Kaman Corporation (NASDAQ-GS: KAMN)
Kaman Corporation (NASDAQ-GS: KAMN)
CJS Securities, Inc.
10th Annual “New Ideas for the New Year” Investor Conference
January 14, 2010
2
Distribution
57%
Aerospace
43%
2009 Nine Month Sales
Distribution
14%
Aerospace
86%
2009 Nine Month
Operating Income
2009 YTD Sales 9/30/09 $877M;
4,100 Employees
Aerospace
Industrial
Distribution
NASDAQ GS: KAMN
KAMAN CORPORATION
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AEROSPACE SEGMENT
2009 YTD Nine Month Sales $381 million
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Bloomfield, CT
700,000 sq ft
•Mechanical
•Composites
•Large Assembly
Wichita, KS
168,000 sq ft
•Composites
•Structural
Bondments
•Composite
Assemblies
Jacksonville, FL
220,000 sq ft
•Fabrication-
ØMachining
ØSheet Metal Form
ØExtrusion
•Assembly
ØMajor Subs
ØFinal Structure
•Product Integration
Darwen, UK
208,000 sq ft
•Composites
•Metal Fabrication
•Tooling
•Assembly
AEROSPACE - Primary Facilities
•Helicopter assembly
and test facilities
•Bearing manufacturing
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Commercial
Military
Business/Regional
28%
69%
3%
Note: Based on YTD sales at 10/2/09
AEROSPACE - Business Mix
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Manufacture of cockpit
Blade erosion coating
Manufacture and assembly
of tail rotor pylon
of tail rotor pylon
Sub assembly and
joining of fuselage
joining of fuselage
Blade manufacture, repair
and overhaul
and overhaul
Driveline couplings
Bushings
Flight control bearings
AEROSPACE - Programs/Capabilities
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JSF
C-17
A-10
E-2D
Typhoon
UH-60
A400
CH-47
AEROSPACE - Principal Military Platforms
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Fixed trailing edge
Fuel tank access doors
Top covers
Bearing products
Nose landing gear
Rudder
Main landing gear
Flaps
Horizontal stabilizer
Doors
Engine/thrust reverser
Flight controls
AEROSPACE - Programs/Capabilities
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AEROSPACE - Commercial Significant Platforms
Airbus A320
Boeing 777
K-MAX
Airbus A330
Bell Helicopter
Boeing 787
Boeing 737
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Kaman K-MAX
§ K-MAX Commercial Helicopter
Support
Support
§ Teamed with Lockheed Martin to
develop an unmanned military version
of the K-Max
develop an unmanned military version
of the K-Max
AEROSPACE - Kaman Helicopters
Kaman SH-2G Naval Helicopters
§ Support and Upgrades
§ Currently in service with Egypt,
New Zealand, Poland
New Zealand, Poland
§ Remarketing eleven SH-2G(I)s,
formerly Royal Australian Navy aircraft
formerly Royal Australian Navy aircraft
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Aerospace - Programs/Capabilities
Other:
§ Composite tooling design and
manufacture
manufacture
§ Joint Programmable Fuze
§ Missile fuzes
• Tomahawk
• Harpoon
• AMRAAM
• Maverick
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AEROSPACE - Market Environment/Opportunities
§ Stable programs
• C-17
• JPF
• BLACKHAWK
§ Ramp up programs
• A-10 re-wing
• Bell Helicopters
• B787
• JSF
• A380
§ Continuation of outsourcing trend - primes and super tier 1’s
§ Unmanned K-MAX program
§ Sale of SH-2G(I) helicopters
§ Acquisitions providing complementary capabilities and platforms
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INDUSTRIAL DISTRIBUTION SEGMENT
2009 YTD Nine Month Sales $496 million
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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:
§ Bearings
§ Mechanical and electrical power transmission
§ Motion control
§ Material handling
§ Fluid power
Statistics
§ CAGR 2003 to 2008 = 9.3%
§ Sales per employee $435,000
§ 1,700 employees (approximately one third outside sales)
§ SKUs 3.25 million
§ 48,000 customers
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INDUSTRIAL DISTRIBUTION SEGMENT
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INDUSTRIAL DISTRIBUTION SEGMENT - Key Suppliers
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INDUSTRIAL DISTRIBUTION - Market Environment/Opportunities
§ Market recovery - positive ISM index points to improving market
environment
environment
§ Expand our geographic footprint through acquisitions in major industrial
markets to enhance our position in the competition for national and
regional accounts
markets to enhance our position in the competition for national and
regional accounts
§ Broaden our product offerings to gain additional business from existing
customers and new opportunities from a wider slice of the market
customers and new opportunities from a wider slice of the market
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KAMAN CORPORATION - Summary
§ High margin aerospace business led by specialty bearing product lines
§ Industrial distribution business gaining market share in a fragmented
market via national account growth, geographic and product line
expansion
market via national account growth, geographic and product line
expansion
§ Long-term organic growth opportunities in both segments
§ Potential to accelerate growth and increase scale through acquisitions
§ Initiatives to optimize profit, increase cash flow generation, strengthen
competitive position
competitive position
§ Strong balance sheet to fund growth and strategic initiatives
Kaman Corporation (NASDAQ-GS: KAMN)
Kaman Corporation (NASDAQ-GS: KAMN)
Q&A
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APPENDIX
43%
2009 YTD Nine Month Sales $877 million
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OUTLOOK
Aerospace segment
§ Full year 2009 sales expected to be up 5% to 7% year-over-year
§ Operating margin for 2009 expected to be in the “mid-teens”
§ Stable military programs - limited near term impact from DOD reductions
Industrial Distribution segment
§ Full year 2009 sales are expected to decline toward the high end of stated range
of down 10% to 15%
of down 10% to 15%
§ Full year 2009 operating margin is expected to be between 2.1% and 2.5%
Cash Flow
§ Full year 2009 free cash flow is expected to be between $35M and $40M
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1 Corporate expense percentage is to Total Sales
(In thousands) SEGMENTS | Net Sales | Operating Income/(Loss) | Operating Margin | |||
Q3 2009 | Q3 2008 | Q3 2009 | Q3 2008 | Q3 2009 | Q3 2008 | |
Industrial Distribution | $162,921 | $204,275 | $3,388 | $10,704 | 2.1% | 5.2% |
Aerospace | 126,980 | 130,858 | 19,906 | 20,865 | 15.7% | 15.9% |
Net gain/(loss) on sale of assets | (3) | 301 | ||||
Corporate expense | (8,625) | (7,422) | 1 (3.0%) | 1(2.2%) | ||
Sales/Op. inc. from continuing ops | $289,901 | $335,133 | $14,666 | $24,448 | 5.1% | 7.3% |
INCOME STATEMENT HIGHLIGHTS
For quarters ended October 2, 2009 and September 26, 2008
For quarters ended October 2, 2009 and September 26, 2008
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1 Corporate expense percentage is to Total Sales
(In thousands) SEGMENTS | Net Sales | Operating Income/(Loss) | Operating Margin | |||
YTD 2009 | YTD 2008 | YTD 2009 | YTD 2008 | YTD 2009 | YTD 2008 | |
Industrial Distribution | $495,781 | $589,773 | $9,232 | $29,512 | 1.9% | 5.0% |
Aerospace | 381,378 | 347,426 | 56,803 | 46,920 | 14.9% | 13.5% |
Net gain/(loss) on sale of assets | 37 | 94 | ||||
Corporate expense | (25,836) | (23,704) | 1 (2.9%) | 1(2.5%) | ||
Sales/Op. inc. from continuing ops | $877,159 | $937,199 | $40,236 | $52,822 | 4.6% | 5.6% |
INCOME STATEMENT HIGHLIGHTS
For nine months ended October 2, 2009 and September 26, 2008
For nine months ended October 2, 2009 and September 26, 2008
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(In Millions) | As of 10/2/09 | As of 12/31/08 | As of 12/31/07 |
Cash and Cash Equivalents | $16.6 | $8.2 | $73.9 |
Notes Payable and Long-term Debt | $78.7 | $94.2 | $12.9 |
Shareholders’ Equity | $299.8 | $274.3 | $394.5 |
Debt as % of Total Capitalization | 20.8% | 25.6% | 3.2% |
Capital Expenditures (YTD Continuing Operations) | $8.9 | $16.0 | $14.2 |
Depreciation & Amortization (YTD Continuing Operations) | $11.8 | $12.8 | $9.9 |
BALANCE SHEET AND CAPITAL FACTORS
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Sales
EPS
Stock Price (one year)
Return on Invested Capital
PERFORMANCE METRICS
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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