Kadant Inc · NYSE:KAI
Kadant — Q2 2019 Earnings Presentation
26 slides from Kadant's earnings presentation, Jul 30, 2019
Slide 1: Second Quarter 2019 Business Review
Exhibit 99.2 Second Quarter 2019 Business Review July 31, 2019
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
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 revenues that exclude the effect of acquisitions and foreign curr
Slide 4: Business Review
BUSINESS REVIEW Jeffrey L. Powell | President & CEO KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant Inc. All rights reserved. 4
Slide 5: Q2 2019 Financial Highlights
Q2 2019 Financial Highlights ($ Millions, except per share amounts) Q2 2019 Q2 2018 % Change2 Bookings $174.0 $176.4 -1.4% Revenue $177.2 $154.9 14.4% Gross Margin 42.0% 44.0% n.m. Net Income $16.3 $12.3 32.0% Adjusted EBITDA1 $32.7 $26.1 25.0% Adjusted EBITDA Margin1 18.5% 16.9% n.m. Diluted EPS $1
Slide 6: FX Translation and Acquisition Impact Q2 2019
FX Translation and Acquisition Impact Q2 2019 ($ in millions) Revenue Bookings Parts & Consumables Revenue Parts & Consumables Bookings As Reported $177.2 $174.0 $111.9 $109.3 Growth1 14.4% -1.4% 18.0% 14.5% Growth excluding FX2 18.1% 2.0% 21.3% 17.9% Growth excluding FX and Acquisitions3 5.0% -10.4
Slide 7: Bookings and Revenue
Bookings and Revenue US$ (millions) BOOKINGS REVENUE $200 $160 $120 $80 $40 $0 KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant Inc. All rights reserved. 7
Slide 8: Parts and Consumables Bookings and Revenue
Parts and Consumables Bookings and Revenue US$ (millions) BOOKINGS REVENUE $140 $120 $100 $80 $60 $40 $20 $0 KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant Inc. All rights reserved. 8
Slide 9: North America Bookings and Revenue
North America Bookings and Revenue US$ (millions) BOOKINGS REVENUE $120 $100 $80 $60 $40 $20 $0 KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant Inc. All rights reserved. 9
Slide 10: Europe Bookings and Revenue
Europe Bookings and Revenue US$ (millions) BOOKINGS REVENUE $60 $50 $40 $30 $20 $10 $0 KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant Inc. All rights reserved. 10
Slide 11: Asia Bookings and Revenue
Asia Bookings and Revenue US$ (millions) BOOKINGS REVENUE $40 $30 $20 $10 $0 KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant Inc. All rights reserved. 11
Slide 12: Rest-of-World Bookings and Revenue
Rest-of-World Bookings and Revenue US$ (millions) BOOKINGS REVENUE $20 $15 $10 $5 $0 KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant Inc. All rights reserved. 12
Slide 13: Guidance
Guidance • FY 2019 GAAP diluted EPS of $4.97 to $5.09 • FY 2019 adjusted diluted EPS* of $5.26 to $5.38 • FY 2019 revenue of $700 to $710 million • Q3 2019 GAAP diluted EPS of $1.19 to $1.25 • Q3 2019 adjusted diluted EPS* of $1.20 to $1.26 • Q3 2019 revenue of $170 to $174 million * Adjusted dilute
Slide 14: Financial Review
FINANCIAL REVIEW Michael J. McKenney | Executive Vice President & CFO KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant Inc. All rights reserved. 14
Slide 15: Gross Margin
Gross Margin 50% 47.7% 47.9% 45.6% 45.6% 46.0% 44.9% 45% 44.3% 44.0% 44.1% 43.3% 43.3% 42.3% 42.0% 41.2% 40% 35% 30% All data for 2017, 2018, and 2019 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07. Prior period amounts have not bee
Slide 16: SG&A
SG&A US$ (millions) SG&A SG&A as a % of Revenues $50 45% $40 40% $30 35% $20 30% 29.1% 28.8% 27.4% $10 25% $0 20% All data for 2017, 2018, and 2019 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07. Prior period amounts have not been r
Slide 17: 2Q18 to 2Q19 Adjusted Diluted EPS
2Q18 to 2Q19 Adjusted Diluted EPS* $2.00 $0.02 ($0.02) $1.50 $0.05 $1.42 $0.11 $0.19 $1.07 $1.00 $0.50 $0.00 * Adjusted diluted EPS is a non-GAAP financial measure that excludes certain items as detailed in our press release dated July 30, 2019. KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant
Slide 18: Adjusted EBITDA
Adjusted EBITDA* Adjusted EBITDA* Adjusted EBITDA / Revenue* 25% $35 $30 20% $25 18.5% 17.5% 15% 16.9% $20 % of of Revenue % $15 10% EBITDA Adjusted $10 5% $5 0% $0 * Adjusted EBITDA and adjusted EBITDA/revenue (margin) are non-GAAP financial measures that exclude certain items as detailed in our pr
Slide 19: Cash Flow
Cash Flow US$ (millions) Q2 2019 Q2 2018 H1 2019 H1 2018 Net Income $16.4 $12.5 $27.5 $23.5 Depreciation and Amortization 8.3 5.8 16.5 11.9 Stock-Based Compensation 1.9 2.2 3.5 3.6 ROU Asset Amortization 1.1 - 2.2 - Other Items (0.8) (0.3) (1.5) (0.3) Change in Current Assets & Liabilities (excl. ac
Slide 20: Working Capital and Cash Conversion Days
Working Capital and Cash Conversion Days Q2 2019 Q1 2019 Q2 2018 Working Capital % LTM Revenues* 15.4% 14.9% 10.2% Cash Conversion Days** 117 days 110 days 116 days *Working Capital is defined as current assets less current liabilities, excluding cash and debt. ** Based on days in receivables plus d
Slide 21: Cash and Debt
Cash and Debt US$ (millions) Q2 2019 Q1 2019 Q2 2018 Cash, cash equivalents, and restricted cash $58.1 $57.2 $61.2 Debt (340.2) (354.8) (202.2) Other borrowings (6.6) (6.1) (4.7) Net debt $(288.7) $(303.7) $(145.7) $75 $33.9 $22.2 $25 $7.2 $2.5 ($25) $(3.3) $(14.7) ($75) ($125) $(135.6) $(129.7) ($1
Slide 22: Leverage Ratio Debt/EBITDA
Leverage Ratio Debt/EBITDA * 4.00 3.50 3.00 2.50 2.19 2.00 1.50 1.00 0.50 0.00 *Calculated by adding or subtracting certain items from Adjusted EBITDA, as required by our Credit Facility. Our amended and restated Credit Facility defines total debt as debt less worldwide cash of up to $30 million. KA
Slide 23: Guidance
Guidance • FY 2019 GAAP diluted EPS of $4.97 to $5.09 • FY 2019 adjusted diluted EPS* of $5.26 to $5.38 • FY 2019 revenue of $700 to $710 million * Adjusted diluted EPS is a non-GAAP financial measure that excludes certain items as detailed in our press release dated July 30, 2019. KAI Q219 Business
Slide 24: 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 769 9788. Please mute the audio on your computer. KAI Q219 Business Review–July 31, 2019 | © 2019 Kadant Inc. All rights reserved. 24
Slide 25: Key Take-Aways
Key Take-Aways • Record Q2 revenue and good operating performance • China’s decelerating economy and global trade uncertainties creating a drag on business activity in China • Raising full-year GAAP and adjusted diluted EPS guidance for 2019 • Expecting record revenue and adjusted EBITDA in 2019 KAI
Slide 26: Kadant
KADANT