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Kaydon Sales Decline, Profit Flat

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ANN ARBOR (WWJ) – Ann Arbor-based Kaydon Corp. (NYSE: KDN), the precision components manufacturer, reported lower sales in the second fiscal quarter and six months, which ended June 29 this year and June 30 in 2012.

Revenue for the quarter was $117.3 million, down from $124.4 million a year earlier.

Net income was $11.7 million or 36 cents a share, unchanged from a share a year earlier.

For both the quarter and six months, a decline in the cost of goods sold was offset by an increase in selling, general and administrative expenses.

So-called adjusted earnings per share was 42 cents in both the second quarter of 2013 and the second quarter a year earlier. The adjusted earnings exclude acquisition costs and non-cash costs related to a writeoff of postretirement employee benefit plans.

Orders were $123.2 million in the second quarter of 2013, compared to $112.8 million in the second quarter of 2012 and $119.4 million in the first quarter of 2013. Backlog at June 29, 2013 was $158.1 million, compared to $169.5 million at June 30, 2012.

“The second quarter of 2013 was solid as we continue to successfully manage the variables within our control,” said James O’Leary, chairman and CEO. “Relative to the comparable quarter of 2012, we saw improved margins, free cash flow and orders despite a still challenging economic environment. In aggregate, bookings for our industrial businesses were solid with trends consistent with this year’s first quarter. As expected, military bookings were lower due to anticipated reductions in military activity and timing. However, this was more than offset by strong wind energy bookings in the quarter, supporting our view that the wind energy business has bottomed and will continue to show signs of improvement as we look a few quarters forward.

“Like most in the industrial space, we anticipate gradual improvement in the latter half of the year. While we wait for clearer signs of this pickup in economic activity, our principal focus remains managing the things within our control while we explore growth opportunities on the acquisition front. Our operational focus will translate in continued strength in both free cash flow and margins, as demonstrated so far this year, and further improvement when economic growth picks up in a more pronounced and sustained fashion.”

Kaydon supplies custom engineered products to the industrial, military, aerospace, medical, semiconductor and alternative energy equipment markets.

A replay of the conference call discussing the results will be available from 2 p.m. July 25 through Wednesday, July 31 at (888) 203-1112, using the passcode 3897290. The call is also archived at http://www.kaydon.com.

For the six months, net income was $22.4 million or 70 cents a share, down from $23.8 million or 74 cents a share a year earlier. Revenue was $228 million, down from $240.8 million a year earlier.

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