Kaydon Reports Improved
Second Quarter 2003 Results
Kaydon Corporation (USA) reported second quarter 2003 sales and profitability improvements, reflecting generally improving demand and a few areas of flat performance.
Sales for the quarter were up 4% over 2002, to USD $76.1 million from $73.2 million.
Net income hit $8.3 million, up 243.2% from $2.4 million in second quarter 2002. Because 2002's income reflected a one-time $4.8 million litigation charge, it's useful to note 2002's net income would have been $7.2 million, still leaving 2003 more than 15% ahead of 2002.
During the quarter, Kaydon also aggressively sold 4% 20-year notes which netted proceeds of $194 million. The company used $43.5 million of that to repurchase 2 million shares, and $72.2 million to pay off its revolving credit facility. The remaining $78.3 million was added to cash; Kaydon ended the quarter with more than $228 million in cash, up from $146.3 million at the beginning of the year.
Kaydon attributed the sales increase to increased demand for various products including specialty bearings, rings and seals, and filtration elements from defense and aerospace markets as well as increased demand for linear deceleration products used in industrial applications. About 20% of Kaydon's sales are in aerospace defense, which has been a generally weak area for many other bearing manufacturers this quarter.
Other key markets, including specialty balls and equipment for electronic manufacturing, construction, and power generation equipment, saw an unchanged landscape from first quarter in that they were flat or up slightly -- still reflecting the generally cautious capital spending programs seem throughout this economy.
During the quarter, Kaydon said it continued a restructuring plan in the Specialty Bearings Group, designed to enhance operating performance and balance manufacturing utilization. In all, Kaydon forecasts spending $1.8 million for equipment relocation, headcount reduction and other restructuring expenses during 2003. The benefit is expected to be $2 million in annual cost savings, beginning in 2004.
Brian Campbell, President and CEO, said, "In view of the challenging economic environment that many of our businesses faced during the past 30 months, our second quarter and first half performance makes us optimistic about the future. We continue to focus on strengthening our operational excellence with further implementation of our lean manufacturing and information systems programs as well as Six Sigma initiatives. Progress in these areas, along with our efforts to realign and restructure operations, has positioned the Company well for long-term earnings improvements as the economy strengthens."
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