Kadant Inc · NYSE:KAI
Kadant — Shareholder Meeting (May 2011)
54 slides from Kadant's shareholder meeting presentation, May 25, 2011
Slide 1: Annual Meeting of Stockholders May 25, 2011
Annual Meeting of Stockholders May 25, 2011 Westford, Massachusetts
Slide 2: Annual Meeting of Stockholders
2 ANNUAL MEETING OF STOCKHOLDERS William A. Rainville Chairman of the Board
Slide 3: Annual Meeting of Stockholders May 25, 2011
Annual Meeting of Stockholders May 25, 2011 Westford, Massachusetts
Slide 4: Safe Harbor
4 Safe Harbor The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This slide presentation contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our expected future f
Slide 5: Items of Business
5 Items of Business PROPOSAL 1 • Elect two directors constituting the entire class of directors to be elected for a three-year term expiring in May 2014 – Dr. John M. Albertine – Mr. Thomas C. Leonard
Slide 6: Items of Business
6 Items of Business PROPOSAL 1 • Elect two directors constituting the entire class of directors to be elected for a three-year term expiring in May 2014 – Dr. John M. Albertine – Mr. Thomas C. Leonard PROPOSAL 2 • Non-binding advisory vote on executive compensation – Resolved, that the compensation
Slide 7: Items of Business (cont.)
7 Items of Business (cont.) PROPOSAL 3 • Non-binding advisory vote on the frequency of future executive compensation advisory votes
Slide 8: Items of Business (cont.)
8 Items of Business (cont.) PROPOSAL 3 • Non-binding advisory vote on the frequency of future executive compensation advisory votes PROPOSAL 4 • Increase the number of shares available under our 2006 equity incentive plan by 330,000 shares
Slide 9: Items of Business (cont.)
9 Items of Business (cont.) PROPOSAL 3 • Non-binding advisory vote on the frequency of future executive compensation advisory votes PROPOSAL 4 • Increase the number of shares available under our 2006 equity incentive plan by 330,000 shares PROPOSAL 5 • Ratify the selection of Ernst & Young LLP as ou
Slide 10: Business Review
10 BUSINESS REVIEW Jonathan W. Painter President & CEO
Slide 11: About Kadant
11 About Kadant $ 270 million in revenues (2010) 1,600 employees worldwide 16 manufacturing locations
Slide 12: Global Platform Serving Customers Worldwide
12 Major manufacturing site Manufacturing licensee Global Platform Serving Customers Worldwide
Slide 13: Kadant Strengths, Competitive Advantages
13 Kadant Strengths, Competitive Advantages • Industry reputation, brand strength • Patented and proprietary technologies • Specialized process knowledge • Large installed base • Low cost manufacturing • Global distribution and service network • Consultative selling model
Slide 14: 2010 Revenues by Geography and Product Line
14 2010 Revenues by Geography and Product Line Revenue: $270 million Geographic data is attributed to countries based on selling location.
Slide 15: Product Review
15 PRODUCT REVIEW
Slide 16: Expertise from Stock Prep to Drying
16 Expertise from Stock Prep to Drying
Slide 17: Stock Preparation
17 35% Stock Preparation • Pulpers • Screens • Cleaners • De-inking • Recycling systems • Heat transfer products Separation and cleaning products and systems to convert waste paper into clean pulp.
Slide 18: Water Management
18 Water Management • Shower systems • Spray nozzles • Wear surfaces • Filters • Formation systems Products and systems for delivering, filtering, and recycling process water. FORMING & PRESSING 11%
Slide 19: Doctoring
19 19% Doctoring • Doctor blades • Blade holders • Doctoring systems Consumable products used to clean roll surfaces and remove contaminants. PRESSING & DRYING
Slide 20: Fluid Handling
20 31% Fluid Handling • Rotary joints • Syphon systems • Steam and condensate systems • Dryer systems control software Fluid handling products and systems used in process industries worldwide. DRYING
Slide 21: Kadant R&D and Product Innovations
21 Kadant R&D and Product Innovations • Technical capabilities – Recycling pilot plant – Two commercial size paper dryers – Computational fluid dynamics – Blade material testing and qualification • New product offerings – FibreWall™ screen cylinder – Nano technology blade – MAK-C advanced deinking s
Slide 22: Industry Review
22 INDUSTRY REVIEW
Slide 23: Kadant Revenue Source by Major Paper Grade
23 Containerboard 35% Printing & Writing 28% Boxboard & Other Paper 22% Newsprint 8% Tissue 7% Containerboard 31% Printing & Writing 13% Tissue 14% Boxboard & Other Paper 17% Non-Paper 20% Kadant Revenue Source by Major Paper Grade Percentage estimated by Company using 2010 revenue. 2010 Revenue Sou
Slide 24: Pulp & Paper Industry Outlook
24 Pulp & Paper Industry Outlook DEVELOPED REGIONS • Operating rates remain relatively high • Stable inventory levels • North America is stronger than Europe • Escalating energy and fiber costs • Energy-driven investments remain a priority EMERGING REGIONS • Strong growth forecasted, particularly in
Slide 25: Per Capita Consumption of Paper
25 Per Capita Consumption of Paper Source: RISI, Inc. World Production and Trade by Country (2010) Kilograms per capita 2009
Slide 26: World Demand for Paper & Paperboard
26 World Demand for Paper & Paperboard 2005 2015 369 million tons 468 million tons (projected) Source: RISI World Pulp & Recovered Paper Forecast, 2011 Asia 35% Asia 49%
Slide 27: CAGR = 3.4%
27 Source: RISI World Pulp & Recovered Paper Forecast, 2011 CAGR = 3.4%
Slide 28: Selected Emerging Markets and U.S.
28 Selected Emerging Markets and U.S. Containerboard Production from 2000 to 2010 • Selected emerging market growth rates more than 2x U.S. growth rate • Compound annual growth rate of 9% over 10 years • Selected emerging markets expected to continue growth trend, mature markets to be relatively fla
Slide 29: Recovered Paper Usage in Emerging Markets
29 Recovered Paper Usage in Emerging Markets Source: RISI World Pulp & Recovered Paper Forecast, 2011
Slide 30: Input Costs Continue to Escalate
30 Input Costs Continue to Escalate Source: RISI, Inc. Examples of raw material fiber cost escalation in the U.S. spot market
Slide 31: Helping our customers maximize yield and efficiency
31 Helping our customers maximize yield and efficiency.
Slide 32: Dryer Management System Control Strategy
32 Dryer Management System® Control Strategy Reduces Steam Energy Consumption at Board Mill “When you gain 15 minutes a day in productivity of quality output, you’re looking at over $1 million a year.” - Superintendent, U.S. Board Mill PROBLEM • Energy inefficiency • Poor runnability • Inconsistent
Slide 33: Petax Filtration System Reduces Water Usage
33 Petax® Filtration System Reduces Water Usage “Innovative stock preparation, combined with conservation advances in water and energy, puts us at a high level of tissuemaking .” - Pesach Bernat, CEO, Shaniv Paper PROBLEM • Mill located in Negev desert • Water availability is scarce and cost is risi
Slide 34: Compact Stock Prep System Increases Fiber Yield
34 Compact Stock Prep System Increases Fiber Yield “With our new stock preparation system, we capture high quality fiber from poor quality waste.” - Franco Masotina, CEO, Cartiera di Colgno PROBLEM • Low fiber yield • High level of contaminants in raw material furnish • Rapid equipment wear, high op
Slide 35: AirSet Doctor Blade Holders Help Reduce Energy Use
35 AirSet™ Doctor Blade Holders Help Reduce Energy Use and Increase Capacity New doctoring equipment on suction press and grooved rolls increased machine capacity by 4% and reduced steam energy by $170,000 per year. PROBLEM • Higher steam usage due to poor moisture profile • Excessive water usage to
Slide 36: Growth Initiatives
36 GROWTH INITIATIVES
Slide 37: Our Strategy for Growth
37 Our Strategy for Growth • Offer products with compelling ROI • Focus on higher-growth regions • Increase spares and consumables business • Increase market penetration in low-share areas • Leverage low cost manufacturing • Seek opportunities outside paper industry • Leverage sales and distribution
Slide 38: Moving Kadant Forward Through Acquisitions
38 Moving Kadant Forward Through Acquisitions • Acquisitions within the Paper Industry – Synergy opportunities • Leverage sales force • Increase manufacturing efficiencies • Expand market access • Research & Development • Criteria for acquisitions outside the Paper Industry – Industrial – Technology
Slide 39: FibreWall/HDS Acquisition
39 FibreWall/HDS Acquisition • Supplier of pressure screen baskets and dewatering equipment acquired in July 2010 • Revenue: $3.8 million* • $150 million global market • Consumable with 6 to 9 months life * Annualized revenue during year of acquisition.
Slide 40: Techmo Systems Acquisition
40 Techmo Systems Acquisition • Supplier of advanced steam systems and control software acquired in October 2010 • Revenue: $1.8 million* • Strong market position in France, Spain, and Italy • Differentiator in competitive dryer system marketplace * Annualized revenue during year of acquisition.
Slide 41: Pending Acquisition of M-Clean Papertech
41 Pending Acquisition of M-Clean Papertech • European-based supplier of paper machine cleaning equipment • 2010 revenues approximately $14 million • 2010 EBITDA $2.7 million • Purchase price: $16 million • Expected closing: May 27, 2011
Slide 42: M-Clean MultiJet Product Line
42 M-Clean MultiJet Product Line • High-pressure single jet cleaning systems for paper machine clothing • On-line backing roll and press roll cleaning • Unique design for high efficiency, reliability
Slide 43: Reliable and Efficient Fabric Cleaning
43 Reliable and Efficient Fabric Cleaning Before After
Slide 44: M-Clean Worldwide Installations Total Units
44 M-Clean Worldwide Installations Total 320 Units Company estimate based on installed units. Company estimate based on installed units.
Slide 45: Benefits to Kadant
45 Benefits to Kadant • Extended product line with world-class cleaning solutions • Limited installations in U.S. offer significant market opportunity • Parts revenue stream provides ample room for growth • Manufacturing capabilities are easily transferrable • Market presence in China and Europe enh
Slide 46: Financial Results
46 FINANCIAL RESULTS
Slide 47: ions)
$120 $100 ions) — ee ao > $40 wother 1a Fiber-based Products 2 Water-Management 1 Doctoring ‘a Fluid.ttandling Stock-Preparation
Slide 48: Parts and Consumables Bookings
48 Parts and Consumables Bookings
Slide 49: Twelve Months Financial Summary
49 1 Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is a non-GAAP financial measure that excludes certain items as detailed in our 2010 fourth quarter earnings press release issued February 23, 2011. 2 From continuing operations. Revenues $ 270.0 $ 225.6 Gross Prof
Slide 50: First Quarter 2011 Financial Summary
50 Revenues $ 71.7 $ 61.1 Gross Profit Margin 47.6% 44.0% Operating Expenses: SG&A, R&D expenses $ 25.8 $ 22.5 Restructuring and other income $ - $ (0.3) Operating Income $ 8.3 $ 4.7 Net Income $ 5.8 $ 3.6 Diluted Earnings per Share from Continuing Operations $ 0.47 $ 0.29 Adjusted EBITDA 1 $ 10.2 $
Slide 51: Balance Sheet Data
51 Cash, Cash Equivalents, and Restricted Cash $ 57.7 $ 43.6 Accounts Receivable, net $ 52.3 $ 40.9 Inventories $ 51.5 $ 40.3 Property, Plant and Equipment, net $ 37.5 $ 37.3 Intangible Assets $ 26.5 $ 27.4 Goodwill $ 100.6 $ 95.5 Other Assets $ 23.4 $ 25.5 Total Assets $ 349.5 $ 310.5 Accounts Paya
Slide 52: 2011 Goals
52 2011 Goals • Focus on higher-growth regions • Leverage global manufacturing and sourcing capability • Increase spares and consumables business • Increase market penetration in low-share areas • Integrate M-Clean product line into global organization • Continue to pursue complementary acquisitions
Slide 53: Questions & Answers
Questions & Answers To ask a question, please call 866-804-6926 within the U.S. or +1-857-350-1672 outside the U.S. and reference 83375884. Please mute the audio on your computer.
Slide 54: Annual Meeting of Stockholders May 25, 2011
Annual Meeting of Stockholders May 25, 2011 Westford, Massachusetts