Kaman Reports 2016 First Quarter Results

May 03, 2016

First Quarter 2016 Highlights:

  • Diluted earnings per share of $0.35, $0.41 adjusted*
  • Aerospace sales growth of 24%, 11% organic growth
  • Distribution operating profit margin of 3.6%, a 110 bps increase over the fourth quarter
  • Aerospace backlog increases 8.6% to $716 million

BLOOMFIELD, Conn.--(BUSINESS WIRE)--May 3, 2016-- Kaman Corp. (NYSE:KAMN) today reported financial results for the first fiscal quarter ended April 1, 2016.

                   
  Table 1. Summary of Financial Results        
  In thousands except per share amounts       For the Three Months Ended
          April 1,
2016
  April 3,
2015
  Change
  Net sales:                
  Distribution       $ 288,664     $ 311,471     $ (22,807 )
  Aerospace       162,534     131,311     31,223  
  Net sales       $ 451,198     $ 442,782     $ 8,416  
                   
  Operating income:                
  Distribution       $ 10,469     $ 12,964     $ (2,495 )
  % of sales       3.6 %   4.2 %   (0.6 )%
  Aerospace       21,297     21,821     (524 )
  % of sales       13.1 %   16.6 %   (3.5 )%
  Net gain (loss) on sale of assets       28     (27 )   55  
  Corporate expense       (13,444 )   (12,428 )   (1,016 )
  Operating income       $ 18,350     $ 22,330     $ (3,980 )
                   
  Adjusted EBITDA*:                
  Distribution       $ 14,272     $ 17,137     $ (2,865 )
  Aerospace       27,095     25,695     1,400  
  Net gain (loss) on sale of assets       28     (27 )   55  
  Corporate expense       (12,125 )   (11,105 )   (1,020 )
  Adjusted EBITDA*       $ 29,270     $ 31,700     $ (2,430 )
                   
  Adjusted diluted earnings per share*       $ 0.41     $ 0.47     $ (0.06 )
                               

Neal J. Keating, Chairman, President and Chief Executive Officer, stated, "In the first quarter of 2016 we achieved GAAP diluted earnings per share of $0.35 or adjusted diluted earnings per share* of $0.41, largely in line with our expectations. Sales were higher year-over-year, driven by direct commercial sales of the joint programmable fuze, our legacy fuze programs, and acquisitions in Aerospace partially offset by lower Distribution revenues and lower sales from our New Zealand helicopter program which was substantially completed in 2015.

We were pleased with operating profit margin performance at Distribution for the quarter. Adjusted operating margin* expanded 60 basis points to 3.7% when compared to the fourth quarter on relatively flat organic sales per sales day*. Our recent actions at Distribution to adjust our cost structure have contributed to the sequential improvement in operating margin performance. While we anticipate continued market challenges, we feel well positioned to improve operating performance for the balance of the year.

At Aerospace sales increased 23.8%, driven by organic growth of 10.6% and the contributions from our 2015 acquisitions. Adjusted operating margin* in the quarter was 14.3%, which includes $5.8 million in depreciation and amortization expense, a 50% increase over the prior year, primarily driven by acquisitions, and a $1.0 million decrease in operating income resulting from changes in estimates on our long-term contracts. Aerospace adjusted EBITDA* for the quarter was 16.7%.”

Chief Financial Officer,
Robert D. Starr, commented, "Overall we executed well in the first quarter providing us confidence to reaffirm our outlook for the year. Earnings are expected to be more back half weighted as we move through the year led by continued strong demand for our bearing and fuzing products and improved performance from our structures programs. In addition, we expect tepid market conditions in Distribution to continue with year-over-year comparisons improving as we move through the second half of the year. Distribution’s operating margin should improve as we realize benefits from our restructuring actions, our productivity initiatives take hold and our organic sales per sales day* improve."

2016 Outlook

We are reaffirming our full-year outlook for 2016, as follows:

  • Distribution:
    • Sales of $1,125.0 million to $1,165.0 million
    • Operating margins of 4.4% to 4.6%
    • Adjusted EBITDA margin of 5.8% to 6.0%
  • Aerospace:
    • Sales of $700.0 million to $720.0 million
    • Operating margins of 17.5% to 17.8%, or 18.3% to 18.6%, when adjusted for $5.5 million of transaction and integration costs in 2016 associated with the 2015 acquisitions
    • Adjusted EBITDA margin of 21.8% to 22.0%
  • Interest expense of approximately $16.0 million
  • Corporate expenses of approximately $55.0 million
  • Estimated annualized tax rate of approximately 34.5%
  • Depreciation and amortization expense of approximately $45.0 million
  • Capital expenditures of $30.0 million to $40.0 million
  • Free cash flow in the range of $50.0 million to $60.0 million

Please see the MD&A section of the Company's SEC Form 10-Q filed concurrent with the issuance of this release for greater detail on our results and various company programs.

A conference call has been scheduled for tomorrow, May 4, 2016, at 8:30 AM ET. Listeners may access the call live by telephone at (866) 291-5954 and from outside the U.S. at (412) 455-6203 using the Conference ID: 84741530; or, via the Internet at www.kaman.com. A replay will also be available two hours after the call and can be accessed at (855) 859-2056 or (404) 537-3406 using the Conference ID: 84741530. In its discussion, management may include certain non-GAAP measures related to company performance. If so, a reconciliation of that information to GAAP, if not provided in this release, will be provided in the exhibits to the conference call and will be available through the Internet link provided above.

             
Table 2. Summary of Segment Information (in thousands)            
        For the Three Months Ended
        April 1,
2016
  April 3,
2015
Net sales:            
Distribution       $ 288,664     $ 311,471  
Aerospace       162,534     131,311  
Net sales       $ 451,198     $ 442,782  
             
Operating income:            
Distribution       $ 10,469     $ 12,964  
Aerospace       21,297     21,821  
Net gain (loss) on sale of assets       28     (27 )
Corporate expense       (13,444 )   (12,428 )
Operating income       $ 18,350     $ 22,330  
             
Table 3. Depreciation and Amortization by Segment (in thousands)            
        For the Three Months Ended
        April 1,
2016
  April 3,
2015
Depreciation and Amortization:            
Distribution            
Depreciation       $ 1,838     $ 2,099  
Amortization       1,965     2,074  
Total       $ 3,803     $ 4,173  
Aerospace            
Depreciation       $ 3,760     $ 3,030  
Amortization       2,038     844  
Total       $ 5,798     $ 3,874  
Corporate            
Depreciation       $ 938     $ 923  
Amortization       381     400  
Total       $ 1,319     $ 1,323  
                     

Non-GAAP Measures Disclosure

Management believes that the non-GAAP (Generally Accepted Accounting Principles) measures indicated 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 report and other disclosures as follows:

Adjusted EBITDA - Adjusted EBITDA is defined as operating income before depreciation and amortization. Adjusted EBITDA is calculated for our consolidated results as well as the results of our reportable segments. Adjusted EBITDA differs from Segment Operating Income, as calculated in accordance with GAAP, in that it excludes depreciation and amortization. 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 new ERP systems. Management believes Adjusted EBITDA 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 by eliminating the impact of non-cash depreciation and amortization expense. Adjusted EBITDA does not give effect to cash used for debt service requirements and thus does not reflect funds available for distributions, reinvestment or other discretionary uses. Adjusted EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. No other adjustments were made during the three-month fiscal periods ended April 1, 2016, and April 3, 2015. The following table illustrates the calculation of Adjusted EBITDA using GAAP measures, "Operating Income" and "Depreciation and Amortization".

         
Table 4. Adjusted EBITDA (in thousands)        
        For the Three Months Ended
        April 1,
2016
  April 3,
2015
Adjusted EBITDA            
Distribution            
Sales       $ 288,664     $ 311,471  
Operating income       $ 10,469     $ 12,964  
Depreciation and Amortization       3,803     4,173  
Adjusted EBITDA       $ 14,272     $ 17,137  
Adjusted EBITDA margin       4.9 %   5.5 %
Aerospace            
Sales       $ 162,534     $ 131,311  
Operating income       $ 21,297     $ 21,821  
Depreciation and Amortization       5,798     3,874  
Adjusted EBITDA       $ 27,095     $ 25,695  
Adjusted EBITDA margin       16.7 %   19.6 %
Corporate expense            
Operating expense       $ (13,444 )   $ (12,428 )
Depreciation and Amortization       1,319     1,323  
Adjusted EBITDA       $ (12,125 )   $ (11,105 )
Net gain (loss) on sale of assets       28     (27 )
Total Adjusted EBITDA       $ 29,270     $ 31,700  
Adjusted EBITDA margin       6.5 %   7.2 %
                 

The following table reconciles our operating margin outlook for 2016 to our Adjusted EBITDA margin outlook for 2016:

             
Table 5. Adjusted EBITDA Outlook            
        2016 Outlook
Adjusted EBITDA       Low End of Range   High End of Range
Distribution            
GAAP Operating margin       4.4%   4.6%
Depreciation and Amortization as a percentage of sales       1.4%   1.4%
Adjusted EBITDA margin       5.8%   6.0%
             
Aerospace            
GAAP Operating margin       17.5%   17.8%
Transaction and integration costs as a percentage of sales       0.8%   0.8%
Adjusted operating margin       18.3%   18.6%
Depreciation and Amortization as a percentage of sales       3.5%   3.4%
Adjusted EBITDA margin       21.8%   22.0%
               

Organic Sales per Sales Day - Organic sales per sales day is defined as GAAP net sales of the Distribution segment less sales derived from acquisitions, divided by the number of sales days in a given period. Sales days are essentially days that the Company's branch locations are open for business and exclude weekends and holidays. Management believes organic sales per sales day provides an important perspective on how net sales may be impacted by the number of days the segment is open for business and provides a basis for comparing periods in which the number of sales days differs.

The following table illustrates the calculation of organic sales per sales day using “Net sales: Distribution” from the “Segment and Geographic Information” footnote in the “Notes to Condensed Consolidated Financial Statements” from the Company's Form 10-Q filed with the Securities and Exchange Commission on May 3, 2016. Sales from acquisitions are classified as organic beginning with the thirteenth month following the acquisition. Prior period information is adjusted to reflect acquisition sales for that period as organic sales when calculating the change in organic sales per sales day.

             

Table 6. Distribution - Organic Sales
Per Sales Day (in thousands, except days)

           
        For the Three Months Ended
        April 1,
2016
  April 3,
2015
Current period            
Net sales       $ 288,664     $ 311,471  
Acquisition sales (1)       2,659     29,997  
Organic sales       286,005     281,474  
Sales days       65     66  
Organic sales per sales day for the current period   a   $ 4,400     $ 4,265  
             
Prior period            
Net sales from the prior year       $ 311,471     $ 258,896  
Sales days from the prior year       66     62  
Sales per sales day from the prior year   b   $ 4,719     $ 4,176  
             
% change   (a-b)÷b   (6.8 )%  

2.1

%
                 
                     
Table 7. Distribution - Sales Days                    
       

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

Distribution Sales Days                    
2016 sales days by quarter       65   64   63   61
2015 sales days by quarter       66   63   64   60
                     

Free Cash Flow - Free cash flow is defined as GAAP “Net cash provided by (used in) operating activities” less “Expenditures for property, plant & equipment”. Management believes free cash flow provides an important perspective on the cash available for dividends to shareholders, debt repayment, and acquisitions after making capital investments required to support ongoing business operations and long-term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow internally to assess both business performance and overall liquidity. The following table illustrates the calculation of free cash flow using “Net cash provided by operating activities” and “Expenditures for property, plant & equipment”, GAAP measures from the Condensed Consolidated Statements of Cash Flows included in this release.

         
Table 8. Free Cash Flow (in thousands)        
       

For the Three
Months Ended

        April 1,
2016
Net cash provided by operating activities       $ 5,727  
Expenditures for property, plant & equipment       (7,624 )
Free Cash Flow       $ (1,897 )
             
Table 9. Free Cash Flow - 2016 Outlook (in millions)   2016 Outlook
Free Cash Flow:            
Net cash provided by operating activities   $ 80.0     to   $ 100.0
Expenditures for property, plant and equipment   30.0     to   40.0
Free Cash Flow   $ 50.0     to   $ 60.0
                   

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 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 using GAAP measures from the condensed consolidated balance sheets included in this release.

         
Table 10. Debt to Capitalization (in thousands)        
    April 1,
2016
  December 31,
2015
Current portion of long-term debt   $ 5,000     $ 5,000  
Long-term debt, excluding current portion   442,730     434,227  
Debt   447,730     439,227  
Total shareholders' equity   556,046     543,077  
Capitalization   $ 1,003,776     $ 982,304  
Debt to capitalization   44.6 %   44.7 %
             

Adjusted Net Earnings and Adjusted Diluted Earnings Per Share - Adjusted net earnings and adjusted diluted earnings per share are defined as net earnings and diluted earnings per share, less items that are not indicative of the operating performance of the business for the period 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 using “Net earnings” and “Diluted earnings per share” from the “Condensed Consolidated Statements of Operations” from the Company's Form 10-Q filed with the Securities and Exchange Commission on May 3, 2016.

 
Table 11. Reconciliation of Non-GAAP Financial Information - Net Earnings
(In thousands except per share amounts)
         
        For the Three Months Ended
        April 1,
2016
  April 3,
2015
GAAP Net earnings, as reported       $ 9,777   $ 12,749
Acquisition transaction and integration costs       1,301  
Severance costs at Distribution       226   168
Adjusted net earnings       $ 11,304   $ 12,917
GAAP diluted earnings per share       $ 0.35   $ 0.46
Acquisition transaction and integration costs       0.05  
Severance costs at Distribution       0.01   0.01
Adjusted diluted earnings per share       $ 0.41   $ 0.47
Diluted weighted average shares outstanding       27,806   27,878
               

Non-GAAP adjusted operating income - Non-GAAP adjusted operating income is defined as operating income, less items that are not indicative of the operating performance of the Company's segments or corporate function for the period presented. These items are included in the reconciliation below. Management uses Non-GAAP adjusted operating income to evaluate performance period over period, to analyze the underlying trends in our segments and corporate function and to assess their performance relative to their 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 Non-GAAP adjusted operating profit using information found in Note 13, Segment and Geographic Information, to the Condensed Consolidated Financial Statements included in the Company's Form 10-Q filed with the Securities and Exchange Commission on May 3, 2016.

 
Table 12. Reconciliation of Non-GAAP Financial Information - Operating Segments
(In thousands)
    For the Three Months Ended
    April 1,
2016
  April 3,
2015
DISTRIBUTION SEGMENT OPERATING INCOME:        
Net Sales   $ 288,664     $ 311,471  
GAAP operating income - Distribution segment   $ 10,469     $ 12,964  
% of GAAP net sales   3.6 %   4.2 %
Restructuring and severance costs at Distribution   347     259  
Non-GAAP adjusted operating income - Distribution segment   $ 10,816     $ 13,223  
% of net sales   3.7 %   4.2 %
         
AEROSPACE SEGMENT OPERATING INCOME:        
Net Sales   $ 162,534     $ 131,311  
GAAP operating income - Aerospace segment   21,297     21,821  
% of GAAP net sales   13.1 %   16.6 %
Acquisition transaction and integration costs   $ 2,002     $  
Non-GAAP adjusted operating income - Aerospace segment   $ 23,299     $ 21,821  
% of net sales   14.3 %   16.6 %
         
CONSOLIDATED OPERATING INCOME:        
GAAP - Operating income   $ 18,350     $ 22,330  
Acquisition inventory step-up at Aerospace   2,002      
Restructuring and severance costs at Distribution   347     259  
Non-GAAP adjusted operating income   $ 20,699     $ 22,589  
                 

The following table reconciles our GAAP operating margin outlook for Aerospace for 2016 to our Adjusted operating margin outlook for Aerospace for 2016:

         
Table 13. Adjusted operating margin outlook        
    2016 Outlook
Adjusted Operating Margin  

Low End of
Range

 

High End of
Range

Aerospace        
GAAP operating margin   17.5%   17.8%
Transaction and integration costs as a percentage of sales   0.8%   0.8%
Adjusted operating margin   18.3%   18.6%
             

About Kaman Corporation

Kaman Corporation, founded in 1945 by aviation pioneer
Charles H. Kaman, and headquartered in Bloomfield, Connecticut conducts business in the aerospace and industrial distribution markets. The company produces and markets proprietary aircraft bearings and components; super precision, miniature ball bearings; 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; manufacture and support of our K-MAX® manned and unmanned medium-to-heavy lift helicopters; and engineering design, analysis and certification services. The company is a leading distributor of industrial parts, and operates approximately 240 customer service centers and five distribution centers across the U.S. and Puerto Rico. Kaman offers more than four million items including bearings, mechanical power transmission, electrical, material handling, motion control, fluid power, automation and MRO supplies to customers in virtually every industry. Additionally, Kaman provides engineering, design and support for automation, electrical, linear, hydraulic and pneumatic systems as well as belting and rubber fabrication, customized mechanical services, hose assemblies, repair, fluid analysis and motor management. More information is available at www.kaman.com.

FORWARD-LOOKING STATEMENTS

This release 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) changes in geopolitical conditions in countries where the Company does or intends to do business; (iv) 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; (v) the existence of standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; (vi) the successful resolution of government inquiries or investigations relating to our businesses and programs; (vii) 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; (viii) potential difficulties associated with variable acceptance test results, given sensitive production materials and extreme test parameters; (ix) the receipt and successful execution of production orders under the Company's existing U.S. government 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; (x) 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 investment in the restart of the K-MAX® production line; (xi) the accuracy of current cost estimates associated with environmental remediation activities; (xii) the profitable integration of acquired businesses into the Company's operations; (xiii) the ability to implement our ERP systems in a cost-effective and efficient manner, limiting disruption to our business, and allowing us to capture their planned benefits while maintaining an adequate internal control environment; (xiv) changes in supplier sales or vendor incentive policies; (xv) the effects of price increases or decreases; (xvi) the effects of pension regulations, pension plan assumptions, pension plan asset performance, future contributions and the pension freeze; (xvii) future levels of indebtedness and capital expenditures; (xviii) the continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items; (xix) the effects of currency exchange rates and foreign competition on future operations; (xx) changes in laws and regulations, taxes, interest rates, inflation rates and general business conditions; (xxi) future repurchases and/or issuances of common stock; (xxii) the incurrence of unanticipated restructuring costs or the failure to realize anticipated savings or benefits from past or future expense reduction actions; and (xxiii) other risks and uncertainties set forth herein and in our 2015 Form 10-K.

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
    April 1,
2016
  April 3,
2015
Net sales   $ 451,198     $ 442,782  
Cost of sales   316,768     314,871  
Gross profit   134,430     127,911  
Selling, general and administrative expenses   116,108     105,554  
Net (gain) loss on sale of assets   (28 )   27  
Operating income   18,350     22,330  
Interest expense, net   3,807     3,327  
Other expense, net   86     (64 )
Earnings before income taxes   14,457     19,067  
Income tax expense   4,680     6,318  
Net earnings   $ 9,777     $ 12,749  
         
Earnings per share:        
Basic earnings per share   $ 0.36     $ 0.47  
Diluted earnings per share   $ 0.35     $ 0.46  
         
Average shares outstanding:        
Basic   27,059     27,188  
Diluted   27,806     27,878  
Dividends declared per share   $ 0.18     $ 0.18  
                 
         
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts) (unaudited)

         
    April 1,
2016
  December 31,
2015
Assets        
Current assets:        
Cash and cash equivalents   $ 18,033     $ 16,462  
Accounts receivable, net   252,217     238,102  
Inventories   391,773     385,747  
Income tax refunds receivable   561     3,591  
Other current assets   32,507     32,133  
Total current assets   695,091     676,035  
Property, plant and equipment, net of accumulated depreciation of $209,023 and $202,648, respectively   177,878     175,586  
Goodwill   358,509     352,710  
Other intangible assets, net   142,211     144,763  
Deferred income taxes   66,743     66,815  
Other assets   23,520     23,702  
Total assets   $ 1,463,952     $ 1,439,611  
Liabilities and Shareholders’ Equity        
Current liabilities:        
Current portion of long-term debt   $ 5,000     $ 5,000  
Accounts payable – trade   127,157     121,044  
Accrued salaries and wages   36,080     40,284  
Advances on contracts   14,825     11,274  
Other accruals and payables   67,855     58,761  
Income taxes payable   537     326  
Total current liabilities   251,454     236,689  
Long-term debt, excluding current portion   442,730     434,227  
Deferred income taxes   15,003     15,207  
Underfunded pension   146,061     158,984  
Other long-term liabilities   52,658     51,427  
Commitments and contingencies (Note 10)        
Shareholders' equity:        
Preferred stock, $1 par value, 200,000 shares authorized; none outstanding        
Common stock, $1 par value, 50,000,000 shares authorized; voting; 27,861,979 and 27,735,757 shares issued, respectively   27,862     27,736  
Additional paid-in capital   160,510     156,803  
Retained earnings   525,769     520,865  
Accumulated other comprehensive income (loss)   (131,477 )   (140,138 )
Less 807,394 and 698,183 shares of common stock, respectively, held in treasury, at cost   (26,618 )   (22,189 )
Total shareholders’ equity   556,046     543,077  
Total liabilities and shareholders’ equity   $ 1,463,952     $ 1,439,611  
                 
 
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows

(In thousands) (unaudited)

 
    For the Three Months Ended
    April 1,
2016
  April 3,
2015
Cash flows from operating activities:        
Net earnings   $ 9,777     $ 12,749  
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:        
Depreciation and amortization   10,920     9,370  
Accretion of convertible notes discount   526     499  
Provision for doubtful accounts   218     628  
Net (gain)/loss on sale of assets   (28 )   27  
Net loss on derivative instruments   374     136  
Stock compensation expense   1,494     1,605  
Excess tax benefit from share-based compensation arrangements   (170 )   (168 )
Deferred income taxes   (1,901 )   (973 )
Changes in assets and liabilities, excluding effects of acquisitions/divestitures:        
Accounts receivable   (13,732 )   16,854  
Inventories   (5,715 )   (7,109 )
Income tax refunds receivable   3,035      
Other current assets   (546 )   (2,217 )
Accounts payable - trade   4,732     10,754  
Accrued contract losses   216     (111 )
Advances on contracts   3,551     284  
Other accruals and payables   2,473     (7,329 )
Income taxes payable   (399 )   5,319  
Pension liabilities   (9,774 )   (8,075 )
Other long-term liabilities   676     464  
Net cash provided by operating activities   5,727     32,707  
Cash flows from investing activities:        
Proceeds from sale of assets   116     25  
Expenditures for property, plant & equipment   (7,624 )   (7,195 )
Acquisition of businesses (net of cash acquired)   (64 )   (10,956 )
Other, net   (501 )   (575 )
Cash used in investing activities   (8,073 )   (18,701 )
Cash flows from financing activities:        
Net borrowings (repayments) under revolving credit agreements   10,143     (8,509 )
Debt repayment   (1,250 )   (2,500 )
Net change in book overdraft   1,567     (913 )
Proceeds from exercise of employee stock awards   2,339     911  
Purchase of treasury shares   (4,427 )   (671 )
Dividends paid   (4,871 )   (4,341 )
Other   (92 )    
Windfall tax benefit   170     168  
Cash provided by (used in) financing activities   3,579     (15,855 )
Net increase (decrease) in cash and cash equivalents   1,233     (1,849 )
Effect of exchange rate changes on cash and cash equivalents   338     (495 )
Cash and cash equivalents at beginning of period   16,462     12,411  
Cash and cash equivalents at end of period   $ 18,033     $ 10,067  
                 

 

Source: Kaman Corp.

Kaman Corp.
Eric Remington, 860-243-6334
V.P., Investor Relations
Eric.Remington@kaman.com