kamn-20231101
0000054381false00000543812023-11-012023-11-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):November 1, 2023
KAMAN CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut001-3541906-0613548
(State or Other Jurisdiction of Incorporation)(Commission File Number)(IRS Employer Identification No.)
1332 Blue Hills Avenue,Bloomfield,Connecticut06002
(Address of principal executive offices)(Zip Code)
(860) 243-7100
(Registrant’s telephone number, including area code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

    Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol (s)Name of each exchange on which registered
Common Stock ($1 par value)KAMNNew York Stock Exchange LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.





Item 2.02.    Results of Operations and Financial Condition

On November 1, 2023, the Company issued a press release summarizing the Company's financial results for the fiscal quarter ended September 29, 2023. A copy of this press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

A conference call has been scheduled for tomorrow, November 2, 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 http://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 the press release, furnished herewith, a copy of which can be accessed in the investor relations section of the Company's website.

Item 9.01.    Financial Statements and Exhibits

    (c)    Exhibits

        The following document is furnished as an Exhibit pursuant to Item 2.02 hereof:

Exhibit 99.1 - Press Release of the Company, dated November 1, 2023, regarding financial performance for the fiscal quarter ended September 29, 2023.



SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KAMAN CORPORATION
By:/s/ Carroll K. Lane
Carroll K. Lane
Senior Vice President and
Interim Chief Financial Officer
Date: November 1, 2023



KAMAN CORPORATION AND SUBSIDIARIES

Index to Exhibits
ExhibitDescription
99.1Attached
104Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101

Document

https://cdn.kscope.io/d23d1b856a30eac43d2e3125fa917211-kaman_logoxhorzxcmyk.jpg
NEWS RELEASE
November 1, 2023

KAMAN REPORTS THIRD QUARTER 2023 RESULTS

Third Quarter 2023 Highlights:
Revising full year outlook after another strong quarter; Expect higher sales, operating income and adjusted EBITDA led by sustained growth in Engineered Products
Net sales: $183.0 million
Operating income: $11.9 million
Net earnings: $1.5 million
Adjusted EBITDA*: $25.2 million; Adjusted EBITDA margin*: 13.8%
Diluted earnings per share: $0.05 per share, $0.10 per share adjusted*

Table 1. Summary of Financial Results (unaudited)
Thousands of U.S. dollars
(except share data)
Three Months EndedFor the Nine Months Ended
September 29,
2023
June 30,
2023
September 30,
2022
September 29,
2023
September 30,
2022
Net sales$183,031 $195,158 $172,004 $572,731 $490,818 
Net earnings (loss)1,466 5,255 (280)5,952 7,369 
Adjusted EBITDA*25,232 32,008 19,467 81,058 47,520 
Adjusted EBITDA margin*13.8 %16.4 %11.3 %14.2 %9.7 %
Diluted earnings (loss) per share$0.05 $0.19 $(0.01)$0.21 $0.26 
Adjusted diluted earnings per share*$0.10 $0.22 $0.29 $0.37 $0.72 
*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 5-11 for reconciliations to the most comparable GAAP measure.
(1)Information for the period September 30, 2022 has been revised from amounts reported in the prior year to correct errors related to the accounting for certain labor costs at one business in the Precision Products segment and the net realizable value on certain portions of the Company's inventory at another business in the Structures segment. These errors resulted in an understatement of cost of sales, net of tax, of $0.9 million and $1.3 million, in the three-month and nine-month fiscal periods ended September 30, 2022, respectively. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information.

BLOOMFIELD, Conn. (November 1, 2023) - Kaman Corp. (NYSE:KAMN) today reported financial results for the third fiscal quarter ended September 29, 2023.

"Our Engineered Products segment continues to demonstrate sustained strong performance with year over year growth in both sales and operating income. This strength provides confidence to raise our sales, operating income and adjusted EBITDA expectations for 2023. In the nine-month period, operating income was $37.1 million, net earnings was $6.0 million and Adjusted EBITDA was $81.1 million. In the quarter, net sales for the Company increased by 6.4% compared to the prior year led by organic growth of 20.9% in our Engineered Products segment. Positive order intake continues to support near-record backlog at this segment, particularly in our PMA aftermarket and bearings businesses," said Ian K. Walsh, Chairman, President and Chief Executive Officer.

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"This quarter we celebrate the one-year anniversary of our Aircraft Wheel and Brake acquisition and are pleased with the meaningful margin expansion that it provides to our Engineered Products segment. As we continue to reshape our portfolio, optimizing our cost structure and eliminating the major sources of variation in performance, we also remain disciplined in our approach to capital allocation, realizing additional opportunities to reduce expense across the organization. We are focused on paying down debt through the remainder of the year and will continue to invest in the Company's highest-margin assets and opportunities. We are confident in our transformational strategy as we enhance our profitability and position Kaman to deliver sustainable shareholder value," said Walsh.

OUTLOOK DISCUSSION

Given the strength in our performance at our Engineered Products segment, we are raising our expectations for sales, operating income, Adjusted EBITDA and diluted EPS. Operating Cash Flow and Free Cash Flow expectations remain consistent with our prior outlook as we continue to invest in the future growth of our Engineered Products segment and improvements in our Structures segment.

Previous OutlookCurrent Outlook
Net sales$730.0 - $750.0 million
$765.0 - $775.0 million
Net earnings$3.7 - $11.3 million
$6.5 - $12.2 million
Adjusted EBITDA$97.5 - $107.5 million
$102.5 - $110.0 million
Adjusted EBITDA margin
13.4% - 14.3%
13.4% - 14.2%
Diluted EPS
$0.13 - $0.40 per share
$0.23 - $0.43 per share
Adjusted diluted EPS
$0.29 - $0.56 per share
$0.40 - $0.60 per share
Cash from operating activities$60.0 - $70.0 million
$60.0 - $70.0 million
Free cash flow$35.0 - $45.0 million
$35.0 - $45.0 million

For further information, the Company's supplemental presentation relating to the third 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. dollarsThree Months EndedNine Months Ended
September 29,
2023
June 30,
2023
September 30,
2022
September 29,
2023
September 30,
2022
Net sales$123,598 $133,513 $92,052 $380,437 $263,269 
Operating income29,026 30,542 14,156 78,924 40,665 
Adjusted EBITDA38,428 40,659 21,772 109,206 60,655 
Adjusted EBITDA margin31.1 %30.5 %23.7 %28.7 %23.0 %

Three months ended September 29, 2023 versus three months ended June 30, 2023 - Operating income decreased $1.5 million and Adjusted EBITDA decreased $2.2 million, primarily driven by lower sales and associated gross profit on PMA Aftermarket parts and the timing of sales at Aircraft Wheel and Brake resulting from our preparation for its ERP implementation.
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Three months ended September 29, 2023 versus three months ended September 30, 2022 - Operating income increased $14.9 million, Adjusted EBITDA increased $16.7 million and margin increased 7.4 percentage points compared to the corresponding period in 2022, primarily due to the contribution from our Aircraft Wheel and Brake acquisition, higher sales and associated gross profit on our commercial and defense bearings products and PMA aftermarket parts and higher gross profit on our seals, springs and contacts.

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. dollarsThree Months EndedNine Months Ended
September 29,
2023
June 30,
2023
September 30,
2022
September 29,
2023
September 30,
2022
Net sales$27,098 $28,059 $46,282 $93,128 $135,098 
Operating (loss) income(3,241)(1,884)5,296 (3,996)10,725 
Adjusted EBITDA(2,458)(1,078)6,100 (1,595)13,603 
Adjusted EBITDA margin(9.1)%(3.8)%13.2 %(1.7)%10.1 %
(1)Information for the period ended September 30, 2022 has been revised from amounts reported in the prior year to correct errors related to the accounting for certain labor costs at one business in the Precision Products segment. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information.

Three months ended September 29, 2023 versus three months ended June 30, 2023 - Operating income and Adjusted EBITDA decreased $1.4 million and margin decreased 5.3 percentage points versus the second quarter of 2023. Results declined compared to the prior quarter, driven by lower sales and gross profit on the JPF program and cost growth on legacy fuzing and measuring programs, partially offset by higher sales and associated gross profit from the K-MAX® aftermarket.

Three months ended September 29, 2023 versus three months ended September 30, 2022 - Operating income decreased $8.5 million, Adjusted EBITDA decreased $8.6 million and margin decreased 22.3 percentage points compared to the corresponding period in 2022, primarily attributable to lower sales and gross profit on the JPF program and cost growth on measuring programs, partially offset by higher sales and associated gross profit from the K-MAX® aftermarket and lower operating expenses at our Orlando facility as we begin to realize the benefits of the cost reduction initiatives announced earlier in the year.

Structures - Our 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. dollarsThree Months EndedNine Months Ended
September 29,
2023
June 30,
2023
September 30,
2022
September 29,
2023
September 30,
2022
Net sales$32,335 $33,586 $33,670 $99,166 $92,451 
Operating loss
(3,020)(106)(642)(3,769)(2,121)
Adjusted EBITDA(2,222)675 228 (1,396)542 
Adjusted EBITDA margin(6.9)%2.0 %0.7 %(1.4)%0.6 %
(1)Information for the period ended September 30, 2022 has been revised from amounts reported in the prior year to correct errors related to the net realizable value on certain portions of the Company's inventory at a business in the Structures segment. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information.
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Three months ended September 29, 2023 versus three months ended June 30, 2023 - Operating loss increased $2.9 million, Adjusted EBITDA decreased $2.9 million and margin decreased 8.9 percentage points versus the second quarter of 2023, primarily attributable to lower sales and gross profit on the Sikorsky UH-60 BLACK HAWK program and the receipt of an insurance claim settlement in the prior quarter that related to a fire at one of our suppliers in the prior year.

Three months ended September 29, 2023 versus three months ended September 30, 2022 - Operating loss increased $2.4 million, Adjusted EBITDA decreased $2.5 million and margin decreased 7.6 percentage points compared to the third quarter of 2022, primarily attributable to lower sales and associated gross profit on the A-10 program and the Sikorsky UH-60 BLACK HAWK program.

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 Thursday, November 2, 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 third 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
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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. dollarsThree Months Ended
September 29, 2023
ConsolidatedEngineered ProductsPrecision ProductsStructuresCorp/Elims**
Adjusted EBITDA
Consolidated Results
Net sales$183,031 $123,598 $27,098 $32,335 $— 
Net earnings
$1,466 
Interest expense, net9,405 
Income tax expense462 
Non-service pension and post retirement benefit income(310)
Other expense, net849 
Operating income (loss)$11,872 $29,026 $(3,241)$(3,020)$(10,893)
Depreciation and amortization11,800 9,402 783 798 817 
Restructuring and severance costs(1)
571 — — — 571 
Integration and implementation costs(2)
572 — — — 572 
Program inventory impairment(3)
417 — — — 417 
Other Adjustments$13,360 $9,402 $783 $798 $2,377 
Adjusted EBITDA$25,232 $38,428 $(2,458)$(2,222)$(8,516)
   Adjusted EBITDA margin13.8 %31.1 %(9.1)%(6.9)%
(1) Restructuring and severance costs include actions associated with the previously announced cost reduction efforts that include the consolidation of our JPF production facilities and discontinuation of the K-MAX® aircraft production line.
(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.
(3) Program inventory impairment includes the write-off of long lead parts received in the current period associated with K-MAX® program which were determined to have no alternative use.
**Corp/Elims Operating income (loss) represents the Corporate office expenses and $1.1 million of unallocated expenses that are shown on the Consolidated Statement of Operations as their own line items.

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Table 6. Adjusted EBITDA (unaudited)
Thousands of U.S. dollarsThree Months Ended
June 30, 2023
ConsolidatedEngineered ProductsPrecision ProductsStructuresCorp/Elims**
Adjusted EBITDA
Consolidated Results
Net sales$195,158 $133,513 $28,059 $33,586 $— 
Net earnings$5,255 
Interest expense, net10,340 
Income tax expense2,115 
Non-service pension and post retirement benefit income(239)
Other expense, net99 
Operating income (loss)$17,570 $30,542 $(1,884)$(106)$(10,982)
Depreciation and amortization13,290 10,874 806 781 829 
Restructuring and severance costs(1)
272 — — — 272 
Integration and implementation costs(2)
1,037 — — — 1,037 
Program inventory impairment(3)
596 — — — 596 
Tax contingency reversal(4)
(757)(757)— — — 
Other Adjustments$14,438 $10,117 $806 $781 $2,734 
Adjusted EBITDA$32,008 $40,659 $(1,078)$675 $(8,248)
   Adjusted EBITDA margin16.4 %30.5 %(3.8)%2.0 %
(1) Restructuring and severance costs include actions associated with the previously announced cost reduction efforts that include the consolidation of our JPF production facilities and discontinuation of the K-MAX® aircraft production line.
(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.
(3) Program inventory impairment includes the write-off of long lead parts received in the current period associated with K-MAX® program which were determined to have no alternative use.
(4) Following an evaluation of a wide range of factors, including legislative activity and administrative practices, the Company deemed a reserve was no longer needed for a certain tax contingency.
**Corp/Elims Operating income (loss) represents the Corporate office expenses and $1.3 million of unallocated expenses that are shown on the Consolidated Statement of Operations as their own line items.

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Table 7. Adjusted EBITDA (unaudited)
Thousands of U.S. dollarsThree Months Ended
September 30, 2022
ConsolidatedEngineered ProductsPrecision ProductsStructuresCorp/Elims**
Adjusted EBITDA
Consolidated Results
Net sales$172,004 $92,052 $46,282 $33,670 $— 
Net loss
$(280)
Interest expense, net3,614 
Income tax benefit(114)
Non-service pension and post retirement benefit income(5,142)
Other expense, net1,221 
Operating (loss) income
$(701)$14,156 $5,296 $(642)$(19,511)
Depreciation and amortization9,383 6,856 804 870 853 
Restructuring and severance costs(243)— — — (243)
Cost associated with corporate development activities10,725 — — — 10,725 
Inventory step-up associated with acquisition760 760 — — — 
(Gain) loss on sale of business(457)— — — (457)
Other Adjustments$20,168 $7,616 $804 $870 $10,878 
Adjusted EBITDA$19,467 $21,772 $6,100 $228 $(8,633)
   Adjusted EBITDA margin11.3 %23.7 %13.2 %0.7 %
(1)Information for the period ended September 30, 2022 has been revised from amounts reported in prior periods to correct errors related to the accounting for certain labor costs at one business in the Precision Products segment and the net realizable value on certain portions of the Company's inventory at another business in the Structures segment. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information.
**Corp/Elims Operating income (loss) represents the Corporate office expenses and $0.7 million of unallocated income that are shown on the Consolidated Statement of Operations as their own line items.




















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Table 8. Adjusted EBITDA (unaudited)
Thousands of U.S. dollarsNine Months Ended
September 29, 2023
ConsolidatedEngineered ProductsPrecision ProductsStructuresCorp/Elims**
Adjusted EBITDA
Consolidated Results
Net sales$572,731 $380,437 $93,128 $99,166 $— 
Net earnings$5,952 
Interest expense, net29,349 
Income tax expense
2,371 
Non-service pension and post retirement benefit income(930)
Other income, net377 
Operating income (loss)$37,119 $78,924 $(3,996)$(3,769)$(34,040)
Depreciation and amortization38,244 31,039 2,401 2,373 2,431 
Restructuring and severance costs(1)
3,033 — — — 3,033 
Integration and implementation costs(2)
2,406 — — — 2,406 
Program inventory impairment(3)
1,013 — — — 1,013 
Tax contingency reversal(4)
(757)(757)— — — 
Other Adjustments$43,939 $30,282 $2,401 $2,373 $8,883 
Adjusted EBITDA$81,058 $109,206 $(1,595)$(1,396)$(25,157)
   Adjusted EBITDA margin14.2 %28.7 %(1.7)%(1.4)%
(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.
(3) Program inventory impairment includes the write-off of long lead parts received in the current period associated with K-MAX® program which were determined to have no alternative use.
(4) Following an evaluation of a wide range of factors, including legislative activity and administrative practices, the Company deemed a reserve was no longer needed for a certain tax contingency.
**Corp/Elims Operating income (loss) represents the Corporate office expenses and $4.5 million of unallocated expenses that are shown on the Consolidated Statement of Operations as their own line items.
















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Table 9. Adjusted EBITDA (unaudited)
Thousands of U.S. dollarsNine Months Ended
September 30, 2022
ConsolidatedEngineered ProductsPrecision ProductsStructuresCorp/Elims**
Adjusted EBITDA
Consolidated Results
Net sales$490,818 $263,269 $135,098 $92,451 $— 
Net earnings$7,369 
Interest expense, net8,088 
Income tax expense (benefit)1,631 
Non-service pension and post retirement benefit income(15,429)
Other expense (income), net2,415 
Operating income (loss)$4,074 $40,665 $10,725 $(2,121)$(45,195)
Depreciation and amortization27,037 19,230 2,878 2,663 2,266 
Restructuring and severance costs2,853 — — — 2,853 
Cost associated with corporate development activities13,253 — — — 13,253 
Inventory step-up associated with acquisition760 760 — — — 
(Gain) loss on sale of business(457)— — — (457)
Other Adjustments$43,446 $19,990 $2,878 $2,663 $17,915 
Adjusted EBITDA$47,520 $60,655 $13,603 $542 $(27,280)
   Adjusted EBITDA margin9.7 %23.0 %10.1 %0.6 %
(1)Information for the period September 30, 2022 has been revised from amounts reported in prior periods to correct errors related to the accounting for certain labor costs at one business in the Precision Products segment and the net realizable value on certain portions of the Company's inventory at another business in the Structures segment. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information.
**Corp/Elims Operating income (loss) represents the Corporate office expenses and $2.5 million of unallocated expenses that are shown on the Consolidated Statement of Operations 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.

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The following table illustrates the calculation of adjusted net earnings and adjusted diluted earnings per share:
Table 10. Adjusted Net Earnings and Adjusted Diluted Earnings per Share (unaudited)
Thousands of U.S. dollars (except share data)
Three Months EndedThree Months Ended
September 29, 2023September 30, 2022
Pre-TaxTax-EffectedDiluted EPSPre-TaxTax-EffectedDiluted EPS
Net earnings (loss)$1,928 $1,466 $0.05 $(394)$(280)$(0.01)
Adjustments:
Restructuring and severance costs571 451 0.02 (243)(189)(0.01)
Integration and implementation costs572 452 0.02 — — — 
Costs associated with corporate development activities— — — 10,725 8,363 0.30 
Inventory step-up associated with acquisition— — — 760 593 0.02 
Program inventory impairment417 329 0.01 — — — 
(Gain) loss on sale of business— — — (457)(356)(0.01)
Adjustments$1,560 $1,232 $0.05 $10,785 $8,411 $0.30 
Adjusted net earnings$3,488 $2,698 $0.10 $10,391 $8,131 $0.29 
Diluted weighted average shares outstanding28,350 28,037 
Three Months Ended
June 30, 2023
Pre-TaxTax-EffectedDiluted EPS
Net earnings
$7,370 $5,255 $0.19 
Adjustments:
Restructuring and severance costs272 215 — 
Integration and implementation costs1,037 819 0.03 
Program inventory impairment596 471 0.02 
Tax contingency reversal
(757)(598)(0.02)
Adjustments$1,148 $907 $0.03 
Adjusted net earnings$8,518 $6,162 $0.22 
Diluted weighted average shares outstanding28,355 
(1))Information for the period ended September 30, 2022 has been revised from amounts reported in prior periods to correct errors related to the accounting for certain labor costs at one business in the Precision Products segment and the net realizable value on certain portions of the Company's inventory at another business in the Structures segment. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information

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Table 10. Adjusted Net Earnings and Adjusted Diluted Earnings per Share (unaudited) - continued
Thousands of U.S. dollars (except share data)
For the Nine Months EndedFor the Nine Months Ended
September 29, 2023September 30, 2022
Pre-TaxTax-EffectedDiluted EPSPre-TaxTax-EffectedDiluted EPS
Net earnings$8,323 $5,952 0.21 $9,000 $7,369 0.26 
Adjustments:
Restructuring and severance costs3,033 2,396 0.08 2,853 2,225 0.08 
Integration and implementation costs2,406 1,901 0.07 — — — 
Costs associated with corporate development activities— — — 13,253 10,334 0.37 
Inventory step-up associated with acquisition— — — 760 593 0.02 
Program inventory impairment1,013 800 0.03 — — — 
Foreign wage tax provision reversal(757)(598)(0.02)— — — 
(Gain) loss on sale of business— — — (457)(356)(0.01)
Adjustments$5,695 $4,499 $0.16 $16,409 $12,796 $0.46 
Adjusted net earnings$14,018 $10,451 $0.37 $25,409 $20,165 $0.72 
Diluted weighted average shares outstanding28,324 28,076 
(1)Information for the period ended September 30, 2022 has been revised from amounts reported in prior periods to correct errors related to the accounting for certain labor costs at one business in the Precision Products segment and the net realizable value on certain portions of the Company's inventory at another business in the Structures segment. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information.

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 11. Free Cash Flow (unaudited)
Thousands of U.S. dollarsThree Months EndedLast Twelve Months
December 31, 2022March 31,
2023
June 30,
2023
September 29,
2023
September 29,
2023
Net cash provided by (used in) operating activities
$54,669 $(5,453)$24,259 $10,867 $84,342 
Expenditures for property, plant & equipment(6,063)(5,948)(6,888)(7,028)(25,927)
Free cash flow$48,606 $(11,401)$17,371 $3,839 $58,415 




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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) risks and uncertainties associated with the successful integration of our Aircraft Wheel and Brake acquisition; (iv) changes in geopolitical conditions in countries where the Company does or intends to do business; (v) 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; (vi) the timely receipt of any necessary export approvals and/or other licenses or authorizations from the USG; (vii) timely satisfaction or fulfillment of material contractual conditions precedents in customer purchase orders, contracts, or similar arrangements; (viii) the existence of standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; (ix) the successful resolution of government inquiries or investigations relating to our businesses and programs; (x) 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; (xi) potential difficulties associated with variable acceptance test results, given sensitive production materials and extreme test parameters; (xii) 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; (xiii) the continued support of the existing K-MAX® helicopter fleet, including sale of existing K-MAX® spare parts inventory and the receipt of orders for new aircraft sufficient to recover our investments in the K-MAX® production line; (xiv) the accuracy of current cost estimates associated with environmental remediation activities; (xv) the profitable integration of acquired businesses into the Company's operations; (xvi) the ability to recover from cyber-based or other security attacks, information technology failures or other disruptions; (xvii) changes in supplier sales or vendor incentive policies; (xviii) the ability of our suppliers to satisfy their performance obligations, including any supply chain disruptions; (xix) the effects of price increases or decreases; (xx) the effects of pension regulations, pension plan assumptions, pension plan asset performance, future contributions and the pension freeze; (xxi) future levels of indebtedness and capital expenditures; (xxii) compliance with our debt covenants; (xxiii) the continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items; (xxiv) the effects of currency exchange rates and foreign competition on future operations; (xxv) changes in laws and regulations, taxes, interest rates, inflation rates and general business conditions; (xxvi) future repurchases and/or issuances of common stock;(xxvii) the occurrence of unanticipated restructuring costs or the failure to realize anticipated savings or benefits from past or future expense reduction actions; (xxviii) the ability to recruit and retain skilled employees; (xxix) 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 (xxx) other risks and uncertainties set forth herein and in our 2022 Form 10-K and our third quarter 2023 Form 10-Q filed November 1, 2023.
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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.

Contact:

InvestorRelations@kaman.com
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Thousands of U.S. dollars, except share data) (unaudited)

 Three Months EndedFor the Nine Months Ended
 September 29, 2023September 30, 2022September 29, 2023September 30, 2022
Net sales$183,031 $172,004 $572,731 $490,818 
Cost of sales117,977 117,326 368,246 334,008 
Program inventory impairment417 — 1,013 — 
Gross profit64,637 54,678 203,472 156,810 
Selling, general and administrative expenses42,501 49,009 127,765 127,980 
Research and development costs4,022 3,937 15,122 14,265 
Intangible asset amortization expense5,593 3,118 19,937 8,024 
Restructuring and severance costs571 (243)3,033 2,853 
Gain on sale of business
— (457)— (457)
Net loss on disposition of assets
78 15 496 71 
Operating income (loss)
11,872 (701)37,119 4,074 
Interest expense, net9,405 3,614 29,349 8,088 
Non-service pension and post retirement benefit income(310)(5,142)(930)(15,429)
Other expense, net
849 1,221 377 2,415 
Earnings (loss) before income taxes
1,928 (394)8,323 9,000 
Income tax expense (benefit)
462 (114)2,371 1,631 
Net earnings (loss)
$1,466 $(280)$5,952 $7,369 
Earnings (loss) per share:  
Basic earnings (loss) per share
$0.05 $(0.01)$0.21 $0.26 
Diluted earnings (loss) per share
$0.05 $(0.01)$0.21 $0.26 
Average shares outstanding:  
Basic28,247 28,037 28,189 27,997 
Diluted28,350 28,037 28,324 28,076 
(1) The condensed consolidated statement of operations for the three-month and nine-month fiscal periods ended September 30, 2022 has been revised from amounts reported in the prior year to correct errors related to the accounting for certain labor costs at one business in the Precision Products segment and the net realizable value on certain portions of the Company's inventory at another business in the Structures segment. These errors resulted in an understatement of cost of sales, net of tax, of $0.9 million and $1.3 million, respectively. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information.


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KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of U.S. dollars, except share data) (unaudited)

 September 29, 2023December 31, 2022
Assets  
Current assets:  
Cash and cash equivalents$30,065 $24,154 
Accounts receivable, net106,647 87,659 
Contract assets100,709 113,182 
Inventories201,439 172,383 
Income tax refunds receivable4,680 14,843 
Other current assets21,063 16,114 
Total current assets464,603 428,335 
Property, plant and equipment, net of accumulated depreciation of $283,272 and $268,089, respectively
203,704 201,606 
Operating right-of-use assets, net6,325 7,391 
Goodwill380,243 379,854 
Other intangible assets, net352,208 372,331 
Deferred income taxes45,878 47,385 
Other assets54,831 51,207 
Total assets$1,507,792 $1,488,109 
Liabilities and Shareholders’ Equity  
Current liabilities:  
Current portion of long-term debt$198,854 $— 
Accounts payable – trade45,890 48,277 
Accrued salaries and wages31,027 31,395 
Contract liabilities, current portion7,884 4,081 
Operating lease liabilities, current portion3,110 3,332 
Income taxes payable2,214 393 
Other current liabilities45,540 39,097 
Total current liabilities334,519 126,575 
Long-term debt, excluding current portion, net of debt issuance costs382,000 561,061 
Deferred income taxes6,490 6,079 
Underfunded pension49,813 52,309 
Contract liabilities, noncurrent portion19,653 20,515 
Operating lease liabilities, noncurrent portion3,452 4,534 
Other long-term liabilities32,570 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; 30,910,177 and 30,640,068 shares issued, respectively
30,910 30,640 
Additional paid-in capital251,843 245,436 
Retained earnings674,271 685,234 
Accumulated other comprehensive income (loss)(154,794)(158,421)
Less 2,663,437 and 2,607,841 shares of common stock, respectively, held in treasury, at cost
(122,935)(122,133)
Total shareholders’ equity679,295 680,756 
Total liabilities and shareholders’ equity$1,507,792 $1,488,109 
(1) The condensed consolidated balance sheet at December 31, 2022 has been revised from amounts reported in the prior year to correct misstatements related to the accounting for certain labor costs at one business in the Precision Products segment and the net realizable value on certain portions of the Company's inventory at another business in the Structures segment. The correction of these errors impacted the amounts reported for inventory, income tax refunds receivable and retained earnings. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information.

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KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Thousands of U.S. dollars) (unaudited)
 For the Nine Months Ended
 September 29, 2023September 30, 2022
Cash flows from operating activities:  
Net earnings$5,952 $7,369 
Adjustments to reconcile earnings, net of tax to net cash provided by operating activities:
Depreciation and amortization38,244 27,037 
Amortization of debt issuance costs2,985 1,882 
Provision for doubtful accounts1,495 619 
Gain on sale of business
— (457)
Net loss on disposition of assets496 71 
Program inventory impairment1,013 — 
Net loss on derivative instruments
620 2,670 
Stock compensation expense5,190 6,145 
Non-cash consideration received for blade exchange(1,309)(827)
Deferred income taxes212 1,600 
Changes in assets and liabilities, excluding effects of acquisitions/divestitures:
Accounts receivable(20,736)(23,640)
Contract assets12,467 (5,405)
Inventories(30,952)(19,478)
Income tax refunds receivable10,158 (2,401)
Operating right of use assets1,052 3,347 
Other assets(3,802)(3,230)
Accounts payable - trade(2,423)(8,780)
Contract liabilities2,951 4,246 
Operating lease liabilities(1,290)(3,296)
Other current liabilities5,057 (4,591)
Income taxes payable1,867 (227)
Pension liabilities3,005 (13,309)
Other long-term liabilities(2,579)(3,045)
Net cash provided by (used in) operating activities29,673 (33,700)
Cash flows from investing activities:  
Expenditures for property, plant & equipment(19,864)(17,626)
Investment in Near Earth Autonomy— (10,000)
Acquisition of businesses, net of cash acquired(1,487)(441,340)
Other, net(708)2,438 
Net cash used in investing activities(22,059)(466,528)
Cash flows from financing activities:  
Net borrowings under revolving credit agreement
19,000 412,000 
Purchase of treasury shares(780)(762)
Dividends paid(16,871)(16,760)
Debt issuance costs(4,833)(4,285)
Other, net1,903 1,725 
Net cash (used in) provided financing activities
(1,581)391,918 
Net increase (decrease) in cash and cash equivalents6,033 (108,310)
Effect of exchange rate changes on cash and cash equivalents(122)(1,132)
Cash and cash equivalents at beginning of period24,154 140,800 
Cash and cash equivalents at end of period$30,065 $31,358 
(1) The condensed consolidated statement of cash flows for the nine-month fiscal periods ended September 30, 2022 has been revised from amounts reported in the prior year to correct errors related to the accounting for certain labor costs at one business in the Precision Products segment and the net realizable value on certain portions of the Company's inventory at another business in the Structures segment. The correction of these errors impacted the amounts reported for net earnings, inventory and income tax refunds receivable. Refer to the Company's Form 10-Q for the quarter ended September 29, 2023 for further information.
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