Kadant Inc · NYSE:KAI

Kadant — Q3 2023 Earnings Presentation

24 slides from Kadant's earnings presentation, Nov 6, 2023

  1. Slide 1: Third Quarter 2023 Business Review

    Third Quarter 2023 Business Review November 1, 2023

  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 increases or decreases in revenue excluding the effect of acquisitions and foreign currency

  4. Slide 4: Business Review

    BUSINESS REVIEW Jeffrey L. Powell, President & CEO 4 KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED.

  5. Slide 5: Operational Highlights

    Operational Highlights • Excellent execution by our businesses led to record-setting results in Q3 • Record adjusted EBITDA*, adjusted EBITDA margin*, and adjusted EPS* • Healthy balance sheet positions us well to capitalize on new opportunities KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADAN

  6. Slide 6: Q3 2023 Performance

    Q3 2023 Performance 6 ($ in millions, except per share amounts) Q3 23 Q3 22 Change Revenue $244.2 $224.5 +8.8% Net Income $30.9 $27.5 +12.3% Adjusted EBITDA* $52.7 $47.8 +10.2% Adjusted EBITDA Margin* 21.6% 21.3% +30 bps EPS $2.63 $2.35 +11.9% Adjusted EPS* $2.69 $2.38 +13.0% Operating Cash Flow $47

  7. Slide 7: Flow Control

    $84.9 $78.8 $104.6 $88.3 $83.0 3Q22 4Q22 1Q23 2Q23 3Q23 7 ($ in millions) Q3 23 Q3 22 Change Revenue $90.8 $86.9 +4.5% Bookings $83.0 $84.9 -2.2% Adjusted EBITDA* $27.0 $25.6 +5.4% Adjusted EBITDA Margin* 29.7% 29.4% +30 bps HIGHLIGHTS • Capital project activity and aftermarket demand contributed to

  8. Slide 8: Industrial Processing

    8 ($ in millions) Q3 23 Q3 22 Change Revenue $94.2 $86.1 +9.4% Bookings $70.4 $77.9 -9.5% Adjusted EBITDA* $22.5 $20.7 +8.7% Adjusted EBITDA Margin* 23.8% 24.0% -20 bps HIGHLIGHTS • Record aftermarket parts revenue and strong capital sales led to excellent revenue performance • Producers continue to

  9. Slide 9: Material Handling

    9 ($ in millions) Q3 23 Q3 22 Change Revenue $59.2 $51.5 +14.8% Bookings $56.2 $48.1 +16.8% Adjusted EBITDA* $13.3 $10.0 +32.9% Adjusted EBITDA Margin* 22.5% 19.5% +300 bps HIGHLIGHTS • Strong revenue performance led by capital equipment shipments across all product lines • Excellent execution led t

  10. Slide 10: Business Outlook

    Business Outlook • Industrial demand expected to stabilize around current levels • Macroeconomic headwinds create uncertainty with capital project timing • Our healthy balance sheet positions us well for new opportunities and growth • Expecting to generate record results in fiscal 2023 10KAI 3Q23 BU

  11. Slide 11: Financial Review

    FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 11

  12. Slide 12: Q3 2023 Financial Performance

    Q3 2023 Financial Performance ($ in millions, except per share amounts) Q3 23 Q3 22 Gross Margin 43.3% 42.5% SG&A % of Revenue 23.7% 23.7% Operating Income $43.5 $38.9 Net Income $30.9 $27.5 Adjusted EBITDA* $52.7 $47.8 EPS $2.63 $2.35 Adjusted EPS* $2.69 $2.38 HIGHLIGHTS • Adjusted EBITDA margin* o

  13. Slide 13: Key Consolidated Financial Metrics

    Key Consolidated Financial Metrics KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 13 $24.9 $35.2 $36.9 $22.5 $47.0 $18.5 $23.2 $23.2 $13.7 $38.1 FREE CASH FLOW* OPERATING CASH FLOW 3Q22 4Q22 1Q23 2Q23 3Q23 CASH FLOW ($ in millions) $47.8 $49.5 $48.6 $51.6 $52.7 $27

  14. Slide 14: 3Q22 to 3Q23 Adjusted EPS

    2Q21 ADJ EPS* 2Q22 ADJ EPS* KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 3Q22 to 3Q23 Adjusted EPS* 14 $2.38 $0.53 $0.13 $0.01 $(0.33) $(0.02) $(0.01) $2.69 3Q22 ADJ EPS* REVENUE GROSS MARGIN TAX PROVISION OPERATING EXPENSES INTEREST EXPENSE CHANGE IN SHARES 3Q23

  15. Slide 15: Key Liquidity Metrics

    Key Liquidity Metrics KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 15 ($ in millions) Q3 23 Q2 23 Q3 22 Cash, cash equivalents, and restricted cash $79.1 $70.2 $75.1 Debt $127.5 $155.1 $207.9 Lease obligations $1.7 $1.8 $1.8 Net Debt $50.2 $86.7 $134.6 Leverage r

  16. Slide 16: Guidance

    Guidance KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 16 • FY 2023 revenue of $941 to $949 million, revised from $925 to $940 million • FY 2023 GAAP EPS of $9.59 to $9.69, revised from $9.11 to $9.31 • FY 2023 adjusted EPS* of $9.65 to $9.75, revised from $9.15 t

  17. Slide 17: Questions & Answers

    Questions & Answers To participate in the live Q&A session, please go to investor.kadant.com and click on the Q&A session link to receive a dial-in number and unique PIN. Please mute the audio on your computer. KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 17

  18. Slide 18: 2023 Key Priorities

    2023 Key Priorities 18 ENABLE SUSTAINABLE INDUSTRIAL PROCESSING DELIVER EXCEPTIONAL STAKEHOLDER VALUE PROVIDE STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED.

  19. Slide 19: Investor Relations Contact

    INVESTOR RELATIONS CONTACT Michael McKenney, 978-776-2000 IR@kadant.com MEDIA RELATIONS CONTACT Wes Martz, 269-278-1715 media@kadant.com November 1, 2023

  20. Slide 20: Appendix

    APPENDIX Third Quarter 2023 Business Review KAI 3Q23 BUSINESS REVIEW– NOVEMBER 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. 20

  21. Slide 21: Revenue by Customer Location

    Revenue by Customer Location ($ in thousands) Q3 23 Q3 22 Change Change Excluding FX* North America $133,780 $126,699 $7,081 $7,520 Europe 66,491 57,409 9,082 4,855 Asia 27,393 26,953 440 1,002 Rest of World 16,518 13,449 3,069 2,345 Total $244,182 $224,510 $19,672 $15,722 KAI 3Q23 BUSINESS REVIEW–

  22. Slide 22: Adjusted EPS and Free Cash Flow Reconciliation

    Adjusted EPS Reconciliation Q3 23 Q3 22 EPS, as Reported $2.63 $2.35 Adjustments, Net of Tax Acquisition Costs — 0.02 Relocation Costs 0.03 — Restructuring and Impairment Costs 0.03 0.01 Adjusted EPS* $2.69 $2.38 Adjusted EPS (earnings per share) is a non-GAAP financial measure. KAI 3Q23 BUSINESS RE

  23. Slide 23: 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 23 Q3 22 Net Income Attributable to Kadant $30,864 $27,487

  24. Slide 24: Notes

    Notes PRESENTATION NOTES • All references to EPS (earnings per share) are to our EPS as calculated on a diluted basis. • Percent change in slides 6-9 is calculated using actual numbers reported in our press release dated October 31, 2023. FOOTNOTES 1) Leverage ratio is calculated by dividing total d

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