Hartford Business Journal

18 HARTFORDBUSINESS.COM | JULY 8, 2024 Kaman Corp. CEO Ian Walsh recently sat down with the Hartford Business Journal to discuss the Bloomfield-based manufacturer's future. HBJ PHOTO | SKYLER FRAZER Test Flight Amid recent job cuts, newly private Kaman Corp. bets on new technology for future growth Private equity impact Arcline, which has offices in New York, Nashville and San Francisco, was founded in 2018 by CEO Rajeev Amara, who was previously a managing director at private equity giant Golden Gate Capital. As of mid-January, the company said it had roughly $8.9 billion in cumulative capital commitments. But it's been active in the M&A market since then. In addition to buying Kaman, it reached an agreement in May to sell one of its portfolio companies, Nashville electric infra- structure services provider Voltyx. Arcline still lists nearly two dozen businesses in its portfolio, including numerous aerospace and defense companies, like Rhode Island-based electronic components maker Quantic, and engineered components manufacturers like Qnnect, based in Boston. The Kaman deal came after the Bloomfield manufacturer spent the past few years undergoing a major restructuring to focus on new products, like its unmanned aerial vehicle technology, and away from its long-established joint fuze program it supported through U.S. military contracts. At its peak, the joint fuze program accounted for one-third of Kaman's annual profit, but the company wasn't selected to make the next generation of fuzes. Kaman makes a variety of propri- etary parts and components for the aerospace, defense, medical and industrial markets. Its engineered products division, for example, makes aircraft bearings and springs, while its precision products unit focuses on helicopter work. It also makes medical device components. In the last few decades, Kaman was perhaps best-known for its heavy-lift K-MAX manned helicopter, which has been used by the U.S. military. Kaman is discontinuing production of those copters, instead opting to focus time and energy on its next-generation of heavy-lift vehicles, the unmanned KARGO UAV, which had their first test flight in December. Another test flight, to be conducted with the U.S. Marine Corps., is sched- uled for this month. Walsh said the KARGO UAV has potential across a plethora of U.S. military and commercial markets, and the focus of the new tech- nology hasn't ceased since Arcline got involved. He said Arcline aims to be an "extension" of Kaman rather than come in and control the company's everyday operations. "I think what makes this partner- ship very unique and special is that everything that they're working with us to do are the things that we were already working on," Walsh said. "They're allowing us to move much quicker and much faster in a private setting, which is really what being a private company is all about." So, why go private? Well, now in year four of its five-year transforma- tion effort since Walsh took over as CEO, Kaman was at a crossroads, the By Skyler Frazer sfrazer@hartfordbusiness.com J ust a few months after going private, Bloomfield-based Kaman Corp. is focusing on new technology while beginning to explore business opportunities with subsidiaries of its new parent company, private equity firm Arcline Investment Management L.P. Kaman Corp. CEO Ian Walsh — head of the historic Connecticut manufacturer founded in 1945 by the late aeronautical engineer, business executive and philanthropist Charles H. Kaman — said Arcline executives have spent the last few months visiting the company's numerous sites, and doing more in-depth "deep dives" into its product lines and programs. "We're 99.99% aligned on where we're trying to get to, versus a company coming in and saying 'no, you're gonna go left or right, or shift directions,'" Walsh said. "That is the first question all the time: Are they going to change strategy to the busi- ness? The answer is, no. They know exactly what we're trying to do and are going to help us get there faster." Kaman has gone through many changes throughout its history, including, at one point, making and selling Ovation guitars and other musical instruments to fulfill Charles Kaman's guitar-enthusiast dreams. But perhaps the most significant, modern shift is becoming a private equity-owned company. Arcline closed its $1.8 billion purchase of the formerly publicly traded Kaman in April. Walsh recently sat down with the Hartford Business Journal for the first time since the Arcline deal was first announced in January. If you ask Walsh, the deal was several years in the making. Arcline took a stake in Kaman in the summer of 2023, and several months later came to Walsh with a proposal to join forces. The two companies have a history. Arcline was one of the bidders for California-based Bal Seal Engineering Inc. in 2020, before Kaman ultimately purchased the precision seals and springs maker for $330 million. Both companies were also final bidders for Ohio-based Parker-Hannifin Corp.'s aircraft wheel and brake division, which Kaman bought in 2022 for $440 million. Kaman was also previ- ously interested in acquiring certain businesses owned by Arcline. "Arcline is a new company — they've been around for more than five years — and they've done a marvelous job of scaling their busi- nesses," said Walsh, sitting behind his desk, casually-dressed in a Kaman-logo embroidered navy blue, short-sleeve polo shirt. "So, at the end of the day, what's interesting is we had assets they wanted and they had assets we wanted. … I think things happen for a reason." However, private equity acquisi- tions often come with cost-cutting, a reality Walsh said he knows and understands. The Harvard MBA grad and former U.S. Marine Corps officer said Kaman has shed some corporate and administrative staff — about a dozen employees — since being absorbed by Arcline. He said additional corporate cuts are being finalized — Kaman employed just below 1,000 people in the state as of May. However, the long-term plan is to grow the business. "We've already taken actions because there are certain capabilities and functions that we just don't need anymore as a private company," he said.

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