Kaman Corporation (NASDAQ-GS: KAMN)
Kaman Corporation (NASDAQ-GS: KAMN)
INVESTOR PRESENTATION
August 12, 2008
Slide 2
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 implementation of the Deed of Settlement
agreed upon with the Commonwealth of Australia, which would conclude the Australia SH-2G (A) program with a mutual release of
claims; 8) receipt and successful execution of production orders for the JPF U.S. government contract, including the exercise of all
contract options, successful negotiation of price increases with the U.S. government, and receipt of orders from allied militaries, as all
have been assumed in connection with goodwill impairment evaluations; 9) satisfactory resolution of the company’s contract dispute
with the U.S. Army procurement agency relating to the FMU-143 program; 10) continued support of the existing K-MAX helicopter fleet,
including sale of existing K-MAX spare parts inventory; 11) cost growth in connection with environmental remediation activities at the
Bloomfield, Moosup and New Hartford, CT facilities; 12) profitable integration of acquired businesses into the company's operations;
13) changes in supplier sales or vendor incentive policies; 14) the effect of price increases or decreases; 15) pension plan
assumptions and future contributions; 16) future levels of indebtedness and capital expenditures; 17) continued availability of raw
materials and other commodities in adequate supplies and the effect of increased costs therefore; 18) the effects of currency
exchange rates and foreign competition on future operations; 19) changes in laws and regulations, taxes, interest rates, inflation rates,
general business conditions and other factors; and 20) 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 implementation of the Deed of Settlement
agreed upon with the Commonwealth of Australia, which would conclude the Australia SH-2G (A) program with a mutual release of
claims; 8) receipt and successful execution of production orders for the JPF U.S. government contract, including the exercise of all
contract options, successful negotiation of price increases with the U.S. government, and receipt of orders from allied militaries, as all
have been assumed in connection with goodwill impairment evaluations; 9) satisfactory resolution of the company’s contract dispute
with the U.S. Army procurement agency relating to the FMU-143 program; 10) continued support of the existing K-MAX helicopter fleet,
including sale of existing K-MAX spare parts inventory; 11) cost growth in connection with environmental remediation activities at the
Bloomfield, Moosup and New Hartford, CT facilities; 12) profitable integration of acquired businesses into the company's operations;
13) changes in supplier sales or vendor incentive policies; 14) the effect of price increases or decreases; 15) pension plan
assumptions and future contributions; 16) future levels of indebtedness and capital expenditures; 17) continued availability of raw
materials and other commodities in adequate supplies and the effect of increased costs therefore; 18) the effects of currency
exchange rates and foreign competition on future operations; 19) changes in laws and regulations, taxes, interest rates, inflation rates,
general business conditions and other factors; and 20) 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
PERCENT DISTRIBUTION
OF SEGMENT SALES:
FULL YEAR 2007
Slide 3
KAMAN CORPORATION
SEGMENT REPORTING STRUCTURE
SEGMENT REPORTING STRUCTURE
2008 SIGNIFICANT EVENTS
Slide 4
Aerospace:
ü Appointed Greg Steiner, President Kaman Aerospace Group
ü Helicopters - - Settlement negotiated with Commonwealth of Australia related to
legacy prime helicopter program
legacy prime helicopter program
ü Aerostructures - - Acquired Brookhouse Holdings, Limited
ü Aerostructures - - Awarded contract with a potential value in excess of $100 million
to supply Boeing with components for the A-10 re-wing program
to supply Boeing with components for the A-10 re-wing program
Industrial Distribution:
ü Acquired Industrial Supply Corporation of Richmond, VA on 3/31/08
ü Savannah Distribution Center opened to support increased business in the
Southeast
Southeast
Slide 5
SPECIALTY BEARINGS SEGMENT: Bloomfield, CT and Dachsbach, Germany
Designs and manufactures proprietary self-
lubricating airframe bearings
lubricating airframe bearings
Programs: Kaman products are used in nearly all
military and commercial aircraft produced in North
and South America and Europe.
military and commercial aircraft produced in North
and South America and Europe.
Strategy: Maintain leadership in product technical
performance and application engineering support
while staying ahead of the curve in product
technology enhancement
performance and application engineering support
while staying ahead of the curve in product
technology enhancement
Slide 6
AEROSTRUCTURES SEGMENT: Jacksonville, FL; Wichita, KS; and Manchester, UK
Produces parts and subassemblies for
Tier 1 and Prime Manufacturers:
Tier 1 and Prime Manufacturers:
4Military: Boeing C-17 internal wing structures, Sikorsky BLACK HAWK
helicopter cockpits, Sikorsky MH-92 helicopter composite tail rotor
pylons, JSF wing panels, A-400M FTAC
helicopter cockpits, Sikorsky MH-92 helicopter composite tail rotor
pylons, JSF wing panels, A-400M FTAC
4Commercial: Boeing 777 and 767 wing trailing edges, A330/340
composite wing panels, new large wide-body program
composite wing panels, new large wide-body program
Global leader in composite molding and aerostructure assembly
tooling
tooling
Full after-market service supplier to UK MoD Platforms
Strategy: Take advantage of subcontracting opportunities
as the Tier 1 and Prime producers focus on final assembly
and systems integration.
as the Tier 1 and Prime producers focus on final assembly
and systems integration.
Slide 7
BROOKHOUSE HOLDINGS, LTD.: Strategic Fit
§ Accelerates growth and increases scale in Aerostructures market
§ Significantly enhances our composite capabilities
§ “Out of Autoclave” RFI technology provides differentiator
§ Balanced portfolio of platforms and mix of business including Airbus
platforms and new Boeing program
platforms and new Boeing program
•47% Commercial, 53% Military
•66% OEM, 34% Repair and Overhaul
§ Adds a world class tooling capability to Kaman’s portfolio
§ Provides entry into higher margin aftermarket services business
§ Revenue synergies through enhanced capabilities to an expanded customer
base
base
§ Talented, committed employees
§ Proven management team
Slide 8
AEROSTRUCTURES - - Platforms
Slide 9
PRECISION PRODUCTS SEGMENT: Middletown, CT
and Orlando, FL
and Orlando, FL
Manufactures safe, arm and fuzing devices
for major missile and bomb programs.
for major missile and bomb programs.
4Principal Missile programs: AMRAAM, ATACMS,
Harpoon, Maverick, Standard and Tactical Tomahawk
Harpoon, Maverick, Standard and Tactical Tomahawk
4Principal Bomb program: Joint Programmable Fuze
4Segment includes Measuring & Memory
Systems products.
Systems products.
Strategy: Become a leading producer of fuzing systems
for the U.S. and allied militaries.
for the U.S. and allied militaries.
Principal customers: U.S. and allied militaries, Boeing
General Dynamics, Lockheed and Raytheon.
General Dynamics, Lockheed and Raytheon.
Slide 10
HELICOPTERS SEGMENT: Bloomfield, CT
Full service helicopter subcontractor. Supports legacy
Kaman-made SH-2G Super Seasprite maritime
helicopter and K-MAX “Aerial Truck” helicopter.
Currently re-marketing SH-2G(I) helicopters.
Kaman-made SH-2G Super Seasprite maritime
helicopter and K-MAX “Aerial Truck” helicopter.
Currently re-marketing SH-2G(I) helicopters.
Principal programs:
Major maintenance and upgrades to Egyptian SH-2G(E)
helicopters, BLACK HAWK subcontract work for Sikorsky,
Executing Settlement Agreement for legacy Australia program
Major maintenance and upgrades to Egyptian SH-2G(E)
helicopters, BLACK HAWK subcontract work for Sikorsky,
Executing Settlement Agreement for legacy Australia program
Strategy: Take advantage of subcontracting opportunities
as the tier 1 and prime producers focus on final assembly
and systems integration.
as the tier 1 and prime producers focus on final assembly
and systems integration.
Principal customers: The governments of Egypt, New Zealand
and Poland; MDHI and Sikorsky.
and Poland; MDHI and Sikorsky.
Slide 11
INDUSTRIAL DISTRIBUTION SEGMENT
Third largest industrial distribution firm in $12 billion
power transmission market.
power transmission market.
Strategy:
4Expand the geographic footprint to enhance competitive
position for national and regional accounts.
position for national and regional accounts.
4Broaden the product line
4Improve operating and asset utilization efficiencies
Customers: Broad cross section of industry with more than 50,000
customers served from local branches in 72 of the top 100 U.S.
Industrial markets. Growing national account base.
customers served from local branches in 72 of the top 100 U.S.
Industrial markets. Growing national account base.
Slide 12
INDUSTRIAL SUPPLY CORPORATION: Strategic Fit
§ Supports corporate strategy of accelerating growth of KIT
§ Adds $55 million in annual sales
§ Increases Kaman’s presence in important Virginia and North Carolina
markets
markets
§ Expands product offerings
§ Increases our capability to service national and regional customers
§ Adds a proven management team and dedicated employees
KIT Branch Location
Distribution Center
ISC Branch Location
Geographical Coverage: Approximately 200 locations in U.S., Canada and Mexico
Slide 13
INDUSTRIAL DISTRIBUTION SEGMENT
Slide 14
INDUSTRIAL DISTRIBUTION SEGMENT
1 Corporate expense percentage is to Total Sales
(In thousands) SEGMENTS | Net Sales | Operating Income/(Loss) | Operating Margin | |||
Q2 2008 | Q2 2007 | Q2 2008 | Q2 2007 | Q2 2008 | Q2 2007 | |
1. Aerostructures | $30,944 | $23,322 | ($6,248) | $3,680 | (20.2%) | 15.8% |
2. Precision Products | 27,236 | 23,962 | 880 | 4,015 | 3.2% | 16.8% |
3. Helicopters | 18,105 | 19,025 | 2,866 | (244) | 15.8% | (1.3%) |
4. Specialty Bearings | 36,667 | 31,471 | 13,941 | 10,204 | 38.0% | 32.4% |
5. Subtotal Aerospace | 112,952 | 97,780 | 11,439 | 17,655 | 10.1% | 18.1% |
6. Industrial Distribution | 203,333 | 174,602 | 9,735 | 8,304 | 4.8% | 4.8% |
7. Net gain/(loss) on sale of assets | (97) | 58 | ||||
8. Corporate expense | (6,486) | (10,156) | 1 (2.1%) | 1(3.7%) | ||
9. Sales/Op. inc. from continuing ops | $316,285 | $272,382 | $14,591 | $15,861 | 4.6% | 5.8% |
Slide 15
INCOME STATEMENT HIGHLIGHTS
For quarters ended June 27, 2008 and June 29, 2007
For quarters ended June 27, 2008 and June 29, 2007
Slide 16
NON GAAP RECONCILIATION - Continuing Operations
(In Millions) | As of 6/27/08 | As of 12/31/07 | As of 6/29/07 |
1. Cash and Cash Equivalents | $13.6 | $73.9 | $12.9 |
2. Notes Payable and Long-term Debt | $97.3 | $12.9 | $108.1 |
3. Shareholders’ Equity | $409.5 | $394.5 | $318.5 |
4. Debt as % of Total Capitalization | 19.2% | 3.2% | 25.3% |
5. Capital Expenditures (Continuing Operations) | $6.7 | $14.2 | $6.5 |
6. Depreciation & Amortization (Continuing Operations) | $5.4 | $9.9 | $4.8 |
BALANCE SHEET AND CAPITAL FACTORS
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