Kadant Inc · NYSE:KAI
Kadant — Q3 2018 Earnings Presentation
26 slides from Kadant's earnings presentation, Oct 29, 2018
Slide 1: Third Quarter 2018 Business Review
Exhibit 99.2 THIRD QUARTER 2018 BUSINESS REVIEW Jonathan W. Painter, President & CEO Michael J. McKenney, Executive Vice President & CFO
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 Jonathan W. Painter President & CEO
Slide 5: Q3 2018 Financial Highlights
Q3 2018 Financial Highlights ($ Millions, except per share amounts) Q3 2018 Q3 2017 % CHANGE2 Bookings $165.0 $135.5 21.8% Revenue $165.7 $152.8 8.5% Gross Margin 44.1% 42.3% n.m. Operating Income $27.4 $19.7 39.1% Adjusted Operating Income1 $27.8 $24.6 12.9% Net Income $18.8 $13.3 41.4% Adjusted EB
Slide 6: FX Translation and Acquisition Impact
FX Translation and Acquisition Impact Q3 2018, $ in millions Revenue Bookings Parts & Consumables Parts & Consumables Revenue Bookings As Reported $165.7 $165.0 $92.7 $90.7 Growth1 8.5% 21.8% 10.7% 11.8% Growth excluding FX2 10.9% 24.6% 13.5% 14.7% Growth excluding FX and Acquisitions3 10.3% 23.7% 1
Slide 7: Bookings and Revenue
Bookings and Revenue US$ (millions) BOOKINGS BOOKINGS REVERSAL REVENUE $200 $160 $120 $80 $40 $0 1 1 Reported Q415 bookings were $76 million, which included new orders of $92 million and a booking reversal of $16 million. 7 KAI Q318 Business Review–October 30, 2018 | © 2018 Kadant Inc. All rights re
Slide 8: Parts and Consumables Bookings and Revenue
Parts and Consumables Bookings and Revenue US$ (millions) BOOKINGS REVENUE $120 $100 $80 $60 $40 $20 $0 8 KAI Q318 Business Review–October 30, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 9: North America Bookings and Revenue
North America Bookings and Revenue US$ (millions) BOOKINGS REVENUE $100 $80 $60 $40 $20 $0 9 KAI Q318 Business Review–October 30, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 10: Europe Bookings and Revenue
Europe Bookings and Revenue US$ (millions) BOOKINGS REVENUE $60 $50 $40 $30 $20 $10 $0 10 KAI Q318 Business Review–October 30, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 11: Asia Bookings and Revenue
Asia Bookings and Revenue US$ (millions) BOOKINGS NEW ORDERS REVENUE $40 $30 $20 $10 $0 -$10 1 1 Reported Q415 Asia bookings were negative $6 million, which included new orders of $10 million and a booking reversal of $16 million. 11 KAI Q318 Business Review–October 30, 2018 | © 2018 Kadant Inc. All
Slide 12: Rest-of-World Bookings and Revenue
Rest-of-World Bookings and Revenue US$ (millions) BOOKINGS REVENUE $20 $15 $10 $5 $0 12 KAI Q318 Business Review–October 30, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 13: Guidance
Guidance • FY 2018 GAAP diluted EPS of $4.93 to $4.98 • FY 2018 adjusted diluted EPS* of $5.00 to $5.05 • FY 2018 revenue of $628 to $632 million • Q4 2018 GAAP diluted EPS of $1.24 to $1.29 • Q4 2018 adjusted diluted EPS* of $1.33 to $1.38 • Q4 2018 revenue of $158 to $162 million * Adjusted dilute
Slide 14: Financial Review
FINANCIAL REVIEW Michael J. McKenney Executive Vice President & CFO
Slide 15: Gross Margin
Gross Margin 50% 48.1% 47.9% 48% 47.5% 47.7% 46.5% 46.0% 45.6% 45.6% 46% 45.2% 44.7% 44.7% 44.9% 44.3% 44.0% 44.1% 44% 43.3% 43.0% 43.1% 42.3% 42% 40% 38% 36% All data for 2017 and 2018 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07
Slide 16: SG&A
SG&A US$ (millions) SG&A SG&A as a % of Revenues $50 45% $40 40% $30 35% $20 30% $10 25% $0 20% All data for 2017 and 2018 is presented in conformity with the Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07. Prior period amounts have not been restated. 16 KAI Q318 Busi
Slide 17: 3Q17 to 3Q18 Adjusted Diluted EPS
3Q17 to 3Q18 Adjusted Diluted EPS* $2.00 $0.35 $0.01 ($0.11) ($0.11) ($0.05) ($0.04) $1.49 ($0.01) $1.53 $1.50 $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 October 29, 2018. 17 KAI Q318 Business Review–Oct
Slide 18: Adjusted EBITDA
Adjusted EBITDA* Adjusted EBITDA * Adjusted EBITDA / Revenue 25% $50 20% $40 15% $30 10% $20 5% $10 0% $0 * Adjusted EBITDA is a non-GAAP financial measure that excludes certain items as detailed in our press release dated October 29, 2018. 18 KAI Q318 Business Review–October 30, 2018 | © 2018 Kadan
Slide 19: Cash Flow
Cash Flow YTD YTD US$ (millions) Q3 2018 Q3 2017 2018 2017 Net Income $19.0 $13.4 $42.5 $30.7 Depreciation and Amortization 5.8 6.5 17.7 13.1 Stock-Based Compensation 1.7 1.6 5.3 4.3 Other Items (2.7) (3.0) (3.0) (1.4) Change in Current Assets & Liabilities (excl. acquisitions) (6.8) (11.5) (9.9) (1
Slide 20: Key Working Capital Metrics
Key Working Capital Metrics Q3 2018 Q2 2018 Q3 2017 Days in Receivables 57 52 59 Days in Inventory 91 100 79 Days in Payables 34 36 36 Days in Receivables Days in Inventory Days in Payables 140 120 100 100 80 91 79 60 59 52 57 40 36 36 34 20 20 KAI Q318 Business Review–October 30, 2018 | © 2018 Kada
Slide 21: Working Capital and Cash Conversion Days
Working Capital and Cash Conversion Days Q3 2018 Q2 2018 Q3 2017 Working Capital % LTM Revenues* 11.1% 10.2% 18.0% Cash Conversion Days** 114 days 116 days 102 days *Working Capital is defined as current assets less current liabilities, excluding cash and debt. ** Based on days in receivables plus d
Slide 22: Cash and Debt
Cash and Debt US$ (millions) Q3 2018 Q2 2018 Q3 2017 Cash, cash equivalents, and restricted cash $58.1 $61.2 $91.4 Debt (189.1) (202.2) (273.7) Capital lease obligations (4.6) (4.7) (5.1) Net debt $(135.6) $(145.7) $(187.4) $50 $0 ($50) ($100) US$ (millions) US$ $(135.6) ($150) $(145.7) ($200) $(187
Slide 23: Leverage Ratio
Leverage Ratio Debt/EBITDA * 3.50 3.00 2.50 2.00 1.50 1.37 1.00 0.50 0.00 *Calculated by adding or subtracting certain items from Adjusted EBITDA, as required by our Credit Facility. Effective March 2, 2017, our amended and restated Credit Facility defined total debt as debt less worldwide cash of u
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 809 7465. Please mute the audio on your computer. 24 KAI Q318 Business Review–October 30, 2018 | © 2018 Kadant Inc. All rights reserved.
Slide 25: Key Take-Aways
Key Take-Aways • Record Q3 revenue, diluted EPS, and adjusted EBITDA • Strong internal growth in revenue and bookings in Q3 • Pulping and OSB capacity additions in Asia offer growth opportunities • Expecting record revenue, bookings and diluted EPS in 2018 25 KAI Q318 Business Review–October 30, 201
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