Kadant Inc · NYSE:KAI

Kadant — Q1 2023 Earnings Presentation

24 slides from Kadant's earnings presentation, May 2, 2023

  1. Slide 1: First Quarter 2023 Business Review

    First Quarter 2023 Business Review May 3, 2023 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 4 KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED.

  5. Slide 5: Operational Highlights

    Operational Highlights • Strong demand continued into the first quarter leading to record bookings • Solid execution by our businesses led to record adjusted EPS* • Cash flow reached a new historical high for a first quarter KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED.

  6. Slide 6: Q1 2023 Performance

    Q1 2023 Performance 6 ($ in millions, except per share amounts) Q1 23 Q1 22 Change Revenue $229.8 $226.5 +1.4% Net Income $28.1 $41.2 -31.8% Adjusted EBITDA* $48.6 $45.8 +5.9% Adjusted EBITDA Margin* 21.1% 20.2% +90 bps EPS $2.40 $3.53 -32.0% Adjusted EPS* $2.40 $2.28 +5.3% Operating Cash Flow $36.9

  7. Slide 7: Flow Control

    $100.1 $97.3 $84.9 $78.8 $104.6 1Q22 2Q22 3Q22 4Q22 1Q23 7 ($ in millions) Q1 23 Q1 22 Change Revenue $89.5 $85.8 +4.3% Bookings $104.6 $100.1 +4.4% Adjusted EBITDA* $26.5 $23.9 +10.7% Adjusted EBITDA Margin* 29.6% 27.9% +170 bps HIGHLIGHTS • Strong aftermarket demand and capital project activity dr

  8. Slide 8: Industrial Processing

    8 ($ in millions) Q1 23 Q1 22 Change Revenue $83.5 $93.1 -10.3% Bookings $96.3 $106.3 -9.5% Adjusted EBITDA* $18.9 $22.0 -13.9% Adjusted EBITDA Margin* 22.7% 23.6% -90 bps HIGHLIGHTS • Demand for capital equipment softened in Q1 relative to the strong prior year period • Healthy demand for aftermark

  9. Slide 9: Material Handling

    9 ($ in millions) Q1 23 Q1 22 Change Revenue $56.7 $47.6 +19.2% Bookings $73.7 $59.6 +23.6% Adjusted EBITDA* $12.5 $9.7 +29.1% Adjusted EBITDA Margin* 22.0% 20.3% +170 bps HIGHLIGHTS • Robust demand for our bulk material handling equipment and baling systems • Business activity remains healthy with

  10. Slide 10: Business Outlook

    Business Outlook • Project activity continues to be good despite global macroeconomic headwinds • Industrial demand expected to moderate as the year progresses, particularly in the second half • Record backlog in the first quarter positions us well for strong performance in 2023 10KAI 1Q23 BUSINESS

  11. Slide 11: Financial Review

    FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 11

  12. Slide 12: Q1 2023 Financial Performance

    Q1 2023 Financial Performance ($ in millions, except per share amounts) Q1 23 Q1 22 Gross Margin 44.4% 43.4% SG&A % of Revenue 25.5% 26.1% Operating Income $40.1 $56.0 Net Income $28.1 $41.2 Adjusted EBITDA* $48.6 $45.8 EPS $2.40 $3.53 Adjusted EPS* $2.40 $2.28 HIGHLIGHTS • Adjusted EBITDA margin* o

  13. Slide 13: Key Consolidated Financial Metrics

    Key Consolidated Financial Metrics KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 13 $23.8 $18.8 $24.9 $35.2 $36.9 $20.9 $11.9 $18.5 $23.2 $32.4 FREE CASH FLOW* OPERATING CASH FLOW 1Q22 2Q22 3Q22 4Q22 1Q23 CASH FLOW ($ in millions) $45.8 $46.0 $47.8 $49.5 $48.6 $41.2 $26

  14. Slide 14: 1Q22 to 1Q23 Adjusted EPS

    2Q21 ADJ EPS* 2Q22 ADJ EPS* KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 1Q22 to 1Q23 Adjusted EPS* 14 $2.28 $0.17 $0.09 $(0.06) $(0.05) $(0.03) $2.40 1Q22 ADJ EPS* GROSS MARGIN REVENUE INTEREST EXPENSE TAX PROVISION OPERATING EXPENSES 1Q23 ADJ EPS*

  15. Slide 15: Key Liquidity Metrics

    Key Liquidity Metrics KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 15 ($ in millions) Q1 23 Q4 22 Q1 22 Cash, cash equivalents, and restricted cash $85.5 $79.7 $89.0 Debt $180.1 $199.2 $243.4 Lease obligations $1.8 $1.9 $4.5 Net Debt $96.4 $121.4 $158.9 Leverage ratio1

  16. Slide 16: Guidance

    Guidance KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 16 • FY 2023 revenue of $910 to $935 million, revised from $900 to $925 million • FY 2023 GAAP EPS of $8.82 to $9.07, revised from $8.72 to $8.97 • FY 2023 adjusted EPS* of $8.90 to $9.15, revised from $8.80 to $9.0

  17. Slide 17: Questions & Answers

    Questions & Answers To participate in the live Q&A session, please go to investor.kadant.com and click on the Q&A session link to receive a dial-in number and unique PIN. Please mute the audio on your computer. KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 17

  18. Slide 18: 2023 Key Priorities

    2023 Key Priorities 18 ENABLE SUSTAINABLE INDUSTRIAL PROCESSING DELIVER EXCEPTIONAL STAKEHOLDER VALUE PROVIDE STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 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 May 3, 2023

  20. Slide 20: Appendix

    APPENDIX First Quarter 2023 Business Review KAI 1Q23 BUSINESS REVIEW–MAY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 20

  21. Slide 21: Revenue by Customer Location

    Revenue by Customer Location ($ in thousands) Q1 23 Q1 22 Change Change Excluding FX* North America $132,453 $124,336 $8,117 $9,833 Europe 54,157 58,366 (4,209) (1,027) Asia 27,770 31,987 (4,217) (2,168) Rest of World 15,378 11,791 3,587 4,032 Total $229,758 $226,480 $3,278 $10,670 KAI 1Q23 BUSINESS

  22. Slide 22: Adjusted EPS and Free Cash Flow Reconciliation

    Adjusted EPS Reconciliation Q1 23 Q1 22 EPS, as Reported $2.40 $3.53 Adjustments, Net of Tax Gain on Sale — (1.30) Acquisition Costs — 0.01 Impairment Costs — 0.01 Acquired Profit in Inventory and Backlog Amortization — 0.03 Adjusted EPS* $2.40 $2.28 Adjusted EPS (earnings per share) is a non-GAAP f

  23. Slide 23: 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) Q1 23 Q1 22 Net Income Attributable to Kadant $28,075 $41,192

  24. Slide 24: 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 May 2, 2023. FOOTNOTES 1) Leverage ratio is calculated by dividing total debt b

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