Kadant Inc · NYSE:KAI
Kadant — Q4 2018 Earnings Presentation
36 slides from Kadant's earnings presentation, Feb 13, 2019
Slide 1: Fourth Quarter and Fiscal Year 2018 Business Review
Exhibit 99.3 Fourth Quarter and Fiscal Year 2018 Business Review February 14, 2019
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
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 revenues that exclude the effect of acquisitions and foreign curr
Slide 4: Business Review
BUSINESS REVIEW Jonathan W. Painter | President & CEO 4
Slide 5: Q4 2018 Financial Highlights
Q4 2018 Financial Highlights ($ Millions, except per share amounts) Q4 2018 Q4 2017 % Change2 Bookings $147.1 $146.6 0.3% Revenue $163.9 $149.1 9.9% Gross Margin 43.3% 43.3% n.m. Operating Income $24.8 $18.0 37.6% Adjusted Operating Income1 $26.1 $20.9 25.3% Net Income3 $18.4 $0.8 n.m. Adjusted EBIT
Slide 6: 2018 Financial Highlights
2018 Financial Highlights ($ Millions, except per share amounts) 2018 2017 % Change2 Bookings $670.4 $521.2 28.6% Revenue $633.8 $515.0 23.1% Gross Margin 43.9% 44.9% n.m. Net Income1 $60.4 $31.1 94.3% Adjusted EBITDA3 $115.2 $91.7 25.6% Adjusted EBITDA Margin3 18.2% 17.8% n.m. Diluted EPS $5.30 $2.
Slide 7: FX Translation and Acquisition Impact
FX Translation and Acquisition Impact Q4 2018 ($ in millions) Revenue Bookings Parts & Consumables Revenue Parts & Consumables Bookings As Reported $163.9 $147.1 $90.8 $89.4 Growth1 9.9% 0.3% -1.5% -0.7% Growth excluding FX2 13.3% 3.2% 1.5% 2.2% Growth excluding FX and Acquisitions3 13.3% 3.2% 1.5%
Slide 8: Bookings and Revenue
Bookings and Revenue US$ (millions) BOOKINGS BOOKINGS REVERSAL REVENUE $200 $160 $120 $80 $40 $0 1 1 Reported Q415 bookings were $76 million, which included new orders of $92 million and a booking reversal of $16 million. KAI Q418 Business Review–February 14, 2019 | © 2019 Kadant Inc. All rights res
Slide 9: Parts and Consumables Bookings and Revenue
Parts and Consumables Bookings and Revenue US$ (millions) BOOKINGS REVENUE $120 $100 $80 $60 $40 $20 $0 KAI Q418 Business Review–February 14, 2019 | © 2019 Kadant Inc. All rights reserved. 9
Slide 10: Syntron Acquisition
Syntron Acquisition • Acquired in Q1 2019 • Manufacturer of vibratory and conveying equipment for bulk materials • High impact products on large capital investments • Integration moving forward as planned • Expected to have a modestly positive impact on 2019 adjusted EPS 10
Slide 11: North America Bookings and Revenue
North America Bookings and Revenue US$ (millions) BOOKINGS REVENUE $100 $80 $60 $40 $20 $0 KAI Q418 Business Review–February 14, 2019 | © 2019 Kadant Inc. All rights reserved. 11
Slide 12: Europe Bookings and Revenue
Europe Bookings and Revenue US$ (millions) BOOKINGS REVENUE $60 $50 $40 $30 $20 $10 $0 KAI Q418 Business Review–February 14, 2019 | © 2019 Kadant Inc. All rights reserved. 12
Slide 13: Asia Bookings and Revenue
Asia Bookings and Revenue US$ (millions) BOOKINGS NEW ORDERS REVENUE $40 $30 $20 $10 $0 -$10 1 1 Reported Q415 Asia bookings were negative $6 million, which included new orders of $10 million and a booking reversal of $16 million. KAI Q418 Business Review–February 14, 2019 | © 2019 Kadant Inc. All r
Slide 14: Rest-of-World Bookings and Revenue
Rest-of-World Bookings and Revenue US$ (millions) BOOKINGS REVENUE $20 $15 $10 $5 $0 KAI Q418 Business Review–February 14, 2019 | © 2019 Kadant Inc. All rights reserved. 14
Slide 15: Guidance
Guidance • FY 2019 GAAP diluted EPS of $4.75 to $4.90 • FY 2019 adjusted diluted EPS* of $5.20 to $5.35 • FY 2019 revenue of $700 to $710 million • Q1 2019 GAAP diluted EPS of $0.77 to $0.83 • Q1 2019 adjusted diluted EPS* of $1.11 to $1.17 • Q1 2019 revenue of $160 to $165 million * Adjusted dilute
Slide 16: Financial Review
FINANCIAL REVIEW Michael J. McKenney | Executive Vice President & CFO 16
Slide 17: Quarterly Gross Margin
Quarterly Gross Margin 50% 48.1% 47.9% 48% 47.5% 47.7% 46.5% 46.0% 45.6% 45.6% 46% 45.2% 44.7% 44.7% 44.9% 44.3% 44.0% 44.1% 44% 43.3% 43.3% 43.0% 43.1% 42.3% 42% 40% 38% 36% All data for 2017 and 2018 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Up
Slide 18: Full-Year Gross Margin
Full-Year Gross Margin 48% 46.2% 45.8% 46% 45.5% 44.9% 44.4% 43.9% 43.9% 44% 43.3% 42% 40% 38% 2011 2012 2013 2014 2015 2016 2017 2018 All data for 2017 and 2018 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07. Prior period amounts h
Slide 19: Quarterly SG&A
Quarterly SG&A US$ (millions) SG&A SG&A as a % of Revenues $50 45% $40 40% $30 35% $20 30% $10 25% $0 20% All data for 2017 and 2018 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07. Prior period amounts have not been restated. KAI Q4
Slide 20: Full-Year SG&A
Full-Year SG&A US$ (millions) SG&A SG&A as a % of Revenues $180 50% $160 45% $140 40% $120 35% $100 30% $80 25% $60 20% 2011 2012 2013 2014 2015 2016 2017 2018 All data for 2017 and 2018 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-0
Slide 21: 4Q17 to 4Q18 Adjusted Diluted EPS
4Q17 to 4Q18 Adjusted Diluted EPS* $2.00 $0.04 $0.23 ($0.12) ($0.02) $1.66 $0.39 $1.50 $1.14 $1.00 $0.50 $0.00 * Adjusted diluted EPS is a non-GAAP financial measure that excludes certain items as detailed in our press release dated February 13, 2019. KAI Q418 Business Review–February 14, 2019 | © 2
Slide 22: 2017 to 2018 Adjusted Diluted EPS
2017 to 2018 Adjusted Diluted EPS* $8.00 $0.53 ($0.56) $1.59 ($0.40) $6.00 ($0.24) ($0.04) ($0.03) $5.34 $4.49 $4.00 $2.00 $0.00 * Adjusted diluted EPS is a non-GAAP financial measure that excludes certain items as detailed in our press release dated February 13, 2019. KAI Q418 Business Review–Febru
Slide 23: Quarterly Adjusted EBITDA
Quarterly Adjusted EBITDA* Adjusted EBITDA* Adjusted EBITDA Margin* 25% $35 $30 20% $25 15% $20 % of of Revenue % $15 10% EBITDA Adjusted $10 5% $5 0% $0 * Adjusted EBITDA and adjusted EBITDA/revenue (margin) are non-GAAP financial measures that exclude certain items as detailed in our press release
Slide 24: Full-Year Adjusted EBITDA
Full-Year Adjusted EBITDA* Adjusted EBITDA* Adjusted EBITDA Margin* 20% 18.2% $120 17.8% $100 15% 15.8% 15.2% $80 14.0% 13.5% 13.4% 13.0% 10% $60 % of of Revenue % $115.2 $91.7 EBITDA Adjusted $40 $63.0 5% $56.3 $61.5 $44.8 $44.8 $44.7 $20 0% $0 ** ** ** * Adjusted EBITDA and adjusted EBITDA/revenue
Slide 25: Cash Flow
Cash Flow US$ (millions) Q4 2018 Q4 2017 FY 2018 FY 2017 Net Income $18.6 $0.9 $61.0 $31.6 Depreciation and Amortization 5.8 6.3 23.6 19.4 Stock-Based Compensation 1.7 1.5 7.0 5.8 Other Items 4.6 2.7 1.5 1.4 Change in Current Assets & Liabilities (excl. acquisitions) (20.3) 21.4 (30.1) 7.0 Cash Prov
Slide 26: Free Cash Flow
Free Cash Flow* US$ (millions) $60 $47.9 $46.4 $50 $44.4 $45.2 $40 $33.7 $34.9 $30 $26.3 $26.2 $20 $10 $0 2011 2012 2013 2014** 2015 ** 2016 ** 2017** 2018 ** * Free cash flow, a non-GAAP financial measure, is defined as cash flows from continuing operations less capital expenditures, as calculated
Slide 27: Key Working Capital Metrics
Key Working Capital Metrics Q4 2018 Q3 2018 Q4 2017 Days in Receivables 59 57 56 Days in Inventory 86 91 93 Days in Payables 35 34 38 Days in Receivables Days in Inventory Days in Payables 140 120 100 93 80 91 Days 86 60 56 57 59 40 38 35 20 34 KAI Q418 Business Review–February 14, 2019 | © 2019 Kad
Slide 28: Working Capital and Cash Conversion Days
Working Capital and Cash Conversion Days Q4 2018 Q3 2018 Q4 2017 Working Capital % LTM Revenues* 12.5% 11.1% 11.2% Cash Conversion Days** 110 days 114 days 111 days *Working Capital is defined as current assets less current liabilities, excluding cash and debt. ** Based on days in receivables plus d
Slide 29: Cash and Debt
Cash and Debt US$ (millions) Q4 2018 Q3 2018 Q4 2017 Cash, cash equivalents, and restricted cash $46.1 $58.1 $76.9 Debt (171.4) (189.1) (237.0) Capital lease obligations (4.4) (4.6) (5.1) Net debt $(129.7) $(135.6) $(165.2) $225 $150 $75 $0 ($75) US$ (millions) US$ ($150) $(135.6) $(129.7) $(165.2)
Slide 30: Leverage Ratio
Leverage Ratio Debt/EBITDA * 3.50 3.00 2.50 2.00 1.50 1.19 1.00 0.50 0.00 *Calculated by adding or subtracting certain items from Adjusted EBITDA, as required by our Credit Facility. Effective December14, 2018, our amended and restated Credit Facility defined total debt as debt less worldwide cash o
Slide 31: Guidance
Guidance • Q1 2019 GAAP diluted EPS of $0.77 to $0.83 • FY 2019 GAAP diluted EPS of $4.75 to $4.90 • CAPEX of $12 to $14 million • Depreciation & Amortization Expense of $29 to $30 million KAI Q418 Business Review–February 14, 2019 | © 2019 Kadant Inc. All rights reserved. 31
Slide 32: Questions & Answers
Questions & Answers To ask a question, please call 888-326-8410 within the U.S. or +1 704-385-4884 outside the U.S. and reference 461 9678. Please mute the audio on your computer. KAI Q418 Business Review–February 14, 2019 | © 2019 Kadant Inc. All rights reserved. 32
Slide 33: Key Take-Aways
Key Take-Aways • Record 2018 revenue, bookings, adjusted EBITDA, and GAAP diluted EPS • Expecting record revenue and adjusted EBITDA in 2019 INVESTOR DAY Grand Hyatt New York | March 7 RSVP to joanne.stoner@kadant.com KAI Q418 Business Review–February 14, 2019 | © 2019 Kadant Inc. All rights reserve
Slide 34: Kadant
KADANT
Slide 35: Appendix
APPENDIX 35
Slide 36: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($ Millions) 2011 2012 2013 2014 2015 2016 2017 2018 Cash Provided by Continuing Operations, as reported $ 34.3 $ 30.5 $ 39.9 $ 51.1 $ 40.4 $ 51.0 $ 65.2 $ 63.0 Capital Expenditures $ (8.0) $ (4.3) $ (6.2) $ (6.7) $ (5.5) $ (5.8) $ (17.3) $ (16.6) Free Cash Flow* $ 26.3