Kaman Reports 2014 Fourth Quarter Results

BLOOMFIELD, Conn.–(BUSINESS WIRE)–

Kaman Corp. (KAMN) today reported financial results for the fourth
quarter ended December 31, 2014.

       
Table 1. Summary of Financial Results
In thousands except per share amounts For the Three Months Ended
December 31, 2014 December 31, 2013 Change
Net sales from continuing operations:
Distribution $ 302,687 $ 260,184 $ 42,503
Aerospace 175,244   170,856   4,388  
Net sales $ 477,931   $ 431,040   $ 46,891  
 
Operating income from continuing operations:
Distribution $ 14,295 $ 11,452 $ 2,843
Aerospace 33,182 25,346 7,836
Net loss on sale of assets (5 ) (38 ) 33
Corporate expense (14,228 ) (11,395 ) (2,833 )
Operating income $ 33,244   $ 25,365   $ 7,879  
 
Adjusted EBITDA*:
Distribution $ 18,453 $ 14,236 $ 4,217
Aerospace 37,553 29,224 8,329
Net loss on sale of assets (5 ) (38 ) 33
Corporate expense (12,855 ) (9,984 ) (2,871 )
Adjusted EBITDA* $ 43,146   $ 33,438   $ 9,708  
 
Adjusted diluted earnings per share from continuing operations* $ 0.76   $ 0.57   $ 0.19  

Neal J. Keating, Chairman, President and Chief Executive Officer,
stated, “We finished 2014 with very strong results, achieving earnings
per share from continuing operations of $0.77 for the quarter and $2.37
for the full year, or $2.43 when adjusted*. Our free cash flow* for the
full year was $80.8 million, an increase of $56.8 million over 2013. In
addition, we are pleased that, based on our strong results, our Board of
Directors has approved an increase in our quarterly dividend by 12.5% to
$0.18 per share.

Distribution had strong organic sales growth* of 4.8% during the fourth
quarter, our fifth consecutive quarter of organic sales growth and our
highest rate of growth since the third quarter of 2011. Our investment
in our sales force expansion was accretive in the quarter and the
results for the quarter speak to the importance of this initiative
towards achieving growth rates in line with our long-term goals. During
the quarter we divested Distribution’s Mexico operations, increasing the
focus on our core strategy of building out product platforms in the U.S.
and delivering improved operating performance.

Aerospace had a strong fourth quarter with operating margin of 18.9% and
top line sales growth of 2.6%. Aerospace enters 2015 in the midst of a
transition, as certain legacy defense programs continue to ramp down.
However, our Aerospace Group is managing this transition period
effectively as evidenced by the top line growth in 2014, which we
believe will continue into 2015.”

Distribution Segment

Table 2. Summary of
Distribution

Segment Information (in

thousands)

           
For the Three Months Ended For the Twelve Months Ended
December 31,
2014
December 31,
2013

Change

December 31,
2014

December 31,
2013
Change
Net sales $ 302,687 $ 260,184 $ 42,503 $ 1,161,992 $ 1,039,954 $ 122,038
Operating income $ 14,295 $ 11,452 $ 2,843 $ 56,765 $ 46,206 $ 10,559
% of sales 4.7 % 4.4 % 0.3 % 4.9 % 4.4 % 0.5 %

The increase in sales in the fourth quarter resulted from $25.8 million
in sales from acquisitions and an increase of $16.7 million in organic
sales. Sales from acquisitions are classified as organic beginning with
the thirteenth month following the acquisition. (See Table 6 for
additional details regarding the Segment’s sales per sales day*
performance.) The increase in operating income in the fourth quarter was
driven by higher rebate income and contributions from our 2014
acquisitions.

The increase in sales for the full year resulted from $89.4 million in
sales from acquisitions and an increase of $32.7 million in organic
sales. The increase in operating income for the full year was driven by
the contribution of operating income from 2014 and 2013 acquisitions,
the absence of $2.8 million of restructuring costs, lower pension
expense and higher rebate income. These increases were partially offset
by higher operating expenses, primarily related to higher employee
related incentive costs and an increase in salary and wage expense
associated with the expansion of our sales force.

Aerospace Segment

Table 3. Summary of
Aerospace Segment
Information
(in

thousands)

         
For the Three Months Ended For the Twelve Months Ended
December 31,
2014
December 31,
2013
Change December 31,
2014
December 31,
2013
Change
Net sales $ 175,244 $ 170,856 $ 4,388 $ 632,970 $ 613,967 $ 19,003
Operating income $ 33,182 $ 25,346 $ 7,836 $ 108,697 $ 102,573 $ 6,124
% of sales 18.9 % 14.8 % 4.1 % 17.2 % 16.7 % 0.5 %

Sales for the fourth quarter increased due to our SH-2G(I) contract with
New Zealand and higher commercial bearing product sales. These increases
were partially offset by lower volume of JPF deliveries, a reduction in
shipments on our Sikorsky BLACK HAWK helicopter program, and decreased
year over year revenue under our AH-1Z program. Operating margin in the
fourth quarter was higher than the prior year primarily due to our
SH-2G(I) contract with New Zealand and stronger contribution from
bearing product lines. These increases were partially offset by the
lower volume and a less favorable mix of JPF deliveries.

Sales for the full year increased due to increased deliveries on
commercial composite structures products/programs, higher commercial
bearing product sales, our SH-2G(I) contract with New Zealand, increased
sales to the U.S. Government under the JPF program and higher sales
volume on the A-10 program. These increases were partially offset by
lower sales of engineering design services, composite imaging products
and Boeing CH-47 inlet screens, reduced deliveries of the JPF to foreign
militaries, a reduction in shipments on our Sikorsky BLACK HAWK
helicopter program and lower military bearing product sales. Operating
margin for the full year increased primarily due to gross profit from
the SH-2G(I) program and commercial bearing product sales and the
absence of the $2.1 million goodwill impairment charge recorded in 2013.
These increases were partially offset by lower gross margin on military
bearing products and tooling sales and lower commercial sales of the JPF
to foreign militaries.

Chief Financial Officer, Robert D. Starr, commented, “Our strong 2014
performance reflects the continued execution of our long-term
strategies. Full year operating margin performance at Aerospace improved
50 bps to 17.2%, driven by a favorable sales mix and a focus on
operating expenses. Distribution’s operating margin increased 50 bps
from the prior year to 4.9%, benefiting from solid organic sales growth
of 3.2%.

Free cash flow generation for the full year was $80.8 million or 123% of
net earnings from continuing operations, which we used to pay down
outstanding borrowings bringing our year end debt to capitalization
ratio to 35.2%, consistent with the prior year-end level. We are very
encouraged with this level of free cash flow. With our continued focus
on working capital management we believe we can consistently achieve our
goal of 80% to 100% free cash flow as a percentage of net earnings.

For 2015 we expect strong sales growth at Distribution and low single
digit growth at Aerospace. The operating profit outlook reflects strong
underlying core performance, offset by a number of significant
headwinds, most notably pension, ERP and group health expense. Similar
to 2014, we anticipate quarterly earnings to increase sequentially
throughout the year, with approximately 60% to 65% of our full year
earnings in the second half. Finally, we anticipate another outstanding
year of free cash flow generation in 2015.”

2015 Outlook

Our 2015 outlook is as follows:

  • Distribution:

    • Sales of $1,250 million to $1,280 million
    • Operating margins of 4.9% to 5.2%
  • Aerospace:

    • Sales of $635 million to $655 million
    • Operating margins of 16.8% to 17.2%
  • Interest expense of approximately $13 million
  • Corporate expenses of $52 million to $53 million
  • Estimated annualized tax rate of approximately 34%
  • Depreciation and amortization expense of approximately $40 million
  • Capital expenditures of $30 million to $40 million
  • Free cash flow* in the range of $75 million to $90 million

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

A conference call has been scheduled for tomorrow, February 24, 2015,
at 8:30 AM ET.
Listeners may access the call live by telephone at
(877) 280-4958 and from outside the U.S. at (857) 244-7315; (passcode:62668708); or, via the Internet at www.kaman.com.
A replay will also be available two hours after the call and can be
accessed at (888) 286-8010 or (617) 801-6888 using the passcode:
49474372. In its discussion, management may include certain non-GAAP
measures related to company performance. If so, a reconciliation of that
information to GAAP, if not provided in this release, will be provided
in the exhibits to the conference call and will be available through the
Internet link provided above.

Table 4. Summary of Segment
Information (in
thousands)

     
For the Three Months Ended For the Twelve Months Ended
December 31,
2014
December 31,
2013
December 31,
2014
December 31,
2013
Net sales:
Distribution $ 302,687 $ 260,184 $ 1,161,992 $ 1,039,954
Aerospace 175,244   170,856   632,970   613,967  
Net sales $ 477,931   $ 431,040   $ 1,794,962   $ 1,653,921  
 
Operating income:
Distribution $ 14,295 $ 11,452 $ 56,765 $ 46,206
Aerospace 33,182 25,346 108,697 102,573
Net gain (loss) on sale of assets (5 ) (38 ) (233 ) (142 )
Corporate expense (14,228 ) (11,395 ) (54,722 ) (45,291 )
Operating income $ 33,244   $ 25,365   $ 110,507   $ 103,346  
 
Depreciation and Amortization:
Distribution
Depreciation $ 2,141 $ 1,247 $ 7,017 $ 5,338
Amortization 2,017   1,537   7,444   5,898  
Total $ 4,158   $ 2,784   $ 14,461   $ 11,236  
Aerospace
Depreciation $ 3,520 $ 3,048 $ 12,639 $ 11,777
Amortization 851   830   3,400   3,264  
Total $ 4,371   $ 3,878   $ 16,039   $ 15,041  
Corporate
Depreciation $ 975 $ 1,014 $ 4,129 $ 3,723
Amortization 398   397   1,580   1,555  
Total $ 1,373   $ 1,411   $ 5,709   $ 5,278  

Non-GAAP Measures Disclosure

Management believes that the non-GAAP (Generally Accepted Accounting
Principles) measures indicated by an asterisk (*) used in this release
or in other disclosures provide important perspectives into the
Company’s ongoing business performance. The Company does not intend for
the information to be considered in isolation or as a substitute for the
related GAAP measures. Other companies may define the measures
differently. We define the non-GAAP measures used in this report and
other disclosures as follows:

Adjusted EBITDA – Adjusted EBITDA is defined as operating income
before depreciation and amortization. Adjusted EBITDA is calculated on
our consolidated results as well as the results of our reportable
segments. Adjusted EBITDA differs from Segment Operating Income, as
calculated in accordance with GAAP, in that it excludes depreciation and
amortization. We have made numerous investments in our business, such as
acquisitions and increased capital expenditures, including facility
improvements, new machinery and equipment, improvements to our
information technology infrastructure and new ERP systems. Management
believes Adjusted EBITDA provides an additional perspective on the
operating results of the organization and its earnings capacity and
helps improve the comparability of our results between periods by
eliminating the impact of non-cash depreciation and amortization
expense. Adjusted EBITDA does not give effect to cash used for debt
service requirements and thus does not reflect available funds for
distributions, reinvestment or other discretionary uses. Adjusted EBITDA
is not presented as an alternative measure of operating results or cash
flows from operations, as determined in accordance with GAAP. No other
adjustments were made during the three-month and twelve-month periods
ended December 31, 2014 and 2013.

Table 5. Adjusted EBITDA (in thousands)      
For the Three Months Ended   For the Twelve Months Ended
December 31,
2014
  December 31,
2013
December 31,
2014
December 31,
2013
Adjusted EBITDA
Distribution
Operating Income $ 14,295 $ 11,452 $ 56,765 $ 46,206
Depreciation and Amortization 4,158   2,784   14,461   11,236  
Adjusted EBITDA $ 18,453   $ 14,236   $ 71,226   $ 57,442  
 
Aerospace
Operating Income $ 33,182 $ 25,346 $ 108,697 $ 102,573
Depreciation and Amortization 4,371   3,878   16,039   15,041  
Adjusted EBITDA $ 37,553   $ 29,224   $ 124,736   $ 117,614  
 
Corporate expense
Operating expense $ (14,228 ) $ (11,395 ) $ (54,722 ) $ (45,291 )
Depreciation and Amortization 1,373   1,411   5,709   5,278  
Adjusted EBITDA $ (12,855 ) $ (9,984 ) $ (49,013 ) $ (40,013 )
 
Net loss on sale of assets (5 ) (38 ) (233 ) (142 )
Total Adjusted EBITDA $ 43,146   $ 33,438   $ 146,716   $ 134,901  

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

The following table illustrates the calculation of organic sales per
sales day using “Net sales: Distribution” from the “Segment and
Geographic Information” footnote in the “Notes to Condensed Consolidated
Financial Statements” from the Company’s Form 10-K filed with the
Securities and Exchange Commission on February 23, 2015. Sales from
acquisitions are classified as organic beginning with the thirteenth
month following the acquisition. Prior period information is adjusted to
reflect acquisition sales for that period as organic sales when
calculating organic sales per sales day.

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

     
For the Three Months Ended For the Twelve Months Ended
December 31,
2014
December 31,
2013
December 31,
2014
December 31,
2013
Current period
Net sales: Distribution $ 302,687 $ 260,184 $ 1,161,992 $ 1,039,954
Acquisition sales 25,783   6,420   89,388   72,578  
Organic sales $ 276,904 $ 253,764 $ 1,072,604 $ 967,376
Sales days 64   63   253   253  
Organic sales per sales day for the current period a $ 4,327   $ 4,028   $ 4,240   $ 3,824  
 
Prior period
Net sales from the prior year $ 260,184 $ 240,474 $ 1,039,954 $ 982,573
Sales days from the prior year 63   62   253   253  
Organic sales per sales day from the prior year b $ 4,130   $ 3,879   $ 4,110   $ 3,884  
 
% change in organic sales per sales day (a-b)÷b 4.8 % 3.8 % 3.2 % (1.5 )%

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

Table 7. Free Cash Flow from continuing operations

(in thousands)

     

For the Twelve
Months Ended

For the Nine
Months Ended

For the Three
Months Ended

December 31,
2014

September 26,
2014

December 31,
2014

Net cash provided by operating activities $ 109,089 $ 45,132 $ 63,957
Expenditures for property, plant & equipment (28,283 ) (22,177 ) (6,106 )
Free Cash Flow $ 80,806   $ 22,955   $ 57,851  
Table 8. Free Cash Flow – 2015 Outlook (in millions)   2015 Outlook
   
Free Cash Flow:
Net cash provided by operating activities $ 105.0 to $ 130.0
Expenditures for property, plant and equipment (30.0 ) to (40.0 )
Free Cash Flow $ 75.0   to $ 90.0  

Debt to Capitalization Ratio – Debt to capitalization ratio is
calculated by dividing debt by capitalization. Debt is defined as GAAP
“Notes payable” plus “Current portion of long-term debt” plus “Long-term
debt, excluding current portion”. Capitalization is defined as Debt plus
GAAP “Total shareholders’ equity”. Management believes that debt to
capitalization is a measurement of financial leverage and provides an
insight into the financial structure of the Company and its financial
strength. The following table illustrates the calculation of debt to
capitalization using GAAP measures from the condensed consolidated
balance sheets included in this release.

Table 9. Debt to Capitalization (in thousands)    
December 31,
2014
December 31,
2013
Notes payable $

-

$ 559
Current portion of long-term debt 10,000 10,000
Long-term debt, excluding current portion 271,232   264,655  
Debt 281,232 275,214
Total shareholders’ equity 517,665   511,292  
Capitalization $ 798,897   $ 786,506  
Debt to capitalization 35.2 % 35.0 %

Non-GAAP adjusted net earnings and Non-GAAP adjusted diluted earnings
per share
– Non-GAAP adjusted net earnings and Non-GAAP adjusted
diluted earnings per share are defined as net earnings and diluted
earnings per share, less items that are not indicative of the operating
performance of the business for the period presented. These items are
included in the reconciliation below. Management uses Non-GAAP adjusted
net earnings and Non-GAAP adjusted diluted earnings per share to
evaluate performance period over period, to analyze the underlying
trends in our business and to assess its performance relative to its
competitors. We believe that this information is useful for investors
and financial institutions seeking to analyze and compare companies on
the basis of operating performance.

The following table illustrates the calculation of Non-GAAP adjusted net
earnings and Non-GAAP adjusted diluted earnings per share using “Net
earnings” and “Diluted earnings per share” from the “Consolidated
Statement of Operations” and the “Selected Quarterly Financial Data”
from the Company’s Form 10-K filed with the Securities and Exchange
Commission on February 23, 2015.

Table 10. Reconciliation of Non-GAAP Financial Information – Net
Earnings
(In thousands except per share amounts)
   
For the Three Months Ended For the Twelve Months Ended

December 31,
2014

 

December 31,
2013

December 31,
2014

 

December 31,
2013

NET EARNINGS:

GAAP Earnings from continuing operations, as reported $ 21,330 $ 13,507 $ 65,780 $ 59,066
Costs associated with the sale of Moosup (45 )

-

1,499

-

Severance costs at Distribution

-

-

367

-

Goodwill impairment charge

-

  2,071  

-

  2,071

Non-GAAP adjusted net earnings from continuing
operations

$ 21,285   $ 15,578   $ 67,646   $ 61,137
 
GAAP diluted earnings per share from continuing operations $ 0.77 $ 0.49 $ 2.37 $ 2.17
Costs associated with the sale of Moosup (0.01 )

-

0.05

-

Severance costs at Distribution

-

-

0.01

-

Goodwill impairment charge

-

  0.08  

-

  0.08

Non-GAAP adjusted diluted earnings per share from
continuing
operations

$ 0.76   $ 0.57   $ 2.43   $ 2.25
 
Diluted weighted average shares outstanding 27,812   27,375   27,777   27,143

Non-GAAP adjusted operating income for Distribution – Non-GAAP
adjusted operating income for Distribution is defined as operating
income for Distribution, less items that are not indicative of the
operating performance of Distribution for the period presented. These
items are included in the reconciliation below. Management uses Non-GAAP
adjusted operating income to evaluate performance period over period, to
analyze the underlying trends in our segments and to assess their
performance relative to their competitors. We believe that this
information is useful for investors and financial institutions seeking
to analyze and compare companies on the basis of operating performance.

The following table illustrates the calculation of Non-GAAP adjusted
operating profit for Distribution using Footnote 19, Segment and
Geographic Information, to the consolidated financial statements from
the Company’s Form 10-K filed with the Securities and Exchange
Commission on February 23, 2015.

Table 11. Reconciliation of Non-GAAP Financial Information –
Operating Segments
(In thousands)
  For the Three Months Ended   For the Twelve Months Ended

December 31,
2014

 

December 31,
2013

December 31,
2014

 

December 31,
2013

DISTRIBUTION SEGMENT OPERATING INCOME:
Net Sales $ 302,687 $ 260,184 $ 1,161,992 $ 1,039,954
GAAP operating income from continuing operations – Distribution
segment
$ 14,295   $ 11,452   $ 56,765   $ 46,206  
% of GAAP net sales from continuing operations 4.7 % 4.4 % 4.9 % 4.4 %
Severance costs at Distribution $

-

  $

-

  $ 550   $

-

 
Non-GAAP adjusted operating income – Distribution segment $ 14,295   $ 11,452   $ 57,315   $ 46,206  
% of adjusted net sales 4.7 % 4.4 % 4.9 % 4.4 %

About Kaman Corporation

Kaman Corporation, founded in 1945 by aviation pioneer Charles H. Kaman,
and headquartered in Bloomfield, Connecticut conducts business in the
aerospace and industrial distribution markets. The company produces
and/or markets widely used proprietary aircraft bearings and components;
complex metallic and composite aerostructures for commercial, military
and general aviation fixed and rotary wing aircraft; aerostructure
engineering design analysis and FAA certification services; safe and arm
solutions for missile and bomb systems for the U.S. and allied
militaries; subcontract helicopter work; and support for the company’s
SH-2G Super Seasprite maritime helicopters and K-MAX® medium-to-heavy
lift helicopters. The company is a leading distributor of industrial
parts, and operates more than 200 customer service locations and five
distribution centers across North America. Kaman offers more than four
million items including bearings, mechanical power transmission,
electrical, material handling, motion control, fluid power, automation
and MRO supplies to customers in virtually every industry. Additionally,
Kaman provides engineering, design and support for automation,
electrical, linear, hydraulic and pneumatic systems as well as belting
and rubber fabrication, customized mechanical services, hose assemblies,
repair, fluid analysis and motor management.

FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of
the safe harbor provisions of the U.S. Private Securities Litigation
Reform Act of 1995. Forward-looking statements also may be included in
other publicly available documents issued by the Company and in oral
statements made by our officers and representatives from time to time.
These forward-looking statements are intended to provide management’s
current expectations or plans for our future operating and financial
performance, based on assumptions currently believed to be valid. They
can be identified by the use of words such as “anticipate,” “intend,”
“plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,”
“strategy,” “future,” “likely,” “may,” “should,” “would,” “could,”
“will” and other words of similar meaning in connection with a
discussion of future operating or financial performance. Examples of
forward looking statements include, among others, statements relating to
future sales, earnings, cash flows, results of operations, uses of cash
and other measures of financial performance.

Because forward-looking statements relate to the future, they are
subject to inherent risks, uncertainties and other factors that may
cause the company’s actual results and financial condition to differ
materially from those expressed or implied in the forward-looking
statements. Such risks, uncertainties and other factors include, among
others: (i) changes in domestic and foreign economic and competitive
conditions in markets served by the Company, particularly the defense,
commercial aviation and industrial production markets; (ii) changes in
government and customer priorities and requirements (including
cost-cutting initiatives, government and customer shut-downs, the
potential deferral of awards, terminations or reductions of expenditures
to respond to the priorities of Congress and the Administration, or
budgetary cuts resulting from Congressional actions or automatic
sequestration); (iii) changes in geopolitical conditions in countries
where the Company does or intends to do business; (iv) the successful
conclusion of competitions for government programs and thereafter
contract negotiations with government authorities, both foreign and
domestic; (v) the existence of standard government contract provisions
permitting renegotiation of terms and termination for the convenience of
the government; (vi) the conclusion to government inquiries or
investigations regarding government programs; (vii) risks and
uncertainties associated with the successful implementation and ramp up
of significant new programs; (viii) potential difficulties associated
with variable acceptance test results, given sensitive production
materials and extreme test parameters; (ix) the receipt and successful
execution of production orders for the U.S. government JPF contract,
including the exercise of all contract options and receipt of orders
from allied militaries, as all have been assumed in connection with
goodwill impairment evaluations; (x) the continued support of the
existing K-MAX® helicopter fleet, including sale of existing K-MAX®
spare parts inventory; (xi) the accuracy of current cost estimates
associated with environmental remediation activities; (xii) the
profitable integration of acquired businesses into the Company’s
operations; (xiii) the ability to implement our ERP systems in a
cost-effective and efficient manner, limiting disruption to our
business, and to capture their planned benefits while maintaining an
adequate internal control environment; (xiv) changes in supplier sales
or vendor incentive policies; (xv) the effects of price increases or
decreases; (xvi) the effects of pension regulations, pension plan
assumptions, pension plan asset performance and future contributions;
(xvii) future levels of indebtedness and capital expenditures; (xviii)
the continued availability of raw materials and other commodities in
adequate supplies and the effect of increased costs for such items;
(xix) the effects of currency exchange rates and foreign competition on
future operations; (xx) changes in laws and regulations, taxes, interest
rates, inflation rates and general business conditions; (xxi) future
repurchases and/or issuances of common stock; and (xxii) other risks and
uncertainties set forth herein and in our 2014 Form 10-K.

Any forward-looking information provided in this report 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 Twelve Months Ended

December 31,
2014

 

December 31,
2013

December 31,
2014

 

December 31,
2013

Net sales $ 477,931 $ 431,040 $ 1,794,962 $ 1,653,921
Cost of sales 341,906   315,217   1,287,023     1,190,610  
Gross profit

 

136,025 115,823 507,939 463,311
Selling, general and administrative expenses 102,776 88,349 397,199 357,752
Goodwill impairment

-

2,071

-

2,071
Net loss on sale of assets 5   38     233     142  
Operating income 33,244 25,365 110,507 103,346
Interest expense, net 3,650 3,113 13,382 12,294
Other expense, net (127 ) 64     623     398  
Earnings from continuing operations before income taxes 29,721 22,188 96,502 90,654
Income tax expense 8,391   8,681   30,722   31,588  
Earnings from continuing operations 21,330   13,507   65,780   59,066  
Earnings from discontinued operations, net of taxes

 

(998 ) (632 ) (2,924 ) (2,386 )
Gain on disposal of discontinued operations, net of taxes (5,269 )

-

  (4,984 )   420  
Total earnings from discontinued operations, net of taxes (6,267 ) (632 ) (7,908 ) (1,966 )
Net earnings $ 15,063   $ 12,875   $ 57,872   $ 57,100  
 
Earnings per share:
Basic earnings per share from continuing operations $ 0.79 $ 0.50 $ 2.43 $ 2.21
Basic earnings per share from discontinued operations (0.04 ) (0.02 ) (0.11 ) (0.09 )
Basic earnings per share from disposal of discontinued operations (0.19 )

-

  (0.18 ) 0.02  
Basic earnings per share $ 0.56   $ 0.48   $ 2.14   $ 2.14  
 
Diluted earnings per share from continuing operations $ 0.77 $ 0.49 $ 2.37 $ 2.17
Diluted earnings per share from discontinued operations (0.04 ) (0.02 ) (0.11 ) (0.09 )
Diluted earnings per share from disposal of discontinued operations (0.19 )

-

  (0.18 ) 0.02  
Diluted earnings per share $ 0.54   $ 0.47   $ 2.08   $ 2.10  
Average shares outstanding:
Basic 27,137 26,815 27,053 26,744
Diluted 27,812   27,375   27,777   27,143  
Dividends declared per share $ 0.16   $ 0.16   $ 0.64   $ 0.64  

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

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

   

December 31,
2014

December 31,
2013

Assets
Current assets:
Cash and cash equivalents $ 12,411 $ 10,384
Accounts receivable, net 234,648 205,873
Inventories 359,741 390,495
Deferred income taxes 25,888 30,128
Income tax refunds receivable

-

2,297
Other current assets 29,568   26,028  
Total current assets 662,256   665,205  
Property, plant and equipment, net of accumulated depreciation of
$183,829 and $167,282, respectively
147,825 148,508
Goodwill 238,581 203,923
Other intangible assets, net 94,491 89,449
Deferred income taxes 34,784 10,287
Other assets

23,268

  23,259  
Total assets $ 1,201,205   $ 1,140,631  
Liabilities and Shareholders’ Equity
Current liabilities:
Notes payable $

-

$ 559
Current portion of long-term debt 10,000 10,000
Accounts payable – trade 116,787 119,482
Accrued salaries and wages 42,214 33,677
Advances on contracts 2,406 9,470
Other accruals and payables 47,583 54,095
Income taxes payable 2,734   673  
Total current liabilities 221,724   227,956  
Long-term debt, excluding current portion 271,232 264,655
Deferred income taxes 3,391 3,855
Underfunded pension 141,546 85,835
Other long-term liabilities 45,647 47,038
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $1 par value, 200,000 shares authorized; none
outstanding

-

-

Common stock, $1 par value, 50,000,000 shares authorized; voting;
27,518,226 and 27,189,922 shares issued, respectively
27,518 27,190
Additional paid-in capital 145,845 133,517
Retained earnings 479,984 439,441
Accumulated other comprehensive income (loss) (126,261 ) (81,121 )
Less 385,942 and 330,487 shares of common stock, respectively, held
in treasury, at cost
(9,421 ) (7,735 )
Total shareholders’ equity 517,665   511,292  
Total liabilities and shareholders’ equity $ 1,201,205   $ 1,140,631  

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands) (unaudited)

 
  For the Twelve Months Ended

December 31,
2014

 

December 31,
2013

Cash flows from operating activities:
Earnings from continuing operations $ 65,780 $ 59,066
Adjustments to reconcile earnings from continuing operations to net
cash provided by (used in) operating activities of continuing
operations:
Depreciation and amortization 36,209 31,555
Accretion of convertible notes discount 1,931 1,833
Provision for doubtful accounts 853 1,286
Net loss on sale of assets 233 142
Goodwill impairment

-

2,071
Net gain (loss) on derivative instruments 1,071 178
Stock compensation expense 5,411 4,973
Excess tax benefit from share-based compensation arrangements (834 ) (543 )
Deferred income taxes 1,434 2,938
Changes in assets and liabilities, excluding effects of
acquisitions/divestitures:
Accounts receivable (23,876 ) (22,565 )
Inventories 30,181 (19,707 )
Income tax refunds receivable 2,292 (2,297 )
Other current assets (2,560 ) 1,299
Accounts payable – trade (3,858 ) 12,170
Accrued contract losses (1,899 ) (969 )
Advances on contracts (7,065 ) 7,570
Other accruals and payables 6,746 (10,187 )
Income taxes payable 4,455 (2,024 )
Pension liabilities (6,380 ) (3,118 )
Other long-term liabilities (1,035 ) 1,169  
Net cash provided by (used in) operating activities of continuing
operations
109,089 64,840
Net cash provided by operating activities of discontinued operations (2,902 ) (1,892 )
Net cash provided by (used in) operating activities 106,187   62,948  
Cash flows from investing activities:
Proceeds from sale of assets 39 100
Proceeds from sale of discontinued operations 7,863

-

Expenditures for property, plant & equipment (28,283 ) (40,852 )
Acquisition of businesses (77,618 ) (18,162 )
Other, net (2,060 ) (2,305 )
Cash used in investing activities of continuing operations (100,059 ) (61,219 )
Cash used in investing activities of discontinued operations 3   (56 )
Cash used in investing activities (100,056 ) (61,275 )
Cash flows from financing activities:
Net borrowings under revolving credit agreements 15,788 22,720
Debt repayment (10,000 ) (10,000 )
Net change in book overdraft 1,568 (9,878 )
Proceeds from exercise of employee stock awards 6,411 6,333
Purchase of treasury shares (853 ) (644 )
Dividends paid (17,286 ) (17,091 )
Other

-

(98 )
Windfall tax benefit 834   543  
Cash provided by financing activities of continuing operations (3,538 ) (8,115 )
Cash provided by financing activities of discontinued operations

-

 

-

 
Cash provided by financing activities (3,538 ) (8,115 )
Net increase (decrease) in cash and cash equivalents 2,593 (6,442 )
Effect of exchange rate changes on cash and cash equivalents (566 ) 233
Cash and cash equivalents at beginning of period 10,384   16,593  
Cash and cash equivalents at end of period $ 12,411   $ 10,384  

Contact:
Eric Remington
V.P., Investor Relations
860-243-6334
Eric.Remington@kaman.com

Source Article from http://finance.yahoo.com/news/kaman-reports-2014-fourth-quarter-210600135.html

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