Bloomfield aerospace manufacturer Kaman reported a significant drop in first-quarter profits, largely due to one-time costs associated with its $330-million acquisition of a California precision manufacturing company.
But CEO Neal Keating said the company is in a strong position, with the majority of its business avoiding COVID-19-related disruption.
“The strength of our defense business should partially offset the expected pressure from the lower commercial aerospace volume,” Keating said, noting that Kaman also expects its medical devices business to recover more quickly than commercial aerospace.
Kaman reported a first quarter profit of $285,000, or 1 cent per diluted share, vs. a $14.1 million profit, or 50 cents per diluted share, in the year-ago period.
Kaman CFO Robert Starr said that dropoff is largely attributable to one-time costs like $6.9 million in costs associated with Kaman’s purchase of Bal Seal, and $3.2 million spent on corporate development and restructuring and severance expenses.
Sales were up about 25% in the first quarter to $207 million.
Kaman’s mid-morning stock price — $35.12 — was trading about 4% below its Monday closing price.Â
In a Tuesday earnings call, Keating said commercial aerospace (about 30% of Kaman’s business) is taking a hit amid the COVID-19 pandemic, but defense manufacturing (about 50% of Kaman’s business) appears to be increasing possibly enough to offset commercial losses. The remaining 20% of Kaman’s business is mostly medical supplies manufacturing, which Keating said he expects to remain strong barring possible supply chain disruptions.
One reason Kaman’s medical-devices segment should recover relatively quickly, Keating said, is hospitals are increasingly moving forward with elective surgeries that have been on-hold since March.
While Keating struck an optimistic tone, the earnings call came after the company announced pay cuts in the wake of COVID-19. Keating reduced his own salary by 20%, and Kaman’s executive officer base salaries were reduced by 15%, while other corporate officers will took a 10% hit. Further, Kaman’s board of directors board of directors agreed to reduce their cash compensation by 20%.
