Kaman Reports 2020 Third Quarter Results
Third Quarter Highlights:
-
Net sales from continuing operations of
$214.0 million , up 17.1% over prior year period -
Organic sales from continuing operations* of
$194.9 million , up 6.7% over prior year period -
Positive operating results offset by a
$50.3 million goodwill impairment charge -
Net loss from continuing operations of
$38.5 million , or$(1.39) per diluted share -
Adjusted diluted earnings per share from continuing operations* of
$0.70 , up 52% over prior year period -
Adjusted EBITDA from continuing operations* up 32.6% to
$35.5 million , or 16.6% of sales -
Net cash provided by operating activities of
$27.0 million leading to Free Cash Flow* of$22.4 million -
Ian K. Walsh appointed President and Chief Executive Officer;
Neal J. Keating becomes Executive Chairman of the Board of Directors
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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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Change |
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Net sales from continuing operations |
$ |
213,959 |
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$ |
182,670 |
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$ |
31,289 |
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Operating income from continuing operations: |
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Operating (loss) income from continuing operations |
$ |
(38,927) |
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$ |
15,627 |
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$ |
(54,554) |
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% of sales |
(18.2) |
% |
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8.6 |
% |
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(26.8) |
% |
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Adjustments |
$ |
62,082 |
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$ |
4,228 |
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$ |
57,854 |
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Adjusted operating income from continuing operations* |
$ |
23,155 |
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$ |
19,855 |
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$ |
3,300 |
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% of sales |
10.8 |
% |
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10.9 |
% |
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(0.1) |
% |
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Adjusted EBITDA from continuing operations*: |
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(Loss) earnings from continuing operations |
$ |
(38,507) |
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$ |
10,130 |
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$ |
(48,637) |
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Adjustments |
74,052 |
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16,668 |
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57,384 |
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Adjusted EBITDA from continuing operations* |
$ |
35,545 |
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$ |
26,798 |
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$ |
8,747 |
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% of sales |
16.6 |
% |
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14.7 |
% |
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1.9 |
% |
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Earnings per share from continuing operations: |
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Diluted earnings per share from continuing operations |
$ |
(1.39) |
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$ |
0.36 |
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$ |
(1.75) |
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Adjustments |
2.09 |
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0.10 |
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1.99 |
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Adjusted diluted earnings per share from continuing operations* |
$ |
0.70 |
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$ |
0.46 |
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$ |
0.24 |
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Management's Commentary on Third Quarter Results:
As we end the third quarter we are very pleased with our performance given the unprecedented challenges we have faced during the year. We have seen organic sales growth for both the quarter and year-to-date periods, reflecting the strength of our business and the benefit from the diversity of our product offerings and end market exposures. Gross margins in excess of 30% and our cost reduction and mitigation efforts allowed us to deliver strong adjusted financial results in the quarter. A GAAP loss of
Organic sales from continuing operations* increased 6.7% over the third quarter of 2019 due in large part to the strength of our defense products, including Safe and Arm Devices, which were up 24.0% over the third quarter of 2019 and 28.6% over the second quarter of 2020. During the quarter we delivered more than 14,000 JPF's, bringing our total year-to-date deliveries to over 36,500 units. We continue to expect to deliver between 45,000 to 50,000 fuzes during the year. JPF demand remains strong and during the quarter we received an order under Option 15 of our USG JPF contract totaling
Sales for our commercial, business and general aviation products decreased 18.0% over the third quarter of 2019, but increased 10.5% when compared to the second quarter of 2020. This sequential increase was largely due to a 34.1% increase in sales for our general and business aviation products, which included the sale of one K-MAX® aircraft. This increase was offset by the continued sales decline for our commercial aviation products, which decreased 25.8% from the second quarter of 2020. As we look to the fourth quarter we expect the diversity of our product offerings and the broad range of platforms we support to benefit our commercial, business, and general aviation product sales.
Sales for our medical products increased 18.6% from the second quarter, and it appears the second quarter performance for these products may represent the low point for the year. Looking forward, the resurgence of COVID-19 in parts of the
Commenting on the quarter, Chief Financial Officer,
We remain focused on mitigating the risks associated with COVID-19 and we continue to manage our cost structure in light of the end market challenges we are experiencing. Additionally, we continued moving forward with our previously announced G&A reduction efforts and we expect to achieve savings at the high end of our previously announced range. In the period we recorded approximately
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 Nine Months Ended |
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Net sales |
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$ |
213,959 |
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$ |
182,670 |
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$ |
599,171 |
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$ |
523,816 |
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Acquisition Sales |
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19,032 |
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— |
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60,449 |
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— |
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Organic Sales |
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$ |
194,927 |
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$ |
182,670 |
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$ |
538,722 |
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$ |
523,816 |
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$ Change |
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12,257 |
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25,536 |
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14,906 |
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8,681 |
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% Change |
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6.7 |
% |
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16.3 |
% |
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2.8 |
% |
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1.7 |
% |
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 Nine Months Ended |
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CONSOLIDATED OPERATING INCOME: |
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$ |
213,959 |
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$ |
182,670 |
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$ |
599,171 |
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$ |
523,816 |
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GAAP - Operating (loss) income from continuing operations |
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$ |
(38,927) |
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$ |
15,627 |
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$ |
(46,119) |
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$ |
38,571 |
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% of GAAP net sales |
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(18.2) |
% |
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8.6 |
% |
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(7.7) |
% |
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7.4 |
% |
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Adjustments |
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Non-cash, non tax goodwill impairment charge |
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$ |
50,307 |
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$ |
— |
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$ |
50,307 |
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$ |
— |
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Restructuring and severance costs |
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1,541 |
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81 |
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7,820 |
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553 |
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Costs associated with corporate development activities |
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1,866 |
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2,993 |
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4,332 |
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2,993 |
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14 |
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— |
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8,461 |
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— |
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Cost of acquired |
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5,703 |
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— |
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17,110 |
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— |
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Inventory step-up associated with |
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— |
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— |
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2,355 |
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— |
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Costs from transition services agreement |
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3,019 |
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1,154 |
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11,532 |
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|
1,154 |
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Senior leadership transition |
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280 |
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— |
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280 |
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— |
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Reversal of employee tax-related matters in foreign operations |
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(648) |
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— |
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(1,859) |
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— |
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Reversal of environmental accrual at GRW |
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— |
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— |
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(264) |
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— |
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Gain on sale of |
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— |
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— |
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(493) |
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— |
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Total adjustments |
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$ |
62,082 |
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$ |
4,228 |
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$ |
99,581 |
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$ |
4,700 |
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Adjusted Operating Income |
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$ |
23,155 |
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$ |
19,855 |
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$ |
53,462 |
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$ |
43,271 |
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% of GAAP net sales |
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10.8 |
% |
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10.9 |
% |
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8.9 |
% |
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8.3 |
% |
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 nine-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 Nine Months Ended |
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Adjusted EBITDA from continuing operations |
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Consolidated Results |
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Sales from continuing operations |
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$ |
213,959 |
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$ |
182,670 |
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$ |
599,171 |
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$ |
523,816 |
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(Loss) earnings from continuing operations, net of tax |
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(38,507) |
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10,130 |
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(39,014) |
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|
22,341 |
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Interest expense, net |
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5,327 |
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|
4,058 |
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|
14,382 |
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|
14,595 |
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Income tax (benefit) expense |
|
679 |
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|
2,297 |
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|
(1,022) |
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|
3,244 |
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Non-service pension and post retirement benefit income |
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(4,063) |
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(99) |
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(12,188) |
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(298) |
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Other (income) expense, net |
|
(534) |
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|
185 |
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(424) |
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|
(367) |
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Depreciation and amortization |
|
12,390 |
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|
6,943 |
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|
32,204 |
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|
19,308 |
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Other Adjustments: |
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|
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|
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Non-cash, non tax goodwill impairment charge |
|
50,307 |
|
|
— |
|
|
50,307 |
|
|
— |
|
||||
Restructuring and severance costs |
|
1,541 |
|
|
81 |
|
|
7,820 |
|
|
553 |
|
||||
Cost associated with corporate development activities |
|
1,866 |
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|
2,993 |
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|
4,332 |
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|
2,993 |
|
||||
|
|
14 |
|
|
— |
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|
8,461 |
|
|
— |
|
||||
Cost of acquired |
|
5,703 |
|
|
— |
|
|
17,110 |
|
|
— |
|
||||
Inventory step-up associated with |
|
— |
|
|
— |
|
|
2,355 |
|
|
— |
|
||||
Costs from transition services agreement |
|
3,019 |
|
|
1,154 |
|
|
11,532 |
|
|
1,154 |
|
||||
Income from transition services agreement |
|
(1,829) |
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|
(944) |
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|
(7,853) |
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|
(944) |
|
||||
Senior leadership transition |
|
280 |
|
|
— |
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|
280 |
|
|
— |
|
||||
Reversal of employee tax-related matters in foreign operations |
|
(648) |
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|
— |
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|
(1,859) |
|
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
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|
(264) |
|
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(493) |
|
|
— |
|
||||
Adjustments |
|
$ |
74,052 |
|
|
$ |
16,668 |
|
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$ |
124,680 |
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|
$ |
40,238 |
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Adjusted EBITDA from continuing operations |
|
$ |
35,545 |
|
|
$ |
26,798 |
|
|
$ |
85,666 |
|
|
$ |
62,579 |
|
Adjusted EBITDA margin |
|
16.6 |
% |
|
14.7 |
% |
|
14.3 |
% |
|
11.9 |
% |
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 |
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For the Nine Months Ended |
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Adjustments to Earnings from Continuing Operations |
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|
|
|
|
||||||||
Non-cash, non tax goodwill impairment charge |
|
$ |
50,307 |
|
|
$ |
— |
|
|
$ |
50,307 |
|
|
$ |
— |
|
Restructuring and severance costs |
|
1,541 |
|
|
81 |
|
|
7,820 |
|
|
553 |
|
||||
Costs associated with corporate development activities |
|
1,866 |
|
|
2,993 |
|
|
4,332 |
|
|
2,993 |
|
||||
|
|
14 |
|
|
— |
|
|
8,461 |
|
|
— |
|
||||
Cost of acquired |
|
5,703 |
|
|
— |
|
|
17,110 |
|
|
— |
|
||||
Inventory step-up associated with |
|
— |
|
|
— |
|
|
2,355 |
|
|
— |
|
||||
Costs from transition services agreement |
|
3,019 |
|
|
1,154 |
|
|
11,532 |
|
|
1,154 |
|
||||
Income from transition services agreement |
|
(1,829) |
|
|
(944) |
|
|
(7,853) |
|
|
(944) |
|
||||
Senior leadership transition |
|
280 |
|
|
— |
|
|
280 |
|
|
— |
|
||||
Reversal of employee tax-related matters in foreign operations |
|
(648) |
|
|
— |
|
|
(1,859) |
|
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(264) |
|
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(493) |
|
|
— |
|
||||
Benefit from change in state tax laws |
|
— |
|
|
— |
|
|
— |
|
|
(2,137) |
|
||||
Adjustments, pre tax |
|
$ |
60,253 |
|
|
$ |
3,284 |
|
|
$ |
91,728 |
|
|
$ |
1,619 |
|
|
|
|
|
|
|
|
|
|
||||||||
Tax Effect of Adjustments to Earnings from Continuing Operations |
|
|
|
|
|
|
|
|
||||||||
Non-cash, non tax goodwill impairment charge |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Restructuring and severance costs |
|
354 |
|
|
15 |
|
|
1,797 |
|
|
70 |
|
||||
Costs associated with corporate development activities |
|
429 |
|
|
554 |
|
|
995 |
|
|
380 |
|
||||
|
|
3 |
|
|
— |
|
|
1,944 |
|
|
— |
|
||||
Cost of acquired |
|
1,280 |
|
|
— |
|
|
3,841 |
|
|
— |
|
||||
Inventory step-up associated with |
|
— |
|
|
— |
|
|
529 |
|
|
— |
|
||||
Costs from transition services agreement |
|
694 |
|
|
213 |
|
|
2,650 |
|
|
147 |
|
||||
Income from transition services agreement |
|
(420) |
|
|
(175) |
|
|
(1,805) |
|
|
(120) |
|
||||
Senior leadership transition |
|
64 |
|
|
— |
|
|
64 |
|
|
— |
|
||||
Employee tax-related matters in foreign operations |
|
— |
|
|
— |
|
|
(167) |
|
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(66) |
|
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(123) |
|
|
— |
|
||||
Benefit from change in state tax laws |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Tax effect of Adjustments |
|
$ |
2,404 |
|
|
$ |
607 |
|
|
$ |
9,659 |
|
|
$ |
477 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustments to Earnings from Continuing Operations, net of tax |
|
|
|
|
|
|
|
|
||||||||
GAAP (Loss) earnings from continuing operations, as reported |
|
$ |
(38,507) |
|
|
$ |
10,130 |
|
|
$ |
(39,014) |
|
|
$ |
22,341 |
|
Non-cash, non tax goodwill impairment charge |
|
50,307 |
|
|
— |
|
|
50,307 |
|
|
— |
|
||||
Restructuring and severance costs |
|
1,187 |
|
|
66 |
|
|
6,023 |
|
|
483 |
|
||||
Costs associated with corporate development activities |
|
1,437 |
|
|
2,439 |
|
|
3,337 |
|
|
2,613 |
|
||||
|
|
11 |
|
|
— |
|
|
6,517 |
|
|
— |
|
||||
Cost of acquired |
|
4,423 |
|
|
— |
|
|
13,269 |
|
|
— |
|
||||
Inventory step-up associated with |
|
— |
|
|
— |
|
|
1,826 |
|
|
— |
|
||||
Costs from transition services agreement |
|
2,325 |
|
|
941 |
|
|
8,882 |
|
|
1,007 |
|
||||
Income from transition services agreement |
|
(1,409) |
|
|
(769) |
|
|
(6,048) |
|
|
(824) |
|
||||
Senior leadership transition |
|
216 |
|
|
— |
|
|
216 |
|
|
— |
|
||||
Employee tax-related matters in foreign operations |
|
(648) |
|
|
— |
|
|
(1,692) |
|
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(198) |
|
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(370) |
|
|
— |
|
||||
Benefit from change in state tax laws |
|
— |
|
|
— |
|
|
— |
|
|
(2,137) |
|
||||
Adjusted Earnings from continuing operations |
|
$ |
19,342 |
|
|
$ |
12,807 |
|
|
$ |
43,055 |
|
|
$ |
23,483 |
|
|
|
|
|
|
|
|
|
|
||||||||
Calculation of Adjusted Diluted Earnings per Share from Continuing Operations |
|
|
|
|
|
|
|
|
||||||||
GAAP diluted (loss) earnings per share from continuing operations |
|
$ |
(1.39) |
|
|
$ |
0.36 |
|
|
$ |
(1.41) |
|
|
$ |
0.79 |
|
Non-cash, non tax goodwill impairment charge |
|
1.82 |
|
|
— |
|
|
1.82 |
|
|
— |
|
||||
Restructuring and severance costs |
|
0.04 |
|
|
— |
|
|
0.22 |
|
|
0.02 |
|
||||
Costs associated with corporate development activities |
|
0.05 |
|
|
0.09 |
|
|
0.12 |
|
|
0.09 |
|
||||
|
|
— |
|
|
— |
|
|
0.24 |
|
|
— |
|
||||
Cost of accrued |
|
0.16 |
|
|
— |
|
|
0.47 |
|
|
— |
|
||||
Inventory step-up associated with |
|
— |
|
|
— |
|
|
0.06 |
|
|
— |
|
||||
Costs from transition services agreement |
|
0.08 |
|
|
0.04 |
|
|
0.32 |
|
|
0.04 |
|
||||
Income from transition services agreement |
|
(0.05) |
|
|
(0.03) |
|
|
(0.22) |
|
|
(0.03) |
|
||||
Senior leadership transition |
|
0.01 |
|
|
— |
|
|
0.01 |
|
|
— |
|
||||
Employee tax-related matters in foreign operations |
|
(0.02) |
|
|
— |
|
|
(0.06) |
|
|
— |
|
||||
Reversal of environmental accrual at GRW |
|
— |
|
|
— |
|
|
(0.01) |
|
|
— |
|
||||
Gain on sale of |
|
— |
|
|
— |
|
|
(0.01) |
|
|
— |
|
||||
Benefit from change in state tax laws |
|
— |
|
|
— |
|
|
— |
|
|
(0.07) |
|
||||
Adjustments to diluted earnings per share from continuing operations |
|
$ |
2.09 |
|
|
$ |
0.10 |
|
|
$ |
2.96 |
|
|
$ |
0.05 |
|
Adjusted Diluted Earnings per Share from continuing operations |
|
$ |
0.70 |
|
|
$ |
0.46 |
|
|
$ |
1.55 |
|
|
$ |
0.84 |
|
Diluted weighted average shares outstanding |
|
27,687 |
|
|
28,117 |
|
|
27,718 |
|
|
28,104 |
|
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 Nine Months Ended |
|
For the Six Months Ended |
|
For the Three Months Ended |
||||||
|
|
|
|
|
|
|
||||||
Net cash (used in) provided by operating activities from continuing operations |
|
$ |
(52,379) |
|
|
$ |
(79,400) |
|
|
$ |
27,021 |
|
Expenditures for property, plant & equipment |
|
(14,232) |
|
|
(9,592) |
|
|
(4,640) |
|
|||
Free Cash Flow from continuing operations |
|
$ |
(66,611) |
|
|
$ |
(88,992) |
|
|
$ |
22,381 |
|
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 |
|
$ |
285,608 |
|
|
$ |
181,622 |
|
Debt |
|
285,608 |
|
|
181,622 |
|
||
Total shareholders' equity |
|
770,678 |
|
|
823,202 |
|
||
Capitalization |
|
$ |
1,056,286 |
|
|
$ |
1,004,824 |
|
Debt to Capitalization Ratio |
|
27.0 |
% |
|
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 Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
|
$ |
213,959 |
|
|
$ |
182,670 |
|
|
$ |
599,171 |
|
|
$ |
523,816 |
|
Cost of sales |
|
147,084 |
|
|
121,537 |
|
|
407,926 |
|
|
355,573 |
|
||||
Gross profit |
|
66,875 |
|
|
61,133 |
|
|
191,245 |
|
|
168,243 |
|
||||
Selling, general and administrative expenses |
|
45,224 |
|
|
43,855 |
|
|
151,093 |
|
|
127,614 |
|
||||
|
|
50,307 |
|
|
— |
|
|
50,307 |
|
|
— |
|
||||
Costs from transition services agreement |
|
3,019 |
|
|
1,154 |
|
|
11,532 |
|
|
1,154 |
|
||||
Cost of acquired retention plans |
|
5,703 |
|
|
— |
|
|
17,110 |
|
|
— |
|
||||
Restructuring costs |
|
1,541 |
|
|
81 |
|
|
7,820 |
|
|
553 |
|
||||
Gain on sale of business |
|
— |
|
|
— |
|
|
(493) |
|
|
— |
|
||||
Net gain on sale of assets |
|
8 |
|
|
416 |
|
|
(5) |
|
|
351 |
|
||||
Operating (loss) income |
|
(38,927) |
|
|
15,627 |
|
|
(46,119) |
|
|
38,571 |
|
||||
Interest expense, net |
|
5,327 |
|
|
4,058 |
|
|
14,382 |
|
|
14,595 |
|
||||
Non-service pension and post retirement benefit income |
|
(4,063) |
|
|
(99) |
|
|
(12,188) |
|
|
(298) |
|
||||
Income from transition services agreement |
|
(1,829) |
|
|
(944) |
|
|
(7,853) |
|
|
(944) |
|
||||
Other (income) expense, net |
|
(534) |
|
|
185 |
|
|
(424) |
|
|
(367) |
|
||||
(Loss) earnings from continuing operations before income taxes |
|
(37,828) |
|
|
12,427 |
|
|
(40,036) |
|
|
25,585 |
|
||||
Income tax (benefit) expense |
|
679 |
|
|
2,297 |
|
|
(1,022) |
|
|
3,244 |
|
||||
(Loss) earnings from continuing operations |
|
(38,507) |
|
|
10,130 |
|
|
(39,014) |
|
|
22,341 |
|
||||
Earnings from discontinued operations before gain on disposal, net of tax |
|
— |
|
|
9,860 |
|
|
— |
|
|
25,240 |
|
||||
Gain on disposal of discontinued operations, net of tax |
|
— |
|
|
122,786 |
|
|
692 |
|
|
122,786 |
|
||||
Total earnings from discontinued operations |
|
— |
|
|
132,646 |
|
|
692 |
|
|
148,026 |
|
||||
Net (loss) earnings |
|
$ |
(38,507) |
|
|
$ |
142,776 |
|
|
$ |
(38,322) |
|
|
$ |
170,367 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share: |
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share from continuing operations |
|
$ |
(1.39) |
|
|
$ |
0.36 |
|
|
$ |
(1.41) |
|
|
$ |
0.80 |
|
Basic earnings per share from discontinued operations |
|
— |
|
|
4.75 |
|
|
0.03 |
|
|
5.30 |
|
||||
Basic earnings per share |
|
$ |
(1.39) |
|
|
$ |
5.11 |
|
|
$ |
(1.38) |
|
|
$ |
6.10 |
|
Diluted (loss) earnings per share from continuing operations |
|
$ |
(1.39) |
|
|
$ |
0.36 |
|
|
$ |
(1.41) |
|
|
$ |
0.79 |
|
Diluted earnings per share from discontinued operations |
|
— |
|
|
4.72 |
|
|
0.03 |
|
|
5.27 |
|
||||
Diluted earnings per share |
|
$ |
(1.39) |
|
|
$ |
5.08 |
|
|
$ |
(1.38) |
|
|
$ |
6.06 |
|
Average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
27,687 |
|
|
27,952 |
|
|
27,718 |
|
|
27,941 |
|
||||
Diluted |
|
27,687 |
|
|
28,117 |
|
|
27,718 |
|
|
28,104 |
|
KAMAN CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share and per share amounts) (unaudited) |
||||||||
|
|
|
|
|
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
152,288 |
|
|
$ |
471,540 |
|
Restricted cash |
|
25,120 |
|
|
— |
|
||
Accounts receivable, net |
|
185,129 |
|
|
156,492 |
|
||
Contract assets |
|
127,260 |
|
|
121,614 |
|
||
Contract costs, current portion |
|
3,762 |
|
|
6,052 |
|
||
Inventories |
|
188,199 |
|
|
156,353 |
|
||
Income tax refunds receivable |
|
12,474 |
|
|
8,069 |
|
||
Other current assets |
|
14,400 |
|
|
16,368 |
|
||
Total current assets |
|
708,632 |
|
|
936,488 |
|
||
Property, plant and equipment, net of accumulated depreciation of |
|
217,906 |
|
|
140,450 |
|
||
Operating right-of-use assets, net |
|
15,377 |
|
|
15,159 |
|
||
|
|
252,707 |
|
|
195,314 |
|
||
Other intangible assets, net |
|
144,132 |
|
|
53,439 |
|
||
Deferred income taxes |
|
26,393 |
|
|
35,240 |
|
||
Contract costs, noncurrent portion |
|
8,438 |
|
|
6,099 |
|
||
Other assets |
|
38,325 |
|
|
36,754 |
|
||
Total assets |
|
$ |
1,411,910 |
|
|
$ |
1,418,943 |
|
Liabilities and Shareholders’ Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable – trade |
|
$ |
53,937 |
|
|
$ |
70,884 |
|
Accrued salaries and wages |
|
56,598 |
|
|
43,220 |
|
||
Contract liabilities, current portion |
|
38,233 |
|
|
42,942 |
|
||
Operating lease liabilities, current portion |
|
4,853 |
|
|
4,306 |
|
||
Income taxes payable |
|
1,448 |
|
|
4,722 |
|
||
Other current liabilities |
|
39,206 |
|
|
37,918 |
|
||
Total current liabilities |
|
194,275 |
|
|
203,992 |
|
||
Long-term debt, excluding current portion, net of debt issuance costs |
|
285,608 |
|
|
181,622 |
|
||
Deferred income taxes |
|
6,020 |
|
|
6,994 |
|
||
Underfunded pension |
|
74,550 |
|
|
97,246 |
|
||
Contract liabilities, noncurrent portion |
|
16,398 |
|
|
37,855 |
|
||
Operating lease liabilities, noncurrent portion |
|
11,132 |
|
|
11,617 |
|
||
Other long-term liabilities |
|
53,249 |
|
|
56,415 |
|
||
Commitments and contingencies |
|
|
|
|
||||
Shareholders' equity: |
|
|
|
|
||||
Preferred stock, |
|
— |
|
|
— |
|
||
Common stock, |
|
30,228 |
|
|
30,058 |
|
||
Additional paid-in capital |
|
236,310 |
|
|
228,153 |
|
||
Retained earnings |
|
765,722 |
|
|
820,666 |
|
||
Accumulated other comprehensive income (loss) |
|
(140,973) |
|
|
(150,893) |
|
||
Less 2,555,693 and 2,219,332 shares of common stock, respectively, held in treasury, at cost |
|
(120,609) |
|
|
(104,782) |
|
||
Total shareholders’ equity |
|
770,678 |
|
|
823,202 |
|
||
Total liabilities and shareholders’ equity |
|
$ |
1,411,910 |
|
|
$ |
1,418,943 |
|
KAMAN CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (unaudited) |
||||||||
|
|
For the Nine Months Ended |
||||||
|
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net (loss) earnings |
|
$ |
(38,322) |
|
|
$ |
170,367 |
|
Less: Total earnings from discontinued operations |
|
692 |
|
|
148,026 |
|
||
(Loss) earnings from continuing operations |
|
$ |
(39,014) |
|
|
$ |
22,341 |
|
Adjustments to reconcile net earnings from continuing operations to net cash (used in) provided by operating activities of continuing operations: |
|
|
|
|
||||
Depreciation and amortization |
|
32,204 |
|
|
19,308 |
|
||
Amortization of debt issuance costs |
|
1,325 |
|
|
1,401 |
|
||
Accretion of convertible notes discount |
|
2,132 |
|
|
2,067 |
|
||
Provision for doubtful accounts |
|
570 |
|
|
384 |
|
||
|
|
50,307 |
|
|
— |
|
||
Gain on sale of business |
|
(493) |
|
|
— |
|
||
Net (gain) loss on sale of assets |
|
(5) |
|
|
351 |
|
||
Net loss on derivative instruments |
|
144 |
|
|
549 |
|
||
Stock compensation expense |
|
4,254 |
|
|
3,969 |
|
||
Deferred income taxes |
|
6,590 |
|
|
(3,743) |
|
||
Changes in assets and liabilities, excluding effects of acquisitions/divestitures: |
|
|
|
|
||||
Accounts receivable |
|
(19,556) |
|
|
17,650 |
|
||
Contract assets |
|
(5,085) |
|
|
(20,303) |
|
||
Contract costs |
|
(48) |
|
|
3,130 |
|
||
Inventories |
|
(18,273) |
|
|
(43,139) |
|
||
Income tax refunds receivable |
|
(4,431) |
|
|
157 |
|
||
Operating right of use assets |
|
427 |
|
|
2,388 |
|
||
Other assets |
|
526 |
|
|
(4,020) |
|
||
Accounts payable - trade |
|
(18,258) |
|
|
704 |
|
||
Contract liabilities |
|
(26,165) |
|
|
(16,647) |
|
||
Operating lease liabilities |
|
(498) |
|
|
(2,256) |
|
||
Other current liabilities |
|
5,997 |
|
|
7,318 |
|
||
Income taxes payable |
|
(3,464) |
|
|
15,620 |
|
||
Pension liabilities |
|
(18,662) |
|
|
3,128 |
|
||
Other long-term liabilities |
|
(2,903) |
|
|
979 |
|
||
Net cash (used in) provided by operating activities of continuing operations |
|
(52,379) |
|
|
11,336 |
|
||
Net cash used in operating activities of discontinued operations |
|
— |
|
|
(7,341) |
|
||
Net cash (used in) provided by operating activities |
|
(52,379) |
|
|
3,995 |
|
||
Cash flows from investing activities: |
|
|
|
|
||||
Proceeds from sale of assets |
|
128 |
|
|
82 |
|
||
Proceeds from sale of discontinued operations |
|
5,223 |
|
|
656,736 |
|
||
Proceeds from sale of business |
|
493 |
|
|
— |
|
||
Expenditures for property, plant & equipment |
|
(14,232) |
|
|
(17,411) |
|
||
Acquisition of businesses, net of cash acquired |
|
(304,661) |
|
|
— |
|
||
Other, net |
|
(2,225) |
|
|
(3,092) |
|
||
Net cash (used in) provided by investing activities of continuing operations |
|
(315,274) |
|
|
636,315 |
|
||
Net cash used in investing activities of discontinued operations |
|
— |
|
|
(9,838) |
|
||
Net cash (used in) provided by investing activities |
|
(315,274) |
|
|
626,477 |
|
||
Cash flows from financing activities: |
|
|
|
|
||||
Net borrowings (repayments) under revolving credit agreements |
|
101,100 |
|
|
(38,500) |
|
||
Debt repayment |
|
— |
|
|
(76,875) |
|
||
Repayment of convertible notes |
|
— |
|
|
(500) |
|
||
Net change in bank overdraft |
|
958 |
|
|
2,995 |
|
||
Proceeds from exercise of employee stock awards |
|
2,451 |
|
|
8,616 |
|
||
Purchase of treasury shares |
|
(14,205) |
|
|
(12,006) |
|
||
Dividends paid |
|
(16,675) |
|
|
(16,756) |
|
||
Other, net |
|
(566) |
|
|
(1,092) |
|
||
Net cash provided by (used in) financing activities of continuing operations |
|
73,063 |
|
|
(134,118) |
|
||
Net cash provided by financing activities of discontinued operations |
|
— |
|
|
7,967 |
|
||
Net cash provided by (used in) financing activities |
|
73,063 |
|
|
(126,151) |
|
||
Net (decrease) increase in cash and cash equivalents |
|
(294,590) |
|
|
504,321 |
|
||
Cash and cash equivalents of discontinued operations |
|
— |
|
|
(21,834) |
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
458 |
|
|
(208) |
|
||
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 |
|
$ |
177,408 |
|
|
$ |
509,990 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201104005740/en/
V.P., Investor Relations and Business Development
(860) 243-6342
James.Coogan@kaman.com
Source: