Kaman Corporation KAMN disappointed investors as its fourth-quarter 20Array5 adjusted earnings of 69 cents per share came in below the Zacks Consensus Estimate of 8Array cents. Also, earnings declined 9.2% from the year-ago figure of 76 cents per share.
In 20Array5, Kaman’s adjusted earnings were $2.42 per share, one cent below the year-ago figure and short of the Zacks Consensus Estimate of $2.53.
Revenues
In the reported quarter, Kaman generated net sales of $452.3 million from continuing operations, down 5.4% year over year and below the Zacks Consensus Estimate of $476 million.
The company reports net sales under two heads/segments. Segment results are briefly discussed below:
The Distribution segment generated sales of $265.7 million, decreasing Array2.2% year over year. Revenues from the Aerospace segment grew 6.5% year over year to $Array86.6 million.
In 20Array5, the company’s net sales totalled $Array,775.Array million, down Array.Array% year over year.
Margins
Kaman’s cost of sales in the quarter decreased 5% year over year, representing 7Array.8% of total revenue compared with 7Array.5% in the year-ago quarter. Gross margin inched down 30 basis points year over year to 28.2%. Selling, general and administrative (SG&A) expenses, as a percentage of revenues, were 23.3% compared with 2Array.5% in the year-ago quarter.
Adjusted earnings before interest, tax, depreciation and amortization were $3Array.9 million, down 26.Array% year over year. Operating income increased 33.9% year over year to $22 million, while operating margin came in at 4.9% compared with 9% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting fourth-quarter 20Array5, Kaman had cash and cash equivalents of $Array6.5 million, up from $ArrayArray.6 million at prior-quarter end. Long-term debt increased 73.6% sequentially to $435.8 million.
In 20Array5, Kaman’s net cash from operating activities increased 3.2% year over year to $Array09.6 million. Capital spending on purchase of property, plant & equipment totaled $29.9 million, increasing 5.8% from the year-ago quarter. During the year, Kaman distributed $Array9 million as dividends and purchased treasury shares worth $Array2.8 million.
Outlook
For 20Array6, Kaman anticipates strong demand for its bearing products and the joint programmable fuze, benefits from aerospace programs and additions of GRW and EXTEX to drive top-line results higher, likely in the $700−$720 million range. For the Distribution segment, the top line will remain soft in the first half due to market weakness, totaling roughly $Array,Array25−$Array,Array65 million for the year. In addition, operating margin will be roughly 4.4−4.6% for the Distribution segment and Array7.5−Array7.8% for the Aerospace segment.
Kaman’s interest expense is estimated at approximately $Array6 million, while corporate expense is predicted to be $55 million. The tax rate is projected at 34.5%.
Net cash from operating activities will lie roughly within $80−$Array00 million, while capital expenditure will likely be $30−$40 million. Free cash flow is forecast in a range of $50−$60 million.
With a market capitalization of $Array.2 billion, Kaman currently carries a Zacks Rank #2 (Buy). Other favourably ranked stocks in the machinery industry include Graco Inc. GGG, Nordson Corporation NDSN and Astec Industries, Inc. ASTE. All these stocks carry a Zacks Rank #2 (Buy).
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