Kaman Corporation (KAMN - Free Report) recently announced a plan to restructure its Aerosystems business, for improving profitability. The move is in sync with the company’s existing initiatives to strengthen the Aerosystems business’ capacity utilization and operating efficiency.
The company, reportedly, operates under two segments, namely, Distribution and Aerospace. The Aerospace business has exhibited steady growth over time, accounting for 35.3% of total revenues in 2014 to 38.8% in 2016. Within this segment, the company deals with manufacturing of composite aerostructure, complex assembling, tooling design and manufacture, and conducting helicopter maintenance, repair and overhaul (MRO) activities.
A Peek Into the Headlines
Through its announced restructuring plans, Kaman intends to shut down its Composite Structures division in Bloomfield, CT, by transferring its operations to Wichita, KS-based composites facility and Bloomfield, CT-based Air Vehicles and MRO division.
Additionally, Kaman intends to transfer fabricated products operations at its Hyde facility in the U.K. to Darwen facility. This move might result in workforce reduction.
Financial Aspects of This Restructuring
The Aerosystems restructuring efforts, initiated in the third quarter of 2017, are anticipated to be completed in the fourth quarter of 2018. During this implementation phase, Kaman expects to incur pre-tax restructuring charges of $8-$10 million, including $5.5-$6.5 million cash expenses related to facility closure and employee separation, and $2.5-$3.5 million non-cash charges related to assets impairment and inventory write-down. Of the total estimated expenses, roughly $5 million will be incurred in 2017.
Upon completion of the restructuring initiatives, Kaman anticipates realizing annualized cost savings of $4 million.