Kaman Reports 2019 Fourth Quarter and Full Year Results
Fourth Quarter Highlights from Continuing Operations:
-
Net sales up 7.7% to
$237.8 million versus prior year -
Aerospace operating income increased 7.9% to
$45.0 million , or 18.9% of sales -
Net earnings increased
$18.5 million to$34.1 million -
Diluted earnings per share rose
$0.66 to$1.22 , or$0.80 adjusted*
Full Year Highlights from Continuing Operations:
-
Net sales up 3.5% to
$761.6 million versus prior year - Aerospace operating margin up 430 basis points to 17.1%, or 17.2% adjusted*
-
Diluted earnings per share
$2.01 , or$1.63 adjusted* - Record JPF deliveries of 41,429 units
- Record order intake for specialty bearing and engineered products
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Table 1. Summary of Financial Results (unaudited) |
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|||||||
In thousands except per share amounts |
For the Three Months Ended |
|
||||||||||
|
|
|
|
|
Change |
|
||||||
|
|
|
|
|
|
|
||||||
Net sales from continuing operations |
$ |
237,792 |
|
|
$ |
220,859 |
|
|
$ |
16,933 |
|
|
Operating income from continuing operations: |
|
|
|
|
|
|
||||||
Aerospace |
$ |
45,041 |
|
|
$ |
41,748 |
|
|
$ |
3,293 |
|
|
% of sales |
18.9 |
% |
|
18.9 |
% |
|
— |
% |
|
|||
Loss on sale of business |
(3,739 |
) |
|
(5,722 |
) |
|
1,983 |
|
|
|||
Net gain (loss) on sale of assets |
114 |
|
|
(528 |
) |
|
642 |
|
|
|||
Corporate expense |
(26,576 |
) |
|
(11,379 |
) |
|
(15,197 |
) |
|
|||
Operating income from continuing operations |
$ |
14,840 |
|
|
$ |
24,119 |
|
|
$ |
(9,279 |
) |
|
Adjusted EBITDA*: |
|
|
|
|
|
|
||||||
Earnings from continuing operations |
$ |
34,105 |
|
|
$ |
15,632 |
|
|
$ |
18,473 |
|
|
Adjustments |
2,641 |
|
|
26,098 |
|
|
(23,457 |
) |
|
|||
Adjusted EBITDA* |
$ |
36,746 |
|
|
$ |
41,730 |
|
|
$ |
(4,984 |
) |
|
% of sales |
15.5 |
% |
|
18.9 |
% |
|
(3.4 |
)% |
|
|||
Earnings per share: |
|
|
|
|
|
|
||||||
Diluted earnings per share from continuing operations |
$ |
1.22 |
|
|
$ |
0.56 |
|
|
$ |
0.66 |
|
|
Adjustments |
(0.42 |
) |
|
0.33 |
|
|
(0.75 |
) |
|
|||
Adjusted diluted earnings per share from continuing operations* |
$ |
0.80 |
|
|
$ |
0.89 |
|
|
$ |
(0.09 |
) |
|
|
During the fourth quarter, we took initial steps towards reducing our general and administrative expenses and we remain focused on achieving our previously stated goal of reducing G&A expense across the organization near the high end of our estimated
On
Chief Financial Officer,
2020 Outlook
(in millions) |
2019 |
2020 Outlook |
||||||
|
Actual |
Low End |
High End |
|||||
Sales from continuing operations |
$ |
761.6 |
$ |
860.0 |
$ |
880.0 |
||
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|
|
|
|||||
Operating Margins |
|
|
|
|||||
Operating margin from continuing operations |
7.0% |
5.0% |
6.7% |
|||||
Operating margin impact of adjustments |
2.6% |
5.0% |
4.8% |
|||||
Operating margin from continuing operations, adjusted* |
9.6% |
10.0% |
11.5% |
|||||
|
|
|
|
|||||
Adjusted EBITDA |
|
|
|
|||||
Earnings from continuing operations |
$ |
56.4 |
$ |
38.5 |
$ |
50.5 |
||
Adjustments |
$ |
42.9 |
$ |
82.2 |
$ |
85.8 |
||
Adjusted EBITDA* from continuing operations |
$ |
99.3 |
$ |
120.7 |
$ |
136.3 |
||
Adjusted EBITDA margin* from continuing operations |
13.0% |
14.0% |
15.5% |
|||||
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|
|||||
Free Cash Flow |
|
|
|
|||||
Operating cash flow from continuing operations |
$ |
42.5 |
$ |
85.0 |
$ |
95.0 |
||
Cash used for the purchase of property, plant and equipment |
$ |
(22.5) |
$ |
(25.0) |
$ |
(25.0) |
||
Free Cash Flow* from continuing operations |
$ |
20.0 |
$ |
60.0 |
$ |
70.0 |
Commenting on the 2020 outlook,
Finally, we expect earnings for 2020 to be weighted toward the second half of the year. Approximately 65% of our earnings will occur in the second half of the year, consistent with our earnings pattern in recent years."
Additional Financial Information
-
Expenses associated with the purchase accounting of Bal Seal of approximately
$32 million -
Depreciation and amortization expense of approximately
$35 million -
Net periodic pension benefit of approximately
$16.5 million -
Interest expense of approximately
$15.0 million - Estimated annualized tax rate of 23.0%
Please see the MD&A section of the Company's Form 10-K filed with the
A conference call has been scheduled for tomorrow,
About
More information is available at www.kaman.com.
Table 2. Summary of Segment Information (in thousands) |
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||||||||
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For the Three Months Ended |
|
For the Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net sales from continuing operations |
|
$ |
237,792 |
|
|
$ |
220,859 |
|
|
$ |
761,608 |
|
|
$ |
735,994 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income from continuing operations: |
|
|
|
|
|
|
|
|
||||||||
Aerospace |
|
$ |
45,041 |
|
|
$ |
41,748 |
|
|
$ |
130,393 |
|
|
$ |
94,357 |
|
Loss on sale of business |
|
(3,739 |
) |
|
(5,722 |
) |
|
(3,739 |
) |
|
(5,722 |
) |
||||
Net gain (loss) on sale of assets |
|
114 |
|
|
(528 |
) |
|
(237 |
) |
|
1,031 |
|
||||
Corporate expense |
|
(26,576 |
) |
|
(11,379 |
) |
|
(73,006 |
) |
|
(56,703 |
) |
||||
Operating income from continuing operations |
|
$ |
14,840 |
|
|
$ |
24,119 |
|
|
$ |
53,411 |
|
|
$ |
32,963 |
|
Table 3. Depreciation and Amortization from continuing operations (in thousands) |
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||||||||
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For the Three Months Ended |
|
For the Twelve Months Ended |
||||||||||||
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|
|
|
||||||||
Depreciation and Amortization: |
|
|
|
|
|
|
|
|
||||||||
Aerospace |
|
$ |
5,766 |
|
|
$ |
5,945 |
|
|
$ |
22,697 |
|
|
$ |
24,506 |
|
Corporate |
|
780 |
|
|
850 |
|
|
3,157 |
|
|
3,369 |
|
||||
Consolidated Total |
|
$ |
6,546 |
|
|
$ |
6,795 |
|
|
$ |
25,854 |
|
|
$ |
27,875 |
|
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:
Organic Sales - Organic Sales is defined as "
Organic Sales from continuing operations (in thousands) |
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||||||||||
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For the Three Months Ended |
|
For the Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
|
$ |
237,792 |
|
|
$ |
220,859 |
|
|
$ |
761,608 |
|
|
$ |
735,994 |
|
Acquisition Sales |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Organic Sales |
|
$ |
237,792 |
|
|
$ |
220,859 |
|
|
$ |
761,608 |
|
|
$ |
735,994 |
|
Adjusted EBITDA from continuing operations - Adjusted EBITDA from continuing operations is defined as earnings from continuing operations before interest, taxes, other expense (income), net, depreciation and amortization and certain items that are not indicative of the operating performance of the Company's for the period presented. Adjusted EBITDA from continuing operations differs from earnings from continuing operations, as calculated in accordance with GAAP, in that it excludes interest expense, net, income tax expense, depreciation and amortization, other expense (income), net, non-service pension and post retirement benefit expense (income), and certain items that are not indicative of the operating performance of the Company for the period presented. We have made numerous investments in our business, such as acquisitions and capital expenditures, including facility improvements, new machinery and equipment, improvements to our information technology infrastructure and ERP systems, which we have adjusted for in Adjusted EBITDA from continuing operations. Adjusted EBITDA from continuing operations also does not give effect to cash used for debt service requirements and thus does not reflect funds available for distributions, reinvestments or other discretionary uses. Management believes Adjusted EBITDA from continuing operations provides 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 it provides 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 from continuing operations is not presented as an alternative measure of operating performance, as determined in accordance with GAAP. No other adjustments were made during the three-month and twelve-month fiscal periods ended
Adjusted EBITDA from continuing operations (in thousands) |
|
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|
|
|
|
||||||||||
|
|
For the Three Months Ended |
|
For the Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA from continuing operations |
|
|
|
|
|
|
|
|
||||||||
Consolidated Results |
|
|
|
|
|
|
|
|
||||||||
Sales from continuing operations |
|
$ |
237,792 |
|
|
$ |
220,859 |
|
|
$ |
761,608 |
|
|
$ |
735,994 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings from continuing operations, net of tax |
|
$ |
34,105 |
|
|
$ |
15,632 |
|
|
$ |
56,446 |
|
|
$ |
15,877 |
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
2,607 |
|
|
4,639 |
|
|
17,202 |
|
|
20,046 |
|
||||
Income tax (benefit) expense |
|
(19,103 |
) |
|
6,883 |
|
|
(15,859 |
) |
|
9,259 |
|
||||
Non-service pension and post retirement benefit income |
|
(98 |
) |
|
(3,084 |
) |
|
(396 |
) |
|
(12,127 |
) |
||||
Other expense (income), net |
|
58 |
|
|
49 |
|
|
(309 |
) |
|
(92 |
) |
||||
Depreciation and amortization |
|
6,546 |
|
|
6,795 |
|
|
25,854 |
|
|
27,875 |
|
||||
Other Adjustments: |
|
|
|
|
|
|
|
|
||||||||
Restructuring and severance costs |
|
1,005 |
|
|
2,642 |
|
|
1,558 |
|
|
7,353 |
|
||||
Non-cash intangible asset impairment charge |
|
— |
|
|
— |
|
|
— |
|
|
10,039 |
|
||||
Non-cash write-off of inventory |
|
— |
|
|
— |
|
|
— |
|
|
709 |
|
||||
Employee tax-related matters in foreign operations |
|
— |
|
|
1,761 |
|
|
— |
|
|
3,040 |
|
||||
Cost associated with corporate development activities |
|
7,097 |
|
|
30 |
|
|
10,090 |
|
|
1,081 |
|
||||
Costs from transition services agreement |
|
3,519 |
|
|
— |
|
|
4,673 |
|
|
— |
|
||||
Income from transition services agreement |
|
(2,729 |
) |
|
— |
|
|
(3,673 |
) |
|
— |
|
||||
Loss on sale of |
|
3,739 |
|
|
5,722 |
|
|
3,739 |
|
|
5,722 |
|
||||
Loss on sale of assets and liabilities of Engineering
|
|
— |
|
|
661 |
|
|
— |
|
|
661 |
|
||||
Gain on the sale of land |
|
— |
|
|
— |
|
|
— |
|
|
(1,520 |
) |
||||
Adjustments |
|
$ |
2,641 |
|
|
$ |
26,098 |
|
|
$ |
42,879 |
|
|
$ |
72,046 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA from continuing operations |
|
$ |
36,746 |
|
|
$ |
41,730 |
|
|
$ |
99,325 |
|
|
$ |
87,923 |
|
Adjusted EBITDA margin |
|
15.5 |
% |
|
18.9 |
% |
|
13.0 |
% |
|
11.9 |
% |
Outlook - Adjusted EBITDA from continuing operations (in millions) |
|||||||||
|
|
|
|||||||
|
|
2020 Outlook |
|||||||
|
|
Low |
|
High |
|||||
Adjusted EBITDA from continuing operations |
|
|
|
|
|||||
2020 Outlook |
|
|
|
|
|||||
Sales from continuing operations |
|
$ |
860.0 |
|
|
$ |
880.0 |
|
|
|
|
|
|
|
|||||
Earnings from continuing operations, net of tax |
|
$ |
38.5 |
|
|
$ |
50.5 |
|
|
|
|
|
|
|
|||||
Interest expense, net |
|
15.0 |
|
|
15.0 |
|
|||
Income tax (benefit) expense |
|
11.5 |
|
|
15.1 |
|
|||
Net Periodic Pension Benefit |
|
(16.5 |
) |
|
(16.5 |
) |
|||
Other expense (income), net |
|
1.5 |
|
|
1.5 |
|
|||
Depreciation and amortization |
|
35.0 |
|
|
35.0 |
|
|||
Other Adjustments: |
|
|
|
|
|||||
Bal Seal Purchase Accounting - Inventory Step-up |
|
9.2 |
|
|
9.2 |
|
|||
Bal Seal Purchase Accounting - Compensation Expense |
|
22.8 |
|
|
22.8 |
|
|||
Cost associated with corporate development activities |
|
1.5 |
|
|
1.5 |
|
|||
Costs from transition services agreement, net of income received |
|
2.2 |
|
|
2.2 |
|
|||
Total Adjustments |
|
$ |
82.2 |
|
|
$ |
85.8 |
|
|
|
|
|
|
|
|||||
Adjusted EBITDA from continuing operations |
|
$ |
120.7 |
|
|
$ |
136.3 |
|
|
Adjusted EBITDA margin |
|
14.0 |
% |
|
15.5 |
% |
Free Cash Flow from continuing operations - Free Cash Flow from continuing operations is defined as GAAP “Net cash provided by (used in) operating activities from continuing operations” in a period less “Expenditures for property, plant & equipment” in the same period. Management believes Free Cash Flow from continuing operations 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 from continuing operations should not be viewed as representing the residual cash flow available for discretionary expenditures such as dividends to shareholders or acquisitions, as it may exclude certain mandatory expenditures such as repayment of maturing debt and other contractual obligations. Management uses Free Cash Flow from continuing operations internally to assess overall liquidity. The following table illustrates the calculation of Free Cash Flow from continuing operations using “Net cash provided by (used in) operating activities from continuing operations” and “Expenditures for property, plant & equipment”, GAAP measures from the Condensed Consolidated Statements of Cash Flows included in this release.
Free Cash Flow from continuing operations (in thousands) |
|
|
|
|
|
|
||||||
|
|
For the Twelve
|
|
For the Nine
|
|
For the Three
|
||||||
|
|
|
|
|
|
|
||||||
Net cash provided by operating activities from continuing
|
|
$ |
42,488 |
|
|
$ |
11,336 |
|
|
$ |
31,152 |
|
Expenditures for property, plant & equipment |
|
(22,447 |
) |
|
(17,411 |
) |
|
(5,036 |
) |
|||
Free Cash Flow from continuing operations |
|
$ |
20,041 |
|
|
$ |
(6,075 |
) |
|
$ |
26,116 |
|
Debt to Capitalization Ratio - Debt to Capitalization Ratio is calculated by dividing debt by capitalization. Debt is defined as GAAP “Current portion of long-term debt” plus “Long-term debt, excluding current portion”. Capitalization is defined as Debt plus GAAP “Total shareholders' equity”. Management believes that Debt to Capitalization Ratio is a measurement of financial leverage and provides an insight into the financial structure of the Company and its financial strength. The following table illustrates the calculation of Debt to Capitalization Ratio using GAAP measures from the Condensed Consolidated Balance Sheets included in this release.
Debt to Capitalization Ratio (in thousands) (unaudited) |
|
|
|
|
||||
|
|
|
|
|
||||
Current portion of long-term debt |
|
$ |
— |
|
|
$ |
9,375 |
|
Long-term debt, excluding current portion |
|
181,622 |
|
|
284,256 |
|
||
Debt |
|
$ |
181,622 |
|
|
$ |
293,631 |
|
Total shareholders' equity |
|
823,202 |
|
|
633,157 |
|
||
Capitalization |
|
$ |
1,004,824 |
|
|
$ |
926,788 |
|
Debt to Capitalization Ratio |
|
18.1 |
% |
|
31.7 |
% |
Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings Per Share from Continuing Operations - Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations are defined as GAAP "Earnings from Continuing Operations" and "Diluted earnings per share from continuing operations", 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 Earnings from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations 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 Earnings from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations using “Earnings from Continuing Operations” and “Diluted earnings per share from continuing operations” from the “Consolidated Statements of Operations” included in the Company's Form 10-K filed with the
Adjusted Earnings from continuing operations and Adjusted Diluted Earnings per Share from continuing operations |
||||||||||||||||
(In thousands except per share amounts) (unaudited) |
|
|
|
|
||||||||||||
|
|
For the Three Months Ended |
|
For the Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Adjustments to Earnings from Continuing Operations |
|
|
|
|
|
|
|
|
||||||||
Restructuring and severance costs |
|
$ |
1,005 |
|
|
$ |
2,642 |
|
|
$ |
1,558 |
|
|
$ |
7,353 |
|
Costs associated with corporate development activities |
|
7,097 |
|
|
30 |
|
|
10,090 |
|
|
1,081 |
|
||||
Loss on sale of |
|
3,739 |
|
|
5,722 |
|
|
3,739 |
|
|
5,722 |
|
||||
Costs from transition services agreement |
|
3,519 |
|
|
— |
|
|
4,673 |
|
|
— |
|
||||
Income from transition services agreement |
|
(2,729 |
) |
|
— |
|
|
(3,673 |
) |
|
— |
|
||||
Tax benefit from change in state tax laws |
|
— |
|
|
— |
|
|
(2,137 |
) |
|
— |
|
||||
Tax benefit of foreign derived income included in
|
|
3,360 |
|
|
— |
|
|
3,360 |
|
|
— |
|
||||
Tax benefit from change in |
|
(25,710 |
) |
|
— |
|
|
(25,710 |
) |
|
— |
|
||||
Non-cash non-taxable intangible assets impairment
|
|
— |
|
|
— |
|
|
— |
|
|
10,039 |
|
||||
Non-cash non-taxable write-off of inventory |
|
— |
|
|
— |
|
|
— |
|
|
709 |
|
||||
Employee tax-related matters in foreign operations |
|
— |
|
|
1,761 |
|
|
— |
|
|
3,040 |
|
||||
Loss on sale of assets and liabilities of Engineering
|
|
— |
|
|
661 |
|
|
— |
|
|
661 |
|
||||
Gain on the sale of land |
|
— |
|
|
— |
|
|
— |
|
|
(1,520 |
) |
||||
Adjustments, pre tax |
|
$ |
(9,719 |
) |
|
$ |
10,816 |
|
|
$ |
(8,100 |
) |
|
$ |
27,085 |
|
|
|
|
|
|
|
|
|
|
||||||||
Tax Effect of Adjustments to Earnings from Continuing
|
|
|
|
|
|
|
|
|
||||||||
Restructuring and severance costs |
|
$ |
212 |
|
|
$ |
808 |
|
|
$ |
328 |
|
|
$ |
2,706 |
|
Costs associated with corporate development activities |
|
1,496 |
|
|
9 |
|
|
2,124 |
|
|
398 |
|
||||
Loss on sale of |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Costs from transition services agreement |
|
742 |
|
|
— |
|
|
984 |
|
|
— |
|
||||
Income from transition services agreement |
|
(575 |
) |
|
— |
|
|
(773 |
) |
|
— |
|
||||
Tax benefit from change in state tax laws |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Tax benefit of foreign derived income included in
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Non-cash non-taxable intangible assets impairment
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Non-cash non-taxable write-off of inventory |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Employee tax-related matters in foreign operations |
|
— |
|
|
538 |
|
|
— |
|
|
1,119 |
|
||||
Loss on sale of assets and liabilities of Engineering
|
|
— |
|
|
202 |
|
|
— |
|
|
243 |
|
||||
Gain on the sale of land |
|
— |
|
|
— |
|
|
— |
|
|
(559 |
) |
||||
Tax effect of Adjustments |
|
$ |
1,875 |
|
|
$ |
1,557 |
|
|
$ |
2,663 |
|
|
$ |
3,907 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustments to Earnings from Continuing Operations,
|
|
|
|
|
|
|
|
|
||||||||
GAAP Earnings from continuing operations, as
|
|
$ |
34,105 |
|
|
$ |
15,632 |
|
|
$ |
56,446 |
|
|
$ |
15,877 |
|
Restructuring and severance costs |
|
793 |
|
|
1,834 |
|
|
1,230 |
|
|
4,647 |
|
||||
Costs associated with corporate development activities |
|
5,601 |
|
|
21 |
|
|
7,966 |
|
|
683 |
|
||||
Loss on sale of |
|
3,739 |
|
|
5,722 |
|
|
3,739 |
|
|
5,722 |
|
||||
Costs from transition services agreement |
|
2,777 |
|
|
— |
|
|
3,689 |
|
|
— |
|
||||
Income from transition services agreement |
|
(2,154 |
) |
|
— |
|
|
(2,900 |
) |
|
— |
|
||||
Tax benefit from change in state tax laws |
|
— |
|
|
— |
|
|
(2,137 |
) |
|
— |
|
||||
Tax benefit of foreign derived income included in
|
|
3,360 |
|
|
— |
|
|
3,360 |
|
|
— |
|
||||
|
|
(25,710 |
) |
|
— |
|
|
(25,710 |
) |
|
— |
|
||||
Non-cash non-taxable intangible assets impairment
|
|
— |
|
|
— |
|
|
— |
|
|
10,039 |
|
||||
Non-cash non-taxable write-off of inventory |
|
— |
|
|
— |
|
|
— |
|
|
709 |
|
||||
Employee tax-related matters in foreign operations |
|
— |
|
|
1,223 |
|
|
— |
|
|
1,921 |
|
||||
Loss on sale of assets and liabilities of Engineering
|
|
— |
|
|
459 |
|
|
— |
|
|
418 |
|
||||
Gain on the sale of land |
|
— |
|
|
— |
|
|
— |
|
|
(961 |
) |
||||
Adjusted Earnings from continuing operations |
|
$ |
22,511 |
|
|
$ |
24,891 |
|
|
$ |
45,683 |
|
|
$ |
39,055 |
|
|
|
|
|
|
|
|
|
|
||||||||
Calculation of Adjusted Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
||||||||
GAAP diluted earnings per share from continuing
|
|
$ |
1.22 |
|
|
$ |
0.56 |
|
|
$ |
2.01 |
|
|
$ |
0.56 |
|
Restructuring and severance costs at Aerospace |
|
0.03 |
|
|
0.07 |
|
|
0.04 |
|
|
0.16 |
|
||||
Costs associated with corporate development activities |
|
0.20 |
|
|
— |
|
|
0.29 |
|
|
0.02 |
|
||||
Loss on sale of |
|
0.13 |
|
|
0.20 |
|
|
0.13 |
|
|
0.20 |
|
||||
Costs from transition services agreement |
|
0.10 |
|
|
— |
|
|
0.13 |
|
|
— |
|
||||
Income from transition services agreement |
|
(0.08 |
) |
|
— |
|
|
(0.10 |
) |
|
— |
|
||||
Tax benefit from change in state tax laws |
|
— |
|
|
— |
|
|
(0.07 |
) |
|
— |
|
||||
Tax benefit of foreign derived income included in
|
|
0.12 |
|
|
— |
|
|
0.12 |
|
|
— |
|
||||
|
|
(0.92 |
) |
|
— |
|
(0.92 |
) |
|
— |
||||||
Non-cash non-taxable intangible assets impairment
|
|
— |
|
|
— |
|
|
— |
|
|
0.36 |
|
||||
Non-cash non-taxable write-off of inventory |
|
— |
|
|
— |
|
|
— |
|
|
0.03 |
|
||||
Employee tax-related matters in foreign operations |
|
— |
|
|
0.04 |
|
|
— |
|
|
0.07 |
|
||||
Loss on sale of assets and liabilities of Engineering
|
|
— |
|
|
0.02 |
|
|
— |
|
|
0.01 |
|
||||
Gain on the sale of land |
|
— |
|
|
— |
|
|
— |
|
|
(0.03 |
) |
||||
Adjusted Diluted Earnings per Share from continuing
|
|
$ |
0.80 |
|
|
$ |
0.89 |
|
|
$ |
1.63 |
|
|
$ |
1.38 |
|
Diluted weighted average shares outstanding |
|
28,056 |
|
|
28,119 |
|
|
28,092 |
|
|
28,223 |
|
Adjusted
Adjusted |
|
|
|
|
||||||||||||||
(In thousands) (unaudited) |
|
|
|
|
||||||||||||||
|
|
For the Three Months Ended |
|
For the Twelve Months Ended |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||
AEROSPACE SEGMENT OPERATING INCOME: |
|
|
|
|
|
|
|
|
||||||||||
|
|
$ |
237,792 |
|
|
$ |
220,859 |
|
|
$ |
761,608 |
|
|
$ |
735,994 |
|
||
GAAP Operating income - Aerospace segment |
|
$ |
45,041 |
|
|
$ |
41,748 |
|
|
$ |
130,393 |
|
|
$ |
94,357 |
|
||
% of GAAP net sales |
|
|
18.9 |
% |
|
|
18.9 |
% |
|
|
17.1 |
% |
|
|
12.8 |
% |
||
Restructuring and severance costs |
|
|
78 |
|
|
|
2,305 |
|
|
|
631 |
|
|
|
7,016 |
|
||
Non-cash non-taxable intangible assets impairment
|
|
— |
|
|
— |
|
|
— |
|
|
|
10,039 |
|
|||||
Non-cash non-taxable write-off of inventory |
|
— |
|
|
— |
|
|
— |
|
|
|
709 |
|
|||||
Employee tax-related matters in foreign operations |
|
— |
|
|
|
1,761 |
|
|
— |
|
|
|
3,040 |
|
||||
Adjusted Operating Income - Aerospace segment |
|
$ |
45,119 |
|
|
$ |
45,814 |
|
|
$ |
131,024 |
|
|
$ |
115,161 |
|
||
% of GAAP net sales |
|
|
19.0 |
% |
|
|
20.7 |
% |
|
|
17.2 |
% |
|
|
15.6 |
% |
||
CORPORATE EXPENSE: |
|
|
|
|
|
|
|
|
||||||||||
GAAP Corporate Expense |
|
$ |
(26,576 |
) |
|
$ |
(11,379 |
) |
|
$ |
(73,006 |
) |
|
$ |
(56,703 |
) |
||
Restructuring and severance costs |
|
|
927 |
|
|
|
337 |
|
|
|
927 |
|
|
|
337 |
|
||
Costs associated with corporate development activities |
|
|
7,097 |
|
|
|
30 |
|
|
|
10,090 |
|
|
|
1,081 |
|
||
Costs from transition services agreement |
|
|
3,519 |
|
|
— |
|
|
|
4,673 |
|
|
— |
|
||||
Adjusted Corporate Expense |
|
$ |
(15,033 |
) |
|
$ |
(11,012 |
) |
|
$ |
(57,316 |
) |
|
$ |
(55,285 |
) |
||
CONSOLIDATED OPERATING INCOME: |
|
|
|
|
|
|
|
|
||||||||||
|
|
$ |
237,792 |
|
|
$ |
220,859 |
|
|
$ |
761,608 |
|
|
$ |
735,994 |
|
||
GAAP - Operating income from continuing operations |
|
$ |
14,840 |
|
|
$ |
24,119 |
|
|
$ |
53,411 |
|
|
$ |
32,963 |
|
||
% of GAAP net sales |
|
|
6.2 |
% |
|
|
10.9 |
% |
|
|
7.0 |
% |
|
|
4.5 |
% |
||
Restructuring and severance costs |
|
|
1,005 |
|
|
|
2,642 |
|
|
|
1,558 |
|
|
|
7,353 |
|
||
Costs associated with corporate development activities |
|
|
7,097 |
|
|
|
30 |
|
|
|
10,090 |
|
|
|
1,081 |
|
||
Costs from transition services agreement |
|
|
3,519 |
|
|
— |
|
|
|
4,673 |
|
|
— |
|
||||
Non-cash non-taxable intangible assets impairment
|
|
— |
|
|
— |
|
|
— |
|
|
|
10,039 |
|
|||||
Non-cash non-taxable write-off of inventory |
|
— |
|
|
— |
|
|
— |
|
|
|
709 |
|
|||||
Employee tax-related matters in foreign operations |
|
— |
|
|
|
1,761 |
|
|
— |
|
|
|
3,040 |
|
||||
Loss on sale of |
|
|
3,739 |
|
|
|
5,722 |
|
|
|
3,739 |
|
|
|
5,722 |
|
||
Loss on sale of assets and liabilities of Engineering
|
|
— |
|
|
|
661 |
|
|
— |
|
|
|
661 |
|
||||
Gain on sale of land |
|
— |
|
|
— |
|
|
— |
|
|
|
(1,520 |
) |
|||||
Adjusted Operating Income |
|
$ |
30,200 |
|
|
$ |
34,935 |
|
|
$ |
73,471 |
|
|
$ |
60,048 |
|
||
% of GAAP net sales |
|
|
12.7 |
% |
|
|
15.8 |
% |
|
|
9.6 |
% |
|
|
8.2 |
% |
Outlook - Adjusted |
||||||||
(In millions) (unaudited) |
|
|
|
|
||||
|
|
2020 Outlook |
||||||
|
|
Low |
|
High |
||||
OPERATING INCOME FROM CONTINUING OPERATIONS |
|
|
|
|
||||
|
|
$ |
860.0 |
|
|
$ |
880.0 |
|
GAAP - Operating income from Continuing Operations |
|
$ |
43.4 |
|
|
$ |
59.0 |
|
Operating margin from Continuing Operations |
|
5.0 |
% |
|
6.7 |
% |
||
Adjustments |
|
|
|
|
||||
Bal Seal Purchase Accounting - Inventory Step-up |
|
$ |
9.2 |
|
|
$ |
9.2 |
|
Bal Seal Purchase Accounting - Compensation Expense |
|
22.8 |
|
|
22.8 |
|
||
Cost associated with corporate development activities |
|
1.5 |
|
|
1.5 |
|
||
Costs from transition services agreement |
|
8.8 |
|
|
8.8 |
|
||
Adjusted Operating Income from Continuing Operations |
|
$ |
85.7 |
|
|
$ |
101.3 |
|
Operating margin from continuing operations, adjusted |
|
10.0 |
% |
|
11.5 |
% |
FORWARD-LOOKING STATEMENTS
This release contains "forward-looking statements" within the meaning of the safe harbor provisions of the
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) the possibility that we may be unable to find appropriate reinvestment opportunities for the proceeds from the sale of our former Distribution business; (ii) risks related to Kaman's performance of its obligations under the transition services agreement entered into in connection with the sale of our former Distribution business and disruption of management time from ongoing business operations relating thereto; (iii) changes in domestic and foreign economic and competitive conditions in markets served by the Company, particularly the defense, commercial aviation and industrial production markets; (iv) 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
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
(In thousands, except per share amounts) (unaudited)
|
|
For the Three Months Ended |
|
For the Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
|
$ |
237,792 |
|
|
$ |
220,859 |
|
|
$ |
761,608 |
|
|
$ |
735,994 |
|
Cost of sales |
|
165,230 |
|
|
147,851 |
|
|
520,803 |
|
|
508,677 |
|
||||
Gross profit |
|
72,562 |
|
|
73,008 |
|
|
240,805 |
|
|
227,317 |
|
||||
Selling, general and administrative expenses |
|
49,573 |
|
|
39,997 |
|
|
177,187 |
|
|
172,271 |
|
||||
Other intangible assets impairment (Note 12) |
|
— |
|
|
— |
|
|
— |
|
|
10,039 |
|
||||
Costs from transition services agreement (Note 3) |
|
3,519 |
|
|
— |
|
|
4,673 |
|
|
— |
|
||||
Restructuring costs (Note 5) |
|
1,005 |
|
|
2,642 |
|
|
1,558 |
|
|
7,353 |
|
||||
Loss on sale of business (Note 5) |
|
3,739 |
|
|
5,722 |
|
|
3,739 |
|
|
5,722 |
|
||||
Net loss (gain) on sale of assets |
|
(114 |
) |
|
528 |
|
|
237 |
|
|
(1,031 |
) |
||||
Operating income |
|
14,840 |
|
|
24,119 |
|
|
53,411 |
|
|
32,963 |
|
||||
Interest expense, net |
|
2,607 |
|
|
4,639 |
|
|
17,202 |
|
|
20,046 |
|
||||
Non-service pension and post retirement benefit
|
|
(98 |
) |
|
(3,084 |
) |
|
(396 |
) |
|
(12,127 |
) |
||||
Income from transition services agreement (Note 3) |
|
(2,729 |
) |
|
— |
|
|
(3,673 |
) |
|
— |
|
||||
Other expense (income), net |
|
58 |
|
|
49 |
|
|
(309 |
) |
|
(92 |
) |
||||
Earnings from continuing operations before income
|
|
15,002 |
|
|
22,515 |
|
|
40,587 |
|
|
25,136 |
|
||||
Income tax (benefit) expense |
|
(19,103 |
) |
|
6,883 |
|
|
(15,859 |
) |
|
9,259 |
|
||||
Earnings from continuing operations, net of tax |
|
34,105 |
|
|
15,632 |
|
|
56,446 |
|
|
15,877 |
|
||||
Earnings from discontinued operations before gain on
|
|
3,787 |
|
|
7,945 |
|
|
29,027 |
|
|
38,292 |
|
||||
Gain on disposal of discontinued operations, net of tax |
|
1,570 |
|
|
— |
|
|
124,356 |
|
|
— |
|
||||
Total earnings from discontinued operations, net of
|
|
5,357 |
|
|
7,945 |
|
|
153,383 |
|
|
38,292 |
|
||||
Net earnings |
|
$ |
39,462 |
|
|
$ |
23,577 |
|
|
$ |
209,829 |
|
|
$ |
54,169 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share: |
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share from continuing
|
|
$ |
1.22 |
|
|
$ |
0.56 |
|
|
$ |
2.02 |
|
|
$ |
0.57 |
|
Basic earnings per share from discontinued
|
|
0.19 |
|
|
0.28 |
|
|
5.49 |
|
|
1.37 |
|
||||
Basic earnings per share |
|
$ |
1.41 |
|
|
$ |
0.84 |
|
|
$ |
7.51 |
|
|
$ |
1.94 |
|
Diluted earnings per share from continuing
|
|
$ |
1.22 |
|
|
$ |
0.56 |
|
|
$ |
2.01 |
|
|
$ |
0.56 |
|
Diluted earnings per share from discontinued
|
|
0.19 |
|
0.28 |
|
5.46 |
|
|
1.36 |
|
||||||
Diluted earnings per share |
|
$ |
1.41 |
|
|
$ |
0.84 |
|
|
$ |
7.47 |
|
|
$ |
1.92 |
|
Average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
27,922 |
|
|
27,951 |
|
|
27,936 |
|
|
27,945 |
|
||||
Diluted |
|
28,056 |
|
|
28,119 |
|
|
28,092 |
|
|
28,223 |
|
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts) (unaudited)
|
|
|
|
|
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
471,540 |
|
|
$ |
25,895 |
|
Accounts receivable, net |
|
156,492 |
|
|
149,338 |
|
||
Contract assets |
|
121,614 |
|
|
99,261 |
|
||
Contract costs, current portion |
|
6,052 |
|
|
5,993 |
|
||
Inventories |
|
156,353 |
|
|
131,569 |
|
||
Income tax refunds receivable |
|
8,069 |
|
|
1,752 |
|
||
Assets held for sale, current portion |
|
— |
|
|
351,261 |
|
||
Other current assets |
|
16,368 |
|
|
8,036 |
|
||
Total current assets |
|
936,488 |
|
|
773,105 |
|
||
Property, plant and equipment, net of accumulated depreciation of |
|
140,450 |
|
|
137,112 |
|
||
Operating right-of-use asset, net |
|
15,159 |
|
|
— |
|
||
|
|
195,314 |
|
|
196,161 |
|
||
Other intangible assets, net |
|
53,439 |
|
|
58,567 |
|
||
Deferred income taxes |
|
35,240 |
|
|
38,040 |
|
||
Contract costs, noncurrent portion |
|
6,099 |
|
|
10,666 |
|
||
Assets held for sale, noncurrent portion |
|
— |
|
|
229,238 |
|
||
Other assets |
|
36,754 |
|
|
31,173 |
|
||
Total assets |
|
$ |
1,418,943 |
|
|
$ |
1,474,062 |
|
Liabilities and Shareholders’ Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Current portion of long-term debt, net of debt issuance costs |
|
$ |
— |
|
|
$ |
9,375 |
|
Accounts payable – trade |
|
70,884 |
|
|
56,826 |
|
||
Accrued salaries and wages |
|
43,220 |
|
|
32,795 |
|
||
Contract liabilities, current portion |
|
42,942 |
|
|
28,865 |
|
||
Operating lease liabilities, current portion |
|
4,306 |
|
|
— |
|
||
Income taxes payable |
|
4,722 |
|
|
139 |
|
||
Liabilities held for sale, current portion |
|
— |
|
|
131,047 |
|
||
Other current liabilities |
|
37,918 |
|
|
39,429 |
|
||
Total current liabilities |
|
203,992 |
|
|
298,476 |
|
||
Long-term debt, excluding current portion, net of debt issuance costs |
|
181,622 |
|
|
284,256 |
|
||
Deferred income taxes |
|
6,994 |
|
|
7,146 |
|
||
Underfunded pension |
|
97,246 |
|
|
104,988 |
|
||
Contract liabilities, noncurrent portion |
|
37,855 |
|
|
78,562 |
|
||
Operating lease liabilities, noncurrent portion |
|
11,617 |
|
|
— |
|
||
Liabilities held for sale, noncurrent portion |
|
— |
|
|
15,602 |
|
||
Other long-term liabilities |
|
56,415 |
|
|
51,875 |
|
||
Commitments and contingencies (Note 19) |
|
|
|
|
||||
Shareholders’ equity: |
|
|
|
|
||||
Preferred stock, |
|
— |
|
|
— |
|
||
Common stock, |
|
30,058 |
|
|
29,545 |
|
||
Additional paid-in capital |
|
228,153 |
|
|
200,474 |
|
||
Retained earnings |
|
820,666 |
|
|
610,103 |
|
||
Accumulated other comprehensive income (loss) |
|
(150,893 |
) |
|
(134,898 |
) |
||
Less 2,219,332 and 1,672,917 shares of common stock, respectively, held
|
|
(104,782 |
) |
|
(72,067 |
) |
||
Total shareholders’ equity |
|
823,202 |
|
|
633,157 |
|
||
Total liabilities and shareholders’ equity |
|
$ |
1,418,943 |
|
|
$ |
1,474,062 |
|
KAMAN CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (unaudited)
|
||||||||
|
|
For the Twelve Months Ended |
||||||
|
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net earnings |
|
$ |
209,829 |
|
|
$ |
54,169 |
|
Less: Total earnings from discontinued operations, net of tax |
|
153,383 |
|
|
38,292 |
|
||
Earnings from continuing operations, net of tax |
|
56,446 |
|
|
15,877 |
|
||
Adjustments to reconcile earnings from continuing operations, net of tax to net cash
|
|
|
|
|
||||
Depreciation and amortization |
|
25,854 |
|
|
27,875 |
|
||
Amortization of debt issuance costs |
|
1,996 |
|
|
1,806 |
|
||
Accretion of convertible notes discount |
|
2,760 |
|
|
2,596 |
|
||
Provision for doubtful accounts |
|
788 |
|
|
767 |
|
||
Loss on sale of business |
|
3,971 |
|
|
5,722 |
|
||
Net loss (gain) on sale of assets |
|
237 |
|
|
(1,031 |
) |
||
Other intangible assets impairment |
|
— |
|
|
10,039 |
|
||
Net loss (gain) on derivative instruments |
|
302 |
|
|
829 |
|
||
Stock compensation expense |
|
4,669 |
|
|
5,484 |
|
||
Non-cash consideration received for aircraft sale |
|
(3,100 |
) |
|
— |
|
||
Deferred income taxes |
|
182 |
|
|
7,834 |
|
||
Changes in assets and liabilities, excluding effects of acquisitions/divestitures: |
|
|
|
|
||||
Accounts receivable |
|
(8,173 |
) |
|
(6,020 |
) |
||
Contract assets |
|
(21,994 |
) |
|
(24,294 |
) |
||
Contract costs |
|
4,506 |
|
|
(5,834 |
) |
||
Inventories |
|
(25,129 |
) |
|
7,135 |
|
||
Income tax refunds receivable |
|
(6,296 |
) |
|
1,136 |
|
||
Operating right-of-use assets |
|
3,390 |
|
|
— |
|
||
Other assets |
|
(6,108 |
) |
|
(2,944 |
) |
||
Accounts payable - trade |
|
14,034 |
|
|
10,807 |
|
||
Contract liabilities |
|
(26,638 |
) |
|
96,430 |
|
||
Operating lease liabilities |
|
(3,423 |
) |
|
— |
|
||
Other current liabilities |
|
6,085 |
|
|
(374 |
) |
||
Income taxes payable |
|
7,888 |
|
|
(2,393 |
) |
||
Pension liabilities |
|
4,170 |
|
|
(38,179 |
) |
||
Other long-term liabilities |
|
6,071 |
|
|
5,446 |
|
||
Net cash provided by operating activities from continuing operations |
|
42,488 |
|
|
118,714 |
|
||
Net cash (used in) provided by operating activities of discontinued operations |
|
(50,288 |
) |
|
43,654 |
|
||
Net cash (used in) provided by operating activities |
|
(7,800 |
) |
|
162,368 |
|
||
Cash flows from investing activities: |
|
|
|
|
||||
Proceeds from sale of assets |
|
196 |
|
|
2,138 |
|
||
Proceeds from sale of discontinued operations |
|
655,030 |
|
|
— |
|
||
Expenditures for property, plant & equipment |
|
(22,447 |
) |
|
(21,504 |
) |
||
Other, net |
|
(4,463 |
) |
|
(3,172 |
) |
||
Net cash provided by (used in) investing activities of continuing operations |
|
628,316 |
|
|
(22,538 |
) |
||
Net cash used in investing activities of discontinued operations |
|
(9,838 |
) |
|
(7,423 |
) |
||
Net cash provided by (used in) investing activities |
|
618,478 |
|
|
(29,961 |
) |
||
Cash flows from financing activities: |
|
|
|
|
||||
Net repayments under revolving credit agreements |
|
(38,500 |
) |
|
(98,087 |
) |
||
Debt repayment |
|
(76,875 |
) |
|
(7,500 |
) |
||
Repayment of convertible notes |
|
(500 |
) |
|
— |
|
||
Net change in bank overdraft |
|
886 |
|
|
(279 |
) |
||
Proceeds from exercise of employee stock awards |
|
19,676 |
|
|
7,351 |
|
||
Purchase of treasury shares |
|
(30,060 |
) |
|
(19,278 |
) |
||
Dividends paid |
|
(22,343 |
) |
|
(22,349 |
) |
||
Debt and equity issuance costs |
|
(3,584 |
) |
|
— |
|
||
Other |
|
(1,413 |
) |
|
(1,003 |
) |
||
Net cash used in financing activities of continuing operations |
|
(152,713 |
) |
|
(141,145 |
) |
||
Net cash provided by (used in) financing activities of discontinued operations |
|
7,967 |
|
|
(217 |
) |
||
Net cash used in financing activities |
|
(144,746 |
) |
|
(141,362 |
) |
||
Net increase (decrease) in cash and cash equivalents |
|
465,932 |
|
|
(8,955 |
) |
||
Cash and cash equivalents of discontinued operations |
|
(21,834 |
) |
|
(1,816 |
) |
||
Effect of exchange rate changes on cash and cash equivalents |
|
(269 |
) |
|
(238 |
) |
||
Cash and cash equivalents at beginning of period |
|
27,711 |
|
|
36,904 |
|
||
Cash and cash equivalents at end of period |
|
$ |
471,540 |
|
|
$ |
25,895 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200224005906/en/
V.P., Investor Relations and Business Development
(860) 243-6342
James.Coogan@kaman.com
Source:
James Coogan
V.P., Investor Relations and Business Development
(860) 243-6342
James.Coogan@kaman.com