Slide 1: First Quarter 2011 Business Review
First Quarter 2011 Business Review Jonathan W. Painter, President & CEO Thomas M. O’Brien, Executive 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 contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our expected f
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 excluding the effect of foreign currency translation, adjuste
Slide 4: Financial Classifications
Financial Classifications All geographic revenues and bookings data are attributed to regions based on selling locations. For North America and China, this also approximates revenues and bookings based on where the equipment is shipped to and installed. Our European geographic data, however, include
Slide 5: Business Review
Business Review Jonathan W. Painter President & CEO
Slide 6: Q1 2011 Financial Highlights: Revenues
Q1 2011 Financial Highlights: Revenues • $71.7 million, up 17% compared to Q1 2010 • All product lines saw increases compared to Q1 2010 – Stock-Preparation up 31% – Fluid-Handling up 13% – Doctoring up 13% – Water-Management up 5% – Fiber-based Products up 14% • All product lines except Stock-Prepa
Slide 7: Financial Highlights
Financial Highlights Q1 2011 Q1 2010 Revenues $71.7 million $61.1 million Gross margins 47.6% 44.0% Diluted EPS $0.47 $0.29 Adjusted EBITDA $10.2 million $6.0 million Adjusted EBITDA/Sales 14% 10%
Slide 8: Q1 2011 Financial Highlights: Bookings
Q1 2011 Financial Highlights: Bookings • $84.3 million, up 20% compared to Q1 2010 • Q1 booking performance – Stock-Preparation up 37% – Fluid-Handling up 15% – Water-Management up 15% – Doctoring up 4% – Fiber-based Products up 25%
Slide 9: Bookings by product line chart
$100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 1Q08 2Q08 3Q08 4208 1009 2009 3Q09 4Q09 1010 2010 3Q10 4Q10 1011 Other Fiber-based Products us Water-Management & Doctoring 1 Fluid-Handling 1 Stock-Preparation KADANT
Slide 10: Bookings by product line chart
$50 $40 $30 us Water-Management &Doctoring \Fluid-Handling u Stock-Preparation 1Q08 2Q08 3208 4Q08 1Q09 2009 3Q09 4Q09 1010 2010 3Q10 4Q10 1011
Slide 11: Parts and Consumables Bookings
Parts and Consumables Bookings
Slide 12: Market Review
Market Review
Slide 13: North America Paper Industry Trends
North America Paper Industry Trends • Q1 operating rates remained high in Containerboard • Printing & Writing grades continue to be under pressure • Rising energy, freight, and fiber cost • Capital spending up from 2010, energy-driven projects high on project list
Slide 14: North America Bookings
North America Bookings $42.4 million, up 16% compared to Q1 2010
Slide 15: Highlighted Q1 North America Bookings
Highlighted Q1 North America Bookings • OCC system upgrade for containerboard producer in the Southeastern U.S. • Steam system rebuild for packaging producer in Ontario, Canada • Multiple doctor systems sold to a leading U.S. steel producer in the Midwest
Slide 16: Europe Paper Industry Trends
Europe Paper Industry Trends • Containerboard inventories remained at historically low levels • Pricing remains relatively high • Demand for packaging grades still strong, but could weaken if industrial production or exports soften • Operating rates expected to be negatively impacted by proactive su
Slide 17: European Bookings
European Bookings $22.7 million, down 9% compared to Q1 2010
Slide 18: Highlighted Q1 European Bookings
Highlighted Q1 European Bookings • Creping blade holders order for six tissue machines from a Europe- based OEM • Steam system and related drying hardware for a corrugated board machine in Finland • Dryer system rebuild and drying equipment for a corrugated board mill in Ukraine
Slide 19: China Paper Industry Trends
China Paper Industry Trends • Price movements are mixed due to oversupply and input costs • Demand has weakened, but outlook remains relatively strong • Machine start-ups being “strategically” delayed by a few months • Capacity additions continue to be announced
Slide 20: China Bookings
China Bookings $16.3 million, up 146% compared to Q1 2010
Slide 21: Highlighted Q1 China Bookings
Highlighted Q1 China Bookings • Eight stock prep systems orders from China with a combined value of $11.5 million for OCC and approach flow equipment • Drying and showering equipment for five new paper machines from China-based paper machine OEM • 13 doctor systems for a boxboard producer in Jiangsu
Slide 22: Guidance for Continuing Operations
Guidance for Continuing Operations • FY 2011 revenues of $315 to $325 million • FY 2011 GAAP diluted EPS of $2.15 to $2.25 • Q2 2011 revenues of $78 to $80 million • Q2 2011 GAAP diluted EPS of $0.54 to $0.56
Slide 23: Financial Review
Financial Review Thomas M. O’Brien Executive Vice President and Chief Financial Officer
Slide 24: 1Q11 Revenues Summary
1Q11 Revenues Summary • Consolidated Revenues = $71.7 million – 17% increase vs. 1Q10 – Includes 2% favorable foreign currency translation • Revenue Guidance = $71 to $73 million – Higher Doctoring, Fiber-based Products and Fluid-Handling revenues – Lower Stock-Preparation and Water-Management reven
Slide 25: 1Q11 and 1Q10 Revenues by Product Line
% Change Qtr to Excl. ($ Millions) 1Q11 1Q10 Qtr FX * Stock-Preparation $ 23.3 $ 17.8 31% 30% Doctoring 14.1 12.5 13% 11% Water-Management 6.8 6.5 5% 3% Other 0.7 0.6 8% 2% Papermaking Systems Segment 67.5 57.5 18% 16% Fiber-based Products 4.2 3.6 14% 14% Total $ 71.7 $ 61.1 17% 16% 1Q11 and 1Q10 Re
Slide 26: 1Q11 and 4Q10 Revenues by Product Line
% Change Qtr to Excl. ($ Millions) 1Q11 4Q10 Qtr FX * Stock-Preparation $ 23.3 $ 28.9 -19% -19% Doctoring 14.1 13.8 2% 1% Water-Management 6.8 6.6 4% 3% Other 0.7 0.6 16% 13% Papermaking Systems Segment 67.5 71.5 -6% -6% Fiber-based Products 4.2 1.8 136% 136% Total $ 71.7 $ 73.3 -2% -3% 1Q11 and 4Q1
Slide 27: Revenues by Geography
% Change Excl. FX* ($ Millions) 1Q11 4Q10 1Q10 4Q10 1Q10 1Q10 North America $ 35.1 $ 33.4 $ 29.7 5% 18% 17% Europe 21.2 23.0 21.0 -8% 1% 1% China 8.8 12.3 5.4 -29% 64% 56% Australia 0.8 0.5 0.3 71% 122% 99% Total $ 67.5 $ 71.5 $ 57.5 -6% 18% 16% Revenues by Geography (Papermaking Systems Segment Onl
Slide 28: Revenue Detail
% Change ($ Millions) 1Q11 4Q10 1Q10 4Q10 1Q10 Parts & Consumables $ 47.3 $ 43.0 $ 40.1 10% 18% Capital 24.4 30.3 21.0 -19% 17% Total $ 71.7 $ 73.3 $ 61.1 -2% 17% Revenue Detail
Slide 29: Gross Margin Percentages
% Point Change Quarter 1Q11 4Q10 1Q10 4Q10 1Q10 Papermaking Systems Segment 47.4 42.4 43.5 5.0% 3.9% Fiber-based Products 50.8 41.8 50.7 9.0% 0.1% Total 47.6 42.4 44.0 5.2% 3.6% Gross Margin Percentages
Slide 30: SG&A
Quarter Change ($ Millions) 1Q11 4Q10 1Q10 4Q10 1Q10 SG&A $ 24.5 $ 22.9 $ 21.1 $ 1.6 $ 3.4 % Revenues 34.1% 31.3% 34.6% 2.8% -0.5% SG&A
Slide 31: EPS chart
$0.80 $0.17 ($0.22) $0.31 $0.29
Slide 32: Cash Flow
($ Millions) 1Q11 1Q10 Income from Continuing Operations $ 5.9 $ 3.6 Depreciation and Amortization 1.9 1.6 Stock-Based Compensation 0.8 0.5 Other Items 0.5 (0.7) Change in Current Assets & Liabilities, Excluding Acquisitions (8.7) (5.6) Cash from Continuing Operations $ 0.4 $ (0.6) Cash Flow
Slide 33: Key Working Capital Metrics
($ Millions) 1Q11 4Q10 1Q10 Days in Receivables 68 62 67 Days in Payables 62 51 58 Days in Inventory 112 90 102 Key Working Capital Metrics
Slide 34: Cash and Debt
($ Millions) 1Q11 4Q10 1Q10 Cash * $ 57.6 $ 61.8 $ 43.6 Debt (17.6) (22.7) (23.1) Net Cash $ 40.0 $ 39.1 $ 20.5 Cash and Debt
Slide 35: Leverage Ratio
Leverage Ratio * Calculated by adding or subtracting certain items, as defined in our Credit Facility, from Adjusted EBITDA reported externally.
Slide 36: Questions & Answers
Questions & Answers To ask a question, please call 866-804-6926 within the U.S. or +1-857-350-1672 outside the U.S. and reference 83375884. Please mute the audio on your computer.
Slide 37: First Quarter 2011 Business Review
First Quarter 2011 Business Review Jonathan W. Painter, President & CEO Thomas M. O’Brien, Executive Vice President & CFO