K Tron International — Merger or Acquisition (January 2010)
73 slides from K Tron International's merger presentation, Jan 11, 2010
Slide 1: Schedule 14A Proxy Statement cover
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A (Rule 14A-101) Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. __) Filed by the Registrant £ Filed by a Party other than the Registrant S Check appropriate box: £ Prel
Slide 2: Filed by Hillenbrand, Inc. Pursuant to Rule 14a-12
Filed by Hillenbrand, Inc. Pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: K-Tron International, Inc. Commission File No: 000-09576 The following investor presentation was used during a conference call with investors held by Hillenbrand, Inc. on January 11, 2010:
Slide 3: Transaction Overview, January 11, 2010
Transaction Overview January 11,2010
Slide 4: Hillenbrand Speaker Mark Lanning
Hillenbrand Speaker Mark Lanning Vice President of Investor Relations & Treasurer Hillenbrand, Inc 2
Slide 5: Forward-looking Statements
Forward-looking Statements Certain statements in this presentation contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the company’s future plans, objectives, beliefs, expectations, representations and projections. The company has
Slide 6: Hillenbrand Speaker Ken Camp
Hillenbrand Speaker Chief Executive Officer Ken Camp Hillenbrand, Inc President & 4
Slide 7: It's the Right Acquisition
It’s the Right Acquisition • Attractive product, industry and customer diversification Strategic • Creates sizable new global platforms in two attractive sectors • Ideal fit with Hillenbrand’s stringent acquisition criteria • $435MM cash purchase ($390MM net purchase price) provides approximately $2
Slide 8: K-Tron International's Corporate Profile Is Very Attractive to Hillenbrand
K-Tron International’s Corporate Profile Is Very Attractive to Hillenbrand • 2008 Revenues and EBITDA of $243 MM and $44.6 MM • 21% Total revenue CAGR over last 5 years; • 10% Organic revenue CAGR over last 5 years • Two attractive segments within bulk solids material handling equipment sector • Lea
Slide 9: New Platform: K-Tron Process Group
New Platform: K-Tron Process Group Is a Leader in Feeding and Conveying With a Clear Growth Path Product Summary Provide accurate feeding of “hard-to-handle” materials in a wide variety of manufacturing Feeders processes, enabling customers in key end markets to produce high quality products and opt
Slide 10: New Platform: K-Tron Size Reduction Group
New Platform: K-Tron Size Reduction Group Is a Brand Leader Supported by its High Margin, Recurring Consumable Parts Business Product Summary Size Coal Processing: Hammermills, sizers, roll crushers Reduction Wood/pulp Processing/Biomass: Wood/bark hogs, chip screens Mining: Potash and mineral minin
Slide 11: Leverage Hillenbrand's Core Competencies Across New Platforms
To Maximize Value Creation, We Will Leverage Hillenbrand’s Core Competencies Across New Platforms Supply Chain Optimization (Favorably benchmarked against FedEx & UPS) § Efficient § Dependable § Fast § Optimizes finished goods inventory Lean Business Management (Capabilities nationally recognized be
Slide 12: K-Tron Historical Results Show Strong Growth and Cash Generation
K-Tron International Historical Results Show Strong Growth and Cash Generation Capabilities Revenue EBITDA Total Debt Cash 10
Slide 13: Creates Multiple Pathways to Strong Revenue Growth
Creates Multiple Pathways to Strong Revenue Growth Through New Platforms Growth Attractive Within New •Existing Aggressively grow Wuxi K-Tron End • Size Reduction Group well positioned Regions Colormax to Markets • division EnhanceinSales China & Marketing efforts for capture Biomass Energy growth •
Slide 14: K-Tron Has a Proven Senior Management Team
K-Tron International Has a Proven Senior Management Team Edward B. Cloues,II Donald W. Melchiorre Kevin C. Bowen Chairman & CEO SVP Size Reduction Group SVP Process Group Turnaround and Acquisition Expertise 30+ Year Industry Veteran 30+ Yrs with the Company Diverse Industry Knowledge Ground-up Know
Slide 15: Provides Hillenbrand With a Global Business Platform
Provides Hillenbrand With a Global Business Platform Niederlenz, Belleville, IL Switzerland 65,000 sq. ft. 54,000 sq. ft. Batesville, IN 494,000 sq. ft. Cuyahoga Falls, OH 70,000 sq. ft. Manchester, TN 375,000 sq. ft. K-Tron HQ Pitman, NJ Batesville, MS 92,000 sq. ft. 180,000 sq. ft. Vicksburg, MS P
Slide 16: Hillenbrand Speaker Cindy Lucchese
Hillenbrand Speaker Cindy Chief Lucchese Financial Officer Hillenbrand, Inc Senior Vice President & 14
Slide 17: Contributes to Hillenbrand's Ability to Deliver Predictable Performance
Contributes to Hillenbrand’s Ability to Deliver Predictable Performance K-Tron International Financial Highlights LTM $ IN MILLIONS, EXCEPT PER SHARE DATA 2004 2005 2006 2007 2008 10/03/09(1) 2004 - 2008 Total Revenue $113 $119 $148 $202 $243 $213 Gross Profit $46 $50 $62 $86 $101 $88 EBITDA $14 $17
Slide 18: K-Tron International - Cash Flow Summary
K-Tron International - Cash Flow Summary FISCAL YEAR ENDING 2005 2006 2007 2008 LTM 10/03/09 ACTUAL ACTUAL ACTUAL ACTUAL $ IN MILLIONS ACTUAL Operating Activities Net Income $7 $13 $21 $26 $23 Depreciation & Amortization 4 5 6 6 6 Change in Working Capital (1) 0 (1) (7) 9 Other, Net 1 1 1 2 (1) Cash
Slide 19: Transaction Summary
Transaction Summary Hillenbrand, Inc. to acquire K-Tron International, Inc. (Nasdaq: KTII) for 100% Overview cash consideration The net purchase price associated with this transaction is approximately $390 million based on equity purchase price of $435 million and a net cash balance at Purchase Pric
Slide 20: K-Tron Represents a Very Attractive Strategic Opportunity
K-Tron International Represents a Very Attractive Strategic Opportunity • Matches Hillenbrand’s growth strategy • Market leader with preeminent brands • Strong platforms in growing industries/markets • Proven growth potential (organic and acquisition) • Attractive markets - large, diversified, fragm
Slide 21: Transaction Overview January 11, 2010
Transaction Overview January 11,2010
Slide 22: Additional Information and Where to Find it
Additional Information and Where to Find it This investor presentation may be deemed to be solicitation material in respect of the proposed acquisition of K-Tron International, Inc. (“K-Tron”) by Hillenbrand, Inc. (“Hillenbrand”). In connection with the proposed acquisition, K-Tron plans to file a p
Slide 23: Filed by Hillenbrand, Inc. Pursuant to Rule 14a-12
Filed by Hillenbrand, Inc. Pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: K-Tron International, Inc. Commission File No: 000-09576 On January 11, 2010, Hillenbrand, Inc. posted the following investor presentation to its website at http://ir.hillenbrandinc.com:
Slide 24: Hillenbrand, Inc - Creating Shareholder Value
HILLENBRAND, INC | Creating Shareholder Value |
Slide 25: Forward-looking Statements
Forward-looking Statements Certain statements in this presentation contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the company’s future plans, objectives, beliefs, expectations, representations and projections. The company has
Slide 26: Hillenbrand / K-Tron Team Introductions
Hillenbrand / K-Tron International Team Introductions Ken Camp Cindy Lucchese Chief Executive Officer Chief SeniorFinancial Officer Vice President & President & Hillenbrand, Inc. Hillenbrand, Inc. Lukas Guenthardt Mark Lanning Vice President of Investor Senior ViceDevelopment Corporate President, Re
Slide 27: Agenda
Agenda Transaction Summary Strategic Benefits Financial Highlights Business Summary Wrap-up Appendix 4
Slide 28: Transaction Summary
HILLENBRAND, INC. Transaction Summary
Slide 29: Transaction Summary
Transaction Summary Hillenbrand, Inc. to acquire K-Tron International, Inc. (Nasdaq: KTII) for 100% Overview cash consideration The net purchase price associated with this transaction is approximately $390 million based on equity purchase price of $435 million and a net cash balance at Purchase Pric
Slide 30: Transaction Rationale
Transaction Rationale • Hillenbrand’s sole operating unit, Batesville Casket, remains a high-margin cash generator with a leading brand and excellent management • However, revenue growth is historically challenging in death care and has been even more challenging in the current economic environment
Slide 31: Strategic Benefits
HILLENBRAND, INC. Strategic Benefits
Slide 32: It's the Right Acquisition
It’s the Right Acquisition • Attractive product, industry and customer diversification Strategic • Creates sizable new global platforms in two attractive sectors • Ideal fit with Hillenbrand’s stringent acquisition criteria • $435MM cash purchase ($390MM net purchase price) provides approximately $2
Slide 33: K-Tron International's Corporate Profile Is Very Attractive to Hillenbrand
K-Tron International’s Corporate Profile Is Very Attractive to Hillenbrand • 2008 Revenues and EBITDA of $243 MM and $44.6 MM • 21% Total revenue CAGR over last 5 years; • 10% Organic revenue CAGR over last 5 years • Two attractive segments within bulk solids material handling equipment sector • Lea
Slide 34: Diversifies Hillenbrand's Platforms and Markets
Diversifies Hillenbrand’s Platforms and Markets Post Acquisition Post Acquisition Revenue By EBITDA By Platform(1) End Market(1) Chemical Detergent & Other Plastics Compounding & Base Process Group Industries Resin Manufacturing K-Tron 3% 9% Other BCC 4% Power Generation 2% Pulp, Paper & Forest Prod
Slide 35: Broadens Our Product Portfolio of Leading Brands
Broadens Our Product Portfolio of Leading Brands Hillenbrand Today Post Acquisition Batesville Casket Process Group Size Reduction Group = g LS i : NORTHSTAR Oe Feeding and Conveying Equipment & | Product
Slide 36: Provides Hillenbrand With a Global Business Platform
Provides Hillenbrand With a Global Business Platform Niederlenz, Switzerland Belleville, IL 65,000 sq. ft. 54,000 sq. ft. Batesville, IN 494,000 sq. ft. Cuyahoga Falls , OH 70,000 sq. ft. Manchester, TN 375,000 sq. ft. K-Tron HQ Pitman, NJ Batesville, MS 92,000 sq. ft. 180,000 sq. ft. Vicksburg, MS
Slide 37: Creates Multiple Pathways to Strong Revenue Growth
Creates Multiple Pathways to Strong Revenue Growth Through New Platforms Growth Attractive Within New •Existing Aggressively grow Wuxi K-Tron Colormax division in China End • Size Reduction Group well positioned to Regions capture Biomass Energy growth • Enhance Sales & Marketing efforts for Penn Ma
Slide 38: Contributes to Hillenbrand's Ability to Deliver Predictable Performance
Contributes to Hillenbrand’s Ability to Deliver Predictable Performance K-Tron International Financial Highlights LTM $ IN MILLIONS, EXCEPT PER SHARE DATA 2004 2005 2006 2007 2008 10/03/09(1) 2004 - 2008 Total Revenue $113 $119 $148 $202 $243 $213 Gross Profit $46 $50 $62 $86 $101 $88 EBITDA $14 $17
Slide 39: K-Tron Positioned to Weather Downturn and Thrive Post Recession
K-Tron International Is Strongly Positioned to Weather the Current Economic Downturn and Thrive Post Recession • K-Tron revenues declined in the first nine months of 2009 by $30.2 MM, or 17%, compared to the same period in 2008 • A significant component of the revenue decline was K-Tron’s Process Gr
Slide 40: Financial Highlights
HILLENBRAND, INC. Financial Highlights
Slide 41: Financial Highlights of Combination
Financial Highlights of Combination • We believe the acquisition increases net revenue and EBITDA growth rates in first year excluding acquisition and purchase accounting costs. • We believe the transaction will be immediately accretive to EPS and cash flow, excluding acquisition costs, transition c
Slide 42: Combination Provides a Superior Financial Profile
Combination Provides a Superior Financial Profile Twelve Months Ended Pro forma Hillenbrand K-Tron Non-GAAP(1) $ IN MILLIONS 9/30/09 10/03/09 Combined Net Revenue $649.0 $213.0 $862.0 Gross Profit $274.0 $88.0 $362.0 Margin % 42.2% 41.3% 42.0% EBITDA $181.0 $39.0 $220.0 % of Revenue 27.9% 18.3% 25.5
Slide 43: Acquisition Funded With a Combination of Cash and Borrowings
The Acquisition Will Be Funded With a Combination of Cash and Borrowings Acquisition $ IN MILLIONS Funding Credit Facility $300-$350 Cash & Other Borrowings $85-$135 Total Purchase Price $435 ü We will remain in compliance with the Hill-Rom covenant 20
Slide 44: Pro-Forma Capital Structure & Strategy Remains Consistent
Pro-Forma Capital Structure & Strategy Remains Consistent with Hillenbrand’s Previously Discussed Guidelines Financial Principles Generate stable and predictable revenues and cash flows Maintain a healthy capital structure that minimizes risks and provides flexibility Maintain a solid investment gra
Slide 45: Overview of Hillenbrand's Key Financial Policies
Overview of Hillenbrand’s Key Financial Policies Dividend Policy Capital Spending Acquisitions Share Purchases • Payout amounts will be • Strong budgetary controls • The company continues to • Periodically purchase reviewed and approved and targets evaluate prudent strategic treasury shares to off-s
Slide 46: Business Overview
HILLENBRAND, Business Over
Slide 47: Batesville Casket Commands a Premium as Most Respected Brand
Hillenbrand Post Hillenbrand’s Batesville Casket Commands a Acquisition Revenue By Platform Premium as the Industry’s Most Respected Brand BCC “Every family deserves a Batesville” World’s Largest Casket Manufacturer • Iconic brand with 100+ years of history • Industry leader: volume, revenue, margin
Slide 48: Batesville Casket Is Largest Player in Largest Death Care Segment
Batesville Casket Is the Largest Player in the Largest Segment of the Death Care Industry Funeral Products ($2.6 Billion Industry) Vaults Cremation Caskets $0.4 $0.3 (Total Revenue $1.3 Billion) Batesville Casket Other Importers (100+) (Total 2009 Revenue: $649 Million) Grave Aurora Markers Caskets
Slide 49: Batesville Casket Has Generated Solid Results in a Declining Market
Batesville Casket Has Generated Solid Financial Results in a Declining Casket Market N.A. Casket Market Revenue Gross Margin Operating Margin Net Income Cash Flow * ** * $28 million, after tax pension funding ** $13 million, after tax separation costs 26
Slide 50: Death Care Industry Is Stable, but Challenges Remain
Death Care Industry Is Stable, but Challenges Remain • Slow and steady increases in cremations have reduced burials in a flat death market Reduced • While projected deaths will increase at some point as baby boomers age, this will likely Burial be offset by continued increases in cremations Demand •
Slide 51: Investing Prudently in Batesville Casket
By Investing Prudently in Batesville Casket, We Will Continue to Focus on Future Revenue and Earnings Growth From This Segment and Generate Strong Cash Flow Top-line Growth • Focused sales coverage that leverages strong customer relationships and premium brand • Targeted investments to drive innovat
Slide 52: New Platform: K-Tron Process Group
New Platform: K-Tron Process Group Is a Leader in Feeding and Conveying With a Clear Growth Path Product Summary Provide accurate feeding of “hard-to-handle” materials in a wide variety of manufacturing Feeders processes, enabling customers in key end markets to produce high quality products and opt
Slide 53: New Platform: K-Tron Size Reduction Group
New Platform: K-Tron Size Reduction Group Is a Brand Leader Supported by its High Margin, Recurring Consumable Parts Business Product Summary Size Coal Processing: Hammermills, sizers, roll crushers Reduction Wood/pulp Processing/Biomass: Wood/bark hogs, chip screens Mining: Potash and mineral minin
Slide 54: Leverage Hillenbrand's Core Competencies Across New Platforms
To Maximize Value Creation, We Will Leverage Hillenbrand’s Core Competencies Across New Platforms Supply Chain Optimization (Favorably benchmarked against FedEx & UPS) § Efficient § Dependable § Fast § Optimizes finished goods inventory Lean Business Management (Capabilities nationally recognized Te
Slide 55: Wrap-up
HILLENBRAND, INC. Wrap-up
Slide 56: K-Tron Represents a Very Attractive Strategic Opportunity
K-Tron International Represents a Very Attractive Strategic Opportunity • Matches Hillenbrand’s growth strategy • Market leader with preeminent brands • Strong platforms in growing industries/markets • Proven growth potential (organic and acquisition) • Attractive markets - large, diversified, fragm
Slide 57: Hillenbrand, Inc - Creating Shareholder Value
HILLENBRAND, INC | Creating Shareholder Value |
Slide 58: Appendix
Appendix
Slide 59: K-Tron International Has a Proven Senior Management Team
K-Tron International Has a Proven Senior Management Team Edward B. Cloues,II Donald W. Melchiorre Kevin C. Bowen Chairman & CEO SVP Size Reduction Group SVP Process Group Turnaround and Acquisition Expertise 30+ Year Industry Veteran 30+ Yrs with the Company Diverse Industry Knowledge Ground-up Know
Slide 60: K-Tron Historical Results Show Strong Growth and Cash Generation
K-Tron International Historical Results Show Strong Growth and Cash Generation Capabilities Revenue EBITDA Total Debt Cash 37
Slide 61: K-Tron Historical Credit Metrics Complement Hillenbrand's Credit Strength
K-Tron International Historical Credit Metrics Complement Hillenbrand’s Credit Strength Debt / EBITDA 38
Slide 62: K-Tron International - Operating Performance Summary
K-Tron International - Operating Performance Summary FISCAL YEAR ENDING 2005 2006 2007 2008 LTM 10/03/09 ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL $ IN MILLIONS Net Revenue $119 $148 $202 $243 $213 % Y/Y Growth 5.3% 24.4% 36.5% 20.3% N/A Gross Profit $50 $62 $86 $101 $88 % of Revenue 42.0% 41.9% 42.6% 41.6
Slide 63: K-Tron International - Balance Sheet Summary
K-Tron International - Balance Sheet Summary FISCAL YEAR ENDING 2005 2006 2007 2008 10/03/09 $ IN MILLIONS ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ASSETS Cash $15 $14 $31 $42 $63 Accounts Receivable 18 23 31 37 27 Inventory 15 23 30 29 24 Other Current Assets 4 7 10 6 9 Current Assets 52 67 102 114 123 P
Slide 64: K-Tron International - Cash Flow Summary
K-Tron International - Cash Flow Summary FISCAL YEAR ENDING 2005 2006 2007 2008 LTM 10/03/09 ACTUAL ACTUAL ACTUAL ACTUAL $ IN MILLIONS ACTUAL Operating Activities Net Income $7 $13 $21 $26 $23 Depreciation & Amortization 4 5 6 6 6 Change in Working Capital (1) 0 (1) (7) 9 Other, Net 1 1 1 2 (1) Cash
Slide 65: Hillenbrand Financials
HILLENBRAND, INC. Hillenbrand Financials
Slide 66: Hillenbrand, Inc. - 2009 versus 2008
Hillenbrand, Inc. - 2009 versus 2008 FISCAL YEAR ENDING SEPTEMBER 30 2009 2008 $ IN MILLIONS ACTUAL ACTUAL NET REVENUES Net Revenue $649 $678 % Y/Y Growth (4.3%) 1.6% Revenue lower because of relatively mild flu and pneumonia season, combined with higher cremation rate and product mix-down from Gros
Slide 67: Hillenbrand 2010 Guidance - Pre K-Tron Acquisition
Hillenbrand, Inc. 2010 Guidance - Pre K-Tron Acquisition (Unaudited) FISCAL YEAR ENDING SEPTEMBER 30 FY10 RANGE FY09 AMOUNTS IN MILLIONS (EXCEPT PER SHARE DATA) LOW HIGH Net Revenues $649 $630 $670 Income before Taxes $161 $137 $161 Tax Rate 36.4% 37% 36% Net Income $102 $86 $103 Average Diluted Sha
Slide 68: Non-GAAP Financial Disclosures and Reconciliations for 2009 and 2010 Guidance
Hillenbrand, Inc. - Non-GAAP Financial Disclosures and Reconciliations for 2009 Actual and 2010 Guidance (Unaudited) (Excluding K-Tron International) While Hillenbrand, Inc. reports financial results in accordance with U.S. GAAP, this press release includes non-GAAP measures. These non-GAAP measures
Slide 69: Hillenbrand, Inc. - Operating Performance Summary
Hillenbrand, Inc. - Operating Performance Summary FISCAL YEAR ENDING SEPTEMBER 30 2007 2008 2009 $ IN MILLIONS ACTUAL ACTUAL ACTUAL Net Revenue $667 $678 $649 % Y/Y Growth (1.2%) 1.6% (4.3%) Gross Profit $279 $281 $274 % of Revenue 41.8% 41.4% 42.3% Operating Expenses $123 $131 $119 % of Revenue 18.
Slide 70: Hillenbrand, Inc. - Balance Sheet Summary
Hillenbrand, Inc. - Balance Sheet Summary FISCAL YEAR ENDING SEPTEMBER 30 2007 2008 2009 ACTUAL ACTUAL ACTUAL $ IN MILLIONS ASSETS Cash $12 $15 $35 Accounts Receivable 91 88 85 Inventory 48 49 43 Other Current Assets 19 30 70 Current Assets 170 182 233 PP&E 89 91 85 Other Assets 58 272 243 Total Ass
Slide 71: Hillenbrand, Inc. - Cash Flow Summary
Hillenbrand, Inc. - Cash Flow Summary FISCAL YEAR ENDING SEPTEMBER 30 2007 2008 2009 ACTUAL ACTUAL ACTUAL $ IN MILLIONS Operating Activities Net Income $100 $93 $102 Depreciation & Amortization 19 19 19 Change in Working Capital 8 (16) 5 Other, Net 0 6 (3) Cash Flow from Operating Activities 127 102
Slide 72: GAAP Reconciliation
GAAP Reconciliation HILLENBRAND K-TRON INTERNATIONAL FISCAL YEAR ENDING FISCAL YEAR ENDING SEPTEMBER 30 LTM 2004 2005 2006 2007 2008 2007 2008 2009 10/03/09 $ IN MILLIONS Net Income $7 $7 $13 $21 $26 $20 $100 $93 $102 Taxes 2 5 6 9 11 12 57 61 58 Interest 1 1 1 2 1 1 0 2 2 Depreciation & 4 4 5 6 6 6
Slide 73: Additional Information and Where to Find it
Additional Information and Where to Find it This investor presentation may be deemed to be solicitation material in respect of the proposed acquisition of K-Tron International, Inc. (“K-Tron”) by Hillenbrand, Inc. (“Hillenbrand”). In connection with the proposed acquisition, K-Tron plans to file a p
K Tron International — Merger or Acquisition (January 2010) on 6ix