.6% 17.1% 17.4% 19.4% 19.1% 4Q19 1Q20 2Q20 3Q20 4Q20 ADJUSTED EBITDA MARGIN* $35.5 $3.5 $21.1 $22.6 $38.1 4Q19 1Q20 2Q20 3Q20 4Q20 FREE CASH FLOW* OPERATING CASH FLOW CASH FLOW $39.2 $22.0 $6.2 $24.4 $40.3 $61.9

  16. Slide 16: 4Q19 to 4Q20 Adjusted Diluted EPS

    4Q19 to 4Q20 Adjusted Diluted EPS* KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. 16 $1.32 $0.21 $0.15 $0.07 $0.06 $0.02 $0.01 ($0.29) ($0.01) $1.54 $0.00 $0.50 $1.00 $1.50 $2.00

  17. Slide 17: 2019 to 2020 Adjusted Diluted EPS

    2019 to 2020 Adjusted Diluted EPS* KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. 17 $5.36 $0.45 $0.39 $0.35 $0.33 $0.03 $0.01 ($1.87) ($0.05) $5.00 $0.00 $2.00 $4.00 $6.00 $8.00

  18. Slide 18: Key Liquidity Metrics

    Key Liquidity Metrics 18KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. $ in millions Q4 20 Q3 20 Q4 19 Cash, cash equivalents, and restricted cash $66.7 $56.2 $68.2 Debt (228.0) (255.0) (294.8) Lease obligations (5.5) (5.6) (6.2) Net Debt $166.8 $204.4 $232.8 Le

  19. Slide 19: Financial Outlook for 2021

    Financial Outlook for 2021 • Revenue increasing 9% to 12% over 2020 • Gross margins close to 2020, excluding government assistance programs • SG&A approximately 27% to 28% of revenue • Recurring tax rate of 27% to 28% • Capex spending approximately 2% of revenue • Depreciation & amortization expense

  20. Slide 20: Question instructions: dial-in details

    To ask a question, please call 888-326-8410 within the U.S. or +1 704-385-4884 outside the U.S. and reference 2636925. Please mute the audio on your device. KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. 20

  21. Slide 21: 2021 Key Priorities

    2021 Key Priorities 21KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. MEET OUR CUSTOMERS’ NEEDS ACCELERATE OUR REVENUE GROWTH MAINTAIN STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES

  22. Slide 22: Thank You

    Thank You INVESTOR RELATIONS CONTACT Michael McKenney, 978-776-2000 IR@kadant.com MEDIA RELATIONS CONTACT Wes Martz, 269-278-1715 media@kadant.com FEBRUARY 18, 2021

  23. Slide 23: Appendix

    APPENDIX 23 Fourth Quarter and Fiscal Year 2020 Business Review KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved.

  24. Slide 24: Strategic Operating Segments

    Strategic Operating Segments 24KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. • Fluid Handling and Doctoring, Cleaning, & Filtration product lines • Custom-engineered products, systems and technologies that control the flow of fluids • Key industries include pac

  25. Slide 25: Revenue by Customer Location

    Revenue by Customer Location 25KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. $ in thousands Q4 20 Q4 19 Change Change Excl. Acquisition and FX* North America $90,154 $95,368 $(5,214) $(5,703) Europe 48,646 48,944 (298) (3,784) Asia 21,276 22,960 (1,684) (2,810)

  26. Slide 26: Quarterly Gross Margin and SG&A

    26.1% 28.7% 29.5% 28.4% 28.1% 4Q19 1Q20 2Q20 3Q20 4Q20 Quarterly Gross Margin and SG&A 26KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. SG&A 40.9% 42.9% 43.5% 44.2% 44.1% 4Q19 1Q20 2Q20 3Q20 4Q20 (as a % of revenue) GROSS MARGIN

  27. Slide 27: Adjusted Diluted EPS Reconciliation

    Adjusted Diluted EPS Reconciliation 27KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. Q4 20 Q4 19 FY 20 FY 19 Diluted EPS, as reported $1.40 $0.76 $4.77 $4.54 Settlement Loss, Net of Tax - 0.55 - 0.55 Impairment and Restructuring Costs, Net of Tax 0.13 0.17 0.19

  28. Slide 28: Free Cash Flow Reconciliation

    Free Cash Flow Reconciliation 28 ($ in millions) 2013 2014 2015 2016 2017 2018 2019 2020 Cash Provided by Continuing Operations, as reported $ 39.9 $ 51.1 $ 40.4 $ 51.0 $ 65.2 $ 63.0 $ 97.4 $ 92.9 Capital Expenditures $ (6.2) $ (6.7) $ (5.5) $ (5.8) $ (17.3) $ (16.6) $ (9.9) $ (7.6) Free Cash Flow $

  29. Slide 29: Adjusted EBITDA Reconciliation

    Adjusted EBITDA Reconciliation 29KAI Q420 Business Review–February 18, 2021 | © 2021 Kadant Inc. All rights reserved. Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA in a given period by revenue in the same

  30. Slide 30: Notes

    Notes PRESENTATION NOTES • This presentation reflects our new reportable operating segments, as announced on the Form 8-K we filed with the U.S. Securities and Exchange Commission on April 22, 2020. Prior periods have been recast to conform to this presentation. • All references to EPS are to our EP

Kadant — FY2020 Earnings Presentation on 6ix