Kadant Inc · NYSE:KAI
Kadant — Q2 2018 Earnings Presentation
26 slides from Kadant's earnings presentation, Jul 30, 2018
Slide 1: Second Quarter 2018 Business Review
Exhibit 99.2 SECOND QUARTER 2018 BUSINESS REVIEW Jonathan W. Painter, President & CEO Michael J. McKenney, Executive Vice President & CFO
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 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
Slide 4: Business Review
BUSINESS REVIEW Jonathan W. Painter President & CEO
Slide 5: Q2 2018 Financial Highlights
Q2 2018 Financial Highlights ($ Millions, except per share amounts) Q2 2018 Q2 2017 % CHANGE2 Bookings $176.4 $120.3 46.7% Revenue $154.9 $110.2 40.5% Gross Margin 44.0% 47.9% n.m. Net Income $12.3 $8.1 52.5% Adjusted EBITDA1 $26.1 $19.0 37.4% Adjusted EBITDA Margin1 16.9% 17.3% n.m. Diluted EPS $1.
Slide 6: FX Translation and Acquisition Impact
FX Translation and Acquisition Impact Q2 2018, $ in millions except EPS Revenue Bookings Parts & Consumables Parts & Consumables Revenue Bookings As Reported $154.9 $176.4 $94.9 $95.5 Growth1 40.5% 46.7% 35.4% 40.0% Growth excluding FX2 36.3% 42.2% 32.2% 36.7% Growth excluding FX and Acquisitions3 1
Slide 7: Bookings and Revenue
Bookings and Revenue US$ (millions) BOOKINGS BOOKINGS REVERSAL REVENUE $200 $160 $120 $80 $40 $0 1 1 Reported Q415 bookings were $76 million, which included new orders of $92 million and a booking reversal of $16 million. 7 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc. All rights reser
Slide 8: Parts and Consumables Bookings and Revenue
Parts and Consumables Bookings and Revenue US$ (millions) BOOKINGS REVENUE $120 $100 $80 $60 $40 $20 $0 8 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 9: North America Bookings and Revenue
North America Bookings and Revenue US$ (millions) BOOKINGS REVENUE $100 $80 $60 $40 $20 $0 9 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 10: Europe Bookings and Revenue
Europe Bookings and Revenue US$ (millions) BOOKINGS REVENUE $60 $50 $40 $30 $20 $10 $0 10 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 11: Asia Bookings and Revenue
Asia Bookings and Revenue US$ (millions) BOOKINGS NEW ORDERS REVENUE $40 $30 $20 $10 $0 -$10 1 1 Reported Q415 Asia bookings were negative $6 million, which included new orders of $10 million and a booking reversal of $16 million. 11 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc. All ri
Slide 12: Rest-of-World Bookings and Revenue
Rest-of-World Bookings and Revenue US$ (millions) BOOKINGS REVENUE $20 $15 $10 $5 $0 12 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 13: Guidance
Guidance • FY 2018 GAAP diluted EPS of $4.89 to $4.99 • FY 2018 adjusted diluted EPS* of $5.00 to $5.10 • FY 2018 revenue of $630 to $638 million • Q3 2018 GAAP diluted EPS of $1.35 to $1.40 • Q3 2018 revenue of $162 to $166 million * Adjusted diluted EPS is a non-GAAP financial measure that exclude
Slide 14: Financial Review
FINANCIAL REVIEW Michael J. McKenney Executive Vice President & CFO
Slide 15: Gross Margin
Gross Margin 50% 48.1% 47.9% 48% 47.5% 47.7% 46.5% 46.0% 45.6% 45.6% 46% 45.2% 44.7% 44.7% 44.9% 44.3% 44.0% 44% 43.3% 43.0% 43.1% 42.3% 42% 40% 38% 36% All data for 2017 and 2018 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07. Prio
Slide 16: SG&A
SG&A US$ (millions) SG&A SG&A as a % of Revenues $50 45% $40 40% $30 35% $20 30% $10 25% $0 20% All data for 2017 and 2018 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07. Prior period amounts have not been restated. 16 KAI Q218 Busi
Slide 17: 2Q17 to 2Q18 Adjusted Diluted EPS
2Q17 to 2Q18 Adjusted Diluted EPS* $2.00 $0.19 ($0.21) $0.49 ($0.17) $1.50 ($0.15) ($0.11) ($0.01) $1.04 $1.07 $1.00 $0.50 $0.00 * Adjusted diluted EPS is a non-GAAP financial measure that excludes certain items as detailed in our press release dated July 30, 2018. 17 KAI Q218 Business Review–July 3
Slide 18: Adjusted EBITDA
Adjusted EBITDA* Adjusted EBITDA* Adjusted EBITDA / Revenue 25% $50 20% $40 15% $30 10% $20 5% $10 0% $0 * Adjusted EBITDA is a non-GAAP financial measure that excludes certain items as detailed in our press release dated July 30, 2018. 18 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc.
Slide 19: Cash Flow
Cash Flow US$ (millions) 2Q18 2Q17 Net Income $12.5 $8.2 Depreciation and Amortization 5.8 3.3 Stock-Based Compensation 2.2 1.4 Other Items (0.3) 1.5 Change in Current Assets & Liabilities (excl. acquisitions) 8.2 9.3 Cash Provided by Operating Activities $28.4 $23.7 19 KAI Q218 Business Review–July
Slide 20: Key Working Capital Metrics
Key Working Capital Metrics 2Q18 1Q18 2Q17 Days in Receivables 52 57 62 Days in Inventory 100 98 97 Days in Payables 36 40 45 Days in Receivables Days in Inventory Days in Payables 140 120 100 98 100 97 80 60 62 57 52 40 40 45 36 20 20 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc. All
Slide 21: Working Capital and Cash Conversion Days
Working Capital and Cash Conversion Days 2Q18 1Q18 2Q17 Working Capital % LTM Revenues* 10.2% 13.0% 11.6% Cash Conversion Days** 116 days 115 days 113 days *Working Capital is defined as current assets less current liabilities, excluding cash and debt. ** Based on days in receivables plus days in in
Slide 22: Cash and Debt
Cash and Debt US$ (millions) 2Q18 1Q18 2Q17 Cash, cash equivalents, and restricted cash $61.2 $73.7 $88.0 Debt (202.2) (235.8) (60.7) Capital lease obligations (4.7) (5.1) (5.1) Net (debt) cash $(145.7) $(167.2) $22.2 $50 $22.2 $0 ($50) ($100) US$ (millions) US$ ($150) $(145.7) $(167.2) ($200) 22 KA
Slide 23: Leverage Ratio Debt/EBITDA
Leverage Ratio Debt/EBITDA * 3.50 3.00 2.50 2.00 1.50 1.56 1.00 0.50 0.00 *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 debt less worldwide cash of u
Slide 24: 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 906 8779. Please mute the audio on your computer. 24 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 25: Key Take-Aways
Key Take-Aways • Strong internal growth in revenue and bookings in Q2 • Capacity build-out in Southeast Asia presents new opportunities • Excellent cash flow from operations in Q2 • Expecting record revenue and diluted EPS in 2018 25 KAI Q218 Business Review–July 31, 2018 | © 2018 Kadant Inc. All ri
Slide 26: Slide 26