Kaman(US:KAMN)2023-02-23 21:44Backlog and Sales Performance - Kaman Corporation's total backlog at December 31, 2022, was $720.936 million, with approximately 70% expected to be completed in 2023[22]. - The Engineered Products segment accounted for $322.452 million of the total backlog, while the Precision Products and Structures segments contributed $134.903 million and $263.581 million, respectively[23]. - In 2022, consolidated net sales were primarily driven by the Commercial, Business, & General Aviation segment, which represented 35.3% of total sales, followed by Defense at 21.2% and Safe and Arm Devices at 18.3%[17]. - The company reported a significant increase in the Medical segment's contribution to net sales, rising to 13.7% in 2022 from 8.9% in 2020[17]. - Total unfulfilled performance obligations (backlog) increased by 2.9% to $720.9 million, driven by strong order intake in the Engineered Products segment[164]. - The company had an order backlog of $720.9 million as of December 31, 2022, but there is no assurance that all expected sales from this backlog will be realized[125]. - Net sales for 2022 reached $377,241,000, an increase of $59,558,000 or 18.7% compared to 2021[199]. Financial Performance and Challenges - The company incurred an operating loss of $66.3 million in 2022, primarily due to a $25.3 million goodwill impairment charge and a $53.7 million inventory write-off[161]. - Cash flows from operating activities decreased by $27.7 million to $21.0 million in 2022, largely due to the timing of payments on the Joint Programmable Fuze (JPF) program[164]. - The company experienced some shortages in raw materials due to supply chain pressures but does not foresee any near-term unavailability that would materially affect operations[18]. - The company is facing unique risks related to long-term contracts with the U.S. Government, which could lead to modifications or terminations that adversely affect financial performance[87]. - Inflation has significantly increased in 2022, impacting operational costs and potentially affecting margin profitability if price increases cannot be passed on to customers[91]. - The company is experiencing substantial pressure from original equipment manufacturers (OEMs) to reduce prices, which could adversely affect financial condition if not managed effectively[92]. - The company incurred $9.1 million in program contract costs impairment related to the K-MAX TITAN unmanned aerial system in 2022[186]. Workforce and Employee Engagement - As of December 31, 2022, Kaman Corporation employed 3,063 individuals, with 73% based in the United States[34]. - In 2022, over 10,000 webinar courses were completed by employees, up from 7,000 in 2021, covering compliance, wellness, and leadership topics[41]. - The Company offers a Paid Parental Leave of Absence, providing eligible employees with three weeks of parental leave at 100% of base pay[50]. - The Company executed an All-Employee Engagement Survey in 2021 to measure and improve engagement and satisfaction, focusing on Training and Development, Inclusive Culture, and Communication[44]. - The company must attract and retain skilled personnel to succeed, facing competition for talent and potential labor shortages[133]. Corporate Governance and Diversity - The Company has shifted its Board composition to include 50% women and 29% racially or ethnically diverse members, compared to 22% women and no diversity in 2020[63]. - As of December 31, 2022, 73% of the Company's management positions were held by men and 27% by women, compared to the overall U.S. population of 68% males and 32% females[42]. Research and Development - The Precision Products segment is focused on developing the KARGO UAV unmanned aerial system, enhancing the company's capabilities in autonomous logistics[12]. - The company invests in research and development to advance technologies and products, but delays in development could lead to increased costs and missed market opportunities[132]. Debt and Financial Obligations - The company had $562.5 million in long-term debt outstanding as of December 31, 2022, excluding debt issuance costs[77]. - The secured revolving credit facility had a remaining borrowing capacity of $211.1 million as of December 31, 2022[77]. - The company's Consolidated Total Net Leverage Ratio was 3.65, compared to the maximum permitted ratio of 5.00 to 1.00[75]. Legal and Regulatory Risks - The company is involved in ongoing legal proceedings, but believes that any potential settlements will not materially affect its financial condition[149]. - The company is subject to audits of costs incurred on U.S. Government contracts, with potential financial repercussions if costs are found to be improperly allocated[87]. - The company faces risks related to compliance with complex international laws, including the U.S. Foreign Corrupt Practices Act, which could lead to severe penalties[111]. Environmental, Social, and Governance (ESG) Considerations - The company has experienced increasing scrutiny regarding its environmental, social, and governance (ESG) practices, which may affect access to financing[110]. - The company is subject to environmental regulations and potential liabilities, but management does not expect these to have a material adverse effect on operations[151]. Strategic Initiatives and Restructuring - The company announced a restructuring plan leading to the permanent closure of its Orlando, Florida manufacturing facility by the end of 2024[81]. - A restructuring plan announced in December 2022 is expected to generate approximately $25 million in annualized run-rate cost savings through facility consolidations and workforce reductions[120]. - The company plans to consolidate the production of JPF fuzes to its Middletown facility, resulting in the closure of the Orlando facility in 2024[184]. Market and Economic Conditions - Future operating results may be impacted by changes in global economic and political conditions, including credit availability and inflation[122]. - Business disruptions, including IT attacks and pandemics, could adversely affect sales and financial condition[136]. - The financial performance of the company is significantly influenced by conditions in the aerospace and defense industries, which are subject to various global factors[83].