Kadant Inc · NYSE:KAI

Kadant — Q3 2020 Earnings Presentation

25 slides from Kadant's earnings presentation, Oct 27, 2020

  1. Slide 1: Third Quarter 2020 Business Review

    Exhibit 99.2 Third Quarter 2020 Business Review October 28, 2020

  2. 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

  3. 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 adjusted diluted EPS, adjusted earnings before interest, taxes, depreciation, and amortizat

  4. Slide 4: Business Review

    BUSINESS REVIEW Jeffrey L. Powell | President & CEO KAI Q320 Business Review–October 28, 2020 | © 2020 Kadant Inc. All rights reserved. 4

  5. Slide 5: Operational Highlights

    Operational Highlights • Safeguarding our workplaces and protecting the health and safety of our employees remains a core priority as the virus persists in most regions • Solid execution by our businesses led to strong margin performance and excellent cash flow from operations • Our balance sheet re

  6. Slide 6: Q3 2020 Performance

    Q3 2020 Performance ($ in millions, except per share amounts) Q3 20 Q3 19 Change HIGHLIGHTS Revenue $154.6 $173.5 -10.9% Net Income $14.9 $16.1 -7.8% • Free cash flow* was strong at $23 million Adjusted EBITDA* $30.0 $32.3 -7.3% Adjusted EBITDA Margin* 19.4% 18.6% +80 bps • Parts and consumables rev

  7. Slide 7: Flow Control

    Flow Control Custom-engineered products, systems, and technologies that control the flow of fluids HIGHLIGHTS $ in millions Q3 20 Q3 19 Change Revenue $56.8 $62.4 -8.9% • Q3 capital project activity still sluggish Bookings $49.6 $58.8 -15.7% while service demand strengthening Adjusted EBITDA* $15.6

  8. Slide 8: Industrial Processing

    Industrial Processing Products used to recycle paper and paperboard and to process timber HIGHLIGHTS $ in millions Q3 20 Q3 19 Change Revenue $62.1 $74.2 -16.4% • Strong demand for wood products Bookings $59.9 $74.9 -20.1% continued in Q3 as U.S. housing starts Adjusted EBITDA* $15.7 $16.4 -3.7% rem

  9. Slide 9: Material Handling

    Material Handling Products used to handle bulk and discrete materials for secondary processing. HIGHLIGHTS $ in millions Q3 20 Q3 19 Change Revenue $35.7 $36.9 -3.2% • Solid performance in the aggregates and Bookings $33.8 $37.2 -9.0% food sectors Adjusted EBITDA* $5.7 $6.3 -10.4% Adjusted EBITDA Ma

  10. Slide 10: Business Outlook

    Business Outlook • Capital project activity is increasing, particularly in our packaging market segment • Q4 is expected to show solid bookings improvement over Q3 • Our strong cash flow position enables us to capitalize on new opportunities KAI Q320 Business Review–October 28, 2020 | © 2020 Kadant

  11. Slide 11: Financial Review

    FINANCIAL REVIEW Michael J. McKenney | EVP & CFO KAI Q320 Business Review–October 28, 2020 | © 2020 Kadant Inc. All rights reserved. 11

  12. Slide 12: Q3 2020 Financial Performance

    Q3 2020 Financial Performance ($ in millions, except per share amounts) HIGHLIGHTS Q3 20 Q3 19 Gross Margin 44.2% 42.8% • Adjusted EBITDA margin* of 19.4% SG&A % of Revenue 28.4% 27.1% • Operating cash flows of $24.4 million Operating Income $21.3 $24.6 • Free cash flow* of $22.6 million Net Income

  13. Slide 13: Key Consolidated Financial Metrics

    Key Consolidated Financial Metrics GROSS MARGIN SG&A (as a % of revenue) 29.5% 28.7% 44.2% 28.4% 42.8% 42.9% 43.5% 27.1% 40.9% 26.1% 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 ADJ. EBITDA MARGIN* CASH FLOWS $39.2 ($ in millions) $35.5 19.4% $25.7 $24.4 18.6% $22.0 17.6% 17.1% 17.4% $23.6 $21.

  14. Slide 14: 3Q19 to 3Q20 Adjusted Diluted EPS

    3Q19 to 3Q20 Adjusted Diluted EPS* $2.00 $0.02 $0.02 ($0.55) $0.10 $0.17 $0.18 $1.50 $1.38 ($0.01) $1.31 $1.00 $0.50 $0.00 KAI Q320 Business Review–October 28, 2020 | © 2020 Kadant Inc. All rights reserved. 14

  15. Slide 15: Key Liquidity Metrics

    Key Liquidity Metrics $ in millions Q3 20 Q2 20 Q3 19 Cash, cash equivalents, and restricted cash $56.2 $60.9 $49.9 Debt $255.0 $277.5 $310.5 Lease obligations $5.6 $5.6 $6.3 Net Debt $204.4 $222.2 $266.9 Leverage ratio1 1.88 2.01 2.07 Working capital % LTM revenue2 15.6% 14.8% 14.6% Cash conversion

  16. Slide 16: Financial Review

    FINANCIAL REVIEW Michael J. McKenney | EVP & CFO KAI Q320 Business Review–October 28, 2020 | © 2020 Kadant Inc. All rights reserved. 16

  17. Slide 17: 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 264 9708. Please mute the audio on your computer. KAI Q320 Business Review–October 28, 2020 | © 2020 Kadant Inc. All rights reserved. 17

  18. Slide 18: 2020 Key Priorities

    2020 Key Priorities SAFEGUARD OUR MAINTAIN STRONG EMPLOYEES CASH FLOW MEET OUR OPTIMIZE OUR CUSTOMERS’ NEEDS LIQUIDITY KAI Q320 Business Review–October 28, 2020 | © 2020 Kadant Inc. All rights reserved. 18

  19. Slide 19: Thank You

    Thank You INVESTOR RELATIONS CONTACT Michael McKenney, 978-776-2000 IR@kadant.com MEDIA RELATIONS CONTACT Wes Martz, 269-278-1715 media@kadant.com October 28, 2020

  20. Slide 20: Appendix

    APPENDIX Third Quarter 2020 Business Review KAI Q320 Business Review–October 28, 2020 | © 2020 Kadant Inc. All rights reserved. 20

  21. Slide 21: Strategic Operating Segments

    Strategic Operating Segments FLOW CONTROL INDUSTRIAL PROCESSING MATERIAL HANDLING • Fluid Handling and Doctoring, Cleaning, & • Stock Preparation and Wood Processing • Conveyors, Vibratory Feeders, Balers, and Filtration product lines product lines Fiber-based Products • Custom-engineered products,

  22. Slide 22: Operating Segment Revenue

    Operating Segment Revenue Fiber-based Material Handling Material Products, 2% Fluid Handling 12% Handling 19% 22% Stock Preparation Flow Control (Balers) 36% 8% Doctoring, Cleaning, Filtration 17% Stock Preparation 70% 61% 60% 55% 22% Industrial Wood Processing Processing 20% 42% 2019 AS REPORTED 20

  23. Slide 23: Adjusted Diluted EPS Reconciliation

    Adjusted Diluted EPS Reconciliation Adjusted diluted EPS (earnings per share) is a non-GAAP financial measure. Q3 20 Q3 19 Diluted EPS, as reported $1.28 $1.41 Restructuring Costs, Net of Tax 0.03 - Acquisition Costs, Net of Tax 0.01 - Amortization of Acquired Backlog, Net of Tax 0.02 - Discrete Tax

  24. Slide 24: Adjusted EBITDA Reconciliation

    Adjusted EBITDA Reconciliation Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA in a given period by revenue in the same period. $ in thousands Q3 20 Q3 19 Net Income Attributable to Kadant $14,851 $16,115 Ne

  25. Slide 25: Notes

    Notes PRESENTATION NOTES • This presentation reflects our new reportable operating segments, as announced on the Form 8-K we filed with the U.S. Securities and Exchange Commission on April 22, 2020. Prior periods have been recast to conform to this presentation. • All references to EPS (earnings per

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