Slide 1: Third Quarter 2013 Business Review
Third Quarter 2013 Business Review Jonathan W. Painter, President & CEOThomas M. O’Brien, Executive Vice President & CFO
Slide 2: Forward-Looking Statements
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. 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
Slide 3: Use of Non-GAAP Financial Measures
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. 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
Slide 4: Business Review
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. BUSINESS REVIEW Jonathan W. PainterPresident & CEO
Slide 5: Q3 2013 Financial Highlights
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Q3 2013 Financial Highlights ($ Millions, except per share amounts) Q3 2013 Q3 2012 % CHANGE Revenue $91.3 $86.6 5.4% Gross Margin 43.9% 43.4% n.m. Operating Income $9.9 $9.9 n.m. Diluted EPS1 $0.57 $0.66 -13.6% Booki
Slide 6: Q3 2013 Revenue By Product Line
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Q3 2013 Revenue By Product Line ($ Millions) Q3 2013 Q3 2012 % CHANGE EXCL. FX Stock-Preparation $38.8 $34.5 12.6% 9.4% Doctoring, Cleaning, & Filtration $28.8 $27.1 6.3% 5.4% Fluid-Handling $21.8 $23.6 -7.6% -8.4% Fi
Slide 7: Q3 2013 Bookings By Product Line
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Q3 2013 Bookings By Product Line Percent change calculated using actual numbers reported in our Q3 2013 earnings release dated November 4, 2013. ($ Millions) Q3 2013 Q3 2012 % CHANGE EXCL. FX Stock-Preparation $25.8 $
Slide 8: Bookings and Revenues
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Bookings and Revenues US$ (millions)
Slide 9: Parts and Consumables Bookings and Revenues
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Parts and Consumables Bookings and Revenues US$ (millions)
Slide 10: Carmanah Design & Manufacturing Inc.
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. * Carmanah Design & Manufacturing Inc. Leading manufacturer of equipment used to debark and cut logs into thin strands that are pressed into engineered Oriented Strand Board (OSB) OSB wood panels are used in construct
Slide 11: OSB Production Process
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. OSB Production Process Log hauling and sorting Jackladder DEBARKING STRANDING Wet bins, drying, and blending Forming, pressing, and finishing
Slide 12: U.S. Single-Family Housing Starts
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Thousands of annualized units 1,823 353 - 81% 610 Source: Federal Reserve, RBC Capital Markets U.S. Single-Family Housing Starts
Slide 13: Household Formation and Change in Occupied Housing
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Average of Household Formation and Change in Occupied Housing (In thousands) A Key Driver for Housing Starts is Pent Up Demand for New Household Formation Source: Federal Reserve, RBC Capital Markets
Slide 14: Market Position OSB Mill Sites
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Market Position OSB Mill Sites
Slide 15: Parts and Consumables
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Parts and Consumables More than 70% of revenues from parts and consumables $150,000 to $200,000 annual revenues per installed ring stranderDisposable knives replaced once or twice per day Replaceable Precision Wear Co
Slide 16: Regional Performance
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. REGIONAL PERFORMANCE
Slide 17: North America Bookings and Revenues
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. North America Bookings and Revenues US$ (millions)
Slide 18: Europe Bookings and Revenues
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Europe Bookings and Revenues US$ (millions)
Slide 19: China Bookings and Revenues
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. China Bookings and Revenues US$ (millions) $36.2
Slide 20: South America Bookings and Revenues
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. South America Bookings and Revenues US$ (millions)
Slide 21: Guidance for Continuing Operations
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Guidance for Continuing Operations Q4 2013 GAAP diluted EPS of $0.47 to $0.49 Q4 2013 revenues of $86 to $88 millionFY 2013 GAAP diluted EPS of $2.02 to $2.04FY 2013 revenues of $336 to $338 million
Slide 22: Financial Review
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. FINANCIAL REVIEW Thomas M. O’BrienExecutive Vice President & Chief Financial Officer
Slide 23: Quarterly Gross Margins
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Quarterly Gross Margins
Slide 24: Quarterly SG&A
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Quarterly SG&A
Slide 25: 3Q12 to 3Q13 Diluted EPS from Continuing Operations
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. 3Q12 to 3Q13 Diluted EPS from Continuing Operations
Slide 26: Cash Flow
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Cash Flow ($ Millions) 3Q13 3Q12 YTD3Q13 YTD3Q12 Income from Continuing Operations $6.5 $7.7 $17.7 $21.4 Depreciation and Amortization 2.3 2.1 6.7 6.4 Stock-Based Compensation 1.2 1.3 3.8 3.6 Other Items 0.1 0.3 (2.4)
Slide 27: Key Working Capital Metrics
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Key Working Capital Metrics 3Q13 2Q13 3Q12 Days in Receivables 64 70 70 Days in Inventory 92 103 85 Days in Payables 46 56 42
Slide 28: Working Capital and Cash Conversion Days
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Working Capital and Cash Conversion Days 3Q13 2Q13 3Q12 Working Capital % LTM Revenues* 14.4% 15.1% 13.4% Cash Conversion Days** 110 days 117 days 113 days *Working Capital is defined as current assets less current li
Slide 29: Cash and Debt
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Cash and Debt ($ Millions) 3Q13 2Q13 3Q12 Cash, cash equivalents, and restricted cash $73.2 $64.5 $53.4 Debt (14.5) (16.0) (11.9) Net Cash $58.7 $48.5 $41.5
Slide 30: Leverage Ratio
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Leverage Ratio * Calculated by adding or subtracting certain items, as required by our Credit Facility, from Adjusted EBITDA. Under our new Credit Facility entered into on August 3, 2012 total debt is defined as debt
Slide 31: Questions & Answers
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Questions & Answers To ask a question, please call 877-703-6107 within the U.S. or +1-857-244-7306 outside the U.S. and reference 83375884. Please mute the audio on your computer.
Slide 32: Q3 2013 Key Take-Aways
* KAI 3Q13 Business Review–November 5, 2013© 2013 Kadant Inc. All rights reserved. Q3 2013 Key Take-Aways Solid EPS performance Strong cash flowsPending acquisition of Carmanah Design and Manufacturing
Slide 33: Third Quarter 2013 Business Review
Third Quarter 2013 Business Review Jonathan W. Painter, President & CEOThomas M. O’Brien, Executive Vice President & CFO