Slide 1: Second Quarter 2016 Business Review
Second Quarter 2016 Business Review Jonathan W. Painter, President & CEO Michael J. McKenney, Senior Vice President & CFO
Slide 2: Forward-Looking Statements
2 KAI 2Q16 Business Review–August 4, 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
Slide 3: Use of Non-GAAP Financial Measures
3 KAI 2Q16 Business Review–August 4, 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 d
Slide 4: Business Review
4 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. BUSINESS REVIEW Jonathan W. Painter President & CEO
Slide 5: Q2 2016 Financial Highlights
5 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Q2 2016 Financial Highlights ($ Millions, except per share amounts) Q2 2016 Q2 2015 % CHANGE3 EXCL. FX3 Revenue $111.8 $98.3 13.7% 15.7% Gross Margin 44.9% 46.5% n.m. n.m. Net Income1 $8.3 $8.5 -1.8% 3.6% Adjusted EBIT
Slide 6: FX Translation and Acquisition Impact
6 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. FX Translation and Acquisition Impact Q2 2016, $ in millions except EPS Revenue Adjusted EPS4 Bookings Parts & Consumables Revenue Parts & Consumables Bookings As Reported $111.8 $0.88 $98.1 $69.5 $64.6 Growth1 13.7% 1
Slide 7: Bookings and Revenues
7 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Bookings and Revenues US$ (millions) 1 Reported Q415 bookings were $76 million, which included new orders of $92 million and a booking reversal of $16 million. $0 $20 $40 $60 $80 $100 $120 Bookings Booking Reversal Rev
Slide 8: Parts and Consumables Bookings and Revenues
8 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Parts and Consumables Bookings and Revenues US$ (millions) $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues
Slide 9: Regional Performance
9 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. REGIONAL PERFORMANCE
Slide 10: North America Bookings and Revenues
10 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. North America Bookings and Revenues US$ (millions) $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues
Slide 11: Europe Bookings and Revenues
11 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Europe Bookings and Revenues US$ (millions) $0 $5 $10 $15 $20 $25 $30 $35 Bookings Revenues
Slide 12: Asia Bookings and Revenues
12 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Asia Bookings and Revenues US$ (millions) 1 Reported Q415 Asia bookings were negative $6 million, which included new orders of $10 million and a booking reversal of $16 million. -$10 -$5 $0 $5 $10 $15 $20 $25 $30 $35
Slide 13: Rest-of-World Bookings and Revenues
13 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Rest-of-World Bookings and Revenues US$ (millions) $0 $2 $4 $6 $8 $10 $12 $14 $16 Bookings Revenues
Slide 14: Guidance
14 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Guidance • FY 2016 GAAP diluted EPS of $2.75 to $2.81 • FY 2016 adjusted diluted EPS of $2.98 to $3.04 • FY 2016 revenues of $415 to $421 million • Q3 2016 GAAP diluted EPS of $0.62 to $0.65 • Q3 2016 revenues of $103
Slide 15: Financial Review
15 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. FINANCIAL REVIEW Michael J. McKenney Senior Vice President & Chief Financial Officer
Slide 16: Quarterly Gross Margins
16 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Quarterly Gross Margins 45.6% 43.7% 43.4% 43.0% 47.3% 48.6% 43.9% 43.9% 45.2% 43.0% 44.7% 44.7% 48.1% 46.5% 47.5% 43.1% 45.6% 44.9% 30% 35% 40% 45% 50%
Slide 17: Quarterly SG&A
17 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Quarterly SG&A US$ (millions) 25% 30% 35% 40% 45% $0 $10 $20 $30 $40 SG&A SG&A as a % of Revenues
Slide 18: 2Q15 to 2Q16 Adjusted Diluted EPS
18 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. 2Q15 to 2Q16 Adjusted Diluted EPS $0.78 $0.11 $0.02 $0.01 $0.01 ($0.05) $0.88 $0.00 $0.25 $0.50 $0.75 $1.00
Slide 19: Cash Flow
19 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Cash Flow ($ Millions) 2Q16 2Q15 Income from Continuing Operations $8.4 $8.5 Depreciation and Amortization 4.9 2.8 Stock-Based Compensation 1.3 1.7 Other Items (0.6) 0.1 Change in Current Assets & Liabilities (excl. a
Slide 20: Key Working Capital Metrics
20 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Key Working Capital Metrics 2Q16 1Q16 2Q15 Days in Receivables 58 60 57 Days in Inventory 89 99 107 Days in Payables 45 41 49 57 60 58 107 99 89 49 41 45 20 40 60 80 100 120 140 Days in Receivables Days in Inventory D
Slide 21: Working Capital and Cash Conversion Days
21 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Working Capital and Cash Conversion Days 2Q16 1Q16 2Q15 Working Capital % LTM Revenues* 12.7% 15.1% 15.8% Cash Conversion Days** 102 days 118 days 115 days *Working Capital is defined as current assets less current li
Slide 22: Cash and Debt
22 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Cash and Debt ($ Millions) 2Q16 1Q16 2Q15 Cash, cash equivalents, and restricted cash $54.9 $106.1 $48.6 Debt (64.3) (72.2) (28.5) Net (Debt) Cash $(9.4) $33.9 $20.1 $30.9 $30.1 $41.5 $47.7 $51.8 $48.5 $58.7 $11.6 $14
Slide 23: Leverage Ratio
23 KAI 2Q16 Business Review–August 4, 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
Slide 24: Questions & Answers
24 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. 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 46143277. Please mute the audio on your computer.
Slide 25: Q2 2016 Key Take-Aways
25 KAI 2Q16 Business Review–August 4, 2016 © 2016 Kadant Inc. All rights reserved. Q2 2016 Key Take-Aways • Solid quarter in revenue, EPS, and cash flow • PAAL integration is going well and we expect this progress to continue to gain momentum • We continue to expect 2016 to be a good year despite th
Slide 26: Second Quarter 2016 Business Review
Second Quarter 2016 Business Review Jonathan W. Painter, President & CEO Michael J. McKenney, Senior Vice President & CFO