Kaydon Surpasses Earnings Estimate
Recently Kaydon Corp. (KDN) reported first quarter 2013 adjusted earnings of 37 cents exceeding the Zacks Estimate of 35 cents or with a positive earnings surprise of 5.71%. However, adjusted earnings decreased by 15.9% year over year.
Reported earnings per share decreased by 13.16% to 33 cents from 38 cents in the year-earlier quarter.
Revenue
Revenue for the reported quarter was $110.7 million, compared to $116.5 million in the first quarter of 2012. The decline in net sales was primarily driven by an anticipated decrease in wind sales totaling $14.6 million.
However, new orders booked during the quarter were up 8.7% year over year to $119.4 million, which is equivalent to a book-to-bill ratio of 108%. Orders were up 16.4% sequentially. Order entry declined in the prior quarter (4Q12) as customers reacted to adverse macroeconomic conditions. As of March 30, 2013, backlog was $152.2 million, compared to $174.9 million in the year–ago period.
Margins
Adjusted EBITDA during the quarter was $23.1 million compared to $26.8 million during the prior-year quarter. Gross margin increased during the quarter to 38.6% from 36.4% in the year-earlier quarter and 36.8% sequentially. The increased operating leverage derived from restructuring activities undertaken in the previous year and favorable product mix boosted the performance.
Balance Sheet and Cash Flow
Free cash flow during the first quarter of 2013 was $24.3 million compared to $4.4 million during the first 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 $65.6 million with long-term debt of $164.1 million.
The company repaid $3.9 million of debt during the reported quarter. In addition, dividends totaling to $6.4 million were also paid by the company to its share holders.
Outlook
In the quarters to follow, management expects the company’s margins to improve as a result of more stable economic environments and more focused approach.
Kaydon currently has Zacks Rank #4 (Sell). Other sector participants that are worth mentioning include NSK Ltd. (NPSKY), having a Zacks Rank #1 (Strong Buy), while Norsk Hydro ASA (NHYDY) and Northwest Pipe Co. (NWPX) has Zacks Rank #2 (Buy) each.
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