Form 8-K KAMAN Corp For: Sep 09
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 9, 2015
Kaman Corporation
(Exact Name of Registrant as Specified in Its Charter)
Connecticut
(State or Other Jurisdiction of Incorporation)
001-35419
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06-0613548
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(Commission File Number)
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(IRS Employer Identification No.)
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1332 Blue Hills Avenue, Bloomfield, Connecticut
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06002
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(Address of Principal Executive Offices)
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(Zip Code)
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(860) 243-7100
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 7.01 Regulation FD Disclosure.
From time to time, members of the Company's senior management present information about the Company to investors. A copy of an investor presentation dated September 9, 2015 is attached as Exhibit 99.1.
The information in this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following documents are furnished as Exhibits pursuant to Item 7.01 hereof:
Exhibit 99.1 - Investor Presentation dated September 9, 2015.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
KAMAN CORPORATION
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By:
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/s/ Shawn G. Lisle
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Shawn G. Lisle
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Senior Vice President, General Counsel
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and Assistant Secretary
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Date: September 9, 2015
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KAMAN CORPORATION AND SUBSIDIARIES
Index to Exhibits
Exhibit
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Description
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99.1
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Investor Presentation dated September 9, 2015
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Attached
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Investor Presentation September 9, 2015
Forward Looking Statements This presentation contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements also may be included in other publicly available documents issued by the Company and in oral statements made by our officers and representatives from time to time. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. They can be identified by the use of words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "would," "could," "will" and other words of similar meaning in connection with a discussion of future operating or financial performance. Examples of forward looking statements include, among others, statements relating to future sales, earnings, cash flows, results of operations, uses of cash and other measures of financial performance.Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that may cause the Company's actual results and financial condition to differ materially from those expressed or implied in the forward-looking statements. Such risks, uncertainties and other factors include, among others: (i) changes in domestic and foreign economic and competitive conditions in markets served by the Company, particularly the defense, commercial aviation and industrial production markets; (ii) changes in government and customer priorities and requirements (including cost-cutting initiatives, government and customer shut-downs, the potential deferral of awards, terminations or reductions of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional actions or automatic sequestration); (iii) changes in geopolitical conditions in countries where the Company does or intends to do business; (iv) the successful conclusion of competitions for government programs (including new, follow-on and successor programs) and thereafter successful contract negotiations with government authorities (both foreign and domestic) for the terms and conditions of the programs; (v) the existence of standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; (vi) the successful resolution of government inquiries or investigations regarding government programs; (vii) risks and uncertainties associated with the successful implementation and ramp up of significant new programs, including the ability to manufacture the products to the detailed specifications required and recover unanticipated start-up costs and other investments in the programs; (viii) potential difficulties associated with variable acceptance test results, given sensitive production materials and extreme test parameters; (ix) the receipt and successful execution of production orders for the U.S. government JPF 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; (x) the continued support of the existing K-MAX® helicopter fleet, including sale of existing K-MAX® spare parts inventory and the receipt of orders for new aircraft sufficient to recover our investment in the restart of the K-MAX production line; (xi) the accuracy of current cost estimates associated with environmental remediation activities; (xii) the profitable integration of acquired businesses into the Company's operations; (xiii) the ability to implement our ERP systems in a cost-effective and efficient manner, limiting disruption to our business, and allowing us to capture their planned benefits while maintaining an adequate internal control environment; (xiv) changes in supplier sales or vendor incentive policies; (xv) the effects of price increases or decreases; (xvi) the effects of pension regulations, pension plan assumptions, pension plan asset performance and future contributions; (xvii) future levels of indebtedness and capital expenditures; (xviii) the continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items; (xix) the effects of currency exchange rates and foreign competition on future operations; (xx) changes in laws and regulations, taxes, interest rates, inflation rates and general business conditions; (xxi) future repurchases and/or issuances of common stock; and (xxii) other risks and uncertainties set forth herein and in our 2014 Form 10-K.Any forward-looking information provided in this presentation should be considered with these factors in mind. We assume no obligation to update any forward-looking statements contained in this presentation
What is Kaman? Solving Our Customers’ Critical Problems with Technically Differentiated Products & Services Leading Provider of Highly Engineered Aerospace & Industrial Products Serving a Broad Range of End Markets
Distribution Kaman Corporation Overview Distribution Aerospace $1.8B Revenues Aerospace Based on LTM Actual Results from Continuing Operations as of July 3, 2015
Outstanding portfolio of intellectual property (IP) across AerospaceDistribution aligned with best-in-class, vendorsDiverse end market exposure provides consistent performance to fund growth Strategically Positioned Kaman Investment Highlights Improving Financials Reliable Business Strategies Focused on driving profitable top-line growth Deliver earnings growth through scale and operational executionGenerate strong consistent cash flow to fund long-term growthERP investments will yield improved efficiencies & financial performance over medium-term Disciplined acquisition growth to achieve scale and margin enhancementsContinuing focus on innovation to maintain differentiationRelentless effort to drive operational excellence and leanShared services allow for efficient allocation of resources
Aerospace Overview v AEROSYSTEMS SPECIALTY BEARINGS & ENGINEERED PRODUCTS FUZING & PRECISION PRODUCTS Engineering design and testingTooling design & manufactureAdvanced machining and composite aerostructure manufacturing Complex assemblyHelicopter MRO and support Self-lube airframe bearingsTraditional airframe bearingsFlexible drive systems Bomb and missile safe and arm fuzing devicesPrecision measuring systems Memory products Global commercial and defense OEM’sSuper Tier I’s to subcontract manufacturersAircraft operators and MRO Specialized aerospace distributors U.S. and allied militariesWeapon system OEMs “One Kaman” combines design and build capabilities to provide customers with a global integrated solutionBearing 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 BusinessDynamic Customers Products
Distribution Overview PRODUCT PLATFORM Bearings & Mechanical PowerTransmission (BPT) FLUID POWER AUTOMATION, CONTROL & ENERGY (ACE) % of LTM 7/3/2014 Sales 50% 21% 29% Market Size(1) $13 Billion $7 Billion $15 Billion Acquisitions since 2008 Industrial Supply CorpAllied Bearings SupplyPlains BearingFlorida Bearings Inc.Ohio Gear and Transmission INRUMECCatchingNorthwest Hose & FittingsWestern Fluid ComponentsB. W. Rogers ZellerMinarikTarget Electronic SupplyB. W. RogersG.C. Fabrication Major Suppliers (1) Source: PTDA Market Size Report; US Census Bureau; ARC Advisory
Market Opportunities Secular trends helping to drive significant long-term growth opportunities in both Aerospace and Distribution segments AEROSPACEOEM/Tier 1 outsourcing and supplier consolidationHigher bearing content on new platformsIncreasing commercial build rates driving bearing and aerostructure salesNew programs provide offset to lower defense spending DISTRIBUTIONSupplier consolidation favors larger national service providersIncreased need for value added servicesLarge fragmented market provides consolidation opportunitiesFactory automation trends driving fluid power and high speed automation solutions
Growth Drivers Aerospace Distribution “One Kaman Approach”New product development efforts at Specialty Bearings and Precision ProductsContinued commercial aerospace cycle growthProgram renewals and extensionsExpanded geographic footprint Supplier consolidationFactory automation trendsDifferentiated product and servicesProduct platform cross-selling National account opportunitiesSales force expansion
Capital Deployment Framework Capital deployment is focused on growth investments & return of capital to shareholders Dividends & Share Repurchases Capital Expenditures Acquisitions Total $803 Million Period: Years 2007-2014 and YTD 7/2/2015 Increased dividend 12.5% in 2015 to an annualized rate of $0.72 per shareDividends paid without interruption for 45 yearsRecently announced share repurchase authorization to offset dilution from the issuance of shares under employee stock plansNew credit agreement provides committed capital of $700 millionContinue to pursue acquisitions to accelerate growth
33% Aerospace
Aerospace Profile Sales by Product LineLTM 7/3/2015 Net Sales $603MOI% 18.4% Financial Summary LTM 7/3/2015 Technology Profile
Aerospace Strategy
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Aircraft Programs/Capabilities 1. Doors2. Nose landing gear3. Engine/thrust reverser4. Flight controls5. Flaps6. Main landing gear7. Rudder8. Horizontal stabilizer Bearing Products Other Products 9. Door assemblies10. Top covers11. Fixed leading edge12. Fixed trailing edge13. Winglets14. Wing structures, flaps, slats15. Composite structures (e.g. access doors, radomes, consoles)16. Nacelle components 15 15
1 4 1 2 3 5 4 4 4 4 Aircraft Programs/Capabilities 1. Flexible drive systems2. Flight control bearings3. Landing gear bearings Bearing Products Other Products 4. Manufacture and subassembly of major structures (e.g. cockpit) 5. Blade manufacture, repair andoverhaul6. Manufacture of composite structures (e.g. radomes) 6
Aerospace Renewals/New Programs Recent JPF orders have driven program backlog to over $200 millionBell – commercial bladesBell – military bladesZodiac – 737 landing gear kits and assembliesBoeing – 777/767 fixed trailing edgeBoeing – KC-46A fixed trailing edgeTriumph – G280 ailerons and wingletsPeru SH-2G Over $400 million in total potential revenue
Market Leading Self-Lube Airframe Bearing Product Lines ProprietaryTechnology Material Science Capability Application EngineeringExpertise Operational Excellence KAron® • KAflex® • Tufflex® New TechnologiesNew ProductsCustomizationCustomer Intimacy Work ForceLean Automation World Class Performance
Fuzing Products SLAM-ER HARPOON MAVERICK AMRAAM FMU-139 TOMAHAWK JPF STANDARD MISSILE SLAM-ER SLAM-ER AMRAAM TOMAHAWK STANDARD MISSILE AGM-65M AMRAAM On a Majority of U.S. Weapon Systems
U.S. Air Force (USAF) bomb fuze of choiceUSAF inventory levels below desired quantity, and foreign orders provide additional opportunitiesUSAF contract extends sole source position into 2017$180 million in orders over the last year have driven backlog to over $200 million27 foreign customersSystem field reliability is greater than 99% Bomb CompatibilityJDAMPaveway II and IIIGBU-10, 12, 16, 24, 27, 28, 31, 32, 38, 54BLU-109, 110, 111, 113, 117, 121, 122, 126MK82/BSU-49, MK83/BSU-85, MK84/BSU-50 JPF Program
Helicopter Programs – K-MAX® Re-opened the K-MAX® production line June 2015Deliveries of manned commercial aircraft expected to begin in early 2017First ten aircraft produced are expected to generate $75 million to $85 million in revenueCommercial fleet service and support provides recurring revenuePartnered with Lockheed Martin on an unmanned version of the K-MAX®Two unmanned aircraft supported the USMC for 33 months in a cargo supply role in AfghanistanContinue research, development and testing of unmanned technologies & capabilities and pursuit of a military program of record
Scheduled to complete our contract to provide ten aircraft to the New Zealand Ministry of Defence during 2015Under contract to support the procurement of five aircraft by the Peruvian NavyFlying fleet expected to grow in excess of 40% from 2014 to 2016 providing additional service and support opportunities Helicopter Programs – SH-2G Super Seasprite
Distribution
Kaman Distribution Segment LTM 7/3/2015 Net Sales $1,221M(1)LTM 7/3/2015 OI% 4.8%(2) # of Customers 65,000 SKUs in Catalog 4+ million Business Overview Served Market Size = $35B dollars in billions Source: PTDA Market Size Report; US Census Bureau; ARC Advisory (1) From continuing operations (2) From continuing operations, adjusted to exclude $1.1M in severance costs
Business Strategies Pipeline for each product platformFormal integration processEnd market diversification Focused on outside sales forceTargeting strategic geographic marketsKaman training programs Adding more differentiated productsLarge national account pipeline Targeting new end markets Strategic pricingSupplier rebates Purchasing leverage Multi-phase rolloutIncludes CRM, WMS, FinancialsDrives operational efficiencies 1 2 3 5 4
Scale Distribution – Road to 7+% Operating Margin TODAY<5% FUTURE7+% Improved Operational Efficiencies Product Mix Strategic Pricing CATALYSTS
Platform Evolution Through acquisitions and organic growth, Kaman has significantly grown its Distribution business while greatly expanding its product offering Bearings & Power Transmission up 35% Automation, Control & Energy up 244% Fluid Power up 305% a a a Growth in sales from the full year 2009 thru 7/3/2015 LTM a
Executing Strategy and Building Network
Acquisitions in all Product Platforms Distribution Group Sales
Adding Leading Brands in Multiple Technologies PLCs, HMIsSensors & SignalingMachine Safety HydraulicsPneumaticsFluid Connectors Motion ControlServos & SteppersLinear Motion BearingsPower TransmissionIndustrial Supplies Value- Added Technologies 2009 2015
Extensive Solution and Service Capabilities
Aerospace– Leveraging unique set of proprietary products and capabilities– Strong platform positions across commercial & defense markets– Robust pipeline of future opportunitiesDistribution– Three product platform strategy expands growth opportunities– Increased scale provides improved operating leverage– ERP implementation benefitsSuccessfully execute future acquisitionsLeverage experienced management and workforce across the companyStrong financial position provides significant capital deployment opportunities Positioned for Future Growth Executing strategies to deliver shareholder value over time
Financial Information and Non-GAAP Reconciliations
Sales and Operating Income
Net Earnings
Cash Flow, Balance Sheet, and Capital Factors
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