Delaware
|
001-34045
|
54-1887631
|
(State
or other jurisdiction
|
(Commission
|
(I.R.S.
Employer
|
of
incorporation)
|
File
Number)
|
Identification
No.)
|
Item
7.01 Regulation FD
Disclosure.
|
(d)
|
Exhibits
|
99.1 Colfax
Corporation investor presentation
slides
|
Colfax
Corporation
|
||||
Date: February
23, 2009
|
By:
|
/s/
JOHN A. YOUNG
|
||
Name:
|
John
A. Young
|
|||
Title:
|
President
and Chief Executive Officer
|
|||
|
99.1
|
Colfax
Corporation investor presentation
slides.
|
Investor Presentation
February 2009
Exhibit 99.1
The following information contains forward-looking statements, including forward-looking statements
within the meaning of the 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 facts. 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 as well as its Registration Statement on Form S-1 under the caption Risk
Factors. In
addition, these statements are based on a number of assumptions that are subject to
change. This presentation speaks only as of this date. Colfax disclaims any duty to update the
information herein.
Forward-Looking Statements
1
2008 revenue of
$605 million
~2,200 associates
worldwide
16 principal
production facilities in
7 countries
Over 300 direct
sales and marketing
associates
More than 450
authorized distributors
in approximately 80
countries
Headquartered in
Richmond, VA
Colfax is strategically focused on serving key infrastructure end markets in the fluid handling industry
2 & 3 Screw
Pumps
Centrifugal
Pumps
Progressive
Cavity Pumps
Precision Gear
Pumps
Specialty
Valves
Fluid Handling
Systems
End Markets
Products
Global Navy
General
Industrial
Commercial
Marine
Oil & Gas
Power
Generation
Company Overview
2
Founded in 1995
John Young, President & CEO, was an original founder
Equity capital provided by Mitch and Steve Rales, founders of Danaher (NYSE: DHR)
Targeted global industrial companies with strong brands
12 acquisitions, 5 divestitures
Exclusively focused on fluid handling industry
Proven, experienced management team
Began trading on the NYSE in May 2008
There are approximately 5,000 pump companies globally and Colfax is in the top 15
Background
3
POLICY DEPLOYMENT
On Time Delivery - Products and Services
Customer
Satisfaction
Voice
of the
Customer
Production Poka-Yoke Jidoka Strategic Supplier Design for
Preparation Development Six Sigma
Product Development QFD Six Sigma DOE Multi-skilled JIT
System Process Workforce Accounting
DMP SMED Visual TPM One-piece Problem
Management Flow Solving
Benchmark 5S Metrics Standard Measurement Cellularization
WorkSystem Analysis
Profitable
Sales
Growth
Six Sigma Quality
Cost Control and Improvement
Derived from the proven
Danaher Business System
Utilize Voice of the
Customer (VOC) to target
breakthrough growth
initiatives, new products and
applications
Conduct root-cause
analysis, develop process
improvements and
implement sustainable
systems
Culture of continuous
improvement
Integrated in all aspects
of operations and strategic
planning
CBS is how we manage our business and has been a key driver of our success
Colfax Business System Drives Business Improvement
4
Global leader in specialty fluid handling products
Proven application expertise in solving critical customer needs
Serving fast growing global infrastructure driven end markets
Leading brand names generating aftermarket sales and services
Experienced management team in place to grow organically and through strategic
acquisition
Strong financial position
Significant insider ownership
Consistent track record of driving profitable organic sales growth
Investment Highlights
5
6
Broad Product Portfolio Focused on Customer Applications
Centrifugal Pumps
Specialty Valves
Progressive Cavity Pumps
Precision Gear Pumps
Fluid Handling Systems
Well recognized brands across served markets
2 and 3 Screw Pumps
Global Navy
Commercial
Marine
Oil & Gas
Power
Generation
General
Industrial
Serving Critical Applications in Our
Key End Markets
Key Markets
Applications
Brands
Commercial
Marine
Fuel oil transfer; oil transport; water and
wastewater handling
Allweiler, Houttuin, Imo AB
Oil & Gas
Crude oil gathering; pipeline services;
unloading and loading; rotating equipment
lubrication; lube oil purification
Allweiler, Houttuin, Imo, LSC,Tushaco,
Warren
Power Generation
Fuel unloading, transfer, burner and
injection; rotating equipment lubrication
Allweiler, Imo, Tushaco, Warren
Global Navy
Fuel oil transfer; oil transport; water and
wastewater handling; firefighting; fluid
control
Allweiler, Fairmount, Imo, Imo AB,
Portland Valve, Warren
General Industrial
Machinery lubrication; hydraulic elevators;
chemical processing; pulp and paper
processing; food and beverage processing
Allweiler, Fairmount, Houttuin, Imo,
Tushaco, Warren, Zenith
7
Situation Analysis
Husky Energy moves heavy crude oil along pipelines
from the oil fields in Northern Canada through
extremely harsh environment to a central blending
facility
Colfax engineers and the customer's project engineer
jointly developed the design, quality, and testing spec
Warren GTS-H268 2 screw pumps with specially
designed internal wear resistant components were
chosen to meet the rigorous application
Colfax pumps installed 6X increase in service life
Customer realizes $2M annual savings - spare parts
alone
Colfax Solution
Situation Analysis
Major Venezuelan oil company moves 180,000 BPD of
sand laden crude oil through pipelines using a
competitors pumps. Pumps are failing after only 3 - 4
months due to excessive
wear
Colfax Solution
For the past 40 years Husky has turned to Colfax and
the Imo 8L 3 screw pump more than 80 installations
Reliable in the toughest environment
Superior energy efficiency reduces operating
costs
Imo 8L is the industry standard for Canadian pipeline
applications from 400 to 2500 gallons per minute
Strong Application Expertise
Proven expertise in meeting customer needs in heavy oil applications
New Imo 8L-912Y
8
Driven by VOC, examples of new products introduced in 2008
Develop New Products, Applications and Technologies
Driven by Voice of the Customer
Step 1 - VOC
Step 1a VOC Summary
Step 2 Prioritization
Step 3 Specification
All-Heat SMART
EMTEC SMART
Benefits
1.
Senses wear & alerts
end-user
2.
Easy to upgrade
Benefits
1.
50% energy usage
reduction
2.
Eliminates system
components (cooler &
valve)
All-Fuel SMART
Benefits
1.
Efficient seal
leakage monitoring
system - best value
2.
Easy to upgrade
Simplifies OEM
design
Easier installation
9
Blue chip customer base with no single customer representing more than 3% of sales in 2008
____________________
(1)
Includes Distribution (11%), Chemical Processing (7%), Machinery Support (5%), Building Products (4%), Wastewater (2%), Heat Transfer (2%), Pulp and Paper (1%), Diesel Engines (1%), Food & Beverage (1%) and Other (7%).
(2)
Revenues based on our shipping destination.
41%
25%
14%
14%
6%
(1)
22%
51%
5%
15%
4%
3%
2008 Revenues By End Markets
2008 Revenues By Geography (2)
Blue Chip Customers
Large and Diverse Customer Base and End Markets
10
~$24.8bn
~$0.3bn
~$2.3bn
~$4.0bn
~$2.0bn
Global infrastructure development will drive capital investment long term and will benefit
local suppliers as well as international exporters
of fluid handling equipment. Expect
demand to soften in chemical, building products, diesel engine and distribution markets.
In the U.S., expect Congress to continue to appropriate funds for new ship construction as
older navy vessels are decommissioned. Sovereign nations outside of the U.S. continue to
expand
their fleets as they address national security concerns.
Activity in Asia and the Middle East to remain strong as economic growth and a
fundamental under supply of power generation capacity continues to drive investment in
energy infrastructure
projects. Efficiency improvements will continue to drive demand in
the worlds developed economies.
Activity within the global crude oil market to remain favorable as long term capacity
constraints and global demand drive further development of heavy oil fields where Colfax
products excel. May
experience project delays.
Growth in international trade and demand for crude oil and other commodities as well as
the age of the global merchant fleet should continue to create demand for new ship
construction. Increasing
fleet size creating aftermarket opportunities. Experiencing order
cancellations.
Estimated
Market Size
Favorable long term demand driven by global infrastructure build
Market Expectations
Serving Fast Growing Infrastructure Driven End Markets
11
EMEA
~ 1,200 Associates
2008 Sales (1) = $338mm
Asia Pacific
~ 300 Associates
2008 Sales (1) = $93mm
____________________
(1)
Sales figures reflect sales destination.
Americas
~ 700 Associates
2008 Sales (1) = $174mm
% of Revenue: 29%
% of Revenue: 56%
% of Revenue: 15%
LSC
Houston
Warren
Corporate HQ Richmond
Imo Kentucky
Imo Monroe
Sanford
Houttuin
Tushaco
Vapi
Tushaco
Daman
Colfax Wuxi
Imo AB Stockholm
Allweiler
Gottmandingen
Portland Valve
Allweiler
Tours
Allweiler Radolfzell
Allweiler Bottrop
Fairmount Automation
Expanding global footprint allows us to serve fast growing, developing markets
Extensive Global Sales, Distribution and Manufacturing
Footprint
12
Capitalize on growth opportunities by offering regionally developed products and solutions
Standard packages of Imo and Allweiler products produced at our Greenfield, Wuxi China
facility for Commercial Marine
Continue to invest in sales and marketing capabilities to more effectively serve local Asia Pacific
markets
Leverage application expertise to design fluid handling solutions that cater to heavy crude oil
exploration in Latin America,
Middle East and Russia
Opening sales and engineering office in Bahrain in March
Utilize Indian / Chinese low cost manufacturing to supply components to other Colfax business
units
Execute acquisitions
Assam, India
Shanghai, China
Target Fast Growing Regions
13
Est. 1860
Acq. 1998
Est. 1897
Acq. 1997
Est. 1929
Acq. 1998
Est. 1931
Acq. 1997
Est. 1973
Acq. 2004
Est. 1920
Acq. 2004
Est. 1967
Acq. 2005
Est. 1968
Acq. 2007
Est. 1996
Acq. 2007
Product history dating back
to 1860 provides large
installed base
High quality, reliable
products used in critical
applications
Tendency for customers to
replace like for like products
Significant aftermarket
demand for replacement
products, spare parts and
repair and maintenance
services
Approximately 24% of revenues were derived from aftermarket sales and services in 2008
Leading Brands Generating Aftermarket Sales and Services
14
Continue to proactively engage with
highly strategic targets
Product, market and geographically
focused searches
Evaluate opportunistic bolt-on
companies
Pursue adjacent fluid handling
acquisitions
Effective selection and integration of 12 acquisitions since 1995
Acquisition Criteria
Acquisition Initiatives
Acquire companies in the fluid handling
industry
Strong brand name recognition
Leading market position
Differentiated product technology / highly
engineered product
Complementary end market / geographic
focus
Attain double digit return on investment in
the 3
rd year
Continue to Pursue Strategic Acquisitions that
Complement Our Platform
15
Claims arise from purchased components previously included in our products
Significant solvent insurance coverage
Bad faith lawsuit against insurance carriers increases costs in near term
Estimated annual liability and related defense costs of $5 - $7 million before potential
insurance asset or liability adjustments
Asbestos Update
2008
2007
2006
2005
60,000
54,000
48,000
42,000
36,000
30,000
59,217
35,357
37,554
50,020
Average Cost of Resolved Claims
Unresolved Claims
$6,194
$5,378
$5,232
$8,896
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
2005
2006
2007
2008
16
Financial Overview
17
($ in millions)
Financial Performance - Revenue
(1) Refer to Appendix for Non-GAAP reconciliation.
Total Growth
FX Translation
Acquisitions
Existing Businesses
--
--
--
--
13.9%
0.8%
1.4%
11.8%
28.6%
7.1%
8.0%
13.5%
19.5%
4.5%
1.1%
13.9%
Revenue (1)
$604.9
$506.3
$393.6
345.5
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
2005
2006
2007
2008
18
Financial Performance Adjusted EBITDA
($ in millions)
(1) Refer to Appendix for Non-GAAP reconciliation.
Adjusted EBITDA (1)
17.4%
17.5%
16.3%
15.9%
% Margin
$54.8
$64.1
$105.6
$88.2
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
2005
2006
2007
2008
19
(1) Refer to Appendix for Non-GAAP reconciliation.
($ in millions)
Total Growth
FX Translation
Acquisitions
Existing Businesses
---
---
---
---
19.4%
0.5%
1.2%
17.7%
31.5%
7.8%
6.1%
17.6%
15.1%
6.1%
2.0%
7.0%
Orders (1)
Financial Performance Orders
$370.4
$442.3
$581.5
$669.2
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
2005
2006
2007
2008
20
($ in millions)
Financial Performance Backlog
Backlog
$118.3
$179.3
$292.8
$337.3
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
$400.0
2005
2006
2007
2008
21
Refer to Appendix for Non-GAAP reconciliation.
__________________
Note: Dollars in millions.
Income Statement Summary
22
____________________
Note: Dollars in millions.
Statement of Cash Flows Summary
(Preliminary & Unaudited)
23
Strong Financial Condition(1)
Debt to adjusted EBITDA < 1 times
Approximately $130 million available on revolver (expires in 2013)
Approximately $29 million in cash
Strong balance sheet and credit availability provide flexibility
(1) As of FYE 2008
24
Adjusted EPS for 2009 of $1.10 to $1.17
2009 Outlook Summary
$585 million
to
$570 million
2009 Total
3%
to
1%
2009 Organic growth (1)
Revenue Range
$1.17
to
$1.10
2009 Adjusted net income per share (2)
$0.87
to
$0.80
2009 Net income per share
EPS Range
(1) Excludes impact of foreign exchange rate fluctuations and acquisitions
(2) Excludes impact of asbestos coverage litigation and asbestos liability and defense costs
(See Appendix for Non-GAAP reconciliation)
$2.5 million
Incremental public company costs
43.3 million
Outstanding shares
$8 million
Interest expense
32%
Tax rate
$1.41
Euro
$7 million
Asbestos liability and defense costs
$12 million
Asbestos coverage litigation
Assumptions
25
Well Positioned for the Future
Leading Brand Names
Generating Aftermarket
Sales and Services
Experienced Management
Team in Place to Grow
Organically and Through
Strategic Acquisitions
Global Leader in Specialty
Fluid Handling Products
Proven Application
Expertise in Solving
Critical Customer Needs
Serving Fast
Growing Infrastructure
Driven End Markets
CBS-Driven Culture Focused
on Profitable Sales Growth
26
Appendix
27
Adjusted net income, adjusted net income per share, adjusted operating income, EBITDA, adjusted EBITDA, adjusted
selling, general and administrative expenses, organic sales growth and organic
order growth are non-GAAP financial
measures. Adjusted net income, adjusted net income per share, adjusted operating income and adjusted EBITDA
exclude asbestos liability and defense cost (income) and asbestos coverage litigation expense, certain legacy
legal
charges, certain due diligence costs, certain other post-employment benefit settlement, cross currency swap,
environmental indemnification and discontinued operations expense (income), as well as one time initial public offering-
related costs.
Adjusted selling, general and administrative expenses exclude certain legacy legal charges and certain
due diligence costs. Adjusted net income also reflects interest expense as if the initial public offering (IPO) had occurred
at the beginning
of 2007 and presents income taxes at an effective tax rate of 34%. Adjusted net income per share
assumes the 44,006,026 shares outstanding at the closing of the IPO to be outstanding since January 1, 2007. Projected
adjusted net income per share excludes
asbestos coverage litigation and asbestos liability and defense costs, and
presents income tax benefit at 32%. Organic sales growth and organic order growth exclude the impact of acquisitions
and foreign exchange rate fluctuations. These
non-GAAP financial measures assist Colfax in comparing its operating
performance on a consistent basis because, among other things, they remove the impact of changes in our capital
structure and asset base, non-recurring items such as IPO-related costs,
legacy asbestos issues (except in the case of
EBITDA) and items outside the control of its operating management team.
Sales and order information by end market are estimates. We periodically update our customer groupings in order to
refine these estimates. During the fourth quarter of
2008, reclassifications of previously reported amounts were made to
conform to current period presentation. No changes have been made to total sales or orders.
Disclaimer
28
____________________
Note: Dollars in thousands.
Non-GAAP Reconciliation
2008
2007
2006
2005
EBITDA
Net income (loss)
(571)
$
64,882
$
94
$
12,247
$
Interest expense
11,822
19,246
14,186
9,026
Provision for income taxes
5,438
39,147
3,866
6,907
Depreciation and amortization
14,788
15,239
11,481
11,430
EBITDA
31,477
$
138,514
$
29,627
$
39,610
$
Adjusted EBITDA
Net income (loss)
(571)
$
64,882
$
94
$
12,247
$
Interest expense
11,822
19,246
14,186
9,026
Provision for income taxes
5,438
39,147
3,866
6,907
Depreciation and amortization
14,788
15,239
11,481
11,430
IPO-related costs
57,017
-
-
-
Asbestos liability and defense (income) costs
(4,771)
(63,978)
21,783
14,272
Asbestos coverage litigation expense
17,162
13,632
12,033
3,840
Other post-employment benefit settlement
-
-
(9,102)
(251)
Legacy legal expenses
4,131
-
8,330
3,100
Environmental indemnification
-
-
-
(3,100)
Cross currency swap
-
-
-
(2,075)
Due diligence costs
582
-
-
-
Discontinued operations expense (income)
-
-
1,397
(616)
Adjusted EBITDA
105,598
$
88,168
$
64,068
$
54,780
$
29
____________________
Note: Dollars in thousands, except per share amounts.
Non-GAAP Reconciliation
December 31,
December 31,
2008
2007
Adjusted Net Income and Adjusted Earnings per Share
Net income (loss)
(571)
$
64,882
$
IPO-related costs
57,017
-
Legacy legal adjustment
4,131
-
Due diligence costs
582
-
Asbestos liability and defense (income) costs
(4,771)
(63,978)
Asbestos coverage litigation expense
17,162
13,632
Interest adjustment to effect IPO at beginning of period
2,302
7,536
Tax adjustment to 34% effective rate
(22,201)
18,333
Adjusted net income
53,651
$
40,405
$
Adjusted net income margin
8.9%
8.0%
Shares outstanding at closing of IPO
44,006,026
44,006,026
Adjusted net income per share
1.22
$
0.92
$
Net income (loss) per share-basic
and diluted in accordance with GAAP
(0.11)
$
1.79
$
Adjusted Operating Income
Operating income
16,689
$
123,275
$
IPO-related costs
57,017
-
Legacy legal adjustment
4,131
-
Due diligence costs
582
-
Asbestos liability and defense (income) costs
(4,771)
(63,978)
Asbestos coverage litigation expense
17,162
13,632
Adjusted operating income
90,810
$
72,929
$
Adjusted operating income margin
15.0%
14.4%
Year Ended
30
____________________
Note: Dollars in thousands.
Non-GAAP Reconciliation
December 31,
December 31,
2008
2007
Adjusted SG&A Expense
Selling, general and administrative expenses
125,234
$
98,500
$
Legacy legal adjustment
4,131
-
Due diligence costs
582
-
Adjusted selling, general and administrative expenses
120,521
$
98,500
$
31
____________________
Note: Dollars in millions.
Sales & Order Growth
$
%
$
%
Year Ended December 31, 2005
345.5
$
370.4
$
Components of Growth:
Organic Growth from Existing Businesses
40.7
11.8%
65.6
17.7%
Acquisitions
4.8
1.4%
4.4
1.2%
Foreign Currency Translation
2.6
0.8%
1.9
0.5%
Total Growth
48.1
13.9%
71.9
19.4%
Year Ended December 31, 2006
393.6
$
442.3
$
Components of Growth:
Organic Growth from Existing Businesses
53.3
13.5%
77.7
17.6%
Acquisitions
31.3
8.0%
27.2
6.1%
Foreign Currency Translation
28.1
7.1%
34.3
7.8%
Total Growth
112.7
28.6%
139.2
31.5%
Year Ended December 31, 2007
506.3
$
581.5
$
Components of Growth:
Organic Growth from Existing Businesses
70.2
13.9%
40.9
7.0%
Acquisitions
5.5
1.1%
11.7
2.0%
Foreign Currency Translation
22.9
4.5%
35.1
6.1%
Total Growth
98.6
19.5%
87.7
15.1%
Year Ended December 31, 2008
604.9
$
669.2
$
Sales
Orders
32
Non-GAAP Reconciliation
Projected 2009 net income per share - fully diluted
0.80
$
0.87
$
Asbestos coverage litigation
0.28
0.28
Asbestos liability and defense costs
0.16
0.16
Income tax benefit at 32%
(0.14)
(0.14)
Projected 2009 adjusted net income per share - fully diluted
$ 1.10
$ 1.17
EPS Range
(amounts in dollars)
Preliminary and Unaudited
33