Kaydon Corporation Reports First Quarter 2013 Results

Before you go, we thought you'd like these...
Before you go close icon

Kaydon Corporation Reports First Quarter 2013 Results

ANN ARBOR, Mich.--(BUSINESS WIRE)-- Kaydon Corporation (NYS: KDN) today announced its results for the first fiscal quarter ended March 30, 2013.

Consolidated Results


Sales in the first quarter of 2013 were $110.7 million, compared to sales of $116.5 million in the first quarter of 2012. The change relative to the first quarter of 2012 was attributable to a $14.6 million decrease in wind sales, which had been anticipated.

Diluted earnings per share in the first quarter of 2013 equaled $0.33, compared to diluted earnings per share of $0.38 in the first quarter of 2012. Adjusted earnings per share, as defined below, was $0.37 in the first quarter of 2013, compared to $0.44 in the first quarter of 2012.

Adjusted EBITDA, as defined below, was $23.1 million during the first quarter of 2013, compared to $26.8 million, during the first quarter of 2012. Free cash flow, as defined below, for the first quarter of 2013 was $24.3 million compared to $4.4 million in the first quarter of 2012.

Adjusted gross margin improved to 38.6 percent in the first quarter of 2013, compared to 36.8 percent in the fourth quarter of 2012 and 36.4 percent in the first quarter of 2012, as the current period benefitted from increased operating leverage resulting from restructuring activities undertaken in 2012 and favorable product mix during the quarter.

This press release includes certain non-GAAP measures, including adjusted gross margin, adjusted earnings per share, EBITDA, adjusted EBITDA and free cash flow. Readers should refer to the attached Reconciliation of Non-GAAP Measures exhibit for the reconciliations of the applicable GAAP measures to the non-GAAP measures presented.

Adjustments to GAAP results include certain items management considers in evaluating operating performance in each period. During the first quarter of 2013, Kaydon incurred $0.6 million of costs associated with restructuring and due diligence activities, and $1.2 million of non-cash amortization of previously incurred net actuarial losses related to postretirement benefit plans. Adjustments to the results for the first quarter of 2012 include recapitalization, restructuring and arbitration costs of $1.4 million and $1.1 million of non-cash amortization of previously incurred net actuarial losses related to postretirement benefit plans.

Orders and Backlog

Orders improved both sequentially and year-over-year. Orders were $119.4 million in the first quarter of 2013, compared to $109.8 million in the first quarter of 2012, reflecting a book-to-bill ratio of 108 percent in the current quarter. Orders were $102.6 million in the fourth quarter of 2012. Backlog at March 30, 2013 was $152.2 million, compared to $174.9 million at March 31, 2012. Excluding wind, backlog was $136.3 million at March 30, 2013, compared to $124.1 million at March 31, 2012.

Management Commentary

James O'Leary, Chairman and Chief Executive Officer commented, "We were pleased with a solid first quarter of 2013, which saw expanding operating margins, strong free cash flow and improved orders. We clearly experienced the benefits of the actions taken last year to restructure our wind and military businesses and refocus our organization on opportunities outside of those end markets. The progress this quarter reflects those efforts and should continue going forward, particularly in an improving economy.

"Like most in the industrial sector, we expect gradual improvement in business conditions as we enter the second half of 2013. However, we are managing our businesses judiciously in the event the broader, still fragile, economic environment fails to cooperate. We remain focused on managing the things within our control, principally improving margins, driving free cash flow, and accelerating organic growth within our portfolio of leadership companies. This quarter illustrated our success in driving these key areas of focus. As the year develops, any acceleration in business conditions will amplify the impact of the steps already taken."

Financial Position and Free Cash Flow

Free cash flow was $24.3 million in the first quarter of 2013, compared to $4.4 million in the first quarter of 2012. During the quarter, the Company repaid $3.9 million of debt while paying dividends of $6.4 million.

As of March 30, 2013, the Company had cash and cash equivalents totaling $65.6 million. Kaydon had borrowings outstanding in the principal amount of $30.0 million under the revolving credit facility and $142.5 million under the term loan facility as of March 30, 2013.

About Kaydon

Kaydon Corporation is a leading designer and manufacturer of custom engineered, performance-critical products, supplying a broad and diverse group of industrial, military, aerospace, medical, semiconductor and alternative energy equipment, and aftermarket customers.

Conference call information: At 11:00 a.m. Eastern time today, Kaydon will host a first quarter 2013 earnings conference call. The conference call can be accessed telephonically in a listen-only mode by dialing 1-888-428-9490 and providing the following passcode number: 800500. Participants are asked to dial in 10 minutes prior to the scheduled start time of the call.

Alternatively, interested parties are invited to listen to the conference call on the internet at:

http://w.on24.com/r.htm?e=607791&s=1&k=FF450372E59C97D7667F245101F25C75

or by logging on to the Kaydon Corporation website at: http://www.kaydon.com and accessing the conference call at the "First Quarter 2013 Conference Call" icon.

To accommodate those that are unable to listen at the scheduled start time, a replay of the conference call will be available telephonically beginning at 2:00 p.m. Eastern time today through Wednesday, May 15, 2013 at 2:00 p.m. Eastern time. The replay is accessible by dialing 1-888-203-1112 and providing the following passcode number: 2107567.

Additionally, interested parties can access an archive of the conference call on the Kaydon Corporation website at http://www.kaydon.com.

This press release contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 regarding the Company's plans, expectations, estimates and beliefs. Forward-looking statements are typically identified by words such as "believes," "anticipates," "estimates," "expects," "intends," "will," "may," "should," "could," "potential," "projects," "approximately," and other similar expressions, including statements regarding general economic conditions, competitive dynamics and the adequacy of capital resources. These forward-looking statements may include, among other things, projections of the Company's financial performance, anticipated growth, characterization of and the Company's ability to control contingent liabilities, and anticipated trends in the Company's businesses. These statements are only predictions, based on the Company's current expectations about future events. Although the Company believes the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, performance or achievements or that predictions or current expectations will be accurate. These forward-looking statements involve risks and uncertainties that could cause the Company's actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements.

In addition, the Company or persons acting on its behalf may from time to time publish or communicate other items that could also be construed to be forward-looking statements. Statements of this sort are or will be based on the Company's estimates, assumptions, and projections and are subject to risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. Kaydon does not undertake any responsibility to update its forward-looking statements or risk factors to reflect future events or circumstances except to the extent required by applicable law.

Certain non-GAAP measures are presented in this press release. These measures should be viewed as supplemental data, rather than as substitutes or alternatives to the most comparable GAAP measures.

KAYDON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
   
 
Three Months Ended
 
March 30,March 31,
20132012
Net sales$110,673$116,466
 
Cost of sales 69,302  74,867 
 
Gross profit41,37141,599
 
Selling, general and administrative expenses 25,633  24,264 
 
Operating income15,73817,335
 
Interest expense(896)(388)
 
Interest income 66  125 
 
Income before taxes14,90817,072
 
Provision for income taxes 4,234  4,951 
 
Net income$10,674 $12,121 
 
 
 
Earnings per share:
Basic$0.33 $0.38 
Diluted$0.33 $0.38 
 
 
Dividends declared per share$0.20 $10.70 
 
 
Weighted average common shares outstanding:
Basic 31,812  31,734 
Diluted 31,839  31,757 
 
KAYDON CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
   
 
March 30,December 31,
20132012
Assets:
Cash and cash equivalents$65,575$53,556
Accounts receivable, net71,86071,410
Inventories, net99,33097,933
Other current assets 15,448 20,354
 
Total current assets252,213243,253
 
Property, plant and equipment, net118,283121,233
 
Assets held for sale6,5186,530
Goodwill, net188,922190,323
Other intangible assets, net47,88449,177
Other assets 4,639 4,646
 
Total assets$618,459$615,162
 
 
Liabilities and Shareholders' Equity:
 
Accounts payable$21,716$15,555
Accrued expenses22,08521,539
Current portion long-term debt 8,438 10,313
Total current liabilities52,23947,407
 
Long-term debt164,062166,062
Other long-term liabilities 71,302 70,917
Total long-term liabilities235,364236,979
 
Shareholders' equity 330,856 330,776
 
Total liabilities and shareholders' equity$618,459$615,162
 
KAYDON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
   
Three Months Ended
 
March 30,March 31,
20132012
Cash Flows from Operating Activities:
Net income$10,674$12,121
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation3,8505,010
Amortization of intangible assets958739
Amortization of stock awards644891
Stock option compensation expense1601,116
Excess tax benefits from stock-based compensation156(702)
Deferred financing fees123346
Contributions to qualified pension plans(180)(634)
Net change in receivables, inventories and trade payables3,185(18,216)
Net change in other assets and liabilities 6,732  5,286 
 
Net cash from operating activities26,3025,957
 
Cash Flows from Investing Activities:
Capital expenditures(2,012)(3,307)
Dispositions of property, plant and equipment 52  1,793 
 
Net cash used in investing activities(1,960)(1,514)
 
Cash Flows from Financing Activities:
Proceeds from long-term borrowings-150,000
Repayments of long-term borrowings(3,875)-
Debt issuance costs-(1,357)
Cash dividends paid(6,420)(342,490)
Purchase of treasury stock(678)(1,199)
Excess tax benefits from stock-based compensation(156)702
Proceeds from exercise of stock options -   15 
 
Net cash used in financing activities(11,129)(194,329)
 
 
Effect of exchange rate changes on cash and
cash equivalents (1,194) 963 
 
Net increase (decrease) in cash and cash equivalents12,019(188,923)
 
Cash and cash equivalents - Beginning of period 53,556  225,214 
 
Cash and cash equivalents - End of period$65,575 $36,291 
<
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Gift Finder Promo
More to Explore
Sat, Dec 10
Set Your Location
City, State, or Zip
 
KAYDON CORPORATION
REPORTABLE SEGMENT INFORMATION
(In thousands)
  
Three Months Ended
 
March 30,March 31,
Net sales20132012
 
Friction Control Products$51,674$65,803
Velocity Control Products32,58724,299
Other Industrial Products 26,412  26,364 
 
Total consolidated net sales$110,673 $116,466 
 
 
Three Months Ended
 
March 30,March 31,
Operating income20132012
 
Friction Control Products$7,293$11,819
Velocity Control Products7,5085,842
Other Industrial Products 2,072  1,909 
Total segment operating income16,87319,570
Items not allocated to segment operating income(1,135)(2,235)
Interest expense(896)(388)
Interest income 66  125 
 
Income before taxes$14,908 $17,072 
 
The Company has two reporting segments: Friction Control Products and Velocity Control Products. The Company's remaining operating segments are combined and disclosed as "Other Industrial Products."