BLOOMFIELD, Conn., Aug. 2 /PRNewswire-FirstCall/ -- Kaman Corp.
(Nasdaq: KAMN) today reported financial results for the second quarter and
six months ended June 29, 2007.
Net earnings for the second quarter of 2007 were $10.1 million, or
$0.40 per share diluted, an increase of 34.4% for net earnings and 29.0%
for earnings per share diluted over the $7.5 million, or $0.31 per share
diluted, reported for the second quarter of 2006. The second quarter
results for 2007 and 2006 include $2.4 million and $2.8 million
respectively in additional pretax charges for the company's SH-2G(A)
helicopter program for Australia. Net sales for the second quarter of 2007
were $320.0 million, an increase of 9.2% over the $293.0 million reported
for the second quarter of 2006.
For the first half of 2007 the company reported net earnings of $20.1
million, or $0.81 per share diluted, an increase of 50.2% for net earnings
and 47.3% for earnings per share diluted, compared to net earnings of $13.4
million, or $0.55 per share diluted, in the first half of 2006. The 2007
and 2006 first half results include $4.9 million and $5.3 million,
respectively, in additional pretax charges for the Australia program. Net
sales for the first half of 2007 were $637.3 million, an increase of 8.1%
over the $589.6 million reported for the first half of 2006.
Paul R. Kuhn, chairman, president and chief executive officer, said:
"Strong performance for the second quarter of 2007 was driven by solid
programs and good market conditions across the four segments of our
aerospace business with each showing sales and earnings growth. Higher
sales volume from a growing business base and increased efficiencies
contributed to the results. For the Industrial Distribution and Music
segments, results reflect weaker market conditions, but also actions we
have taken to build these businesses. Both segments are expected to perform
well when conditions in their markets firm up and, for all of our segments,
we are pleased with our prospects going forward."
Segment reports follow:
Aerostructures segment net sales for the second quarter of 2007 were
$23.3 million, compared to $17.1 million for the second quarter of 2006.
The continued ramp-up of certain segment programs drove the sales increase.
Segment operating income was $3.7 million in the second quarter of 2007,
compared to $2.0 million for the second quarter of 2006. Segment net sales
for the first half of 2007 were $48.5 million, compared to $34.0 million
for the first half of 2006. Segment operating income was $8.2 million in
the first half of 2007, compared to $4.4 million for the first half of
2006.
Fuzing segment net sales for the second quarter of 2007 were $24.0
million, compared to $14.6 million in the second quarter of 2006. The
increase was due primarily to a significant increase in shipments of the
company's Joint Programmable Fuze product line. Segment operating income
was $4.0 million for the second quarter of 2007, compared to $1.5 million
in the second quarter of 2006. Segment net sales for the first half of 2007
were $42.5 million, compared to $33.7 million for the first half of 2006.
Segment operating income was $6.6 million in the first half of 2007,
compared to $4.4 million in the first half of 2006.
Helicopters segment net sales for the second quarter of 2007 were $19.0
million, compared to $15.2 million for the second quarter of 2006. The
increase is the result of the company's ongoing maintenance and upgrade
program for Egyptian SH-2G(E) aircraft, and the Sikorsky BLACK HAWK program
involving fuselage joining, installations and other tasks. The segment had
an operating loss of $0.2 million for the second quarter of 2007 (including
a $2.4 million pretax charge for the Australia helicopter program) compared
to an operating loss of $1.1 million (including a $2.8 million pretax
charge for the Australia program) for the second quarter of 2006. Segment
net sales for the first half of 2007 were $36.5 million, compared to $26.7
million in the first half of 2006. For the first half, the segment had an
operating loss of $1.3 million (including $4.9 million in pretax charges
for the Australia program), compared to an operating loss of $3.2 million
(including $5.3 million pretax charges for the Australia program) for the
first half of 2006.
Specialty Bearings segment net sales for the second quarter of 2007
were $31.5 million, compared to $27.5 million in the second quarter of
2006. The increase was due to increased shipments of the segment's airframe
bearing products as the company continues to meet strong demand and add
market share. During the quarter, the company completed its previously
announced facilities expansion, providing necessary capacity to support
further growth. Segment operating income was $10.2 million in the second
quarter of 2007, compared to $8.3 million in the second quarter of 2006.
Segment net sales for the first half of 2007 were $63.4 million, compared
to $53.6 million for the first half of 2006. Segment operating income was
$20.8 million for the first half of 2007, compared to $15.1 million for the
first half of 2006.
Collectively, the Aerospace Segments' net sales for the second quarter
of 2007 were $97.8 million, compared to $74.4 million for the second
quarter of 2006. Total operating income for the Aerospace Segments was
$17.7 million for the second quarter of 2007, compared to $10.7 million for
the second quarter of 2006. First half net sales for the Aerospace Segments
were $190.9 million for 2007, compared to $148.0 million in 2006. First
half operating income was $34.3 million for 2007, compared to $20.7 million
for the first half of 2006.
Industrial Distribution segment net sales for the second quarter of
2007 were $174.6 million, compared to $170.5 million in the second quarter
of 2006. Segment operating income was $8.3 million in the second quarter of
2007, compared to $9.3 million in the second quarter of 2006. The segment's
results for the second quarter reflect a weak economic climate for various
industries, including the building materials industry, which was down
sharply, automobile manufacturing, and original equipment manufacturing.
This was somewhat offset by continued strength in other areas, including
food processing, coal mining, oil exploration and electrical power
generation. Results for the quarter also reflect the expenses associated
with bringing new national account wins on line and increases in
incremental operating costs. The new national accounts are expected to
begin generating revenue over the next several quarters. Segment net sales
for the first half of 2007 were $348.0 million, compared to $341.1 million
in the first half of 2006. Segment operating income was $17.0 million in
the first half of 2007, compared to $20.1 million in the first half of
2006.
Music segment net sales for the second quarter of 2007 were $47.6
million, compared to $48.1 in the second quarter of 2006. Segment operating
income was $1.6 million for the second quarters of both 2007 and 2006.
While results for this segment were affected by a combination of economic
stresses within the age demographic of our end customers and typical
seasonal softness, the segment was able to maintain profitability on
slightly lower sales levels as a result of cost control measures
implemented in mid-2006. The benefits realized from these measures was
partially offset in both the second quarter and first half of 2007,
however, by an increase in legal expenses associated primarily with
document production in response to an inquiry by the Federal Trade
Commission issued to participants throughout the music industry in general
relative to minimum advertised pricing policies. Segment net sales for the
first half of 2007 were $98.4 million, compared to $100.5 million for the
first half of 2006. Segment operating income was $3.2 million in the first
half of 2007, compared to $2.9 million for the first half of 2006.
A conference call to discuss this report has been scheduled for
tomorrow, August 3, 2007 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. In its discussion, management will include
certain non- GAAP measures related to company performance. A reconciliation
of this information to GAAP will be provided in the exhibits to the
conference call and will be available through the Internet link provided
above. 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
quarter's financial results and various company programs.
Forward-Looking Statements
This release may contain forward-looking information relating to the
company's business and prospects, including the Aerospace, Industrial
Distribution and Music 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
defense, commercial aviation, industrial production and the consumer market
for music products; 5) risks associated with successful implementation and
ramp up of significant new programs 6) satisfactory completion of the
Australian SH-2G(A) program, including negotiation of payment and
performance terms for the balance of the program as well as the additional
work scope that would assist the Commonwealth in achieving certification of
the aircraft in Australia; 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) in the EODC/University of Arizona litigation,
successful defeat of the University's appeal of the jury verdict in the
company's favor; 9) satisfactory resolution of (i) the company's dispute
with the U.S. Army procurement agency relating to warranty work for the
FMU-143 program and (ii) the 2005 DCIS investigation of that program; 10)
satisfactory results of negotiations with NAVAIR concerning purchase of the
company's leased facility in Bloomfield, Conn.; 11) continued support of
the existing K- MAX helicopter fleet, including sale of existing K-MAX
spare parts inventory and in 2007, availability of a redesigned clutch
assembly system; 12) cost growth in connection with environmental
remediation activities at the Moosup facility and such potential activities
at the Bloomfield facility; 13) profitable integration of acquired
businesses into the company's operations; 14) changes in supplier sales or
vendor incentive policies; 15) the effect of price increases or decreases;
16) pension plan assumptions and future contributions; 17) future levels of
indebtedness and capital expenditures; 18) continued availability of raw
materials in adequate supplies; 19) the effects of currency exchange rates
and foreign competition on future operations; 20) changes in laws and
regulations, taxes, interest rates, inflation rates, general business
conditions and other factors; and 21) other risks and uncertainties set
forth in the company's annual, quarterly and current reports, and proxy
statements. Any forward-looking information provided in this report should
be considered with these factors in mind. The company assumes no obligation
to update any forward-looking statements contained in this release.
A summary of segment information follows:
Summary of Segment Information
For the Three For the Six
Months Ended Months Ended
June 29, June 30, June 29, June 30,
(in millions) 2007 2006 2007 2006
Net sales:
Aerostructures $23.3 $17.1 $48.5 $34.0
Fuzing 24.0 14.6 42.5 33.7
Helicopters 19.0 15.2 36.5 26.7
Specialty Bearings 31.5 27.5 63.4 53.6
Subtotal Aerospace Segments 97.8 74.4 190.9 148.0
Industrial Distribution 174.6 170.5 348.0 341.1
Music 47.6 48.1 98.4 100.5
$320.0 $293.0 $637.3 $589.6
Operating income:
Aerostructures 3.7 2.0 8.2 4.4
Fuzing 4.0 1.5 6.6 4.4
Helicopters (0.2) (1.1) (1.3) (3.2)
Specialty Bearings 10.2 8.3 20.8 15.1
Subtotal Aerospace Segments 17.7 10.7 34.3 20.7
Industrial Distribution 8.3 9.3 17.0 20.1
Music 1.6 1.6 3.2 2.9
Net gain (loss) on sale of assets - - - 0.1
Corporate expense (1) (10.1) (7.6) (19.5) (18.1)
Operating income: 17.5 14.0 35.0 25.7
Interest expense, net (1.6) (1.6) (3.2) (2.9)
Other expense, net (0.3) (0.3) (0.2) (0.6)
Earnings before income taxes $15.6 $12.1 $31.6 $22.2
(1) "Corporate expense" increased for the quarter and six months ended June
29, 2007 compared to the same periods of 2006, as shown below:
For the Three For the Six
Months Ended Months Ended
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
Corporate expenses before breakout
items $(7.0) $(6.4) $(13.3) $(13.8)
Breakout items:
Stock appreciation rights (0.8) 0.8 (1.0) (0.5)
Pension expense (0.1) (1.0) (0.2) (1.7)
Supplemental employees' retirement
plan (1.5) (1.4) (3.0) (2.7)
Group insurance (0.7) (0.1) (2.0) 0.1
Legal - recapitalization - 0.5 - 0.5
Corporate expense - total $(10.1) $(7.6) $(19.5) $(18.1)
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
For the For the
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
Net sales $319,953 $292,967 $637,271 $589,604
Costs and expenses:
Cost of sales 231,774 212,462 459,963 427,754
Selling, general and
administrative expense 71,472 67,008 143,571 137,082
Net (gain) loss on sale of
assets (56) (43) (14) (56)
Other operating income (724) (452) (1,256) (823)
Interest expense, net 1,625 1,630 3,143 2,888
Other expense (income), net 260 303 218 563
304,351 280,908 605,625 567,408
Earnings before income taxes 15,602 12,059 31,646 22,196
Income tax expense (5,543) (4,573) (11,512) (8,790)
Net earnings $10,059 $7,486 $20,134 $13,406
Net earnings per share:
Basic $0.41 $0.31 $0.83 $0.56
Diluted $0.40 $0.31 $0.81 $0.55
Average shares outstanding:
Basic 24,285 24,031 24,213 23,984
Diluted 25,210 24,880 25,157 24,883
Dividends declared per share $0.125 $0.125 $0.25 $0.25
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
June 29, December 31,
2007 2006
Assets
Current assets:
Cash and cash equivalents $12,902 $12,720
Accounts receivable, net 216,684 189,328
Inventories 241,563 231,350
Income taxes receivable 2,056 -
Deferred income taxes 28,722 25,425
Other current assets 18,691 19,097
Total current assets 520,618 477,920
Property, plant and equipment, net 55,303 54,165
Goodwill 58,095 56,833
Other intangible assets, net 19,108 19,264
Deferred income taxes 15,417 14,000
Other, net 9,964 8,231
$678,505 $630,413
Liabilities and shareholders' equity
Current liabilities:
Notes payable $442 $-
Current portion of long-term debt 523 1,551
Accounts payable - trade 98,253 95,059
Accrued salaries and wages 22,634 26,129
Accrued pension costs 8,725 2,965
Accrued contract losses 11,477 11,542
Advances on contracts 9,964 10,215
Other accruals and payables 39,619 42,661
Income taxes payable - 8,215
Total current liabilities 191,637 198,337
Long-term debt, excluding current portion 107,135 72,872
Other long-term liabilities 61,199 62,643
Shareholders' equity 318,534 296,561
$678,505 $630,413
SOURCE Kaman Corp.
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Related links:
http://www.kaman.com
http://www.prnewswire.com/comp/480450.html /
CONTACT:
Russell H. Jones, SVP, Chief Investment
Officer & Treasurer of Kaman Corp., +1-860-243-6307,
Russell.Jones@kaman.com
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