Slide 1: First Quarter 2016 Business Review
First Quarter 2016 Business Review Jonathan W. Painter, President & CEO Michael J. McKenney, Senior Vice President & CFO
Slide 2: Forward-Looking Statements
2 KAI 1Q16 Business Review–May 3, 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 contains forward-looking statements that involve a number of ris
Slide 3: Use of Non-GAAP Financial Measures
3 KAI 1Q16 Business Review–May 3, 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 decr
Slide 4: Business Review
4 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. BUSINESS REVIEW Jonathan W. Painter President & CEO
Slide 5: Q1 2016 Financial Highlights
5 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Q1 2016 Financial Highlights ($ Millions, except per share amounts) Q1 2016 Q1 2015 % CHANGE EXCL. FX Revenue $96.5 $92.3 4.6% 8.7% Gross Margin 45.6% 48.1% n.m. n.m. Net Income1 $6.9 $6.9 -0.3% 9.0% Adjusted EBITDA1, 2 $
Slide 6: FX Translation and Acquisition Impact
6 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. FX Translation and Acquisition Impact Q1 2016, $ in millions except EPS Revenue Adjusted EPS4 Bookings Parts & Consumables Revenue Parts & Consumables Bookings As reported $96.5 $0.72 $96.9 $63.2 $61.9 Growth1 4.6% 14.3%
Slide 7: Bookings and Revenues
7 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Bookings and Revenues US$ (millions) $0 $20 $40 $60 $80 $100 $120 Bookings Booking Reversal Revenues Q415 bookings were $76 million, which included new orders of $92 million and a booking reversal of $16 million. * *
Slide 8: Parts and Consumables Bookings and Revenues
8 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Parts and Consumables Bookings and Revenues US$ (millions) $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues
Slide 9: Acquisition Update: PAALGROUP–Manufacturer of Balers & Related Equipment
9 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. ACQUISITION UPDATE PAALGROUP–MANUFACTURER OF BALERS & RELATED EQUIPMENT
Slide 10: Europe's Largest Supplier of Balers
10 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Europe’s Largest Supplier of Balers • Revenue: €48 million (2015) • Large installed base in recycling and waste management industries • Well-established, well-managed • Aftermarket represents 30% of revenue
Slide 11: Full Line of Horizontal Balers for Recycling and Waste Handling
11 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Full Line of Horizontal Balers for Recycling and Waste Handling
Slide 12: Demand Drivers for Baling Machinery
12 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Demand Drivers for Baling Machinery • Rising standards of living and population growth • Shortage and cost of landfilling • Increased recycling rates • Environmental regulations
Slide 13: Fits Well With Our Acquisition Strategy and Business Model
13 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Fits Well With Our Acquisition Strategy and Business Model • Technology leader with high quality products and excellent market reputation • Addresses a critical process requirement where failure is expensive • Innovative
Slide 14: Potential Synergies and Opportunities
14 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Potential Synergies and Opportunities • Opportunity to leverage European leadership position with Kadant’s platform in North America, South America, and China • Potential sourcing and manufacturing synergies • Highly fra
Slide 15: Regional Performance
15 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. REGIONAL PERFORMANCE
Slide 16: North America Bookings and Revenues
16 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. North America Bookings and Revenues US$ (millions) $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues
Slide 17: Europe Bookings and Revenues
17 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Europe Bookings and Revenues US$ (millions) $0 $5 $10 $15 $20 $25 $30 Bookings Revenues
Slide 18: Asia Bookings and Revenues
18 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Asia Bookings and Revenues US$ (millions) -$10 -$5 $0 $5 $10 $15 $20 $25 $30 $35 $40 Bookings New Orders Revenues Q415 Asia bookings were negative $6 million, which included new orders of $10 million and a booking revers
Slide 19: Rest-of-World Bookings and Revenues
19 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Rest-of-World Bookings and Revenues US$ (millions) $0 $2 $4 $6 $8 $10 $12 $14 $16 Bookings Revenues
Slide 20: Guidance for Continuing Operations
20 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Guidance for Continuing Operations • FY 2016 GAAP diluted EPS of $2.75 to $2.85 • FY 2016 adjusted diluted EPS of $2.97 to $3.07 • FY 2016 revenues of $412 to $422 million • Q2 2016 GAAP diluted EPS of $0.50 to $0.53 • Q
Slide 21: Financial Review
21 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. FINANCIAL REVIEW Michael J. McKenney Senior Vice President & Chief Financial Officer
Slide 22: Quarterly Gross Margins
22 KAI 1Q16 Business Review–May 3, 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% 36% 38% 40% 42% 44% 46% 48% 50%
Slide 23: Quarterly SG&A
23 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Quarterly SG&A 20% 25% 30% 35% 40% $0 $10 $20 $30 $40 SG&A SG&A as a % of Revenues US$ (millions)
Slide 24: 1Q15 to 1Q16 Adjusted Diluted EPS
24 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. 1Q15 to 1Q16 Adjusted Diluted EPS $0.63 $0.13 $0.06 $0.05 ($0.15) $0.72 $0.00 $0.25 $0.50 $0.75 $1.00
Slide 25: Cash Flow
25 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Cash Flow ($ Millions) 1Q16 1Q15 Income from Continuing Operations $7.0 $6.9 Depreciation and Amortization 2.6 2.9 Stock-Based Compensation 1.3 1.6 Other Items 0.2 (1.6) Change in Current Assets & Liabilities (5.6) (12.0
Slide 26: Key Working Capital Metrics
26 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Key Working Capital Metrics 1Q16 4Q15 1Q15 Days in Receivables 60 59 63 Days in Inventory 99 91 109 Days in Payables 41 36 50 63 59 60 109 91 99 50 36 41 20 50 80 110 140 Days in Receivables Days in Inventory Days in Pay
Slide 27: Working Capital and Cash Conversion Days
27 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Working Capital and Cash Conversion Days 1Q16 4Q15 1Q15 Working Capital % LTM Revenues* 15.1% 12.0% 15.4% Cash Conversion Days** 118 114 122 *Working Capital is defined as current assets less current liabilities, excludi
Slide 28: Cash and Debt
28 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Cash and Debt ($ Millions) 1Q16 4Q15 1Q15 Cash, cash equivalents, and restricted cash $106.1 $66.9 $43.2 Debt (72.2) (31.2) (30.7) Net Cash $33.9 $35.7 $12.5 $30.9 $30.1 $41.5 $47.7 $51.8 $48.5 $58.7 $11.6 $14.3 $9.5 $18
Slide 29: Leverage Ratio
29 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Leverage Ratio * Calculated by adding or subtracting certain items, as required by our Credit Facility, from Adjusted EBITDA. Under our new Credit Facility entered into on August 3, 2012 total debt is defined as debt les
Slide 30: Questions & Answers
30 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Questions & Answers To ask a question, please call 877-703-6107 within the U.S. or +1-857-244-7306 outside the U.S. and reference 83375884. Please mute the audio on your computer.
Slide 31: Q1 2016 Key Take-Aways
31 KAI 1Q16 Business Review–May 3, 2016 © 2016 Kadant Inc. All rights reserved. Q1 2016 Key Take-Aways • Excellent internal revenue growth of 9% excluding FX • Integrating PAAL to capitalize on potential synergies • Increasing adjusted diluted EPS for FY 2016
Slide 32: First Quarter 2016 Business Review
First Quarter 2016 Business Review Jonathan W. Painter, President & CEO Michael J. McKenney, Senior Vice President & CFO