BLOOMFIELD, Conn. -- Kaman Corp. recently reported financial results for the third quarter ended October 1, 2010.
Kaman reported third-quarter sales of $359.5 million, an increase of 24 percent over the same period a year ago.
Neal J. Keating, Chairman, President and Chief Executive Officer, stated, "Stronger performance across our businesses allowed us to end the third quarter with higher sales and profitability than originally anticipated. In our Industrial Distribution segment, organic daily sales increased 3.6% sequentially over the second quarter of 2010 and the acquisitions completed earlier this year are proving to be more accretive than projected. In our Aerospace segment, after resuming production of JPF fuzes in August, we were able to achieve a higher rate of output than anticipated in our outlook and we transitioned to the more profitable Option 6 of the contract. We also achieved record BLACK HAWK cockpit deliveries. Despite the anticipated top line weakness of our aerospace bearing product lines, the strength of our diversified product portfolio allowed us to report an increase in Aerospace sales and maintain flat operating margins, excluding the charge associated with the resolution of the pricing of the Company's contract to produce the composite tail rotor pylon (TRP) for the Sikorsky MH-92 helicopter program. Given the improved profitability in Industrial Distribution, we expanded our consolidated operating margin by approximately 250 basis points during the quarter (on a non-GAAP basis). We are encouraged by the underlying trends we are seeing in our businesses and believe these trends coupled with several new contract awards in our Aerospace business during the quarter should allow us to build on this progress."
Segment reports follow:
Industrial Distribution segment sales increased 37.0% in the 2010 third quarter to $223.1 million from $162.9 million a year ago. Acquisitions contributed $35.3 million in sales during the quarter. On a sales per sales day… basis, organic sales were up 17.1% over last year's third quarter (see table on page 5 for additional details regarding the Company's sales per day performance). Segment operating income for the third quarter of 2010 was $8.5 million, a 150.7% increase from operating income of $3.4 million in the third quarter of 2009. The operating profit margin for the third quarter of 2010 was 3.8% compared to 3.7% in the second quarter of 2010 and 2.1% in the third quarter of 2009.
Industrial Distribution segment sales for the third quarter of 2010 reflect growth from acquisitions made in 2010 and a healthier business environment for the segment compared to the same period in 2009. The improved market conditions were broad based across geographies, customers and end markets. Sales and operating margin were higher on a sequential basis in the third quarter due to the contribution from acquisitions and the better operating environment.
Aerospace segment sales were $136.4 million, an increase of 7.4% from sales of $127.0 million in the third quarter of 2009. The sales increase was primarily attributable to the Joint Programmable Fuze program combined with higher deliveries of BLACK HAWK cockpits and Bell blade components. These increases were partially off-set by anticipated lower sales of bearing product lines and helicopter services and support revenue. Operating income for the third quarter of 2010 was $19.0 million, compared to operating income of $19.9 million in the 2009 third quarter. The current quarter includes a pre-tax charge of $2.0 million, or after-tax $0.05 per diluted share related to the resolution of pricing associated with the TRP contract.
Outlook
The company's updated expectations for full year 2010 include: -- Aerospace segment sales of $480 million to $490 million-- Aerospace operating margins of 14.0% to 14.5%, excluding the $2.0
million TRP settlement
-- Industrial Distribution organic sales growth of 10% to 13% yielding sales in a range of $810 million to $830 million when combined with previously announced acquisitions
-- Industrial Distribution segment operating margins of 3.3% to 3.5%
-- Interest expense of approximately $9.8 million (net interest expense will be approximately $3.2 million as a result of the one-time look-back interest benefit)
-- Fourth quarter corporate expenses of approximately $8.5 million to $9.5 million
Chief Financial Officer William C. Denninger commented, "Given our stronger than expected third quarter performance, we are increasing our outlook for the full year. The strengthening that we experienced in our Industrial Distribution segment, both organically and in our acquired businesses, provides us with the confidence that we will once again be able to drive significant year-over-year growth in the fourth quarter. In Aerospace, while we expect sales of our bearing product lines to be lower than the prior year, we still expect to generate growth for the segment overall as we deliver a substantial quantity of JPF fuzes in the fourth quarter. With generally favorable underlying market conditions and internal initiatives gaining traction, Kaman is well positioned as we move toward the end of the year and into 2011."
