Kadant Inc · NYSE:KAI

Kadant — Q4 2023 Earnings Presentation

29 slides from Kadant's earnings presentation, Feb 14, 2024

  1. Slide 1: Fourth Quarter and FY 2023 Business Review

    Fourth Quarter and FY 2023 Business Review February 15, 2024 Exhibit 99.2

  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 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED.

  5. Slide 5: Operational Highlights

    Operational Highlights • Excellent execution by our businesses led to strong financial performance in Q4 • Solid demand for aftermarket parts continued while capital activity softened in the quarter • Named by Newsweek as one of America's Most Responsible Companies for the fourth consecutive year KA

  6. Slide 6: Q4 2023 Performance

    Q4 2023 Performance 6 ($ in millions, except per share amounts) Q4 23 Q4 22 Change Revenue $238.7 $232.1 +2.8% Net Income $27.4 $26.1 +5.1% Adjusted EBITDA* $48.5 $49.5 -2.0% Adjusted EBITDA Margin* 20.3% 21.3% -100 bps EPS $2.33 $2.23 +4.5% Adjusted EPS* $2.41 $2.33 +3.4% Operating Cash Flow $59.2

  7. Slide 7: FY 2023 Performance

    FY 2023 Performance 7 ($ in millions, except per share amounts) FY 23 FY 22 Change Revenue $957.7 $904.7 +5.9% Net Income $116.1 $120.9 -4.0% Adjusted EBITDA* $201.3 $189.1 +6.4% Adjusted EBITDA Margin* 21.0 % 20.9 % +10 bps EPS $9.90 $10.35 -4.3% Adjusted EPS* $10.04 $9.24 +8.7% Operating Cash Flow

  8. Slide 8: Flow Control

    $78.8 $104.6 $88.3 $83.0 $85.4 4Q22 1Q23 2Q23 3Q23 4Q23 8 ($ in millions) Q4 23 Q4 22 Change Revenue $87.4 $91.2 -4.1% Bookings $85.4 $78.8 +8.4% Adjusted EBITDA* $23.6 $26.2 -10.0% Adjusted EBITDA Margin* 27.0% 28.7% -170 bps HIGHLIGHTS • Strong demand for capital and aftermarket parts led to booki

  9. Slide 9: Industrial Processing

    9 ($ in millions) Q4 23 Q4 22 Change Revenue $87.0 $90.1 -3.5% Bookings $84.1 $84.1 +0.1% Adjusted EBITDA* $20.7 $22.4 -7.8% Adjusted EBITDA Margin* 23.8% 24.9% -110 bps HIGHLIGHTS • Strong aftermarket parts revenue offset by decline in capital revenue • Aftermarket parts revenue represented 64% of

  10. Slide 10: Material Handling

    10 ($ in millions) Q4 23 Q4 22 Change Revenue $64.3 $50.8 +26.6% Bookings $48.5 $52.5 -7.6% Adjusted EBITDA* $14.2 $9.5 +50.0% Adjusted EBITDA Margin* 22.1% 18.6% +350 bps HIGHLIGHTS • Record revenue performance led by our conveying product line • Capital equipment represented 55% of total Q4 revenu

  11. Slide 11: 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 solid financial results in 2024 11KAI 4Q23

  12. Slide 12: Financial Review

    FINANCIAL REVIEW Michael J. McKenney, EVP & CFO KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 12

  13. Slide 13: Q4 2023 Financial Performance

    Q4 2023 Financial Performance ($ in millions, except per share amounts) Q4 23 Q4 22 Gross Margin 42.7% 43.1% SG&A % of Revenue 25.1% 24.5% Operating Income $39.0 $39.0 Net Income $27.4 $26.1 Adjusted EBITDA* $48.5 $49.5 EPS $2.33 $2.23 Adjusted EPS* $2.41 $2.33 HIGHLIGHTS • Adjusted EBITDA margin* o

  14. Slide 14: FY 2023 Financial Performance

    FY 2023 Financial Performance ($ in millions, except per share amounts) FY 23 FY 22 Gross Margin 43.5% 43.1% SG&A % of Revenue 24.7% 24.8% Operating Income $165.8 $171.3 Net Income $116.1 $120.9 Adjusted EBITDA* $201.3 $189.1 Diluted EPS $9.90 $10.35 Adjusted EPS* $10.04 $9.24 HIGHLIGHTS • Adjusted

  15. Slide 15: Adjusted EBITDA and Cash Flow Metrics

    $127.1 $115.9 $159.4 $189.1 $201.3 $52.1 $55.2 $84.0 $120.9 $116.1 18.0% 18.3% 20.3% 20.9% 21.0% NET INCOME ADJUSTED EBITDA* ADJ. EBITDA MARGIN* 2019 2020 2021 2022 2023 Adjusted EBITDA* and Cash Flow Metrics KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 15 FY ADJ

  16. Slide 16: 4Q22 to 4Q23 Adjusted EPS

    2Q21 ADJ EPS* 2Q22 ADJ EPS* KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 4Q22 to 4Q23 Adjusted EPS* 16 $2.33 $0.17 $0.09 $0.05 $(0.17) $(0.05) $(0.01) $2.41 4Q22 ADJ EPS* REVENUE TAX PROVISION INTEREST EXPENSE OPERATING EXPENSES GROSS MARGIN CHANGE IN SHARES 4Q23

  17. Slide 17: FY 2022 to FY 2023 Adjusted EPS

    2Q21 ADJ EPS* 2Q22 ADJ EPS* KAI 4Q22 BUSINESS REVIEW–FEBRUARY 2023 | © 2023 KADANT INC. ALL RIGHTS RESERVED. FY 2022 to FY 2023 Adjusted EPS* 17 $9.24 $1.41 $0.26 $0.08 $0.01 $(0.86) $(0.07) $(0.03) $10.04 2022 ADJ EPS* REVENUE GROSS MARGIN TAX PROVISION NONCONTROLLING INTEREST OPERATING EXPENSES IN

  18. Slide 18: Key Liquidity Metrics

    Key Liquidity Metrics KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 18 ($ in millions) Q4 23 Q3 23 Q4 22 Cash, cash equivalents, and restricted cash $106.5 $79.1 $79.7 Debt $109.1 $127.5 $199.2 Lease obligations $1.8 $1.7 $1.9 Net Debt $4.4 $50.2 $121.4 Leverage r

  19. Slide 19: Guidance

    Guidance KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 19 • FY 2024 revenue of $1.040 to $1.065 billion • FY 2024 GAAP EPS of $9.55 to $9.85 • FY 2024 adjusted EPS* of $9.75 to $10.05 • Q1 2024 revenue of $238 to $246 million • Q1 2024 GAAP EPS of $1.76 to $1.86 •

  20. Slide 20: 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 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 20

  21. Slide 21: 2024 Key Priorities

    2024 Key Priorities 21 ENABLE SUSTAINABLE INDUSTRIAL PROCESSING DELIVER EXCEPTIONAL STAKEHOLDER VALUE PROVIDE STRONG CASH FLOW CAPITALIZE ON NEW OPPORTUNITIES KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED.

  22. Slide 22: 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 February 15, 2024

  23. Slide 23: Appendix

    APPENDIX Fourth Quarter and FY 2023 Business Review KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 23

  24. Slide 24: Revenue by Customer Location

    Revenue by Customer Location ($ in thousands) Q4 23 Q4 22 Change Change Excluding Acquisition and FX* North America $137,040 $133,784 $3,256 $3,072 Europe 63,881 59,526 4,355 1,386 Asia 25,481 26,016 (535) (608) Rest of World 12,277 12,774 (497) (1,011) Total $238,679 $232,100 $6,579 $2,839 KAI 4Q23

  25. Slide 25: Percentage of Parts and Consumables Revenue

    Percentage of Parts and Consumables Revenue KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 25 Q4 23 Q4 22 FY 23 FY 22 Flow Control 68 % 66 % 69 % 70 % Industrial Processing 64 % 58 % 62 % 61 % Material Handling 45 % 53 % 53 % 57 % Consolidated 60 % 60 % 62 % 63 %

  26. Slide 26: Gross Margin and SG&A

    Gross Margin and SG&A KAI 4Q23 BUSINESS REVIEW– FEBRUARY 2024 | © 2024 KADANT INC. ALL RIGHTS RESERVED. 26 24.5% 25.5% 24.5% 23.7% 25.1% 4Q22 1Q23 2Q23 3Q23 4Q23 43.1% 44.4% 43.5% 43.3% 42.7% 4Q22 1Q23 2Q23 3Q23 4Q23 SG&A (as a % of revenue) GROSS MARGIN 41.7% 43.7% 42.9% 43.1% 43.5% 2019 2020 2021

  27. Slide 27: Adjusted EPS and Free Cash Flow Reconciliation

    Adjusted EPS* Reconciliation Q4 23 Q4 22 FY 23 FY 22 EPS, as Reported $2.33 $2.23 $9.90 $10.35 Adjustments, Net of Tax Gain on Sale and Other Income (0.05) — (0.05) (1.30) Acquisition-Related Costs 0.10 0.01 0.10 0.08 Relocation Costs 0.01 — 0.05 — Restructuring and Impairment Costs 0.02 0.09 0.04 0

  28. Slide 28: Adjusted EBITDA Reconciliation

    Adjusted EBITDA* Reconciliation ($ in thousands) Q4 23 Q4 22 FY 23 FY 22 Net Income Attributable to Kadant $27,396 $26,079 $116,069 $120,928 Net Income Attributable to Noncontrolling Interest 166 130 737 802 Provision for Income Taxes 10,449 10,831 42,210 43,906 Interest Expense, Net 971 1,903 6,640

  29. Slide 29: 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 6-10 is calculated using actual numbers reported in our press release dated February 14, 2024. FOOTNOTES 1) Leverage ratio is calculated by dividing total

Kadant — Q4 2023 Earnings Presentation on 6ix