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Kaydon Corporation Reports Fourth Quarter and Full Year 2011 Results

Dépèche transmise le 24 février 2012 par Business Wire

Kaydon Corporation Reports Fourth Quarter and Full Year 2011 Results

Kaydon Corporation Reports Fourth Quarter and Full Year 2011 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, 2011.

“Fourth Quarter and Full Year 2011 Conference Call”

Consolidated Results

Fourth quarter sales increased 3.0 percent to $108.1 million, compared to sales of $105.0 million in the fourth quarter of 2010. Fourth quarter sales were impacted by approximately $7 million of international wind energy deferred shipments which are expected to be released in the first half of 2012.

Operating income was $11.9 million in the fourth quarter of 2011, compared to $17.1 million in the fourth quarter of 2010. Adjusting for the items detailed below, operating income was $17.5 million in the fourth quarter of 2011. The fourth quarter of 2011 included $5.2 million of costs and charges associated with a previously disclosed customer arbitration which is expected to be concluded in 2012. These charges include an impairment charge for which the Company is pursuing recovery. The Company also incurred $0.5 million of costs for due diligence and restructuring activities.

Net income for the fourth quarter of 2011 was $8.7 million, compared to net income of $11.3 million in the fourth quarter of 2010. Diluted earnings per share in the fourth quarter of 2011 equaled $.27 compared to $.34 in the fourth quarter of 2010. Adjusting for the items noted above, net income was $12.7 million, or $.40 per share on a diluted basis, in the fourth quarter of 2011.

EBITDA equaled $19.3 million, or 17.8 percent of sales, during the fourth quarter of 2011, compared to $24.6 million, or 23.5 percent of sales, during the fourth quarter of 2010. Adjusting for the items noted above, EBITDA was $24.8 million, or 22.9 percent of sales, in the fourth quarter of 2011.

Full year 2011 sales totaled $460.1 million compared to $464.0 million for full year 2010. Full year 2011 diluted earnings per share totaled $1.52 per share compared to $1.67 per share in full year 2010. Adjusting for the items noted above and for plant consolidation costs and legal expenses incurred earlier in the year for the arbitration, full year 2011 diluted earnings per share totaled $1.75 per share and full year 2011 EBITDA totaled $109.5 million, or 23.8 percent of sales.

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 for both the fourth quarter and full year.

Management Commentary

James O’Leary, Chairman and Chief Executive Officer commented, “Fiscal 2011 saw early strength and continued progress in our efforts to broaden our sales both internationally and in North America. In particular, our industrial businesses performed well through most of the year as investments in sales and marketing resources, both globally and in North America, have proved successful. For the year, our industrial businesses grew over 16 percent, substantially offsetting the decline in our wind and military businesses.

“As has been well publicized in the media, the fourth quarter was characterized by the general economic uncertainty and volatility that began in the third quarter as both international orders and shipments were affected by softening business conditions. However, we remain confident that the investments made to better support our international and North American distribution channels will serve us well over the long term. The successes we experienced in 2011 were necessary to offset the expected decline in both military and wind energy sales. The decline in these two markets, most of which was offset by growth elsewhere in the portfolio, accounted for the entire shortfall relative to 2010.

“Wind energy performance was negatively impacted as compared to 2010, as sales in 2011 dropped by $42 million from 2010's shipments of $96 million. The fourth quarter was also impacted by approximately $7 million of delayed shipments as an international customer deferred releases into 2012. We currently expect 2012 sales to exceed $70 million as wind installations pick up in advance of the potential expiration of the United States' Production Tax Credit (PTC). In the fourth quarter, we took preliminary action to both rationalize headcount and better align customer inventories in advance of potential further action later in 2012 should the PTC not be extended and global renewable energy conditions remained challenged.

“Military performance was likewise negatively impacted as compared to 2010, as recent years benefited from our leading position on several major military vehicle programs, and the highly publicized fiscal issues affecting future defense spending in the United States. Most of the decline, year over year, was due to the absence of significant sales in a key ground vehicle program in 2010 as the breadth of our program coverage insulated us to some extent. Going forward, we expect performance more comparable to 2011 with a less severe, but still modestly downward bias, due to uncertainty over defense spending through much of this election year.”

Segment Results and Review

Friction Control Products sales in the fourth quarter of 2011 were $58.5 million, compared to $61.5 million in the 2010 fourth quarter. The decline was largely attributable to lower wind energy sales. Wind energy sales were $9.6 million in the fourth quarter of 2011 compared to $12.5 million in the fourth quarter of 2010. Approximately $7 million of wind energy orders originally scheduled for delivery in the fourth quarter 2011 were rescheduled for delivery in the first half of 2012. Wind energy sales were approximately $54 million in 2011 and are expected to exceed $70 million in 2012. Fourth quarter 2011 sales to non-wind markets totaled $48.9 million compared to $49.1 million in the fourth quarter of 2010.

Fourth quarter 2011 Friction Control Products operating income totaled $4.9 million, compared to $11.8 million in the prior fourth quarter due to $5.2 million of arbitration related costs and charges previously discussed and the decline in wind energy sales.

Velocity Control Products sales in the fourth quarter of 2011 were $20.4 million, compared to $14.9 million in the fourth quarter of 2010. Operating income for this segment totaled $3.4 million in the fourth quarter of 2011, compared to $2.8 million earned in the fourth quarter of 2010.

Other Industrial Products sales equaled $29.2 million in the fourth quarter of 2011, compared to $28.5 million in the prior year fourth quarter. Operating income equaled $3.8 million in the fourth quarter of 2011, compared to operating income of $3.5 million in the fourth quarter of 2010, due to improved sales.

Order Activity

Orders were $84.6 million in the fourth quarter of 2011, compared to $100.8 million in the fourth quarter of 2010. Collectively, wind energy and military orders declined $12.8 million in the fourth quarter of 2011 as compared to the fourth quarter of 2010. The remainder of the decline was due to weaker international and export orders, principally in Europe, and the timing of a major aerospace blanket order received in the fourth quarter of 2010. Backlog at December 31, 2011 was $181.6 million of which $60.0 million was in support of wind energy shipments.

Financial Position and Free Cash Flow

Free cash flow, a non-GAAP measure defined by the Company, was $16.6 million in the fourth quarter of 2011, compared to $23.4 million in the fourth quarter of 2010. For the full year of 2011, net cash generated from operating activities was $54.9 million, compared to a record $93.9 million in the full year of 2010, while full year 2011 free cash flow was $40.2 million compared to a record $78.6 million in the full year of 2010.

On October 3, 2011, the Company paid common stock dividends of $.20 per share or an aggregate of $6.4 million. For the full year of 2011, the Company paid common stock dividends of $25.1 million. During the fourth quarter of 2011 the Company repurchased 135,000 shares of common stock for $4.0 million. For the full year of 2011, the Company repurchased 1,082,091 shares for $38.7 million. In aggregate, the Company returned $63.8 million to its shareholders in 2011 while investing over $50 million in the previously announced Hahn acquisition, capital expenditures and growth programs to further enhance the long term value of our businesses.

As of December 31, 2011, the Company had unrestricted cash totaling $225.2 million. The Company has 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 outstanding borrowings under this facility and no other debt outstanding as of December 31, 2011.

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, military, 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 2011 earnings conference call. The conference call can be accessed telephonically in a listen-only mode by dialing 1-888-438-5524 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=396612&s=1&k=6ED35A900B0771FD9ECF2992F0175FAA

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 2011 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 Thursday, March 1, 2012 at 2:00 p.m. Eastern time. The replay is accessible by dialing 1-888-203-1112 and providing the following passcode number: 9524488.

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,
2011 2010 2011 2010
Net sales $ 108,113,000 $ 104,963,000 $ 460,120,000 $ 463,988,000
 
Cost of sales   72,684,000     66,430,000     299,043,000     299,363,000  
 
Gross profit 35,429,000 38,533,000 161,077,000 164,625,000
 
Selling, general and administrative expenses   23,483,000     21,428,000     90,841,000     83,006,000  
 
Operating income 11,946,000 17,105,000 70,236,000 81,619,000
 
Interest expense (95,000 ) (98,000 ) (388,000 ) (231,000 )
 
Interest income   114,000     171,000     491,000     486,000  
 
Income before income taxes 11,965,000 17,178,000 70,339,000 81,874,000
 
Provision for income taxes   3,285,000     5,864,000     21,007,000     25,829,000  
 
Net income $ 8,680,000   $ 11,314,000   $ 49,332,000   $ 56,045,000  
 
 
 
Earnings per share:
Basic $ 0.27   $ 0.34   $ 1.52   $ 1.67  
Diluted $ 0.27   $ 0.34   $ 1.52   $ 1.67  
 
 
Dividends declared per share $ 0.20   $ 0.19   $ 0.78   $ 0.74  
   
KAYDON CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
         
 
 
December 31, December 31,
2011 2010
Assets:
Cash and cash equivalents $ 225,214,000 $ 286,648,000
Accounts receivable, net 78,441,000 76,010,000
Inventories, net 110,206,000 88,253,000
Other current assets   16,701,000   16,384,000
 
Total current assets 430,562,000 467,295,000
 
Property, plant and equipment, net 168,946,000 169,597,000
 
Goodwill, net 157,087,000 143,428,000
Other intangible assets, net 31,140,000 18,047,000
Other assets   3,962,000   2,965,000
 
Total assets $ 791,697,000 $ 801,332,000
 
 
Liabilities and Shareholders' Equity:
 
Accounts payable $ 19,699,000 $ 16,944,000
Accrued expenses   29,766,000   36,085,000
Total current liabilities 49,465,000 53,029,000
 
Long-term liabilities 57,594,000 39,165,000
 
Shareholders' equity   684,638,000   709,138,000
 
Total liabilities and shareholders' equity $ 791,697,000 $ 801,332,000
 
KAYDON CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                   
         
Fourth Quarter Ended Full Year Ended
 
December 31, December 31, December 31, December 31,
2011 2010 2011 2010
Cash flows from operating activities:
Net income $ 8,680,000 $ 11,314,000 $ 49,332,000 $ 56,045,000

Adjustments to reconcile net income to net cash from operating activities:

Depreciation 5,124,000 5,280,000 20,219,000 20,925,000
Amortization of intangible assets 802,000 872,000 3,076,000 3,585,000
Amortization of stock awards 1,079,000 1,037,000 4,204,000 4,035,000
Stock option compensation expense 317,000 323,000 1,312,000 1,314,000
Excess tax benefits from stock-based compensation (309,000 ) - (404,000 ) (186,000 )
Deferred financing fees 97,000 97,000 388,000 231,000
Non-cash postretirement benefits curtailment gain (133,000 ) (385,000 ) (275,000 ) (3,451,000 )

Net change in receivables, inventories and trade payables

8,054,000 7,116,000 (17,412,000 ) (2,417,000 )
Contributions to qualified pension plans (634,000 ) (657,000 ) (2,586,000 ) (2,271,000 )
Net change in other assets and liabilities   (3,465,000 )   2,478,000     (2,968,000 )   16,054,000  
 

Net cash from operating activities

19,612,000 27,475,000 54,886,000 93,864,000
 
Cash flows from investing activities:
Capital expenditures (3,053,000 ) (4,117,000 ) (14,918,000 ) (15,397,000 )
Dispositions of property, plant and equipment - 34,000 210,000 141,000
Acquisition of business, net of cash received   -     -     (39,610,000 )   -  
 
Net cash used in investing activities (3,053,000 ) (4,083,000 ) (54,318,000 ) (15,256,000 )
 
Cash flows from financing activities:
Cash dividends paid (6,430,000 ) (6,356,000 ) (25,082,000 ) (24,477,000 )
Purchase of treasury stock (3,965,000 ) (18,254,000 ) (38,684,000 ) (27,043,000 )
Excess tax benefits from stock-based compensation 309,000 - 404,000 186,000
Proceeds from exercise of stock options - 49,000 39,000 153,000
Credit facility issuance costs   -     (13,000 )   -     (1,948,000 )
 
Net cash used in financing activities (10,086,000 ) (24,574,000 ) (63,323,000 ) (53,129,000 )
 
 

Effect of exchange rate changes on cash and cash equivalents

  (347,000 )   (972,000 )   1,321,000     (1,234,000 )
 
Net increase (decrease) in cash and cash equivalents 6,126,000 (2,154,000 ) (61,434,000 ) 24,245,000
 
Cash and cash equivalents - Beginning of period   219,088,000     288,802,000     286,648,000     262,403,000  
 
Cash and cash equivalents - End of period $ 225,214,000   $ 286,648,000   $ 225,214,000   $ 286,648,000  
       
KAYDON CORPORATION

EARNINGS PER SHARE

                   
 
Fourth Quarter Ended Full Year Ended

Business Wire

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