Kadant Inc · NYSE:KAI

Kadant — Q2 2020 Earnings Presentation

25 slides from Kadant's earnings presentation, Jul 28, 2020

  1. Slide 1: Second Quarter 2020 Business Review

    Exhibit 99.2 Second Quarter 2020 Business Review July 29, 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 Q220 Business Review–July 29, 2020 | © 2020 Kadant Inc. All rights reserved. 4

  5. Slide 5: Operational Highlights

    Operational Highlights • Our global workforce performed exceptionally well with continued commitment to meet our customers’ needs • Safeguarding our workplaces and protecting the health and safety of our employees remains a core priority • Our balance sheet remains healthy and our liquidity position

  6. Slide 6: Q2 2020 Performance

    Q2 2020 Performance ($ in millions, except per share amounts) Q2 20 Q2 19 Change HIGHLIGHTS Revenue $152.9 $177.2 -13.7% Net Income $11.6 $16.3 -28.8% • Free cash flow* was strong at $21 million and Adjusted EBITDA* $26.6 $32.7 -18.8% increased 2% over Q2 2019 Adjusted EBITDA Margin* 17.4% 18.5% -11

  7. Slide 7: Flow Control

    Flow Control Custom-engineered products, systems, and technologies that control the flow of fluids HIGHLIGHTS $ in millions Q2 20 Q2 19 Change Revenue $51.4 $65.3 -21.3% • Softness in general industry outside of Bookings $49.4 $60.7 -18.7% critical infrastructure manufacturers Adjusted EBITDA* $12.3

  8. Slide 8: Industrial Processing

    Industrial Processing Products used to recycle paper and paperboard and to process timber HIGHLIGHTS $ in millions Q2 20 Q2 19 Change Revenue $65.7 $76.4 -14.0% • Strong demand for wood products, Bookings $53.1 $75.0 -29.1% lumber prices near all-time high Adjusted EBITDA* $14.2 $17.1 -17.0% Adjuste

  9. Slide 9: Material Handling

    Material Handling Products used to handle bulk and discrete materials for secondary processing. HIGHLIGHTS $ in millions Q2 20 Q2 19 Change Revenue $35.8 $35.5 +0.9% • Solid performance in the aggregates and Bookings $30.5 $38.3 -20.4% food sectors Adjusted EBITDA* $6.4 $5.9 +8.3% Adjusted EBITDA Ma

  10. Slide 10: Business Outlook

    Business Outlook • Certain end markets are showing signs of gradual recovery • Q3 is expected to be the weakest quarter of the year • Expect increased business activity in Q4 • Our strong cash flow positions us well to navigate through these uncertain times and capitalize on new opportunities KAI Q2

  11. Slide 11: Financial Review

    FINANCIAL REVIEW Michael J. McKenney | EVP & CFO KAI Q220 Business Review–July 29, 2020 | © 2020 Kadant Inc. All rights reserved. 11

  12. Slide 12: Q2 2020 Financial Performance

    Q2 2020 Financial Performance ($ in millions, except per share amounts) HIGHLIGHTS Q2 20 Q2 19 • Adjusted EBITDA margin* of 17.4% Gross Margin 43.5% 42.0% SG&A % of Revenue 29.5% 27.4% • Operating cash flows of $22.0 million Operating Income $18.1 $23.1 • Free cash flow* of $21.1 million Net Income

  13. Slide 13: Key Consolidated Financial Metrics

    Key Consolidated Financial Metrics GROSS MARGIN SG&A 43.5% 29.5% 42.0% 42.8% 42.9% 28.7% 40.9% 27.4% 27.1% 26.1% 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 ADJUSTED EBITDA* CASH FLOWS ($ in millions) $39.2 18.5% 18.6% $25.7 $35.5 $22.6 $22.0 17.6% 17.1% 17.4% $23.6 $20.6 $21.1 $6.2 $3.5 2Q19

  14. Slide 14: 2Q19 to 2Q20 Adjusted Diluted EPS

    2Q19 to 2Q20 Adjusted Diluted EPS* $2.00 $0.08 ($0.71) $0.11 $0.24 $1.50 $1.42 ($0.08) $1.06 $1.00 $0.50 $0.00 KAI Q220 Business Review–July 29, 2020 | © 2020 Kadant Inc. All rights reserved. 14

  15. Slide 15: Key Liquidity Metrics

    Key Liquidity Metrics $ in millions Q2 20 Q1 20 Q2 19 Cash, cash equivalents, and restricted cash $60.9 $62.1 $58.1 Debt $277.5 $289.5 $340.2 Lease obligations $5.6 $5.9 $6.6 Net Debt $222.2 $233.3 $288.7 Leverage ratio1 2.01 2.04 2.19 Working capital % LTM revenue2 14.8% 14.2% 15.4% Cash conversion

  16. Slide 16: Financial Review

    FINANCIAL REVIEW Michael J. McKenney | EVP & CFO KAI Q220 Business Review–July 29, 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 488 0692. Please mute the audio on your computer. KAI Q220 Business Review–July 29, 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 Q220 Business Review–July 29, 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 July 29, 2020

  20. Slide 20: Appendix

    APPENDIX Second Quarter 2020 Business Review KAI Q220 Business Review–July 29, 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 and Free Cash Flow Reconciliation

    Adjusted Diluted EPS Reconciliation Adjusted diluted EPS (earnings per share) is a non-GAAP financial measure. Q2 20 Q2 19 Diluted EPS, as reported $1.00 $1.42 Restructuring Costs, Net of Tax $0.03 - Acquisition Costs, Net of Tax $0.03 - Amortization of Acquired Profit in Inventory and Backlog, Net

  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 Q2 20 Q2 19 Net Income Attributable to Kadant $11,607 $16,304 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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