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Strategic Overview
Neal Keating
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Charlie’s legacy lives on at Kaman Corporation
where our more than 5,000 employees are
inspired by his ingenuity, integrity and humanity.
where our more than 5,000 employees are
inspired by his ingenuity, integrity and humanity.
Charles Kaman - Spirit of Innovation
“Today’s products and services
are sophisticated, complex and
involved far beyond the most
visionary expectations I ever had
as our first product, the K-125
helicopter, first flew in January
1947. But what we built then and
what we do now both represent
the very highest degrees of
excellence, innovation, quality
and technical sophistication of
their times. I firmly believe that
our accomplishments will
continue indefinitely.”
- Charles Kaman
are sophisticated, complex and
involved far beyond the most
visionary expectations I ever had
as our first product, the K-125
helicopter, first flew in January
1947. But what we built then and
what we do now both represent
the very highest degrees of
excellence, innovation, quality
and technical sophistication of
their times. I firmly believe that
our accomplishments will
continue indefinitely.”
- Charles Kaman
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Kaman Milestones
Entry into fuzing business via acquisition
Recapitalization eliminated dual class structure
Unmanned K-MAX® deployed to Afghanistan
First turbine helicopter
KAron® machineable liner introduced
$1 Billion
$2 Billion
RWG Germany acquired
Divestiture of Music segment
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What is Kaman?
Solving Our Customers’ Critical Problems with Technically
Differentiated Products & Services
Differentiated Products & Services
Leading Provider of Highly Engineered Aerospace &
Industrial Products Serving a Broad Range of End Markets
Industrial Products Serving a Broad Range of End Markets
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ü Outstanding portfolio
of intellectual property
across Aerospace
of intellectual property
across Aerospace
ü Distribution aligned
with best-in-class,
vendors
with best-in-class,
vendors
ü ERP investments will
yield improved
efficiencies & financial
performance
yield improved
efficiencies & financial
performance
Strategically
Positioned
Positioned
Kaman Investment Highlights
Improving
Financials
Financials
Reliable Business
Strategies
Strategies
ü Focused on driving
strong top-line
growth
strong top-line
growth
ü Deliver earnings
growth through
scale and operating
efficiencies
growth through
scale and operating
efficiencies
ü Generate strong
cash flow to grow
the business
cash flow to grow
the business
ü Disciplined acquisition
growth to achieve scale
and margin enhancements
growth to achieve scale
and margin enhancements
ü Continuing focus on
innovation to maintain
differentiation
innovation to maintain
differentiation
ü Relentless effort to drive
operational excellence and
lean
operational excellence and
lean
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Distribution
Kaman Corporation Overview
Distribution
Aerospace
$1.7B Revenues
Aerospace
Based on 2013 Actual Results
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Aerospace Overview
v | AEROSYSTEMS | SPECIALTY BEARINGS & ENGINEERED PRODUCTS | FUZING & PRECISION PRODUCTS |
• Engineering design and testing • Tooling design & manufacture • Advanced machining and composite aerostructure manufacturing • Complex assembly • Helicopter MRO and support | • Self-lube airframe bearings • Traditional airframe bearings • Flexible drive systems | • Bomb and missile safe and arm fuzing devices • Precision measuring systems • Memory products | |
• Global commercial and defense OEM’s • Super Tier I’s to subcontract manufacturers • Aircraft operators and MRO • Specialized aerospace distributors | • U.S. and allied militaries • Weapon system OEMs | ||
• “One Kaman” combines design and build capabilities to provide customers with a global integrated solution • Bearing product lines strong commercial customer base expected to provide growth from new program wins and higher build rates | • Exclusivity and significant backlog provide a stable revenue base | ||
Business
Dynamic
Customer
Product
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Distribution Overview
PRODUCT PLATFORM | BEARINGS & MECHANICAL POWER TRANSMISSION (BPT) | FLUID POWER | AUTOMATION, CONTROL & ENERGY (ACE) |
% of 2013 Sales | 61% | 14% | 25% |
Market Size | $13 Billion | $7 Billion | $15 Billion |
Acquisitions since 2008 | • Industrial Supply Corp • Allied Bearings Supply • Plains Bearing • Fawick de Mexico • Florida Bearings Inc. • Ohio Gear and Transmission | • INRUMEC • Catching • Northwest Hose & Fittings • Western Fluid Components • B. W. Rogers | • Zeller • Minarik • Target Electronic Supply • B. W. Rogers |
Major Suppliers |
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Market Opportunities
Secular trends helping to drive significant long-term growth
opportunities in both Aerospace and Distribution segments
opportunities in both Aerospace and Distribution segments
AEROSPACE
• OEM/Tier 1 outsourcing and supplier
consolidation
consolidation
• Higher bearing content on new platforms
• Increasing commercial build rates driving
bearing and aerostructure sales
bearing and aerostructure sales
• New programs provide offset to lower
defense spending
defense spending
DISTRIBUTION
• Supplier consolidation favors larger national
service providers
service providers
• Increased need for value added services
• Large fragmented market provides
consolidation opportunities
consolidation opportunities
• Factory automation trends driving fluid
power and high speed automation solutions
power and high speed automation solutions
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Strategic Themes
• Optimize Business Portfolio to Drive Shareholder Value
• Expand Scale & Market Leading Positions Through Acquisitions
& Organic Growth Initiatives
& Organic Growth Initiatives
• Continue Technical and Service Differentiation Strategy in both Segments
• Drive Operational Excellence and Lean Through the Organization
• Target 3%-6% Organic Revenue Growth through 2019 ; 3%-10% Revenue
Growth with Acquisitions
Growth with Acquisitions
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Aerospace Strategic Positioning
ACTIONS TAKEN
• Significant investments in
product R&D, new facilities
and ERP systems
product R&D, new facilities
and ERP systems
• Creation of integrated
Aerosystems unit
Aerosystems unit
• Secured key positions on
commercial and defense
platforms
commercial and defense
platforms
• Unmanned K-MAX
deployment to Afghanistan
deployment to Afghanistan
STRATEGIC GOALS
• Improve balance between
commercial and defense
commercial and defense
• Leverage broad capability set
to expand market positions
to expand market positions
• Execute strategic acquisitions
• Generate 3%-6% organic
growth
growth
• Deliver high-teens operating
margins
margins
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Distribution Strategic Positioning
ACTIONS TAKEN
STRATEGIC GOALS
• Built out three product platform
organization
organization
q Expands served market
q Targets higher margin and
higher growth markets
higher growth markets
q Enables increased scale to
drive operating leverage
drive operating leverage
• Parker alignment provides
unique market position
unique market position
• ERP rollout will drive significant
operational efficiencies
operational efficiencies
• Accelerate growth in higher
margin product platforms
margin product platforms
• Increase scale to drive operating
efficiencies
efficiencies
• Leverage differentiated product
offerings to increase market share
offerings to increase market share
• Execute strategic acquisitions
• Generate 3%-6% organic growth
• Deliver 7+% operating margins
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Shareholder Value Drivers
Leadership
Organic
Growth
Growth
Operational
Excellence
Excellence
Acquisition
Execution
Execution
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Leadership
• Experienced Senior Management Team
• High performance culture
• Organization Development
– Program management
– Supply chain management
– Annual Kaman Leadership
Development Program (KLDP)
Development Program (KLDP)
– Technical sales and engineering
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Organic Growth Drivers
Aerospace
Distribution
• “One Kaman Approach”
• New product development efforts
at Specialty Bearings and
Precision Products
at Specialty Bearings and
Precision Products
• Continued commercial aerospace
cycle growth
cycle growth
• JPF Navy Opportunity
• Expanded geographic footprint
• Supplier consolidation
• Factory automation trends
• Differentiated product and
services
services
• Product platform cross-selling
• National account opportunities
• Sales force expansion
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Operational Excellence
KEY INITIATIVES
• Significant ERP investments
at both Segments
at both Segments
• New state-of-the-art facilities in
the UK and Germany
the UK and Germany
• Low Cost Country operations
provide margin expansion
opportunities
provide margin expansion
opportunities
• Increasing use of automation
and robotics are favorably
impacting quality, throughput and
labor costs
and robotics are favorably
impacting quality, throughput and
labor costs
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Acquisition Strategy Framework
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Historical Adjusted EBITDA*
PERIOD CAGR = 8%
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Historical Total Shareholder Return Since 2005 Recap
Source: Bloomberg 11/4/2005 - 6/30/2014
KAMAN RETURN = 138%
RUSSELL 2000 = 103%
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ü Proven strategies have delivered strong shareholder value over time
ü Aerospace
- Leveraging unique set of proprietary products and capabilities
- Strong platform positions across commercial & defense markets
- Robust pipeline of future opportunities
ü Distribution
- Three product platform strategy expands growth opportunities
- Increased scale provides improved operating leverage
- ERP implementation benefits
ü Successfully execute future acquisitions - maintain discipline
ü Leverage experienced management and workforce across the
company
company
Positioned for Future Growth