KAMN - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, welcome to the Kaman Corporation fourth quarter 2018 earnings conference call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at the time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to James Coogan, Vice President, Investor Relations. begin. may you Sir,

James Coogan

Starr, like call. everyone are Conducting and and Chairman, I'd Financial and quarter Officer. Neal Kaman's XXXX President Rob Officer Executive earnings the Chief Vice to morning. President to Chief welcome fourth Keating, Executive Good call today

with include I'd note the current our we the during respect of to discussed of that its expectations Company projections differ results and the any described Company's these Annual the indicated filed underlying filings items, future together These many revenue, the our in latest management, are and the business. earnings Form the forth plans materially begin, financial events. X-K, statements those important our statements including economy and yesterday Exchange Before call other Form could Commission, current due of on statements, will setting other to the release. some most in of earnings on Company's information future forward-looking and factors, business, statements and today's consist like with Company actual and Report to Company's future report and assumptions from of statements performance XXXX evening which Securities economic forward-looking with objectives or the XX-K the on The of the of regarding its

call Reconciliations Neal rules in with regulations. I'll and are included the over non-GAAP that release and filed financial the measures measures information we in Keating. With addition, yesterday's measures discuss defined applicable to to that, earnings In SEC certain expect Company's turn the as X-K. are to GAAP

Neal Keating

sales K-MAX bearings $X.XX, higher on XX.X% period the we primarily of tooling product quarter, sales achieved included led The in share When segment. distribution the for our quarter growth specialty the shipment like call. sales and adjusted net our the well Top marks then sales a to a million share continued the contract. with restructuring sale review growth. achieved turn an $XXX year-over-year and discuss call fourth day DCS a from and This the Aerospace sales begin line period joining to number Jamie. XXXX the a diluted the on through helicopters for benefited and of $XX as million, in as quarter adjusted we three Good in year. you, per and increase over the $X.XX. morning with portion our earnings one-time prior the consecutive of at Thank results, quarter sales of outlook top costs per We our today for delivery results mix each engineered X.X% earnings engineering strong for of losses the over services to thank events our the per to items, items, you finished businesses. the with key to increase results growth fifth fourth Rob update of financial of provide I'll us and today's on quarter JPF XXXX. I'd and and related these experienced prior-year. reporting in X.X%, a over over earnings Meanwhile, of which share up line per of of

of are prior expectations We very our to of in due pleased which our factors. with ahead quarter number results, fourth came a

from resolve quarter, the shipments also the we portion in due JPF encountered issues for worked and XXXX supply DCS the First, quarter third the on timing commitments. our out we make the the up call, uncertainty approvals. the moving year, into they of know, bearings missed on chain our business XXXX diligently of fourth volume government of contract while and you our around adjusted able million third as quarter for to outlook a our $XX to And delivering third to our specialty quarter were team customer the

approvals these were to make partial allowing us However, late a received shipment December. in

Moving the quarter fourth up to year. costs million, for when aerospace quarter $XXX.X in to in and the fourth look restructuring our X.X% an employee the was compared at XX.X% revenue was operating operating with a for segments; matter. prior adjusted quarter associated or Segment XX.X% margin the closer additional tax-related

a militaries. December. milestone During important of with delivered to while the we XX,XXX JPF an in first program the in provided XXX,XXXth the XXXX, deliveries the the and foreign we Since JPFs, quarter, allied delivery marking our record have unit US

long and and this we look proud program XXX,XXX our of the with the remains around ended performance backlog world. are Demand US and allied JPF strong continuing forward year with over the militaries units. of to our a relationship very We on for Force Air

result, of approximately XX% US in deliveries XX,XXX a delivering anticipate the we and As those units expected XX,XXX for full XXXX, to to go the year to government. are

approvals projected quarters, to and are and deliveries. securing to prior approvals in of DCS our licenses in XXXX are process subject contracts DCS As we all licenses and government for prior the delivery, currently we these discussed

we $XXX prior throughout more XX.X%, we for orders are the very bearings expected new our order specialty engineered high, for XXXX. X.X% self-lubricating add our and than backlog orders over compared finished X% products the Sales million. were the addition, the our over components intake DCS bearings more remained orders year up saw year, increase while engine aftermarket are year. with for up in prior to grew our Overall, XX% rates our to year trend these that than saw to a products Orders prior In XXXX. products discussions to a of bearing of backlog continuing number during and growing

progress quarter, five quarter, delivered our deliveries good we for program, during bringing XXXX secured new for fourth K-MAX total aircraft. make the to to contracts three continue our three on and We the aircraft. successfully in We

almost This future XXth demand. XXXX. since bring positive total continuing We now meet of our and to initial K-MAX XX outlook will anticipated March. XX% for the fleet We delivering the on and increase production in nine remain delivered are and anticipate size production have the from the aircraft XX aircraft, to run the

when day increased Moving Taking sales result with period X.X% seven of paper, non-metallic sales number goods, and was and and top the in over adjusted driven markets since of This look on at year the sales freight and in mineral period. XX to XX distribution; primarily for XXXX. up led prior the equal an Segment per operating level to GAAP day fourth days highest of the end-market operating on the per an higher quarter compensation X.X% corporate by decline higher quarter, a merchant slight The mix by was of in points mining. wholesalers, the both durable prior fourth sales basis. year the basis in decreased costs. comparable profit products a sales higher quarter our increase the accounts, performance our compared margin pulp incentive were

we our the approximately in full higher total, group employee costs. operating operating basis higher For one-time associated tax on these health which points of costs of incentive XX margin X.X% year, and margin achieved year. an with had or costs, the adjusted, X.X% impact included freight items In

approximately the by distribution corporate have end-market quarter in trends XXXX, favorable which on the results impact the change improved wins final driven XX an for distribution conditions. the we which consistently through basis from is in had account this in impact point have year. and pension accounting, Additionally, will Sales

We and and despite the Kaman. maximize will and on total Overall year for note, price it a on a sales continue was executed balancing volume operating execution, schedule. its in focus we as exit We to challenging X% nearly consolidated delivery and controlling XXXX costs at successful distribution very returns to strong improved JPF challenges, grew business. on by well sales a trends

turn are and look now, solid expect the XXXX. with year backlog strong And the for entering Rob. forward, continued in aerospace we distribution the call a stage to to we over As sales I'll set in

Rob Starr

prior Neal, increased Thank to quarter year of increased in which were sales, morning, the year driven X.X% delivery performance and I outlook. were fourth were everyone. segments. on $XXX.X will K-MAX higher by our both and period begin by at bearings distribution, reviewing USG for million primarily million prior compared good $XXX.X offset sales to X% X.X% missile period. million At to during safe in sales XXXX prior quarter sales the providing Consolidated million with our $XXX.X compared and DCS million sales JPF JPF aerospace, period Higher higher today fourth period. million $XXX.X At sales to the partially to arm $XXX.X the by volume, higher in compared operating lower $XXX commentary and year before the up devices increases sales. you, to

or of gross Consolidated million, the increased in the $XXX.X the offset in $XX.X we X.X% Higher income $XX.X are to growth fourth $XXX.X quarter, strong and related program dollars quarter to in to to highest compared employee posted fourth quarter in in thus million quarter, in year. sales cost profit period, of approximately with the offset associated a compared accounts relative the a in partially $XXX.X gross X.X% prior costs from the in comparable costs prior fourth prior profit year partially corporate the year SG&A far. corporate or XX.X% million of reflected quarter SG&A activities by margin of XXXX. million increased profit in incurred increase or very Gross severance foreign sales the seen to XX.X% continues sales by million Our fourth in we gross profit to in moderation in the pleased the quarterly margin at margin $XXX.X up matters for period. period. of our level in sales, to quarter and operation or the absence was XX.X% the sales year. have due of primarily The with was ramp $XXX,XXX tax 'XX. in Operating of prior was development million compared was the incurred X.X%

of free our past net on been generation and earnings and free cash or long-term over the of years. X% achieving flow sales income million items, XXX% year. the conversion the X.X% goal of tooling the have discussed one-time past of in restructuring focus to XX% and primarily of was operating $XX.X million sales loss adjusted of $XX.X businesses, Excluding cash the excess successful service prior compared included in on the We've couple engineered on which our and flow sale with of to

from For of led million of net adjusted anticipated had XXX% XXXX, we delivered initially of or $XXX.X we million million in XXXX. $XX included discretionary This flow contributions, than of cash $XX flows earnings. to $XXX.X which more million, operations over cash free pension

programs aerospace, focus to down our lowering our leverage to and with balance the along the the and our the debt-to-cap anticipated XX%. growth of outlook our are contribute in JPF the million over and have ratios HAWK headwind my higher approximately BLACK expect our XXX metallic in absence our XXXX. bearings expectations basis taken to remaining in volumes range K-MAX, operating debt, XX.X% with Starting actions the Sales for approximately the large our from led range. we $XXX I'd more long-term of XX.X% and paid XX sales program XXXX, midpoint The products. with to million by positive our approximately for like restructuring end margins flat will for specialty JPF sales at on sales past products helicopter year we part lower by of growth months stronger million range to offset margin in X% $XXX SH-X, than our to reducing structures from the These by aerospace and of specialty ratio our in declines of and with and $XXX $XX Additionally, low and in engineered of Peru as are on remarks impact engineered the services. lower the bearing sales in faces business XXXX. tooling for an from AH-XZ we of million

a technology, our This and During new technology, missile anticipate of XXXX, includes in self-lubricating work opportunities and next-generation to aerospace. designed new of especially on vehicle and bomb new bearings also the continued evolution growth PMA device safe technologies the components investing at we number arm and technologies. future air drive

growth be benefit the Moving The wins to our sales end of we at serve. expect representing will over X% full-year of account distribution, XXXX. and range result $X.XX in in the we midpoint sales sales the markets $X.XX increase the XXXX of in billion to from corporate growth to billion

expect incentives. of improved the we the absence sales Turning be to XXXX operating X% for range margin expected vendor was XX%, distribution, our at XXXX, to of recur. higher expectations to non-taxable one-time paid which the operating margin is Contributing points X.X%. negatively estimate volume, are not to XXXX leverage in to basis by losses, margins performance from impacted in higher benefit employee the approximately which rate We be our and foreign operating XXXX below tax to XXX

earnings in approximately the Moving earnings XX% with of to year, the earnings occurring fourth to cadence be back we for half XX% our year of expect our first the weighted in the quarter quarter. and full

largely similar we the earnings of the experienced past, full to delivery for have of I is our XX% to products. of earnings the and the bearings As earned schedules in specialty where we quarter fourth weighting the XXXX, JPF XXXX of that year our highlight in earnings is fourth expectations result would like fuse our quarter.

million $XXX $XX million back XXXX, to we million. Neal. into free expect strong from turn flow the With of flow to I $XXX that, operations $XX cash flows cash will Our of million will and to call over performance where cash continue

Neal Keating

Rob. Thanks,

exit of embody defined As the for XX technology we've work to innovation future our strategic of by for Technological the to critical the are each proud demonstrates continue a the the I'm partner, years. is over extent done XXXX, a leading driver from Kaman that technologies day. every recognition spirit of to Airbus we we has manufacturers received valued innovation world's and Kaman's and in as growth XXXX which the

open we employees interest, to for like our Before around and our line commitment. questions, their the for and I'd investors world thank their dedication for the X,XXX

to the Jamie. turn over Now, I'll call back

James Coogan

Operator, may first the question please. we have

Operator

Marshall first comes Our with from Instructions] & Sidoti Company. Edward question [Operator you. Thank

Your open. is line

Edward Marshall

QX. I So businesses the that's -- maybe of that could. in slid you margin XX% an much there portion XQ, that about in was I'm just quarter, little be talk of how losses weighting of to of bit the in it might XX% Noting kind there was Could JPF a JPF margins on surprised the roughly that the at else other into QX. XQ shipment wanted into by Are I or $XX JPF if might assuming in absorbing of that some itself, some happening? that impact what to million? be immaterial the that that slipped talk looking sales fourth the

Rob Starr

Ed, Yes. It's Rob. this is good question.

we're quarter. has typically to margin expect due distribution. quarter, in in seeing a ship impacts the start of the to balance with employee-related first While that we in do the costs. number quarter -- are there first order another the expectation I'll of lower other Distribution first that a

year the the going the really that shifted has Just impacting so timing also bearings. really got to just that's results, to driver is back half biggest be of the the

the on the improvement as that of as do of of during we to timing there. them balance in contributor. in largest and in the expecting QX improved for for QX the expect see based a so actions based down year the deliveries significant Just year, the to move weaker throughout wind the recovering a see largely through really profitability quarter balance shipments, just expected that's demand year aerosystems we the cadence relatively And on then the as customer expect of QX, see we to we're restructuring expected the

Edward Marshall

say about kind DCS outlook have XX XXXX XX% some shook have curious, to do for to waiting gave of the this that out of U.S. between units -- shipments You XX,XXX of you you USG? XXXX government. XX,XXX do I'm how -- that and

Rob Starr

you provided was that toward weighted have the I for year. than weighting this year that We expectation Ed, this our USG can more year not but -- tell last

than So, XX% higher in portion USG will represent 'XX. a

Edward Marshall

for 'XX in higher was your It anticipation XXXX? then sorry. I'm

Rob Starr

'XX. USG higher percentage correct. the USG The That's was 'XX than percentage for in expected

Edward Marshall

have XXXX that So that that did yet? $XXX weighted? And kind you order think I about approvals I order do -- received is you rate first, that XXXX, how million JPF shipment the about to for from through? rolls that think when How of back-end

Neal Keating

Ed, Neal. it's

-- year We four-year for shipment order, have three the large not the schedule be that approval that, that a yet would schedule. received shipment is and anticipation

can XXXX. break in that beginning four So, over years we up

Edward Marshall

relatively even? So,

Neal Keating

across can't on going it's Depending years that to so. demand, sorry. or customer we those be I'm say four linear

Edward Marshall

of is you thought but similar? the mean too that And the maybe just I comment the business given size, given is directly, I I I know then don't profile -- margin finally, size, at do the the to $XX or think million maybe Can on margin look contract? similar relate size that could it business? I Are they we of contract. that on we how profile

Rob Starr

USG customers, I -- But competitive provided even agent other profitability but would a profitability it's of a things any but lot we've DCS more orders that. of to certainly order haven't our different higher significantly orders talked that that guidance going that to we I'm say does specific between DCS about I costs factor relative There lot give differ. get. cost reasons, margins, into we really that commentary. rate DCS certainly, as that within relative and other orders versus that for of profitable, other not the are

Operator

you. Thank

Seth with Our question next from JP comes Morgan. Seifman

open. line Your is

Mike Rednor

This bit. is on distribution to talk Seth. I Mike a wanted little the about just for Rednor

kind X% target actions margins just margin are of that and of longer-term what improve available business. in levers wondering, move higher? have or there still was you to You to this out for it I the kind

Neal Keating

Yes. Mike. if good It's -- Ed sorry question. recall you a

if granted each If have improved extensive to quarter. productivity you fashion and for recall, really very improved we of and driving in a adjust start undertook or in necessarily margins you pension by the set the others, initiatives not very business and a margin large, we linear

around for scale. So, to be us, really it's going

year. to long-term line the also we to really product out to initiatives our going infrastructure, are fluid sales cost then leverage be growth but productivity rolling important know power this is You fixed our

ahead how forth. manage still terms in logistics of a work infrastructure, of how the us optimize of our customers and so we optimize of lot our we initiatives service lot and a there's really productivity So to

a important scale definitely number is that. there us will we reach to that do long-term toward X% But have still levers a path, available target. So toward of be to

Mike Rednor

should one, plans in last contribution minimal say can about pension be kind you or one And there? funding XXXX? of longer-term What outlook

Neal Keating

the this given I probably what we're This would That million the similar expecting the question on the past, pension. required in range. made great make reasonable all funding model But $XX it's to as contributions somewhere to I year, performance determinant the Yes, say expectation. to going so done be contributions just forward, well not Mike. XXXX. as a any pension going or be would year, we've of in level that we've in will think that's future

Operator

you. Thank

Chris next from comes Our question Longbow Dankert with Research.

Your line open. is

Chris Dankert

First busy I say record congrats to want this K-MAX it's the the JPF a quarter guys. in production on off, deliveries for you and shipments on run,

Neal Keating

I it. appreciate

Chris Dankert

I circle and guess of built us of in just a pricing KIT, quick give for kind here? you the fourth the XXXX kind of to was sense could quarter, what what back in any you've

Neal Keating

We points XXXX with. probably of and probably saw of go I'll last X maybe to with of year point relatively anticipate half XXXX. XXXX begin the the price four to second in Chris, consistent through to we months X.X the what

have term from when while contracts a price you takes you tended and pass they increases, that to you the the had about come middle margins was get a you the to year as reasons those one end price lower little Because increase through. it we with beginning to customer, know, quarter. your fixed As and about of and we've fourth slightly know, fixed-price talked contracts supplier a in it you the of

see points to of expect X.X we benefit XXXX in that So, though.

Chris Dankert

guide kind the you of kind shipments can you're five then sticking assuming And the range? at K-MAX guide of similar now, of number give or that right is of us in here, with four kind the

Neal Keating

XXXX. Actually, Chris, delivery of three anticipating in we're aircraft

and out but the a even for aircraft we're was fourth We're a little that, down quarter a in back bit from days. been big not going which of days. have production figure 'XX, last may quite obviously us a record for us. the year big trying few actually to for Five So, us to sure it

at this the to we're deliver As last in the least continued aircraft you we've year and for production of initial and as know, another XX going our March we production of stated, aircraft. XXth run so

anticipated simply this we slowdown rate. increased relative production the that have of would we deliveries in of So a year because timing that

for since for and for this that and term fleet unanticipated we down that almost -- we've to it year, in continued also support a, the was that very go fact three mean almost So XXXX longer feel about; will the to response doubled not good what service revenues, increased demand. getting us the and us but it we're

Chris Dankert

color have still interest from in could. absolutely we yes, on but and of one seen expensive? the prices or just discipline the I applaud change and understandable for M&A, I any Yes, me one your last things expensive, if thanks that kind peaks there,

Rob Starr

appropriate say opportunities, in multiples certainly searching are would collapse very Chris, the environment Yes, I strong. December of the market pricing would elevated. I that remain spite acquisition the say debt market in but We for actively remains

are So scarcity folks of a there assets lot and chasing of a them.

we're So in still but the game, much we're and disciplined pricey. it's being very

Operator

Thank with Research. you. Our from [Operator Northcoast question Instructions] Ryan comes next Cieslak

open. line is Your

Avi Danda

Ryan. for focused XXXX there any And then on additive end-market first on question is national terms color be quantify Avi is they're on how new in? to provide what account the way in some could of will wins on, distribution, guidance? you sales is This My

Rob Starr

this Avi, is Rob. Sure.

the half a XXXX have that of during from expecting represents probably the approximate I secured that ramp up full-year would little impacts we of that corporate shy accounts in kind that about of the growth So we're 'XX.

markets our corporate they're good focused in you're where a It's wins. corporate considerable In around also traction some as initiatives. -- We're for pretty result account pretty account food us asking it's seen another of Certainly that's think seeing has end-market and end we've -- pretty bev, a that on area, beneficiary, a terms range. been a of broad a the of paper on. I

Avi Danda

in doing talk you've could had the you've what XXXX you about gain release. the -- you detail in success highlighted distribution the on in that my seen that some that share And initiatives far? that you incremental And so you're then or specific at did provide next Is you there XXXX? question, on than could anything

Rob Starr

-- of want of based some that and development, again, really terms we to it accounts their they we've But book being -- things, also because of in of that on by the to serviced account we business. adequately of clearly we've XXXX, successful to that we relative continue weren't think providers. a been for level on in we perhaps of rebates important secure corporate account think also just I our high existing have focus terms service managing balanced Yes, other focus accounts, customer the a corporate while -- very future service corporate but in kind of able critically accounts would view to are of accounts the we and and number been felt relates as core to area share are particular success helpful the our as are as

Neal Keating

our our think certainly, I across But that with right seeing us account U.S. the pluses across for reflection And market for corporate growth we're one the is quarters. that pleased Avi, of the of we're success. real of a all the XXX industrial board in had the the now. U.S., we've five facilities overall in growth last the

market accounts. really we're certainly of of being take So important, both as the as in well wins some uptick advantage corporate with always pleased to able combination that's the specific

Avi Danda

How could. XQ? last so far guess question is in trending growth sales I then distribution if And I

Rob Starr

Yes.

results But for to February's January, books number finalize as the relates it up our we to fiscal very through not much Avi, track. our as were certainly of we have yet. for still year-over-year closing a expectations, mid-single There's we're So month work digits adjustments of finalized over. on internal February. we

Operator

Thank you.

with Our Capital next Barger question comes Markets. from KeyBanc Steve

open. is line Your

Steve Barger

the single-digits, to you up by last on being could progressed back comment us quarter? how January Going month mid the tell quarter

Neal Keating

can. Sure

Rob Starr

That's no problem.

when digits October kind look high-single December; up X.X% we digits November accumulating quarter. December in October, was same in November, of a and year-over-year then So the the for growth year-over-year low-single with at was up

Steve Barger

aerospace the just, want I digit go to year-over-year mid-single about revenue a in meaning earnings From standpoint, just thinking decline the low I question. are double the thinking And in ramp year, digit a that? fairly cadence we modeling right big to back through am margin,

Rob Starr

about of to aerospace? think want You in terms quarter-over-quarter

Steve Barger

was decline Yes, that of about given XQ it's XX%. earnings, the year just Last XX% we're this now. year talking

obviously So pretty variance. is a there big

Rob Starr

know highlight we fair. in XXXX. you cadence we And very to similar that what earnings that's I actually would in the just expect 'XX Yes, is experienced

So Steve, negative down yes your first 'XX go of the we've this to the be path quarter through, question expect in of we as relative through sales aerospace year. the it kind as and But track 'XX, broken to balance that we to recoups we before. would variance of kind answer of then

Steve Barger

plus I'm The so wider total guidance than X that, is negative X if to range right, remembering the will right? be

Rob Starr

was The yes, -- midpoint we the therefore I provided range Yes. a to range, Steve. speaking

Steve Barger

Understood.

can benefit just of operations about, talked equipment the drivers talk those On your big initiatives you the in productivity by in terms driven are that improvements Can you technology margin or new or expansion? about consolidation? facility

Neal Keating

drive and the overall been technology the optimization. would toward remainder a of continued developed of Yes, network expansion, the the and we've tools I and of certainly as application execution the that working certainly business as refinement say, we can have well margin considerable branch across those

where better have customers in So, facility consolidation can local markets appropriate that opportunity. done we to continues and it where our be serve an

We logistics. improve -- the is this continuing team think area also an certainly general opportunities to performance think where in are is we've the of I to look is demonstrated to on at focused there point. That opportunities that it, terms I just

Steve Barger

be the comment headwind that like standpoint. into year won't It a this and last from contract Okay. your problem. from on how year your And the seems thinking flows just customers a mix mix about guidance assumes

that. you up enough are to contract fast customers overcome customers growing mixing those So smaller or

Just trying to get a sense.

Rob Starr

it is stickiness price there we non-contract go for those price the Yes, of I growth customers. we we're pass of through time, is customer a to, think contract little Neal a that, customers appropriately to bit important, alluded through certainly but focused to the on 'XX, and period then able call increases of as ultimately kind are

the through to 'XX, we issue go would alleviate went we as we year. expect So that see through as

Steve Barger

or more by up of smaller growth Is in the customers margin segment? the contract the mixing driven expansion by

Rob Starr

customer Well, expansion, The of there's employee that to fixed the margin infrastructure. some our and of of things. to of couple really incentives, cost absence the also going certainly is leveraging to drive and help the also sales growth mix just

Steve Barger

Yes.

Rob Starr

considerable We're tight G&A. very and our controls we on expecting see have a to growth

Steve Barger

Okay, question then me. and last from

on what term hit scale longer you target, that? quarterly to numbers, of that rate need run X% meeting rough to revenue do hit Just kind

Rob Starr

trying of X%, that little have Steve. where to would to working to mean to alone drive not that where to going we're down we that's and go go get ways Yes, path. to that evasive, we north and toward where I going scale a are. we're I'm I its us to scale say be a continue is but to

Steve Barger

is this hard but you can the to we predict future, question cycle? Or nobody ask, really longer that, are in a think can the do cycle where that happen expect This because term? is this given you

Rob Starr

us recession. of made really in there for lately, they've really whether to think is a hard we're the a discussion be I are mean, of every to make that cycle. that, prediction conjecture lot would And going around everyone's on incorrect. a been about not there's time a enter that we into It lot comment where because I or

certainly all industrial front at continue So, to been exposure is to certainly prepared should and slowdown. point. rates that downturn, a potential a forth this we of [indiscernible] has reading point certainly probably quite but line indications And we have order one economy the certainly auto low industrial been that, area so we're just robust our in see support pretty my I and also from that's out the would at the

Operator

Thank you.

from comes with Cardinal question next Capital. Kirkpatrick Our Robert

open. line Your is

Robert Kirkpatrick

the about a you would little talk what business? and the that please? headwinds be decision of in you engineered results, services to tooling bit And quantify exit could Could terms XXXX

Neal Keating

tremendously Sure of thing, over around could were bought the basis the that Neal. frame as or for Rob. of headwind XXXX. Those we tooling nicely those on and in also a It's the part of nice time business pretty by the you years years. last changed in actually But they about The back three acquired initial acquisition we both came A-XX, with UK overall, XX% and both external had $X probably XXXX and several that our we Tooling programs. And in AH-XZ, really the minus gone made the us helped million. it since from the -- has is Rob the model really market the we the had plus in number markets benefited programs down businesses. a

was were time the when we at investment to come we we where felt not wait UK. didn't the point one a buyer us was in it for that needed back, or best in and to so going that had willing to we it market for And

services repurposing was us contract because onerous. great So looked the risk engineering well. sharing that attractive. external contracting being business two-folded. had with our biggest our back back And came the the didn't us build and in we revenue for were our us felt design requirement that also frankly that really that internally the participate basis. the risk point in returns time adjusted thought. it help It provided part for market. originally the way XXXX on those used that really but Quite right in meet approach SH-Xs in broader evolve of in were positioned the really we engineering build acquired contracts as with that, didn't environment us on Zealand, a terms conversion for on group again services, a also services engineering then very was to Australian Peru change felt the the to as But and worked New they we a us our was of and We market And and there it Boeing design structures a at we customer, XXXX

case think participating a probably build economics some we revenue for that gained in in in years, of have been and it onerous I of anybody Kaman. recent we from are just don't structures risk on focused as the in think But last benefit can not the too services, the We engineering number design for just five, tell market. that for sharing work and the from our approach think requirements So years. you we

Robert Kirkpatrick

as you. investment number that just tipping obviously, mentioned Aerospace technologies comment broadly prepared thank briefly ran you your of the could at you you Great, And in planned on Kaman without remarks. through hand your a more

Neal Keating

to We've is on do of relaunch and we in a with we our safe invest number program to investing in there's fuzing about investing are help engineered very the will lower all-composite area And machine in recent new K-MAX, we've unmanned very new Also, well. will continue that We an and to systems products blade certainly, at to programs of and to will and and ourselves there invest of And and the aircraft step for also successful bearings some that it be can PMA before years for interested broader also which for rotable spares the we're the as will us. area, customers level range been there. the a be area. continue make the specialty but We've in arm our fleet. technologies a the investing as which of there, want in important in a talked some things existing used products arm do also, a very those in wanted into microelectronic we us, already. going new we we safe we be for to think been fuzing our performance want new attractive developments

Robert Kirkpatrick

why anything dependent as to so can maybe is somewhat so, much a and of there of bearings And customer are then out on that to year earnings the way our structured. the end the out the to out or the an Is control so toward requirements of broader we completely seems to Or requirements. opposed smooth the really it about end really out door? the year? rush just of customer get And the driven fuzes oriented cadence perhaps by be question do being business if the door

Neal Keating

control. it's demand sense, it that, think for historically totally not surprising But so tend to on-time demand high, specialty go we reflects it's approval to government get -- way know our a are waiting delivery were of third is fourth be DCS is do in to on-time September of is and we have to then do ready anything run our third or government bearing certainly but to in we products that performance and if honest -- into but I the for the a I for which our make typically To out what I the if doesn't and into in Rob, the our run the -- us that's that and we orders, deliveries, a just agree and it about talk it, lot be is you. year or the quarter. heavily end think very weighted to facility, perfect has manufacturing tend we the later the to approvals run fiscal not, fourth of would then the to I quarter. year. don't XXth a That And on with U.S. not it those with would seem

could approvals when So the see fuzes get delivered those we and we inventory quarter. to JPF, the from be XX,XXX would you -- and able go in as fourth over build we're the have to ready with

are in particular, bearings, Kamatics in for our we able a cadence So the in than able our have to little to get line manufacturing JPF specialty currently smooth bit and to we're facilities. more

Robert Kirkpatrick

think then up quarter, number? I And the a year a versus number? that -- prior quarter year And year, or you a what sales of the speaking were the X% that said was the bearings, was if

Rob Starr

the Rob was me quarter sec. and one number year, the That give

Neal Keating

It's digit. just mid-single a

Rob Starr

about almost, same. -- about the Yes,

Operator

Thank you.

next Global. Our Alembic Skibitski Peter comes from with question

open. Your line is

Peter Skibitski

Neal, revenue well I had you that or that was engineering raised a about I that million [$XX] Did business, services include UK heard in XXXX. say as think tooling business stream? separate

Neal Keating

the businesses. was combination of two that the No,

Peter Skibitski

in other think headwind I what's and for of then And the a items? helicopters revenue other XXXX? couple aerospace source of

Neal Keating

a Yes, are chime business few exactly, us. legacy year-to-year, down There's year-to-year as us. impacts will but five and fuzing down on that so K-MAX well, We're probably missile to Rob our from here so three deliveries right. impacts from we in obviously you're that in

will quarter program headwind. Peru of complete this Our early the year, or second in that's so quarter first a

number also AH-XZ. headwind currently We UH-XX, have from also year-to-year the on of have and lower UH-XX in we a aircraft a

million components primary of are think the year-to-year. I the $XX headwind about those from So

Peter Skibitski

it if just, or over it the offset holding of the other the approval? -- you but the U.S. of do million Then if for XXX into sense And the XXXX? up any $XXX holding if I'm -- negotiations government with that this, factored And is up? wondering your I'm guidance program, timing is the I on sorry missed country fuze have approval any agreement

Rob Starr

currently we do -- for final for approval waiting that. We have government are not

customers. our with contract signed a have We

we commented part do prepared So it are have that of of But that if in we on that approval remarks, is a other and the also government we outlook. portion now in internal have that in XXXX need as mitigate we area, of working number our we DCS be a could believe our orders shortfall.

Peter Skibitski

you'll the think when have to to a been contract -- per don't you out million kind so degree. $XXX easy like of so to think million that and out, $XX one sounds I first the Is statement? a get maybe that'll It would 'XX. breakup through from Yes, way 'XX pushed was $XX years this think of it that have year I fair release came million year,

Rob Starr

four really mean, I Pete. over years. it's Yes,

So 'XX. it's 'XX really and 'XX, 'XX,

is back-half that the expectation then over customer point, have I dictate to our well. years assuming certainly depends requirements schedule, the think be cadence straight four the on will line customer that as to see on And would certainly, we weighted. that's the order year, ultimately, your from of when, there. year. out, it's we mean, timing that a And for and deliver. contributing going but but a But this fairly all also we I -- So period earnings works deliveries that it's to

Peter Skibitski

versus delivered quarter wanted you just is how And I the million $XX first for to then in guys order. on clarify much much just tell how you us fourth one left quarter? the item DCS Could that the

Rob Starr

relative to to mean, performance partial the that certainly shipments this of would competitive think I our a don't Rob. really you in we the I reasons. when result as was want But level is over quarter, of the expectations. for Pete, say, provide the -- about fourth the performance that majority visibility of Yes.

Neal Keating

our that Pete, remember well call as pull for and outlook decision year. made we of do, the you out quarter our we as we went the into God third to

we ship their we that's exactly would we if Although that contract happened. against think receive that approval very did we clearly state, and did what

of much did it said, pretty against shipment. the as make we So And made Rob outlook. over a our performance partial

for think I way best you the So about that's to it. think

Peter Skibitski

And it. for very me. one I A appreciate last

clear, you think aero the up. Could down, in given -- guess fuzes you flat guidance expect do structures I finish So aero, or up, I I mean, 'XX? pretty it's for bearings for down

Neal Keating

up line. on be top will overall Fuzes

So structures talked predominantly in of is business. really we've of just offset which part by the the kind as headwind really the

Operator

you. Thank

Cieslak Our Northcoast is from with question follow Research. Ryan up next

line is open. Your

Avi Danda

Hey, guys, Avi.

somewhat me. up at or where you from baked step one Just distribution is going down in provide be of ERP rollout? notable Could there more you're that that to not the and into terms in an segment then at on update step a all? or is guidance rollout with XXXX at your And

Rob Starr

for know well four. you systems had XXXX to went XX major as from SXE have ERP our which Avi, We we in very down us. currently, gone platform upgrade of a

and transition of in KIT business SXE of quarter this third portions likely beginning year. our we the of to currently are So next anticipating our

Avi Danda

baked so there I sort Is then, of, into all? any -- is guess, guidance disruption no change at in that rollout there is And there segment XXXX? in any

Rob Starr

in it. the isn't of down at obviously, very latest when systems at we've got good gone or to version of a from Avi. smooth to and transition they are doing XX XXXX. this we've get We people had group good a XX There that pretty And pretty doing SXE four,

customer because our key So the not on go we going of we are one it's If levels, business we'll are that's our ready it. live take any feel impact anticipating to a delay we that to not service because in disruptions things.

Operator

turn And you. closing James I'm questions Coogan Thank to like over time. back for currently the this no remarks. further I to showing at would

James Coogan

us speaking you quarter our to report you on Thank for forward conference We joining call. look we with when results. today's again first

Operator

wonderful gentlemen, a your concludes for conference. today's Thanks day. this and Have participation. Ladies

Kaman (KAMN) 26 Feb 192018 Q4 Earnings call transcript