Kaydon's Q2 Earnings Beat Estimates

Zacks

Kaydon Corp (KDN) reported second-quarter 2013 adjusted earnings of 42 cents, which beat the Zacks Estimate of 39 cents by 7.7%. Quarterly earnings were flat year over year.

Revenues

Revenues for the reported quarter were $117.3 million, down 5.7% compared with $124.4 million in the second quarter of 2012. The decline in net sales was primarily attributable to $14.3 million decline in wind sales and military sales, partially offset by growth in industrial sales.  

However, new orders booked during the quarter increased 9.2% year over year to $12.32 million, which is equivalent to a book-to-bill ratio of 1.05%. Orders were up 3.2% sequentially. As of Jun 29, 2013, backlog was $158.1 million, compared with $169.5 million in the year–ago period.

Margins

Adjusted EBITDA during the quarter was $25.6 million compared with $27.3 million during the prior-year quarter. Gross margin increased during the quarter to 38.6% from 33.7% in the year-earlier quarter, but it remained flat sequentially. The increased operating leverage derived from restructuring activities that were undertaken in the previous year and favorable product mix boosted the performance.

Cash Flow and Balance Sheet

Free cash flow during the first quarter of 2013 was $18.7 million compared with $13.3 million during the second quarter of 2012. The increase in free cash flow was due to improved performance by the company during the quarter. As a result of the debt repayment initiatives, cash and cash equivalents were $69.9 million with long-term debt of $156.2 million.

Capital expenditures during the quarter amounted to $3 million compared with $4.8 million in the prior-year quarter. The company repaid $7.9 million of debt during the reported quarter. In addition, dividends totaling to $6.4 million were also paid by the company to its shareholders.

Kaydon currently has Zacks Rank #3 (Hold). Other sector participants that are worth mentioning include NSK Ltd. (NPSKY), having a Zacks Rank #1 (Strong Buy), while Norsk Hydro ASA (NHYDY) and Precision Castparts Corp. (PCP) have Zacks Rank #2 (Buy).

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