Though a series of strategic acquisitions, a strengthening of its existing businesses, and an expansion of its sales force, Kaman Industrial Technologies (KIT), the distribution arm of the Kaman Corp., enjoyed its fifth consecutive quarter of organic sales growth.
“2014 was an important year for our distribution segment as we continued to build momentum,” said Neal Keating, president, chairman and CEO of the Kaman Corp., in a conference call with analysts after releasing its fourth quarter earnings and year-end report. Overall, KIT grew revenue to more than $1.16 billion in 2014, a 12 percent increase compared to 2013.
KIT is No. 20 on Industrial Distribution's 2014 Big 50 List.
Acquisitions continued to play an important role in KIT’s growth. A year ago, KIT completed its acquisition of B.W. Rogers, the biggest purchase in the company’s history. And it is paying off. B.W. Rogers provides KIT additional scale to its fluid power and automation control and energy platform. Top line growth was driven by the combination of the B.W. Rogers acquisition and full-year organic growth of 3.2 percent, KIT’s highest annual rate since 2011. In the fourth quarter, KIT had an organic growth of 4.8 percent.
For 2015, KIT is now forecasting sales growth of 8 to 10 percent. This breaks down to between 3 percent and 5 percent organic growth with the balance coming from the B.W. Rogers purchase and KIT’s more recent acquisition of G.C. Fabrication.
“Our organic growth outlook reflects our expectations for continued moderate economic growth during 2015,” Keating said.
With the acquisition of B.W. Rogers, Parker now has become KIT’s biggest supplier and KIT is believed to be the second largest Parker distributor in North America. The company indicated it will be looking to grow its Parker business even further.
Last month, KIT completed its acquisition of G.C. Fabrication, (GCF) which enhances KIT’s automation, controls, and energy platforms in the New York metro market while deepening its relationship with Schneider Electric. GCF is a premier Schneider Electric/ SQARE D distributor. In 2012, KIT entered into a national distributor agreement with Schneider, a global specialist in energy management. KIT is a national distributor of Schneider industrial automation and control products as well as select power control and protection products commonly used in motion control applications.
The company also completed the hiring of 60 new salespeople to help drive organic growth.
"The early indicators (of the new hires) are encouraging with this initiative increasing positive sales, earnings and margin impacts in our fourth quarter,” Keating said according to a transcript of the call as provided by www.seekingalpha.com.
KIT also intends to remain active on the acquisition front, particularly in the bearings sector.
“We continue to be very active in the M&A side of our business, obviously starting the year with the GC Fabrication acquisition that was a nice one for us to continue to build out our Automation, Control and Energy platform,” Keating said. “
He went on to say, according to the transcript, “we would really like to be able to add to our bearings business and increasingly you are going to see us focus there… whether we will be able to be successful or not is the question mark, but we are very active.”
In December 2014 KIT completed the divestiture of its Mexico distribution business Delamac de Mexico.
The company said it reached the conclusion that this operation was “subscale” and based on the lack of suitable acquisition targets the business will be better positioned for success by being a part of RYASA, the largest bearing and power transmission distributor in Mexico.