Investor Presentation
Kadant Inc. (NYSE: KAI) March 2024
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 financial and operating performance, demand for our products, and economic and industry outlook. These forward-looking statements represent our expectations as of February 14, 2024. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to 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 annual report on Form 10-K for the fiscal year ended December 30, 2023 and subsequent filings with the Securities and Exchange Commission. These include risks and uncertainties relating to adverse changes in global and local economic conditions; the variability and difficulty in accurately predicting revenues from large capital equipment and systems projects; our acquisition strategy; levels of residential construction activity; reductions by our wood processing customers of their capital spending or production of oriented strand board; changes to the global timber supply; development
and use of digital media; cyclical economic conditions affecting the global mining industry; demand for coal, including economic and environmental risks associated with coal; failure of our information systems or breaches of data security and cybertheft; implementation of our internal growth strategy; supply chain constraints, inflationary pressure, price increases and shortages in raw materials; competition; changes in our tax provision or exposure to additional tax liabilities; our ability to successfully manage our manufacturing operations; disruption in production; future restructurings; loss of key personnel and effective succession planning; protection of intellectual property; climate change; adequacy of our insurance coverage; global operations; policies of the Chinese government; the variability and uncertainties in sales of capital equipment in China; currency fluctuations; changes to government regulations and policies around the world; compliance with government regulations and policies and compliance with laws; environmental laws and regulations; environmental, health and safety laws and regulations impacting the mining industry; our debt obligations; restrictions in our credit agreement and note purchase agreement; soundness of financial institutions; fluctuations in our share price; and anti-takeover provisions.
INVESTOR PRESENTATION - MARCH 2024 | © 2024 KADANT INC. | 2 |
Use of Non-GAAP Financial Measures & Company Estimates
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 revenue excluding the effect of acquisitions and foreign currency translation (organic revenue), adjusted EPS, adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA), adjusted EBITDA margin, adjusted operating income, adjusted gross profit, adjusted gross margin, adjusted SG&A, free cash flow, and adjusted free cash flow. All references to EPS (earnings per share) are to our EPS as calculated on a diluted basis.
Specific non-GAAP financial measures have been marked with an * (asterisk) within this presentation. A reconciliation of those numbers to the most directly comparable GAAP financial measures is shown in the Appendix and in our fourth quarter 2023 earnings press release issued February 14, 2024, which is available in the Investors section of our website at investor.kadant.com under the heading News Releases.
We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook. We believe the inclusion of such measures helps investors gain an understanding of our underlying operating performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts and to the performance of our competitors. Such measures are also used by
us in our financial and operating decision-making and for compensation purposes. We also believe this information is responsive to investors' requests and gives them an additional measure of our performance.
The non-GAAP financial measures included in this presentation are not meant to be considered superior to or a substitute for the results of operations or cash flows prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this presentation have limitations associated with their use as compared to the most directly comparable GAAP measures, in that they may be different from, and therefore not comparable to, similar measures used by other companies.
COMPANY ESTIMATES
We make estimates of global market share, revenue and market opportunities and total market size for various product lines. These estimates are based on Company information and are not derived from published studies or other market data.
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Table of Contents
Company Overview | 5 |
Operating Segments | 12 |
Growth Trends | 17 |
Acquisition Strategy | 24 |
Financial Performance | 28 |
Key Takeaways | 34 |
Appendix | 35 |
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Technology driving a sustainable future
5
Company Attributes
- Technologies that drive Sustainable Industrial ProcessingSM
- Stable business model with recurring revenue of high-impact solutions with "sticky" customer relationships
- Over 60% of revenue from parts and consumables
- Growing end markets driven by global macro trends
- Decentralized structure, asset-light operating model
- Excellent financial performance and free cash flow* generation
- Focused capital allocation and proven record of value-creating acquisitions
- Experienced management team
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Our Sustainability-Driven Culture Enables Responsible Growth
Our People and Our Communities
We focus our efforts on providing the best solutions possible to benefit our customers and invest in our people and the communities in which we operate.
Our Systems and Products
Our products are designed to reduce waste, use resources more efficiently, and allow our customers to create more value with fewer inputs.
Our Use of Renewable Resources and Materials
Our products maximize the use of renewable and biodegradable materials which, in turn, can help our customers achieve their sustainability goals.
Named one of America's Greatest Workplaces for Job Starters by Newsweek
Named one of America's Most Responsible Companies by Newsweek for four consecutive years
Named one of 100 Best ESG Companies by Investor's Business Daily
INVESTOR PRESENTATION - MARCH 2024 | © 2024 KADANT INC. | 7 |
Global Platform, Local Presence
Geographic revenue (FY 2023) is attributed to countries based on customer location.
North America: $539 million | Europe: $245 million |
Rest of World: $60 million | Asia: $114 million |
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Accelerating Growth: Diversifying Our Strategic Mix
Aligning growing end-markets with long-term strategic vision
• Secular growth trends | • Infrastructure investment needs | ||||
• Global supply chain trends | • Evolution of the circular economy | ||||
25% | |||||
13% | 2023 | 38% | |||
4% | 2016 | Revenue | |||
2009 | 40% | $958M | |||
38% | Revenue | ||||
Revenue | $414M | ||||
$226M | |||||
58% | 47% | 37% | |||
Flow Control | Industrial Processing | Material Handling |
INVESTOR PRESENTATION - MARCH 2024 | © 2024 KADANT INC. | 9 |
Revenue Snapshot
Geographic revenue (FY 2023) is attributed to countries based on customer location.
PRODUCT MIX | GEOGRAPHY |
PARTS & CONSUMABLES CAPITAL
38%
NORTH AMERICA EUROPE ASIA ROW
6%
12%
62%
26%
56%
INVESTOR PRESENTATION - MARCH 2024 | © 2024 KADANT INC. | 10 |
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Disclaimer
Kadant Inc. published this content on 08 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 March 2024 14:16:04 UTC.