Kadant Inc · NYSE:KAI
Kadant — Q3 2017 Earnings Presentation
28 slides from Kadant's earnings presentation, Oct 31, 2017
Slide 1: Third Quarter 2017 Business Review
Third Quarter 2017 Business Review Jonathan W. Painter, President & CEO Michael J. McKenney, Senior 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 and our accompanying commentary contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking
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: Q3 2017 Financial Highlights
Q3 2017 Financial Highlights ($ Millions, except per share amounts) Q3 2017 Q3 2016 % CHANGE2 Bookings $135.5 $94.8 42.9% Revenue $152.8 $105.5 44.8% Gross Margin 42.3% 45.6% n.m. Operating Income $19.5 $12.6 54.9% Adjusted Operating Income1 $24.4 $12.7 91.4% Net Income $13.3 $9.2 45.1% Adjusted EBI
Slide 6: FX Translation and Acquisition Impact
FX Translation and Acquisition Impact Q3 2017, $ in millions except EPS Revenue Adjusted EPS4 Bookings Parts & Consumables Revenue Parts & Consumables Bookings As Reported $152.8 $1.49 $135.5 $83.8 $81.1 Growth1 44.8% 84.0% 42.9% 36.4% 27.2% Growth excluding FX2,4 42.3% 79.0% 40.4% 34.1% 25.3% Growt
Slide 7: Bookings and Revenues
$0 $20 $40 $60 $80 $100 $120 $140 $160 Bookings Booking Reversal Revenues Bookings and Revenues US$ (millions) 1 Reported Q415 bookings were $76 million, which included new orders of $92 million and a booking reversal of $16 million. 1 KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. A
Slide 8: Parts and Consumables Bookings and Revenues
Parts and Consumables Bookings and Revenues KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 8 US$ (millions) $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 Bookings Revenues
Slide 9: Unaflex Acquisition
Unaflex Acquisition • Unaflex is a market leader in the manufacture and supply of expansion joints and related equipment • Acquisition price: $31 million* • Revenue: $18 million (2016) • High impact product • History of stable earnings • Strong aftermarket business • Integrated with our Fluid-Handli
Slide 10: Q3 2017 Revenue Source by End Market
Q3 2017 Revenue Source by End Market KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 10 Q3 2017 Revenue of $152.8 Million *Based on Company estimates of revenue by industrial category. *
Slide 11: North America Bookings and Revenues
North America Bookings and Revenues US$ (millions) KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 11 $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues
Slide 12: Europe Bookings and Revenues
Europe Bookings and Revenues US$ (millions) KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 12 $0 $10 $20 $30 $40 $50 Bookings Revenues
Slide 13: Asia Bookings and Revenues
-$10 -$5 $0 $5 $10 $15 $20 $25 $30 $35 $40 Bookings New Orders Revenues Asia Bookings and Revenues US$ (millions) 1 Reported Q415 Asia bookings were negative $6 million, which included new orders of $10 million and a booking reversal of $16 million. 1 KAI 3Q17 Business Review–October 31, 2017 | © 20
Slide 14: Rest-of-World Bookings and Revenues
Rest-of-World Bookings and Revenues US$ (millions) KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 14 $0 $2 $4 $6 $8 $10 $12 $14 $16 Bookings Revenues
Slide 15: Guidance
Guidance • FY 2017 GAAP diluted EPS of $3.56 to $3.60 • FY 2017 adjusted diluted EPS of $4.37 to $4.41 • FY 2017 revenue of $509 to $512 million • Q4 2017 GAAP diluted EPS of $0.87 to $0.91 • Q4 2017 adjusted diluted EPS of $1.02 to $1.06 • Q4 2017 revenue of $143 to $146 million KAI 3Q17 Business R
Slide 16: Financial Review
FINANCIAL REVIEW Michael J. McKenney Senior Vice President & Chief Financial Officer
Slide 17: Quarterly Gross Margins
Quarterly Gross Margins KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 17 47.3% 48.6% 43.9% 43.9% 45.2% 43.0% 44.7% 44.7% 48.1% 46.5% 47.5% 43.1% 45.6% 44.9% 45.6% 46.0% 47.6% 47.9% 42.3% 25% 30% 35% 40% 45% 50%
Slide 18: Quarterly SG&A
Quarterly SG&A US$ (millions) KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 18 20% 25% 30% 35% 40% 45% $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 SG&A SG&A as a % of Revenues
Slide 19: 3Q16 to 3Q17 Adjusted Diluted EPS
3Q16 to 3Q17 Adjusted Diluted EPS KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 19 $0.81 $0.53 $0.35 $0.01 ($0.12) ($0.06) ($0.02) ($0.01) $1.49 $0.00 $0.50 $1.00 $1.50 $2.00
Slide 20: Cash Flow
Cash Flow US$ (millions) 3Q17 3Q16 Net Income $13.4 $9.2 Depreciation and Amortization 6.5 3.4 Stock-Based Compensation 1.6 1.3 Other Items (3.0) (0.2) Change in Current Assets & Liabilities (excl. acquisitions) (11.5) 1.8 Cash Provided by Operating Activities $7.0 $15.5 KAI 3Q17 Business Review–Oct
Slide 21: Key Working Capital Metrics
Key Working Capital Metrics 3Q17 2Q17 3Q16 Days in Receivables 59 62 60 Days in Inventory 79 97 95 Days in Payables 36 45 39 KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 21 60 62 59 95 97 79 39 45 36 20 40 60 80 100 120 140 D ay s Days in Receivables Days in In
Slide 22: Working Capital and Cash Conversion Days
Working Capital and Cash Conversion Days 3Q17 2Q17 3Q16 Working Capital % LTM Revenues* 18.0% 11.6% 11.6% Cash Conversion Days** 102 days 113 days 116 days *Working Capital is defined as current assets less current liabilities, excluding cash and debt. ** Based on days in receivables plus days in in
Slide 23: Cash and Debt
Cash and Debt US$ (millions) 3Q17 2Q17 3Q16 Cash, cash equivalents, and restricted cash $91.4 $88.0 $65.5 Debt (273.7) (60.7) (63.5) Capital lease obligations (5.1) (5.1) (5.3) Net (Debt) Cash $(187.4) $22.2 $(3.3) KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 2
Slide 24: Leverage Ratio
Leverage Ratio KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 24 *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 d
Slide 25: 2017 Guidance
2017 Guidance • FY 2017 GAAP diluted EPS of $3.56 to $3.60 • FY 2017 adjusted diluted EPS of $4.37 to $4.41 • Gross margin approximately 45% • SG&A approximately 31% of revenue • Effective tax rate of 26% • Acquisition costs of $5.0 million or $0.38 per diluted share • Acquisition-related amortizati
Slide 26: 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 902 228 03. Please mute the audio on your computer. KAI 3Q17 Business Review–October 31, 2017 | © 2017 Kadant Inc. All rights reserved. 26
Slide 27: Q3 2017 Key Take-Aways
Q3 2017 Key Take-Aways • Record EPS, adjusted EBITDA, and operating income • Record revenue and bookings • Completed NII FPG forest products business acquisition on July 5; Unaflex expansion joint business on August 14 • Raising full-year revenue and EPS guidance KAI 3Q17 Business Review–October 31,
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