Enovis Corporation · NYSE:ENOV
Enovis — Colfax — Investor Day (November 2017)
60 slides from Enovis's investor day presentation, Nov 29, 2017
Slide 1: Investor Day | November 2017
INVESTOR DAY | NOVEMBER 2017
Slide 2: Forward-looking Statements
2 Forward-looking Statements These slides and accompanying oral presentation contain forward-looking statements, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, stat
Slide 3: Agenda
3 Agenda 8:30 AM Colfax Progress Matt Trerotola, President & CEO Dan Pryor, EVP Strategy & BD Chris Hix, SVP & CFO 9:20 AM ESAB Overview & Strategy Shyam Kambeyanda, SVP & ESAB President 10:05 AM Bus to Denton All 10:45 AM Tours & Breakout Sessions ESAB Team 12:00 PM Lunch All 1:00 PM Tours & Breako
Slide 4: Colfax Direction & Progress
4 COLFAX DIRECTION & PROGRESS Matt Trerotola | President and CEO
Slide 5: Summary of the Day
5 Summary of the Day ➢ Strong foundation and winning model ➢ Significant progress on key priorities ➢ Shaping Colfax for the future
Slide 6: Colfax History and Growth
6 Colfax History and Growth Source: Company filings 1850 to 1930 Colfax 2010 Colfax Today Colfax Future ~$4B <$1B Grow Existing Platforms Add New Platforms Build CBS Foundation Fabrication Technology Air & Gas Handling Fluid Handling
Slide 7: Colfax Strategy – A Winning Model
7 Colfax Strategy – A Winning Model Focus and Empower Top Talent Acquire Good Companies Use CBS to Make Them Great ▪ Attractive markets ▪ Strong brands and solutions ▪ Opportunities to improve and expand ▪ Values ▪ Tools & processes ▪ Way of working ▪ Independent businesses ▪ Great leaders, strong t
Slide 8: Colfax Corporate Priorities
8 Colfax Corporate Priorities 1. Secure a Strong Foundation 2. Improve and Grow our Businesses 3. Innovate and Acquire to Accelerate ▪ Great team, relentless talent focus ▪ Values driven culture ▪ CBS as “The Way to Win” ▪ Leading brands and technologies ▪ Core growth > competition ▪ Margin improvem
Slide 9: The Best Team Wins
9 The Best Team Wins Colfax Leadership Strong Additions Strong, seasoned leadership ready to accelerate and scale Shyam Kambeyanda President, ESAB May, 2016 21 yrs. Eaton Chris Hix SVP & CFO July, 2016 11 yrs. public CFO 13 yrs. Roper Jason MacLean SVP, CBS & SC October, 2017 11 yrs. Cummins Strong
Slide 10: The Best Team Wins - Creating CBS Leadership Depth
10 The Best Team Wins - Creating CBS Leadership Depth Areas of Focus Progress ▪ Development of our CBS capable leaders ▪ Improved leadership depth ▪ 35% of senior GMs participated in flagship Exec Development Program ▪ Expanding early talent pipeline through MBA Pathways program ▪ Stronger, deeper t
Slide 11: A Strong Foundation – Values Driven Business System
11 A Strong Foundation – Values Driven Business System VALUES + TOOLS + WAY OF WORKING 2015-2017 2018 and beyond2012-2014 Broad deployment Training, # of kaizen Operations & innovation Focus for impact Mfg. Excellence KPI’s + Growth tools Scale impact Journeys to leadership + Leverage digital 0.6 0.
Slide 12: Continuous Improvement Is Our Way of Life
12 Continuous Improvement Is Our Way of Life Continuous improvement culture changing the game Source: Internal company reporting and analysis. 0 1 2 3 4 2013 2017 -74% SAFETY (TRIR) 0 50 100 150 200 2013 2017 -72% QUALITY (FM PPM) 84% 86% 88% 90% 92% 94% 96% 98% 2013 2017 DELIVERY(On Time Delivery)
Slide 13: Global Presence in Growing Economies
13 Global Presence in Growing Economies Source: Internal company reporting, Continuing Ops, 2016 unless noted; international Monetary Fund WOE, 2017 Positioned to win in emerging markets that are 60% of global investment COLFAX REVENUE BY REGION (2017 YTD through Q3) GDP GROWTH ESTIMATE Emerging Mar
Slide 14: Stronger, More Flexible Cost Structure
14 Stronger, More Flexible Cost Structure ▪ Over $160M of restructuring savings since 2015 – 19 sites closed – 14% headcount reduction – SG&A focus with simpler org structures and regional shared services centers – Successful project management ▪ Maintaining growth investments – Shifting resources t
Slide 15: Shaping Colfax for the Future
15 Shaping Colfax for the Future Aftermarket General Industrial Oil & Gas Power Marine & Mining Aftermarket General Industrial Oil & Gas Power Marine & Mining ➢ Lower cyclicality ➢ Less volatility ➢ Higher margins ➢ Higher vitality COLFAX 2012 (Orders, New Build by Market) COLFAX ENTERING 2018 (Orde
Slide 16: Building a Wastewater Leadership Position
16 Building a Wastewater Leadership Position ▪ Existing Howden turboblower technology could serve <10% of market opportunity ▪ Establishing position in China ▪ Roots acquisition expanded addressable range to ~50% ▪ STE acquisition extends addressable applications to ~75% ▪ Organic product developmen
Slide 17: Accelerating Innovation
17 NEW PRODUCT DEVELOPMENT − CBS tools: VOC, QFD, APD − R&D − Open innovation DIGITAL GROWTH − Productivity & uptime − Process optimization − Partnerships ACQUISITIONS − Simsmart, Ventsim − HKS, TBi, AMI Accelerating Innovation Leveraging leadership positions in markets where technology matters Weld
Slide 18: Digital Technology Development
18 Digital Technology Development Using digital technologies to create differentiation and expand market Global leader in mining fans Innovative system optimization tool Industry standard for design & visualization Smart Fan IoT enabled & microcontroller Ventilation as a Service model VOC & integrat
Slide 19: Colfax Acquisition Strategy
19 COLFAX ACQUISITION STRATEGY Dan Pryor | EVP Strategy & Business Development
Slide 20: Acquisitions Accelerating Growth Initiatives
20 Acquisitions Accelerating Growth Initiatives 1. Converted at current exchange rates. Includes Sandvik Welding Materials business, expected to close early 2018. Key elements of process: ▪ Rooted in strategy – acquisitions as accelerator of initiatives / goals ▪ Proactive approach – priority target
Slide 21: Acquisitions Accelerating Growth Initiatives
21 Acquisitions Accelerating Growth Initiatives Industrial Diversification Automation Solutions Digital Growth Emerging Markets Aftermarket Specialty Filler Metal Sandvik Welding Consumables ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Siemens Turbo Equipment Strategic acquisitions enhancing core business
Slide 22: Ramping Up New Platform Efforts
22 Ramping Up New Platform Efforts Goals: • Enhance growth profile • Balance end-market exposure • Shift margin structure • Provide innovation headroom • Lengthen bolt-on runway Key elements of process: • Top-down / bottom-up approach • Rigorous market diligence • Portfolio of opportunities • Discip
Slide 23: Colfax Financial Update
23 COLFAX FINANCIAL UPDATE Chris Hix | SVP & CFO
Slide 24: Improving Segment Profitability
24 0% 4% 8% 12% '15 '16 '17F Improving Segment Profitability Mid-teen margin performance would generate ~75¢ or more of additional aEPS FABRICATION TECHNOLOGY (Segment AOP%) GAS & FLUID HANDLING (Segment AOP%) 0% 4% 8% 12% '15 '16 '17F Source: Company filings and management analysis ▪ Overall segmen
Slide 25: Growing Investment Firepower
25 Growing Investment Firepower $234 $184 $200+ '15 '16 17F ▪ $67M in 2016 and roughly $37M in 2017 to support restructuring actions ▪ Cash generation expected to grow as business pivots to growth ▪ Opportunities remain to improve working capital performance ▪ Long-term strategic goal of achieving i
Slide 26: Improving Earnings Trajectory
26 Improving Earnings Trajectory Well-positioned to deliver Adj. EPS growth in 2018 ADJUSTED EARNINGS PER SHARE ’17PFFH SaleSTE Other’17 $1.55 – $1.65 $1.65 – $1.75 ▪ Turned the corner on earnings in 2016 despite market and currency pressures ▪ Returned to solid earnings growth in 2017 with benefits
Slide 27: A Winning Model Creating Value
27 Existing growth platforms A Winning Model Creating Value Line of sight to $3.00 or more of Adj. EPS within 4 years Margin expansion opportunities Strong cash flow generation Successful M&A program Investor value creation
Slide 28: Improving and Growing
28 Improving and Growing ➢ Accelerating growth initiatives at ESAB − Improving regional market conditions − Stronger team and processes − Increasing pace of new technology − Leveraging recent acquisitions ➢ Making the turn at Howden − Focus on industrial and mining growth as energy turns − Additiona
Slide 29: Colfax Strategy
29 Colfax Strategy Mid-teen segment margins GDP +1-2% organic growth Innovate and acquire to compound returns Strengthen the foundation − Deeper, empowered talent accelerating performance − Colfax Business System – culture & impact − Fixed and variable productivity journeys Pivot to growth − Focus o
Slide 30: Q&A
30 Q&A
Slide 31: 31
31
Slide 32: ESAB Overview & Strategy
_ ESAB OVERVIEW & STRATEGY Shyam Kambeyanda //ESAB President
Slide 33: Today's Key Take-aways
» TODAY’S KEY TAKE-AWAYS. Introduction to ESAB » Acentury of technological innovation = Best global reach and complete offering Markets have turned to growth Strategy is gaining momentum = Strengthening the core through CBS and talent development » Revitalizing organic growth = Investing in our futu
Slide 34: To be the premier global provider of welding and cutting solutions
To be the premier global provider of innovative welding and cutting solutions.
Slide 35: A Century of Technological Innovation
A CENTURY OF TECHNOLOGICAL INNOVATION. ‘oftware & connectivity Smart Se MIG and WeldCloud™ advanced are technology A leader is born, ESAB invented plasma _ First of its kind. ae ESAB founded arc cutting. ESAB's first by engineer friction-stir weldin ? Oscar Kiellberg, machine, SuperSti fl is supplie
Slide 36: Truly Global Presence
. TRULY GLOBAL PRESENCE. Bust EUROPE é ee or, | 6 = NORTH AMERICA MIDDLE EAST rerpeoeeciee — &B) AFRICA Driving CBS to improve the. customer experience ESAB & Victor SOUTH EAST 4 4 & Ful line solutions across al product categories ‘Market leader focusing on value added welding solutions. SOUTH AMERI
Slide 37: With an Industry Leading Portfolio
WITH AN INDUSTRY LEADING PORTFOLIO.
Slide 38: Serving Diverse Industries
) SERVING DIVERSE INDUSTRIES. Automotive Construction & infrastructure Power generation General industrial ‘Source: Internal company reporting and analysis. (incl. iron, stee!) Power) | General industrial industries generation | | Marine Construction & infrastructure ~$ 2 0 B market Ol & gas Heavy v
Slide 39: Markets Have Turned to Growth
MARKETS HAVE TURNED TO GROWTH. Growth, Y-0-Y in % 8 ® Demand continues to strengthen in most regions = General industrial & Construction leading the market back to growth = Welding intensive industries like Oil & gas, Marine and Heavy vehicle just beginning to turn positive 2015FY 2016FY 2017Q1 2017
Slide 40: Mega Trends Supporting Growth in Our Market
MEGA TRENDS SUPPORTING ss GROWTH IN OUR MARKET. = Urbanization driving construction across the ogako ndly ™ China and Asia Pacific region dominates as urbanization flourishes = Physical labor and transactional tasks are being widely automated AUTOMATION = Welder shortage and push to increase product
Slide 41: Strategic Focus
STRATEGIC FOCUS.
Slide 42: Strategic Focus
» STRATEGIC FOCUS. ss = Strengthening our core through CBS and talent development = Building on global leadership position in filler metal = Accelerating pace of innovation in equipment = Driving tivity & ion for break-through workflow management
Slide 43: Strengthening Our Core
© STRENGTHENING OUR CORE. ESAB performance 11.6% ~12% 10.9% 10.0% 2,295 1,985 1,800 2014 2015, 2016 2017f 1 Sales $ AOP % ‘Source: Company lings and management estimate. = Expanding margins and returning to growth ® Striving for zero accidents - 46% fewer recordable accidents = Customer service impr
Slide 44: Strengthening Our Core: President's Kaizen
STRENGTHENING OUR CORE: — PRESIDENT’S KAIZEN. PACKAGING LINE IMPROVEMENT SET-UP TIME REDUCTION EVENT OBJECTIVES BEFORE | AFTER IMPROVEMENT EVENT OBJECTIVES BEFORE AFTER IMPROVEMENT | Safety improvements | N/A 14 100% | Safety improvements N/A 14 100% 2 Change over time (min)| 30 7 47% 2 Change over
Slide 45: Filler Metal Leadership
) FILLER METAL LEADERSHIP. High alloy filler metals market $2.4 Billion esas Bother Stainless Hardfacing Aluminum Copper it offshore, of material) batteries, desalination) ‘Source: Management estimate; proforma for WAC and Sandvik acquitions
Slide 46: Innovation Defines Our Future
INNOVATION DEFINES OUR FUTURE. ACCELERATED PRODUCT DEVELOPMENT | Break-through performance Highest power to weight ratio, up to 3.4x SmartMIG adaptive arc technology Victor® EDGE™ 2.wins iF Design Award ICE™ up to 70% faster than next competitor WeldCloud™ wins Industrie Lyon Award Widest input powe
Slide 47: Accelerating Pace of Innovation
ACCELERATING Fa PACE OF INNOVATION. Major new product launches each year = Successfully established a robust process for new product development " Differentiated solutions and platforms = Open innovation to leverage leading edge technologies and resources ®= Strengthening the brand reputation as an
Slide 48: Converting Distributors Through Platform Development
CONVERTING DISTRIBUTORS THROUGH PLATFORM DEVELOPMENT.
Slide 49: Automation Process & Technology Leadership
AUTOMATION PROCESS & TECHNOLOGY LEADERSHIP. PROCESS MOTION!” jy,” NOTAPPLICABLE PRORAGE bauer Seonents Focus on Process Technology = Focusing on the value added welding process packages = Bringing discrete peer leadership into optimized solution: = Investing in R&D and acqi new products and solution
Slide 50: ESAB's Digital Growth Advantage
ESAB’S DIGITAL GROWTH ADVANTAGE. ars of welding expertise Start with core welding data CutCloud ‘Add 25 years of HKS experience ‘Add Univers: in weld quality Keeble Sheu New innovations Information in weld data ere management, true anal and new business lels Machine Learning helping ‘customers make
Slide 51: Acquisitions to Support Growth Initiatives
ACQUISITIONS TO SUPPORT GROWTH INITIATIVES. Automation S Ss V4 Digital growth aS Specialty alloys Vv Vv
Slide 52: Summary
+ SUMMARY. o=4 Markets have turned to growth Strategy is gaining momentum = Strengthening the core through CBS and talent development » Revitalizing organic growth = Investing in our future with R&D and strategic acquisitions Best global reach and complete offering
Slide 53: esab.com
esab.com
Slide 54: Appendix
54 APPENDIX
Slide 55: Non-GAAP Financial Measures
55 Non-GAAP Financial Measures Colfax has provided financial information that has not been prepared in accordance with GAAP. These non-GAAP financial measures are adjusted net income, adjusted net income per share, projected adjusted net income per share, adjusted operating income. Adjusted net inco
Slide 56: Non-GAAP Reconciliation (unaudited)
56 Non-GAAP Reconciliation (unaudited) __________________ Note: Dollars in thousands Corporate and Other Net sales 1,846,555$ 1,800,492$ -$ 3,647,047$ Operating income (loss) 124,326 6.7% 163,509 9.1% (49,820) 238,015 6.5% Restructuring and other related charges 42,482 31,688 - 74,170 Asbestos cover
Slide 57: Non-GAAP Reconciliation (unaudited)
57 Non-GAAP Reconciliation (unaudited) Projected % of net sales: Fabrication Technology Gas and Fluid Handling Operating income ~11% ~8% Restructuring and other related charges ~1% ~1% Divestiture-related expense, net 0% ~1% Adjusted operating income ~12% ~10% Year Ended December 31, 2017
Slide 58: Non-GAAP Reconciliation (unaudited)
58 Non-GAAP Reconciliation (unaudited) __________________ Note: Dollars in thousands Corporate and Other Total Colfax Corporation Net sales 1,408,992$ 1,496,597$ 2,905,589$ -$ 2,905,589$ Operating income (loss) 115,535 8.2% 139,539 9.3% 255,074 8.8% (35,492) 219,582 Restructuring and other related c
Slide 59: Non-GAAP Reconciliation (unaudited)
59 Non-GAAP Reconciliation (unaudited) __________________ Note: Amounts in thousands except per share amounts 2016 2015 128,111$ 167,739$ 74,170 61,177 8,226 - Loss on deconsolidation of Venezuelan operations 2,369 - Debt extinguishment charges- Refinancing of credit agreement - 4,731 Tax adjustment
Slide 60: Non-GAAP Reconciliation (unaudited)
60 Non-GAAP Reconciliation (unaudited) Low High Colfax Corporation Projected net income per share - diluted 1.34$ 1.44$ Restructuring costs- pretax 0.30 0.30 Divestiture-related expense, net- pretax 0.13 0.13 Tax adjustment (0.12) (0.12) Projected adjusted net income per share 1.65$ 1.75$ 2017 Pro F