Kadant Inc · NYSE:KAI

Kadant — Q3 2021 Earnings Presentation

24 slides from Kadant's earnings presentation, Nov 2, 2021

  1. Slide 1: Third Quarter 2021 Business Review

    Third Quarter 2021 Business Review November 3, 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 3Q21 BUSINESS REVIEW–NOVEMBER 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED.

  5. Slide 5: Operational Highlights

    Operational Highlights • Robust demand across all segments led to record bookings and revenue • Capital project activity and aftermarket parts demand remained strong despite the Delta variant and supply chain headwinds • Completed the acquisitions of Clouth and Balemaster • Acquired a manufacturing

  6. Slide 6: Q3 2021 Performance

    Q3 2021 Performance 6 Q3 21 Q3 20 Change Revenue $199.8 $154.6 +29.2% Net Income $20.5 $14.9 +37.8% Adjusted EBITDA* $40.9 $30.0 +36.3% Adjusted EBITDA Margin* 20.5% 19.4% +110 bps Diluted EPS $1.75 $1.28 +36.7% Adjusted Diluted EPS* $1.97 $1.31 +50.4% Operating Cash Flow $37.9 $24.4 +55.5% Free Cas

  7. Slide 7: Flow Control

    $49.6 $61.9 $76.0 $71.8 $76.7 3Q20 4Q20 1Q21 2Q21 3Q21 Flow Control 7 $ in millions Q3 21 Q3 20 Change Revenue $76.3 $56.8 +34.2% Bookings $76.7 $49.6 +54.5% Adjusted EBITDA* $22.2 $15.6 +42.1% Adjusted EBITDA Margin* 29.1% 27.5% +160 bps HIGHLIGHTS • Record revenue and bookings performance benefite

  8. Slide 8: Industrial Processing

    $59.9 $94.8 $86.6 $101.9 $118.9 3Q20 4Q20 1Q21 2Q21 3Q21 Industrial Processing 8 $ in millions Q3 21 Q3 20 Change Revenue $81.6 $62.1 +31.5% Bookings $118.9 $59.9 +98.5% Adjusted EBITDA* $19.5 $15.7 +23.6% Adjusted EBITDA Margin* 23.9% 25.4% -150 bps HIGHLIGHTS • Strong capital project activity and

  9. Slide 9: Material Handling

    $33.8 $39.9 $41.9 $39.4 $49.1 3Q20 4Q20 1Q21 2Q21 3Q21 Material Handling 9 $ in millions Q3 21 Q3 20 Change Revenue $41.9 $35.7 +17.4% Bookings $49.1 $33.8 +45.2% Adjusted EBITDA* $7.2 $5.7 +26.2% Adjusted EBITDA Margin* 17.1% 15.9% +120 bps HIGHLIGHTS • Strong capital project activity led to record

  10. Slide 10: Business Outlook

    Business Outlook • Demand expected to remain strong for the remainder of 2021 • Supply chain constraints and inflationary pressures continue to be a challenge • Delays in shipments and timing of capital orders leading to shifts in revenue recognition • Record backlog positions us well for the remain

  11. Slide 11: Financial Review

    FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 3Q21 BUSINESS REVIEW–NOVEMBER 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED. 11

  12. Slide 12: Q3 2021 Financial Performance

    Q3 2021 Financial Performance Q3 21 Q3 20 Gross Margin 41.9% 44.2% SG&A % of Revenue 26.2% 28.4% Operating Income $28.7 $21.3 Net Income $20.5 $14.9 Adjusted EBITDA* $40.9 $30.0 Diluted EPS $1.75 $1.28 Adjusted Diluted EPS* $1.97 $1.31 HIGHLIGHTS • Adjusted EBITDA margin* of 20.5% • Operating cash f

  13. Slide 13: Key Consolidated Financial Metrics

    $22.6 $38.1 $16.8 $42.3 $34.6 3Q20 4Q20 1Q21 2Q21 3Q21 FREE CASH FLOW* OPERATING CASH FLOW 19.4% 19.1% 18.0% 21.1% 20.5% 3Q20 4Q20 1Q21 2Q21 3Q21 28.4% 28.1% 28.7% 25.2% 26.2% 3Q20 4Q20 1Q21 2Q21 3Q21 44.2% 44.1% 43.9% 43.6% 41.9% 3Q20 4Q20 1Q21 2Q21 3Q21 Key Consolidated Financial Metrics CASH FLOW

  14. Slide 14: 3Q20 to 3Q21 Adjusted Diluted EPS

    3Q20 to 3Q21 Adjusted Diluted EPS* KAI 3Q21 BUSINESS REVIEW–NOVEMBER 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED. 14 $1.31 $0.90 $0.09 $0.05 ($0.21) ($0.15) ($0.01) ($0.01) $1.97 3Q20 ADJ EPS* 3Q21 ADJ EPS* REVENUE ACQUISTIONS INTEREST EXPENSE OPERATING EXPENSE GOV’T PROGRAMS CHANGE IN SHARES NON-

  15. Slide 15: Key Liquidity Metrics

    Key Liquidity Metrics $ in millions Q3 21 Q2 21 Q3 20 Cash, cash equivalents, and restricted cash $83.7 $158.1 $56.2 Debt $309.4 $268.7 $255.0 Lease obligations $5.1 $5.0 $5.6 Net Debt $230.8 $115.6 $204.4 Leverage ratio1 1.69 1.71 1.88 Working capital % LTM revenue2 13.5% 12.7% 15.6% Cash conversio

  16. Slide 16: Financial Outlook for 2021

    Financial Outlook for 2021 16KAI 3Q21 BUSINESS REVIEW–NOVEMBER 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED. • FY 2021 revenue of $778 to $783 million • Q4 2021 revenue of $210 to $215 million • Q4 2021 gross margin of 42.0% • Q4 2021 SG&A of $55 to $56 million • Q4 2021 tax rate of 27% to 28%

  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 947 6904. Please mute the audio on your computer. KAI 3Q21 BUSINESS REVIEW–NOVEMBER 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 3Q21 BUSINESS REVIEW–NOVEMBER 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 November 3, 2021

  20. Slide 20: Appendix

    APPENDIX Third Quarter 2021 Business Review KAI 3Q21 BUSINESS REVIEW–NOVEMBER 2021 | © 2021 KADANT INC. ALL RIGHTS RESERVED. 20

  21. Slide 21: Adjusted Diluted EPS Reconciliation

    Adjusted Diluted EPS Reconciliation Q3 21 Q3 20 Diluted EPS, as reported $1.75 $1.28 Restructuring Costs, Net of Tax - 0.03 Acquisition Costs, Net of Tax 0.05 0.01 Acquired Backlog Amortization, Net of Tax 0.04 0.02 Acquired Profit in Inventory, Net of Tax 0.13 - Discrete Tax Items - (0.03) Adjusted

  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 Q3 21 Q3 20 Net Income Attributable to Kadant $20,461 $14,851 Ne

  23. Slide 23: Revenue by Customer Location

    Revenue by Customer Location $ in thousands Q3 21 Q3 20 Change Change Excl. Acquisitions and FX* North America $105,384 $87,366 $18,018 $12,386 Europe 58,813 38,951 19,862 12,794 Asia 25,504 18,847 6,657 2,736 Rest of World 10,088 9,446 642 (93) TOTAL $199,789 $154,610 $45,179 $27,823 KAI 3Q21 BUSIN

  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 November 2, 2021. FOOTNOTES 1) Leverage ratio is calculated by dividing total d

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