Kaman Reports 2020 Second Quarter Results
Second Quarter Highlights:
- Net sales from continuing operations of
$177.9 million , up 1.8% over prior year period - Organic sales from continuing operations* of
$159.8 million , down 8.5% over prior year period - Net loss from continuing operations of
$0.1 million - Adjusted EBITDA from continuing operations* up 40.5% to
$23.9 million , or 13.4% of sales - Diluted earnings per share from continuing operations of
$0.00 , or$0.36 adjusted*
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Table 1. Summary of Financial Results (unaudited) |
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In thousands except per share amounts |
For the Three Months Ended |
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2020 |
|
2019 |
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Change |
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Net sales from continuing operations |
$ |
177,890 |
|
|
$ |
174,712 |
|
|
$ |
3,178 |
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Operating income from continuing operations: |
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||||||
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Operating (loss) income from continuing operations |
$ |
(2,770 |
) |
|
$ |
10,575 |
|
|
$ |
(13,345 |
) |
|
|
% of sales |
(1.6 |
)% |
|
6.1 |
% |
|
(7.7 |
)% |
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|||
|
Adjustments |
$ |
16,382 |
|
|
$ |
206 |
|
|
$ |
16,176 |
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|
|
Adjusted operating income from continuing operations* |
$ |
13,612 |
|
|
$ |
10,781 |
|
|
$ |
2,831 |
|
|
|
% of sales |
7.7 |
% |
|
6.2 |
% |
|
1.5 |
% |
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Adjusted EBITDA from continuing operations*: |
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(Loss) earnings from continuing operations |
$ |
(100 |
) |
|
$ |
6,389 |
|
|
$ |
(6,489 |
) |
|
|
Adjustments |
24,017 |
|
|
10,635 |
|
|
13,382 |
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|||
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Adjusted EBITDA from continuing operations* |
$ |
23,917 |
|
|
$ |
17,024 |
|
|
$ |
6,893 |
|
|
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% of sales |
13.4 |
% |
|
9.7 |
% |
|
3.7 |
% |
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Earnings per share from continuing operations: |
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Diluted earnings per share from continuing operations |
$ |
0.00 |
|
|
$ |
0.23 |
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|
$ |
(0.23 |
) |
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Adjustments |
0.36 |
|
|
(0.07 |
) |
|
0.43 |
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Adjusted diluted earnings per share from continuing operations* |
$ |
0.36 |
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|
$ |
0.16 |
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$ |
0.20 |
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While sales for the quarter were impacted by the economic slowdown caused by COVID-19 across a number of our end markets, we continued to see strength in our defense markets which account for approximately 50% of our sales. We continue to see strong demand for our Joint Programmable Fuze program. During the quarter, we delivered more than 12,000 JPF's, bringing total year-to-date deliveries to more than 22,000 fuzes. We expect to deliver 45,000 to 50,000 fuzes during the year and currently have line of sight to more than
We have re-designated our “Commercial Aerospace” sales as "Commercial, Business & General Aviation”. This decision was made after careful consideration of the broad range of products we offer, the number of customers we serve, and the underlying trends impacting each of these markets. We saw a sales decline from the first quarter in our commercial, business and general aviation products of 24%, led in large part by a 36% decline for our commercial aviation markets, in line with our prior expectations, while general and business aviation was down significantly less at only 15%. The diversity of our product offerings and the broad range of platforms we support will benefit this portion of our business as we look to the second half of 2020. Sales for our medical products declined 30% from the first quarter, further than we had anticipated, and may remain challenged through the balance of the year. The resurgence of COVID-19 in parts of the
During the second quarter, we continued to experience operational inefficiency as we maintained our processes and procedures to ensure the safety of our employees and continuous production in our facilities. Despite the near term costs associated with these actions, I am happy to report that our employees have embraced these new steps and we are supporting each other as we adjust to the current environment. Our team continues to execute in this challenging environment, with a focus on the safety of our employees, the continued support of customers, and the security of our supply chain. Our portfolio of highly engineered solutions and the mix of our end markets provides balance in the face of the near term challenges, while positioning us for long-term growth."
Chief Financial Officer,
We remain focused on mitigating the risk of COVID-19 and have incurred approximately
Additionally, we continued to execute on our G&A reduction efforts and through the end of the second quarter have taken actions that will lead to more than
In total, including the benefit from reduced discretionary spending, the cost reduction efforts we have taken to-date will result in
Please see the MD&A section of the Company's Form 10-Q filed with the
A conference call has been scheduled for tomorrow,
About
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:
Organic Sales - Organic Sales is defined as "
Table 2. Organic Sales from continuing operations (in thousands) (unaudited) |
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For the Three Months Ended |
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For the Six Months Ended |
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Net sales |
|
$ |
177,890 |
|
|
$ |
174,712 |
|
|
$ |
385,212 |
|
|
$ |
341,146 |
|
Acquisition Sales |
|
18,056 |
|
|
— |
|
|
41,417 |
|
|
— |
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||||
Organic Sales |
|
$ |
159,834 |
|
|
$ |
174,712 |
|
|
$ |
343,795 |
|
|
$ |
341,146 |
|
$ Change |
|
(14,878 |
) |
|
(3,894 |
) |
|
2,649 |
|
|
(16,855 |
) |
||||
% Change |
|
(8.5 |
)% |
|
(2.2 |
)% |
|
0.8 |
% |
|
(4.7 |
)% |
Adjusted
Table 3. Adjusted |
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(In thousands) (unaudited) |
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For the Three Months Ended |
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For the Six Months Ended |
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CONSOLIDATED OPERATING INCOME: |
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$ |
177,890 |
|
|
$ |
174,712 |
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$ |
385,212 |
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|
$ |
341,146 |
|
GAAP - Operating (loss) income from continuing operations |
|
$ |
(2,770 |
) |
|
$ |
10,575 |
|
|
$ |
(7,192 |
) |
|
$ |
22,944 |
|
% of GAAP net sales |
|
(1.6 |
)% |
|
6.1 |
% |
|
(1.9 |
)% |
|
6.7 |
% |
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||||||||
Adjustments |
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|
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Restructuring and severance costs |
|
$ |
4,484 |
|
|
$ |
206 |
|
|
$ |
6,279 |
|
|
$ |
472 |
|
Costs associated with corporate development activities |
|
679 |
|
|
— |
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|
2,466 |
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— |
|
||||
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|
(36 |
) |
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— |
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|
8,447 |
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|
— |
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||||
Cost of acquired |
|
5,704 |
|
|
— |
|
|
11,407 |
|
|
— |
|
||||
Inventory step-up associated with |
|
1,178 |
|
|
— |
|
|
2,355 |
|
|
— |
|
||||
Costs from transition services agreement |
|
4,373 |
|
|
— |
|
|
8,513 |
|
|
— |
|
||||
Reversal of employee tax-related matters in foreign operations |
|
— |
|
|
— |
|
|
(1,211 |
) |
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(264 |
) |
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(493 |
) |
|
— |
|
||||
Total adjustments |
|
$ |
16,382 |
|
|
$ |
206 |
|
|
$ |
37,499 |
|
|
$ |
472 |
|
|
|
|
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Adjusted Operating Income |
|
$ |
13,612 |
|
|
$ |
10,781 |
|
|
$ |
30,307 |
|
|
$ |
23,416 |
|
% of GAAP net sales |
|
7.7 |
% |
|
6.2 |
% |
|
7.9 |
% |
|
6.9 |
% |
Adjusted EBITDA from continuing operations - Adjusted EBITDA from continuing operations is defined as earnings from continuing operations before interest, taxes, other expense (income), net, depreciation and amortization and certain items that are not indicative of the operating performance of the Company's for the period presented. Adjusted EBITDA from continuing operations differs from earnings from continuing operations, as calculated in accordance with GAAP, in that it excludes interest expense, net, income tax expense, depreciation and amortization, other expense (income), net, non-service pension and post retirement benefit expense (income), and certain items that are not indicative of the operating performance of the Company for the period presented. We have made numerous investments in our business, such as acquisitions and capital expenditures, including facility improvements, new machinery and equipment, improvements to our information technology infrastructure and ERP systems, which we have adjusted for in Adjusted EBITDA from continuing operations. Adjusted EBITDA from continuing operations also does not give effect to cash used for debt service requirements and thus does not reflect funds available for distributions, reinvestments or other discretionary uses. Management believes Adjusted EBITDA from continuing operations provides an additional perspective on the operating results of the organization and its earnings capacity and helps improve the comparability of our results between periods because it provides a view of our operations that excludes items that management believes are not reflective of operating performance, such as items traditionally removed from net earnings in the calculation of EBITDA as well as Other expense (income), net and certain items that are not indicative of the operating performance of the Company for the period presented. Adjusted EBITDA from continuing operations is not presented as an alternative measure of operating performance, as determined in accordance with GAAP. No other adjustments were made during the three-month or six-month fiscal periods ended
Table 4. Adjusted EBITDA from continuing operations (in thousands) (unaudited) |
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For the Three Months Ended |
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For the Six Months Ended |
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Adjusted EBITDA from continuing operations |
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Consolidated Results |
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|
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Sales from continuing operations |
|
$ |
177,890 |
|
|
$ |
174,712 |
|
|
$ |
385,212 |
|
|
$ |
341,146 |
|
|
|
|
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(Loss) earnings from continuing operations, net of tax |
|
(100 |
) |
|
6,389 |
|
|
(507 |
) |
|
12,211 |
|
||||
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|
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|
|
|
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|
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Interest expense, net |
|
5,808 |
|
|
5,236 |
|
|
9,055 |
|
|
10,537 |
|
||||
Income tax (benefit) expense |
|
(1,258 |
) |
|
(487 |
) |
|
(1,701 |
) |
|
947 |
|
||||
Non-service pension and post retirement benefit income |
|
(4,062 |
) |
|
(100 |
) |
|
(8,125 |
) |
|
(199 |
) |
||||
Other (income) expense, net |
|
(108 |
) |
|
(463 |
) |
|
110 |
|
|
(552 |
) |
||||
Depreciation and amortization |
|
10,305 |
|
|
6,243 |
|
|
19,814 |
|
|
12,365 |
|
||||
Other Adjustments: |
|
|
|
|
|
|
|
|
||||||||
Restructuring and severance costs |
|
4,484 |
|
|
206 |
|
|
6,279 |
|
|
472 |
|
||||
Cost associated with corporate development activities |
|
679 |
|
|
— |
|
|
2,466 |
|
|
— |
|
||||
|
|
(36 |
) |
|
— |
|
|
8,447 |
|
|
— |
|
||||
Cost of acquired |
|
5,704 |
|
|
— |
|
|
11,407 |
|
|
— |
|
||||
Inventory step-up associated with |
|
1,178 |
|
|
— |
|
|
2,355 |
|
|
— |
|
||||
Costs from transition services agreement |
|
4,373 |
|
|
— |
|
|
8,513 |
|
|
— |
|
||||
Income from transition services agreement |
|
(3,050 |
) |
|
— |
|
|
(6,024 |
) |
|
— |
|
||||
Reversal of employee tax-related matters in foreign operations |
|
— |
|
|
— |
|
|
(1,211 |
) |
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(264 |
) |
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(493 |
) |
|
— |
|
||||
Adjustments |
|
$ |
24,017 |
|
|
$ |
10,635 |
|
|
$ |
50,628 |
|
|
$ |
23,570 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA from continuing operations |
|
$ |
23,917 |
|
|
$ |
17,024 |
|
|
$ |
50,121 |
|
|
$ |
35,781 |
|
Adjusted EBITDA margin |
|
13.4 |
% |
|
9.7 |
% |
|
13.0 |
% |
|
10.5 |
% |
Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings Per Share from Continuing Operations - Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations are defined as GAAP "Earnings from Continuing Operations" and "Diluted earnings per share from continuing operations", less items that are not indicative of the operating performance of the business for the periods presented. These items are included in the reconciliation below. Management uses Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations to evaluate performance period over period, to analyze the underlying trends in our business and to assess its performance relative to its competitors. We believe that this information is useful for investors and financial institutions seeking to analyze and compare companies on the basis of operating performance.
The following table illustrates the calculation of Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations using “Earnings from Continuing Operations” and “Diluted earnings per share from continuing operations” from the “Consolidated Statements of Operations” included in the Company's Form 10-Q filed with the
Table 5. Adjusted Earnings from continuing operations and Adjusted Diluted Earnings per Share from continuing operations |
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(In thousands except per share amounts) (unaudited) |
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|
|
For the Three Months Ended |
|
For the Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Adjustments to Earnings from Continuing Operations |
|
|
|
|
|
|
|
|
||||||||
Restructuring and severance costs |
|
$ |
4,484 |
|
|
$ |
206 |
|
|
$ |
6,279 |
|
|
$ |
472 |
|
Costs associated with corporate development activities |
|
679 |
|
|
— |
|
|
2,466 |
|
|
— |
|
||||
|
|
(36 |
) |
|
— |
|
|
8,447 |
|
|
— |
|
||||
Cost of acquired |
|
5,704 |
|
|
— |
|
|
11,407 |
|
|
— |
|
||||
Inventory step-up associated with |
|
1,178 |
|
|
— |
|
|
2,355 |
|
|
— |
|
||||
Costs from transition services agreement |
|
4,373 |
|
|
— |
|
|
8,513 |
|
|
— |
|
||||
Income from transition services agreement |
|
(3,050 |
) |
|
— |
|
|
(6,024 |
) |
|
— |
|
||||
Reversal of employee tax-related matters in foreign operations |
|
— |
|
|
— |
|
|
(1,211 |
) |
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(264 |
) |
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(493 |
) |
|
— |
|
||||
Benefit from change in state tax laws |
|
— |
|
|
(2,137 |
) |
|
— |
|
|
(2,137 |
) |
||||
Adjustments, pre tax |
|
$ |
13,332 |
|
|
$ |
(1,931 |
) |
|
$ |
31,475 |
|
|
$ |
(1,665 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Tax Effect of Adjustments to Earnings from Continuing Operations |
|
|
|
|
|
|
|
|
||||||||
Restructuring and severance costs |
|
$ |
1,143 |
|
|
$ |
(17 |
) |
|
$ |
1,601 |
|
|
$ |
34 |
|
Costs associated with corporate development activities |
|
173 |
|
|
— |
|
|
629 |
|
|
— |
|
||||
|
|
(9 |
) |
|
— |
|
|
2,154 |
|
|
— |
|
||||
Cost of acquired |
|
1,455 |
|
|
— |
|
|
2,909 |
|
|
— |
|
||||
Inventory step-up associated with |
|
300 |
|
|
— |
|
|
601 |
|
|
— |
|
||||
Costs from transition services agreement |
|
1,115 |
|
|
— |
|
|
2,171 |
|
|
— |
|
||||
Income from transition services agreement |
|
(778 |
) |
|
— |
|
|
(1,536 |
) |
|
— |
|
||||
Employee tax-related matters in foreign operations |
|
— |
|
|
— |
|
|
(309 |
) |
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(67 |
) |
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(126 |
) |
|
— |
|
||||
Benefit from change in state tax laws |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Tax effect of Adjustments |
|
$ |
3,399 |
|
|
$ |
(17 |
) |
|
$ |
8,027 |
|
|
$ |
34 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustments to Earnings from Continuing Operations, net of tax |
|
|
|
|
|
|
|
|
||||||||
GAAP (Loss) earnings from continuing operations, as reported |
|
$ |
(100 |
) |
|
$ |
6,389 |
|
|
$ |
(507 |
) |
|
$ |
12,211 |
|
Restructuring and severance costs |
|
3,341 |
|
|
223 |
|
|
4,678 |
|
|
438 |
|
||||
Costs associated with corporate development activities |
|
506 |
|
|
— |
|
|
1,837 |
|
|
— |
|
||||
|
|
(27 |
) |
|
— |
|
|
6,293 |
|
|
— |
|
||||
Cost of acquired |
|
4,249 |
|
|
— |
|
|
8,498 |
|
|
— |
|
||||
Inventory step-up associated with |
|
878 |
|
|
— |
|
|
1,754 |
|
|
— |
|
||||
Costs from transition services agreement |
|
3,258 |
|
|
— |
|
|
6,342 |
|
|
— |
|
||||
Income from transition services agreement |
|
(2,272 |
) |
|
— |
|
|
(4,488 |
) |
|
— |
|
||||
Employee tax-related matters in foreign operations |
|
— |
|
|
— |
|
|
(902 |
) |
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(197 |
) |
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(367 |
) |
|
— |
|
||||
Benefit from change in state tax laws |
|
— |
|
|
(2,137 |
) |
|
— |
|
|
(2,137 |
) |
||||
Adjusted Earnings from continuing operations |
|
$ |
9,833 |
|
|
$ |
4,475 |
|
|
$ |
22,941 |
|
|
$ |
10,512 |
|
|
|
|
|
|
|
|
|
|
||||||||
Calculation of Adjusted Diluted Earnings per Share from Continuing Operations |
|
|
|
|
|
|
|
|
||||||||
GAAP diluted (loss) earnings per share from continuing operations |
|
$ |
0.00 |
|
|
$ |
0.23 |
|
|
$ |
(0.02 |
) |
|
$ |
0.43 |
|
Restructuring and severance costs at Aerospace |
|
0.12 |
|
|
0.01 |
|
|
0.17 |
|
|
0.02 |
|
||||
Costs associated with corporate development activities |
|
0.02 |
|
|
— |
|
|
0.07 |
|
|
— |
|
||||
|
|
— |
|
|
— |
|
|
0.23 |
|
|
— |
|
||||
Cost of accrued |
|
0.15 |
|
|
— |
|
|
0.30 |
|
|
— |
|
||||
Inventory step-up associated with |
|
0.03 |
|
|
— |
|
|
0.06 |
|
|
— |
|
||||
Costs from transition services agreement |
|
0.12 |
|
|
— |
|
|
0.23 |
|
|
— |
|
||||
Income from transition services agreement |
|
(0.08 |
) |
|
— |
|
|
(0.16 |
) |
|
— |
|
||||
Employee tax-related matters in foreign operations |
|
— |
|
|
— |
|
|
(0.03 |
) |
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
||||
Benefit from change in state tax laws |
|
— |
|
|
(0.08 |
) |
|
— |
|
|
(0.08 |
) |
||||
Adjustments to diluted earnings per share from continuing operations |
|
$ |
0.36 |
|
|
$ |
(0.07 |
) |
|
$ |
0.85 |
|
|
$ |
(0.06 |
) |
Adjusted Diluted Earnings per Share from continuing operations |
|
$ |
0.36 |
|
|
$ |
0.16 |
|
|
$ |
0.83 |
|
|
$ |
0.37 |
|
Diluted weighted average shares outstanding |
|
27,659 |
|
|
28,123 |
|
|
27,734 |
|
|
28,097 |
|
Free Cash Flow from continuing operations - Free Cash Flow from continuing operations is defined as GAAP “Net cash provided by (used in) operating activities from continuing operations” in a period less “Expenditures for property, plant & equipment” in the same period. Management believes Free Cash Flow from continuing operations provides an important perspective on our ability to generate cash from our business operations and, as such, that it is an important financial measure for use in evaluating the Company's financial performance. Free Cash Flow from continuing operations should not be viewed as representing the residual cash flow available for discretionary expenditures such as dividends to shareholders or acquisitions, as it may exclude certain mandatory expenditures such as repayment of maturing debt and other contractual obligations. Management uses Free Cash Flow from continuing operations internally to assess overall liquidity. The following table illustrates the calculation of Free Cash Flow from continuing operations using “Net cash provided by (used in) operating activities from continuing operations” and “Expenditures for property, plant & equipment”, GAAP measures from the Condensed Consolidated Statements of Cash Flows included in this release.
Table 6. Free Cash Flow from continuing operations (in thousands) (unaudited) |
||||||||||||
|
|
For the Six Months Ended |
|
For the Three Months Ended |
|
For the Three Months Ended |
||||||
|
|
|
|
|
|
|
||||||
Net cash used by operating activities from continuing operations |
|
$ |
(79,400 |
) |
|
$ |
(55,442 |
) |
|
$ |
(23,958 |
) |
Expenditures for property, plant & equipment |
|
(9,592 |
) |
|
(5,559 |
) |
|
(4,033 |
) |
|||
Free Cash Flow from continuing operations |
|
$ |
(88,992 |
) |
|
$ |
(61,001 |
) |
|
$ |
(27,991 |
) |
Debt to Capitalization Ratio - Debt to Capitalization Ratio is calculated by dividing debt by capitalization. Debt is defined as GAAP “Current portion of long-term debt” plus “Long-term debt, excluding current portion”. Capitalization is defined as Debt plus GAAP “Total shareholders' equity”. Management believes that Debt to Capitalization Ratio is a measurement of financial leverage and provides an insight into the financial structure of the Company and its financial strength. The following table illustrates the calculation of Debt to Capitalization Ratio using GAAP measures from the Condensed Consolidated Balance Sheets included in this release.
Table 7. Debt to Capitalization Ratio (in thousands) (unaudited) |
||||||||
|
|
|
|
|
||||
Long-term debt, excluding current portion |
|
$ |
384,609 |
|
|
$ |
181,622 |
|
Debt |
|
384,609 |
|
|
181,622 |
|
||
Total shareholders' equity |
|
803,396 |
|
|
823,202 |
|
||
Capitalization |
|
$ |
1,188,005 |
|
|
$ |
1,004,824 |
|
Debt to Capitalization Ratio |
|
32.4 |
% |
|
18.1 |
% |
Please note that the Company held
FORWARD-LOOKING STATEMENTS
This release contains "forward-looking statements" within the meaning of the safe harbor provisions of the
Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that may cause the Company's actual results and financial condition to differ materially from those expressed or implied in the forward-looking statements. Such risks, uncertainties and other factors include, among others: (i) the possibility that we may be unable to find appropriate reinvestment opportunities for the proceeds from the sale of our former Distribution business; (ii) risks related to Kaman's performance of its obligations under the transition services agreement entered into in connection with the sale of our former Distribution business and disruption of management time from ongoing business operations relating thereto; (iii) changes in domestic and foreign economic and competitive conditions in markets served by the Company, particularly the defense, commercial aviation and industrial production markets; (iv) changes in government and customer priorities and requirements (including cost-cutting initiatives, government and customer shut-downs, the potential deferral of awards, terminations or reductions of expenditures to respond to the priorities of
Any forward-looking information provided in this release should be considered with these factors in mind. We assume no obligation to update any forward-looking statements contained in this report.
KAMAN CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (unaudited) |
||||||||||||||||
|
|
For the Three Months Ended |
|
For the Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
|
$ |
177,890 |
|
|
$ |
174,712 |
|
|
$ |
385,212 |
|
|
$ |
341,146 |
|
Cost of sales |
|
121,222 |
|
|
122,123 |
|
|
260,842 |
|
|
234,036 |
|
||||
Gross profit |
|
56,668 |
|
|
52,589 |
|
|
124,370 |
|
|
107,110 |
|
||||
Selling, general and administrative expenses |
|
44,880 |
|
|
41,808 |
|
|
105,869 |
|
|
83,759 |
|
||||
Costs from transition services agreement |
|
4,373 |
|
|
— |
|
|
8,513 |
|
|
— |
|
||||
Cost of acquired retention plans |
|
5,704 |
|
|
— |
|
|
11,407 |
|
|
— |
|
||||
Restructuring costs |
|
4,484 |
|
|
206 |
|
|
6,279 |
|
|
472 |
|
||||
Gain on sale of business |
|
— |
|
|
— |
|
|
(493 |
) |
|
— |
|
||||
Net gain on sale of assets |
|
(3 |
) |
|
— |
|
|
(13 |
) |
|
(65 |
) |
||||
Operating (loss) income |
|
(2,770 |
) |
|
10,575 |
|
|
(7,192 |
) |
|
22,944 |
|
||||
Interest expense, net |
|
5,808 |
|
|
5,236 |
|
|
9,055 |
|
|
10,537 |
|
||||
Non-service pension and post retirement benefit income |
|
(4,062 |
) |
|
(100 |
) |
|
(8,125 |
) |
|
(199 |
) |
||||
Income from transition services agreement |
|
(3,050 |
) |
|
— |
|
|
(6,024 |
) |
|
— |
|
||||
Other (income) expense, net |
|
(108 |
) |
|
(463 |
) |
|
110 |
|
|
(552 |
) |
||||
(Loss) earnings from continuing operations before income taxes |
|
(1,358 |
) |
|
5,902 |
|
|
(2,208 |
) |
|
13,158 |
|
||||
Income tax (benefit) expense |
|
(1,258 |
) |
|
(487 |
) |
|
(1,701 |
) |
|
947 |
|
||||
(Loss) earnings from continuing operations |
|
(100 |
) |
|
6,389 |
|
|
(507 |
) |
|
12,211 |
|
||||
Earnings from discontinued operations before gain on disposal, net of tax |
|
— |
|
|
7,077 |
|
|
— |
|
|
15,380 |
|
||||
Gain on disposal of discontinued operations, net of tax |
|
— |
|
|
— |
|
|
692 |
|
|
— |
|
||||
Total earnings from discontinued operations |
|
— |
|
|
7,077 |
|
|
692 |
|
|
15,380 |
|
||||
Net earnings |
|
$ |
(100 |
) |
|
$ |
13,466 |
|
|
$ |
185 |
|
|
$ |
27,591 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share: |
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share from continuing operations |
|
$ |
— |
|
|
$ |
0.23 |
|
|
$ |
(0.02 |
) |
|
$ |
0.44 |
|
Basic earnings per share from discontinued operations |
|
— |
|
|
0.25 |
|
|
0.03 |
|
|
0.55 |
|
||||
Basic earnings per share |
|
$ |
— |
|
|
$ |
0.48 |
|
|
$ |
0.01 |
|
|
$ |
0.99 |
|
Diluted (loss) earnings per share from continuing operations |
|
$ |
— |
|
|
$ |
0.23 |
|
|
$ |
(0.02 |
) |
|
$ |
0.43 |
|
Diluted earnings per share from discontinued operations |
|
— |
|
|
0.25 |
|
|
0.03 |
|
|
0.55 |
|
||||
Diluted earnings per share |
|
$ |
— |
|
|
$ |
0.48 |
|
|
$ |
0.01 |
|
|
$ |
0.98 |
|
Average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
27,659 |
|
|
27,961 |
|
|
27,734 |
|
|
27,935 |
|
||||
Diluted |
|
27,659 |
|
|
28,123 |
|
|
27,734 |
|
|
28,097 |
|
KAMAN CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share and per share amounts) (unaudited) |
||||||||
|
|
|
|
|
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
235,608 |
|
|
$ |
471,540 |
|
Restricted cash |
|
25,130 |
|
|
— |
|
||
Accounts receivable, net |
|
176,565 |
|
|
156,492 |
|
||
Contract assets |
|
131,061 |
|
|
121,614 |
|
||
Contract costs, current portion |
|
7,132 |
|
|
6,052 |
|
||
Inventories |
|
207,340 |
|
|
156,353 |
|
||
Income tax refunds receivable |
|
11,418 |
|
|
8,069 |
|
||
Other current assets |
|
14,687 |
|
|
16,368 |
|
||
Total current assets |
|
808,941 |
|
|
936,488 |
|
||
Property, plant and equipment, net of accumulated depreciation of |
|
218,202 |
|
|
140,450 |
|
||
Operating right-of-use assets, net |
|
13,732 |
|
|
15,159 |
|
||
|
|
304,768 |
|
|
195,314 |
|
||
Other intangible assets, net |
|
141,630 |
|
|
53,439 |
|
||
Deferred income taxes |
|
30,176 |
|
|
35,240 |
|
||
Contract costs, noncurrent portion |
|
5,861 |
|
|
6,099 |
|
||
Other assets |
|
36,774 |
|
|
36,754 |
|
||
Total assets |
|
$ |
1,560,084 |
|
|
$ |
1,418,943 |
|
Liabilities and Shareholders’ Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable – trade |
|
$ |
58,267 |
|
|
$ |
70,884 |
|
Accrued salaries and wages |
|
49,727 |
|
|
43,220 |
|
||
Contract liabilities, current portion |
|
43,739 |
|
|
42,942 |
|
||
Operating lease liabilities, current portion |
|
4,535 |
|
|
4,306 |
|
||
Income taxes payable |
|
2,302 |
|
|
4,722 |
|
||
Other current liabilities |
|
39,573 |
|
|
37,918 |
|
||
Total current liabilities |
|
198,143 |
|
|
203,992 |
|
||
Long-term debt, excluding current portion, net of debt issuance costs |
|
384,609 |
|
|
181,622 |
|
||
Deferred income taxes |
|
6,723 |
|
|
6,994 |
|
||
Underfunded pension |
|
78,782 |
|
|
97,246 |
|
||
Contract liabilities, noncurrent portion |
|
26,056 |
|
|
37,855 |
|
||
Operating lease liabilities, noncurrent portion |
|
9,940 |
|
|
11,617 |
|
||
Other long-term liabilities |
|
52,435 |
|
|
56,415 |
|
||
Commitments and contingencies |
|
|
|
|
||||
Shareholders' equity: |
|
|
|
|
||||
Preferred stock, |
|
— |
|
|
— |
|
||
Common stock, |
|
30,214 |
|
|
30,058 |
|
||
Additional paid-in capital |
|
235,195 |
|
|
228,153 |
|
||
Retained earnings |
|
809,769 |
|
|
820,666 |
|
||
Accumulated other comprehensive income (loss) |
|
(151,210 |
) |
|
(150,893 |
) |
||
Less 2,554,617 and 2,219,332 shares of common stock, respectively, held in treasury, at cost |
|
(120,572 |
) |
|
(104,782 |
) |
||
Total shareholders’ equity |
|
803,396 |
|
|
823,202 |
|
||
Total liabilities and shareholders’ equity |
|
$ |
1,560,084 |
|
|
$ |
1,418,943 |
|
KAMAN CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (unaudited) |
||||||||
|
|
For the Six Months Ended |
||||||
|
|
2020 |
|
2019 |
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net earnings |
|
$ |
185 |
|
|
$ |
27,591 |
|
Less: Total earnings from discontinued operations |
|
692 |
|
|
15,380 |
|
||
(Loss) earnings from continuing operations |
|
$ |
(507 |
) |
|
$ |
12,211 |
|
Adjustments to reconcile net earnings from continuing operations to net cash (used in) provided by operating activities of continuing operations: |
|
|
|
|
||||
Depreciation and amortization |
|
19,814 |
|
|
12,365 |
|
||
Amortization of debt issuance costs |
|
907 |
|
|
906 |
|
||
Accretion of convertible notes discount |
|
1,412 |
|
|
1,347 |
|
||
Provision for doubtful accounts |
|
314 |
|
|
204 |
|
||
Gain on sale of business |
|
(493 |
) |
|
— |
|
||
Net gain on sale of assets |
|
(13 |
) |
|
(65 |
) |
||
Net loss on derivative instruments |
|
404 |
|
|
3 |
|
||
Stock compensation expense |
|
3,590 |
|
|
3,557 |
|
||
Deferred income taxes |
|
4,124 |
|
|
(3,252 |
) |
||
Changes in assets and liabilities, excluding effects of acquisitions/divestitures: |
|
|
|
|
||||
Accounts receivable |
|
(11,368 |
) |
|
48,270 |
|
||
Contract assets |
|
(9,158 |
) |
|
(19,572 |
) |
||
Contract costs |
|
(842 |
) |
|
2,355 |
|
||
Inventories |
|
(38,029 |
) |
|
(31,662 |
) |
||
Income tax refunds receivable |
|
(3,382 |
) |
|
(3,656 |
) |
||
Operating right of use assets |
|
1,974 |
|
|
2,140 |
|
||
Other assets |
|
135 |
|
|
(892 |
) |
||
Accounts payable - trade |
|
(13,872 |
) |
|
(2,673 |
) |
||
Contract liabilities |
|
(11,002 |
) |
|
(4,640 |
) |
||
Operating lease liabilities |
|
(1,916 |
) |
|
(2,115 |
) |
||
Other current liabilities |
|
528 |
|
|
(4,606 |
) |
||
Income taxes payable |
|
(2,658 |
) |
|
(147 |
) |
||
Pension liabilities |
|
(15,775 |
) |
|
2,087 |
|
||
Other long-term liabilities |
|
(3,587 |
) |
|
(1,303 |
) |
||
Net cash (used in) provided by operating activities of continuing operations |
|
(79,400 |
) |
|
10,862 |
|
||
Net cash used in operating activities of discontinued operations |
|
— |
|
|
(9,134 |
) |
||
Net cash (used in) provided by operating activities |
|
(79,400 |
) |
|
1,728 |
|
||
Cash flows from investing activities: |
|
|
|
|
||||
Proceeds from sale of assets |
|
71 |
|
|
71 |
|
||
Proceeds from sale of discontinued operations |
|
5,223 |
|
|
— |
|
||
Proceeds from sale of business |
|
493 |
|
|
— |
|
||
Expenditures for property, plant & equipment |
|
(9,592 |
) |
|
(11,375 |
) |
||
Acquisition of businesses, net of cash acquired |
|
(304,661 |
) |
|
— |
|
||
Other, net |
|
(437 |
) |
|
(1,618 |
) |
||
Net cash used in investing activities of continuing operations |
|
(308,903 |
) |
|
(12,922 |
) |
||
Net cash used in investing activities of discontinued operations |
|
— |
|
|
(3,662 |
) |
||
Net cash used in investing activities |
|
(308,903 |
) |
|
(16,584 |
) |
||
Cash flows from financing activities: |
|
|
|
|
||||
Net borrowings under revolving credit agreements |
|
201,100 |
|
|
16,700 |
|
||
Debt repayment |
|
— |
|
|
(4,375 |
) |
||
Net change in bank overdraft |
|
131 |
|
|
724 |
|
||
Proceeds from exercise of employee stock awards |
|
1,986 |
|
|
3,546 |
|
||
Purchase of treasury shares |
|
(14,168 |
) |
|
(3,063 |
) |
||
Dividends paid |
|
(11,144 |
) |
|
(11,160 |
) |
||
Other, net |
|
(718 |
) |
|
(663 |
) |
||
Net cash provided by (used in) financing activities of continuing operations |
|
177,187 |
|
|
1,709 |
|
||
Net cash provided by financing activities of discontinued operations |
|
— |
|
|
4,458 |
|
||
Net cash provided by (used in) financing activities |
|
177,187 |
|
|
6,167 |
|
||
Net decrease in cash and cash equivalents |
|
(211,116 |
) |
|
(8,689 |
) |
||
Cash and cash equivalents of discontinued operations |
|
— |
|
|
(1,957 |
) |
||
Effect of exchange rate changes on cash and cash equivalents |
|
314 |
|
|
(49 |
) |
||
Cash and cash equivalents and restricted cash at beginning of period |
|
471,540 |
|
|
27,711 |
|
||
Cash and cash equivalents and restricted cash at end of period |
|
$ |
260,738 |
|
|
$ |
17,016 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200810005722/en/
James.Coogan@kaman.com
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