Kaydon Reports Second Quarter 2006 Results
Kaydon Corporation (USA, NYSE: KDN) reported financial results for fiscal second quarter, ended July 1, 2006.
Overall sales in the quarter were up almost 9% over 2005, to USD $102.7 million from $94.5 million.
Kaydon credited strong increases in sales of specialty bearings, sealing products, air and liquid filtration products, and specialty metal alloys. Those gains were partially offset by an overall $3 million drop in sales of metalforming equipment, deceleration products (Ace Controls), and specialty balls (Industrial Tectonics).
Net income reached $17.7 million, or 17.2% of sales, up from $11.3 million, or 11.9% of sales, in 2005.
Profitability improvement was due to a number of factors, ranging from higher sales volumes to price increases to operating efficiency initiatives. SG&A dropped from 2005's 19% of sales to 17% of sales.
Kaydon said second quarter's incoming orders set a record, at $119.6 million, from a strengthening manufacturing economy and large orders from the wind energy marketplace.
In the quarter, Kaydon's strongest demand spike came from specialty bearings used by the wind power industry in wind turbines. Despite going head-to-head with established European competitors such as SKF, Kaydon's continued success after 20 years in the market has triggered a major expansion program to serve that fast-growing wind energy market.
The program runs through 2007 and involves at least $30 million earmarked for specialty bearing production. In the end, Kaydon said it expects to maintain its leadership position in the wind energy segment, adding capacity to both specialty bearing plants in the U.S. and Mexico.
Kaydon operates North American bearing plants in Muskegon, Michigan; Sumter, South Carolina; Mocksville, North Carolina; and Monterey, Mexico.
Bearing manufacturing and sales are part of Kaydon's Friction and Motion Control segment. In second quarter 2006, the segment recorded sales of $60.6 million, up 19% over 2005. Operating income jumped to 40.3%, from $12.7 million to $17.8 million, largely driven by demand for specialty bearings used in military, industrial, medical and heavy equipment markets, including wind.
Brian Campbell, President and CEO, said: "The excellent financial results and positive order trends we experienced during the second quarter reflect not only continued strong demand from many key markets we serve, but also the success of our efforts to driver growth through new product development, our continued success in providing performance critical products to meet demanding customer needs, and our operational excellence initiatives."
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