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| 8-K - 8-K - Colfax CORP | a8-k2018guidance.htm |
December 18, 2017
2018 Outlook
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Forward-looking Statements
These slides and accompanying oral presentation contain forward-looking statements, including forward-looking
statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking
statements include, but are not limited to, statements concerning Colfax’s plans, objectives, expectations and intentions
and other statements that are not historical or current fact. Forward-looking statements are based on Colfax’s current
expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed
or implied in such forward-looking statements. Factors that could cause Colfax’s results to differ materially from current
expectations include, but are not limited to factors detailed in Colfax’s reports filed with the U.S. Securities and
Exchange Commission including its 2016 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the
period ended September 29, 2017 under the caption “Risk Factors.” In addition, these statements are based on a
number of assumptions that are subject to change. Colfax disclaims any duty to update the information herein.
The term "Colfax" in reference to the activities described in these slides may mean one or more of Colfax's global
operating subsidiaries and/or their internal business divisions and does not necessarily indicate activities engaged in by
Colfax Corporation.
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Executing Our Strategy in 2017
Completed Fluid Handling sale
Committed $430M on 7 complementary bolt-ons
Returned to organic growth
Accelerating new product innovation
Achieving target of $50 million restructuring cost savings
Affirming 2017 guidance with continuing operations representing
$1.37 to $1.47 of Adjusted EPS
Reshaping the portfolio and building momentum
4
Improving and Growing in 2018
Accelerating growth initiatives at ESAB
− Improving regional market conditions
− Increasing pace of new products
− Leveraging recent acquisitions
Making the turn at Howden
− Focusing on industrial and mining growth
− Positioning for Oil & Gas recovery in second half
− Restructuring to drive margin expansion
Shaping the portfolio with attractive acquisitions
− Accretive, strategic bolt-ons
− New growth platform
Driving >20% improvement in Adj. EPS
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2018 Outlook and Reporting Changes
Business improvement and acquisitions create significant earnings
growth
Adding back intangibles amortization and other non-cash acquisition-
related charges in 2018
ADJUSTED EARNINGS PER SHARE
FH Sale
$1.65 –
$1.80
$2.00 –
$2.15
2018
Cont. Ops.
Improvement
& Growth
$1.65 –
$1.75
2017
Guidance
2018
Guidance
2017
Cont. Ops.
$1.37 –
$1.47
Add-back
amortization and
other non-cash
acquisition related
charges
+20%
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2018 Expectations
0% to 2% organic revenue growth
Sales quarterly seasonality: 22-23%, 25-26%, 24-25%, 26-27%
Continuing restructuring actions to achieve $25-$30M in savings
Partially offset by $10-$20M of inflation and growth investments,
net of productivity
Approximately $28-$32M of interest expense1
1 Interest estimate does not include acquisitions not yet closed
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Market Orders Outlook
Current Environment
• Remains sluggish as customers
minimize expenses
• Lower power utilization rates in
the US and China
• Almost all regions back to growth
for welding
• Environmental spend continues
in China
• Slow recent project progression
• Number of projects stable to
increasing but long gestation
• Policy changes in China slows
new build
• Steady pace in SEA
• New regulations in India
Aftermarket
General
Industrial
Oil & Gas
Power
Source: Internal company management estimates.
Order Indicators
• Increasing oil prices
• Maintenance deferments
already in comps
• Installed base growth
• Stable to up global PMI
• GDP forecast uptick in ’18
• Internal growth initiatives
continue
• Stable to increasing oil
prices
• Refinery utilization
• Refined products demand
• Projects reduced in China
• Utilization remains low in
the US and China
Improving outlook with expected second half uptick in A&G Handling
(2H)
8
Colfax Strategy
Mid-teen
segment
margins
GDP +1-2%
organic
growth
Innovate and
acquire to
compound
returns
Strengthen the foundation
− Deeper, empowered talent accelerating performance
− Colfax Business System – culture & impact
− Fixed and variable productivity journeys
Pivot to growth
− Focus on segments where the growth is
− Drive new products & innovation
− Emerging Markets expansion
Innovate and acquire
− Expand innovation and DDA™ (digital growth) pipeline
− Acquisitions to strengthen & extend platforms
− New platforms broaden, diversify portfolio
3-4 Year Objectives
Strategy to deliver results and create shareholder value
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APPENDIX
10
Non-GAAP Financial Measures
Colfax has provided financial information that has not been prepared in accordance with GAAP. These non-GAAP
financial measures are adjusted net income, adjusted net income per share, and projected adjusted net income per
share. These non-GAAP financial measures assist Colfax management in comparing its operating performance over
time because certain items may obscure underlying business trends and make comparisons of long-term performance
difficult. Colfax management believes presenting these measures may be useful to investors as it allows investors to
view its performance over time using additional measures the Company uses in evaluating its financial and business
trends. Non-GAAP measures should be read in conjunction with the GAAP financial measures, and not as a
replacement for the comparable GAAP measure. Each of the non-GAAP measures noted above, may not be
comparable to a similarly titled measure reported by other companies. Certain items have been excluded from the
non-GAAP measures presented herein, to the extent they affect the periods presented, because:
• They are of a nature and/or size that occur with inconsistent frequency;
• Relate to discrete restructuring plans that are fundamentally different from the ongoing productivity improvements of
the Company; or
• Relate to intangibles amortization and other non-cash acquisition related charges where the amount and timing of
such charges are significantly impacted by the specific type of acquisitions we consummate. While we have a
history of acquisition activity, these acquisitions do not occur over a uniform period of time, and the amount of an
acquisition’s purchase value assigned to intangible assets and related amortization term can vary based on the
acquisition target, which would affect the timing and size of the amortization charges. Accordingly, commencing with
this presentation, we will exclude these amounts to enhance our ability to make more consistent comparisons of
operating results over time and amongst peer companies.
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Non-GAAP Reconciliation
(unaudited)
2018 Guidance Low High
Projected net income per share continiuing operations (GAAP) - diluted 1.45$ 1.60$
Restructuring and other related charges - pretax 0.26 0.26
Acquisition-related amortization and other non-cash charges - pretax
(1)
0.49 0.49
Tax adjustment (0.20) (0.20)
Projected adjusted net income per share 2.00$ 2.15$
(1) Includes amortization of acquired intangibles and fair value charges on acquired inventory.
2018 Earngs Per Share Range
2018 Guidance Under Historical Presentation Low High
Projected net income per share continiuing operations (GAAP) - diluted 1.45$ 1.60$
Restructuring nd other related ch rges - pret x 0.26 0.26
Tax adjustment (0.06) (0.06)
Projected adjusted net income per share 1.65$ 1.80$
2018 Earngs Per Share Range
12
Non-GAAP Reconciliation
(unaudited)
Colfax Corporation Low High
Projected net income per share (GAAP) - diluted 1.34$ 1.44$
Restructuring and other related charges - pretax 0.30 0.30
Divestiture-related expense, net - pretax 0.13 0.13
Tax adjustment (0.12) (0.12)
Projected adjusted net income per share 1.65$ 1.75$
2017 Earngs Per Share Range
Contin ing Operations Low High
r j t net income per share (GAAP) - diluted .12 .22
Restructuring and other related charges - pretax 0.34 0.34
Tax adjustment (0.09) (0.09)
Projected adjusted net income per share 1.37$ 1.47$
2017 Earngs Per Share Range
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Non-GAAP Reconciliation
(unaudited)
April 1, 2016 July 1, 2016 September 30, 2016 December 31, 2016
Net income from Continuing Operations attributable to Colfax Corporation $ 23,402 $ 39,828 $ 36,319 $ 38,123
Restructuring and other related charges - pretax 15,206 11,040 11,752 20,498
Loss on deconsolidation of Venezuelan operations - pretax - - 495 -
Acquisition-related amortization and other non-cash charges - pretax
(1) 14,280 14,176 14,003 16,637
Tax adjustment (6,962) (8,344) (7,090) (11,205)
Adjusted net income from continuing operations $ 45,927 $ 56,700 $ 55,479 $ 64,053
Weighted-average shares outstanding - diluted 123,243 123,036 123,102 123,385
Adjuated net income per share from continuing operations $ 0.37 $ 0.46 $ 0.45 $ 0.52
Net income per share from continuining operations - diluted (GAAP) $ 0.19 $ 0.32 $ 0.30 $ 0.31
(1) Includes amortization of acquired intangibles and fair value charges on acquired inventory.
Three Months EndedAdjusted Net Income and Adjusted Net Income Per Share from
Continuing Operations
__________________
Note: Dollars in thousands, except per share amounts
14
Non-GAAP Reconciliation
(unaudited)
__________________
Note: Dollars in thousands, except per share amounts
March 31, 2017 June 30, 2017 September 29, 2017
Net income from Continuing Operations attributable to Colfax Corporation $ 35,446 $ 36,783 43,781$
Restructuring and other related charges - pretax 4,773 11,060 7,298
Acquisition-related amortization and other non-cash charges - pretax
(1) 13,394 13,684 14,286
Tax adjustment (5,397) (5,824) (8,788)
Adjusted net income from continuing operations $ 48,215 $ 55,703 56,577$
Weighted-average shares outstanding - diluted 123,795 123,954 124,081
Adjuated net income per share from continuing operations $ 0.39 $ 0.45 0.46$
Net income per share from continuining operations - diluted (GAAP) $ 0.29 $ 0.30 0.35$
(1) Includes amortization of acquired intangibles and fair value charges on acquired inventory.
Three Months EndedAdjusted Net Income and Adjusted Net Income Per Share from
Continuing Operations