BLOOMFIELD, Conn. — Kaman Corp. reported financial results for the first fiscal quarter ended April 1, 2016.
| Table 1. Summary of Financial Results | |||||||||||||||
| In thousands except per share amounts | For the Three Months Ended | ||||||||||||||
| April 1, 2016 |
April 3, 2015 |
Change | |||||||||||||
| Net sales: | |||||||||||||||
| Distribution | $ | 288,664 | $ | 311,471 | $ | (22,807 | ) | ||||||||
| Aerospace | 162,534 | 131,311 | 31,223 | ||||||||||||
| Net sales | $ | 451,198 | $ | 442,782 | $ | 8,416 | |||||||||
| Operating income: | |||||||||||||||
| Distribution | $ | 10,469 | $ | 12,964 | $ | (2,495 | ) | ||||||||
| % of sales | 3.6 | % | 4.2 | % | (0.6 | )% | |||||||||
| Aerospace | 21,297 | 21,821 | (524 | ) | |||||||||||
| % of sales | 13.1 | % | 16.6 | % | (3.5 | )% | |||||||||
| Net gain (loss) on sale of assets | 28 | (27 | ) | 55 | |||||||||||
| Corporate expense | (13,444 | ) | (12,428 | ) | (1,016 | ) | |||||||||
| Operating income | $ | 18,350 | $ | 22,330 | $ | (3,980 | ) | ||||||||
| Adjusted EBITDA*: | |||||||||||||||
| Distribution | $ | 14,272 | $ | 17,137 | $ | (2,865 | ) | ||||||||
| Aerospace | 27,095 | 25,695 | 1,400 | ||||||||||||
| Net gain (loss) on sale of assets | 28 | (27 | ) | 55 | |||||||||||
| Corporate expense | (12,125 | ) | (11,105 | ) | (1,020 | ) | |||||||||
| Adjusted EBITDA* | $ | 29,270 | $ | 31,700 | $ | (2,430 | ) | ||||||||
| Adjusted diluted earnings per share* | $ | 0.41 | $ | 0.47 | $ | (0.06 | ) | ||||||||
Neal J. Keating, Chairman, President and Chief Executive Officer, stated, “In the first quarter of 2016 we achieved GAAP diluted earnings per share of $0.35 or adjusted diluted earnings per share* of $0.41, largely in line with our expectations. Sales were higher year-over-year, driven by direct commercial sales of the joint programmable fuze, our legacy fuze programs, and acquisitions in Aerospace partially offset by lower Distribution revenues and lower sales from our New Zealand helicopter program which was substantially completed in 2015.
“We were pleased with operating profit margin performance at Distribution for the quarter. Adjusted operating margin* expanded 60 basis points to 3.7% when compared to the fourth quarter on relatively flat organic sales per sales day*. Our recent actions at Distribution to adjust our cost structure have contributed to the sequential improvement in operating margin performance. While we anticipate continued market challenges, we feel well positioned to improve operating performance for the balance of the year.
“At Aerospace sales increased 23.8%, driven by organic growth of 10.6% and the contributions from our 2015 acquisitions. Adjusted operating margin* in the quarter was 14.3%, which includes $5.8 million in depreciation and amortization expense, a 50% increase over the prior year, primarily driven by acquisitions, and a $1.0 million decrease in operating income resulting from changes in estimates on our long-term contracts. Aerospace adjusted EBITDA* for the quarter was 16.7%.”
Chief Financial Officer, Robert D. Starr, commented, “Overall we executed well in the first quarter providing us confidence to reaffirm our outlook for the year. Earnings are expected to be more back half weighted as we move through the year led by continued strong demand for our bearing and fuzing products and improved performance from our structures programs. In addition, we expect tepid market conditions in Distribution to continue with year-over-year comparisons improving as we move through the second half of the year. Distribution’s operating margin should improve as we realize benefits from our restructuring actions, our productivity initiatives take hold and our organic sales per sales day* improve.”
2016 Outlook
We are reaffirming our full-year outlook for 2016, as follows:
- Distribution:
- Sales of $1,125.0 million to $1,165.0 million
- Operating margins of 4.4% to 4.6%
- Adjusted EBITDA margin of 5.8% to 6.0%
- Aerospace:
- Sales of $700.0 million to $720.0 million
- Operating margins of 17.5% to 17.8%, or 18.3% to 18.6%, when adjusted for $5.5 million of transaction and integration costs in 2016 associated with the 2015 acquisitions
- Adjusted EBITDA margin of 21.8% to 22.0%
- Interest expense of approximately $16.0 million
- Corporate expenses of approximately $55.0 million
- Estimated annualized tax rate of approximately 34.5%
- Depreciation and amortization expense of approximately $45.0 million
- Capital expenditures of $30.0 million to $40.0 million
- Free cash flow in the range of $50.0 million to $60.0 million
The full report can be viewed here.
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