10-Aug-2011 Source: Kaman
Neal J. Keating, Chairman, President and Chief Executive Officer, stated, “We are very pleased with our second quarter results, which reflect continuing sales growth and improved profitability, in each of our businesses. In Industrial Distribution, we again achieved record sales and as a result of the higher volume and our focus on profitability improvement delivered higher margin performance. In Aerospace, we saw strong top line performance across programs and generated solid profitability. Our backlog continues to be healthy ending the quarter at $536 million, up 16% from $461 million a year ago. Our strong second quarter performance gives us continued confidence in our outlook for the full year as well as in our long-term competitive and strategic position.”
Segment reports follow:
Industrial Distribution segment sales increased 13.5% in the 2011 second quarter to $239.3 million compared to $210.9 million a year ago. Acquisitions contributed $10.3 million in sales in the quarter (sales from acquisitions are classified as organic beginning with the thirteenth month following the acquisition). On a sales per sales day* basis, organic sales were up 8.6% over last year’s second quarter (see Table 2 for additional details regarding the Company’s sales per sales day performance). Segment operating income for the second quarter of 2011 was $12.3 million, a 58.9% increase from operating income of $7.7 million in the second quarter of 2010. The operating profit margin for the second quarter of 2011 was 5.1% and was the ninth consecutive quarter of sequential operating profit improvement. In comparison, the operating profit margin was 4.9% in the first quarter of 2011 and 3.7% in the second quarter of 2010.
Industrial Distribution segment sales for the second quarter of 2011 reflect strong markets conditions and growth from acquisitions made in 2010. Market strength was broad based across most geographies, customers and end markets . The operating margin was higher on both a year-over-year and sequential basis as a result of the higher sales volume, improved gross margin, contributions from acquisitions, and benefits from our productivity improvements including an organizational realignment and IT investments.
Aerospace segment sales were $145.8 million, an increase of 37.3% from sales of $106.2 million in the second quarter of 2010. Operating income for the second quarter of 2011 was $21.9 million, compared to operating income of $12.1 million in the 2010 second quarter. The operating margin in this year’s second quarter was 15.0% as compared to 11.4% in the comparable period in the prior year. Global Aerosystems, acquired late last year, contributed $7.7 million in sales during the second quarter of 2011. Organic sales in the quarter were up 30.0% over the prior year period. In addition to the contribution from the acquisition, Aerospace sales and profits were higher over the prior year due to increased shipments under the Company’s Joint Programmable Fuze program, higher revenue under the Company’s unmanned K-MAX® program, and increased sales from bearing product lines.
Outlook
The Company’s updated expectations for 2011 are as follows:
Aerospace expectations exclude the sale of SH-2G(I) aircraft. The outlook for corporate expenses excludes the non-recurring benefit of $2.4 million recognized in the first quarter of 2011 resulting from the death of a former executive.
Chief Financial Officer, William C. Denninger, commented, “As we look ahead, our solid first half performance provides us with confidence in our ability to achieve our previously stated full year outlook ranges for sales in both of our businesses. Our Industrial Distribution business is performing well, despite a tough competitive environment and rising costs. Based on this performance we have increased our outlook for profitability in the segment. Our revised expectations for operating margin as a percentage of sales are 4.7% to 4.9%. This is up significantly over the 3.6% and 2.0% we achieved for the full years 2010 and 2009, respectively. Similarly, our Aerospace business is delivering good results. We have experienced some shifting of revenues within the year, such as unmanned K-MAX, resulting in a stronger first half than expected, and while we have encountered some program pushouts, such as A-10, other programs have demonstrated stronger than expected demand, such as BLACK HAWK. All factors considered we are maintaining our full year sales and profit outlook for Aerospace. In addition to our expectations for the full year, we have made good progress against our strategic plan and believe that we are well positioned to drive long-term growth and value to our shareholders.”
