Kadant Inc · NYSE:KAI
Kadant — Q4 2019 Earnings Presentation
36 slides from Kadant's earnings presentation, Feb 12, 2020
Slide 1: Fourth Quarter and Fiscal Year 2019 Business Review
Exhibit 99.2 Fourth Quarter and Fiscal Year 2019 Business Review February 13, 2020
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 Jeffrey L. Powell | President & CEO KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 4
Slide 5: Q4 2019 Financial Highlights
Q4 2019 Financial Highlights ($ Millions, except per share amounts) Q4 2019 Q4 2018 % Change2 Bookings $159.8 $147.1 8.6% Revenue $182.7 $163.9 11.4% Gross Margin 40.9% 43.3% n.m. Net Income $8.7 $18.4 -52.5% Adjusted EBITDA1 $32.2 $32.0 0.6% Adjusted EBITDA Margin1 17.6% 19.5% n.m. Diluted EPS $0.7
Slide 6: 2019 Financial Highlights
2019 Financial Highlights ($ Millions, except per share amounts) 2019 2018 % Change2 Bookings $688.3 $670.4 2.7% Revenue $704.6 $633.8 11.2% Gross Margin 41.7% 43.9% n.m. Net Income $52.1 $60.4 -13.8% Adjusted EBITDA1 $127.1 $115.2 10.4% Adjusted EBITDA Margin1 18.0% 18.2% n.m. Diluted EPS $4.54 $5.
Slide 7: FX Translation and Acquisition Impact
FX Translation and Acquisition Impact Q4 2019 ($ Millions) Revenue Bookings Parts & Consumables Revenue Parts & Consumables Bookings As Reported $182.7 $159.8 $110.4 $111.1 Growth1 11.4% 8.6% 21.5% 24.2% Growth excluding FX2 12.8% 9.9% 22.8% 25.4% Growth excluding FX and Acquisitions3 -0.8% -6.1% 3.
Slide 8: Bookings and Revenue
Bookings and Revenue US$ (millions) BOOKINGS REVENUE $200 $160 $120 $80 $40 $0 KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 8
Slide 9: Parts and Consumables Bookings and Revenue
Parts and Consumables Bookings and Revenue US$ (millions) BOOKINGS REVENUE $140 $120 $100 $80 $60 $40 $20 $0 KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 9
Slide 10: North America Bookings and Revenue
North America Bookings and Revenue US$ (millions) BOOKINGS REVENUE $120 $100 $80 $60 $40 $20 $0 KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 10
Slide 11: Europe Bookings and Revenue
Europe Bookings and Revenue US$ (millions) BOOKINGS REVENUE $60 $50 $40 $30 $20 $10 $0 KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 11
Slide 12: Asia Bookings and Revenue
Asia Bookings and Revenue US$ (millions) BOOKINGS REVENUE $40 $30 $20 $10 $0 KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 12
Slide 13: Rest-of-World Bookings and Revenue
Rest-of-World Bookings and Revenue US$ (millions) BOOKINGS REVENUE $20 $15 $10 $5 $0 KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 13
Slide 14: Guidance
Guidance • FY 2020 GAAP diluted EPS of $4.98 to $5.08 • FY 2020 adjusted diluted EPS* of $5.00 to $5.10 • FY 2020 revenue of $690 to $700 million • Q1 2020 GAAP diluted EPS of $0.80 to $1.08 • Q1 2020 revenue of $153 to $163 million * Adjusted diluted EPS is a non-GAAP financial measure that exclude
Slide 15: Financial Review
FINANCIAL REVIEW Michael J. McKenney | Executive Vice President & CFO KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 15
Slide 16: Quarterly Gross Margin
Quarterly Gross Margin 50% 47.9% 48% 47.7% 46.0% 46% 45.6% 45.6% 44.9% 44.3% 44.0% 44.1% 44% 43.3% 43.3% 42.8% 42.3% 42.0% 42% 41.2% 40.9% 40% 38% 36% All data for 2017, 2018, and 2019 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07.
Slide 17: Full-Year Gross Margin
Full-Year Gross Margin 47% 46.2% 45.8% 45.5% 44.9% 45% 44.4% 43.9% 43.9% 43% 41.7% 41% 39% 37% 35% 2012 2013 2014 2015 2016 2017 2018 2019 All data for 2017, 2018, and 2019 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07. Prior perio
Slide 18: Quarterly SG&A as a % of Revenue
Quarterly SG&A as a % of Revenue 40% 35% 30% 27.1% 26.6% 25% 26.1% 20% KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 18
Slide 19: Full-Year SG&A as a % of Revenue
Full-Year SG&A as a % of Revenue 40% 35% 34.1% 32.2% 32.6% 31.0% 31.5% 30% 31.1% 28.0% 27.3% 25% 20% 2012 2013 2014 2015 2016 2017 2018 2019 KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 19
Slide 20: One-time Charges
One-time Charges ACTUAL GUIDANCE ($ Millions, except per share amounts) Q4 2019 Per Share Q4 2019 Per Share Pre-tax Settlement Loss $5.9 - $7.2 - After-tax Settlement Loss $6.4 $0.55 $7.3 $0.64 Pre-tax Intangible Asset Impairment Charge $2.3 - n/a - After-tax Intangible Asset Impairment Charge $1.8
Slide 21: 4Q18 to 4Q19 Adjusted Diluted EPS
4Q18 to 4Q19 Adjusted Diluted EPS* $2.50 $2.00 $0.05 $0.05 ($0.14) $1.66 ($0.11) ($0.11) $1.50 ($0.08) $1.32 $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 12, 2020. KAI Q419 Business Review–Februar
Slide 22: 2018 to 2019 Adjusted Diluted EPS
2018 to 2019 Adjusted Diluted EPS* $8.00 $7.00 $0.16 $0.11 $0.07 ($0.35) $6.00 $0.22 $5.34 ($0.17) ($0.02) $5.36 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 * Adjusted diluted EPS is a non-GAAP financial measure that excludes certain items as detailed in our press release dated February 12, 2020. KAI Q419 B
Slide 23: Quarterly Adjusted EBITDA
Quarterly Adjusted EBITDA* Adjusted EBITDA* Adjusted EBITDA Margin* 25% $35 $30 20% 19.5% $25 18.6% 17.6% 15% $20 $15 10% % OF REVENUE OF % ADJUSTED EBITDA ADJUSTED $10 5% $5 0% $0 * Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures that exclude certain items as detailed in
Slide 24: Full-Year Adjusted EBITDA
Full-Year Adjusted EBITDA* Adjusted EBITDA* Adjusted EBITDA Margin * 18.2% 20% 18.0% $140 17.8% 15.8% $120 15.2% 15% 13.5% 14.0% 13.0% $100 $80 10% $127.1 % OF REVENUE OF % $115.2 $60 $91.7 EBITDA ADJUSTED $40 5% $56.3 $61.5 $63.0 $44.8 $44.7 $20 0% $0 2012 2013 2014 2015 2016 2017 2018 2019 * Adjus
Slide 25: Cash Provided by Operations
Cash Provided by Operations US$ (millions) $100 $97.4 $80 $60 $65.2 $63.0 $51.1 $51.0 $40 $39.9 $40.4 $30.5 $20 $0 2012 2013 2014 * 2015 * 2016 * 2017 2018 2019 * Periods have been restated as a result of the adoption of the Financial Accounting Standards Board's Accounting Standards Update No. 2016
Slide 26: Free Cash Flow
Free Cash Flow* US$ (millions) $100 $87.5 $80 $60 $46.4 $44.4 $45.2 $40 $47.9 $26.2 $33.7 $34.9 $20 $0 2012 2013 2014** 2015** 2016** 2017 ** 2018 ** 2019** * Free cash flow, a non-GAAP financial measure, is defined as cash flows from continuing operations less capital expenditures, as calculated in
Slide 27: Key Working Capital Metrics
Key Working Capital Metrics Q4 2019 Q3 2019 Q4 2018 Days in Receivables 54 60 59 Days in Inventory 88 99 86 Days in Payables 38 37 35 Days in Receivables Days in Inventory Days in Payables 140 120 99 100 86 88 80 Days 59 60 60 54 40 35 37 38 20 KAI Q419 Business Review–February 13, 2020 | © 2020 Kad
Slide 28: Working Capital and Cash Conversion Days
Working Capital and Cash Conversion Days Q4 2019 Q3 2019 Q4 2018 Working Capital % LTM Revenues* 12.2% 14.6% 12.5% Cash Conversion Days** 104 days 122 days 110 days *Working Capital is defined as current assets less current liabilities, excluding cash and debt. ** Based on days in receivables plus d
Slide 29: Cash and Debt
Cash and Debt US$ (millions) Q4 2019 Q3 2019 Q4 2018 Cash, cash equivalents, and restricted cash $68.2 $49.9 $46.1 Debt (294.8) (310.5) (171.4) Other borrowings (6.2) (6.3) (4.4) Net debt $(232.8) $(266.9) $(129.7) $75 $33.9 $22.2 $25 $7.2 $2.5 ($25) $(14.7) $(3.3) ($75) ($125) $(135.6) $(129.7) ($1
Slide 30: Leverage Ratio Debt/EBITDA
Leverage Ratio Debt/EBITDA * 4.00 3.50 3.00 2.50 2.03 2.00 1.50 1.00 0.50 0.00 *For purposes of our leverage ratio, “EBITDA” is calculated by adding or subtracting certain items from Adjusted EBITDA, as defined in our Credit Facility. Our amended and restated Credit Facility defines “Debt” as debt l
Slide 31: Guidance
Guidance • Q1 2020 GAAP diluted EPS of $0.80 to $1.08 • FY 2020 GAAP diluted EPS of $4.98 to $5.08 • CAPEX of $12 to $14 million • Depreciation & Amortization Expense of $31 to $32 million KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 31
Slide 32: Questions & Answers
Questions & Answers To ask a question, please call 888-326-8410 within the U.S. or 704-385-4884 outside the U.S. and reference 747 3987. Please mute the audio on your computer. KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 32
Slide 33: Key Take-Aways
Key Take-Aways • Record 2019 revenue, bookings, adjusted EBITDA, adjusted diluted EPS, and free cash flow • Continued organic growth in parts and consumables • Challenging environment to start 2020 KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 33
Slide 34: Kadant
KADANT
Slide 35: Appendix
APPENDIX KAI Q419 Business Review–February 13, 2020 | © 2020 Kadant Inc. All rights reserved. 35
Slide 36: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($ Millions) 2012 2013 2014 2015 2016 2017 2018 2019 Cash Provided by Continuing Operations, as reported $ 30.5 $ 39.9 $ 51.1 $ 40.4 $ 51.0 $ 65.2 $ 63.0 $ 97.4 Capital Expenditures $ (4.3) $ (6.2) $ (6.7) $ (5.5) $ (5.8) $ (17.3) $ (16.6) $ (9.9) Free Cash Flow* $ 26.2