Bloomfield, CT - Kaman Corp. reported financial results for the first quarter ended March 29, 2013.
| Table 1. Summary of Financial Results | ||||||||||||
| In thousands except per share amounts | For the three months ended | |||||||||||
| March 29, 2013 | March 30, 2012 | $ Change | ||||||||||
| Net sales: | ||||||||||||
| Distribution | $ | 257,168 | $ | 252,635 | $ | 4,533 | ||||||
| Aerospace | 130,907 | 131,084 | (177 | ) | ||||||||
| Net sales | $ | 388,075 | $ | 383,719 | $ | 4,356 | ||||||
| Operating income: | ||||||||||||
| Industrial Distribution | $ | 4,630 | $ | 12,314 | $ | (7,684 | ) | |||||
| Aerospace | 20,911 | 15,901 | 5,010 | |||||||||
| Net (loss) gain on sale of assets | (79 | ) | 24 | (103 | ) | |||||||
| Corporate expense | (11,695 | ) | (11,525 | ) | (170 | ) | ||||||
| Operating income | $ | 13,767 | $ | 16,714 | $ | (2,947 | ) | |||||
| Diluted earnings per share from continuing operations | $ | 0.26 | $ | 0.35 | $ | (0.09 | ) | |||||
Neal J. Keating, Chairman, President and Chief Executive Officer, stated, “While our results for the first quarter were below last year, our performance was slightly ahead of our expectations. Aerospace delivered a solid operating profit margin of 16.0%, better than expected due to program mix. However, Distribution faced a decline in organic sales which resulted in its operating profit contribution coming in below prior year.
"During the first quarter, we announced a restructuring at Distribution. This restructuring, which focused on workforce reductions and the consolidation of field operations in geographic regions where we had multiple facilities, resulted in $3.0 million of pre-tax expense for the quarter, or $0.07 per diluted share. These expenses combined with the softening of certain of our end markets impacted the performance of this segment in the first quarter. We continue to expect significant improvement in our performance in the second half of the year and believe the cost structure adjustments we made will contribute significantly to that improvement.
"Aerospace sales performance was led by increased volume for our bearing product line and legacy fuze programs. The strength in these programs was offset by lower deliveries on several other programs resulting from reduced customer requirements, most notably the BLACK HAWK and engineering design work for commercial aircraft. The increase in operating profit margin at Aerospace over the prior year is attributable to a more profitable product mix.”
Distribution Segment
Sales increased 1.8% in the first quarter of 2013 to $257.2 million compared to $252.6 million a year ago. Acquisitions contributed $23.2 million in sales in the quarter (sales from acquisitions are classified as organic beginning with the thirteenth month following the acquisition). Organic sales per sales day* decreased 5.9% from last year's first quarter, with organic sales down $18.7 million for the period. (See Table 3 for additional details regarding the Segment's sales per sales day performance.)
Segment operating income for the first quarter of 2013 was $4.6 million compared to operating income of $12.3 million in the first quarter of 2012. The operating profit margin for the first quarter of 2013 was 1.8% compared to 4.9% a year ago. Operating profit margin was lower due to $3.0 million in restructuring costs recorded in the first quarter of 2013 and a decrease in organic sales which impacted our ability to leverage our fixed costs.
Aerospace Segment
Sales were $130.9 million, a decrease of $0.2 million from sales of $131.1 million in the first quarter of 2012, due to a $3.7 million decrease in sales on military products/programs which was offset by a $3.5 million increase in sales on our commercial products/programs. The increase in commercial sales was primarily attributable to a higher volume of shipments for our bearing products, an increase in deliveries of various commercial composite structures products/programs, and stronger tooling fabrication sales. These increases totaled $7.1 million and were partially offset by a $4.3 million decrease in sales in engineering design services resulting from a reduction in customer requirements. The decrease in military sales was primarily attributable to fewer cockpit deliveries on our Sikorsky BLACK HAWK helicopter program, where we delivered 27 cockpits in the first quarter of 2013 versus 35 cockpits in the first quarter of 2012; lower sales on our Egypt Upgrade program; and lower sales on the blade erosion coating program. These decreases totaled $7.2 million and were partially offset by increases totaling $5.4 million related to increased sales volume for our bearings products and an increase in non-JPF bomb fuze deliveries.
Operating income for the first quarter of 2013 was $20.9 million, compared to operating income of $15.9 million in the first quarter of 2012. The operating margin in this year's first quarter was 16.0% as compared to 12.1% in the prior year. The increase was due to the mix of sales between commercial and military products/programs and the absence of $1.5 million in negative changes in contract estimates recorded in prior year. The increase in commercial sales contributed $2.3 million to operating income. Although overall military product/program sales were down by $3.7 million, operating margin contribution improved by $1.7 million as a result of higher bearing product sales, partially offset by lower BLACK HAWK, Egypt upgrade and blade erosion coating program sales volume.
