Kadant Inc · NYSE:KAI
Kadant — Q4 2016 Earnings Presentation
33 slides from Kadant's earnings presentation, Feb 23, 2017
Slide 1: Fourth Quarter and Fiscal Year 2016 Business Review
Fourth Quarter and Fiscal Year 2016 Business Review Jonathan W. Painter, President & CEO Michael J. McKenney, Senior 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 and our accompanying commentary contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking
Slide 3: Use of Non-GAAP Financial Measures
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 decreases in revenues excluding the effect of acquisitions and foreign currency tra
Slide 4: Business Review
BUSINESS REVIEW Jonathan W. Painter President & CEO
Slide 5: Fourth Quarter Highlights
Fourth Quarter Highlights • Solid quarter across a broad range of metrics • Strong bookings • Excellent cash flows • PAAL balers introduced to North American market KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 5
Slide 6: Q4 2016 Financial Highlights
Q4 2016 Financial Highlights ($ Millions, except per share amounts) Q4 2016 Q4 2015 % CHANGE3 EXCL. FX3 Revenue $100.2 $107.6 -6.8% -5.3% Gross Margin 46.0% 43.1% n.m. n.m. Net Income1 $7.7 $10.4 -25.5% -21.5% Adjusted EBITDA1, 2 $14.1 $17.2 -18.3% -15.5% Adjusted EBITDA/Revenue1, 2 14.0% 16.0% n.m.
Slide 7: 2016 Financial Highlights
2016 Financial Highlights ($ Millions, except per share amounts) 2016 2015 % CHANGE3 EXCL. FX3 Revenue $414.1 $390.1 6.2% 8.3% Gross Margin 45.5% 46.2% n.m. n.m. Net Income $32.1 $34.4 -6.7% -1.6% Adjusted EBITDA1, 2 $61.9 $61.5 0.5% 4.2% Adjusted EBITDA/Revenue1, 2 14.9% 15.8% n.m. n.m. Diluted EPS
Slide 8: FX Translation and Acquisition Impact
FX Translation and Acquisition Impact Q4 2016, $ in millions except EPS Revenue Adjusted EPS4 Bookings Parts & Consumables Revenue Parts & Consumables Bookings As Reported $100.2 $0.69 $113.6 $64.0 $67.9 Growth1 -6.8% -27.4% 50.4% 10.0% 11.1% Growth excluding FX2 -5.3% -23.2% 53.4% 11.8% 12.7% Growt
Slide 9: Bookings and Revenues
$0 $20 $40 $60 $80 $100 $120 $140 Bookings Booking Reversal Revenues Bookings and Revenues US$ (millions) 1 Reported Q415 bookings were $76 million, which included new orders of $92 million and a booking reversal of $16 million. 1 KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All r
Slide 10: Parts and Consumables Bookings and Revenues
Parts and Consumables Bookings and Revenues KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 10 $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues US$ (millions)
Slide 11: Kadant Revenue Source by Market
Kadant Revenue Source by Market Percentages estimated by Company using 2016 and 2015 revenues. FY 2016 FY 2015 KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 11
Slide 12: North America Bookings and Revenues
North America Bookings and Revenues US$ (millions) KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 12 $0 $10 $20 $30 $40 $50 $60 $70 $80 Bookings Revenues
Slide 13: Europe Bookings and Revenues
Europe Bookings and Revenues US$ (millions) KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 13 $0 $5 $10 $15 $20 $25 $30 $35 Bookings Revenues
Slide 14: Asia Bookings and Revenues
-$10 -$5 $0 $5 $10 $15 $20 $25 $30 $35 Bookings New Orders Revenues Asia Bookings and Revenues US$ (millions) 1 Reported Q415 Asia bookings were negative $6 million, which included new orders of $10 million and a booking reversal of $16 million. 1 KAI Q416 Business Review–February 23, 2017 | © 2017
Slide 15: Rest-of-World Bookings and Revenues
Rest-of-World Bookings and Revenues US$ (millions) KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 15 $0 $2 $4 $6 $8 $10 $12 $14 $16 Bookings Revenues
Slide 16: Guidance
Guidance • FY 2017 GAAP diluted EPS of $3.13 to $3.23 • FY 2017 revenue of $423 to $433 million • Q1 2017 GAAP diluted EPS of $0.62 to $0.66 • Q1 2017 revenue of $97 to $100 million KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 16
Slide 17: Financial Review
FINANCIAL REVIEW Michael J. McKenney Senior Vice President & Chief Financial Officer
Slide 18: Quarterly Gross Margins
Quarterly Gross Margins KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 18 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% 45.6% 46.0% 30% 35% 40% 45% 50%
Slide 19: Full-Year Gross Margins
Full-Year Gross Margins KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 19 40.3% 43.9% 43.3% 43.9% 45.8% 44.4% 46.2% 45.5% 30% 35% 40% 45% 50% 2009 2010 2011 2012 2013 2014 2015 2016
Slide 20: Quarterly SG&A
25% 30% 35% 40% 45% $0 $10 $20 $30 $40 SG&A SG&A as a % of Revenues Quarterly SG&A US$ (millions) KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 20
Slide 21: Full-Year SG&A
Full-Year SG&A KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 21 US$ (millions) 25% 30% 35% 40% $60 $80 $100 $120 $140 2009 2010 2011 2012 2013 2014 2015 2016 SG&A SG&A as a % of Revenues
Slide 22: 4Q15 to 4Q16 Adjusted Diluted EPS
4Q15 to 4Q16 Adjusted Diluted EPS KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 22 $0.95 $0.27 $0.04 $0.02 ($0.56) ($0.03) $0.69 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 $1.50
Slide 23: 2015 to 2016 Adjusted Diluted EPS
2015 to 2016 Adjusted Diluted EPS KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 23 $3.13 $0.26 $0.11 $0.11 ($0.49) ($0.01) ($0.01) $3.10 $0.00 $1.00 $2.00 $3.00 $4.00
Slide 24: Cash Flow
Cash Flow US$ (millions) 4Q16 4Q15 2016 2015 Income from Continuing Operations $7.8 $10.4 $32.5 $34.6 Depreciation and Amortization 3.4 2.6 14.3 10.8 Stock-Based Compensation 1.2 1.2 5.1 5.7 Other Items 0.3 (2.0) (0.3) (3.5) Change in Current Assets & Liabilities (excl. acquisition) 3.6 0.1 (0.6) (7
Slide 25: Free Cash Flow
Free Cash Flow * Presented in conformity with Financial Accounting Standards Board’s Accounting Standards Update No. 2016-09. Free cash flow is defined as cash flows from continuing operations less purchases of property, plant, and equipment. KAI Q416 Business Review–February 23, 2017 | © 2017 Kadan
Slide 26: Key Working Capital Metrics
Key Working Capital Metrics 4Q16 3Q16 4Q15 Days in Receivables 62 60 59 Days in Inventory 94 95 91 Days in Payables 40 39 36 KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 26 59 60 62 91 95 94 36 39 40 20 40 60 80 100 120 140 D A YS Days in Receivables Days in I
Slide 27: Working Capital and Cash Conversion Days
Working Capital and Cash Conversion Days 4Q16 3Q16 4Q15 Working Capital % LTM Revenues* 11.0% 11.6% 12.0% Cash Conversion Days** 117 days 116 days 114 days *Working Capital is defined as current assets less current liabilities, excluding cash, debt, and the discontinued operation. ** Based on days i
Slide 28: Cash and Debt
Cash and Debt US$ (millions) 4Q16 3Q16 4Q15 Cash, cash equivalents, and restricted cash $73.6 $65.5 $66.9 Debt (61.5) (63.5) (31.2) Lease obligations (4.9) (5.3) Net Cash (Debt) $7.2 $(3.3) $35.7 KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 28 $30.9 $30.1 $4
Slide 29: Leverage Ratio
Leverage Ratio KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 29 0.93 0.00 0.25 0.50 0.75 1.00 1.25 Debt/EBITDA* * Calculated by adding or subtracting certain items, as required by our Credit Facility, from Adjusted EBITDA. Under our current Credit Facility ente
Slide 30: Guidance
Guidance • Q1 2017 GAAP diluted EPS of $0.62 to $0.66 • FY 2017 GAAP diluted EPS of $3.13 to $3.23 • CAPEX of $7 to $8 million • Depreciation & Amortization Expense of $13.5 million KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 30
Slide 31: Summary
Summary • Record 2016 revenue and adjusted EBITDA • Strong Q4 bookings • Excellent gross margin • Record 2016 free cash flow • Expecting record revenue and EPS in 2017 KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 31
Slide 32: 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 398 78 251 Please mute the audio on your computer. KAI Q416 Business Review–February 23, 2017 | © 2017 Kadant Inc. All rights reserved. 32
Slide 33: Slide 33