Hartford Business Journal

10 HARTFORDBUSINESS.COM | JANUARY 23, 2023 Ian Walsh is in his third year as CEO of aerospace and medical components manufacturer Kaman Corp., which is going through major changes in its business. HBJ PHOTO | STEVE LASCHEVER Strategic Pivot Kaman restructuring bets big on unmanned aerial vehicle technology By Skyler Frazer sfrazer@hartfordbusiness.com A fter steering his company through a pandemic, aero- space industry headwinds and a number of mergers and acquisi- tions, Kaman Corp. CEO Ian Walsh said the Bloomfield-based aerospace, defense and medical components manufacturer will continue its trans- formation in 2023. Kaman Corp. struggled to meet many of its quarterly financial expec- tations in 2022, but Walsh said investments in new products and a major strategic shift — including moving away from its long-es- tablished joint fuze program and discontinuing production of its K-Max heavy-lift helicopter, to development of its unmanned aerial vehicle — will carry the company into the future. The shifts will lead to an undis- closed number of job cuts, the closure of at least one manufac- turing plant in Orlando, Florida, and consolidation of fuze production at its Middletown facility. "With respect to workforce reduc- tions, we do not take these decisions lightly," Walsh said. "We remain focused on advancing our strategic priorities to maximize Kaman's performance for the benefit of our customers and shareholders." Walsh, who just finished his second year as Kaman's CEO, said the company's top line is still on the mend following a few rough years amid the pandemic and other economic head- winds, including supply chain issues that have impacted manufacturers across myriad industries. Kaman reported $490.8 million in revenue through the first three quarters of 2022, down from $533.8 million in the year-ago period. Profits during that same period were $8.7 million, or 31 cents per diluted share, down from $34.5 million, or $1.25 cents per share, in the the first three months of 2021. But entering year three as CEO, Walsh said Kaman has the team and vision in place for "consistent, steady growth." "You're going to see Kaman continue to get stronger operationally," Walsh said in a recent interview. "I think great companies are able to really get their heads up and look down the road, see where they're going, and know how fast they need to go to get there." The plan Walsh joined Kaman as CEO in September 2020, after a military career and executive experience at other manufacturers such as Textron Inc. and more recently REV Group Inc. At Textron, Walsh said he was known as a "fix-it guy" who was often given the tough tasks. Kaman shareholders hope he has similar success in his relatively new role. When Walsh took the job in September 2020, a few months after the pandemic began, Kaman was selling at about $38 per share. As of mid-January, the company was trading around $22.80 per share. At the start of his Kaman tenure, Walsh said he had to deal with a down economy and other headwinds, including a major slow down in the aerospace industry. The company had completed a sale of its distri- bution business and also acquired several other companies just prior to the pandemic. "There was a lot of shifting and change that went on in that time," Walsh said. Walsh said he came into the job with a five-year transition plan. His first full year in 2021 consisted of putting his leadership team in place and beginning to overhaul the company's structure. Last year, Walsh said his focus was on assessing each of Kaman's business units: engineered prod- ucts, which makes aircraft bearings, springs and other components; precision products, which focuses on helicopter work, including its heavy-lift K-MAX manned helicopter and KARGO UAV unmanned aerial system; and a structures segment that makes metallic and composite aero structures for commercial, military and general aviation fixed- and rotary-wing aircrafts, and components for medical devices and instruments. Kaman serves customers ranging from commercial aero- space companies including Airbus, Boeing and Sikorsky, to government defense contracts. Other changes include M&A activity. In September, Kaman completed the purchase of Parker-Hannifin Corp.'s aircraft wheel and brake division, which had annual sales of about $70 million. Parker-Hannifin is an Ohio-based motion and control technology company that makes everything from fuel nozzles to air pressure regulators. Kaman early last year also sold for $1.3 billion its Distribution Group subsidiary to Atlanta-based automo- tive and industrial replacement-parts distributor Genuine Parts Co. Walsh said the company has also consolidated operations at its Jacksonville structures facility, which supplies metallic details, complex metallic aerostructures, and sub-as- semblies for aircraft and ground vehicles. He said the company's Vermont composites facility, which makes products for aerospace and medical uses, has had a "miraculous" turnaround over the past year and has improved its profitability. A new focus Kaman's business is going through a major transition, led by the decline of its joint programmable fuze production for the now-ended Joint Air-to-Surface Standoff Missile program. The company several years ago — before Walsh was at Kaman — didn't win the contract to make the KAMAN CORP.'S FINANCIAL SNAPSHOT For the nine months ended SEPT. 30, 2022 OCT. 1, 2021 NET SALES $490.8M $533.8M COST OF SALES $332.3M $355.9M GROSS PROFIT $158.5M $177.9M NET EARNINGS $8.7M $34.5M Source: Kaman financial report

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