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.
|
|
99.1
|
Colfax Corporation investor presentation
slides
|
Colfax
Corporation
|
||||
Date: May 22,
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
May 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 Annual Report on Form 10-K 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
~2,100 associates
worldwide
15 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
7
Serving Critical Applications in Our Key End Markets
General
Industrial
Power
Generation
Oil & Gas
Commercial
Marine
Global Navy
Key Markets
Applications
Brands
Commercial
Marine
Fuel oil transfer; oil transport; water and wastewater handling
Allweiler,
Houttuin
,
I
mo
AB
Oil & Gas
Crude oil gathering; pipeline services; unloading and loading; rotating
equipment lubrication; lube oi
l 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 wastewate
r handling; firefighting;
fluid control
Allweiler,
Fairmount,
I
mo
,
I
m
o
AB,
Portland
Valve,
Warren
General Industrial
Machinery lubrication; hydraulic elevators; chemical processing; pulp and
paper processing; food and beverage processing
Allweiler,
Fairm
ount,
Houttuin,
I
mo
,
Tushaco
, Warren,
Zenith
Key Markets
Applications
Brands
Commercial
Marine
Fuel oil transfer; oil transport; water and wastewater handling
Allweiler,
Houttuin
,
I
mo
AB
Oil & Gas
Crude oil gathering; pipeline services; unloading and loading; rotating
equipment lubrication; lube oi
l 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 wastewate
r handling; firefighting;
fluid control
Allweiler,
Fairmount,
I
mo
,
I
m
o
AB,
Portland
Valve,
Warren
General Industrial
Machinery lubrication; hydraulic elevators; chemical processing; pulp and
paper processing; food and beverage processing
Allweiler,
Fairm
ount,
Houttuin,
I
mo
,
Tushaco
, Warren,
Zenith
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)
Simplifies OEM
design
Easier installation
All-Fuel SMART
Benefits
1.
Efficient seal
leakage monitoring
system - best value
2.
Easy to upgrade
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. Demand has softened in
several portions of the general industrial market including chemical, building products, diesel engine
and distribution primarily in Europe and North America.
In the U.S., expect Congress to continue to appropriate funds for new ship construction as older
naval vessels are decommissioned. Increased
demand for integrated fluid handling systems for
both new ship platforms and existing ship classes that reduce operating costs and improve
efficiency as the U.S. Navy seeks to man vessels with fewer personnel also anticipated. Sovereign
nations
outside of the U.S. continue to expand their fleets as they address national security
concerns.
Expect activity in Asia and the Middle East to remain strong as economic growth and fundamental
undersupply of power generation capacity continues to drive investment in energy infrastructure
projects. Efficiency
improvements will continue to drive demand in the worlds developed
economies.
Expect activity within the crude oil market to remain favorable as long term capacity constraints and
global demand drive further development of heavy oil fields, but are experiencing project delays. In
pipeline applications, demand for highly efficient products expected to remain strong as customers
continue to focus on total cost of ownership. In refinery applications, a reduction in capital
investment by customers is believed will
reduce the demand for our products.
Expect international trade and demand for crude oil and other commodities as well as the age of the
global merchant fleet to continue to create demand for new ship construction; however, expect new
orders
to be significantly lower than in the past two years. Expect sales to grow primarily from
existing orders; likely to have order cancellations. Believe the increase in the size of the global fleet
will create an opportunity to supply
aftermarket parts and service.
Estimated
Market Size
Favorable long term demand driven by global infrastructure build
Market Expectations
Serving Fast Growing Infrastructure Driven End Markets
11
EMEA
~ 1,170 Associates
2008 Sales (1) = $338mm
Asia Pacific
~ 280 Associates
2008 Sales (1) = $93mm
____________________
(1)
Sales figures reflect sales destination.
Americas
~ 650 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
Opened 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 3rd 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
2009
Q1
2008
Q1
-
2008
2007
2006
2005
$720.0
$600.0
$480.0
$360.0
$240.0
$120.0
$0.0
$136.3
$130.7
$604.9
$506.3
$393.6
$345.5
15.0%
16.8%
17.5%
17.4%
16.3%
15.9%
% Margin
--
--
--
--
19.5%
4.5%
1.1%
13.9%
4.3%
--
28.6%
13.9%
Total Growth
(13.6)%
--
7.1%
0.8%
--
FX Translation
--
--
8.0%
1.4%
--
Acquisitions
17.9%
--
13.5%
11.8%
--
Existing
Businesses
Revenue and Adjusted EBITDA
(1) Refer to Appendix for Non-GAAP reconciliation.
__________________
Note: Dollars in millions.
Revenue
Adjusted EBITDA (1)
$54.8
$64.1
$88.2
$105.6
$22.0
$20.5
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
2005
2006
2007
2008
Q1
2008
Q1
2009
18
____________________
Note: Dollars in millions.
Q1 2009
Q1 2008
-
2008
2007
2006
2005
$720.0
$600.0
$480.0
$360.0
$240.0
$120.0
$0.0
$120.8
$180.3
$669.2
$581.5
$442.3
$370.4
Orders
Backlog
Orders and Backlog
--
--
--
--
15.1%
6.1%
2.0%
7.0%
(33.0)%
--
31.5%
19.4%
Total Growth
(7.5)%
--
7.8%
0.5%
--
FX Translation
--
--
6.1%
1.2%
--
Acquisitions
(25.5)%
--
17.6%
17.7%
--
Existing
Businesses
15.2%
(5.0)%
5.2%
15.0%
(13.6)%
--
63.3%
51.6%
Total Growth
(10.8)%
--
13.1%
12.1%
--
FX Translation
--
--
3.0%
--
--
Acquisitions
(2.8)%
--
47.2%
39.5%
--
Existing
Businesses
$118.3
$179.3
$292.8
$337.3
$353.6
$305.6
$0.0
$80.0
$160.0
$240.0
$320.0
$400.0
2005
2006
2007
2008
-
Q1 2008
Q1 2009
19
Refer to Appendix for Non-GAAP reconciliation.
__________________
Note: Dollars in millions.
Income Statement Summary
Long Term Goals: Annual sales of $1 billion, gross profit margin of 40% & EBITDA margin of 20%
20
____________________
Note: Dollars in millions.
Statement of Cash Flows Summary
21
Strong Financial Condition
Debt to adjusted EBITDA < 1 times
Approximately $130 million available on revolver (expires in 2013)
Approximately $30 million in cash
Strong balance sheet and credit availability provide flexibility
____________________
Note: As of 4/3/09
22
Adjusted EPS for 2009 of $1.00 to $1.07
2009 Outlook Summary
$540 million
to
$525 million
2009 Total
(4)%
to
(2)%
2009 Organic growth (1)
Revenue Range
$1.07
to
$1.00
2009 Adjusted net income per share (2)
$0.76
to
$0.69
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 and severance and asset impairment
(See Appendix for Non-GAAP reconciliation)
Note: Outlook as of 5/8/09
$2.5 million
Incremental public company costs
43.3 million
Outstanding shares
$8 million
Interest expense
32%
Tax rate
$1.32
Euro
$7 million
Asbestos liability and defense costs
$12 million
Asbestos coverage litigation
Assumptions
23
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
Growing Infrastructure
Driven End Markets
CBS-Driven Culture Focused
on Profitable Sales Growth
24
Appendix
25
Disclaimer
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 severance and asset impairment charges as well as one time initial public
offering-related costs to the extent they impact the periods presented. Adjusted selling, general and administrative
expenses exclude severance and asset impairment costs, certain legacy legal charges and certain due diligence
costs to the extent they impact the periods presented. 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 32% in 2009 and 34% in 2008. Adjusted net income per share in 2008 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, asbestos liability and defense costs and severance and asset impairment costs.
Organic sales growth
and organic order growth (decline) exclude the impact of 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 2008, reclassifications of previously
reported amounts were made to conform to
current period presentation. No changes have been made to total sales or orders.
26
____________________
Note: Dollars in thousands.
Non-GAAP Reconciliation
27
Non-GAAP Reconciliation
____________________
Note: Dollars in thousands.
2008
2007
2006
2005
EBITDA
Net (loss) income
(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
$
EBITDA margin
5.2%
27.4%
7.5%
11.5%
Adjusted EBITDA
Net (loss) income
(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
Legacy asbestos expense (income)
12,391
(50,346)
33,816
18,112
IPO - related costs
57,017
-
-
-
Legacy legal expenses
4,131
-
8,330
3,100
Due diligence costs
582
-
-
-
Other post-employment benefit settlement
-
-
(9,102)
(251)
Cross currency swap
-
-
-
(2,075)
Environmental indemnification
-
-
-
(3,100)
Discontinued operations
-
-
1,397
(616)
Adjusted EBITDA
105,598
$
88,168
$
64,068
$
54,780
$
Adjusted EBITDA margin
17.5%
17.4%
16.3%
15.9%
28
____________________
Note: Dollars in thousands, except per share amounts.
Non-GAAP Reconciliation
29
____________________
Note: Dollars in thousands.
Non-GAAP Reconciliation
30
____________________
Note: Dollars in millions.
Sales & Order Growth
31
Sales & Order Growth
____________________
Note: Dollars in millions.
$
%
$
%
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
33