Second Quarter 2023 Highlights:
- Revising full year guidance; Expect higher operating income and
adjusted EBITDA led by sustained growth in Engineered Products
- Net sales: $195.2 million
- Operating income: $17.6 million
- Net earnings: $5.3 million
- Adjusted EBITDA*: $32.0 million; Adjusted EBITDA margin*:
16.4%
- Diluted earnings per share: $0.19 per share, $0.22 per share
adjusted*
Kaman Corp. (NYSE:KAMN) today reported financial results for the
second fiscal quarter ended June 30, 2023.
Table 1. Summary of Financial Results
(unaudited)
Thousands of U.S. dollars
(except share data)
Three Months Ended
For the Six Months
Ended
June 30, 2023
March 31, 2023
July 1, 2022
June 30, 2023
July 1, 2022
Net sales
$
195,158
$
194,542
$
160,766
$
389,700
$
318,814
Net earnings (loss)
5,255
(769
)
3,774
4,486
7,649
Adjusted EBITDA*
32,008
23,818
16,061
55,826
28,053
Adjusted EBITDA margin*
16.4
%
12.2
%
10.0
%
14.3
%
8.8
%
Diluted earnings (loss) per share
$
0.19
$
(0.03
)
$
0.13
$
0.16
$
0.27
Adjusted diluted earnings per share*
$
0.22
$
0.06
$
0.30
$
0.27
$
0.45
*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 periods ended March 31, 2023 and July 1,
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. These errors resulted
in an understatement of cost of sales, net of tax, of $0.3 million
and $0.4 million, in the three-month and six-month fiscal periods
ended July 1, 2022, respectively and $0.8 million in the
three-month fiscal period ended March 31, 2023. Refer to the
Company's Form 10-Q for the quarter ended June 30, 2023 for further
information.
"The continued strength in our Engineered Products segment led
to significant growth compared to the prior year period and
provides confidence to raise our operating income and adjusted
EBITDA expectations for 2023. Net sales for the Company increased
by 21.4% compared to the prior year. Excluding the contribution of
Aircraft Wheel and Brake, sales were up 8.2%, mostly driven by our
Engineered Products segment. We continue to see strong order intake
at this segment, particularly in our PMA aftermarket business. In
the six-month period, operating income was $25.2 million, net
earnings was $4.5 million and Adjusted EBITDA was $55.8 million,
which includes $7.2 million in EBITDA from the JPF program, which
is not expected to repeat in the back half of the year" said Ian K.
Walsh, Chairman, President and Chief Executive Officer.
"During the quarter we amended and restated our credit facility
at $740.0 million maintaining sufficient access to liquidity to
address the maturities of our 2024 Convertible Notes and satisfy
our working capital requirements. We remain focused on paying down
debt through the remainder of the year and realized some of our
incremental cash opportunities, as we sold one K-MAX during the
period. We remain confident in our ability to execute on the
current year guide and are pleased with the outstanding performance
at our Engineered Products segment, as well as the overall progress
we are making on the cost out initiatives we started at the
beginning of the year to right size our company." said Walsh.
OUTLOOK DISCUSSION
Management expects net sales in line with our prior
expectations. Given the strength in our performance at our
Engineered Products segment, we are raising our expectations for
operating income and Adjusted EBITDA. In addition, we have lowered
our expectations for net earnings and Diluted EPS due to higher
interest expense which is offset by the increase we now expect in
operating income. Operating Cash Flow and Free Cash Flow
expectations remain consistent with our prior guidance as the
higher interest expense is offset by the cash benefit of improved
performance and the cash collection on the sale of one K-MAX
aircraft.
- Net sales: $730.0 million to $750.0 million
- Net earnings: $3.7 million to $11.3 million
- Adjusted EBITDA: $97.5 million to $107.5 million
- Adjusted EBITDA margin: 13.4% to 14.3%
- Diluted EPS: $0.13 per share to $0.40 per share; adjusted $0.29
per share to $0.56 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 second 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
Six Months Ended
June 30, 2023
March 31, 2023
July 1, 2022
June 30, 2023
July 1, 2022
Net sales
$
133,513
$
123,326
$
89,765
$
256,839
$
171,217
Operating income
30,542
19,356
15,467
49,898
26,509
Adjusted EBITDA
40,659
30,119
21,614
70,778
38,883
Adjusted EBITDA margin
30.5
%
24.4
%
24.1
%
27.6
%
22.7
%
Three months ended June 30, 2023 versus three months ended
March 31, 2023 - Operating income increased $11.2 million,
Adjusted EBITDA increased $10.5 million and margin increased 6.1
percentage points versus the first quarter of 2023, primarily
driven by higher sales and associated margins on PMA Aftermarket
parts and MRO commercial work at Aircraft Wheel and Brake.
Three months ended June 30, 2023 versus three months ended
July 1, 2022 - Operating income increased $15.1 million,
Adjusted EBITDA increased $19.0 million and margin increased 6.4
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. dollars
Three Months Ended
Six Months Ended
June 30, 2023
March 31, 2023
July 1, 2022
June 30, 2023
July 1, 2022
Net sales
$
28,059
$
37,971
$
41,267
$
66,030
$
88,816
Operating (loss) income
(1,884
)
1,129
2,214
(755
)
5,429
Adjusted EBITDA
(1,078
)
1,941
3,257
863
7,503
Adjusted EBITDA margin
(3.8
)%
5.1
%
7.9
%
1.3
%
8.4
%
(1) Information for the periods ended March 31, 2023 and July 1,
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. Refer to the
Company's Form 10-Q for the quarter ended June 30, 2023 for further
information.
Three months ended June 30, 2023 versus three months ended
March 31, 2023 - Operating income and Adjusted EBITDA decreased
$3.0 million and margin decreased 8.9 percentage points versus the
first quarter of 2023. Results declined compared to the prior
quarter, driven by lower sales and gross profit on the JPF program,
partially offset by lower operating expenses at our Orlando
facility as we begin to realize the benefits of the cost reduction
initiatives announced earlier in the year.
Three months ended June 30, 2023 versus three months ended
July 1, 2022 - Operating income decreased $4.1 million,
Adjusted EBITDA decreased $4.3 million and margin decreased 11.7
percentage points compared to the corresponding period in 2022,
primarily attributable to lower sales and gross profit on the JPF
program, partially offset by 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. dollars
Three Months Ended
Six Months Ended
June 30, 2023
March 31, 2023
July 1, 2022
June 30, 2023
July 1, 2022
Net sales
$
33,586
$
33,245
$
29,734
$
66,831
$
58,781
Operating (loss) income
(106
)
(643
)
(862
)
(749
)
(1,479
)
Adjusted EBITDA
675
151
25
826
314
Adjusted EBITDA margin
2.0
%
0.5
%
0.1
%
1.2
%
0.5
%
(1) Information for the periods ended March 31, 2023 and July 1,
2022 has been revised from amounts reported in prior periods 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
June 30, 2023 for further information.
Three months ended June 30, 2023 versus three months ended
March 31, 2023 - Operating income and Adjusted EBITDA increased
$0.5 million and margin increased 1.5 percentage points versus the
first quarter of 2023. Results improved compared to the prior
quarter due to the receipt of an insurance claim settlement in the
period that related to a fire at one of our suppliers in the prior
year.
Three months ended June 30, 2023 versus three months ended
July 1, 2022 - Operating income increased $0.8 million,
Adjusted EBITDA increased $0.7 million and margin increased 1.9
percentage points compared to the second quarter of 2022. Results
improved due to the receipt of an insurance claim settlement in the
period that related to a fire at one of our suppliers in the prior
year.
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,
August 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 second 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 June
30, 2023
Consolidated
Engineered Products
Precision Products
Structures
Corp/Elims**
Adjusted EBITDA
Consolidated Results
Net sales
$
195,158
$
133,513
$
28,059
$
33,586
$
—
Net earnings
$
5,255
Interest expense, net
10,340
Income tax expense
2,115
Non-service pension and post retirement
benefit income
(239
)
Other expense, net
99
Operating income (loss)
$
17,570
$
30,542
$
(1,884
)
$
(106
)
$
(10,982
)
Depreciation and amortization
13,290
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 margin
16.4
%
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.
Table 6. 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
$
(769
)
Interest expense, net
9,604
Income tax (benefit) expense
(206
)
Non-service pension and post retirement
benefit income
(381
)
Other income, net
(571
)
Operating income (loss)
$
7,677
$
19,356
$
1,129
$
(643
)
$
(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
$
23,818
$
30,119
$
1,941
$
151
$
(8,393
)
Adjusted EBITDA margin
12.2
%
24.4
%
5.1
%
0.5
%
(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)
Information for the period ended March 31, 2023 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 June 30, 2023 for further information. **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 Operations as their own line items.
Table 7. Adjusted EBITDA
(unaudited)
Thousands of U.S. dollars
Three Months Ended July
1, 2022
Consolidated
Engineered Products
Precision Products
Structures
Corp/Elims**
Adjusted EBITDA
Consolidated Results
Net sales
$
160,766
$
89,765
$
41,267
$
29,734
$
—
Net earnings
$
3,774
Interest expense, net
1,993
Income tax expense (benefit)
479
Non-service pension and post retirement
benefit income
(5,024
)
Other expense (income), net
690
Operating income (loss)
$
1,912
$
15,467
$
2,214
$
(862
)
$
(14,907
)
Depreciation and amortization
8,822
6,147
1,043
887
745
Restructuring and severance costs
2,927
—
—
—
2,927
Cost associated with corporate development
activities
2,400
—
—
—
2,400
Other Adjustments
$
14,149
$
6,147
$
1,043
$
887
$
6,072
Adjusted EBITDA
$
16,061
$
21,614
$
3,257
$
25
$
(8,835
)
Adjusted EBITDA margin
10.0
%
24.1
%
7.9
%
0.1
%
(1) Information for the period ended July 1, 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 June 30, 2023 for further information. **Corp/Elims
Operating income (loss) represents the Corporate office expenses
and $2.9 million of unallocated expenses that are shown on the
Consolidated Statement of Operations as their own line items.
Table 8. Adjusted EBITDA
(unaudited)
Thousands of U.S. dollars
Six Months Ended
June 30, 2023
Consolidated
Engineered Products
Precision Products
Structures
Corp/Elims**
Adjusted EBITDA
Consolidated Results
Net sales
$
389,700
$
256,839
$
66,030
$
66,831
$
—
Net earnings
$
4,486
Interest expense, net
19,944
Income tax expense
1,909
Non-service pension and post retirement
benefit income
(620
)
Other income, net
(472
)
Operating income (loss)
$
25,247
$
49,898
$
(755
)
$
(749
)
$
(23,147
)
Depreciation and amortization
26,444
21,637
1,618
1,575
1,614
Restructuring and severance costs(1)
2,462
—
—
—
2,462
Integration and implementation
costs(2)
1,834
—
—
—
1,834
Program inventory impairment(3)
596
—
—
—
596
Tax contingency reversal(4)
(757
)
(757
)
—
—
—
Other Adjustments
$
30,579
$
20,880
$
1,618
$
1,575
$
6,506
Adjusted EBITDA
$
55,826
$
70,778
$
863
$
826
$
(16,641
)
Adjusted EBITDA margin
14.3
%
27.6
%
1.3
%
1.2
%
(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 $3.5 million of unallocated expenses
that are shown on the Consolidated Statement of Operations as their
own line items.
Table 9. Adjusted EBITDA
(unaudited)
Thousands of U.S. dollars
Six Months Ended
July 1, 2022
Consolidated
Engineered Products
Precision Products
Structures
Corp/Elims**
Adjusted EBITDA
Consolidated Results
Net sales
$
318,814
$
171,217
$
88,816
$
58,781
$
—
Net earnings
$
7,649
Interest expense, net
4,474
Income tax expense (benefit)
1,745
Non-service pension and post retirement
benefit income
(10,287
)
Other expense (income), net
1,194
Operating income (loss)
$
4,775
$
26,509
$
5,429
$
(1,479
)
$
(25,684
)
Depreciation and amortization
17,654
12,374
2,074
1,793
1,413
Restructuring and severance costs
3,096
—
—
—
3,096
Cost associated with corporate development
activities
2,528
—
—
—
2,528
Other Adjustments
$
23,278
$
12,374
$
2,074
$
1,793
$
7,037
Adjusted EBITDA
$
28,053
$
38,883
$
7,503
$
314
$
(18,647
)
Adjusted EBITDA margin
8.8
%
22.7
%
8.4
%
0.5
%
(1) Information for the period July 1, 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 June 30, 2023 for further information.
**Corp/Elims Operating income (loss) represents the Corporate
office expenses and $3.2 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.
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 Ended
Three Months Ended
June 30, 2023
July 1, 2022
Pre-Tax
Tax-Effected
Diluted EPS
Pre-Tax
Tax-Effected
Diluted EPS
Net earnings
$
7,370
$
5,255
$
0.19
$
4,253
$
3,774
$
0.13
Adjustments:
Restructuring and severance costs
272
215
—
2,927
2,574
0.09
Integration and implementation costs
1,037
819
0.03
—
—
—
Costs associated with corporate
development activities
—
—
—
2,400
2,111
0.08
Program inventory impairment
596
471
0.02
—
—
—
Foreign wage tax provision reversal
(757
)
(598
)
(0.02
)
—
—
—
Adjustments
$
1,148
$
907
$
0.03
$
5,327
$
4,685
$
0.17
Adjusted net earnings
$
8,518
$
6,162
$
0.22
$
9,580
$
8,459
$
0.30
Diluted weighted average shares
outstanding
28,355
28,059
Three Months Ended
March 31, 2023
Pre-Tax
Tax-Effected
Diluted EPS
Net (loss) earnings
$
(975
)
$
(769
)
$
(0.03
)
Adjustments:
Restructuring and severance costs
2,190
1,730
0.06
Integration and implementation costs
797
630
0.03
Adjustments
$
2,987
$
2,360
$
0.09
Adjusted net earnings
$
2,012
$
1,591
$
0.06
Diluted weighted average shares
outstanding
28,117
(1) Information for the periods ended March 31, 2023 and July 1,
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 June 30, 2023 for further
information.
Table 10. Adjusted Net Earnings and
Adjusted Diluted Earnings per Share (unaudited) - continued
Thousands of U.S. dollars (except share
data)
For the Six Months
Ended
For the Six Months
Ended
June 30, 2023
July 1, 2022
Pre-Tax
Tax-Effected
Diluted EPS
Pre-Tax
Tax-Effected
Diluted EPS
Net earnings
$
6,395
$
4,486
0.16
$
9,394
$
7,649
0.27
Adjustments:
Restructuring and severance costs
2,462
1,945
0.06
3,096
2,702
0.10
Integration and implementation costs
1,834
1,449
0.05
—
—
—
Costs associated with corporate
development activities
—
—
—
2,528
2,208
0.08
Program inventory impairment
596
471
0.02
—
—
—
Foreign wage tax provision reversal
(757
)
(598
)
(0.02
)
—
—
—
Adjustments
$
4,135
$
3,267
$
0.11
$
5,624
$
4,910
$
0.18
Adjusted net earnings
$
10,530
$
7,753
$
0.27
$
15,018
$
12,559
$
0.45
Diluted weighted average shares
outstanding
28,311
28,071
(1) Information for the period ended July 1, 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 June 30, 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)
Three Months Ended
Last Twelve Months
September 30, 2022
December 31, 2022
March 31, 2023
June 30, 2023
June 30, 2023
Net cash provided by operating
activities
$
(6,746
)
$
54,669
$
(5,453
)
$
24,259
$
66,729
Expenditures for property, plant & equipment
(7,106
)
(6,063
)
(5,948
)
(6,888
)
(26,005
)
Free cash flow
$
(13,852
)
$
48,606
$
(11,401
)
$
17,371
$
40,724
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 second quarter 2023 Form 10-Q filed August 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
For the Six Months
Ended
June 30, 2023
July 1, 2022
June 30, 2023
July 1, 2022
Net sales
$
195,158
$
160,766
$
389,700
$
318,814
Cost of sales
122,320
109,027
250,269
216,682
Program inventory impairment
596
—
596
—
Gross profit
72,242
51,739
138,835
102,132
Selling, general and administrative
expenses
41,566
39,250
85,264
78,971
Research and development costs
5,193
5,215
11,100
10,328
Intangible asset amortization expense
7,192
2,439
14,344
4,906
Restructuring and severance costs
272
2,927
2,462
3,096
Net loss (gain) on disposition of
assets
449
(4
)
418
56
Operating income
17,570
1,912
25,247
4,775
Interest expense, net
10,340
1,993
19,944
4,474
Non-service pension and post retirement
benefit income
(239
)
(5,024
)
(620
)
(10,287
)
Other expense (income), net
99
690
(472
)
1,194
Earnings before income taxes
7,370
4,253
6,395
9,394
Income tax expense
2,115
479
1,909
1,745
Net earnings
$
5,255
$
3,774
$
4,486
$
7,649
Earnings (loss) per share:
Basic earnings per share
$
0.19
$
0.13
$
0.16
$
0.27
Diluted earnings per share
$
0.19
$
0.13
$
0.16
$
0.27
Average shares outstanding:
Basic
28,203
28,005
28,160
27,977
Diluted
28,355
28,059
28,311
28,071
(1) The condensed consolidated statement of operations for the
three-month and six-month fiscal periods ended July 1, 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 $0.3 million and
$0.4 million, respectively. Refer to the Company's Form 10-Q for
the quarter ended June 30, 2023 for further information.
KAMAN CORPORATION AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(Thousands of U.S. dollars,
except share data) (unaudited)
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
34,283
$
24,154
Accounts receivable, net
101,730
87,659
Contract assets
106,381
113,182
Inventories
192,785
172,383
Income tax refunds receivable
4,514
14,843
Other current assets
21,194
16,114
Total current assets
460,887
428,335
Property, plant and equipment, net of
accumulated depreciation of $279,746 and $268,089, respectively
203,678
201,606
Operating right-of-use assets, net
6,144
7,391
Goodwill
382,971
379,854
Other intangible assets, net
358,333
372,331
Deferred income taxes
45,595
47,385
Other assets
55,524
51,207
Total assets
$
1,513,132
$
1,488,109
Liabilities and Shareholders’
Equity
Current liabilities:
Current portion of long-term debt
$
198,593
$
—
Accounts payable – trade
49,881
48,277
Accrued salaries and wages
29,690
31,395
Contract liabilities, current portion
7,826
4,081
Operating lease liabilities, current
portion
3,024
3,332
Income taxes payable
1,328
393
Other current liabilities
38,317
39,097
Total current liabilities
328,659
126,575
Long-term debt, excluding current portion,
net of debt issuance costs
384,000
561,061
Deferred income taxes
6,804
6,079
Underfunded pension
50,645
52,309
Contract liabilities, noncurrent
portion
19,624
20,515
Operating lease liabilities, noncurrent
portion
3,463
4,534
Other long-term liabilities
33,608
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; 30,830,203 and 30,640,068 shares issued,
respectively
30,830
30,640
Additional paid-in capital
250,152
245,436
Retained earnings
678,456
685,234
Accumulated other comprehensive income
(loss)
(150,464
)
(158,421
)
Less 2,636,393 and 2,607,841 shares of
common stock, respectively, held in treasury, at cost
(122,645
)
(122,133
)
Total shareholders’ equity
686,329
680,756
Total liabilities and shareholders’
equity
$
1,513,132
$
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 June 30, 2023 for further
information.
KAMAN CORPORATION AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(Thousands of U.S. dollars)
(unaudited)
For the Six Months
Ended
June 30, 2023
July 1, 2022
Cash flows from operating
activities:
Net earnings
$
4,486
$
7,649
Adjustments to reconcile earnings, net of
tax to net cash provided by operating activities:
Depreciation and amortization
26,444
17,654
Amortization of debt issuance costs
2,317
1,024
Provision for doubtful accounts
1,125
263
Net loss on disposition of assets
418
56
Program inventory impairment
596
—
Net (gain) loss on derivative
instruments
(206
)
1,646
Stock compensation expense
3,928
4,811
Non-cash consideration received for blade
exchange
—
(827
)
Deferred income taxes
1,043
2,050
Changes in assets and liabilities,
excluding effects of acquisitions/divestitures:
Accounts receivable
(14,868
)
(5,430
)
Contract assets
6,816
2,936
Inventories
(21,094
)
(23,849
)
Income tax refunds receivable
10,332
(2,484
)
Operating right of use assets
1,264
1,748
Other assets
(3,713
)
(2,493
)
Accounts payable - trade
1,502
(9,701
)
Contract liabilities
2,853
(38
)
Operating lease liabilities
(1,396
)
(1,703
)
Other current liabilities
(4,059
)
(8,635
)
Income taxes payable
928
(160
)
Pension liabilities
2,004
(8,873
)
Other long-term liabilities
(1,914
)
(2,598
)
Net cash provided by (used in) operating
activities
18,806
(26,954
)
Cash flows from investing
activities:
Expenditures for property, plant &
equipment
(12,836
)
(10,520
)
Investment in Near Earth Autonomy
—
(10,000
)
Acquisition of businesses, net of cash
acquired
(1,487
)
—
Other, net
(1,020
)
1,341
Net cash used in investing activities
(15,343
)
(19,179
)
Cash flows from financing
activities:
Borrowings under revolving credit
agreement
100,000
—
Repayments under revolving credit
agreement
(79,000
)
—
Purchase of treasury shares
(503
)
(698
)
Dividends paid
(11,233
)
(11,163
)
Debt issuance costs
(4,402
)
(4,236
)
Other, net
1,645
2,319
Net cash provided by (used in) financing
activities
6,507
(13,778
)
Net increase (decrease) in cash and cash
equivalents
9,970
(59,911
)
Effect of exchange rate changes on cash
and cash equivalents
159
(645
)
Cash and cash equivalents at beginning of
period
24,154
140,800
Cash and cash equivalents at end of
period
$
34,283
$
80,244
(1) The condensed consolidated statement of cash flows for the
six-month fiscal periods ended July 1, 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
June 30, 2023 for further information.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802144788/en/
InvestorRelations@kaman.com
Grafico Azioni Kaman (NYSE:KAMN)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Kaman (NYSE:KAMN)
Storico
Da Gen 2024 a Gen 2025
