edited transcript of kai earnings conference call or presentation 30-apr-19 3:00pm gmt

CallWESTFORD, May 2, 2019 (2019
Thomson StreetEvents)--
Tuesday, April 30, 2019, at 3:00:00, the transcript of the call or presentation of Kadant Inc. earnings was Edited
PainterKadant-
Michael J. , President, CEO and director.
McKenny Cardan-
Executive Vice President and CFO = = = conference call attendee = = = * Daniel Andres JacomeSidoti Co. , Ltd-
Analyst at Securities Research * Huang HoweBarrington Research Associates, Inc.
Research Department-
Senior investment analyst and research analyst, research arm, Walter Scott Liptak Harbour Global Securities Co. , Ltd.
MD and senior industrial analyst-------------------------------------------------------------------------------Operator [1]--------------------------------------------------------------------------------
Hello ladies and gentlemen, welcome to Q1 2019 Kadant Inc.
Earnings Conference Call(
Operator instructions)
A reminder that this conference call may be recorded for replay purposes.
I am now happy to hand over the meeting to Michael McKinney, chief financial officer.
You can start, Sir. --------------------------------------------------------------------------------Michael J.
McKinney of Cardan company-
Executive Vice President and Chief Financial Officer2]--------------------------------------------------------------------------------
Thank you, Brian. good morning, everyone. welcome to the first quarter 2019 financial report call.
Our chief executive, Jon painter, called with me today.
Let me read our Safe Harbor Statement before we start.
We may make various comments today on the future plans and expectations, financial and operational results and prospects of Cardan --
According to the statement of the Private Securities Litigation Reform Act of 1995 looking for safe harbor provisions. These forward-
Forward-looking statements are affected by known and unknown risks and uncertainties that may lead to significant differences in our actual results from those forward-looking
Due to various important factors, including the factors outlined at the beginning of our slide and the factors discussed under the heading of risk factors in our Annual Report on table 10, we look forward to presenting
For the fiscal year ended December 29, 2018, and the documents subsequently submitted to the Securities and Exchange Commission.
In addition, any forwarding-
Our forward-looking statements on webcast represent only our views and estimates today.
Although we may choose to update forward
From statements at some point in the future, even if our views or estimates change, we expressly deny any obligation to do so.
In this webcast, we will mention some non-
GAAP Financial indicators. These non-
The accepted accounting principles are not prepared in accordance with the accepted accounting principles.
A reconciliation
GAAP financial measures are the most directly comparable GAAP measures, included in the slides presented in our revenue Press Release and Webcast for the first quarter and discussed in the conference call, this information can be found in the investor section of our website at www. kadant.
Com under the title of investor News.
With this, I will transfer the call to Jon Panter, who will introduce you to the business and future prospects of Cardan.
After Jon spoke, I will give you an overview of our financial results for the quarter, and then we will have a Q & A session. Jon? --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director3]--------------------------------------------------------------------------------Thanks, Mike.
Thank you all for joining us this morning, reviewing our first quarter results and introducing you to our business prospects for 2019.
Overall, we have had a good start this year and good operating results have resulted in stable earnings per share [beat]
Record revenue and bookings.
Let me start with the financial highlights of the first quarter.
Our bookings for the first quarter were $0. 184 billion, up 1% from last year\'s record.
We also have record revenues, up 15% to $0. 171 billion.
Gross profit margin fell to 41.
2% due to lower procurement accounting and inclusion-
Profit income from our recent acquisition.
Adjusted EBITDA rose 27% to $30 million or $17. 5% of revenue.
We made $0.
GAAP diluted 96 of earnings per share and our adjusted earnings per share increased by 16% to $1. 24.
The negative effect of foreign exchange on our earnings per share is $0. 08.
Cash flow in the first quarter increased 37% from a year earlier to $10 million.
Finally, we ended the quarter with a net debt of $0. 304 billion and a leverage ratio of 2. 33.
If you look at Slide 6, you can see that FX has a meaningful negative impact on our Q1 results, while Syntron\'s acquisition has a positive impact.
Excluding foreign exchange and acquisitions, our internal revenue grew by 6% per cent, while internal revenue growth and bookings fell by 8% per cent compared to record levels in 2018.
You may remember that our bookings in the first half of 2018 were very high, so we expect it to be difficult to compare in the first half of this year.
Nevertheless, I am very pleased with the booking level for the first quarter.
In the first quarter, the internal growth of our parts and consumables was also good, and revenue increased by 4.
5% and booked 3. 6%.
Continue our booking and revenue performance.
Slide 7 shows that due to the contribution of our recent acquisition, bookings for the first quarter showed positive growth compared to the first three quarters, reaching a record $0. 184 billion.
I should also point out that we had a record backlog of $0. 2 billion at the end of this quarter.
Revenue rose 15% in the first quarter to a record $0. 171 billion. Mainly due to the contribution of our acquisition, and also the strong performance of our stock preparation product line in Europe and North America and our physician cleaning and filtration product line in North America.
Another high point in the quarter was our parts and consumables business, with significant increases in bookings and revenue.
Due to the contribution of our recent acquisition, bookings for parts and consumables increased by 17% to a record $0. 12 billion.
Revenue from parts and consumables also stood out in the first quarter, up 18% to a record $0. 113 billion, or 66% of our total revenue in the first quarter.
Parts and consumables account for 66% of revenue and continue to account for a large part of our total revenue.
I would like to point out that after analyzing Syntron\'s business, we decided that it would be better to classify its after-sales replacement and upgrade business as parts and consumables.
Using this classification, Syntron\'s parts and Consumables revenue in q1 accounts for 82% of its total revenue.
Next, let me review our performance in the main geographic areas we operate and I will start in North America.
The packaging market in North America started in 2019 in an environment of weak demand and increased new capacity.
This led to a freight rate of 91% for the first quarter of the container board, down from 95% in the same period last year.
The potential strength of the United States. S.
The economy is smooth, but the overall demand is still uncertain enough, and packaging buyers are cautious when accumulating too much inventory.
A big problem in the North American market is what role China will play in importing North American liners to offset the fiber shortage they have experienced in China.
In housing, the United StatesS.
Compared with the strength of the first quarter of 2018, the number of housing starts in the first quarter fell by about 10%.
March\'s annualized rate is $1.
However, 1 million of housing starts are still healthy.
With interest rates falling, the market does seem to be strengthening to make new homes more affordable.
That said, compared to the high level we saw last year, we saw a decrease in capital project activities in the wood processing sector, as many producers were anxious to increase production capacity and modernize their facilities.
This combination suggests that the outlook for capital projects will be weaker than last year, but still at a reasonable level.
In the mining and aggregate market, which is mainly served by our new material processing system department, the prospects are even brighter.
We see that based on the healthy industrial activities in North America, we have a high level of project activity communicating products with mining customers.
We also see good activity in aggregate space such as sand, gravel and gravel in our vibrating feed and delivery products.
As you can see on slide 9, revenue has increased to a record $0. 11 billion, up 30% from 2018.
While our recent acquisition is the main reason for revenue growth, our internal revenue ---
Revenue growth excluding foreign exchange and acquisitions is a very healthy 7%, making North America the strongest region in the world for us.
Bookings in North America rose 13% to a record $0. 105 billion.
The increase in bookings for our medical, cleaning and filtration product line partially offset the decline in our wood processing and inventory preparation product line.
That is to say, our recent acquisition is the biggest reason for the increase in our bookings.
Excluding the impact of foreign exchange and acquisitions, our bookings in North America were very strong from the first quarter of 2018, down 9%.
Before leaving North America, I would like to report how we, as part of Kadant, processed the acquisition of materials for the first quarter.
Overall, the business is doing well and executed as planned.
Revenue from the business was $21 million, bookings were $24 million, and revenue was $0.
We adjusted earnings per share growth in the first quarter.
The management team took part in our global management meeting and achieved some synergies.
Looking ahead, we expect 2019 to be a solid year.
In slide 10 we show our revenue and booking performance in Europe.
The European market is roughly the same as in the past few years.
The region appears to be dragged down by a slowdown in export activity as China, its most important trading partner, is overcoming its own economic resistance.
Weak manufacturing in the industrial sector, coupled with ongoing trade disputes between the United StatesS.
The uncertainty over China and Britain\'s exit from the EU continues to lead to a fairly sluggish economic environment.
Revenue fell 6% in the first quarterover-
Despite strong growth in our inventory preparation and timber processing product lines, forex has led to this year.
Excluding the effects of foreign exchange and acquisitions, revenue grew by 2%.
Bookings in Europe fell by 9%, excluding foreign exchange and acquisitions, by only 2%.
With the exception of wood processing, all of our product lines have declined in the first quarter, with bookings increasing by 25% compared to 2018.
In particular, we booked capital orders for 5 machines in Eastern Europe, which are Rotary Hair removal equipment that we use in our wood processing plants, with a total value of about $2. 6 million.
Overall, the European market is stable and we expect the market conditions to remain moderate due to high political uncertainty and relatively weak demand.
Now turn to Asia.
We see the impact of the proposed waste paper ban and China\'s economic slowdown.
Revenue fell 15% in the first quarter compared with first quarter of 2018.
Bookings decreased by 4% compared to 2018, but continued to grow by 56%.
As we mentioned on the phone earlier, as the government decided to significantly reduce the import of waste paper to China, container manufacturers in China are facing a shortage of fiber. The build-
In response to the waste paper ban, Chinese producers continued their fiber processing capacity in southeast Asia in 2018.
Now, Chinese producers have more projects outside China than in China.
Malaysia has recently become a hot spot for investment, with two of China\'s larger container producers recently announcing plans to add nearly 3 million tons of new capacity in the coming years.
On the other hand, container manufacturers in China are extending downtime due to lack of fiber and slowing demand.
Therefore, we expect the demand for capital and parts from Chinese paper industry customers to decrease this year.
Despite the challenging market situation, we did book some capital projects in China this quarter, especially in our stocking product line, if we Book 3 OCC system orders, as mentioned in our last call, the total value of the order is about $9 million.
In addition, the OSB project is still in progress and, if secured, will help offset the weak booking of the expected paper industry sales capital.
Finally, make a few comments on the results of the rest of the world.
The market conditions in South America, particularly Brazil, remain limited but stable.
In the first quarter, our income in the rest of the world was $14 million, an increase of 45% over the same period last year and a sequential increase of 31%.
Compared with the relatively strong first quarter of 2018, bookings fell by 33%.
However, we are up 18% in a row.
Finally, I would like to make a few comments on our guidance for the second quarter and the full year of 2019.
Despite some volatility in the Chinese market and a decline in housing demand in North America, we are encouraged by a good start in 2019.
Based on the results of the first quarter and our outlook for the remainder of the year, we reiterate the full-year earnings and adjusted earnings per diluted per share guidance and improve the earnings per diluted per share guidance for GAAP.
For 2019, we now expect earnings per share to reach $4. 84 to $4.
In 99, revenue was $0. 7 billion to $0. 71 billion.
We expect adjusted earnings per share to be between $5. 20 and $5. 35.
Mike will give you more details about our guidance in his comments.
In the second quarter of 2019, we expect earnings per share to reach $0. 99 to $1.
05. revenue was $0. 165 billion to $0. 17 billion, and adjusted diluted earnings per share were $1. 07 to $1. 13.
I will transfer the call to Mike for more details on our financial performance. Mike? --------------------------------------------------------------------------------Michael J.
McKinney of Cardan company-
Executive Vice President and Chief Financial Officer4]--------------------------------------------------------------------------------Thank you, Jon.
Let me start with our gross profit margin.
The gross profit margin is 41.
The first quarter of 2019 was 2%, down 310 basis points from 44.
The first quarter of 2018 was 3%.
The consolidated gross profit margin for the first quarter of 2019 was negatively affected by the amortization of acquisition profits in stock related to our recent acquisition, which reduced the consolidated gross profit margin by 130 basis points.
Excluding the impact of amortization of inventory profits, the combined gross profit margin for 2019 was 42.
5%, down 180 basis points from the first quarter of last year, mainly due to the inclusion of lower
Gross profit margin profile of our recent acquisition.
In the first quarter of 2019, our component and consumer goods revenue accounted for 66% of total revenue, compared to 64% in 2018.
As Jon pointed out, we have classified after-sales replacement and upgrades for Syntron as parts and consumables.
Excluding Syntron revenue from parts and consumables, this quarter will reach 64%.
Looking ahead, in 2019, due to Amortization of acquired profits in stock, we expect gross margin to be reduced by about 60 basis points.
Now let\'s go to slide 16 and our quarterly SG & A fee.
SG & A costs $49.
The first quarter of 2019 increased by $3 million.
From 5 million in 2018.
That includes an increase of $5.
We lost $7 million from our acquisition.
Translation effect from favorable foreign currency is 8 million. The $5.
7 million of the acquisition-
The related SG & A fee includes $0.
Amortization expenses related to the backlog of acquisitions and $0 increased by 7 million.
8 million of the acquisition cost.
SG & A expenses fell to 28 as A percentage of revenue.
The first quarter of 2019 was 8% per cent, compared to 30 per cent.
The first quarter of 2018 was 7%.
We expect that this indicator will continue to improve in the second half of 2019 as income increases.
Let me take a look at our EPS performance this quarter.
In the first quarter of 2019, GAAP diluted earnings per share were $0.
Our adjusted diluted earnings per share are $1. 24. The $0.
The 28 difference is related to $0.
22 amortized expenses and $0 related to profits gained in inventory and backlog.
06 acquisition costs.
In the first quarter of 2018, GAAP diluted earnings per share were $0.
Our adjusted diluted earnings per share are $1. 07. The $0.
11 is related to $0.
05 restructuring costs, $0.
A discrete tax item of 04 and $0.
02 amortization expenses related to the backlog of acquisitions.
The increase of $0.
The adjusted diluted EPS in 2019, compared to 2018, included the following: $0.
16 due to low operating costs; $0.
07 from the operating results of our acquisition, deduct the interest expenses incurred by the acquisition; and $0.
04 due to higher income.
These additions were partially offset by $0.
06 $0 due to low gross margin percentage.
04 effective tax rate from higher.
Overall, all the categories I mentioned just now include the unfavorable foreign currency translation effect of $0.
2019 compared with the first quarter of last year, due to the strengthening of the US economyS. dollar.
Let me take a moment to compare our first quarter Adjusted Diluted EPS results with the guidance we posted on our earnings call on February 2019.
Our adjusted diluted EPS guidance for 2019 in the first quarter was $1. 11 to $1. 17.
We report adjusted earnings per share of $1.
There were 24 in the first quarter of 19. This $0.
The increase in the high end of our guidance range is mainly due to better-than-
Mainly from the expected revenue of our stocking product line.
Slide 18 shows our quarterly Adjusted EBITDA performance.
The adjusted EBITDA for the quarter was $30 million or $17.
Revenue accounted for 5% per cent compared to $23. 5 million or 15
Revenue for the first quarter of 2018 was 8%, up $6. 5 million.
Now let\'s start with slide 19 and look at our cash flow and working capital metrics.
Business cash flow is $9.
The first quarter of 2019 was $9 million.
The first quarter of 2018 was 2 million.
As you can see on the chart, we have $11.
4 million the use of cash related to working capital, mainly due to cash outflows related to performance incentive pay and inventory, was partially offset by cash received from customer deposits.
Free cash flow increased to $7.
Compared to $2, it was 7 million per cent in 2019.
1 million in the first half of 2018, this was partly due to a decrease in capital expenditure.
As we have pointed out in the past, historically, the first quarter was the quarter where Operating cash flows were weak, partly because performance incentive pay was paid.
In the first quarter of 2019, we had several notable non-operating cash uses. We paid a $175.
3 million net cash obtained for our materials and processing acquisitions, $2.
Withholding tax payments related to the ownership of stock rewards 6 million: a $2.
4 million dividend and $2 of our common stock.
Capital expenditure of 2 million.
I would also like to add that we ended up paying $1 in 2019.
6 million materials related to the obtained liquidity and processing acquisitions.
Now let\'s take a look at the key working capital indicators in slide 20.
Our number of days in accounts receivable, inventory and accounts payable is continuous.
Looking at our overall working capital status, our cash conversion day measures, calculated by the number of accounts receivable days plus the number of inventory days and the number of accounts payable days, were 110 at the end of first quarter of 2019.
The proportion of working capital to income is 14.
The first quarter of 2019 was 9% per cent, compared to 12 per cent.
2018 5% years the first fourth quarter and 13% years the first quarter of 2018.
Order and Year-over-
This year\'s growth was due to our recent acquisition, which contributed only three months of revenue to the use of indicators for the past 12 monthly income.
As of the end of 2019, the net debt of debt minus cash was $303.
7 million, above $129 in net debt.
The end of the fourth quarter of 2018 was 7 million.
Our net loan is $182.
The first quarter of 2019 was £ 6 million, primarily used to fund our material and processing acquisitions.
As you can see on slide 23, the leverage ratio we calculated based on our credit line has increased to 1. 19 --
From 1.
From the end of 2018 to 2.
33 due to increased debt related to acquisitions, the end of 2019.
According to our credit arrangement, this ratio must be less than 4.
In the next three quarters, 0, then dropped to less than 3. 75.
We expect free cash flow to improve as we progress through 2019 and we will continue our debt repayment strategy.
Guidance on US
As in 2017 and 2018, we expect revenue and EPS performance in the second half of 2019 to be significantly better than in the first half, with the fourth quarter being the strongest quarter of the year.
I would also like to point out that we told me in February to note that the 2019 tax rate in the first quarter of this year may reduce the remaining 2019 due to the expected quarterly tax benefits, 3. ownership of equity awards.
The rate for the first quarter of 2019 was 26.
4%, as expected in our guide, EPS diluted by 2019 GAAP in the first quarter included a $0 tax benefit.
03 is related to the ownership of equity awards.
While we will continue our debt repayment strategy, our leverage ratio will rise from 1. 19 to 2.
33 has raised our credit facility pricing grid by one level and will increase our borrowing margin by 25 basis points starting in 2019.
As a result, we expect quarterly interest expenditures for the remainder of 2019 to be higher than in 2019.
This increase was included in the 2019 guidance we gave at our earnings call on February.
Finally, both the GAAP and the adjusted EPS guidelines include our initial estimates of the procurement accounting adjustments that may change as we review and finalize the acquisition assessment work.
We expect that this review will be substantially completed by the end of 2019.
Finally, I would like to add that this is the last official revenue Call for Jon.
I\'m sure he will comment on this in his summary. up comments.
Jon had a great time working with you.
Although we will work together, you are no longer interested in our future revenue calls.
I know you will miss my reading. . . --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director5]--------------------------------------------------------------------------------(inaudible)--------------------------------------------------------------------------------Michael J.
McKinney of Cardan company-
Executive Vice President and Chief Financial Officer6]--------------------------------------------------------------------------------
My comments on finance ended here and now I\'m going to switch the phone back to the operator for a Q &. Operator?
Questions and Answers--------------------------------------------------------------------------------Operator [1]--------------------------------------------------------------------------------(
Operator instructions)
Our first question will come from Chris Howe at Barrington Research. --------------------------------------------------------------------------------
Huang Hao, Barrington Research Association
Research Department-
Senior investment analyst and research analyst2]--------------------------------------------------------------------------------
Well, I think I should give all of these questions to Jon because it will be his last call. --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director3]--------------------------------------------------------------------------------Be it.
I was surprised that Mike didn\'t say, \"do all the tricky questions now.
\"I will say leave them to Jeff because he is much smarter. --------------------------------------------------------------------------------
Huang Hao, Barrington Research Association
Research Department-
Senior investment analyst and research analyst4]--------------------------------------------------------------------------------
First of all, regarding China, the uncertainty of waste imports, can you mention some of the weaknesses you see in the timber processing capital business?
The operating rate in North America is 91%.
In terms of the transfer rate, increasing the transfer rate and seeing that weak demand has a positive impact, does it depend on the fiber shortage in China?
So if the fiber shortage starts and the linerboard starts to export to China, we should see an increase in the speed of operation while the North American packaging should improve? --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director5]--------------------------------------------------------------------------------Yes, that\'s --
So it\'s definitely a scene, it\'s--
There are two reasons for the lower start rate in North America:-the --
As you know-
At the end of last year or at the beginning of this quarter, the economy seems to be a little weak, I heard (sic)[ITW\'s]
They are talking about the impact of flooding on some fruit harvests and similar things to reduce demand.
As a result, your demand situation eased and then some capacity started to go online.
This is where we are now.
I think the print of this 3.
2% of GDP and similar things, we will see that it may be a little optimistic for the North American economy.
But then the core of your question.
Then the question is: if there is some excess capacity in North America, more capacity is expected to go online next time ---
If China moves to buy a liner from North America this year and next year, how many of them will eventually flow to China and pick up operating interest rates?
I definitely think this is a scene that is very likely to be staged.
In fact, if China passed and banned them in full by 2020, their increased capacity in Southeast Asia would not be in place in time.
So they need to import the liner from North America and Europe.
Now who knows they may be different, they may be able to rest them until 2021.
But if they do what they say, I will say that they should increase their exports to China. --------------------------------------------------------------------------------
Huang Hao, Barrington Research Association
Research Department-
Senior investment analyst and research analyst6]--------------------------------------------------------------------------------That\'s helpful.
As for the demand for capital equipment outside China, how is it going?
Is this state stable, waiting for what is happening in China? --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director7]--------------------------------------------------------------------------------
So, as I said in my statement, there are quite good capital project activities in Southeast Asia, but not so much in China.
If I look at the overall needs of North America, that\'s fine.
I will say beautiful-
Not a rocket ship, but stable.
Of course, I do comment that I don\'t think we have that high expectations for capital bookings for the North American wood products business, which really has much to do with the fact that they both bought it last year. They were --
Last year, they did make a lot of progress in their desire to increase capacity.
So I can see, pause. --------------------------------------------------------------------------------
Huang Hao, Barrington Research Association
Research Department-
Senior investment analyst and research analyst8]--------------------------------------------------------------------------------Okay.
Then I have a question about Syntron.
Is there any synergy that needs attention this quarter?
You mentioned a huge backlog driven by Syntron.
Is this from their existing customer base?
Or can you--
How many new businesses can you extract from Syntron? --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director9]--------------------------------------------------------------------------------
So it certainly has something to do with their existing business.
We are looking for some synergies, but there are many gestation phases for these synergies.
I don\'t expect any revenue synergies from Syntron this year.
These take a long time.
Usually, the time is usually, Chris, we integrate their financial information, and then we introduce some things like best practices.
Then I would say that you have manufacturing synergies, sourcing, and elsewhere, and then what really lasts the longest is revenue synergies. --------------------------------------------------------------------------------
Huang Hao, Barrington Research Association
Research Department-
Senior investment analyst and research analyst10]--------------------------------------------------------------------------------
OK, then we look further at any debt target at the end of this year. We\'re at 2. 33 now.
By the end of this year, where should we see this? --------------------------------------------------------------------------------Michael J.
McKinney of Cardan company-
Executive Vice President and Chief Financial Officer11]--------------------------------------------------------------------------------
Well, Chris, well, of course we will be actively paying off the debt, hopefully in the next few quarters.
So I hope we can do 2.
Something like this.
I don\'t think we will. -
I don\'t think we will score less than 2 points this year, but we will try to do that. --------------------------------------------------------------------------------Operator [12]--------------------------------------------------------------------------------
Our next question will come from Walter liptuck at the global seaport. --------------------------------------------------------------------------------
Walter Scott Liptak, Research Department, Seaport Global Securities Co. , Ltd-
Senior Industrial analyst13]--------------------------------------------------------------------------------
I would like to ask a few questions about Syntron
You mentioned $21 million in sales this quarter.
Can you talk about the business?
Did they grow this quarter?
I know we didn\'t have this in our data last year. --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director14]--------------------------------------------------------------------------------
So they ordered $24 million.
So you may remember when we introduced it, we said it was $89 million for 12 months.
Frankly, $21 million is slightly lower than their operating price, but $24 million is slightly higher than their booking price.
I mean, I\'m very happy with their profitability of $21 million and their contribution of $21 million.
So I\'m very encouraged by this year\'s Syntron.
I want to say it looks like this year. -
Their activity environment is very good. --------------------------------------------------------------------------------
Walter Scott Liptak, Research Department, Seaport Global Securities Co. , Ltd-
Senior Industrial analyst15]--------------------------------------------------------------------------------Okay.
So with a $24 million booking, do you think there is still a $89 million booking this year? --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director16]--------------------------------------------------------------------------------
Yes, we didn\'t. -
I don\'t think we gave the forecast, but $24 million is definitely OK--
A large part of this should shift to this year\'s income. --------------------------------------------------------------------------------
Walter Scott Liptak, Research Department, Seaport Global Securities Co. , Ltd-
Senior Industrial analyst17]--------------------------------------------------------------------------------Okay.
With Syntron, Mike, you may have mentioned this already-
What is the purchasing accounting for the quarter?
What are your expectations for the next quarter? --------------------------------------------------------------------------------Michael J.
McKinney of Cardan company-
Executive Vice President and Chief Financial Officer18]--------------------------------------------------------------------------------So it\'s $0.
22 related to backlog and inventory. And $0.
06 acquisition costs.
I think the cost of our acquisition is over.
We will see about $0 next quarter.
08, this is mainly the inventory part. --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director19]--------------------------------------------------------------------------------
Then basically complete. --------------------------------------------------------------------------------Michael J.
McKinney of Cardan company-
Executive Vice President and Chief Financial Officer20]--------------------------------------------------------------------------------Then we--
Yes, then we\'re done. --------------------------------------------------------------------------------
Walter Scott Liptak, Research Department, Seaport Global Securities Co. , Ltd-
Senior Industrial analyst21]--------------------------------------------------------------------------------Okay. All right.
I would like to ask the good-looking part of them.
Is the part [in stock preparation]up]?
Or do you think this is due to some good growth in doctors as well? --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director22]--------------------------------------------------------------------------------
It\'s wide-based.
Let me have a look here. I would say --
Wait, Walter. --------------------------------------------------------------------------------
Walter Scott Liptak, Research Department, Seaport Global Securities Co. , Ltd-
Senior Industrial analyst23]--------------------------------------------------------------------------------Okay. Yes.
I think, Jon, the problem is--
I think you\'re in a really tough game. -
In particular, medical accidents in the first quarter of last year.
I would like to know if the way customers order has changed?
Maybe they placed a blanket order for the parts at the beginning of the year and then shipped them for the rest of the year.
Or is it because of some internal efforts to develop the parts business? --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director24]--------------------------------------------------------------------------------
What I want to say is that the parts business works just like it does.
In addition to foreign exchange and acquisitions, we usually grow at a low order
Number rate, maybe a couple--
In the past few years, we usually go a little higher, a little higher, but for me, it\'s taken for granted.
What I want to say is-
From its source, it is also very extensivebased.
Even wood processing companies that have fallen in the capital market are ---
The spare parts are well supported.
So it\'s as stable as you expect. --------------------------------------------------------------------------------
Walter Scott Liptak, Research Department, Seaport Global Securities Co. , Ltd-
Senior Industrial analyst25]--------------------------------------------------------------------------------That\'s great. Okay.
Maybe my last one.
You talked about 80/20 a few years ago and how you tested it.
I would like to know if there is any update on this. If you are re-upping on that?
Or what is that burning behind? --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director26]--------------------------------------------------------------------------------
As you know, we did it in both of our departments and I would say they showed good results and we will move on and do it with some others, but it has been resolved and we are satisfied with how this can be done. . . --------------------------------------------------------------------------------Operator [27]--------------------------------------------------------------------------------(
Operator instructions)
Our next question will come from a line with Dan Jacome from Sidoti. --------------------------------------------------------------------------------
Daniel Andres jacombe, Sidoti & Company, LLC-
Stock research analyst28]--------------------------------------------------------------------------------
You talked a little about Syntron bookings of $24 million, which is encouraging compared to $21 million in revenue. So you had a --
The booking of the statement is more than 1.
Could you please talk about some of the markets that Syntron has entered?
I think you talked a little bit about cement and infrastructure.
But how about food packaging?
Did you see anything positive?
So far in 2019, is there any market that might surprise you-
What books did you read last year? --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director29]--------------------------------------------------------------------------------
So I would say--
One of the truly powerful areas is the mining sector, which is trona for glass production; pot ash;
Coal is actually good. Even though --
For thermal coal, which is used less and less in power plants, it is still exported.
So I would say it\'s relatively stable. The other --
I would say that the next strongest area is probably what I\'m talking about gathering.
It has to do with both architecture and infrastructure, and I would say that food has always been normal.
So it\'s more like a package than food processing. --------------------------------------------------------------------------------Operator [30]--------------------------------------------------------------------------------
Thank you. I don\'t have any further questions now.
So now it is my pleasure to hand over the meeting to Sir.
Jonathan Painter, chief executive, any concluding remarks or comments. --------------------------------------------------------------------------------Jonathan W.
Painter of Cardan company-
President, CEO and director31]--------------------------------------------------------------------------------Thanks, Brian.
Before I let everyone go, I would like to summarize three points I think for the quarter: first, another strong quarter with record bookings and revenues;
Second, according to the acquisition of Syntron--
And proceed as planned;
Third, we will maintain full year income guidance and expect to achieve record revenue and adjusted EBITDA in 2019.
As Mike pointed out, it was my last Revenue call before I finished, after 37 quarters.
In the future, I will be more like a listener.
I would like to take this opportunity to sincerely thank the investment community for their support to me.
I feel very lucky, and I think all of us at Cardan think that we have investors who really think about it for a long time.
I mean, people say that sometimes Wall Street pushes companies too short-term, but I can say that I \'ve never had such a conversation in the last 10 years I \'ve talked to investors.
Frankly, if I-
You did push me. -
We wouldn\'t have listened, but it\'s good not to be put in that position.
I think [too [thank]
Make this company an employee of today\'s company.
I think we are as strong as ever.
I think with Jeff and his team moving forward, we are ready to get to the new heights.
So I am looking forward to working with Jeff in his new role and I am very excited about the company.
So, thank you very much.
Jeff will update you on future calls. Thanks again. --------------------------------------------------------------------------------Operator [32]--------------------------------------------------------------------------------
Ladies and gentlemen, thank you all for attending today\'s meeting.
It did end our plan and we could all be disconnected.
I wish you all a good day.