Kadant Inc · NYSE:KAI

Kadant — Q2 2021 Earnings Presentation

25 slides from Kadant's earnings presentation, Aug 3, 2021

  1. Slide 1: Second Quarter 2021 Business Review

    Second Quarter 2021 Business Review August 4, 2021 Exhibit 99.2

  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

  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 4KAI 2Q21 BUSINESS REVIEW–AUGUST 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED.

  5. Slide 5: Q2 2021 Operational Highlights

    Q2 2021 Operational Highlights • Robust demand across all segments and solid execution by our businesses led to record bookings, revenue, EPS, and operating cash flow • Capital project activity and aftermarket parts and consumables demand benefited from the broadening economic recovery • Global supp

  6. Slide 6: Q2 2021 Performance

    Q2 2021 Performance 6 Q2 21 Q2 20 Change Revenue $195.8 $152.9 +28.1% Net Income $22.9 $11.6 +97.0% Adjusted EBITDA* $41.3 $26.6 +55.6% Adjusted EBITDA Margin* 21.1% 17.4% +370 bps Diluted EPS $1.96 $1.00 +96.0% Adjusted Diluted EPS* $2.01 $1.06 +89.6% Operating Cash Flow $44.4 $22.0 +101.4% Free Ca

  7. Slide 7: Flow Control

    Flow Control 7 $ in millions Q2 21 Q2 20 Change Revenue $70.8 $51.4 +37.8% Bookings $71.8 $49.4 +45.5% Adjusted EBITDA* $21.1 $12.3 +71.9% Adjusted EBITDA Margin* 29.9% 23.9% +600 bps HIGHLIGHTS • Record revenue and strong bookings performance benefited from strong demand from end markets • Parts an

  8. Slide 8: Industrial Processing

    $53.1 $59.9 $94.8 $86.6 $101.9 2Q20 3Q20 4Q20 1Q21 2Q21 Industrial Processing 8 $ in millions Q2 21 Q2 20 Change Revenue $82.7 $65.7 +25.9% Bookings $101.9 $53.1 +91.7% Adjusted EBITDA* $20.7 $14.2 +45.8% Adjusted EBITDA Margin* 25.0% 21.6% +340 bps HIGHLIGHTS • Demand for wood products and packagin

  9. Slide 9: Material Handling

    $30.5 $33.8 $39.9 $41.9 $39.4 2Q20 3Q20 4Q20 1Q21 2Q21 Material Handling 9 $ in millions Q2 21 Q2 20 Change Revenue $42.4 $35.8 +18.3% Bookings $39.4 $30.5 +29.5% Adjusted EBITDA* $8.3 $6.4 +29.9% Adjusted EBITDA Margin* 19.6% 17.8% +180 bps HIGHLIGHTS • Demand from Europe led to record revenue in Q

  10. Slide 10: Business Outlook

    Business Outlook • Demand expected to remain strong in the second half of 2021 • Healthy levels of industrial activity are expected to reflect the broadening economic recovery, particularly in Europe and Asia • An increase in COVID-19 infections attributed to the Delta variant is leading to growing

  11. Slide 11: Financial Review

    FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 2Q21 BUSINESS REVIEW–AUGUST 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED. 11

  12. Slide 12: Q2 2021 Financial Performance

    Q2 2021 Financial Performance Q2 21 Q2 20 Gross Margin 43.6% 43.5% SG&A % of Revenue 25.2% 29.5% Operating Income $33.0 $18.1 Net Income $22.9 $11.6 Adjusted EBITDA* $41.3 $26.6 Diluted EPS $1.96 $1.00 Adjusted Diluted EPS* $2.01 $1.06 HIGHLIGHTS • Adjusted EBITDA margin* of 21.1% • Operating cash f

  13. Slide 13: Key Consolidated Financial Metrics

    $21.1 $22.6 $38.1 $16.8 $42.3 2Q20 3Q20 4Q20 1Q21 2Q21 FREE CASH FLOW* OPERATING CASH FLOW 17.4% 19.4% 19.1% 18.0% 21.1% 2Q20 3Q20 4Q20 1Q21 2Q21 29.5% 28.4% 28.1% 28.7% 25.2% 2Q20 3Q20 4Q20 1Q21 2Q21 43.5% 44.2% 44.1% 43.9% 43.6% 2Q20 3Q20 4Q20 1Q21 2Q21 Key Consolidated Financial Metrics CASH FLOW

  14. Slide 14: 2Q20 to 2Q21 Adjusted Diluted EPS

    2Q20 to 2Q21 Adjusted Diluted EPS* KAI 2Q21 BUSINESS REVIEW–AUGUST 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED. 14 $1.06 $1.15 $0.08 $0.05 ($0.27) ($0.04) ($0.02) $2.01 REVENUE 2Q20 ADJ EPS* GROSS MARGIN INTEREST EXPENSE OPERATING EXPENSE GOV’T PROGRAMS CHANGE IN SHARES 2Q21 ADJ EPS*

  15. Slide 15: Key Liquidity Metrics

    Key Liquidity Metrics $ in millions Q2 21 Q1 21 Q2 20 Cash, cash equivalents, and restricted cash $158.1 $66.7 $60.9 Debt $268.7 $217.3 $277.5 Lease obligations $5.0 $5.2 $5.6 Net Debt $115.6 $155.8 $222.2 Leverage ratio1 1.71 1.50 2.01 Working capital % LTM revenue2 12.7% 15.1% 14.8% Cash conversio

  16. Slide 16: Financial Outlook for 2021

    Financial Outlook for 2021 16KAI 2Q21 BUSINESS REVIEW–AUGUST 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED. • Revenue of $783 to $793 million, up 23% to 25% over 2020 • Gross margin of 42.5% • SG&A at 26% of revenue • Interest expense up $0.5 million in second half of 2021

  17. Slide 17: 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 308 3302. Please mute the audio on your computer. KAI 2Q21 BUSINESS REVIEW–AUGUST 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED. 17

  18. Slide 18: 2021 Key Priorities

    2021 Key Priorities 18 MEET OUR CUSTOMERS’ NEEDS ACCELERATE OUR REVENUE GROWTH MAINTAIN STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES KAI 2Q21 BUSINESS REVIEW–AUGUST 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED.

  19. 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 4, 2021

  20. Slide 20: Appendix

    APPENDIX Second Quarter 2021 Business Review KAI 2Q21 BUSINESS REVIEW–AUGUST 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED. 20

  21. Slide 21: Adjusted Diluted EPS Reconciliation

    Adjusted Diluted EPS Reconciliation Q2 21 Q1 21 4 Q2 20 Diluted EPS, as reported $1.96 $1.43 $1.00 Restructuring Costs, Net of Tax - - 0.03 Acquisition Costs, Net of Tax 0.05 0.10 0.03 Adjusted Diluted EPS* $2.01 $1.53 $1.06 Free Cash Flow Reconciliation $ in thousands Q2 21 Q2 20 Operating Cash Flo

  22. Slide 22: 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 21 Q1 21 4 Q2 20 Net Income Attributable to Kadant $22,864 $1

  23. Slide 23: Select Segment Information

    Select Segment Information (with Q1 2021 recast) $ in thousands Q2 21 Q1 21 4 Q2 20 Flow Control $19,563 $16,443 $10,716 Industrial Processing 17,301 11,193 11,074 Material Handling 5,619 4,443 3,593 Corporate (8,843) (7,294) (6,371) 33,640 $24,785 $19,012 Operating Income Adjusted Operating Income*

  24. Slide 24: Revenue by Customer Location

    Revenue by Customer Location $ in thousands Q2 21 Q2 20 Change Change Excl. Acquisition and FX* North America $106,767 $88,718 $18,049 $14,631 Europe 55,827 37,916 17,911 12,489 Asia 24,729 16,237 8,492 6,229 Rest of World 8,488 9,989 (1,501) (1,972) TOTAL $195,811 $152,860 $42,951 $31,377 KAI 2Q21

  25. Slide 25: 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 3, 2021. FOOTNOTES 1) Leverage ratio is calculated by dividing total deb

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