Kaman Reports First Quarter 2023 Results

Kaman Reports First Quarter 2023 Results

02 May 2023

First Quarter 2023 Highlights:

  • Net sales: $194.5 million

  • Operating income: $8.6 million

  • Net loss: $19 thousand

  • Adjusted EBITDA*: $24.8 million; Adjusted EBITDA margin*: 12.7%

  • Diluted (loss) earnings per share: $(0.00) per share, $0.08 per share adjusted*

BLOOMFIELD, Conn.–(BUSINESS WIRE)–May 2, 2023–
Kaman Corp. (NYSE:KAMN) today reported financial results for the first fiscal quarter ended March 31, 2023.

Table 1. Summary of Financial Results (unaudited)

Thousands of U.S. dollars

(except share data)

 

Three Months Ended

 

 

March 31,

2023

 

December 31,

2022

 

April 1,

2022

Net sales

 

$

194,542

 

 

$

197,143

 

 

$

158,048

 

Net (loss) earnings

 

 

(19

)

 

 

(54,943

)

 

 

4,028

 

Adjusted EBITDA*

 

 

24,769

 

 

 

30,987

 

 

 

12,186

 

Adjusted EBITDA margin*

 

 

12.7

%

 

 

15.7

%

 

 

7.7

%

Diluted (loss) earnings per share

 

$

(0.00

)

 

$

(1.96

)

 

$

0.14

 

Adjusted diluted earnings per share*

 

$

0.08

 

 

$

0.42

 

 

$

0.15

 

*See the end of this release for an explanation of the Company’s use of Adjusted EBITDA, Adjusted EBITDA margin, Free cash flow and Adjusted diluted earnings per share. See tables 5-9 for reconciliations to the most comparable GAAP measure.

“We begin the year with solid results, demonstrating the strength of the Engineered Products segment and the benefit this provides as we continue our transformation. Highlighting this performance is the end-market recovery we anticipated in our commercial aerospace and medical end markets. For the three-month period, net sales increased 23% and operating income more than doubled, when compared to the same three-month period in 2022. At the Engineered Products segment, net sales grew by 51% over the first quarter of 2022. Excluding the contribution from Aircraft Wheel and Brake, this segment was up approximately 29%. The results are reflective of the team’s execution against its robust backlog and we continue to see strong order rates across this segment. With efforts focused on our highest growth opportunities, we are on the path to enhance earnings power and deliver improved financial performance.” said Ian K. Walsh, Chairman, President and Chief Executive Officer.

“Our cost control efforts remain on track as we execute on the Precision Product segment facility consolidation between the Orlando, FL and Middletown, CT sites. We continue to identify additional opportunities to reduce expense across the organization and enhance our profitability. We remain focused on finding incremental cash opportunities as part of our net working capital management and will steadily pay down debt through the remainder of the year. We are maintaining our full year outlook for 2023.” said Walsh.

OUTLOOK DISCUSSION

Management reaffirms its guidance for 2023. Revenue and earnings will benefit from the addition of Aircraft Wheel and Brake to the portfolio. Organically, Adjusted EBITDA is expected to improve due to margin expansion from the Engineered Products segment.

  • Net sales: $730.0 million to $750.0 million

  • Net earnings: $4.0 million to $11.6 million

  • Adjusted EBITDA: $95.0 million to $105.0 million

  • Adjusted EBITDA margin: 13.0% to 14.0%

  • Diluted EPS: $0.14 per share to $0.41 per share; adjusted $0.30 per share to $0.57 per share

  • Cash from operating activities: $60.0 million to $70.0 million

  • Free cash flow: $35.0 million to $45.0 million

For further information, the Company’s supplemental presentation relating to the first quarter 2023 results and 2023 outlook will be posted to the Company’s website, as detailed below.

KAMAN BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT

Kaman manages its portfolio through three segments: (1) Engineered Products; (2) Precision Products; and (3) Structures.

Engineered Products – Our Engineered Products segment serves the aerospace and defense, industrial and medical markets providing sophisticated, proprietary aircraft bearings and components; super precision, miniature ball bearings; proprietary spring energized seals, springs and contacts; and wheels, brakes and related hydraulic components for helicopters, fixed-wing and UAV aircraft.

Table 2. Engineered Products Results

 

 

Thousands of U.S. dollars

 

Three Months Ended

 

 

March 31,

2023

 

December 31,

2022

 

April 1,

2022

Net sales

 

$

123,326

 

 

$

113,972

 

 

$

81,452

 

Operating income

 

 

19,356

 

 

 

17,168

 

 

 

11,042

 

Adjusted EBITDA

 

 

30,119

 

 

 

30,698

 

 

 

17,269

 

Adjusted EBITDA margin

 

 

24.4

%

 

 

26.9

%

 

 

21.2

%

Three months ended March 31, 2023 versus three months ended December 31, 2022 – Operating income increased $2.2 million, Adjusted EBITDA decreased $0.6 million and margin decreased 2.5 percentage points versus the fourth quarter of 2022. Lower EBITDA and margin compared to the prior period was driven by lower sales and gross margin on our commercial and defense bearings, partially offset by higher volume on our springs, seals and contacts used in medical and aerospace applications and our aftermarket parts and improved margins on our wheels and brakes.

Three months ended March 31, 2023 versus three months ended April 1, 2022 – Operating income increased $8.3 million, despite $4.8 million of intangible asset amortization associated with the acquisition of Aircraft Wheel and Brake. Adjusted EBITDA increased $12.9 million and margin increased 3.2 percentage points versus the first quarter of 2022. Results improved compared to the prior period driven by the contribution of sales and gross margin from our Aircraft Wheel and Brake acquisition and higher sales and gross margin on our commercial bearings and aftermarket parts.

Precision Products – Our Precision Products segment serves the aerospace and defense markets providing precision safe and arming solutions for missile and bomb systems for the U.S. and allied militaries; subcontract helicopter work; restoration, modification and support of our SH-2G Super Seasprite maritime helicopters; support of our heavy lift K-MAX® manned helicopter, and development of the KARGO UAV unmanned aerial system, a purpose built autonomous medium lift logistics vehicle.

Table 3. Precision Products Results

Thousands of U.S. dollars

 

Three Months Ended

 

 

March 31,

2023

 

December 31,

2022

 

April 1,

2022

Net sales

 

$

37,971

 

 

$

49,925

 

 

$

47,549

 

Operating income

 

 

1,674

 

 

 

6,016

 

 

 

3,409

 

Adjusted EBITDA

 

 

2,486

 

 

 

6,801

 

 

 

4,440

 

Adjusted EBITDA margin

 

 

6.5

%

 

 

13.6

%

 

 

9.3

%

Three months ended March 31, 2023 versus three months ended December 31, 2022 – Operating income and Adjusted EBITDA decreased $4.3 million and margin decreased 7.1 percentage points versus the fourth quarter of 2022. Results declined compared to the prior quarter, driven by lower sales and gross margin on K-MAX® spares and support, cost growth on the Fireburst program and higher R&D spend associated with the KARGO UAV unmanned aerial system.

Three months ended March 31, 2023 versus three months ended April 1, 2022 – Operating income decreased $1.7 million, Adjusted EBITDA decreased $2.0 million and margin decreased 2.8 percentage points versus the first quarter of 2022. Results declined compared to the prior period, driven by expected lower JPF sales, planned higher R&D spend associated with the KARGO UAV unmanned aerial system and cost growth on certain fuzing and measuring programs, partially offset by higher sales and margin on our K-MAX® spares and support.

StructuresOur Structures segment serves the aerospace and defense and medical end markets providing sophisticated complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft, and medical imaging solutions.

Table 4. Structures Results

Thousands of U.S. dollars

 

Three Months Ended

 

 

March 31,

2023

 

December 31,

2022

 

April 1,

2022

Net sales

 

$

33,245

 

 

$

33,246

 

 

$

29,047

 

Operating loss

 

 

(237

)

 

 

(1,624

)

 

 

(617

)

Adjusted EBITDA

 

 

557

 

 

 

(768

)

 

 

289

 

Adjusted EBITDA margin

 

 

1.7

%

 

 

(2.3

) %

 

 

1.0

%

Three months ended March 31, 2023 versus three months ended December 31, 2022 – Operating loss decreased $1.4 million, Adjusted EBITDA increased $1.3 million, and margin increased 4.0 percentage points versus the fourth quarter of 2022. Results improved compared to the prior quarter, driven by higher sales and gross profit on certain composite programs, partially offset by changes in profit estimates for long term contracts.

Three months ended March 31, 2023 versus three months ended April 1, 2022 – Operating loss decreased $0.4 million, Adjusted EBITDA increased $0.3 million, and margin increased 0.7 percentage points versus the first quarter of 2022. Results improved compared to the prior quarter, driven by higher sales and gross profit on certain composite programs, partially offset by changes in profit estimates for long term contracts.

Please see the MD&A section of the Company’s Form 10-Q filed with the Securities and Exchange Commission concurrently with the issuance of this release for greater detail on our results and various company programs.

CONFERENCE CALL

A webcast and conference call has been scheduled for Wednesday, May 3, 2023, at 8:30 AM ET. Participants must register for the teleconference. Once registration is complete, participants will be provided with a dial-in number containing a personalized PIN to access the call. While not required, it is recommended that participants join 10 minutes prior to the event start. A live webcast will be available during the call and a replay will be available two hours after the call. Registration and webcast can be accessed at www.kaman.com/investors/quarterly-earnings-calls. In its discussion, management may reference certain non-GAAP financial measures related to company performance. A reconciliation of that information to the most directly comparable GAAP measures is provided in this release. In addition, a supplemental presentation relating to the first quarter 2023 results will be posted to the Company’s website prior to the earnings call at www.kaman.com/investors/quarterly-earnings-calls.

ABOUT KAMAN CORPORATION

Kaman Corporation, founded in 1945 by aviation pioneer Charles H. Kaman, and headquartered in Bloomfield, Connecticut, conducts business in the aerospace & defense, industrial and medical markets. Kaman produces and markets proprietary aircraft bearings and components; super precision, miniature ball bearings; proprietary spring energized seals, springs and contacts; wheels, brakes and related hydraulic components for helicopters, fixed-wing and UAV aircraft; complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft; safe and arming solutions for missile and bomb systems for the U.S. and allied militaries; subcontract helicopter work; restoration, modification and support of our SH-2G Super Seasprite maritime helicopters; support of our heavy lift K-MAX® manned helicopter, and development of the KARGO UAV unmanned aerial system, a purpose built autonomous medium lift logistics vehicle. More information is available at www.kaman.com.

NON-GAAP MEASURES DISCLOSURE

Management believes that the Non-GAAP financial measures (i.e. financial measures that are not computed in accordance with Generally Accepted Accounting Principles) identified by an asterisk (*) used in this release or in other disclosures provide important perspectives into the Company’s ongoing business performance. The Company does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures. Other companies may define the measures differently. We define the Non-GAAP measures used in this release and other disclosures as follows:

Adjusted EBITDA – Adjusted EBITDA for the consolidated company results is defined as net earnings before interest, taxes, other expense (income), net, depreciation and amortization and certain items that are not indicative of the operating performance of the Company for the periods presented. Adjusted EBITDA for the segments is defined as operating income before depreciation and amortization. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percent of Net sales. Management believes Adjusted EBITDA and Adjusted EBITDA margin provide an additional perspective on the operating results of the organization and its earnings capacity and helps improve the comparability of our results between periods because they provide a view of our operations that excludes items that management believes are not reflective of operating performance, such as items traditionally removed from net earnings in the calculation of EBITDA as well as Other expense (income), net and certain items that are not indicative of the operating performance of the Company for the period presented. Adjusted EBITDA and Adjusted EBITDA margin are not presented as an alternative measure of operating performance, as determined in accordance with GAAP. The following tables illustrate the calculation of Adjusted EBITDA:

Table 5. Adjusted EBITDA (unaudited)

 

 

 

 

Thousands of U.S. dollars

 

Three Months Ended

March 31, 2023

 

 

Consolidated

 

Engineered

Products

 

Precision

Products

 

Structures

 

Corp/Elims**

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

Consolidated Results

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

194,542

 

 

$

123,326

 

 

$

37,971

 

 

$

33,245

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) earnings

 

$

(19

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

9,604

 

 

 

 

 

 

 

 

 

Income tax (benefit) expense

 

 

(5

)

 

 

 

 

 

 

 

 

Non-service pension and post retirement benefit income

 

 

(381

)

 

 

 

 

 

 

 

 

Other income, net

 

 

(571

)

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

8,628

 

 

$

19,356

 

 

$

1,674

 

 

$

(237

)

 

$

(12,165

)

Depreciation and amortization

 

 

13,154

 

 

 

10,763

 

 

 

812

 

 

 

794

 

 

 

785

 

Restructuring and severance costs(1)

 

 

2,190

 

 

 

 

 

 

 

 

 

 

 

 

2,190

 

Integration and implementation costs(2)

 

 

797

 

 

 

 

 

 

 

 

 

 

 

 

797

 

Other Adjustments

 

$

16,141

 

 

$

10,763

 

 

$

812

 

 

$

794

 

 

$

3,772

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

24,769

 

 

$

30,119

 

 

$

2,486

 

 

$

557

 

 

$

(8,393

)

Adjusted EBITDA margin

 

 

12.7

%

 

 

24.4

%

 

 

6.5

%

 

 

1.7

%

 

 

(1) Restructuring and severance costs include actions associated with the previously announced cost reduction efforts that include the consolidation of our JPF production facilities, discontinuation of the K-MAX® aircraft production line and Corporate headcount reductions.

(2) Integration and implementation costs include one-time costs associated with the integration of Aircraft Wheel and Brake and costs associated with the set-up of a new joint venture to satisfy existing offset requirements the Company has with a foreign customer.

**Corp/Elims Operating income (loss) represents the Corporate office expenses and $2.2 million of unallocated expenses that are shown on the Consolidated Statement of Earnings as their own line items.

Table 6. Adjusted EBITDA (unaudited)

 

 

 

 

Thousands of U.S. dollars

 

Three Months Ended

December 31, 2022

 

 

Consolidated

 

Engineered

Products

 

Precision

Products

 

Structures

 

Corp/Elims**

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

Consolidated Results

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

197,143

 

 

$

113,972

 

 

$

49,925

 

 

$

33,246

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) earnings

 

$

(54,943

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

8,786

 

 

 

 

 

 

 

 

 

Income tax (benefit) expense

 

 

(18,724

)

 

 

 

 

 

 

 

 

Non-service pension and post retirement benefit income

 

 

(5,145

)

 

 

 

 

 

 

 

 

Other income, net

 

 

(2,100

)

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

(72,126

)

 

$

17,168

 

 

$

6,016

 

 

$

(1,624

)

 

$

(93,686

)

Depreciation and amortization

 

 

13,675

 

 

 

11,231

 

 

 

785

 

 

 

856

 

 

 

803

 

Goodwill impairment

 

 

25,306

 

 

 

 

 

 

 

 

 

 

 

 

25,306

 

Program assets impairment

 

 

53,677

 

 

 

 

 

 

 

 

 

 

 

 

53,677

 

Restructuring and severance costs

 

 

6,989

 

 

 

 

 

 

 

 

 

 

 

 

6,989

 

Cost associated with corporate development activities

 

 

1,167

 

 

 

 

 

 

 

 

 

 

 

 

1,167

 

Inventory step-up associated with acquisition

 

 

2,299

 

 

 

2,299

 

 

 

 

 

 

 

 

 

 

Other Adjustments

 

$

103,113

 

 

$

13,530

 

 

$

785

 

 

$

856

 

 

$

87,942

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

30,987

 

 

$

30,698

 

 

$

6,801

 

 

$

(768

)

 

$

(5,744

)

Adjusted EBITDA margin

 

 

15.7

%

 

 

26.9

%

 

 

13.6

%

 

 

(2.3

) %

 

 

**Corp/Elims Operating income (loss) represents the Corporate office expenses and $86.0 million of unallocated expenses that are shown on the Consolidated Statement of Earnings as their own line items.

 

Table 7. Adjusted EBITDA (unaudited)

 

 

 

 

Thousands of U.S. dollars

 

Three Months Ended

April 1, 2022

 

 

Consolidated

 

Engineered

Products

 

Precision

Products

 

Structures

 

Corp/Elims**

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

Consolidated Results

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

158,048

 

 

$

81,452

 

 

$

47,549

 

 

$

29,047

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

4,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

2,481

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

1,307

 

 

 

 

 

 

 

 

 

Non-service pension and post retirement benefit income

 

 

(5,263

)

 

 

 

 

 

 

 

 

Other expense (income), net

 

 

504

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

3,057

 

 

$

11,042

 

 

$

3,409

 

 

$

(617

)

 

$

(10,777

)

Depreciation and amortization

 

 

8,832

 

 

 

6,227

 

 

 

1,031

 

 

 

906

 

 

 

668

 

Restructuring and severance costs

 

 

169

 

 

 

 

 

 

 

 

 

 

 

 

169

 

Cost associated with corporate development activities

 

 

128

 

 

 

 

 

 

 

 

 

 

 

 

128

 

Other Adjustments

 

$

9,129

 

 

$

6,227

 

 

$

1,031

 

 

$

906

 

 

$

965

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

12,186

 

 

$

17,269

 

 

$

4,440

 

 

$

289

 

 

$

(9,812

)

Adjusted EBITDA margin

 

 

7.7

%

 

 

21.2

%

 

 

9.3

%

 

 

1.0

%

 

 

**Corp/Elims Operating income (loss) represents the Corporate office expenses and $0.2 million of unallocated expenses that are shown on the Consolidated Statement of Earnings as their own line items.

Adjusted Net Earnings and Adjusted Diluted Earnings Per Share – Adjusted net earnings and adjusted diluted earnings per share are defined as GAAP “Net earnings” and “Diluted earnings per share”, less items that are not indicative of the operating performance of the business for the periods presented. These items are included in the reconciliation below. Management uses adjusted net earnings and adjusted diluted earnings per share to evaluate performance period over period, to analyze the underlying trends in our business and to assess its performance relative to its competitors. We believe that this information is useful for investors and financial institutions seeking to analyze and compare companies on the basis of operating performance.

The following table illustrates the calculation of adjusted net earnings and adjusted diluted earnings per share:

Table 8. Adjusted Net Earnings and Adjusted Diluted Earnings per Share (unaudited)

Thousands of U.S. dollars (except share data)

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

March 31, 2023

 

April 1, 2022

 

 

Pre-Tax

 

Tax-Effected

 

Diluted EPS

 

Pre-Tax

 

Tax-Effected

 

Diluted EPS

Net (loss) earnings

 

$

(24

)

 

$

(19

)

 

$

(0.00

)

 

$

5,335

 

 

$

4,028

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and severance costs

 

 

2,190

 

 

 

1,730

 

 

 

0.06

 

 

 

169

 

 

 

128

 

 

 

0.01

 

Integration and implementation costs

 

 

797

 

 

 

630

 

 

 

0.02

 

 

 

 

 

 

 

 

 

 

Costs associated with corporate development activities

 

 

 

 

 

 

 

 

 

 

 

128

 

 

$

97

 

 

 

 

Adjustments

 

$

2,987

 

 

$

2,360

 

 

$

0.08

 

 

$

297

 

 

$

225

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net earnings

 

$

2,963

 

 

$

2,341

 

 

$

0.08

 

 

$

5,632

 

 

$

4,253

 

 

$

0.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

 

 

 

 

28,117

 

 

 

 

 

 

 

28,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax

 

Tax-Effected

 

Diluted EPS

Net (loss) earnings

 

$

(73,667

)

 

$

(54,943

)

 

$

(1.96

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill impairment

 

 

 

 

 

 

 

 

25,306

 

 

 

18,874

 

 

 

0.67

 

Program assets impairment

 

 

 

 

 

 

 

 

53,677

 

 

 

40,034

 

 

 

1.43

 

Restructuring and severance costs

 

 

6,989

 

 

 

5,213

 

 

 

0.19

 

Costs associated with corporate development activities

 

 

1,167

 

 

 

870

 

 

 

0.03

 

Inventory step-up associated with acquisition

 

 

2,299

 

 

 

1,715

 

 

 

0.06

 

Adjustments

 

$

89,438

 

 

$

66,706

 

 

$

2.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net earnings

 

$

15,771

 

 

$

11,763

 

 

$

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

 

 

 

 

28,051

 

Free Cash Flow – Free cash flow is defined as GAAP “Net cash provided by (used in) operating activities” in a period less “Expenditures for property, plant & equipment” in the same period. Management believes free cash flow provides an important perspective on our ability to generate cash from our business operations and, as such, that it is an important financial measure for use in evaluating the Company’s financial performance. Free cash flow should not be viewed as representing the residual cash flow available for discretionary expenditures such as dividends to shareholders or acquisitions. Management uses free cash flow internally to assess overall liquidity. The following table illustrates the calculation of free cash flow.

Table 9. Free Cash Flow (unaudited)

Thousands of U.S. dollars

 

Three Months Ended

 

Last Twelve Months

 

 

July 1,

2022

 

September 30,

2022

 

December 31,

2022

 

March 31,

2023

 

March 31,

2023

Net cash provided by operating activities

 

$

(25,937

)

 

$

(6,746

)

 

$

54,669

 

 

$

(5,453

)

 

$

16,533

 

Expenditures for property, plant & equipment

 

 

(3,643

)

 

 

(7,106

)

 

 

(6,063

)

 

 

(5,948

)

 

 

(22,760

)

Free cash flow

 

$

(29,580

)

 

$

(13,852

)

 

$

48,606

 

 

$

(11,401

)

 

$

(6,227

)

FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements also may be included in other publicly available documents issued by the Company and in oral statements made by our officers and representatives from time to time. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. They can be identified by the use of words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “would,” “could,” “will” and other words of similar meaning in connection with a discussion of future operating or financial performance. Examples of forward looking statements include, among others, statements relating to future sales, earnings, cash flows, results of operations, uses of cash and other measures of financial performance.

Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that may cause the Company’s actual results and financial condition to differ materially from those expressed or implied in the forward-looking statements. Such risks, uncertainties and other factors include, among others: (i) changes in domestic and foreign economic and competitive conditions in markets served by the Company, particularly the defense, commercial aviation and industrial production markets; (ii) changes in government and customer priorities and requirements (including cost-cutting initiatives, government and customer shut-downs, the potential deferral of awards, terminations or reductions of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional actions or automatic sequestration); (iii) the global economic impact of the COVID-19 pandemic; (iv) risks and uncertainties associated with the successful integration of our Aircraft Wheel and Brake acquisition; (v) changes in geopolitical conditions in countries where the Company does or intends to do business; (vi) the successful conclusion of competitions for government programs (including new, follow-on and successor programs) and thereafter successful contract negotiations with government authorities (both foreign and domestic) for the terms and conditions of the programs; (vii) the timely receipt of any necessary export approvals and/or other licenses or authorizations from the USG; (viii) timely satisfaction or fulfillment of material contractual conditions precedents in customer purchase orders, contracts, or similar arrangements; (ix) the existence of standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; (x) the successful resolution of government inquiries or investigations relating to our businesses and programs; (xi) risks and uncertainties associated with the successful implementation and ramp up of significant new programs, including the ability to manufacture the products to the detailed specifications required and recover start-up costs and other investments in the programs; (xii) potential difficulties associated with variable acceptance test results, given sensitive production materials and extreme test parameters; (xiii) the receipt and successful execution of production orders under the Company’s existing USG JPF contract, including the exercise of all contract options and receipt of orders from allied militaries, but excluding any next generation programmable fuze programs, as all have been assumed in connection with goodwill impairment evaluations; (xiv) the continued support of the existing K-MAX® helicopter fleet, including sale of existing K-MAX® spare parts inventory; (xv) the accuracy of current cost estimates associated with environmental remediation activities; (xvi) the profitable integration of acquired businesses into the Company’s operations; (xvii) the ability to recover from cyber-based or other security attacks, information technology failures or other disruptions; (xviii) changes in supplier sales or vendor incentive policies; (xix) the ability of our suppliers to satisfy their performance obligations, including any supply chain disruptions; (xx) the effects of price increases or decreases; (xxi) the effects of pension regulations, pension plan assumptions, pension plan asset performance, future contributions and the pension freeze; (xxii) future levels of indebtedness and capital expenditures; (xxiii) compliance with our debt covenants; (xxiv) the continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items; (xxv) the effects of currency exchange rates and foreign competition on future operations; (xxvi) changes in laws and regulations, taxes, interest rates, inflation rates and general business conditions; (xxvii) future repurchases and/or issuances of common stock;(xxviii) the occurrence of unanticipated restructuring costs or the failure to realize anticipated savings or benefits from past or future expense reduction actions; (xxix) the ability to recruit and retain skilled employees; (xxx) the successful resolution of all pending and future investigations, litigation or claims relating to the manufacture or design of our products, including, without limitation, the K-MAX® helicopter; and (xxxi) other risks and uncertainties set forth herein and in our 2022 Form 10-K and our first quarter 2023 Form 10-Q filed May 2, 2023.

Any forward-looking information provided in this release should be considered with these factors in mind. We assume no obligation to update any forward-looking statements contained in this report.

 

 

 

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Thousands of U.S. dollars, except share data) (unaudited) 

 

 

 

Three Months Ended

 

 

March 31, 2023

 

April 1, 2022

Net sales

 

$

194,542

 

 

$

158,048

 

Cost of sales

 

 

126,998

 

 

 

107,461

 

Gross profit

 

 

67,544

 

 

 

50,587

 

Selling, general and administrative expenses

 

 

43,698

 

 

 

39,721

 

Research and development costs

 

 

5,907

 

 

 

5,113

 

Intangible asset amortization expense

 

 

7,152

 

 

 

2,467

 

Restructuring and severance costs

 

 

2,190

 

 

 

169

 

Net (gain) loss on sale of assets

 

 

(31

)

 

 

60

 

Operating income

 

 

8,628

 

 

 

3,057

 

Interest expense, net

 

 

9,604

 

 

 

2,481

 

Non-service pension and post retirement benefit income

 

 

(381

)

 

 

(5,263

)

Other (income) expense, net

 

 

(571

)

 

 

504

 

(Loss) earnings before income taxes

 

 

(24

)

 

 

5,335

 

Income tax (benefit) expense

 

 

(5

)

 

 

1,307

 

Net (loss) earnings

 

$

(19

)

 

$

4,028

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

Basic (loss) earnings per share

 

$

(0.00

)

 

$

0.14

 

Diluted (loss) earnings per share

 

$

(0.00

)

 

$

0.14

 

Average shares outstanding:

 

 

 

 

Basic

 

 

28,117

 

 

 

27,950

 

Diluted

 

 

28,117

 

 

 

28,082

 

 

 

 

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Thousands of U.S. dollars, except share data) (unaudited) 

 

 

 

March 31, 2023

 

December 31, 2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

53,986

 

 

$

24,154

 

Accounts receivable, net

 

 

101,292

 

 

 

87,659

 

Contract assets

 

 

116,168

 

 

 

113,182

 

Inventories

 

 

186,495

 

 

 

176,468

 

Income tax refunds receivable

 

 

1,321

 

 

 

13,981

 

Other current assets

 

 

22,975

 

 

 

16,114

 

Total current assets

 

 

482,237

 

 

 

431,558

 

Property, plant and equipment, net of accumulated depreciation of $274,458 and $268,089, respectively

 

 

203,266

 

 

 

201,606

 

Operating right-of-use assets, net

 

 

6,618

 

 

 

7,391

 

Goodwill

 

 

382,504

 

 

 

379,854

 

Other intangible assets, net

 

 

365,427

 

 

 

372,331

 

Deferred income taxes

 

 

47,818

 

 

 

47,385

 

Other assets

 

 

50,788

 

 

 

51,207

 

Total assets

 

$

1,538,658

 

 

$

1,491,332

 

Liabilities and Shareholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable – trade

 

$

47,194

 

 

$

48,277

 

Accrued salaries and wages

 

 

26,258

 

 

 

31,395

 

Contract liabilities, current portion

 

 

6,044

 

 

 

4,081

 

Operating lease liabilities, current portion

 

 

3,121

 

 

 

3,332

 

Income taxes payable

 

 

170

 

 

 

393

 

Other current liabilities

 

 

44,210

 

 

 

39,097

 

Total current liabilities

 

 

126,997

 

 

 

126,575

 

Long-term debt, excluding current portion, net of debt issuance costs

 

 

609,325

 

 

 

561,061

 

Deferred income taxes

 

 

6,365

 

 

 

6,079

 

Underfunded pension

 

 

51,459

 

 

 

52,309

 

Contract liabilities, noncurrent portion

 

 

20,329

 

 

 

20,515

 

Operating lease liabilities, noncurrent portion

 

 

3,905

 

 

 

4,534

 

Other long-term liabilities

 

 

36,322

 

 

 

36,280

 

Commitments and contingencies

 

 

 

 

Shareholders’ equity:

 

 

 

 

Preferred stock, $1 par value, 200,000 shares authorized; none outstanding

 

 

 

 

 

 

Common stock, $1 par value, 50,000,000 shares authorized; voting; 30,766,419 and 30,640,068 shares issued, respectively

 

 

30,766

 

 

 

30,640

 

Additional paid-in capital

 

 

247,812

 

 

 

245,436

 

Retained earnings

 

 

682,812

 

 

 

688,457

 

Accumulated other comprehensive income (loss)

 

 

(154,793

)

 

 

(158,421

)

Less 2,632,334 and 2,607,841 shares of common stock, respectively, held in treasury, at cost

 

 

(122,641

)

 

 

(122,133

)

Total shareholders’ equity

 

 

683,956

 

 

 

683,979

 

Total liabilities and shareholders’ equity

 

$

1,538,658

 

 

$

1,491,332

 

 

 

 

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Thousands of U.S. dollars) (unaudited) 

 

 

 

Three Months Ended

 

 

March 31, 2023

 

April 1, 2022

Cash flows from operating activities:

 

 

 

 

Net (loss) earnings

 

$

(19

)

 

$

4,028

 

Adjustments to reconcile earnings, net of tax to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

13,154

 

 

 

8,832

 

Amortization of debt issuance costs

 

 

883

 

 

 

442

 

Provision for doubtful accounts

 

 

805

 

 

 

135

 

Net (gain) loss on sale of assets

 

 

(31

)

 

 

60

 

Net (gain) loss on derivative instruments

 

 

(283

)

 

 

449

 

Stock compensation expense

 

 

2,003

 

 

 

2,081

 

Deferred income taxes

 

 

(669

)

 

 

(1,247

)

Changes in assets and liabilities, excluding effects of acquisitions/divestitures:

 

 

 

 

Accounts receivable

 

 

(14,177

)

 

 

4,307

 

Contract assets

 

 

(2,973

)

 

 

12,973

 

Inventories

 

 

(9,596

)

 

 

(17,285

)

Income tax refunds receivable

 

 

12,663

 

 

 

(410

)

Operating right of use assets

 

 

785

 

 

 

915

 

Other assets

 

 

(6,431

)

 

 

(2,105

)

Accounts payable – trade

 

 

(1,151

)

 

 

(612

)

Contract liabilities

 

 

1,776

 

 

 

(137

)

Operating lease liabilities

 

 

(852

)

 

 

(899

)

Other current liabilities

 

 

(2,483

)

 

 

(10,581

)

Income taxes payable

 

 

(222

)

 

 

53

 

Pension liabilities

 

 

936

 

 

 

(1,876

)

Other long-term liabilities

 

 

429

 

 

 

(140

)

Net cash used in operating activities

 

 

(5,453

)

 

 

(1,017

)

Cash flows from investing activities:

 

 

 

 

Expenditures for property, plant & equipment

 

 

(5,948

)

 

 

(6,877

)

Acquisition of businesses, net of cash acquired

 

 

(1,487

)

 

 

 

Other, net

 

 

(1,363

)

 

 

424

 

Net cash used in investing activities

 

 

(8,798

)

 

 

(6,453

)

Cash flows from financing activities:

 

 

 

 

Borrowings under revolving credit agreement

 

 

94,000

 

 

 

 

Repayments under revolving credit agreement

 

 

(46,000

)

 

 

 

Purchase of treasury shares

 

 

(503

)

 

 

(575

)

Dividends paid

 

 

(5,606

)

 

 

(5,572

)

Other, net

 

 

2,079

 

 

 

2,112

 

Net cash provided by (used in) financing activities

 

 

43,970

 

 

 

(4,035

)

Net increase (decrease) in cash and cash equivalents

 

 

29,719

 

 

 

(11,505

)

Effect of exchange rate changes on cash and cash equivalents

 

 

113

 

 

 

(198

)

Cash and cash equivalents at beginning of period

 

 

24,154

 

 

 

140,800

 

Cash and cash equivalents at end of period

 

$

53,986

 

 

$

129,097

 

 

Rebecca Stath

V.P., Controller and Head of Investor Relations

(860) 286-4127

[email protected] or [email protected]

Source: Kaman Corp.