Kaman Corporation

Good day and thank you for standing by. Welcome to Command Corporation fourth quarter 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one on your touch-tone telephone. Please be advised, today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your host today, Carrie Baer, Head of Investor Relations. Please go ahead.

Good morning. I'd like to welcome everyone to Command's fourth quarter 2021 earnings call. Conducting the call today are Ian Walsh, Chairman, President, and Chief Executive Officer, and Jamie Coogan, Senior Vice President and Chief Financial Officer. Before we begin, I'd like to note that some of the information discussed during today's call will consist of forward-looking statements. Setting forth our current expectations with respect to the future of our business, the economy, and other future events. These include projections of revenue, earnings, and other financial items, statements on plans and objectives of the company or its management, statements of future economic performance, and assumptions underlying those statements regarding the company and its business. The company's actual results could differ materially from those indicated in any forward-looking statements due to many factors, the most important of which are described in the company's latest filings with the Securities and Exchange Commission. including the company's fourth quarter 2021 results included on Form 10-K and the current report on Form 8-K filed yesterday evening together with our earnings release. We also expect to discuss certain financial measures and information that are non-GAAP measures as defined in applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the earnings release filed with yesterday's 8-K. Finally, we posted an earnings call supplement on our website, which provides additional context of financial performance and our outlook for 2022. You can find this presentation at www.command.com slash investors slash presentations. Now, I'll turn the call over to Ian Walsh.

Thank you, Carrie, and welcome aboard the Command team as our new head of investor relations. We are very glad you are here with us at this exciting time in our journey. And good morning, everyone, and thank you for joining our fourth quarter 2021 earnings call. I'll start by providing some highlights on the quarter and full year, share some operational and business updates on each of our new segments, and then discuss some important innovations before passing the call over to Jamie for a more detailed discussion of our financial results and our expectations for 2022. During 2021, sales declined. However, we achieved the financial targets for our adjusted metrics of EBITDA, EBITDA margin, and earnings per share, while delivering significantly more free cash flow. Gross margin increased more than 200 basis points to 33.4%, driven by improved performance in several of our businesses, primarily in our seals, springs, and contacts products. In the first half of 2021, the pandemic continued to present economic challenges. However, in the fourth quarter, we saw meaningful order increases across commercial, business, and general aviation markets, led by strong order intake for our bearings, springs, seals, and contacts products. In fact, sales to Boeing and Airbus increased the second quarter in a row. This is a promising indicator that airline demand is rebounding. These order increases have contributed to an improvement in our order backlog for the company, which increased 11% compared to the same time last year. 2021 was a year focused on building a new leadership team, as well as building a foundation for future growth that will allow us to achieve top quartile performance in each of our segments. I'm pleased to say that we also made notable progress on the implementation of our new operations excellence model. We've taken a number of steps, including the deployment of many new tools and systems to drive improved performance and more formal training across all our businesses. We are beginning to see the benefits of these actions as we eliminate waste and reduce variation in our processes. As part of our overarching strategy, we reported our results under a new segment structure. This reinforces Command's commitment to provide transparency and support of our growth strategy and portfolio management. Our three segments are engineered products, precision products, and structures. The new segments align well with our product capabilities and our new brand architecture. Over the coming months, you will see the rollout of the new brand strategy, which is rooted in a company's aim to simplify complexities for our customers and focus on innovation. Let me highlight the high-level strategy for each of our segments. Our engineer product segment displayed tremendous resiliency in 2021. We saw increased order rates for our products, and the team worked diligently to position the business to meet market demand. The strength in the medical and industrial markets is expected to continue in 2022, and we have increasing confidence in incremental recovery in commercial aviation. We will continue to provide innovative solutions that push the boundaries of application engineering and materials science to meet the needs of our customers across all of the end markets we serve. Our key-run technology, which supports our proprietary self-lubricating bearings, for example, was selected to support NASA's historic launch of the James Webb Space Telescope. Our precision product segment is in a state of positive transition as we continue to streamline the organization, improve our business, and advance new product development efforts. We have recently completed two successful demonstrations with an overseas customer for our FireBurst height-of-burst sensor technology, leading to opportunities for commercial deliveries in the near term. Regarding JPF, we are laser-focused on continuing to fulfill our DCS funnel. Although we expect lower JPF sales over time, we are pursuing several meaningful DCS opportunities that are expected to increase our backlog and extend the life of the program. Ultimately, however, we anticipate offsetting the reduced volume with organic growth in other areas of our business. In addition, we continue to make substantial progress on our autonomous logistics technologies, Cargo UAV unmanned aerial system and KMAX Titan aerial system in partnership with Near Earth Autonomy. Moving to our structure segment, we have made meaningful progress in improving the financial performance of the business in this segment. We have accomplished this through strong deployment of our operations excellence model and believe there is significant opportunity for further enhancement. Our teams in Jacksonville, Wichita, and Vermont have embraced our model and are seeking opportunities to drive improved performance. In Jacksonville, for example, they are in the process of consolidating from four manufacturing plants down to two in order to eliminate excess capacity and optimize manufacturing for space and flow. In addition, they have focused their efforts on driving lean principles through their programs that has led to significant improvements in quality and on-time delivery. The results of these efforts were important enough to be recognized by Sikorsky, which increased the quantities from those originally planned in our follow-on multi-year contract for Black Hawk Toxic production awarded in December. Now let me highlight several exciting innovations underway as a result of listening to our customers and helping them solve their toughest problems. In our engineered product segment, we began manufacturing products in the first quarter utilizing our proprietary titanium diffused hardening process, which provides the benefits of titanium alloys while extending service and improving hardness, durability, and wear characteristics for a wide range of end markets outside of aerospace and defense. Our team is actively exploring a variety of medical applications, including those in orthopedics, while fielding requests for applications from Formula One racing teams and weapons accessory manufacturers. In our precision product segment, we are extremely excited to unveil our new cargo UAV unmanned aerial system in the third quarter. This is a purpose-built, fully autonomous, medium lift, logistics vehicle designed to be easily deployed and provide cost-effective, cargo hauling up to 800 pounds and up to 523 nautical miles when empty. Our initial addressable market is the U.S. military and special operations commands. In longer term, the platform capabilities lend themselves to a wide range of commercial applications, such as servicing oil platforms, search and rescue, and middle-mile delivery for logistics companies. We have had several companies looking to partner with us to help provide value-added capabilities, which could expand the use applications for this vehicle. In addition, we have received direct inquiries from U.S. and international military customers, and we're working to secure initial orders for the program. Finally, we are proud to announce that Cargo UAV Unmanned Aerial System was asked to participate in Phase 2 of the U.S. Air Force Agility Prime Program, a significant accomplishment for the team and validation as to the interest of the U.S. military. These are just some of our exciting growth opportunities that our command team will continue to execute against. Looking ahead, we feel confident the commercial aerospace market is rebounding as the economy continues to recover. We are seeing stronger demand in key and markets, especially in aviation, medical, and industrial, which are expected to benefit our very profitable engineered product segment. Precision products will continue to transform, advancing applications of Command's core competencies in precision manufacturing, sophisticated measuring equipment, and fully autonomous flight. Our structure segment will continue to get operationally healthier and focus on advanced composite applications. We are extremely excited for what's on the horizon with several of our new innovations as we position the company for best-in-class performance. Lastly, we will also continue to take a disciplined approach in identifying and pursuing the right strategic acquisitions. Now I will turn the call over to Jamie for a more detailed discussion of our financial results.