Slide 1: Third Quarter 2015 Earnings Conference Call
THIRD QUARTER 2015 | EARNINGS CONFERENCE CALL
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS The following information contains forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning Colfax's
Slide 3: Q3 2015 Results
Q3 2015 RESULTS
Slide 4: Q3 2015 Highlights
4 Q3 2015 HIGHLIGHTS • Adjusted net income of $29.5 million ($0.24 per share) compared to $71.3 million ($0.57 per share) in Q3 2014 • Net sales of $969.1 million, a decrease of 16.8% from Q3 2014 net sales of $1.164 billion (an organic decline of 6.5%) • Adjusted operating income of $58.6 million a
Slide 5: Year to Date 2015 Highlights
5 YEAR TO DATE 2015 HIGHLIGHTS • Adjusted net income of $137.1 million ($1.10 per share) compared to $182.5 million ($1.48 per share) in the nine months ended September 26, 2014 • Net sales of $2.906 billion, a decrease of 15.0% from the nine months ended September 26, 2014 net sales of $3.418 billi
Slide 6: Gas and Fluid Handling
GAS AND FLUID HANDLING
Slide 7: Gas and Fluid Handling Q3 2015 Highlights
7 GAS AND FLUID HANDLING Q3 2015 HIGHLIGHTS • Net sales of $481.9 million compared to net sales of $564.7 million in Q3 2014, a decrease of 14.7% (an organic decline of 8.8%) • Adjusted segment operating income of $26.6 million and adjusted segment operating income margin of 5.5% • Third quarter ord
Slide 8: Gas and Fluid Handling YTD 2015 Highlights
8 GAS AND FLUID HANDLING YTD 2015 HIGHLIGHTS • Net sales of $1.409 billion compared to net sales of $1.708 billion in the nine months ended September 26, 2014, a decrease of 17.5% (an organic decline of 9.0%) • Adjusted segment operating income of $127.1 million and adjusted segment operating income
Slide 9: Orders and Backlog
9 ORDERS AND BACKLOG ORDERS BACKLOG Note: Dollars in millions (unaudited). $1.51B QTD YTD Existing Businesses (12.5)% (10.5)% Acquisitions 4.7% 1.5% FX Translation (9.8)% (9.8)% Total Decline (17.6)% (18.8)% $1.36B $1.31B
Slide 10: Geographic Exposure
10 GEOGRAPHIC EXPOSURE YTD 2015 REVENUE REVENUE AFTERMARKET REVENUE YTD 2015 Note: Dollars in millions (unaudited). QTD YTD Existing Businesses (8.8)% (9.0)% Acquisitions 4.3% 1.4% FX Translation (10.2)% (9.9)% Total Decline (14.7)% (17.5)% ▪ Foremarket ▪ Aftermarket ▪ Developed Economies ▪ Emerging
Slide 11: Q3 2015 Sales and Orders by End Market
11 Q3 2015 SALES AND ORDERS BY END MARKET SALES: $481.9 million Total (Decline) Growth Organic (Decline) Growth Power Generation (16.1)% (9.0)% Oil, Gas & Petrochemical 6.1% 1.7% Marine (21.4)% (8.1)% Mining (53.6)% (35.8)% General Industrial & Other (15.9)% (10.1)% Total (14.7)% (8.8)% ORDERS: $444
Slide 12: YTD 2015 Sales and Orders by End Market
12 YTD 2015 SALES AND ORDERS BY END MARKET SALES: $1,409.0 million Total Decline Organic Decline Power Generation (20.0)% (13.6)% Oil, Gas & Petrochemical (12.2)% (4.8)% Marine (15.0)% (0.9)% Mining (23.4)% (8.6)% General Industrial & Other (17.8)% (9.1)% Total (17.5)% (9.0)% ORDERS: $1,393.4 millio
Slide 13: Power Generation Market Perspective
13 POWER GENERATION MARKET PERSPECTIVE SALES & ORDERS (DECLINE) GROWTH • Served by both Howden and Colfax Fluid Handling • Sales decline primarily due to SCR projects in China completed in 2014 • Outlook for new power construction and aftermarket products remains stable YTD 2015 SALES SPLIT YTD 2015
Slide 14: Oil, Gas & Petrochemical Market Perspective
14 OIL, GAS & PETROCHEMICAL MARKET PERSPECTIVE SALES & ORDERS GROWTH (DECLINE) • Served by both Howden and Colfax Fluid Handling • Period over period comparisons are difficult due to the timing of large projects • Orders year to date remain up in a down end market YTD 2015 SALES SPLIT YTD 2015 ORDER
Slide 15: Marine Market Perspective
15 MARINE MARKET PERSPECTIVE SALES & ORDERS DECLINE • Primarily served by Colfax Fluid Handling • Year over year comparisons affected by $18 million Defense contract awarded in Q3 2014 • Commercial ship building down • Continued focus on aftermarket growth and expansion of product line YTD 2015 SALE
Slide 16: Mining Market Perspective
16 MINING MARKET PERSPECTIVE SALES & ORDERS DECLINE • Primarily served by Howden • Remains a depressed market; focused on winning targeted projects YTD 2015 SALES SPLIT YTD 2015 ORDERS SPLIT HIGHLIGHTS Q3 2015 vs. Q3 2014 YTD 2015 vs. YTD 2014 Total Organic Total Organic Sales (53.6)% (35.8)% (23.4)
Slide 17: General Industrial & Other Market Perspective
17 GENERAL INDUSTRIAL & OTHER MARKET PERSPECTIVE SALES & ORDERS DECLINE • Includes both Howden and Colfax Fluid Handling • China air pollution reduction targets present opportunity, but expect delayed investment by end users YTD 2015 SALES SPLIT YTD 2015 ORDERS SPLIT HIGHLIGHTS Q3 2015 vs. Q3 2014 Y
Slide 18: Fabrication Technology
FABRICATION TECHNOLOGY
Slide 19: Fabrication Technology Q3 2015 Highlights
19 FABRICATION TECHNOLOGY Q3 2015 HIGHLIGHTS • Net sales of $487.2 million compared to net sales of $599.8 million in Q3 2014, a decrease of 18.8% (an organic decline of 4.4%) ◦ Welding intensive industries down sharply, particularly oil and gas • Adjusted segment operating income of $42.4 million a
Slide 20: Fabrication Technology YTD 2015 Highlights
20 FABRICATION TECHNOLOGY YTD 2015 HIGHLIGHTS • Net sales of $1.497 billion compared to net sales of $1.711 billion in the nine months ended September 26, 2014, a decrease of 12.5% (an organic decline of 6.2%) • Adjusted segment operating income of $153.6 million and adjusted segment operating incom
Slide 21: Geographic Exposure
21 GEOGRAPHIC EXPOSURE YTD 2015 REVENUE REVENUE REVENUE YTD 2015 Note: Dollars in millions (unaudited). ▪ Consumables ▪ Equipment 75% 25% ▪ Developed Economies ▪ Emerging Markets 47% 53% QTD YTD Volume (0.4)% (2.7)% Price/ Mix (4.0)% (3.5)% Acquisitions —% 7.2% FX Translation (14.4)% (13.5)% Total D
Slide 22: Results of Operations
RESULTS OF OPERATIONS
Slide 23: Income Statement Summary
23 INCOME STATEMENT SUMMARY (unaudited) Refer to Appendix for Non-GAAP reconciliation and footnotes. Note: Dollars in millions, except per share amounts. Three Months Ended Nine Months Ended September 25, 2015 September 26, 2014 September 25, 2015 September 26, 2014 Net sales $ 969.1 $ 1,164.5 $ 2,9
Slide 24: COLFAX > ——
COLFAX > —— Se ——aan
Slide 25: Disclaimer
25 DISCLAIMER Colfax has provided financial information that has not been prepared in accordance with GAAP. These non-GAAP financial measures are projected adjusted net income, projected adjusted net income per share, adjusted net income, adjusted net income per share, adjusted operating income, adj
Slide 26: Non-GAAP Reconciliation
26 NON-GAAP RECONCILIATION (unaudited) _____________________ Note: Dollars in thousands. Nine Months Ended September 25, 2015 Nine Months Ended September 26, 2014 Gas and Fluid Handling Fabrication Technology Corporate and Other Total Colfax Corporation Gas and Fluid Handling Fabrication Technology
Slide 27: Non-GAAP Reconciliation
27 NON-GAAP RECONCILIATION (unaudited) (1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 27.5% and 28.5% for the three and nine months ended September 25, 2015, respectively, and 29.8% and 29.3% for the three and nine months ended September 26, 2
Slide 28: Change in Sales, Orders and Backlog
28 CHANGE IN SALES, ORDERS AND BACKLOG (unaudited) _____________________ Note: Dollars in millions. (1) Represents the incremental sales and orders as a result of our acquisition of Roots blowers and compressors. (2) Represents the incremental sales, orders and order backlog as a result of our acqui
Slide 29: Balance Sheets
29 BALANCE SHEETS (unaudited) _____________________ Note: Dollars in thousands. September 25, 2015 December 31, 2014 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 221,247 $ 305,448 Trade receivables, less allowance for doubtful accounts of $36,905 and $27,256 990,452 1,029,150 Inventories, net
Slide 30: Statements of Cash Flows
30 STATEMENTS OF CASH FLOWS (unaudited) _____________________ Note: Dollars in thousands. Nine Months Ended September 25, 2015 September 26, 2014 Cash flows from operating activities: Net income $ 138,649 $ 334,484 Adjustments to reconcile net income to net cash provided by operating activities: Dep
Slide 31: 2015 Outlook Summary (October Update)
31 2015 OUTLOOK SUMMARY (October Update) _____________________ Note: Guidance as of October 14, 2015. (1) Excludes impact of restructuring charges. (2) Excludes impact of restructuring charges, gain on reversal of tax accruals and non-cash charges on debt refinancing. REVENUE RANGE 2015 Total $3.90
Slide 32: 2015 Outlook Summary (October Update)
32 2015 OUTLOOK SUMMARY (October Update) _____________________ Note: Guidance as of October 14, 2015. In thousands, except per share data 2015 Low High Revenue $ 3,900,000 $ 3,950,000 Adjusted Operating Profit (1) 345,000 352,000 Interest (2) (44,000 ) (44,000 ) Taxes (88,000 ) (90,000 ) Noncontroll
Slide 33: Non-GAAP Reconciliation (October Update)
33 NON-GAAP RECONCILIATION (October Update) _____________________ Note: Guidance as of October 14, 2015. 2015 EPS Range Low High Projected net income per share - diluted $ 1.20 $ 1.24 Restructuring costs 0.53 0.53 Non-cash charge on debt refinancing (1) 0.04 0.04 Tax adjustment (2) (0.25 ) (0.25 ) P