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| 8-K - KAMAN CORPORATION FORM 8-K DATED DECEMBER 1, 2009 - KAMAN Corp | forms8-k.htm |
Kaman Corporation (NASDAQ-GS: KAMN)
Kaman Corporation (NASDAQ-GS: KAMN)
Investor Presentation
December 2009
2
KAMAN CORPORATION - Investment Highlights
ü High
margin aerospace business led by specialty bearing product lines
ü Industrial
distribution business gaining market share in a fragmented
market via national account growth, geographic and product line
expansion
market via national account growth, geographic and product line
expansion
ü Long-term
organic growth opportunities in both segments
ü Potential
to accelerate growth and increase scale through acquisitions
ü Initiatives
to optimize profit, increase cash flow generation, strengthen
competitive position
competitive position
ü Strong balance sheet
to fund growth and strategic initiatives
3
KAMAN CORPORATION - Overview
Nine month YTD sales
thru 10/2/09 $877 million
thru 10/2/09 $877 million
Two business segments
4
Source: Boeing and Airbus historical data and ISM
AEROSPACE ORDERS and DELIVERIES VS. ISM INDEX OVER TIME
5
ü December 2007 - Sold Music
segment to Fender focusing the company on
its core industrial distribution and aerospace businesses
ü 2008 - Completed first
acquisition in aerospace since 2002 and first
acquisitions in industrial distribution since 2003
acquisitions in industrial distribution since 2003
ü February 2009 - Took title
to eleven Kaman manufactured SH-2G helicopters
under a previously negotiated settlement with the Commonwealth of Australia
under a previously negotiated settlement with the Commonwealth of Australia
ü July 2009 - Received a
contract modification award for the JPF program
significantly improving profit on U.S. Government sales
significantly improving profit on U.S. Government sales
RECENT SIGNIFICANT EVENTS
6
ü August
2009 - Awarded contract to demonstrate unmanned version of the
company’s K-MAX® helicopter to the U.S. Marine Corps
ü August 2009 - Introduced
the proprietary ReliaMark™ brand of power
transmission products
transmission products
ü August 2009 - Awarded a
five year potentially $53 million program to provide
composite helicopter blade skins and skin core assemblies for Bell
Helicopter
Helicopter
ü August 2009 - $200 million
Shelf registration (S-3) took effect
ü September 2009 - Completed
new three year $225 million revolving credit
facility
facility
RECENT SIGNIFICANT EVENTS
7
RECENT KEY APPOINTMENTS
ü Neal
Keating, Chairman, President and CEO
ü Thomas
Rabaut, Director
ü Greg
Steiner, President, Kaman Aerospace Group
ü Bill
Denninger, Senior Vice President and CFO
ü Phil
Goodrich, Vice President - Business Development
ü William
Higgins, Director
ü Rob
Starr, Vice President and Treasurer
ü George
Minnich, Director
ü Steven
Smidler, Senior Vice President and COO, Kaman Industrial
Technologies
Technologies
8
INDUSTRIAL DISTRIBUTION SEGMENT
2009 YTD Nine Month Sales $496 million
9
INDUSTRIAL DISTRIBUTION SEGMENT
Third largest industrial distribution firm serving $13 billion of a $23 billion power
transmission market.
transmission market.
185 branches and 5 distribution centers
Major product categories:
§ Bearings
§ Mechanical and electrical power transmission
§ Motion control
§ Material handling
§ Fluid power
Statistics
§ CAGR 2003 to 2008 = 9.3%
§ Sales per employee $435,000
§ 1,700 employees (approximately one third
outside sales)
§ SKUs 3.25 million
§ 48,000 customers
10
INDUSTRIAL DISTRIBUTION SEGMENT
Strategy:
§ Expand our geographic footprint in major
industrial markets to enhance our
position in the competition for national and regional accounts
position in the competition for national and regional accounts
§ Broaden our product offerings to gain additional
business from existing
customers and new opportunities from a wider slice of the market
customers and new opportunities from a wider slice of the market
Customers:
§ Broad cross section of industry with 48,000
customers served from local
branches in 72 of the top 100 U.S. Industrial markets. Growing national
account base.
branches in 72 of the top 100 U.S. Industrial markets. Growing national
account base.
11
INDUSTRIAL DISTRIBUTION SEGMENT
12
INDUSTRIAL DISTRIBUTION SEGMENT - Key Suppliers
13
AEROSPACE SEGMENT
2009 YTD Nine Month Sales $381 million
14
Commercial
Military
Business/Regional
28%
69%
3%
Note: Based on YTD sales at 10/2/09
AEROSPACE - Business Mix
15
AEROSPACE - Aerospace Bearing Products
Machineable Self-Lubricating Bearings
Brands KAron®, KAtherm®, KAcarb®, and others,
Custom Air Frame Bearings
§ Fraslip® and other brands
§ Plain and self-lubricating sliding bearings,
ball bearings
§ Customized to meet specialized customer requirements in demanding
aerospace
and industrial applications
Low-Maintenance Flexible Couplings
§ KAflex® and Tufflex® brands
§ Used extensively in the main and tail
rotor drive systems of helicopters
§ Custom-designed and engineered for each application
16
AEROSPACE - Aerospace Bearing Products
Aerospace and niche industrial markets.
§ Fixed
Wing (Commercial, Military)
Flight Controls
Landing Gear and Doors
Engines and Accessories
§ Helicopters
(Commercial, Military)
Rotor System and Controls
Landing Gear and Doors
Engines and Accessories
Main Engine and Tail Rotor Driveshaft Systems
§ Spacecraft,
Submarines, Launch Vehicles and Satellites
Flight Controls
Power Systems
Solar Array Deployment Systems
Hatches and Doors
§ Industrial
Hydropower Systems
Motor Sport - Steering and Suspension Systems
17
AEROSPACE - Metallic and Composite Structures
JACKSONVILLE, FL
WICHITA, KS
DARWEN, UK
Capabilities:
§ Build-to-Print manufacturing of metal and
composite structures and assemblies
composite structures and assemblies
§ Composite tooling design and manufacture
Major Customers:
§ Sikorsky, Boeing IDS, BAe, Spirit, Airbus,
Boeing Commercial, Aircell
Boeing Commercial, Aircell
Core Competencies:
§ Sheet Metal Fabrication
§ Composite Part Fabrication
§ Tooling design and manufacture
§ Aircraft Structure Assembly
§ Program Management
§ Supply Chain Management
18
AEROSPACE - Helicopter Services
Aftermarket Business
§ SH-2G Naval Helicopter - Support and Upgrades
§ K-MAX Commercial Helicopter Support
§ Blade Overhaul, Repairs, and Erosion Coating
HeliworX Subcontract Business
§ Bell blade skins and skin core assemblies
§ MDHI Explorer Rotor Blade System
§ Sikorsky - H-60 Blackhawk
§ Northrop Grumman Hawkeye
§ A-10 Re-wing Program
§ Small Composite Main Rotor Blade (SCRB)
19
Unmanned Airborne Systems (UAS) - Unmanned K-MAX
AEROSPACE - Helicopter Services
§ Teamed with Lockheed Martin to develop
an
unmanned version of the Kaman K-Max
commercial helicopter for the U.S. Military
unmanned version of the Kaman K-Max
commercial helicopter for the U.S. Military
§ The recent decision to postpone the demonstration
from December was made in conjunction with the
Marine Corps
from December was made in conjunction with the
Marine Corps
§ Demonstration for the U.S. Marine Corps
now
scheduled for Q1 2010
scheduled for Q1 2010
20
AEROSPACE - New Bell Blade Program
Customer / Contract Overview
§ Bell Helicopter - Textron
§ Fort Worth, Texas
§ Award - 28 August 2009
§ $53M / Five-Year Program
Product Description / Application
§ Main Rotor Blade Composite Skins and Skin
/ Core Assemblies
§ 18 Total Part Numbers
§ Bell Models - H1, 406, 407, 412, 427, 429,
430 and BA609
Composite Materials
§ Fiberglass & Graphite Pre-Impregnated
(Prepreg) Material
§ Nomex Honeycomb Core
21
HARPOON
FMU-139
TOMAHAWK
STANDARD
MISSILE
MISSILE
SLAM-ER
AMRAAM
KPP Fuzes are on a Majority of Major Weapons
Systems
Systems
STANDARD
MISSILE
MISSILE
JPF
SLAM-ER
TOMAHAWK
AMRAAM
MAVERICK
AGM-65M
AEROSPACE - Fuzing Systems
22
OUTLOOK
Aerospace segment
§ Full year 2009 sales expected to be up 5% to 7% year-over-year
§ Operating margin for 2009 expected to be in the “mid-teens”
§ Stable military programs - limited near term impact from
DOD reductions
Industrial Distribution segment
§ Full year 2009 sales are expected to decline toward the high
end of stated range
of down 10% to 15%
of down 10% to 15%
§ Full year 2009 operating margin is expected to be between
2.1% and 2.5%
Cash Flow
§ Full year 2009 free cash flow is expected to be between $35M
and $40M
23
OPPORTUNITIES
ü Market recovery - Industrial
Distribution
ü Ramp up programs
- A-10 re-wing
- Bell blades
- B787
- JSF
- A380
ü Acquisitions - both businesses
ü Sale of SH-2(I) helicopters
ü Unmanned K-MAX program
ü Continuation of outsourcing
trend - primes and super tier 1’s
24
FINANCIAL REVIEW
43%
2009 YTD Nine Month Sales $887 million
25
1 Corporate expense percentage is to Total Sales
|
(In thousands)
SEGMENTS |
Net Sales |
Operating Income/(Loss) |
Operating Margin | |||
|
Q3 2009 |
Q3 2008 |
Q3 2009 |
Q3 2008 |
Q3 2009 |
Q3 2008 | |
|
Industrial Distribution |
$162,921 |
$204,275 |
$3,388 |
$10,704 |
2.1% |
5.2% |
|
Aerospace |
126,980 |
130,858 |
19,906 |
20,865 |
15.7% |
15.9% |
|
Net gain/(loss) on sale of assets |
|
|
(3) |
301 |
|
|
|
Corporate expense |
|
|
(8,625) |
(7,422) |
1 (3.0%) |
1(2.2%) |
|
Sales/Op. inc. from continuing ops |
$289,901 |
$335,133 |
$14,666 |
$24,448 |
5.1% |
7.3% |
INCOME STATEMENT HIGHLIGHTS
For quarters ended October 2, 2009 and September 26, 2008
For quarters ended October 2, 2009 and September 26, 2008
26
1 Corporate expense percentage is to Total Sales
|
(In thousands)
SEGMENTS |
Net Sales |
Operating Income/(Loss) |
Operating Margin | |||
|
YTD 2009 |
YTD 2008 |
YTD 2009 |
YTD 2008 |
YTD 2009 |
YTD 2008 | |
|
Industrial Distribution |
$495,781 |
$589,773 |
$9,232 |
$29,512 |
1.9% |
5.0% |
|
Aerospace |
381,378 |
347,426 |
56,803 |
46,920 |
14.9% |
13.5% |
|
Net gain/(loss) on sale of assets |
|
|
37 |
94 |
|
|
|
Corporate expense |
|
|
(25,836) |
(23,704) |
1 (2.9%) |
1(2.5%) |
|
Sales/Op. inc. from continuing ops |
$877,159 |
$937,199 |
$40,236 |
$52,822 |
4.6% |
5.6% |
INCOME STATEMENT HIGHLIGHTS
For nine months ended October 2, 2009 and September 26, 2008
For nine months ended October 2, 2009 and September 26, 2008
27
|
(In Millions) |
As of 10/2/09 |
As of 12/31/08 |
As of 12/31/07 |
|
Cash and Cash Equivalents |
$16.6 |
$8.2 |
$73.9 |
|
Notes Payable and Long-term Debt |
$78.7 |
$94.2 |
$12.9 |
|
Shareholders’ Equity |
$299.8 |
$274.3 |
$394.5 |
|
Debt as % of Total Capitalization |
20.8% |
25.6% |
3.2% |
|
Capital Expenditures
(YTD Continuing Operations) |
$8.9 |
$16.0 |
$14.2 |
|
Depreciation & Amortization (YTD Continuing Operations) |
$11.8 |
$12.8 |
$9.9 |
BALANCE SHEET AND CAPITAL FACTORS
28
Sales
EPS
Stock Price (one year)
Return on Invested Capital
PERFORMANCE METRICS
29
Forward-Looking Statements
This presentation 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) management's
success in resolving operational issues at the Aerostructures Wichita facility; 7) successful negotiation of the Sikorsky Canadian MH-
92 program; 8) successful resale of the SH-2G(I) aircraft, equipment and spare parts; 9) 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 all have been assumed in connection with goodwill impairment evaluations; 10) satisfactory resolution of the company’s
litigation relating to the FMU-143 program; 11) continued support of the existing K-MAX helicopter fleet, including sale of existing K-
MAX spare parts inventory; 12) cost growth in connection with environmental remediation activities at the Bloomfield, Moosup and
New Hartford, CT facilities and our U.K. facilities; 13) profitable integration of acquired businesses into the company's operations; 14)
changes in supplier sales or vendor incentive policies; 15) the effects of price increases or decreases; 16) the effects of pension
regulations, pension plan assumptions and future contributions; 17) future levels of indebtedness and capital expenditures; 18)
continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items;
19) the effects of currency exchange rates and foreign competition on future operations; 20) changes in laws and regulations, taxes,
interest rates, inflation rates and general business conditions; 21) future repurchases and/or issuances of common stock; and 22)
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 presentation should be considered with these factors in mind. The company assumes no
obligation to update any forward-looking statements contained in this presentation.
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) management's
success in resolving operational issues at the Aerostructures Wichita facility; 7) successful negotiation of the Sikorsky Canadian MH-
92 program; 8) successful resale of the SH-2G(I) aircraft, equipment and spare parts; 9) 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 all have been assumed in connection with goodwill impairment evaluations; 10) satisfactory resolution of the company’s
litigation relating to the FMU-143 program; 11) continued support of the existing K-MAX helicopter fleet, including sale of existing K-
MAX spare parts inventory; 12) cost growth in connection with environmental remediation activities at the Bloomfield, Moosup and
New Hartford, CT facilities and our U.K. facilities; 13) profitable integration of acquired businesses into the company's operations; 14)
changes in supplier sales or vendor incentive policies; 15) the effects of price increases or decreases; 16) the effects of pension
regulations, pension plan assumptions and future contributions; 17) future levels of indebtedness and capital expenditures; 18)
continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items;
19) the effects of currency exchange rates and foreign competition on future operations; 20) changes in laws and regulations, taxes,
interest rates, inflation rates and general business conditions; 21) future repurchases and/or issuances of common stock; and 22)
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 presentation should be considered with these factors in mind. The company assumes no
obligation to update any forward-looking statements contained in this presentation.
Contact:
Eric B. Remington, Vice President
(860) 243-6334
Eric.Remington@kaman.com
Eric B. Remington, Vice President
(860) 243-6334
Eric.Remington@kaman.com