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Edited Transcript of KAMN earnings conference call or presentation 2-May-19 12:30pm GMT

Q1 2019 Kaman Corp Earnings Call

BLOOMFIELD May 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Kaman Corp earnings conference call or presentation Thursday, May 2, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* James G. Coogan

Kaman Corporation - VP of IR

* Neal J. Keating

Kaman Corporation - Chairman, CEO & President

* Robert Daniel Starr

Kaman Corporation - CFO & Executive VP

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Conference Call Participants

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* Christopher M. Dankert

Longbow Research LLC - Research Analyst

* Edward James Marshall

Sidoti & Company, LLC - Senior Equity Research Analyst

* Michael S. Rednor

JP Morgan Chase & Co, Research Division - Analyst

* Peter John Skibitski

Alembic Global Advisors - Research Analyst

* Ryan Thomas Mills

KeyBanc Capital Markets Inc., Research Division - Associate

* Tony Bancroft

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to Kaman's first quarter 2019 earnings call. (Operator Instructions) As a reminder, this conference is being recorded.

Now it's my pleasure to turn the call to James Coogan, Vice President, Investor Relations.

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James G. Coogan, Kaman Corporation - VP of IR [2]

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Good morning. I'd like to welcome everyone to Kaman's first quarter 2019 earnings call. Conducting the call today are Neal Keating, Chairman, President and Chief Executive Officer; and Rob Starr, Executive Vice President and Chief Financial Officer.

Before we begin, I'd like to note that some of the information discussed during today's call will consist of forward-looking statements setting forth our current expectations with respect to the future of our business, the economy and other future events. These include projections of revenue, earnings and other financial items, statements on the plans and objectives of the company or its management, statements of future economic performance, and assumptions underlying these statements regarding the company and its business.

The company's actual results could differ materially from those indicated in any forward-looking statement due to many factors, the most important of which are described in the company's latest filings with the Securities and Exchange Commission, including the company's first quarter 2019 results on Form 10-Q and the current report on Form 8-K filed yesterday evening together with our earnings release.

In addition, we expect to discuss certain financial measures and information that are non-GAAP measures as defined in applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the earnings release filed with yesterday's 8-K.

With that, I'll turn the call over to Neal Keating.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [3]

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Thank you, Jamie. Good morning, everyone, and thank you for joining our first quarter 2019 earnings call. I will begin today's call with a brief overview of the quarterly results and recent events for each segment before passing the call over to Rob for a more detailed discussion of our financial results and our expectations for the remainder of 2019.

We begin 2019 with very strong results. Top-line performance was slightly ahead of expectations, as we saw higher JPF sales volume at aerospace and continued organic sales growth at distribution, with both segments contributing to our diluted earnings per share of $0.50, or $0.57 adjusted.

The operating income improvement over the prior year was driven by a favorable sales mix at aerospace, which led to a significant increase in operating income, while improved operating results at distribution benefited from organic sales growth and improved operating leverage.

Turning to our segment-level performance, aerospace sales in the quarter of $166.4 million were higher than our prior expectations for the period, but lower than the first quarter of 2018 primarily due to shifting the delivery of the 10th new-build K-MAX aircraft into April, the sale of our tooling and engineering services businesses, and the negative impact of foreign currency exchange rates.

Segment operating profit increased significantly, up 17.4% to $26.6 million, as we begin to see the full run rate benefit of our prior-period restructuring actions and a sales mix weighted towards our specialty bearings and JPF DCS offerings.

Performance for our specialty bearings and engineered products continues to be strong. During the quarter, we saw nice incremental order activity for our self-lubricating bearings and traditional bearings, which were up 5.8% and 18.6%, respectively, over the prior year. This contributed to a 9% increase in backlog across these product lines since year-end and provides us confidence in the higher sales levels in the back half of the year.

During the quarter, we delivered over 8,800 fuses, compared to just under 4,000 in the prior year. We continue to expect JPF deliveries in the range of 40,000 to 45,000 units during 2019, and more than half of these deliveries will satisfy our U.S. government contracts.

As you know, in April we announced a new JPF DCS order, and although this order requires government approvals prior to delivery, we expect to begin shipments late in the third quarter. Our backlog for this program remains exceptionally strong, at over $400 million at the end of Q1 before including this latest DCS order, which will add an additional $49 million to the order book.

Demand for the K-MAX aircraft remains strong, and we're seeing increased service and support sales activity for the existing fleet. As I mentioned previously, we anticipated delivering the 10th new-production K-MAX in March of this year, the final aircraft in Lot 1 and a significant milestone for the relaunched K-MAX program.

Although this delivery was delayed, we did not have to wait long to mark the occasion, as our customer accepted the aircraft in April. I'm proud of the work our team has done to restart this line, consolidating the demand across our existing operators and adding new customers that see the value in the capabilities of our aircraft.

As we look ahead, we're focused on supporting the continued growth of the fleet and accelerating our opportunities to secure contracts for unmanned aircraft. In March, we announced the development of our next-generation K-MAX unmanned aircraft system for use in commercial and military applications, and just this week, we announced that the U.S. Marine Corps has contracted with us to move their 2 unmanned K-MAX from Yuma, Arizona, to our Bloomfield, Connecticut, facility to reactivate the aircraft and prepare them for the next generation of unmanned capabilities.

Moving to distribution, we saw continued improvement in the first quarter with sales up 2.5%, or 4.1% of a sales-per-sales day basis, our sixth consecutive quarter of sales-per-sales day growth, and our highest first quarter daily sales rate since 2015.

All 3 of our product platforms grew year-over-year on a sales-per-sales day basis, and we saw gains across a number of the end markets we serve, including paper manufacturing, durable goods, metal manufacturing, and food processing. And as a sign of continued strength, we ended the quarter with backlog of $142 million, a 5% increase over year-end.

Segment-level operating margin of 4.4% was up 20 basis points from the prior year and 30 basis points from the fourth quarter of 2018. The leverage from the organic sales growth helped drive the year-over-year and sequential improvement in our operating results. We are pleased with the 12.3% drop during the quarter and remain committed to controlling costs. And we reduced SG&A as a percentage of sales by 10 basis points from the fourth quarter of 2018.

Overall, we're very pleased with the excellent start to 2019 with strong order rates across both segments, providing us confidence in our expectations for the remainder of the year.

Now I'll turn the call over to Rob for a closer look at the numbers. Rob?

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Robert Daniel Starr, Kaman Corporation - CFO & Executive VP [4]

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Thank you, Neal, and good morning, everyone. I will begin today by discussing our performance for the quarter and finish with an update on our revised 2019 outlook.

Consolidated sales in the first quarter decreased 1.3% to $457.4 million over the prior year. The anticipated sales decline was the result of lower volume and timing at aerospace partially offset by higher sales volume at distribution. During the quarter, we generated a consolidated gross margin of 29.9%, a 100 basis point increase over the prior-year period, benefiting from favorable sales mix at aerospace.

Diluted earnings per share of $0.50 was flat compared to the corresponding period in the prior year. On an adjusted basis, diluted earnings per share increased $0.02 to $0.57, compared to the $0.55 in the prior-year period. The increase in adjusted diluted earnings per share was driven by the growth in sales and operating profit at distribution, the significant improvement in profitability at aerospace, and a 240 basis point decrease in our tax rate for the quarter when compared to the first quarter of 2018.

Offsetting this performance was a $2.9 million reduction in pension income in the quarter. In our last quarter call, we expected around 10% of our full year earnings to be generated in the first quarter, and the stronger-than-expected first quarter performance pulls forward some of those earnings, while the remainder provides upside to our expected performance for the full year, as I will discuss shortly when I review the revised 2019 outlook.

Moving to our segment results for the quarter, aerospace sales decreased 7.2% to $166.4 million, compared to $179.4 million in the prior year period. This year-over-year decrease in sales was primarily due to lower volume in our K-MAX, UH-60 and SH-2 Peru programs; the absence of sales from our tooling and engineering services businesses, which were sold in the prior year; as well as a $2.5 million headwind from unfavorable foreign currency exchange rates. These decreases were partially offset by higher JPF DCS sales.

Operating income at aerospace increased 17.4% to $26.6 million, while operating margins increased 340 basis points to 16%. On an adjusted basis, operating margins increased 250 basis points to 16.1%, primarily due to the favorable mix of JPF and bearing sales during the quarter, the absence of tooling and engineering services, and the realization of benefits from our prior-period restructuring actions.

At distribution, our sales increased 2.5% to $291 million, compared to $283.9 million in the prior year period. Daily sales for the quarter totaled $4.6 million per sales day, a 4.1% increase over the prior year period. The increase in sales was attributable to continued growth in corporate accounts. Looking at our product platforms, we saw higher sales across all 3 product platforms, with more significant increases in automation and bearings and power transmission product lines.

Operating margin performance increased 20 basis points to 4.4% over the prior year period, and was the result of the realization of operating leverage due to the organic sales growth in the period and strong execution on cost control by our team. Additionally, backlog rose $7.2 million from the end of 2018, to nearly $142 million.

Cash flow from operations was $22.6 million, resulting in free cash flow of $15.2 million in the quarter. This strong cash flow performance allowed us to further reduce our debt-to-cap ratio by 100 basis points sequentially, to 30.7%, while decreasing our leverage ratio to 1.9x. We are well-positioned to meet our full year cash flow forecast and believe our first quarter performance will allow us to achieve full year cash flow towards the higher end of our previously reported range.

To that end, our balance sheet provides us with ample flexibility to maintain a comprehensive approach to capital allocation, including the return of cash to shareholders through our dividend and share buyback programs and investments in organic growth initiatives, all the while pursuing acquisition targets in our specialty bearing and engineered product offering space.

Moving to our outlook for the balance of the year, and beginning with distribution, based on the solid start to 2019, we are reiterating our previously disclosed guidance of sales in the range of $1.19 billion to $1.22 billion, with operating margin expectations in the range of 5.0% to 5.3%.

At aerospace, our first quarter results were ahead of expectations, and while a portion of this performance was due to timing, we note that a portion is expected to be additive to our full year results. As such, we are increasing our full year sales and operating income expectations for this segment. We now expect sales in the range of $730 million to $760 million, a $10 million increase from our prior outlook, and operating margins in the range of 16.7% to 17.2%, a 20-basis-point increase.

Additionally, we are lowing our full year expectation for net periodic pension benefit to $0.4 million. The decrease from our prior expectation of $1.5 million is due to the finalization of our pension assumptions for 2019. All other estimates remain unchanged from our prior outlook.

Before I turn the call over to Neal, I wanted to discuss the cadence of earnings for the remainder of the year. As we discussed, our first quarter earnings were ahead of our prior expectations. We expect approximately 50% of this to be additive to our full year 2019 results, with the remainder representing a shift in earnings from the second quarter into Q1. We continue to expect nearly 40% of our full year earnings in the fourth quarter, with this back half weighting largely dependent on the timing of sales and profit for our specialty bearing products and JPF DCS units.

With that, I will turn the call back over to Neal.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [5]

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Thanks, Rob. We are off to a good start in 2019, highlighted by first quarter results ahead of our expectations. We are entering the balance of the year on a strong footing with an increase in incoming orders, strong backlog, and improving outlook in distribution.

Before we open the line for questions, I'd like to again thank our investors for their interest and our more than 5,000 employees around the world for their dedication and commitment every day.

Now I'll turn the call back over to Jamie.

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James G. Coogan, Kaman Corporation - VP of IR [6]

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Operator, may we have the first question, please?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question is from Seth Seifman with JP Morgan.

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Michael S. Rednor, JP Morgan Chase & Co, Research Division - Analyst [2]

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This is Mike Rednor on for Seth. The first question I have is on the 737 MAX production cut. Do you guys have any sizing or kind of an outlook there for how that will impact your business?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [3]

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Mike, it's Neal. Currently, and mostly with our customers, we have not been asked to slow any shipments, and that is current as of last week. So as you know, it's an important program to us, but it's relatively small in terms of ship set value, at between $25,000 and $30,000 an aircraft. So we like the program, it's good for us, but we really don't see any material impact right now for the balance of the year. Now, we all know that that may change if any return to production is slowed by Boeing, but, right now, us and I think others in the supply chain are really focused on continuing to make sure that we can support Boeing when the aircraft goes back into production.

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Michael S. Rednor, JP Morgan Chase & Co, Research Division - Analyst [4]

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And one more small one from me. Any sizing of the USG versus DCS fuse split in the quarter?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [5]

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Actually, we were about 50-50 on unit deliveries, Mike.

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Operator [6]

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And our next question is from Edward Marshall with Sidoti & Company.

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Edward James Marshall, Sidoti & Company, LLC - Senior Equity Research Analyst [7]

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I wanted to ask on the JPF, considering you just stopped there. Backlog is strong, and the new order, is that -- getting that to ship in the third quarter, is that taking the place of something else that you had kind of queued up in the supply -- in the order book? Because you're not changing full year outlook. Or did you anticipate this order was going to come in and that was originally in your guidance? Thanks.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [8]

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Ed, good question. Obviously, we're working continually on new orders, with a multitude of different foreign governments, and obviously option 15 and 16 with the U.S. government as well. So we had anticipated that we would -- and I think in the first quarter call, we actually talked about that we did anticipate additional DCS orders during the year, and this was one that we had anticipated.

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Edward James Marshall, Sidoti & Company, LLC - Senior Equity Research Analyst [9]

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But I guess when I look at your backlog, you can kind of shift things around if necessary with specific customers -- say, for instance, if you didn't get a government approval on one, perhaps you could shift that to a different customer. Is that the way I should be thinking about your JPF?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [10]

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That's exactly the way you should be thinking about it, Ed. It is -- the same product goes to different customers. There are some different steps that we take with DCS orders, but, for the most part, it is a fungible product between customers.

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Edward James Marshall, Sidoti & Company, LLC - Senior Equity Research Analyst [11]

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Now, on distribution, looking at the guidance and the range, it looks like you started this year like you started last year, maybe 20 basis points ahead, and I'm curious, the guidance was close on roughly the same outlook, yet you fell short of that goal last year, so what changes in 2019 versus what the outlook started 2018 with and how you expect to end out the year? Thanks.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [12]

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I take a step back and then go forward. I think as we look through 2018, a couple times we did comment that we were very pleased with our organic growth, in particular as we accelerated from the first to second quarter last year and then held pretty strong through the third and fourth quarter. We did say that we had a little bit later ramp-up of a number of our national accounts than we had anticipated, so I think that that will certainly help us. Now that we've got a number of them fully integrated, that will certainly help us throughout 2019. The other thing that I hope wasn't lost in our commentary was that we added backlog throughout last year, we added backlog again in the first quarter of this year, about $7 million, and, as you know, we also had 1 fewer selling day in the quarter. So if we would just have held backlog constant from the end of the year, we would have been right at the midpoint of our outlook, at about 6%-plus growth. We also had nice acceleration during the quarter, with sales up about 11% from January to March, and we were pleased with mid-single digit growth, on a preliminary basis at least, for April.

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Operator [13]

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And our next question is from Steve Barger with KeyBanc Capital Markets.

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Ryan Thomas Mills, KeyBanc Capital Markets Inc., Research Division - Associate [14]

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This is Ryan on for Steve. I just wanted to start with aerospace. Commercial aero was down about 7% in the quarter. It sounds like you don't have any impacts from Boeing, so I'm just kind of curious what drove the decline.

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Robert Daniel Starr, Kaman Corporation - CFO & Executive VP [15]

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A good portion on the commercial side would be K-MAX. I mean, that would be the predominant contributor there.

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Ryan Thomas Mills, KeyBanc Capital Markets Inc., Research Division - Associate [16]

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And then the same question for military and defense, ex-fuse. I think that was down about 26% in the quarter.

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Robert Daniel Starr, Kaman Corporation - CFO & Executive VP [17]

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Sure. Really, a number of programs to kind of highlight there, most notably our Peru program, UH-60, and also the AH-1Z. That's going to be where you see the largest impact on our defense programs.

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Ryan Thomas Mills, KeyBanc Capital Markets Inc., Research Division - Associate [18]

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And then do you have an average unit price for the traditional K-MAX and then what your expectations are for the next-generation K-MAX?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [19]

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On the current K-MAX, we're between $7 million and $7.25 million, typically, and right now we have not set pricing for the unmanned system, and we are going through that exercise right now.

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Ryan Thomas Mills, KeyBanc Capital Markets Inc., Research Division - Associate [20]

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And then going to distribution, fluid power was about flat year-over-year. Some peers called out some headwinds in technology end markets. I'm just curious what was driving the flat performance in 1Q '19.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [21]

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We actually did have lower growth, but growth, in fluid power from year-to-year. As you know, we had very strong fluid power last year, so it's a little bit tougher comp. We did have a little bit of headwind in semiconductor, but I don't think quite as much as some others may have encountered.

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Ryan Thomas Mills, KeyBanc Capital Markets Inc., Research Division - Associate [22]

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And then, last question. At the end of 2018, you were getting real good traction on new national accounts. What are you seeing right now in terms of new signings?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [23]

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We continue to be pleased with the success we're having with national accounts because of the comprehensive product line and service portfolio that we can provide to them. Our guys are doing a great job with the companies that have come into the fold with Kaman, and we expect to certainly leverage that in the marketplace.

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Operator [24]

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(Operator Instructions) And our next question is from Chris Dankert with Longbow Research.

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Christopher M. Dankert, Longbow Research LLC - Research Analyst [25]

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Exciting news on getting the K-MAX ready for the Marine Corps. To the extent you guys can comment, I mean, is this more of getting it spooled back up for evaluation purposes, or is it going overseas again?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [26]

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At this point, it would be more for an evaluation situation. As you know, they've had them out at Yuma, where they've been going through their advanced concept of operation development. For distributed operations, K-MAX played a role in that. So they want to make sure that those aircraft come back here, that we can reset them, we can add additional capabilities, and be ready for a program of record.

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Christopher M. Dankert, Longbow Research LLC - Research Analyst [27]

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Is that mostly just the new flight control system that you guys have developed internally, or is there kind of additional add-ons that you guys are working on there?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [28]

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We cannot yet say what additional or other capability they may be wanting to add to the aircraft.

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Christopher M. Dankert, Longbow Research LLC - Research Analyst [29]

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And then, just to clarify, full year, you guys are talking about 3 K-MAX deliveries in '19. I guess is that still the plan, and any sense of general timing for the other 2 airframes?

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Robert Daniel Starr, Kaman Corporation - CFO & Executive VP [30]

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Yes, Chris, that is still the plan, to deliver 3 aircraft. We currently anticipate the other 2 aircraft towards the back half of the year.

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Operator [31]

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And our next question is from Pete Skibitski with Alembic Global.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [32]

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Apologies, I did get on late. Apologies in advance if these are already asked, but I had a few huge questions. Any update on the approval process for the big $324 million DCS order?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [33]

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No, Pete. It continues to go through the process, but there's not another update at this point in time.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [34]

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And do you guys need approval of that this year to meet your fuse guidance and your aero margin guidance, or does the recent DCS order a week or so ago that you're now supporting (inaudible)? Does that kind of supplant the larger order in your guidance?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [35]

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We do not need the approval of the larger order this year to be able to meet our outlook.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [36]

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Well, is everything in backlog at this point to meet your fuse guidance?

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Robert Daniel Starr, Kaman Corporation - CFO & Executive VP [37]

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Pete, this is Rob. In terms of the backlog for JPF, it's really where we expected it to be, so we feel very comfortable with the level of support of our outlook.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [38]

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And then could you give us the -- you delivered roughly 8,800 fuses in the first quarter. Could you give us a rough split of what the USG versus DCS was?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [39]

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Sure, Pete. It was roughly 50-50, like almost exactly.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [40]

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And then versus your expectations, I'm just curious -- the aero margins were great in the first quarter here. I don't know if just the DCS was better than anticipated. I know you mentioned restructuring, but I'm just wondering maybe what the biggest contributor was to the good aero margins in the first quarter relative to your prior expectations.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [41]

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Pete, actually, the good news was that there were multiple things that came together to help drive that improved margin. Part of it was the product mix. We've talked some about the JPF DCS order. Everybody knows that those are above segment average profitability for us. We also had good revenue recognition for the U.S. government and JPF sales, so that helped. The mix with higher specialty bearing sales was certainly positive for us. And the other thing is that, as you know, at the end of 2018, we divested a couple businesses, specifically our tooling and engineering services businesses, that were below segment average. That contributed. And we also invested in some significant restructuring, and now we are beginning to demonstrate the benefit of those restructuring actions. So the good news was it wasn't any 1 thing. There were probably 4 or 5 contributing factors that enabled aerospace to put up the kinds of numbers that they did in the first quarter.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [42]

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I guess DCS will always matter, but I'm just wondering if maybe your quarterly margin profile kind of going forward will be maybe a little bit more smooth than it has in the past.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [43]

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I think that DCS will really -- as you rightly said, Pete, DCS shipments will always skew it. I think as you know, when we look at K-MAX, K-MAX in initial sale is a lower margin, but we certainly make that up over the long term on service and support. So if we were to have a higher K-MAX delivery number, that could impact us, but I think that it's probably not unfair, but it will still be somewhat influenced by those factors.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [44]

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Last question for me. The $2 million spend in the quarter on corporate development activities that you guys adjusted out, did you say what that was for?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [45]

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Pete, as you can appreciate, we usually don't comment specific on corporate development activities, unless we complete something, either we do an acquisition or we don't. And over the past few years, we've incurred costs in a number of years that we've spiked out, and we have a pretty good track record of disclosing them when it's appropriate.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [46]

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And I apologize, one last one for me. K-MAX -- it sounds like you're going to switch the blades out to be composites. It sounds like you're doing the unmanned. Are you anticipating some nice kind of incremental orders in 2020? It seems to me like there's a lot of DoD tech development efforts for unmanned car type stuff. Do you think something like that you guys have a good shot at getting in 2020 as well?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [47]

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It's the reason that we're investing in it, Pete. We see really good opportunities, both for commercial operators with the reception the aircraft has gotten since we put it back into production. We certainly were very pleased with the testimony that General Rudder, the Assistant Commandant of the Marine Corps for Aviation, gave just a couple weeks ago about what an important role the K-MAX can play for the Marine Corps, and certainly we were really pleased to be able to get the aircraft on their way back to Bloomfield so that we can reset the aircraft and begin to work with the Marine Corps for the next generation of autonomous operation.

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Operator [48]

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And our next question is from Tony Bancroft with Gabelli.

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Tony Bancroft, [49]

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Obviously, the Bloomberg article the other month. In that regard, is there any update with spinning or divesting the distribution business? And if not, any update on a catalyst of when that could or would make sense? I know in the past, I think we've discussed the $1.5 billion in distribution being sort of a decision point. Just any comments on that.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [50]

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Tony, in particular, as it relates to the Bloomberg article, we're not going to comment or make any speculation related to that.

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Operator [51]

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And our next question is from Steve Barger from KeyBanc Capital Markets.

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Ryan Thomas Mills, KeyBanc Capital Markets Inc., Research Division - Associate [52]

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Can you just talk about pricing contribution and distribution and how you see pricing panning out for 2019?

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Robert Daniel Starr, Kaman Corporation - CFO & Executive VP [53]

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Ryan, this is Rob. We expect pricing to contribute somewhere between 1% to 2% for the balance of '19.

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Ryan Thomas Mills, KeyBanc Capital Markets Inc., Research Division - Associate [54]

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And then did you provide sales by month yet?

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Robert Daniel Starr, Kaman Corporation - CFO & Executive VP [55]

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No. No, we actually have not provided -- oh, you mean for the first -- in terms of the growth rate for the first 4 months?

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Ryan Thomas Mills, KeyBanc Capital Markets Inc., Research Division - Associate [56]

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Yes. Yes.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [57]

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Oh, we actually had -- from January to March, our daily sales rate went up about 11%, so we were pleased to see that happen. Obviously, January typically is not the strongest daily sales month, but we had really nice acceleration through the quarter, and we haven't closed out April yet, as I'm sure you can appreciate, but preliminary numbers show us up in the mid-single digits. So continued good performance.

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Robert Daniel Starr, Kaman Corporation - CFO & Executive VP [58]

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Yes, we're tracking pretty much right with our expectations, Ryan.

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Ryan Thomas Mills, KeyBanc Capital Markets Inc., Research Division - Associate [59]

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And we shouldn't expect any impact from the holiday timing in April, impacting the second quarter?

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Robert Daniel Starr, Kaman Corporation - CFO & Executive VP [60]

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I think if it does, it would be very minimal.

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [61]

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Yes, but I'm kind of glad that you asked, because the one thing that we haven't talked about is the fact that year-on-year, we had 1 fewer sales day in our first quarter versus last year, so that will -- obviously, we'll pick that up during the course of the year. In fact, we'll pick it up in the second quarter. But when you look at a distribution business, having that 1 fewer sales day really does kind of have a disproportionate impact.

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Operator [62]

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And we have a follow-up from Pete Skibitski with Alembic Global.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [63]

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Sorry, I forgot to ask. This grounding of the 737 MAX, any impact at all in terms of what you're seeing in the bearings business?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [64]

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Pete, not so far. We commented a little bit earlier that, whether it's Boeing or the other suppliers that we work with -- suppliers to Boeing that we work with on the 737 MAX, we have not been asked to slow down at all, so we are not. I think what everybody's focused on is being able to support Boeing effectively when the aircraft goes back into production. So we do not -- to this point in time, we have not had any impact, and we certainly don't think that we will have a material impact on our outlook for the year.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [65]

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And then, Neal, maybe one clarification. The JV in India -- I haven't asked about this in probably a year, and back then, I don't think you were booking anything there, but I read something this quarter that led me to think that maybe you guys were actually booking some earnings there in that JV. Is that true?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [66]

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Yes, that's right. We book it below the line, and I'm glad you mentioned it, because we're doing really well there. In fact, they were awarded a gold -- that's what you read, the gold supplier award from BAE Systems on the consoles that they do for -- that end up in the Boeing P-8. So it's a -- Rick Barnhart has been over there just recently. I was over there in the late fall. We're very proud of what Kineco Kaman Composites India has been able to accomplish.

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Peter John Skibitski, Alembic Global Advisors - Research Analyst [67]

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I imagine it's relatively small at this point, but how does the growth outlook look?

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Neal J. Keating, Kaman Corporation - Chairman, CEO & President [68]

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It is relatively small so far. The trip before last that I was there, actually, Pete, was to lay the foundation stone for a doubling of the facility. It's still small, but, obviously, we see a nice opportunity for growth. And what's interesting to us is that originally we went there in large part to be able to participate in the Indian offset programs, and those are still on the horizon, so we're really pleased with the -- we've got a great team over there, and we're very proud of them.

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Operator [69]

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Thank you. And I'm not showing any further questions in the queue. I would like to turn the call back to James Coogan for his final remarks.

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James G. Coogan, Kaman Corporation - VP of IR [70]

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Thank you for joining us on today's conference call. We look forward to speaking with you again when we report our second quarter results.

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Operator [71]

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And with that, ladies and gentlemen, we thank you for participating in today's conference. This concludes the program, and you may all disconnect. Have a wonderful day.