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Kaydon Corporation Reports Fourth Quarter and Full Year 2010 Results

Dépèche transmise le 25 février 2011 par Business Wire

Kaydon Corporation Reports Fourth Quarter and Full Year 2010 Results

Kaydon Corporation Reports Fourth Quarter and Full Year 2010 Results

ANN ARBOR, Mich.--(BUSINESS WIRE)--Kaydon Corporation (NYSE:KDN) today announced its results for the fourth fiscal quarter and full year ended December 31, 2010.

“Both sales and orders from our industrial end markets increased over 20 percent in the fourth quarter of 2010. With increased order and quotation activity in traditionally later cycle sectors, such as heavy equipment and industrial machinery, we should continue to see strengthening in shipments as the year progresses.”

Consolidated Results

Sales in the fourth fiscal quarter of 2010 were $105.0 million, compared to sales of $108.9 million in the fourth quarter of 2009.

Operating income was $17.1 million in the fourth quarter of 2010, compared to $18.0 million in the fourth quarter of 2009. The fourth quarter of 2010 included $1.4 million of net costs associated with due diligence efforts for acquisitions and a previously announced manufacturing consolidation program, partially offset by a small gain associated with the curtailment of certain postretirement benefits, while the fourth quarter of 2009 included gains of $1.3 million associated with the curtailment of postretirement benefits. Adjusting for these items, operating income was $18.5 million in the fourth quarter of 2010, compared to $16.7 million in the fourth quarter of 2009.

Net income for the fourth quarter of 2010 was $11.3 million, compared to net income of $11.4 million in the fourth quarter of 2009. Diluted earnings per share equaled $.34 in the fourth quarter of 2010 and 2009. Adjusting for the items noted above, net income was $12.2 million, or $.37 per share on a diluted basis, in the fourth quarter of 2010 compared to $10.6 million, or $.31 per share on a diluted basis, in the fourth quarter of 2009.

EBITDA equaled $24.6 million, or 23.5 percent of sales, during the fourth quarter of 2010, compared to $25.6 million, also 23.5 percent of sales, during the fourth quarter of 2009. EBITDA comparisons are also affected by the items noted above. Adjusting for these items, EBITDA was $25.7 million, or 24.5 percent of sales, in the fourth quarter of 2010, compared to $24.3 million, or 22.3 percent of sales, in the fourth quarter of 2009.

The fourth quarter 2010 effective tax rate was 34.1 percent compared to 36.7 percent in the 2009 fourth quarter, due to the full availability of the Domestic Manufacturing Deduction and the planned permanent reinvestment of earnings of certain international operations.

Full year 2010 sales totaled $464.0 million compared to $441.1 million for full year 2009. Sales growth in our core industrial businesses more than offset lower sales to our wind energy and military end markets. Full year 2010 diluted earnings per share totaled $1.67 per share compared to $1.37 per share in full year 2009. Adjusting for the items noted above, full year 2010 diluted earnings per share totaled $1.76 per share compared to $1.22 per share in full year 2009.

This press release includes certain non-GAAP measures, including EBITDA, free cash flow, and as adjusted operating income, EBITDA, net income, and earnings per share – diluted. 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.

Management Commentary

James O’Leary, Chairman and Chief Executive Officer commented, “We are pleased with 2010 as we delivered solid results for both the full year and the most recent quarter. We were well positioned to benefit from a still strengthening industrial environment while effectively managing the long anticipated, public policy-driven moderation in both our renewable energy and military businesses. Through the fourth quarter, and continuing thus far into 2011, we see continued evidence, both tangible and anecdotal, of further improvement in most of our industrial businesses, notably in the heavy equipment, industrial machinery, medical and semiconductor markets. This strength will help offset moderation in wind energy, as the renewable energy business awaits the substantive energy policy required for sustained growth, and the expected decline of certain military programs, which had been in a “ramp up” mode in the prior year.

“Both sales and orders from our industrial end markets increased over 20 percent in the fourth quarter of 2010. With increased order and quotation activity in traditionally later cycle sectors, such as heavy equipment and industrial machinery, we should continue to see strengthening in shipments as the year progresses.

“Our performance in fiscal 2010 demonstrated the benefits of market leadership in well diversified end markets. During 2010, we generated the highest annual operating cash flow in Kaydon’s long history. Structural cost reductions made during the Great Recession, together with strong positioning in attractive industrial end markets, have produced consistent, solid results during both the worst recession in over a generation and a recovery that has thus far been below standard by many measures. Our ability to maximize free cash flow during this period has allowed us to return cash to our shareholders in the form of enhanced dividends and increased share repurchases while reinvesting in our business, both organically and through acquisition as illustrated by today’s announced agreement to acquire HAHN-Gasfedern GmbH.”

Segment Results and Review

Friction Control Products sales in the fourth quarter of 2010 were $61.5 million, compared to $72.9 million in the 2009 fourth quarter. The decline, which we anticipated, was attributable to lower wind energy and military sales. Wind energy sales were $12.5 million in the fourth quarter of 2010 compared to $21.3 million in the fourth quarter of 2009. Fourth quarter 2010 sales to non-wind markets totaled $49.1 million compared to $51.6 million in the fourth quarter of 2009, as growth in sales to our industrial markets were offset by the anticipated wind down of a major military program.

Fourth quarter 2010 Friction Control Products operating income totaled $11.8 million, compared to $12.7 million in the prior fourth quarter. Fourth quarter 2010 included $0.7 million in costs associated with a previously discussed manufacturing consolidation program. An improved mix, weighted more heavily towards industrial end markets, offset the margin decline from lower volume from wind energy and military sales.

Velocity Control Products sales in the fourth quarter of 2010 were $14.9 million, compared to $11.8 million in the fourth quarter of 2009. Operating income for this segment totaled $2.8 million in the fourth quarter of 2010, compared to $1.3 million earned in the fourth quarter of 2009, due to improved sales.

Other Industrial Products sales equaled $28.5 million in the fourth quarter of 2010, compared to $24.2 million in the prior year fourth quarter. Operating income equaled $3.5 million in the fourth quarter of 2010, compared to operating income of $3.1 million in the fourth quarter of 2009, due to improved sales.

Order Activity

Orders were $100.8 million in the fourth quarter of 2010, compared to $77.2 million in the fourth quarter of 2009. Wind energy orders were $8.6 million in the fourth quarter of 2010, compared to $0.9 million in the fourth quarter of 2009. Full year 2010 non-wind orders have exceeded sales with a book-to-bill ratio of 1.02. Full year 2010 wind energy orders were $71.9 million, compared to $49.3 million in the full year of 2009. Backlog at December 31, 2010 was $200.9 million, compared to $205.0 million at October 2, 2010, and $218.5 million at December 31, 2009.

Financial Position and Free Cash Flow

Free cash flow, a non-GAAP measure defined by the Company, was $23.4 million in the fourth quarter of 2010, compared to $19.7 million in the fourth quarter of 2009. For the full year of 2010, net cash generated from operating activities was a record $93.9 million, compared to $66.2 million in the full year of 2009, while full year 2010 free cash flow totaled a record $78.6 million compared to $55.4 million in the full year of 2009.

On October 4, 2010, the Company paid common stock dividends of $.19 per share or an aggregate of $6.4 million. For the full year of 2010, the Company paid common stock dividends of $24.5 million. During the fourth quarter of 2010 the Company repurchased 500,500 shares of common stock for $18.3 million. For the full year of 2010, the Company repurchased 741,754 shares for $27.0 million. In aggregate, the Company returned $51.5 million to its shareholders in 2010 while investing almost $20 million in capital expenditures and growth programs to further enhance the long term value of our businesses.

As of December 31, 2010, the Company had unrestricted cash totaling $286.6 million. During the third quarter of 2010 the Company entered into a $250 million senior revolving credit facility with a syndicate of banks which provides for borrowings by the Company for working capital and other general corporate purposes, including acquisitions. The Company had no borrowing against this facility and no other debt outstanding as of December 31, 2010.

About Kaydon

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

Conference call information: At 11:00 a.m. Eastern time today, Kaydon will host a fourth quarter and full year 2010 earnings conference call. The conference call can be accessed telephonically in a listen-only mode by dialing 1-888-378-4361 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=279179&s=1&k=E7A03E2D34AE4A6773785D0F34B37021

or by logging on to the Kaydon Corporation website at: http://www.kaydon.com and accessing the conference call at the “Fourth Quarter and Full Year 2010 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 Friday, March 4, 2011 at 2:00 p.m. Eastern time. The replay is accessible by dialing 1-888-203-1112 and providing the following passcode number: 4594491.

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 CONDENSED STATEMENTS OF OPERATIONS
                   
         
Fourth Quarter Ended Full Year Ended
 
December 31, December 31, December 31, December 31,
2010 2009 2010 2009
Net sales $ 104,963,000 $ 108,855,000 $ 463,988,000 $ 441,145,000
 
Cost of sales   66,430,000     71,167,000     299,363,000     297,280,000  
 
Gross profit 38,533,000 37,688,000 164,625,000 143,865,000
 
Selling, general and administrative expenses   21,428,000     19,727,000     83,006,000     72,527,000  
 
Operating income 17,105,000 17,961,000 81,619,000 71,338,000
 
Interest expense (98,000 ) (62,000 ) (231,000 ) (247,000 )
 
Interest income   171,000     108,000     486,000     537,000  
 
Income before income taxes 17,178,000 18,007,000 81,874,000 71,628,000
 
Provision for income taxes   5,864,000     6,601,000     25,829,000     25,672,000  
 
Net income $ 11,314,000   $ 11,406,000   $ 56,045,000   $ 45,956,000  
 
 
 
Earnings per share:
Basic $ 0.34   $ 0.34   $ 1.67   $ 1.37  
Diluted $ 0.34   $ 0.34   $ 1.67   $ 1.37  
 
 
Dividends declared per share $ 0.19   $ 0.18   $ 0.74   $ 0.70  
 
KAYDON CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
 
   
 
December 31, December 31,
2010 2009
Assets:
Cash and cash equivalents $ 286,648,000 $ 262,403,000
Accounts receivable, net 76,010,000 77,977,000
Inventories, net 88,253,000 88,796,000
Other current assets   16,384,000   16,601,000
 
Total current assets 467,295,000 445,777,000
 
Property, plant and equipment, net 169,597,000 175,716,000
 
Goodwill, net 143,428,000 143,891,000
Other intangible assets, net 18,047,000 21,552,000
Other assets   2,965,000   1,008,000
 
Total assets $ 801,332,000 $ 787,944,000
 
 
Liabilities and Shareholders' Equity:
 
Accounts payable $ 16,944,000 $ 21,353,000
Accrued expenses   36,085,000   26,731,000
Total current liabilities 53,029,000 48,084,000
 
Long-term liabilities 39,165,000 39,895,000
 
Shareholders' equity   709,138,000   699,965,000
 
Total liabilities and shareholders' equity $ 801,332,000 $ 787,944,000
 
KAYDON CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 
         
Fourth Quarter Ended Full Year Ended
 
December 31, December 31, December 31, December 31,
2010 2009 2010 2009
Cash flows from operating activities:
Net income $ 11,314,000 $ 11,406,000 $ 56,045,000 $ 45,956,000
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation 5,280,000 5,201,000 20,925,000 19,836,000
Amortization of intangible assets 872,000 1,072,000 3,585,000 4,283,000
Amortization of stock awards 1,037,000 1,017,000 4,035,000 4,121,000
Stock option compensation expense 323,000 319,000 1,314,000 1,300,000
Excess tax benefits from stock-based compensation - (113,000 ) (186,000 ) (52,000 )
Deferred financing fees 97,000 62,000 231,000 248,000
Non-cash postretirement benefits curtailment gain (385,000 ) (1,308,000 ) (3,451,000 ) (7,613,000 )
Net change in receivables, inventories
and trade payables 7,116,000 4,167,000 (2,417,000 ) (2,577,000 )
Contributions to qualified pension plans (657,000 ) - (2,271,000 ) (14,846,000 )
Net change in other assets and liabilities   2,478,000     231,000     16,054,000     15,525,000  
 
Net cash from operating activities 27,475,000 22,054,000 93,864,000 66,181,000
 
Cash flows from investing activities:
Capital expenditures (4,117,000 ) (2,401,000 ) (15,397,000 ) (11,986,000 )
Dispositions of property, plant and equipment 34,000 43,000 141,000 1,229,000
Proceeds from sales of investments   -     1,082,000     -     5,145,000  
 
Net cash used in investing activities (4,083,000 ) (1,276,000 ) (15,256,000 ) (5,612,000 )
 
Cash flows from financing activities:
Cash dividends paid (6,356,000 ) (6,043,000 ) (24,477,000 ) (23,207,000 )
Purchase of treasury stock (18,254,000 ) - (27,043,000 ) (8,871,000 )
Credit facility issuance costs (13,000 ) - (1,948,000 ) -
Excess tax benefits from stock-based compensation - 113,000 186,000 52,000
Proceeds from exercise of stock options   49,000     -     153,000     24,000  
 
Net cash used in financing activities (24,574,000 ) (5,930,000 ) (53,129,000 ) (32,002,000 )
 
Effect of exchange rate changes on cash and
cash equivalents   (972,000 )   (286,000 )   (1,234,000 )   838,000  
 
Net increase (decrease) in cash and cash equivalents (2,154,000 ) 14,562,000 24,245,000 29,405,000
 
Cash and cash equivalents - Beginning of period   288,802,000     247,841,000     262,403,000     232,998,000  
 
Cash and cash equivalents - End of period $ 286,648,000   $ 262,403,000   $ 286,648,000   $ 262,403,000  
       
KAYDON CORPORATION
EARNINGS PER SHARE
                   
 

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