Slide 1: Second Quarter 2023 Business Review
Second Quarter 2023 Business Review August 2, 2023 Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 of risks and uncertainties, including forward-looking statements about our future fin
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
Slide 4: Business Review
BUSINESS REVIEW Jeffrey L. Powell, President & CEO 4 KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED.
Slide 5: Operational Highlights
Operational Highlights • Excellent execution by our businesses led to strong financial performance in Q2 • Record revenue, adjusted EBITDA*, and adjusted EPS* • New order activity reflected macroeconomic headwinds in all regions globally • Well positioned to capitalize on new opportunities and capit
Slide 6: Q2 2023 Performance
Q2 2023 Performance 6 ($ in millions, except per share amounts) Q2 23 Q2 22 Change Revenue $245.1 $221.6 +10.6% Net Income $29.7 $26.2 +13.6% Adjusted EBITDA* $51.6 $46.0 +12.2% Adjusted EBITDA Margin* 21.0% 20.7% +30 bps EPS $2.54 $2.24 +13.4% Adjusted EPS* $2.54 $2.24 +13.4% Operating Cash Flow $2
Slide 7: Flow Control
$97.3 $84.9 $78.8 $104.6 $88.3 2Q22 3Q22 4Q22 1Q23 2Q23 7 ($ in millions) Q2 23 Q2 22 Change Revenue $95.7 $85.2 +12.3% Bookings $88.3 $97.3 -9.3% Adjusted EBITDA* $28.1 $25.0 +12.2% Adjusted EBITDA Margin* 29.3% 29.3% 0 bps HIGHLIGHTS • Strong capital project activity and aftermarket demand drove r
Slide 8: Industrial Processing
8 ($ in millions) Q2 23 Q2 22 Change Revenue $90.0 $84.4 +6.6% Bookings $79.3 $109.9 -27.8% Adjusted EBITDA* $20.0 $18.4 +8.9% Adjusted EBITDA Margin* 22.2% 21.8% +40 bps HIGHLIGHTS • Aftermarket parts business remained stable during Q2 • Demand for capital equipment declined in Q2 relative to the s
Slide 9: Material Handling
9 ($ in millions) Q2 23 Q2 22 Change Revenue $59.4 $52.0 +14.1% Bookings $47.6 $58.7 -18.8% Adjusted EBITDA* $13.6 $11.8 +15.4% Adjusted EBITDA Margin* 22.9% 22.6% +30 bps HIGHLIGHTS • Record revenue driven largely by bulk handling equipment and aftermarket parts demand in second quarter • Excellent
Slide 10: Business Outlook
Business Outlook • Project activity continues to be healthy • Industrial demand expected to continue at current levels • Strong backlog and solid execution positions us well for new opportunities and growth • Record financial performance expected in 2023 10KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2
Slide 11: Financial Review
FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 11
Slide 12: Q2 2023 Financial Performance
Q2 2023 Financial Performance ($ in millions, except per share amounts) Q2 23 Q2 22 Gross Margin 43.5% 43.3% SG&A % of Revenue 24.5% 25.0% Operating Income $43.1 $37.5 Net Income $29.7 $26.2 Adjusted EBITDA* $51.6 $46.0 EPS $2.54 $2.24 Adjusted EPS* $2.54 $2.24 HIGHLIGHTS • Adjusted EBITDA margin* o
Slide 13: Key Consolidated Financial Metrics
Key Consolidated Financial Metrics KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 13 $18.8 $24.9 $35.2 $36.9 $22.5 $11.9 $18.5 $23.2 $23.2 $13.7 FREE CASH FLOW* OPERATING CASH FLOW 2Q22 3Q22 4Q22 1Q23 2Q23 CASH FLOW ($ in millions) $46.0 $47.8 $49.5 $48.6 $51.6 $26.2
Slide 14: 2Q22 to 2Q23 Adjusted EPS
2Q21 ADJ EPS* 2Q22 ADJ EPS* KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 2Q22 to 2Q23 Adjusted EPS* 14 $2.24 $0.63 $0.02 $0.01 $(0.30) $(0.05) $(0.01) $2.54 2Q22 ADJ EPS* REVENUE GROSS MARGIN TAX PROVISION OPERATING EXPENSES INTEREST EXPENSE CHANGE IN SHARES 2Q23 A
Slide 15: Key Liquidity Metrics
Key Liquidity Metrics KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 15 ($ in millions) Q2 23 Q1 23 Q2 22 Cash, cash equivalents, and restricted cash $70.2 $85.5 $78.0 Debt $155.1 $180.1 $223.8 Lease obligations $1.8 $1.8 $4.5 Net Debt $86.7 $96.4 $150.3 Leverage rat
Slide 16: Guidance
Guidance KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 16 • FY 2023 revenue of $925 to $940 million, revised from $910 to $935 million • FY 2023 GAAP EPS of $9.11 to $9.31, revised from $8.82 to $9.07 • FY 2023 adjusted EPS* of $9.15 to $9.35, revised from $8.90 to
Slide 17: Questions & Answers
Questions & Answers To participate in the live Q&A session, please go to investor.kadant.com and click on the Q&A session link to receive a dial-in number and unique PIN. Please mute the audio on your computer. KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 17
Slide 18: 2023 Key Priorities
2023 Key Priorities 18 ENABLE SUSTAINABLE INDUSTRIAL PROCESSING DELIVER EXCEPTIONAL STAKEHOLDER VALUE PROVIDE STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED.
Slide 19: Investor Relations Contact
INVESTOR RELATIONS CONTACT Michael McKenney, 978-776-2000 IR@kadant.com MEDIA RELATIONS CONTACT Wes Martz, 269-278-1715 media@kadant.com August 2, 2023
Slide 20: Appendix
APPENDIX Second Quarter 2023 Business Review KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 20
Slide 21: Revenue by Customer Location
Revenue by Customer Location ($ in thousands) Q2 23 Q2 22 Change Change Excluding FX* North America $135,385 $124,080 $11,305 $12,658 Europe 60,625 58,489 2,136 1,677 Asia 32,867 28,976 3,891 5,227 Rest of World 16,176 10,104 6,072 6,174 Total $245,053 $221,649 $23,404 $25,736 KAI 2Q23 BUSINESS REVI
Slide 22: Adjusted EPS and Free Cash Flow Reconciliation
Adjusted EPS Reconciliation Q2 23 Q2 22 EPS, as Reported $2.54 $2.24 Adjustment, Net of Tax Other Costs — — Adjusted EPS* $2.54 $2.24 Adjusted EPS (earnings per share) is a non-GAAP financial measure. KAI 2Q23 BUSINESS REVIEW– AUGUST 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 22 ($ in thousands)
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 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 period. ($ in thousands) Q2 23 Q2 22 Net Income Attributable to Kadant $29,734 $26,170
Slide 24: Notes
Notes PRESENTATION NOTES • All references to EPS (earnings per share) are to our EPS as calculated on a diluted basis. • Percent change in slides 6-9 is calculated using actual numbers reported in our press release dated August 1, 2023. FOOTNOTES 1) Leverage ratio is calculated by dividing total deb