Gabelli & Company
23rd Annual Aerospace & Defense Conference
September 7, 2017
2
Forward Looking Statements
FORWARD-LOOKING STATEMENTS
This presentation contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements also may be included in other publicly available documents issued by the Company and in oral statements made by our officers and
representatives from time to time. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and
financial performance, based on assumptions currently believed to be valid. They can be identified by the use of words such as "anticipate," "intend," "plan," "goal," "seek,"
"believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "would," "could," "will" and other words of similar meaning in connection with a
discussion of future operating or financial performance. Examples of forward looking statements include, among others, statements relating to future sales, earnings, cash
flows, results of operations, uses of cash and other measures of financial performance.
Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that may cause the Company's actual results and
financial condition to differ materially from those expressed or implied in the forward-looking statements. Such risks, uncertainties and other factors include, among others:
(i) changes in domestic and foreign economic and competitive conditions in markets served by the Company, particularly the defense, commercial aviation and industrial
production markets; (ii) changes in government and customer priorities and requirements (including cost-cutting initiatives, government and customer shut-downs, the
potential deferral of awards, terminations or reductions of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from
Congressional actions or automatic sequestration); (iii) changes in geopolitical conditions in countries where the Company does or intends to do business; (iv) the
successful conclusion of competitions for government programs (including new, follow-on and successor programs) and thereafter successful contract negotiations with
government authorities (both foreign and domestic) for the terms and conditions of the programs; (v) the timely receipt of any necessary export approvals and/or other
licenses or authorizations from the U.S. Government; (vi) the existence of standard government contract provisions permitting renegotiation of terms and termination for the
convenience of the government; (vii) the successful resolution of government inquiries or investigations relating to our businesses and programs; (viii) risks and
uncertainties associated with the successful implementation and ramp up of significant new programs, including the ability to manufacture the products to the detailed
specifications required and recover start-up costs and other investments in the programs; (ix) potential difficulties associated with variable acceptance test results, given
sensitive production materials and extreme test parameters; (x) the receipt and successful execution of production orders under the Company's existing U.S. government
JPF contract, including the exercise of all contract options and receipt of orders from allied militaries, but excluding any next generation programmable fuze programs, as all
have been assumed in connection with goodwill impairment evaluations; (xi) the continued support of the existing K-MAX® helicopter fleet, including sale of existing K-
MAX® spare parts inventory and the receipt of orders for new aircraft sufficient to recover our investment in the restart of the K-MAX® production line; (xii) the accuracy of
current cost estimates associated with environmental remediation activities; (xiii) the profitable integration of acquired businesses into the Company's operations; (xiv) the
ability to implement our ERP systems in a cost-effective and efficient manner, limiting disruption to our business, and allowing us to capture their planned benefits while
maintaining an adequate internal control environment; (xv) changes in supplier sales or vendor incentive policies; (xvi) the effects of price increases or decreases; (xvii) the
effects of pension regulations, pension plan assumptions, pension plan asset performance, future contributions and the pension freeze, including the ultimate determination
of the U.S. Government's share of any pension curtailment adjustment calculated in accordance with CAS 413; (xviii) future levels of indebtedness and capital expenditures;
(xix) the continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items; (xx) the effects of currency
exchange rates and foreign competition on future operations; (xxi) changes in laws and regulations, taxes, interest rates, inflation rates and general business conditions;
(xxii) the effects, if any, of the UK's exit from the EU; (xxiii) future repurchases and/or issuances of common stock; (xxiv) the incurrence of unanticipated restructuring costs
or the failure to realize anticipated savings or benefits from past or future expense reduction actions; and (xxv) other risks and uncertainties set forth herein, in our 2016
Form 10-K and in our Form 10-Q for the fiscal quarter ended June 30, 2017.
Any forward-looking information provided in this presentation should be considered with these factors in mind. We assume no obligation to update any forward-looking
statements contained in this report.
3
What is Kaman?
Solving Our Customers’ Critical Problems with Technically
Differentiated Products & Services
Leading Provider of Highly Engineered Aerospace &
Industrial Solutions Serving a Broad Range of End Markets
4
Kaman Corporation Overview
29%
24%
47%
Aerospace
Defense
Fuzing
Commercial
50%
30%
20%
Distribution
Bearings & Mechanical
Power Transmission
Automation
Fluid Power
Full Year 2016 Results
39%
61%
$1.8B Revenues
Aerospace Distribution
5
Distribution
61%
6
Distribution Overview
PRODUCT
PLATFORM
BEARINGS &
MECHANICAL POWER
TRANSMISSION (BPT)
FLUID POWER AUTOMATION
2016
% of Sales
50% 20% 30%
Estimated
Market Size(1)
$18 Billion $5 Billion $12 Billion
Acquisitions
since 2010
• Allied Bearings Supply
• Plains Bearing
• Florida Bearings Inc.
• Ohio Gear and
Transmission
• Catching
• Northwest Hose & Fittings
• Western Fluid Components
• B. W. Rogers
• Calkins Fluid Power
• Zeller
• Minarik
• Target Electronic Supply
• B. W. Rogers
• G.C. Fabrication
(1) Source: PTDA Market Size Report: US (2016 update to original 2013 research)
(2) Sales from continuing operations
74%
14%
12%
2009 Sales2 $613M
Bearings & Power Transmission Automation Fluid Power
50%
30%
20%
2016 Sales2 $1.1B
7
Distribution Expanded Product Portfolio
System Design &
Build
Fluid Power
Systems
Hose & Coupling
Assemblies
Application
Engineering
Belt Fabrication
Maintenance &
Reliability
Value Added Offerings
8
Internal Investments – Systems
Improving customer service
and operating efficiency:
• ERP consolidation and
modernization
• Customer Relationship
Management
• Advanced Data Analytics
9
39%Aerospace Overview
10
Aerospace Overview
AEROSYSTEMS
SPECIALTY BEARINGS &
ENGINEERED PRODUCTS
FUZING & PRECISION
PRODUCTS
Products • Engineering design and testing
• Tooling design & manufacture
• Advanced machining and composite
aerostructure manufacturing
• Complex assembly
• Helicopter MRO and support
• Self-lube airframe bearings
• Traditional airframe bearings
• Miniature ball bearings
• Flexible drive systems
• Aftermarket engineered
components
• Bomb and missile safe and
arm fuzing devices
• Precision measuring
systems
• Memory products
Customers • Global commercial and defense OEMs
• Supplier Tier I’s to subcontract manufacturers
• Aircraft operators and MRO
• Specialized aerospace distributors
• Industrial and medical manufacturers of high precision equipment
• U.S. and allied militaries
• Weapon system OEMs
Platforms K-MAX® 787 Medical Devices Bearings
A350 AH-1Z Marine/Hydro
SLAM-ER
AMRAAM
TOMAHAWK
STANDARD MISSILE
AGM-65M
Aftermarket
11
Specialty Bearings and Engineered Products
Positioned for growth
• Differentiated product offerings with best in class application engineers and
material scientists
• Well positioned on a broad range of fixed wing and rotary wing aircraft
• Increased exposure to healthcare and industrial applications
• Strong order rates and solid backlog
Products Markets
12
STANDARD MISSILE
Fuzing and Precision Products
• Sole source provider to the US Air Force and 27 foreign governments
• Advanced capabilities and operational field reliability above 99%
• Increased production capacity to meet growing demand
• Solid program backlog – robust order pipeline
JPF Program
SLAM-ER
HARPOON
MAVERICK
FMU-139
TOMAHAWK
JPF
STANDARD MISSILE
SLAM-ER
SLAM-ERAMRAAM
TOMAHAWK
AGM-65M
AMRAAM
On Expansive array of U.S. Weapon Systems
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2012 2013 2014 2015 2016 2017
JPF Deliveries
• SH-2G
In service with Egypt, New Zealand, Poland, and Peru
Fleet will grow 50% since 2014 upon completion of Peru program
Opportunity to expand and upgrade the capability of Egyptian fleet
• K-MAX®
Delivered first new production aircraft in 2017
Unmanned aircraft currently in use by Marine Operational Test and Evaluation
Squadron One (VMX-1)
• Aftermarket support including spares, repairs and MRO
Air Vehicles and MRO
Unmanned K-MAX®SH-2G Super Seasprite Commercial K-MAX®
14
Diverse End Markets
Selected Platforms
Boeing Airbus Fuzing
• 787/777
• 737
• A-10
• A350
• A330
• A320
• JPF
• Harpoon
• Tomahawk
Bell Helicopter Sikorsky Kaman
• AH-1Z
• Rotor Blades
• UH-60
• CH-53
• SH-2G
• K-MAX®
(1) Represents breakdown of 2016 full year sales
81%
19%
Aerospace
OEM
Aftermarket 30%
62%
8%
Distribution
OEM
MRO
Other
Selected Industries & Products
Industries Products
• Food and beverage
• Machinery Manufacturing
• Paper manufacturing
• Nonmetallic minerals
• Durable goods
• Primary metal
• Bearings
• Mechanical power
transmission
• Material handling
• Fluid power
• Electric power
• Automation
Full Year 2016 Results
15
Capital Deployment Framework
Focused on growth investments
and return of capital to shareholders
• Strategic acquisitions to create
shareholder value
• High return capital expenditures
including facility expansions, machinery
and equipment, and IT infrastructure
• Quarterly dividend raised 11% in 2017,
or a 43% increase since 2010
• Dividends paid without interruption for
47 years
• $100 million share repurchase
authorization in place to offset dilution
from employee stock plans
Total $900 Million
Period: 2010 to 2016
Acquisitions
59%Capital
Expenditures
24%
Dividends &
Share
Repurchases
17%
16
Kaman Investment Highlights
Strategically Positioned
Highly Engineered Products Outstanding portfolio of highly engineered products and proprietary technologies
Best-in-class Vendors Continue to partner with leading brands and enhance product portfolio
Diverse End Markets Broad exposure to diverse products, platforms and customers
Strong Financial Performance
Top Line Growth Shown consistent, reliable performance with ~6% revenue CAGR over the past 10 years
Profitability Gains Focus on scale, product mix, and operational efficiency to enhance profitability
Strong Free Cash Flow Average Free Cash Flow Conversion from 2014 to 2016 well in excess of Net Earnings
Strong Capital Structure Maintain conservative leverage of 2.0x–3.0x net debt / Adjusted EBITDA over the long term
Reliable Business Strategies
Efficient Capital Allocation Deploy capital to drive future growth while returning capital to shareholders
Focus on Innovation Commitment to internal investment to maintain differentiation and drive productivity
Operational Excellence Strategic investments designed to optimize operational efficiency and returns