Kadant Inc · NYSE:KAI

Kadant — Q4 2017 Earnings Presentation

38 slides from Kadant's earnings presentation, Feb 15, 2018

  1. Slide 1: Fourth Quarter and Fiscal Year 2017 Business Review

    Fourth Quarter and Fiscal Year 2017 Business Review Jonathan W. Painter, President & CEO Michael J. McKenney, Senior Vice President & CFO

  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 press release contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our future fi

  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 generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including increases or decreases in revenues that exclude the effect of acquisitions and foreign currency

  4. Slide 4: Business Review

    BUSINESS REVIEW Jonathan W. Painter President & CEO

  5. Slide 5: Q4 2017 Financial Highlights

    Q4 2017 Financial Highlights ($ Millions, except per share amounts) Q4 2017 Q4 2016 % CHANGE3 Bookings $146.6 $113.6 29.1% Revenue $149.1 $100.2 48.8% Gross Margin 43.3% 46.0% n.m. Adjusted Gross Margin1 44.5% 46.0% n.m. Operating Income $17.8 $10.7 66.8% Adjusted Operating Income2 $20.6 $10.7 93.3%

  6. Slide 6: 2017 Financial Highlights

    2017 Financial Highlights ($ Millions, except per share amounts) 2017 2016 % CHANGE3 Revenue $515.0 $414.1 24.4% Gross Margin 44.9% 45.5% n.m. Adjusted Gross Margin1 45.9% 45.6% n.m. Net Income $31.1 $32.1 -3.1% Adjusted EBITDA2 $90.8 $61.9 46.8% Adjusted EBITDA/Revenue2 17.6% 14.9% n.m. Diluted EPS

  7. Slide 7: FX Translation and Acquisition Impact

    FX Translation and Acquisition Impact Q4 2017, $ in millions except EPS Revenue Adjusted EPS4 Bookings Parts & Consumables Revenue Parts & Consumables Bookings As Reported $149.1 $1.14 $146.6 $92.3 $90.1 Growth1 48.8% 65.2% 29.1% 44.1% 32.7% Growth excluding FX2 43.8% 55.1% 24.8% 40.0% 29.0% Growth

  8. Slide 8: Bookings and Revenues

    $0 $20 $40 $60 $80 $100 $120 $140 $160 Bookings Booking Reversal Revenues Bookings and Revenues US$ (millions) 1 Reported Q415 bookings were $76 million, which included new orders of $92 million and a booking reversal of $16 million. 1 KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc.

  9. Slide 9: Parts and Consumables Bookings and Revenues

    Parts and Consumables Bookings and Revenues KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 9 US$ (millions) $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Bookings Revenues

  10. Slide 10: Second Half of 2017 Revenue Sources

    Second Half of 2017 Revenue Sources* KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 10 PACKAGING 37% WOOD PROCESSING 24% INDUSTRIAL 15% OTHER PAPER 7% TISSUE 7% PRINTING & WRITING 7% NEWSPRINT 3% *Based on Company estimates of revenue by industrial category.

  11. Slide 11: North America Bookings and Revenues

    North America Bookings and Revenues US$ (millions) KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 11 $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues

  12. Slide 12: Kadant Black Clawson, Lebanon, Ohio

    KADANT BLACK CLAWSON LEBANON, OHIO KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 12

  13. Slide 13: Europe Bookings and Revenues

    Europe Bookings and Revenues US$ (millions) KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 13 $0 $10 $20 $30 $40 $50 Bookings Revenues

  14. Slide 14: Asia Bookings and Revenues

    -$10 -$5 $0 $5 $10 $15 $20 $25 $30 $35 $40 Bookings New Orders Revenues Asia Bookings and Revenues US$ (millions) 1 Reported Q415 Asia bookings were negative $6 million, which included new orders of $10 million and a booking reversal of $16 million. 1 KAI Q417 Business Review–February 16, 2018 | © 2

  15. Slide 15: Rest-of-World Bookings and Revenues

    Rest-of-World Bookings and Revenues US$ (millions) KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 15 $0 $2 $4 $6 $8 $10 $12 $14 $16 Bookings Revenues

  16. Slide 16: Guidance

    Guidance • FY 2018 GAAP diluted EPS of $4.74 to $4.84 • FY 2018 adjusted diluted EPS* of $4.95 to $5.05 • FY 2018 revenue of $605 to $615 million • Q1 2018 GAAP diluted EPS of $0.77 to $0.81 • Q1 2018 adjusted diluted EPS* of $0.94 to $0.98 • Q1 2018 revenue of $143 to $146 million KAI Q417 Business

  17. Slide 17: Financial Review

    FINANCIAL REVIEW Michael J. McKenney Senior Vice President & Chief Financial Officer

  18. Slide 18: Quarterly Gross Margins

    Quarterly Gross Margins KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 18 47.3% 48.6% 43.9% 43.9% 45.2% 43.0% 44.7% 44.7% 48.1% 46.5% 47.5% 43.1% 45.6% 44.9% 45.6% 46.0% 47.6% 47.9% 42.3% 43.3% 36% 38% 40% 42% 44% 46% 48% 50%

  19. Slide 19: Full-Year Gross Margins

    Full-Year Gross Margins KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 19 43.9% 43.3% 43.9% 45.8% 44.4% 46.2% 45.5% 44.9% 35% 37% 39% 41% 43% 45% 47% 2010 2011 2012 2013 2014 2015 2016 2017

  20. Slide 20: Quarterly SG&A

    Quarterly SG&A US$ (millions) KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 20 25% 30% 35% 40% 45% $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 SG&A SG&A as a % of Revenues

  21. Slide 21: Full-Year SG&A

    Full-Year SG&A KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 21 US$ (millions) 25% 30% 35% 40% $60 $80 $100 $120 $140 $160 $180 2010 2011 2012 2013 2014 2015 2016 2017 SG&A SG&A as a % of Revenues

  22. Slide 22: 4Q16 to 4Q17 Adjusted Diluted EPS

    4Q16 to 4Q17 Adjusted Diluted EPS* KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 22 $0.69 $0.68 $0.15 $0.05 ($0.23) ($0.13) ($0.07) $1.14 $0.00 $0.50 $1.00 $1.50 $2.00 * Adjusted diluted EPS is non-GAAP financial measure that excludes certain items as detailed

  23. Slide 23: 2016 to 2017 Adjusted Diluted EPS

    2016 to 2017 Adjusted Diluted EPS* KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 23 $3.10 $0.93 $0.59 $0.45 $0.02 ($0.43) ($0.13) ($0.04) $4.49 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 * Adjusted diluted EPS is non-GAAP financial measure that excludes certain

  24. Slide 24: Full-Year Adjusted EBITDA

    Full-Year Adjusted EBITDA* 24 KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. $ (millions) CAGR 16.5% $31.2 $44.8 $44.8 $44.7 $56.3 $61.5 $61.9 $90.8 0 20 40 60 80 100 2010 2011 2012 2013 2014 2015 2016 2017 * Adjusted EBITDA is a non-GAAP financial measure that

  25. Slide 25: Cash Flow

    Cash Flow US$ (millions) 4Q17 4Q16 2017 2016 Net Income $0.9 $7.8 $31.6 $32.5 Depreciation and Amortization 6.3 3.4 19.4 14.3 Stock-Based Compensation 1.5 1.2 5.8 5.1 Other Items 2.7 0.3 1.4 (0.3) Change in Current Assets & Liabilities (excl. acquisitions) 21.4 3.6 7.0 (0.6) Cash Provided by Operati

  26. Slide 26: Free Cash Flow

    24.9 26.3 26.2 33.7 44.4 34.9 45.2 47.9 0 10 20 30 40 50 2010 2011 2012 2013 2014 2015 2016 2017 Free Cash Flow * Presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2016-09. Free cash flow, a non-GAAP financial measure, is defined as cash flows fr

  27. Slide 27: Key Working Capital Metrics

    Key Working Capital Metrics 4Q17 3Q17 4Q16 Days in Receivables 56 59 62 Days in Inventory 93 79 94 Days in Payables 38 36 40 KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 27 62 59 56 94 79 93 40 36 38 20 40 60 80 100 120 140 D ay s Days in Receivables Days in I

  28. Slide 28: Working Capital and Cash Conversion Days

    Working Capital and Cash Conversion Days 4Q17 3Q17 4Q16 Working Capital % LTM Revenues* 11.2% 18.0% 11.0% Cash Conversion Days** 111 days 102 days 117 days *Working Capital is defined as current assets less current liabilities, excluding cash and debt. ** Based on days in receivables plus days in in

  29. Slide 29: Cash and Debt

    Cash and Debt US$ (millions) 4Q17 3Q17 4Q16 Cash, cash equivalents, and restricted cash $76.9 $91.4 $73.6 Debt (237.0) (273.7) (61.5) Capital lease obligations (5.1) (5.1) (4.9) Net (Debt) Cash $(165.2) $(187.4) $7.2 KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved

  30. Slide 30: Leverage Ratio

    Leverage Ratio KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 30 *Calculated by adding or subtracting certain items from Adjusted EBITDA, as required by our Credit Facility. Effective March 2, 2017, our amended and restated Credit Facility defined total debt as

  31. Slide 31: Guidance

    Guidance • Q1 2018 GAAP diluted EPS of $0.77 to $0.81 • FY 2018 GAAP diluted EPS of $4.74 to $4.84 • CAPEX of $18 to $19 million • Depreciation & Amortization Expense of $24 to $25 million KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 31

  32. Slide 32: Questions & Answers

    Questions & Answers To ask a question, please call 888-326-8410 within the U.S. or +1 704-385-4884 outside the U.S. and reference 356 76 56. Please mute the audio on your computer. KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 32

  33. Slide 33: Key Take-Aways

    Key Take-Aways • Record 2017 revenue, adjusted EBITDA, and adjusted EPS • Record Q4 bookings • Record 2017 free cash flow • Expecting record revenue and diluted EPS in 2018 KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 33

  34. Slide 34: Slide 34

  35. Slide 35: Appendix

    APPENDIX KADANT

  36. Slide 36: Adjusted Gross Margin Reconciliation

    Adjusted Gross Margin Reconciliation KAI Q417 Business Review–February 16, 2018 | © 2018 Kadant Inc. All rights reserved. 36 US$ (millions) Q417 Q416 2017 2016 Revenues $ 149.1 $ 100.2 $ 515.0 $ 414.1 Cost of Revenues _ (84.6) _ (54.2) _(284.0) _(225.7) Gross Margin $ 64.5 $ 46.0 $ 231.0 $ 188.4 Gro

  37. Slide 37: Adjusted EBITDA Reconciliation

    Adjusted EBITDA Reconciliation US$ (millions) 2010 2011 2012 2013 2014 2015 2016 2017 Net Income Attributable to Kadant $ 18.5 $ 33.6 $ 31.6 $ 23.4 $ 28.7 $ 34.4 $ 32.1 $ 31.1 Net Income Attributable to Noncontrolling Interest 0.3 0.3 0.2 0.2 0.4 0.3 0.4 0.5 (Income) Loss from Discontinued Operation

  38. Slide 38: Free Cash Flow Reconciliation

    Free Cash Flow Reconciliation US$ (millions) 2009 2010 2011 2012 2013 2014 2015 2016 2017 Cash Provided by Continuing Operations $ 43.1 $ 28.3 $ 34.3 $ 30.5 $ 39.9 $ 51.1 $ 40.4 $ 51.0 $ 65.2 Capital Expenditures _ (2.8) _ (3.4) _ (8.0) _ (4.3) _ (6.2) _ (6.7) _ (5.5) _ (5.8) _ (17.3) Free Cash Flow

Kadant — Q4 2017 Earnings Presentation on 6ix