Attached files
| file | filename |
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| 8-K - KAI FORM 8-K 2-23-2012 - KADANT INC | kaiform8k2232012.htm |
Fourth Quarter 2011 Business Review
Jonathan W. Painter, President & CEO
Thomas M. O’Brien, Executive Vice President & CFO
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KAI 4Q11 Business Review-February 23, 2012
© 2012 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 risks and
uncertainties, including forward-looking statements about our expected future financial and operating
performance, demand for our products, and industry and economic outlook. Our actual results may differ
materially from these forward-looking statements as a result of various important factors, including those
set forth under the heading "Risk Factors" in Kadant's quarterly report on Form 10-Q for the quarter ended
October 1, 2011. These include risks and uncertainties relating to our dependence on the pulp and paper
industry; significance of sales and operation of manufacturing facilities in China; our ability to expand
capacity in China to meet demand; commodity and component price increases or shortages; international
sales and operations; competition; soundness of suppliers and customers; our effective tax rate; future
restructurings; soundness of financial institutions; our debt obligations; restrictions in our credit
agreement; litigation and warranty costs related to our discontinued operation and court approval of the
recently filed settlement; our acquisition strategy; protection of patents and proprietary rights; failure of
our information systems or breaches of data security; fluctuations in our share price; and anti-takeover
provisions. We undertake no obligation to publicly update any forward-looking statement, whether as a
result of new information, future events, or otherwise.
1995: This presentation contains forward-looking statements that involve a number of risks and
uncertainties, including forward-looking statements about our expected future financial and operating
performance, demand for our products, and industry and economic outlook. Our actual results may differ
materially from these forward-looking statements as a result of various important factors, including those
set forth under the heading "Risk Factors" in Kadant's quarterly report on Form 10-Q for the quarter ended
October 1, 2011. These include risks and uncertainties relating to our dependence on the pulp and paper
industry; significance of sales and operation of manufacturing facilities in China; our ability to expand
capacity in China to meet demand; commodity and component price increases or shortages; international
sales and operations; competition; soundness of suppliers and customers; our effective tax rate; future
restructurings; soundness of financial institutions; our debt obligations; restrictions in our credit
agreement; litigation and warranty costs related to our discontinued operation and court approval of the
recently filed settlement; our acquisition strategy; protection of patents and proprietary rights; failure of
our information systems or breaches of data security; fluctuations in our share price; and anti-takeover
provisions. We undertake no obligation to publicly update any forward-looking statement, whether as a
result of new information, future events, or otherwise.
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KAI 4Q11 Business Review-February 23, 2012
© 2012 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 decreases in revenues excluding the effect of foreign currency translation, adjusted operating
income, adjusted net income, adjusted diluted earnings per share, earnings before interest,
taxes, depreciation, and amortization (EBITDA), and adjusted EBITDA.
accounting principles (GAAP), we use certain non-GAAP financial measures, including increases
or decreases in revenues excluding the effect of foreign currency translation, adjusted operating
income, adjusted net income, adjusted diluted earnings per share, earnings before interest,
taxes, depreciation, and amortization (EBITDA), and adjusted EBITDA.
A reconciliation of those numbers to the most directly comparable U.S. GAAP financial measures
is shown in our 2011 fourth quarter earnings press release issued February 22, 2012, which is
available in the Investors section of our website at www.kadant.com under the heading Investor
News.
is shown in our 2011 fourth quarter earnings press release issued February 22, 2012, which is
available in the Investors section of our website at www.kadant.com under the heading Investor
News.
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Financial Classifications
All geographic revenues and bookings data are attributed to regions based on selling
locations. For North America and China, this usually approximates revenues and bookings
based on where the equipment is shipped to and installed. Our European geographic data,
however, includes revenues and bookings that may be shipped to and installed outside
Europe, including South America, Africa, the Middle East, and certain countries in Asia
(excluding China).
locations. For North America and China, this usually approximates revenues and bookings
based on where the equipment is shipped to and installed. Our European geographic data,
however, includes revenues and bookings that may be shipped to and installed outside
Europe, including South America, Africa, the Middle East, and certain countries in Asia
(excluding China).
Prior period amounts for Parts and Consumables revenues and bookings have been
reclassified to include amounts from our Fiber-based products and “other” category within
the Papermaking Systems segment.
reclassified to include amounts from our Fiber-based products and “other” category within
the Papermaking Systems segment.
Beginning with 2011, our Accessories product line is reported as Doctoring.
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
BUSINESS REVIEW
Jonathan W. Painter
President & CEO
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Q4 2011 Financial Highlights
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Q4 2011
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Q4 2010
|
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Revenue
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$97.0 million
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$73.3 million
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Diluted EPS1
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$0.90
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$0.41
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Adjusted Diluted EPS2
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$0.59
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$0.42
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Adjusted EBITDA2
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$11.5 million
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$8.7 million
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Adjusted EBITDA2/Sales
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11.9%
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11.9%
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1 Diluted EPS is for continuing operations.
2 Adjusted Diluted EPS and Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) are non-GAAP financial measures
that exclude certain items as detailed in our Q4 2011 earnings press release issued February 22, 2012.
that exclude certain items as detailed in our Q4 2011 earnings press release issued February 22, 2012.
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Other Highlights from Q4 2011
• Adjusted operating income1 up 41%
• Cash flow from operations was $14.9 million
• Repurchased $6.6 million of common stock
• Net cash position of $35.4 million
• Spares bookings up 7%
1 Adjusted operating income is a non-GAAP financial measure that excludes certain items as detailed in our Q4 2011 earnings press release
issued February 22, 2012.
issued February 22, 2012.
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
2011 Financial Highlights
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2011
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2010
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Revenues
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$335.5 million
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$270.0 million
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Diluted EPS1
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$2.74
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$1.48
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Adjusted Diluted EPS2
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$2.10
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$1.41
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Adjusted EBITDA2
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$44.8 million
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$31.2 million
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Adjusted EBITDA2/Sales
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13.3%
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11.5%
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Return on Total Capital2,3
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13.7%
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10.4%
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1 Diluted EPS is for continuing operations.
2 Adjusted diluted EPS, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), and adjusted net income are non-GAAP
financial measures that exclude certain items as detailed in our Q4 2011 earnings press release issued February 22, 2012.
financial measures that exclude certain items as detailed in our Q4 2011 earnings press release issued February 22, 2012.
3 Return on total capital is based on adjusted net income divided by the sum of shareholders’ investment and net debt.
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Revenue By Product Line: Q4 2011
$97.0 million, up 32% compared to Q4 2010
$97.0 million, up 32% compared to Q4 2010
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($ Millions)
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Q4 2011
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Q4 2010
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% CHANGE
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EXCL. FX
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Stock-Preparation
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$ 43.2
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$ 28.9
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49%
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47%
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Fluid-Handling
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28.2
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21.6
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31%
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31%
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Doctoring
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13.5
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13.8
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-2%
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-1%
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Water-Management
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9.2
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6.6
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40%
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41%
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Fiber-based Products
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2.2
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1.8
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22%
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22%
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Other
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0.7
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0.6
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12%
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24%
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TOTAL
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$ 97.0
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$ 73.3
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32%
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32%
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Percent change calculated using actual numbers reported in our Q4 2011 earnings release dated February 22, 2012.
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Bookings By Product Line: Q4 2011
$78.7 million, down 21% compared to Q4 2010
$78.7 million, down 21% compared to Q4 2010
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($ Millions)
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Q4 2011
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Q4 2010
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% CHANGE
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EXCL. FX
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Stock-Preparation
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$ 27.8
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$ 53.0
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-47%
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-48%
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Fluid-Handling
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22.6
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21.9
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3%
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3%
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Doctoring
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12.6
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14.0
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-10%
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-9%
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Water-Management
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11.6
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7.5
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53%
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53%
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Fiber-based Products
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3.5
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2.8
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25%
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25%
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Other
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0.6
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0.6
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-7%
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3%
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TOTAL
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$ 78.7
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$ 99.8
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-21%
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-21%
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Bookings and Revenues Trends
US$ (millions)
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Parts and Consumables Bookings and Revenues
US$ (millions)
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
REGIONAL PERFORMANCE
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
North America Bookings and Revenues
US$ (millions)
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Europe Bookings and Revenues
US$ (millions)
15
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
China Bookings and Revenues
US$ (millions)
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Guidance for Continuing Operations
• Q1 2012 revenues of $82 to $84 million
• Q1 2012 GAAP diluted EPS of $0.41 to $0.43
• FY 2012 revenues of $330 to $340 million
• FY 2012 GAAP diluted EPS of $1.95 to $2.05
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
FINANCIAL REVIEW
Thomas M. O’Brien
Executive Vice President & Chief Financial Officer
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Gross Margins
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4Q11
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3Q11
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4Q10
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Sequential ∆
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Y-O-Y ∆
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Papermaking Systems Segment
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38.3%
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42.8%
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42.4%
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-4.5%
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-4.1%
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Fiber-based Products
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49.9%
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36.5%
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41.8%
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+13.4%
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+8.1%
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TOTAL
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38.6%
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42.7%
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42.4%
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-4.1%
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-3.8%
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
SG&A
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($ Millions)
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4Q11
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3Q11
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4Q10
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Sequential ∆
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Y-O-Y ∆
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SG&A
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$26.3
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$26.1
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$22.9
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$0.2
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$3.4
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% Revenues
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27.1%
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30.9%
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31.3%
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-3.8%
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-4.2%
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
4Q10 to 4Q11 Diluted EPS from Continuing Operations
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Cash Flow
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($ Millions)
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4Q11
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4Q10
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2011
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2010
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Income from Continuing Operations
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10.7
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5.2
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33.9
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18.7
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Depreciation and Amortization
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2.0
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1.9
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7.9
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7.2
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Stock-Based Compensation
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1.0
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0.7
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3.9
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2.8
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Other Items
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0.1
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1.3
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(2.6)
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(0.4)
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Change in Current Assets & Liabilities (excl. acquisitions)
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1.1
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4.7
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(8.7)
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0.0
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Cash Provided by Continuing Operations
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$ 14.9
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$13.8
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$ 34.4
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$ 28.3
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22
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Key Working Capital Metrics
*Working Capital is defined as current
assets less current liabilities, excluding
cash, debt, and the discontinued operation.
assets less current liabilities, excluding
cash, debt, and the discontinued operation.
|
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4Q11
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3Q11
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4Q10
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Days in Receivables
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58
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62
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62
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Days in Payables
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43
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44
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51
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Days in Inventory
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82
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111
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90
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Working Capital % LTM Revenues*
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9.9%
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10.8%
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9.1%
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23
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Cash and Debt
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($ Millions)
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4Q11
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3Q11
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4Q10
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Cash, cash equivalents, restricted cash
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47.7
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48.1
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61.8
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Debt
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(12.3)
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(17.4)
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(22.7)
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NET CASH
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$ 35.4
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$ 30.7
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$ 39.1
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24
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Leverage Ratio
* Calculated by adding or subtracting certain items, as required by our Credit Facility, from Adjusted EBITDA.
25
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
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.
+1-857-350-1672 outside the U.S. and reference 83375884.
Please mute the audio on your computer.
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Fourth Quarter 2011 Business Review
Jonathan W. Painter, President & CEO
Thomas M. O’Brien, Executive Vice President & CFO
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
APPENDIX
Investor Contact: Thomas M. O’Brien, 978-776-2000
Media Contact: Wes Martz, 269-278-1715
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Appendix: Revenue
2011
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($ Millions)
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2011
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2010
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% Change
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Parts & Consumables
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$182.9
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$165.2
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11%
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Capital
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$152.6
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$104.8
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46%
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Total
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$335.5
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$270.0
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24%
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29
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Appendix: Gross Margins
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2011
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2010
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2009
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2010 ∆
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2009 ∆
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Papermaking Systems Segment
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43.1%
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43.8%
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40.4%
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-0.7%
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+2.7%
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Fiber-based Products
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50.2%
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45.8%
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35.0%
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+4.4%
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+15.2%
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TOTAL
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43.3%
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43.9%
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40.3%
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-0.6%
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+3.0%
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30
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Appendix: SG&A
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($ Millions)
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2011
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2010
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2009
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2010 ∆
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2009 ∆
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SG&A
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$102.7
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$89.2
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$81.2
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$13.5
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$21.5
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% Revenues
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30.6%
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33.0%
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36.0%
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-2.4%
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-5.4%
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31
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KAI 4Q11 Business Review-February 23, 2012
© 2012 Kadant Inc. All rights reserved.
Appendix: Diluted EPS from Continuing Operations
32