BLOOMFIELD, Conn. , May 1 /PRNewswire-FirstCall/ -- Kaman Corp. (Nasdaq: KAMN) today reported financial results for the first quarter ended March 28, 2008 .
Net earnings from continuing operations for the first quarter of 2008 were $8.9 million , or $0.35 per share diluted, compared to $9.1 million , or $0.37 per share diluted, in the first quarter of 2007. The first quarter results for 2007 include a $2.5 million pretax charge for the SH-2G(A) helicopter program for Australia . Net sales from continuing operations for the first quarter of 2008 were $285.8 million compared to $266.5 million in the first quarter of 2007.
Industrial Distribution increased both its revenue and operating profits despite weakness in certain sectors of the economy and increased expenses associated with supporting our national account initiative. Our success with these accounts not only drives revenue growth, but also increases our participation in less cyclical sectors of the economy. We are also benefiting from increases in market share, as we prove ourselves to be the partner of choice for world-class companies who need service across their national footprint. An important step for us in expanding our geographic reach was the purchase of Industrial Supply Corporation, which occurred early in the second quarter. ISC brings a strong reputation for customer service, a very experienced management team and gives us a stronger presence in the important Virginia and North Carolina markets.'
Mr. Keating concluded, 'First quarter performance in our Aerospace segments was mixed. Specialty Bearings produced another set of excellent results. For Helicopters, the major news was the successful negotiation of a settlement agreement with the Commonwealth of Australia for the SH-2G (A) program. Once the agreement is implemented, significant management time and resources will be freed up to focus on growing the business, including remarketing and selling the SH-2G (A) Super Seasprite helicopters. And while our Jacksonville Aerostructures facility had a strong sales quarter, Wichita continues to experience operational issues in ramping up production to meet the concurrent demands of three significant programs. In early February we consolidated operational management for both facilities under the Jacksonville leadership team in order to address the performance issues and in the quarter we recorded charges related to additional tooling costs and production inefficiencies. We are dedicated to working through these issues to satisfy our customers, continuing to win new business and delivering bottom line results. While this may take some time to achieve, I believe that we now have the right management in place to do so.'
Segment reports follow:
Aerostructures segment operating loss for the first quarter of 2008 was $1.0 million , compared to operating income of $4.6 million for the first quarter of 2007. Segment sales were $28.8 million in the first quarter of 2008, compared to $25.2 million for the first quarter of 2007. The growth in net sales was primarily due to higher production levels and increased shipments to Sikorsky for the BLACK HAWK helicopter program. Total operating results decreased primarily as the result of $4.5 million in charges related to the concurrent ramp up of three significant programs at the Wichita facility.
Fuzing segment operating income for the first quarter of 2008 was $1.8 million , compared to $2.5 million in the first quarter of 2007. Segment sales were $24.1 million for the first quarter of 2008, compared to $18.5 million in the first quarter of 2007. The increase in sales occurred as a result of higher shipments on the JPF program to the U.S. Government as well as higher shipments on several legacy programs. Total operating income decreased primarily due to the essentially break even gross margins generated from JPF program sales to the U.S. Government.
Helicopters segment operating income for the first quarter of 2008 was $0.9 million , compared to an operating loss of $1.0 million for the first quarter of 2007. Segment sales were $14.6 million for the first quarter of 2008 compared to $17.5 million for the first quarter of 2007. There was a certain amount of nonrecurring work performed for Egypt in the 2007 quarter that was not repeated during 2008. Additionally, sales for Sikorsky, which are based on the level of order activity for join and subcontract work in the relative periods, were lower in the first quarter of 2008. Operating income increased primarily due to the absence of an accrued contract loss charge for the Australia program in the first quarter of 2008 compared to a $2.5 million charge recorded in the first quarter of 2007.
Specialty Bearings segment operating income for the first quarter of 2008 was a record $13.0 million , compared to $10.6 million in the first quarter of 2007. Segment sales were a record $36.1 million in the first quarter of 2008, compared to $32.0 million in the first quarter of 2007. The increase in net sales was a result of higher shipments to our customers in the commercial jet liner market, regional jet market, military aircraft market and commercial helicopter market. The increase in operating income primarily reflects the leverage gained from increased sale volume.
Collectively, the four Aerospace Segments generated operating income for the first quarter of 2008 of $14.6 million , compared to $16.6 million for the first quarter of 2007; and sales of $103.6 million and $93.1 million , respectively for the same periods.
Industrial Distribution segment operating income for the first quarter of 2008 was $9.1 million , compared to $8.7 million in the first quarter of 2007. Segment sales were $182.2 million in the first quarter of 2008, compared to $173.4 million in the first quarter of 2007. The increase in sales is primarily due to the ramp up of national account business, as well as strong demand in the food & beverage, mining, chemical and paper markets. This sales increase was achieved with one fewer sales day in 2008 compared to 2007. The increase in operating income is a result of the increased sales volume offset partially by greater costs associated with new branch openings.
Discontinued Operations: On December 31, 2007 , the company completed the
sale of its wholly owned subsidiary, Kaman Music Corporation, to Fender
Musical Instruments Corporation for approximately $120 million in cash.
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 the quarters' results and various company programs.
The company held its annual meeting of shareholders on April 16, 2008 . At
that meeting, shareholders elected four directors, including
A conference call has been scheduled for tomorrow, May 2, 2008 at 11:00 AM EDT . Listeners may access the call live over the Internet through a link on the home page of the company's website at http://www.kaman.com. Management may provide exhibits to the conference call and these will be available through the Internet link provided above.
Forward-Looking Statements
This release may contain forward-looking information relating to the
company's business and prospects, including the Aerospace and Industrial
Distribution businesses, operating cash flow, and other matters that involve a
number of uncertainties that may cause actual results to differ materially
from expectations. Those uncertainties include, but are not limited to: 1) the
successful conclusion of competitions for government programs and thereafter
contract negotiations with government authorities, both foreign and domestic;
2) political conditions in countries where the company does or intends to do
business; 3) standard government contract provisions permitting renegotiation
of terms and termination for the convenience of the government; 4) domestic
and foreign economic and competitive conditions in markets served by the
company, particularly the defense, commercial aviation and industrial
production markets; 5) risks associated with successful implementation and
ramp up of significant new programs; 6) successful implementation of the Deed
of Settlement agreed upon with the Commonwealth of Australia , which would
conclude the Australia SH-2G (A) program with a mutual release of claims; 7)
receipt and successful execution of production orders for the JPF U.S.
government contract, including the exercise of all contract options and
receipt of orders from allied militaries, as both have been assumed in
connection with goodwill impairment evaluations; 8) the
A summary of segment information follows:
Summary of Segment Information
(In thousands)
For the Three Months Ended
March 28, 2008(1) March 30, 2007(1)
Net sales:
Aerostructures $28,793 $25,179
Fuzing 24,130 18,500
Helicopters 14,614 17,458
Specialty Bearings 36,079 31,979
Subtotal Aerospace Segments 103,616 93,116
Industrial Distribution 182,165 173,414
Net sales from continuing operations 285,781 266,530
Operating income (loss):
Aerostructures (1,015) 4,551
Fuzing 1,805 2,530
Helicopters 858 (1,025)
Specialty Bearings 12,968 10,559
Subtotal Aerospace Segments 14,616 16,615
Industrial Distribution 9,073 8,694
Net gain (loss) on sale of assets (110) (42)
Corporate expense (9,796) (9,343)
Operating income from continuing
operations $13,783 $15,924
(1) The company has a calendar year-end; however, its first three fiscal
quarters follow a 13-week convention, with each quarter ending on a
Friday. The first quarters of 2008 and 2007 ended on March 28, 2008
and March 30, 2007 respectively.
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
For the Three Months Ended
March 28, 2008 March 30, 2007
Net sales $285,781 $266,530
Cost of sales 209,190 191,369
Selling, general and administrative
expense 62,698 59,195
Net (gain) loss on sale of assets 110 42
271,998 250,606
Operating income from continuing
operations 13,783 15,924
Interest expense (income), net (1) 1,545
Other expense (income), net 141 (41)
Earnings from continuing operations
before income taxes 13,643 14,420
Income tax expense (4,775) (5,347)
Net earnings from continuing
operations 8,868 9,073
Earnings from discontinued
operations before income taxes - 1,624
Income tax expense - (622)
Net earnings from discontinued
operations - 1,002
Net earnings $8,868 $10,075
Net earnings per share:
Basic net earnings per share from
continuing operations 0.35 0.37
Basic net earnings per share from
discontinued operations - 0.05
Basic net earnings per share $0.35 $0.42
Diluted net earnings per share
from continuing operations 0.35 0.37
Diluted net earnings per share
from discontinued operations - 0.04
Diluted net earnings per share $0.35 $0.41
Average shares outstanding:
Basic 25,099 24,140
Diluted 25,391 25,105
Dividends declared per share $0.140 $0.125
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
March 28, 2008 December 31, 2007
Assets
Current assets:
Cash and cash equivalents $28,349 $73,898
Accounts receivable, net 180,796 158,435
Inventories 227,437 210,341
Deferred income taxes 26,129 28,724
Other current assets 21,810 20,231
Total current assets 484,521 491,629
Property, plant and equipment, net 53,585 53,645
Goodwill and other intangible assets, net 46,458 46,188
Deferred income taxes 5,071 3,594
Overfunded pension 31,102 30,486
Other assets, net 9,243 9,321
$629,980 $634,863
Liabilities and shareholders' equity
Current liabilities:
Notes payable $2,377 $1,680
Accounts payable - trade 79,258 74,236
Accrued salaries and wages 16,928 25,328
Accrued pension costs 9,935 14,202
Accrued contract losses 11,561 9,513
Advances on contracts 10,055 9,508
Other accruals and payables 34,875 36,162
Income taxes payable 2,384 12,002
Total current liabilities 167,373 182,631
Long-term debt, excluding current portion 12,011 11,194
Other long-term liabilities 46,730 46,512
Shareholders' equity 403,866 394,526
$629,980 $634,863
SOURCE Kaman Corp.
