Tag - Aerospace

Stow your gear and lock those seatbacks to their upright position, Kaman Corp. (Nasdaq:KAMN) is prepared for takeoff.

After quietly rising to $1 billion in annual revenue, the 63-year-old Connecticut company’s stock is reflecting the infusion of a new management team, a reorganization to focus on its core aerospace and industrial distribution operations, and some key acquisitions. 

Kaman’s shares hit an all-time high of $39.31 the day after Christmas. Then, after sinking to a 52-week low of $21.15 on July 7 on aerospace concerns, share prices started to climb, raising investors’ hopes that the stock will again challenge that year-end peak. Kaman closed Monday at $28.80.

Analysts who follow Kaman believe the stock is worth acquiring: three rate it a “strong buy,” and two have it as a “buy,” according to Thomson Reuters. The median price target is $36, reflecting a 20% upside potential. While down some 22% this year, over the past five years Kaman’s shares increased 108%.

Kaman operates in two arenas, industrial distribution and aerospace. Most of its operations are in the Americas, but the company does have a presence in Europe, Asia and Australia.

Kaman is a defense contractor, and its primary subsidiary is Kaman Aerospace. But industrial accounts for nearly two-thirds of its business, and is the . . .

Although sometimes “it’s not rocket science,” with American Pacific Corp. (Nasdaq: APFC), a leading manufacturer of specialty and fine chemicals, it really is. 

AMPAC is the exclusive North American provider of Grade I ammonium perchlorate, the predominant oxidizing agent for solid-fuel rockets, booster motors and missiles used in space exploration, commercial satellite transportation and national defense programs.

Being a monopolist in the Grade I ammonium perchlorate (which accounts for 28% of revenue) niche provides an enviable economic mote, as does being an oligopolistic in other markets. AMPAC is one of two North American manufacturers of mono-propellant and bi-propellant propulsion systems and thrusters for satellites and launch vehicles, and is one of the world's major producers of bi-propellant thrusters for satellites.

AMPAC's other significant segment, the more comprehensible fine chemicals, isn't shielded from competition to the extent of specialty chemicals, but it still enjoys barriers to entry because of FDA standards and edicts. The segment manufactures active pharmaceutical ingredients used in drugs for indications in areas such as anti-viral, oncology, and central nervous system; registered intermediates; and HIV-related and influenza-combating drugs.

Not unlike a Russian/American space rendezvous, the segments complement each other: Specialty chemicals typically has higher operating margins than fine chemicals, 32% compared to 16%, but fine chemicals is the growth engine, having increased to 57% of the business in the first quarter of fiscal year 2008, ended Dec. 31, 2007, up from nothing in FY2005. Together they rocketed revenue up to $46.9 million in the first quarter, up 34% from $34.9 million one year ago. Net income in the first quarter soared 383% to $2.9 million, or $0.38 per diluted share, up from $0.6 million, or $0.09 per diluted share, in the year ago period.

Lately the broader markets have been a bit grounded. The Dow finished down for the month of December for only the third time in eleven years. The 3.5% return that the S&P 500 posted in 2007 left much still to be desired. Not to mention the fact that the Russell 2000 fell to 15-month lows earlier this week. However, one segment of the market that’s been taking off has been the aerospace and defense sector. The Dow Jones U.S. Select Aerospace & Defense Index posted a mighty return of 28.2% in 2007. 

One small cap that’s been leading the boom is Ducommun Incorporated (NYSE: DCO). And the results that this Carson, Calif.-based company have posted have been anything but common. At a market cap of just $331 million, the company struck it rich in 2007. Ducommun’s stock soared nearly 67% last year.

Founded in 1849 at the height of the Gold Rush, Ducommun is the oldest continuously operating business in Los Angeles. Back then the company repaired watches for prospectors. Today it engineers and manufactures components and assemblies for commercial aircraft, military aircraft and space programs.

A prominent example of Ducommun’s work is its support for a subsidiary of United Technologies Corporation (NYSE: UTX), which manufactures the Black Hawk helicopter for the military. In November, Ducommun locked up a five-year, $60 million deal to provide titanium erosion shields for the helicopter program. The shields are designed to protect the Black Hawk’s main rotor blades. Some of the company’s other major customers include the U.S. government, The Boeing Company (NYSE: BA), Lockheed Martin Corporation (NYSE: LMT), and Raytheon Company (NYSE: RTN).

The Black Hawk contract win is reminiscent of the wave of success that Ducommun has had recently. For the third-quarter ended Sept. 29, management reported net income of $5.8 million, or $0.55 per diluted share on $94.7 million in sales. These figures handily topped analysts polled by Thomson Financial, who were expecting EPS of $0.45 per share on $90.6 million in sales. The results also represented a 42.3% increase in net income and a 16.1% increase in sales versus the year-ago quarter.

GenCorp Inc. (NYSE: GY) CEO Terry Hall said the company is faced with uncertainties, but continues to make progress.

The defense appropriation bill, which has yet to be passed by Congress, continues to be an uncertainty for the maker of aerospace and defense products, Hall said during a midday conference call. Also, NASA’s Constellation program, which includes Moon, Mars and other projects, is being restructured. Aerojet, a GenCorp subsidiary, makes missile and space propulsion engines for NASA.

Hall said he expects continued improvement not only in Aerojet’s business, but also GenCorp’s real estate segment, which generated $2.8 million during the first nine months of 2007, compared with $2.1 million for the same period of 2006. The company expects job and population growth to propel real estate demand over the next two to three years, Hall said.

During the three months ended Aug. 31, the Rancho Cordova, Calif.-based firm earned $15.6 million, or $0.24 a share, above Wall Street estimates of $0.06 per share and compared with a loss of $13.1 million, or $0.24 per share, a year earlier. The period included a $12.4 million tax benefit, compared with $1 million during the same quarter of 2006.

CFO Yasmin Seyal said the firm does not expect anymore substantial tax benefits in fiscal 2008.

Third-quarter revenue increased 25% to $198.5 million, above analyst expectations of $181.8 million and compared with $158.3 million in the year-ago period. Sales in GenCorp’s aerospace and defense segments climbed 26% to $197.1 million from $156.6 million.

“Our strategy of focusing on the in-space propulsion, the missile defense programs and the other programs has driven the success, along with all the good work of the management,” Hall said.

In midday trading, GY shares are up 7.69%, or $0.87, at $12.18. Over the last 52 weeks, shares have ranged from $10.55 to $15.25.

Shares of GenCorp Inc. (NYSE: GY) are up after the maker of aerospace and defense products reported it swung to a third-quarter profit on increased sales and a sizeable tax benefit.

During the three months ended August 31, the Rancho Cordova, Calif.-based firm earned $15.6 million, or $0.24 a share, compared with a loss of $13.1 million, or $0.24 per share, a year earlier. The period included a $12.4 million tax benefit, compared with $1 million during the same quarter of 2006.

Third-quarter revenue increased 25% to $198.5 million, from $158.3 million in the year-ago period. Sales in GenCorp’s aerospace and defense segments climbed 26% to $197.1 million from $156.6 million.

“The aerospace and defense segment delivered another quarter of solid performance," CEO Terry Hall said in a statement. "Our strategy of focusing on the aerospace and defense business, especially with emphasis on inspace, tactical missile and missile defense propulsion, is driving revenue and earnings.”

In morning trading, GY shares are up 6.63%, or $0.75, at $12.06.