UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 29, 2017
Colfax Corporation
(Exact name of registrant as specified in its charter)
Delaware | 001-34045 | 54-1887631 |
(State or other jurisdiction | (Commission | (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
420 National Business Parkway, 5th Floor
Annapolis Junction, MD 20701
(Address of Principal Executive Offices) (Zip Code)
(301) 323-9000
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01 Regulation FD Disclosure.
On November 29, 2017, Colfax Corporation (the "Company") held an Investor Event and provided certain financial information. The presentation is attached to this report as Exhibit 99.1. The presentation and a replay of the event are available on the Company's website at www.colfaxcorp.com under the "Investors" section.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 | Colfax Corporation management's Investor Event presentation on November 29, 2017. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Colfax Corporation
Date: November 29, 2017 By: /s/ Christopher Hix
Name: Christopher Hix
Title: Senior Vice President, Finance,
Chief Financial Officer and Treasurer
EXHIBIT INDEX
INVESTOR DAY | NOVEMBER 2017
2
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.
3
Agenda
8:30 AM Colfax Progress Matt Trerotola, President & CEO
Dan Pryor, EVP Strategy & BD
Chris Hix, SVP & CFO
9:20 AM ESAB Overview & Strategy Shyam Kambeyanda, SVP & ESAB
President
10:05 AM Bus to Denton All
10:45 AM Tours & Breakout Sessions ESAB Team
12:00 PM Lunch All
1:00 PM Tours & Breakout Sessions ESAB Team
2:30 PM Adjourn and Bus to Hotel All
3:15 PM Arrive at Hotel All
4
COLFAX DIRECTION & PROGRESS
Matt Trerotola | President and CEO
5
Summary of the Day
➢ Strong foundation and winning model
➢ Significant progress on key priorities
➢ Shaping Colfax for the future
6
Colfax History and Growth
Source: Company filings
1850 to 1930 Colfax 2010 Colfax Today Colfax Future
~$4B
<$1B
Grow
Existing
Platforms
Add New
Platforms
Build CBS Foundation
Fabrication
Technology
Air & Gas Handling
Fluid Handling
7
Colfax Strategy – A Winning Model
Focus and
Empower Top
Talent
Acquire Good
Companies
Use CBS to Make
Them Great
▪ Attractive markets
▪ Strong brands and
solutions
▪ Opportunities to
improve and expand
▪ Values
▪ Tools & processes
▪ Way of working
▪ Independent
businesses
▪ Great leaders,
strong teams,
winning spirit
▪ Lean, high value
corporate
We use CBS to make good businesses great
8
Colfax Corporate Priorities
1. Secure a Strong
Foundation
2. Improve and Grow
our Businesses
3. Innovate and Acquire
to Accelerate
▪ Great team, relentless talent focus
▪ Values driven culture
▪ CBS as “The Way to Win”
▪ Leading brands and technologies
▪ Core growth > competition
▪ Margin improvement
▪ FCF conversion
▪ Accelerate growth
▪ Access new markets
▪ New platforms
9
The Best Team Wins
Colfax Leadership
Strong
Additions
Strong, seasoned leadership ready to accelerate and scale
Shyam Kambeyanda
President, ESAB
May, 2016
21 yrs. Eaton
Chris Hix
SVP & CFO
July, 2016
11 yrs. public CFO
13 yrs. Roper
Jason MacLean
SVP, CBS & SC
October, 2017
11 yrs. Cummins
Strong
Foundation
Ian Brander
CEO, Howden
34 yrs. Howden
Dan Pryor
EVP, Strategy & BD
6 yrs. Colfax
11 yrs. Danaher
Lynne Puckett
General Counsel
7 yrs. Colfax
Lynne Clark
SVP HR
4 yrs. Colfax
10
The Best Team Wins -
Creating CBS Leadership Depth
Areas of Focus Progress
▪ Development of our CBS
capable leaders
▪ Improved leadership depth
▪ 35% of senior GMs participated in
flagship Exec Development Program
▪ Expanding early talent pipeline
through MBA Pathways program
▪ Stronger, deeper talent bench – line
and functions
▪ 95% key leader retention
▪ Motivated, challenged and
engaged associates
▪ Using talent processes to
support strategic initiatives
▪ Improved in all 4 dimensions of 2nd
Engagement Survey with 91% global
participation
▪ CBS, digital growth, automation,
supply chain talent build
▪ Migrating talent resources and
knowledge to growth regions
Stronger, deeper bench driving performance and ready to support acquisitions
T
al
e
n
t
Organ
izatio
n
Source: Internal company reporting and analysis.
11
A Strong Foundation –
Values Driven Business System
VALUES + TOOLS + WAY OF WORKING
2015-2017 2018 and beyond2012-2014
Broad deployment
Training, # of kaizen
Operations & innovation
Focus for impact
Mfg. Excellence KPI’s
+ Growth tools
Scale impact
Journeys to leadership
+ Leverage digital
0.6
0.8
1.0
1.2
1.4
1.6
2014 2015 2016 2017
SAFETY
(Total Recordable Incident Rate)
80%
85%
90%
95%
2014 2015 2016 2017
ON TIME DELIVERY
(Filler Metal OTD %)
Source: Internal company reporting and analysis.
12
Continuous Improvement Is Our Way of Life
Continuous improvement culture changing the game
Source: Internal company reporting and analysis.
0
1
2
3
4
2013 2017
-74%
SAFETY (TRIR)
0
50
100
150
200
2013 2017
-72%
QUALITY (FM PPM)
84%
86%
88%
90%
92%
94%
96%
98%
2013 2017
DELIVERY(On Time Delivery)
800
bps
COST (Inventory Turns)
0
5
10
15
20
2013 2017
11x
• Market leader acquired in 2012
• 2013-2015 – Introduction to CBS
− CBS Roadmap & core CBS tools
− Internal training and quick,
practical events
− Kaizens focused on main KPI’s
− Visual management
• 2016-17
− Strong visual Daily Management
− Kaizen roadmap to set
breakthrough SQDC performance
− High associate engagement
ESAB Peru – Soldex S.A.
13
Global Presence in Growing Economies
Source: Internal company reporting, Continuing Ops, 2016 unless noted; international Monetary Fund WOE, 2017
Positioned to win in emerging markets that are 60% of global investment
COLFAX REVENUE BY REGION
(2017 YTD through Q3)
GDP GROWTH ESTIMATE
Emerging
Markets
Developed
Countries
2015 2016 2017 2018 2019 2020 2021 20220%
2%
4%
6%
Emerging Markets
Developed Countries
3x
▪ Diverse positions
– China >$300M
– India, Russia, Brazil, SA >$100M
– 18 countries >$50M
▪ Benefitting from global trends
– Urbanization
– Growing global middle class
▪ Delivering results through strong,
local teams
– #1 market positions
– CBS excellence
▪ Investing in talent, capacity, and
capability
14
Stronger, More Flexible Cost Structure
▪ Over $160M of restructuring
savings since 2015
– 19 sites closed
– 14% headcount reduction
– SG&A focus with simpler org
structures and regional shared
services centers
– Successful project management
▪ Maintaining growth investments
– Shifting resources to growth
markets
– Pace of new product launches
6%
8%
10%
12%
14%
$0
$30
$60
$90
$120
$150
$180
2015 2016 2017F
FabTech G&FH
RESTRUCTURING & SEGMENT MARGINS
(Cumulative restructuring savings, Segment AOP%)
Progress on path to mid-teen margins
Source: Internal company reporting and analysis.
15
Shaping Colfax for the Future
Aftermarket
General
Industrial
Oil & Gas
Power
Marine &
Mining
Aftermarket
General
Industrial
Oil & Gas
Power
Marine &
Mining
➢ Lower cyclicality
➢ Less volatility
➢ Higher margins
➢ Higher vitality
COLFAX 2012
(Orders, New Build by Market)
COLFAX ENTERING 2018
(Orders, New Build by Market)
Source: Internal company reporting and analysis; 2018 presents Continuing Ops YTD proforma for STE
72%
from Industrial
and Aftermarket
Organic initiatives
− Industrial growth
− Aftermarket
Bolt-on acquisitions
− Weighted heavily to
industrial applications
− Focus on Digital Growth
New platforms
− CFH sale
− Active work on funnel
A stronger base business positioned to capture upside of any capex recovery
16
Building a Wastewater Leadership Position
▪ Existing Howden turboblower
technology could serve <10% of
market opportunity
▪ Establishing position in China
▪ Roots acquisition expanded
addressable range to ~50%
▪ STE acquisition extends
addressable applications to ~75%
▪ Organic product development to
push toward full coverage of
customer needs
WASTEWATER AERATION
▪ ~$400M global market
▪ Projected 4% CAGR, 6-8% in
emerging markets
▪ Driven by population growth,
urbanization, and environmental
regulations
▪ Competition defined by efficiency,
reliability, and support
Using acquisitions to accelerate and strengthen organic growth initiatives
20
18
/1
9
2
01
2
17
NEW PRODUCT DEVELOPMENT
− CBS tools: VOC, QFD, APD
− R&D
− Open innovation
DIGITAL GROWTH
− Productivity & uptime
− Process optimization
− Partnerships
ACQUISITIONS
− Simsmart, Ventsim
− HKS, TBi, AMI
Accelerating Innovation
Leveraging leadership positions in markets where technology matters
Welding Productivity Mining Productivity Enabled Equipment
SmartMIG Arc Technology Largest Recip Compressor Highest Power/Weight Ratio
Visualization & Control Optimized Solutions Universal Connector
18
Digital Technology Development
Using digital technologies to create differentiation and expand market
Global leader in
mining fans
Innovative system
optimization tool
Industry standard
for design &
visualization
Smart Fan
IoT enabled &
microcontroller
Ventilation as a
Service model
VOC & integration
Complementary
acquisitions
Adjacent complex
ventilation systems
2015 2016 2017 2018
An
nu
al R
eve
nu
e
>$40M annual
opportunity in
complex
ventilation
system
optimization
19
COLFAX ACQUISITION STRATEGY
Dan Pryor | EVP Strategy & Business Development
20
Acquisitions Accelerating Growth Initiatives
1. Converted at current exchange rates. Includes Sandvik Welding Materials business, expected to close early 2018.
Key elements of process:
▪ Rooted in strategy –
acquisitions as accelerator of
initiatives / goals
▪ Proactive approach – priority
targets actively cultivated
▪ Clear value-creation thesis –
acquisition logic tested in
diligence
▪ Rigorous integration – well-
defined plan with regular
follow-up
Recent results:
▪ ~$430M1 deployed on 7 deals
− Average multiple less than 9x
− Year 3 EBITDA above CFH
▪ Businesses enhanced /
strengthened
− Investing in fastest growing
segments and markets
− Diversifying market mix;
increasing lifecycle participation
− Adding leading / differentiated
technology to portfolio
Robust M&A process delivering results
21
Acquisitions Accelerating Growth Initiatives
Industrial Diversification
Automation Solutions
Digital Growth
Emerging Markets
Aftermarket
Specialty Filler Metal
Sandvik
Welding
Consumables
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓ ✓
✓
✓
Siemens
Turbo
Equipment
Strategic acquisitions enhancing core business
22
Ramping Up New Platform Efforts
Goals:
• Enhance growth profile
• Balance end-market exposure
• Shift margin structure
• Provide innovation headroom
• Lengthen bolt-on runway
Key elements of process:
• Top-down / bottom-up approach
• Rigorous market diligence
• Portfolio of opportunities
• Disciplined evaluation
• Significant executive attention
Making Colfax better… not just bigger
23
COLFAX FINANCIAL UPDATE
Chris Hix | SVP & CFO
24
0%
4%
8%
12%
'15 '16 '17F
Improving Segment Profitability
Mid-teen margin performance would generate ~75¢ or more of additional aEPS
FABRICATION TECHNOLOGY
(Segment AOP%)
GAS & FLUID HANDLING
(Segment AOP%)
0%
4%
8%
12%
'15 '16 '17F
Source: Company filings and management analysis
▪ Overall segment margins of 10.8% YTD 2017 vs 9.7% YTD 2015
▪ ESAB margin up ~200 bps on limited growth – clear path to mid-teens
▪ Steady Fluid Handling improvement captured in sale price
▪ Howden using restructuring to offset volume and price pressures
▪ Growth, cost actions available to achieve 3-4 year goal of 15% segment margins
25
Growing Investment Firepower
$234
$184
$200+
'15 '16 17F
▪ $67M in 2016 and roughly $37M in 2017 to support restructuring actions
▪ Cash generation expected to grow as business pivots to growth
▪ Opportunities remain to improve working capital performance
▪ Long-term strategic goal of achieving investment grade status
Over $1B of expected firepower to support strategic growth programs in 2018
Q3 '17 Pro forma Strategic
range
2.6X
1.5X
Typical 2-3X
Stretch 3X+
FREE CASH FLOW*
($ million)
LEVERAGE**
Source: Company filings and management analysis
* Free Cash Flow calculated as net cash provided by operating activities less purchases of fixed assets
** Leverage calculated in accordance with the total leverage ratio definition specified in the credit agreement with Deutsche Bank AG New York Branch.
26
Improving Earnings Trajectory
Well-positioned to deliver Adj. EPS growth in 2018
ADJUSTED EARNINGS PER SHARE
’17PFFH SaleSTE Other’17
$1.55 –
$1.65
$1.65 –
$1.75
▪ Turned the corner on earnings in 2016 despite market and currency pressures
▪ Returned to solid earnings growth in 2017 with benefits from restructuring
actions and improved ESAB market conditions
➢ ESAB sales growth
➢ Howden restructuring
➢ Additional acquisitions
2018 GROWTH VECTORS
’15
$1.60
’16
$1.56
Source: Company filings and management analysis
2017 pro forma for estimated full-year 2017 Fluid Handling contribution and estimated STE and other acquisition contribution
27
Existing growth platforms
A Winning Model Creating Value
Line of sight to $3.00 or more of Adj. EPS within 4 years
Margin expansion opportunities
Strong cash flow generation
Successful M&A program
Investor
value creation
28
Improving and Growing
➢ Accelerating growth initiatives at ESAB
− Improving regional market conditions
− Stronger team and processes
− Increasing pace of new technology
− Leveraging recent acquisitions
➢ Making the turn at Howden
− Focus on industrial and mining growth as energy turns
− Additional cost structure work to drive margin expansion
− Investing in team and capability in emerging markets
➢ Shaping the portfolio with attractive acquisitions
− Accretive bolt-ons
− New growth platform
Well positioned to drive shareholder value
29
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
30
Q&A
31
32
33
34
35
36
37
38
39
40
41
45
46
47
48
49
50
51
52
53
54
APPENDIX
55
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, projected adjusted net income per share, adjusted
operating income. Adjusted net income, adjusted net income per share, projected adjusted net income per share and
adjusted operating income exclude Restructuring and other related items and divestiture-related expense associated with the
sale of our Fluid Handling business to the extent they impact the periods presented. Adjusted net income, adjusted net
income per share, adjusted operating income for 2016 also exclude the loss recorded on our deconsolidation of our
Venezuelan operations and the asbestos coverage adjustment. 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, as they are of a nature and/or size that occur with
inconsistent frequency or relate to discrete restructuring plans that are fundamentally different from the ongoing productivity
improvements of the Company. Colfax management also believes that presenting these measures allows investors to view its
performance using the same measures that the Company uses in evaluating its financial and business performance and
trends.
56
Non-GAAP Reconciliation
(unaudited)
__________________
Note: Dollars in thousands
Corporate and Other
Net sales 1,846,555$ 1,800,492$ -$ 3,647,047$
Operating income (loss) 124,326 6.7% 163,509 9.1% (49,820) 238,015 6.5%
Restructuring and other related charges 42,482 31,688 - 74,170
Asbestos coverage adjustment 8,226 - - 8,226
Loss on deconsolidation of Venezuelan operations 1,874 495 - 2,369
Adjusted operating income (loss) 176,908$ 9.6% 195,692$ 10.9% (49,820)$ 322,780$ 8.9%
Corporate and Other
Net sales 1,981,816$ 1,985,237$ -$ 3,967,053$
Operating income (loss) 162,942 8.2% 168,687 8.5% (46,984) 284,645 7.2%
Restructuring and other related charges 31,527 29,650 - 61,177
Adjusted operating income (loss) 194,469$ 9.8% 198,337$ 10.0% (46,984)$ 345,822$ 8.7%
Corporate and Other
Net sales 2,329,598$ 2,294,878$ -$ 4,624,476$
Operating income (loss) 227,707 9.8% 234,225 10.2% (52,379) 409,553 8.9%
Restructuring and other related charges 26,533 31,588 - 58,121
Adjusted operating income (loss) 254,240$ 10.9% 265,813$ 11.6% (52,379)$ 467,674$ 10.1%
Year Ended December 31, 2016
Fabrication TechnologyGas and Fluid Handling Total Colfax Corporation
Year Ended December 31, 2014
Gas and Fluid Handling Fabrication Technology Total Colfax Corporation
Year Ended December 31, 2015
Gas and Fluid Handling Fabrication Technology Total Colfax Corporation
57
Non-GAAP Reconciliation
(unaudited)
Projected % of net sales:
Fabrication
Technology
Gas and Fluid
Handling
Operating income ~11% ~8%
Restructuring and other related charges ~1% ~1%
Divestiture-related expense, net 0% ~1%
Adjusted operating income ~12% ~10%
Year Ended December 31, 2017
58
Non-GAAP Reconciliation
(unaudited)
__________________
Note: Dollars in thousands
Corporate
and Other
Total Colfax
Corporation
Net sales 1,408,992$ 1,496,597$ 2,905,589$ -$ 2,905,589$
Operating income (loss) 115,535 8.2% 139,539 9.3% 255,074 8.8% (35,492) 219,582
Restructuring and other related charges 11,562 14,096 25,658 - 25,658
Adjusted operating income (loss) 127,097$ 9.0% 153,635$ 10.3% 280,732$ 9.7% (35,492) 245,240$
Nine Months Ended September 25, 2015
Fabrication TechnologyGas and Fluid Handling Overall Segment
Air and Gas Handling Fabrication Technology Corporate and Other
Net sales 989,044$ 1,437,057$ -$ 2,426,101$ 343,690$ 2,769,791$
Operating income (loss) 88,285 8.9% 158,850 11.1% (42,024) 205,111 8.5% 29,362 8.5% 276,497 10.0%
Restructuring and other related charges 9,285 13,846 - 23,131 (7,628) 15,503
Divestiture-related expense, net - - - 7,275 7,275
Adjusted operating income (loss) 97,570$ 9.9% 172,696$ 12.0% (42,024)$ 228,242$ 9.4% 29,009$ 8.4% 299,275$ 10.8%
Total Colfax Corporation
(Continuing Operations)
Fluid Handling
(Discontinued Operations)
Nine Months Ended September 29, 2017
Overall Segment
(Air and Gas Handling,
Fabrication Technology
and Fluid Handling)
59
Non-GAAP Reconciliation
(unaudited)
__________________
Note: Amounts in thousands except per share amounts
2016 2015
128,111$ 167,739$
74,170 61,177
8,226 -
Loss on deconsolidation of Venezuelan operations 2,369 -
Debt extinguishment charges- Refinancing of credit agreement - 4,731
Tax adjustment(1) (21,040) (33,549)
Adjusted net income 191,836$ 200,098$
Adjusted net income margin 5.3% 5.0%
Weighted-average shares outstanding - diluted 123,199 124,870
Adjusted net income per share 1.56$ 1.60$
Net income per share— diluted (in accordance with GAAP) 1.04$ 1.34$
(1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 28.6% and 27.5% for
the year ended December 31, 2016 and the year ended December 31, 2015, respectively.
Year Ended December 31,
Adjusted Net Income and Adjusted Net Income Per Share
Net income attributable to Colfax Corporation
Restructuring and other related charges
Asbestos coverage adjustment
60
Non-GAAP Reconciliation
(unaudited)
Low High
Colfax Corporation
Projected net income per share - diluted 1.34$ 1.44$
Restructuring costs- 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 Pro Forma Earnings Per Share Range
Low High
Colfax Corporation
Projected net income per share - diluted 1.34$ 1.44$
Restructuring costs- pretax 0.30 0.30
Divestiture-related expense, net- pretax 0.13 0.13
Tax adjustment (0.12) (0.12)
STE pro forma full year contribution 0.10 0.10
Fluid Handling pro forma full year operation (0.25) (0.25)
Other pro forma adjustments 0.05 0.05
Projected adjusted net income per share (pro forma) 1.55$ 1.65$
2017 Earnings Per Share Range