Kaman Corporation (NASDAQ-GS: KAMN)
Kaman Corporation (NASDAQ-GS: KAMN)
Gabelli Aircraft Supplier Conference
September 10, 2009
KAMAN CORPORATION - Investment Highlights
Slide 2
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
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
position
ü Strong balance sheet to fund growth and strategic initiatives
KAMAN CORPORATION - Overview
Slide 3
H1 2009 Sales
$587 million
$587 million
Industrial Distribution
Aerospace
Two Business Segments
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
ü February 2009 - Took title to eleven Kaman manufactured SH-2G helicopters
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
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
ü August 2009 - Awarded a five year potentially $53 million program to provide
composite helicopter blade skins and skin core assemblies for Bell Helicopter
Slide 4
RECENT SIGNIFICANT EVENTS
KAMAN CORPORATION AWARDED $53 MILLION
COMPOSITES CONTRACT FROM BELL HELICOPTER
COMPOSITES CONTRACT FROM BELL HELICOPTER
BLOOMFIELD, Connecticut (September 10, 2009) - (NASDAQ-GS:KAMN) Kaman Corporation
announced that the Helicopters Division of its subsidiary, Kaman Aerospace Corporation has been
awarded a five-year contract with a potential value of $53 million to build composite helicopter
blade skins and skin core assemblies for Bell Helicopters. Under the terms of the contract, Kaman
will provide 18 different assemblies for H1, 406, 407, 412, 427, 429, 430 and BA609 aircraft. All
work will be performed at the Kaman HeliworX™ full-service aerospace innovation and
manufacturing support center in Bloomfield, Connecticut. Initial deliveries to Bell’s Hurst, Texas,
facility will begin in late 2009.
announced that the Helicopters Division of its subsidiary, Kaman Aerospace Corporation has been
awarded a five-year contract with a potential value of $53 million to build composite helicopter
blade skins and skin core assemblies for Bell Helicopters. Under the terms of the contract, Kaman
will provide 18 different assemblies for H1, 406, 407, 412, 427, 429, 430 and BA609 aircraft. All
work will be performed at the Kaman HeliworX™ full-service aerospace innovation and
manufacturing support center in Bloomfield, Connecticut. Initial deliveries to Bell’s Hurst, Texas,
facility will begin in late 2009.
“We are delighted by this opportunity to work with Bell Helicopter in producing world-class
rotorcraft,” said Neal J. Keating, Chairman, President and Chief Executive Officer of Kaman
Corporation. “This is further evidence of our ability to leverage our OEM capabilities in support of
other helicopter manufacturers.”
rotorcraft,” said Neal J. Keating, Chairman, President and Chief Executive Officer of Kaman
Corporation. “This is further evidence of our ability to leverage our OEM capabilities in support of
other helicopter manufacturers.”
“Kaman has the skills and competitiveness we require in the composite blade-manufacturing
arena,” said Mary Simmerman, Senior VP Supply Chain Management at Bell. “We expect this to
be a positive agreement for both companies.”
arena,” said Mary Simmerman, Senior VP Supply Chain Management at Bell. “We expect this to
be a positive agreement for both companies.”
In addition to Bell, some of the biggest names in aerospace, including Sikorsky and Northrop
Grumman, receive manufacturing support from HeliworX. Backed by Kaman’s infrastructure and
expertise, HeliworX is the only subcontractor with the OEM advantage capable of offering
design/analysis, manufacturing, and test and flight solutions for companies that require an
experienced outsourcing option. Other capabilities include integration, composite and metallic
manufacturing, final assembly, rotor blade manufacture, erosion protection, whirl towers, and a
sand erosion test facility.
Grumman, receive manufacturing support from HeliworX. Backed by Kaman’s infrastructure and
expertise, HeliworX is the only subcontractor with the OEM advantage capable of offering
design/analysis, manufacturing, and test and flight solutions for companies that require an
experienced outsourcing option. Other capabilities include integration, composite and metallic
manufacturing, final assembly, rotor blade manufacture, erosion protection, whirl towers, and a
sand erosion test facility.
Kaman Corp., headquartered in Bloomfield, Conn. conducts business in the aerospace and
industrial distribution markets. The company produces and/or markets widely used proprietary
aircraft bearings and components; complex metallic and composite aerostructures for commercial,
military and general aviation fixed and rotary wing aircraft; safing and arming solutions for missile
and bomb systems for the U.S. and allied militaries; subcontract helicopter work; and support for
the company’s SH-2G Super Seasprite maritime helicopters and K-MAX medium-to-heavy lift
helicopters. Kaman is also one of the nation’s leading industrial distribution companies for power
transmission, motion control, material handling and electrical components with nearly two hundred
locations throughout North America.
industrial distribution markets. The company produces and/or markets widely used proprietary
aircraft bearings and components; complex metallic and composite aerostructures for commercial,
military and general aviation fixed and rotary wing aircraft; safing and arming solutions for missile
and bomb systems for the U.S. and allied militaries; subcontract helicopter work; and support for
the company’s SH-2G Super Seasprite maritime helicopters and K-MAX medium-to-heavy lift
helicopters. Kaman is also one of the nation’s leading industrial distribution companies for power
transmission, motion control, material handling and electrical components with nearly two hundred
locations throughout North America.
###
Contact:
Eric Remington
VP, Investor Relations
(860) 243-6334
eric.remington@kaman.com
Slide 5
RECENT KEY APPOINTMENTS
Slide 6
ü Neal Keating, Chairman, President and CEO (September 2007)
ü Thomas Rabaut, Director (March 2008)
ü Greg Steiner, President, Kaman Aerospace Group (July 2008)
ü William Denninger, Senior Vice President and CFO (November 2008)
ü Phil Goodrich, Vice President - Business Development (March 2009)
ü William Higgins, Director (April 2009)
ü Rob Starr, Vice President and Treasurer (April 2009)
ü George Minnich, Director (June 2009)
KAMAN CORPORATION - Market Update
Slide 7
Aerospace segment
Ø Q3 sales are expected to show a sequential sales decline of approximately 10%
Ø Full year 2009 sales will be up 5% to 7% year-over-year
Ø Stable military programs - limited near term impact from DOD reductions
Industrial Distribution monthly sales have remained essentially flat from March
through August
through August
AEROSPACE SEGMENT
2009 H1 Sales $254 million
Slide 9
Business/Regional
Commercial
Military
AEROSPACE - Business Mix
Slide 10
AEROSPACE - Aerospace Bearing Products
Machineable Self-Lubricating Bearings
Ø Fixed Wing (Commercial, Military)
Flight Controls
Landing Gear and Doors
Engines and Accessories
Ø Helicopters (Commercial, Military)
Rotor System and Controls
Landing Gear and Doors
Engines and Accessories
Main Engine and Tail Rotor Driveshaft Systems
Ø Spacecraft, Submarines, Launch Vehicles and Satellites
Flight Controls
Power Systems
Solar Array Deployment Systems
Hatches and Doors
Ø Industrial
Hydropower Systems
Motor Sport - Steering and Suspension Systems
Slide 11
AEROSPACE - Metallic and Composite Structures
JACKSONVILLE, FL
WICHITA, KS
DARWEN, UK
Capabilities:
Ø Build-to-Print manufacturing of metal and
composite structures and assemblies
composite structures and assemblies
Ø Composite tooling design and manufacture
Major Customers:
Ø Sikorsky, Boeing IDS, BAe, Spirit, Airbus,
Boeing Commercial, Aircell
Boeing Commercial, Aircell
Core Competencies:
Ø Sheet Metal Fabrication
Ø Composite Part Fabrication
Ø Tooling design and manufacture
Ø Aircraft Structure Assembly
Ø Program Management
Ø Supply Chain Management
Slide 12
Complementary platform positions - improves diversification
AEROSPACE - Brookhouse Acquisition
Slide 13
AEROSPACE - Helicopter Services
Aftermarket Service and Support
Ø SH-2G Naval Helicopter - Support and Upgrades
Ø K-MAX Commercial Helicopter
HeliworX Subcontract Business
Ø Bell - blade skins and skin core assemblies
Ø MDHI - Explorer Rotor Blade System
Ø Sikorsky - H-60 Blackhawk
Ø Northrop Grumman - Hawkeye
Ø U.S. Army - Small Composite Main Rotor Blade
Unmanned Airborne Systems (UAS)
Ø Unmanned K-MAX
Slide 14
AEROSPACE - Fuzing Systems
Fuzing Segment: Middletown, CT and Orlando, FL
Manufactures safe, arm and fuzing devices for major missile and
bomb programs.
bomb programs.
Ø Principal Missile programs: AMRAAM, ATACMS,
Harpoon, Maverick, Standard and Tactical Tomahawk
Harpoon, Maverick, Standard and Tactical Tomahawk
Ø Principal Bomb program: Joint Programmable Fuze
Principal customers:
Ø U.S. Air Force
Ø Other branches of the U.S. military
Ø Allied militaries
Ø Boeing
Ø General Dynamics
Ø Lockheed
Ø Raytheon
Slide 15
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
PERFORMANCE METRICS
Slide 16
Slide 17
Sales
EPS
Stock Price
Return on Invested Capital
PERFORMANCE METRICS
Q&A
Slide 18
Slide 19
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
A-1
Appendix
FINANCIAL REVIEW
43%
2009 H1 Sales $587 million
A-2
1 Corporate expense percentage is to Total Sales
(In thousands) SEGMENTS | Net Sales | Operating Income/(Loss) | Operating Margin | |||
Q2 2009 | Q2 2008 | Q2 2009 | Q2 2008 | Q2 2009 | Q2 2008 | |
Industrial Distribution | $155,954 | $203,333 | $3,065 | $9,735 | 2.0% | 4.8% |
Aerospace | 137,269 | 112,952 | 21,600 | 11,439 | 15.7% | 10.1% |
Net gain/(loss) on sale of assets | (53) | (97) | ||||
Corporate expense | (8,445) | (6,486) | 1 (2.9%) | 1(2.1%) | ||
Sales/Op. inc. from continuing ops | $293,223 | $316,285 | $16,167 | $14,591 | 5.5% | 4.6% |
A-3
INCOME STATEMENT HIGHLIGHTS
For quarters ended July 3, 2009 and June 27, 2008
For quarters ended July 3, 2009 and June 27, 2008
1 Corporate expense percentage is to Total Sales
(In thousands) SEGMENTS | Net Sales | Operating Income/(Loss) | Operating Margin | |||
H1 2009 | H1 2008 | H1 2009 | H1 2008 | H1 2009 | H1 2008 | |
Industrial Distribution | $332,860 | $385,498 | $5,844 | $18,808 | 1.8% | 4.9% |
Aerospace | 254,398 | 216,568 | 36,897 | 26,055 | 14.5% | 12.0% |
Net gain/(loss) on sale of assets | 40 | (207) | ||||
Corporate expense | (17,211) | (16,282) | 1 (2.9%) | 1(2.7%) | ||
Sales/Op. inc. from continuing ops | $587,258 | $602,066 | $25,570 | $28,374 | 4.4% | 4.7% |
A-4
INCOME STATEMENT HIGHLIGHTS
For six months ended July 3, 2009 and June 27, 2008
For six months ended July 3, 2009 and June 27, 2008
(In Millions) | As of 7/3/09 | As of 12/31/08 | As of 12/31/07 |
Cash and Cash Equivalents | $12.4 | $8.2 | $73.9 |
Notes Payable and Long-term Debt | $90.6 | $94.2 | $12.9 |
Shareholders’ Equity | $294.5 | $274.3 | $394.5 |
Debt as % of Total Capitalization | 23.5% | 25.6% | 3.2% |
Capital Expenditures (YTD Continuing Operations) | $5.5 | $16.0 | $14.2 |
Depreciation & Amortization (YTD Continuing Operations) | $7.7 | $12.8 | $9.9 |
BALANCE SHEET AND CAPITAL FACTORS
A-5
A-6
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:
Ø Bearings
Ø Mechanical and electrical power transmission
Ø Motion control
Ø Material handling
Ø Fluid power
Statistics
Ø Sales CAGR 2003 to 2008 = 9.3%
Ø Sales per employee $435,000
Ø 1,700 employees (approximately one third outside sales)
Ø SKUs 3.25 million
Ø 48,000 customers
KIT Branch Location
Distribution Center
ISC Branch Location
INRUMEC Location
A-7
KAMAN INDUSTRIAL TECHNOLOGIES LOCATIONS
Source: Boeing and Airbus historical data and ISM
A-8
AEROSPACE ORDERS and DELIVERIES VS. ISM INDEX OVER TIME