Slide 1: Third Quarter 2016 Business Review
Third Quarter 2016 Business Review Jonathan W. Painter, President & CEO Michael J. McKenney, Senior Vice President & CFO
Slide 2: Forward-Looking Statements
2 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Forward-Looking Statements The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This presentation and our accompanying commentary contains forward-looking st
Slide 3: Use of Non-GAAP Financial Measures
3 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. 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
Slide 4: Business Review
4 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. BUSINESS REVIEW Jonathan W. Painter President & CEO
Slide 5: Third Quarter Strategic Highlights
5 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Third Quarter Strategic Highlights • Solid quarter across a broad range of metrics • Strong profitability and cash flows • Bookings levels impacted by weak industrial markets
Slide 6: Q3 2016 Financial Highlights
6 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Q3 2016 Financial Highlights ($ Millions, except per share amounts) Q3 2016 Q3 2015 % CHANGE3 EXCL. FX3 Revenue $105.5 $91.9 14.8% 15.9% Gross Margin 45.6% 47.5% n.m. n.m. Net Income1 $9.2 $8.6 5.9% 8.9% Adjusted EBI
Slide 7: FX Translation and Acquisition Impact
7 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. FX Translation and Acquisition Impact Q3 2016, $ in millions except EPS Revenue Adjusted EPS4 Bookings Parts & Consumables Revenue Parts & Consumables Bookings As Reported $105.5 $0.81 $94.8 $61.4 $63.7 Growth1 14.8%
Slide 8: Bookings and Revenues
8 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Bookings and Revenues US$ (millions) 1 Reported Q415 bookings were $76 million, which included new orders of $92 million and a booking reversal of $16 million. 1 $0 $20 $40 $60 $80 $100 $120 Bookings Booking Reversal
Slide 9: Parts and Consumables Bookings and Revenues
9 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Parts and Consumables Bookings and Revenues US$ (millions) $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues
Slide 10: Geographic Revenue Contribution
10 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Geographic Revenue Contribution North America 61% Europe 18% Asia 14% ROW 7% North America 50% Europe 27% Asia 14% ROW 9% 2015 Nine-Months Revenue 2016 Nine-Months Revenue
Slide 11: North America Bookings and Revenues
11 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. North America Bookings and Revenues US$ (millions) $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues
Slide 12: Europe Bookings and Revenues
12 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Europe Bookings and Revenues US$ (millions) $0 $5 $10 $15 $20 $25 $30 $35 Bookings Revenues
Slide 13: Asia Bookings and Revenues
13 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Asia Bookings and Revenues US$ (millions) 1 Reported Q415 Asia bookings were negative $6 million, which included new orders of $10 million and a booking reversal of $16 million. 1 -$10 -$5 $0 $5 $10 $15 $20 $25 $30
Slide 14: Rest-of-World Bookings and Revenues
14 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Rest-of-World Bookings and Revenues US$ (millions) $0 $2 $4 $6 $8 $10 $12 $14 $16 Bookings Revenues
Slide 15: Guidance
15 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Guidance • FY 2016 GAAP diluted EPS of $2.76 to $2.82 • FY 2016 adjusted diluted EPS of $2.99 to $3.05 • FY 2016 revenue of $412 to $416 million • Q4 2016 GAAP diluted EPS of $0.57 to $0.63 • Q4 2016 revenue of $98
Slide 16: Financial Review
16 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. FINANCIAL REVIEW Michael J. McKenney Senior Vice President & Chief Financial Officer
Slide 17: Quarterly Gross Margins
17 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Quarterly Gross Margins 45.6% 43.7% 43.4% 43.0% 47.3% 48.6% 43.9% 43.9% 45.2% 43.0% 44.7% 44.7% 48.1% 46.5% 47.5% 43.1% 45.6% 44.9% 45.6% 30% 35% 40% 45% 50%
Slide 18: Quarterly SG&A
18 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Quarterly SG&A US$ (millions) 25% 30% 35% 40% 45% $0 $10 $20 $30 $40 SG&A SG&A as a % of Revenues
Slide 19: 3Q15 to 3Q16 Adjusted Diluted EPS
19 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. 3Q15 to 3Q16 Adjusted Diluted EPS $0.78 $0.11 $0.03 ($0.06) ($0.05) $0.81 $0.00 $0.25 $0.50 $0.75 $1.00
Slide 20: Cash Flow
20 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Cash Flow ($ Millions) 3Q16 3Q15 Income from Continuing Operations $9.2 $8.7 Depreciation and Amortization 3.4 2.6 Stock-Based Compensation 1.3 1.3 Other Items (0.2) (0.1) Change in Current Assets & Liabilities (exc
Slide 21: Key Working Capital Metrics
21 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Key Working Capital Metrics 3Q16 2Q16 3Q15 Days in Receivables 60 58 63 Days in Inventory 95 89 123 Days in Payables 39 45 51 63 58 60 123 89 95 51 45 39 20 40 60 80 100 120 140 Days in Receivables Days in Inventory
Slide 22: Working Capital and Cash Conversion Days
22 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Working Capital and Cash Conversion Days 3Q16 2Q16 3Q15 Working Capital % LTM Revenues* 11.6% 12.7% 14.7% Cash Conversion Days** 116 days 102 days 135 days *Working Capital is defined as current assets less current
Slide 23: Cash and Debt
23 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Cash and Debt ($ Millions) 3Q16 2Q16 3Q15 Cash, cash equivalents, and restricted cash $65.5 $54.9 $56.9 Debt (63.5) (64.3) (29.4) Net Cash (Debt) $2.0 $(9.4) $27.5 $30.9 $30.1 $41.5 $47.7 $51.8 $48.5 $58.7 $11.6 $14
Slide 24: Questions & Answers
24 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. 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 782 961 28. Please mute the audio on your computer.
Slide 25: Q3 2016 Key Take-Aways
25 KAI 3Q16 Business Review–November 1, 2016 © 2016 Kadant Inc. All rights reserved. Q3 2016 Key Take-Aways • Solid quarter in revenue, EPS, and cash flow • Bookings tempered by weak industrial markets • 2016 EPS performance on track • Investor Day in NYC on December 1
Slide 26: Third Quarter 2016 Business Review
Third Quarter 2016 Business Review Jonathan W. Painter, President & CEO Michael J. McKenney, Senior Vice President & CFO