Kaman Corporation (NYSE:KAMN) Q3 2022 Earnings Conference Call November 2, 2022 8:30 AM ET
Company Participants
Kary Bare – Director-Investor Relations
Ian Walsh – Chairman, President & Chief Executive Officer
Jamie Coogan – Senior Vice President & Chief Financial Officer
Conference Call Participants
Steve Barger – KeyBanc Capital Markets
Larry Solow – CJS Securities.
Operator
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Kaman Corporation Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session [Operator Instructions]
At this time, I would like to turn the conference over to Ms. Kary Bare. Ms. Bare you may begin.
Kary Bare
Good morning. Welcome to Kaman’s Third Quarter 2022 Earnings Call. Leading 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, please 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 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 these 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 third quarter 2022 results included on Form 10-Q 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 on our financial performance. You can find this presentation at www.kaman.com/investors/quarterly-earnings-calls.
Now, I’ll turn the call over to Ian Walsh.
Ian Walsh
Thank you, Kary. Good morning everyone, and thank you for joining us for our third quarter 2022 earnings call. I’ll start by providing highlights on the quarter and then share some operational and business updates, along with some respective accomplishments and innovations in each segment, before passing the call over to Jamie for a more detailed discussion of our financial results and outlook for the remainder of the year.
As you may be aware, in September we completed the acquisition of Aircraft Wheel & Brake, the largest in the history of our company. They joined our Engineered Products segment and will be a very meaningful part of our company going forward. When you consider 2021 results, they add approximately 10% to our sales and nearly 30% to our adjusted EBITDA. This transaction has created a unique opportunity to expand our highly engineered product portfolio by investing in a high-margin, quality asset with potential for growth.
For more than 80 years Aircraft Wheel & Brake has been a trusted provider of mission-critical wheel and brake technology, products and solutions. They have a strong OEM and aftermarket portfolio of more than 100 platforms, specializing in wheels, brakes and related hydraulic components for helicopters, fixed-wing and UAV aircraft. They provide customers proprietary design protected by intellectual property and are actively working to win new business.
One such area for growth is in carbon brakes for future military and civilian applications. The benefit of carbon brakes compared to steel brakes, are that they are lightweight, have competitive life cycle costs, offer more landings between overhauls and have increased heat tolerance. The team has been working to advance carbon brake technology, which will allow them to compete on larger business aircraft platforms and even eVTOL applications where weight is imperative.
Now, let me start the business discussion with an update on general market conditions. Demand across the commercial business and general aviation markets continues to show signs of improvement, through additional orders for our bearings, springs, seals and contacts products. In fact, sales to Boeing and Airbus were higher for the fifth quarter in a row. These trends support the higher sales and improved margins we anticipate over the next few years. The defense market is relatively stable, while our industrial and medical order rates continue to increase.
Sequentially, consolidated performance for the third quarter improved organically with higher sales and adjusted EBITDA. Performance for the period relative to our expectations was impacted by certain program execution and some supplier challenges. The teams have identified the most significant areas impacting our results and are working to correct the issues that are creating the delays. These issues are the primary driver for the downward revision in our outlook for 2022.
Engineered Products posted strong results with both sequential and year-over-year sales growth, despite some margin compression due to rising input costs and some supplier challenges that they faced. Precision Products and Structures performance fell short for the quarter due to delays associated with the part availability for one component in our JPF program, the timely satisfaction of technical design changes from our customers on some of our missile fuze programs and the recovery of our A-10 and a supplier fire which affected our BLACK HAWK program.
Gross margin for the company was 32.5%, relatively unchanged compared to the second quarter, but decreased 260 basis points from the third quarter of 2021. Compared to the prior year quarterly sales and associated gross profit were lower for our JPF and K-MAX programs and we incurred an $800,000 inventory step-up associated with the purchase accounting for Aircraft Wheel & Brake acquisition.
Our Engineered Products segment continues to deliver excellent results with quarterly sales increasing 9% compared to the third quarter of 2021 inclusive of Aircraft Wheel & Brake and $4.4 million of foreign exchange headwinds. Absent these items, sales increased 11% for the period, demonstrating the underlying strength of the segment.
Within the quarter, not only was medical demand strong, but sales of commercial bearings also improved. Order rates for many of our products also remain robust. Backlog excluding the addition from Aircraft Wheel & Brake has increased nearly 40% since the beginning of the year.
Our employees continue to provide innovative solutions that push the boundaries of application engineering, material science and process improvement, allowing us to meet the needs of our customers. Recently, we have been working on Industry 4.0 tools and techniques, the next evolutionary step in lean business practices to streamline our capabilities, to drive improved throughput and performance.
Additionally, we just implemented an advanced manufacturing technology cell in the third quarter. This is a dedicated team with dedicated equipment that focuses on creating new processes to improve productivity and margin performance across a range of our most challenging products. They are also developing cost-minimization and industrialization strategies for new products, by leveraging the knowledge of process and manufacturing subject matter experts. This allows us to drive efficiency in the product manufacturing without causing disruption and waste in our production line.
We have seen early successes since implementation of this cell, where we have identified savings of 50% to 80% on certain process steps for two of our more complex bearing products. Our Precision Products segment continues its important transition. Sales and margin in the third quarter increased sequentially, but we were slightly below our expectations.
During the quarter, we experienced a delay in receipt of a component from one of our suppliers, which changed the timing of shipments for JPF to later in the year than we had previously expected. This accounts for a meaningful portion of the downward revision in our free cash flow expectations for the full year 2022.
In October, we are very excited to announce that we reached another milestone in our strategy to expand autonomous technology in this segment, with our purpose-built KARGO UAV unmanned aerial system. The United States Marine Corps selected Kaman to build a KARGO UAV prototype for their MULS-A program. The Marine Corps will be funding the build for the prototype in 2023, and once completed it will undergo a field-user capability assessment.
We will continue to take a stage-gate approach to R&D funding and have released an additional $4 million for this program in the third quarter. We believe this will be a major growth driver for our Air Vehicles business, and look forward to providing an affordable reliable and maintainable logistics vehicle for the autonomous market.
We are planning the first flight of our full-scale KARGO UAV demonstrator in the fourth quarter. Our initial addressable market for this fully autonomous medium-lift vehicle is the US military and Special Operations commands, along with a wide range of commercial applications, such as supporting oil and gas platforms and pipelines, search and rescue, humanitarian relief and the middle-mile delivery for logistics companies. There is no question that, there is a very strong demand signal for our KARGO UAV across the Department of Defense and specific commercial operators.
Our Structures segment continues to focus on strengthening operating margins and seeking new more profitable programs that fit our core capabilities. In fact, we have successfully executed on our plan to diversify this segment’s program base by securing multiple military aftermarket contracts. We expect contribution from this higher-margin work to begin in 2023.
For the quarter, sales and margins were higher than the second quarter of 2022. However, challenges with suppliers and execution in certain programs delayed the level of recovery that we expected in this segment, and our ability to meet our plan for the quarter, and the remainder of the year.
Within Structures, we continue to take the necessary steps to right-size our businesses. In Jacksonville, we have finished the facility consolidation. And in the third quarter, we sold our Mexico operations. This has lowered operating costs, while improving capacity utilization.
In Vermont, we continue to see strong performance. The team has been focusing on transforming the culture through improved communications, and training, successfully applying lean tools and process improvements and winning new profitable business. This has resulted in an average productivity year-to-date of 85%, increasing from 81% last year, which has greatly improved their profitability.
Looking ahead, we remain confident that, the return of the commercial aerospace market and the durable demand in aviation, medical and industrial markets will benefit our high-margin Engineered Products segment. Precision Products will continue to transform and is quickly shifting to autonomous systems, and next-generation safe and arm products. Additionally, our Structures segment will continue to benefit, from our focus on operations excellence, and the addition of new more profitable programs, including more aftermarket. We are excited about the opportunities before us as we position the company for best-in-class performance.
Lastly, we are very excited about the strategic investment in Aircraft Wheel & Brake and have been very pleased, with how smooth the integration has been thus far. We are now laser-focused on de-levering our balance sheet as quickly as possible, so that we can continue to assess strategic opportunities that provide the highest return to our shareholders.
Now, I will turn the call over to Jamie for a more detailed discussion of our financial results.
Jamie Coogan
Thank you, Ian, and good morning, everyone. Today, I will discuss our third quarter results and provide an update on our outlook for the year. On a consolidated basis, our net sales in the third quarter were $172 million, compared to $161 million in the second quarter of 2022, and $180 million in the third quarter of 2021. The decline of 4% year-over-year was largely due to lower sales for our JPF and K-MAX programs, partially offset by increased sales of commercial aerospace bearings.
Adjusted EBITDA in the third quarter was $20.6 million, or a margin of 12% compared to $16.4 million, or a margin of 10.2% in the second quarter of 2022. Sequential improvement resulted from higher sales and margins for our JPF program, and higher volumes of commercial aerospace bearings in our Engineered Products segment. Additionally, we saw a benefit from our sales and margin on our UH-60 program, in our Structures segment, as the team in Jacksonville started the process of recovering, from the supplier fire that impacted their results in the second quarter. These increases were partially offset by lower profit for our K-MAX spares and support program in our Precision Products segment.
When compared to the third quarter of 2021, adjusted EBITDA decreased 26% and margin declined 350 basis points. The decline resulted primarily from lower JPF sales volume. Additionally, sales and margin for our defense bearings and K-MAX program were lower. These decreases were partially offset by robust sales in the third quarter of 2022 for our commercial bearings.
Now, I’d like to walk through each of our segments beginning with Engineered Products. During the third quarter, we incurred an inventory step-up of approximately $800,000 related to the acquisition of Aircraft Wheel & Brake, with the remaining $2.3 million of inventory step-up to be taken during the fourth quarter. Adjusted EBITDA for the third quarter increased to $21.8 million, with a margin of 23.7%.
Compared to the second quarter, volumes increased in the third quarter for bearing products serving commercial aviation, partially offset by lower sales and associated margins for engine aftermarket products and industrial bearings. Year-over-year sales increased 11%, excluding the benefit of $2.7 million of sales from Aircraft Wheel & Brake, and the $4.4 million negative impact from foreign currency exchange rates.
Adjusted EBITDA increased $300,000 and margin decreased 180 basis points. Sales increased at a slightly lower combined margin for commercial bearings and springs seals and contacts for industrial applications. For defense and industrial bearings, sales and margins decreased. Incremental margin opportunities have been slightly tempered by some supplier challenges and rising input costs in this segment. However, we are pleased with the way our teams have been managing these issues to limit the disruption, while continuing to meet our customer requirements. The demand for our spring steels and contacts as well as our commercial bearing products have continued to improve.
Looking ahead, we expect continued strength in this market for the remainder of 2022. Order intake during the quarter, was robust with the backlog increasing nearly 40%, since the beginning of the year, excluding the addition of Aircraft Wheel & Brake.
In our Precision Products segment, adjusted EBITDA for the third quarter was $6.5 million, with a margin of 14.1%. Sequentially, results increased in the third quarter, due to higher sales and associated gross profit for our JPF program. This was partially offset by a decrease in sales and margins for K-MAX spares and support in our SH-2 program.
Year-over-year quarterly adjusted EBITDA declined $8.3 million and margin decreased 920 basis points, primarily due to lower JPF sales and associated gross profit when compared to the third quarter of 2021, which had a much larger volume for this program. Additionally, sales and margin declined for our K-MAX program and we had higher R&D expenses. We are revising our expected JPF deliveries for 2022 downward to 20,000 to 25,000 fuzes.
Deliveries planned for the second half of the year have been postponed slightly, due to a delay in a component from one of our suppliers, shifting cash collections for some of the deliveries into 2023.
In Structures adjusted EBITDA for the third quarter was $900,000 with a margin of 2.8%. Compared to the second quarter sales increased 13% and adjusted EBITDA increased by $900,000. Results improved primarily, due to increased sales and margin for our Sikorsky UH-60 BLACK HAWK program.
Year-over-year results declined from an adjusted EBITDA of $1.2 million and a margin of 3.7% mostly due to lower sales and associated margin for certain composite programs. This was partially offset by higher sales and margin for our Boeing, P-8A and Rolls-Royce programs.
For the remainder of the year, supplier challenges and program execution are delaying the recovery we expect in this segment, which will impact planned earnings and cash flow performance for the full year. SG&A increased $9.7 million compared to the third quarter of 2021 to $49 million or 28% of net sales as a result of higher corporate development costs mostly associated with the acquisition of Aircraft Wheel & Brake.
When excluding Aircraft Wheel & Brake, SG&A decreased to $38.1 million, which was 23% of sales as we continue to manage costs and seek opportunities to increase efficiencies across the organization. Diluted earnings per share were $0.02 for the quarter, which was lower than the $0.14 in the second quarter of 2022 and lower than the $0.53 in the third quarter of 2021.
On an adjusted basis, diluted earnings per share were $0.32 compared to $0.31 in the second quarter of the year. Most of the $0.30 adjustment in the third quarter of 2022, relates to costs associated with the acquisition of Aircraft Wheel & Brake. For the first nine months, adjusted diluted earnings per share decreased from $1.45 per share in 2021 to $0.77 per share. The decline from the first nine months of 2022, was primarily within our Precision Products segment with an impact from JPF of $0.67 per share and increased R&D spend for this segment of $0.13 per share. These reductions were partially offset by strong performance from the Engineered Products segment, which represented an increase of $0.37 per share.
During the quarter, we had cash usage from operations of $6.7 million. This was driven by cash payments and related costs associated with our acquisition of Aircraft Wheel & Brake and delayed collections in Structures, due to the program execution and supplier delays we’ve discussed.
Now, I’d like to discuss our outlook for 2022. Given the favorable sales mix and strength we have seen, sales and margins in our Engineered Products segment are anticipated to be in line with our prior expectations for the year. In Precision Products, our plan for the year includes the sale of four K-MAX aircraft, with an expectation that we will sell the two remaining aircraft prior to year-end.
Profit expectations for this segment have decreased due to the lower margin realized year-to-date on our missile fuze program and K-MAX aftermarket spares and support, as well as the $4 million of additional R&D for KARGO UAV of which $2.5 million is expense and $1.5 million is for CapEx. Of these amounts, we expect approximately $1.1 million of additional expense and $600,000 of additional CapEx to occur in the fourth quarter. Lastly, cash flow performance for the segment is expected to be significantly lower due to the delay in supply of a component for our JPF program, which has caused a shift in shipments to later in the fourth quarter postponing a meaningful portion of our cash receipts, to the first quarter of 2023.
Within Structures, we are experiencing challenges with supplier and program execution at our Jacksonville and Wichita sites, which has limited the recovery that we had previously anticipated and will result in lower profitability, and cash flow generation compared to our prior expectations.
Finally, our revised guidance also includes the expected results from Aircraft Wheel & Brake and the incremental interest expense we expect in the fourth quarter, as a result of the transaction. Our full year outlook is updated as follows: sales in the range of $695 million to $710 million; adjusted EBITDA in the range of $72.5 million to $77.5 million; EPS in the range of $0.95 per share to $1.10 per share; and free cash flow in the range of a use of $10 million to a generation of $5 million.
With that, I’ll now turn the call back over to Ian for closing remarks.
Ian Walsh
Thank you, Jamie. We recognize the challenges we face today and our teams have the capabilities and the resources to work through our program and supplier issues, including enhancing our customer interactions. I am confident, we are laying the groundwork for a much stronger company that will generate improved EBITDA margin, free cash flow conversion and return on invested capital leading to exceptional shareholder returns.
I would again, like to welcome the Aircraft Wheel & Brake team to Kaman and to thank all of our dedicated and talented employees, who are working hard to meet our goals enabling our customers to achieve greater in all that they do every day.
With that, I’d like to open the line for questions. Operator, can we have our first question, please?
Question-and-Answer Session
Operator
[Operator Instructions] Our first question or comment comes from the line of Steve Barger from KeyBanc Capital Markets. Mr. Barger, your line is open.
Steve Barger
Thank you. Good morning. Jamie, if I look at the full year guide the implied 4Q will be the highest revenue quarter of the year, but EPS will be the second lowest. Obviously, that implies deterioration in some or all of the segments sequentially. So does Engineered hold up while Precision and Structures deteriorate sequentially, or can you talk us through, what we should expect on a segment basis?
Jamie Coogan
So, Engineered should hold up pretty well, Steve. And the expectation is that some of the incremental R&D spend for KARGO is going to hit in the fourth quarter, which will drive that down. There’s going to be probably some pressure on our K-MAX and spares performance in the fourth quarter driving Precision Products down, as well as the potential for some continued deterioration in our legacy missile fuze programs, that we had talked about impacting third quarter results. There’s some expectation that that will continue in the period as well. Structures performance, also as we go through that recovery, there’s some downward pressure there as well. So, largely Engineered Products in line. Precision Products and Structures, are driving that down.
Steve Barger
And you’re expecting a loss in Structures in 4Q, on the operating margin line?
Jamie Coogan
On the operating margin line, it’s going to be a close call there. We’ll probably be closer to breakeven, but it could be a loss.
Steve Barger
Okay. The negative contribution from JPF was $0.17 in the first quarter, $0.53 in 2Q and now $0.67 in 3Q. And sorry, if I missed this in your comments, but what do you think that will be in 4Q? And how should we think about the negative contribution from that program in 2023?
Jamie Coogan
Steve, I’ve got to go back. I think in the very first quarter fourth quarter results, we put that in around about an 86% impact year-over-year overall from JPF on a downward trajectory.
Again, given the shift in our JPF performance, that’s really impacting our cash flow expectations for that program, not so much our profit expectations. There’s been a little bit of deterioration. But largely, I think we still expect it to be about a $0.86 drag, plus or minus over the course of the full year.
Steve Barger
Yeah. It was $0.67 alone, in 3Q, right?
Jamie Coogan
No, that was year-to-date, Steve.
Steve Barger
Oh! That’s year-to-date.
Jamie Coogan
Yeah.
Steve Barger
Okay. I understand. So I can – Okay.
Jamie Coogan
Yeah.
Steve Barger
Obviously, the year hasn’t unfolded the way you guys would have liked to see. And I’m sure you don’t want to talk about 2023 yet, but do you have any kind of framework for investors to think about in terms of the roll-off of strong contributors versus the timeline for fixing the non-contributors? I guess, just broadly do you expect revenue growth? Can you expand gross margin from where this year ends? Just anything in terms of how you’re thinking about 2023?
Ian Walsh
Hi, Steve. Good morning. This is Ian and I apologize, everybody for the technical glitches. Yeah. So we’re already obviously super focused on 2023. We had some speed bumps this quarter for sure. The teams are laser-focused on correcting those problems, which I think we’ll be in good shape by year-end.
Regarding 2023, Steve, couple of things. One is we’re in our kind of going into our third year, around operational excellence across the board, a lot of training, a lot of focus, a lot of improvement so far. We’ve got demonstrated examples and even quite frankly in our Structures business as well as some historic performance, Vermont being a shining star right now and some really good work going on in Engineered Products businesses, relative to Industry 4.0.
So a lot of efficiency that we expect to pick up next year, as we continue to kind of builds that capability inside. I think about the top line for next year I think we’re still putting those plans together. We see growth in most of our end markets which is nice, especially on the medical and commercial side which are all rebounding nicely.
So again, we always lag the market there, but we’re seeing a nice up-tick with single aisles and double aisles that will come online, I think probably in 2024 and 2025 a little bit there. So top line I think we’ll be in a — I can’t tell you the exact number there. Bottom-line we’re definitely looking to see improvement year-over-year. We’ve got strong five-year plans. Teams all know what those targets are. We just hit a couple of speed bumps this quarter.
Jamie Coogan
Yeah. And Steve I’ll just add to that. From a cost perspective, we’re going to continue to look really hard at our cost structure and make necessary changes there. And so as we get closer to 2023, we should be able to provide maybe some incremental detail on that as well.
Steve Barger
All right. Thanks. I’ll get back in line.
Jamie Coogan
Thank you, Steve.
Ian Walsh
Thanks Steve.
Operator
Thank you. Our next question comment comes from the line of Larry Solow from CJS Securities. Mr. Solow, your line is open.
Kary Bare
Hey good morning, Larry.
Larry Solow
Hi everybody. Could you just — lot of moving parts, I realize. But just on the guidance can you just take a step back just and clarify. So essentially you’re lowering EBITDA just on the EBITDA line just to make it simpler lowering the basically midpoint $75 million from $96 million, so $20 million or so.
Can you maybe for starters tell us I assume the Wheel & Brake business has a positive contribution in Q4? I don’t know if it did in the two weeks, but I imagine in Q4 there will be something a few million.
And then, is it — Engineered Products sounds like it certainly was a little — it was strong backlog strong but it seemed like it was a little bit slower. I thought, we’d get a sequential up-tick.
So you mentioned that you still expect that to be in line with full year projections. So is that net of the Wheel & Brake business? And then, is essentially the other $20 million then coming out of mostly Precision Products? Can you just give us a little more clarification on that?
Jamie Coogan
Yeah. So on that we do expect to have a positive contribution from Aircraft Wheel & Brake, as that comes online. There’s some inefficiencies that result just through acquisition transition right some overhead rate and sales mix challenges.
But roughly that’s going to be in line with their historical performance maybe slightly lower for the full year period. With that there is — when you look at the guide for the full year it is still a pretty wide range because there are still a number of variables.
And so what we’re trying to make sure is we account for those variables as we provide that guide for the full year. The biggest of those and we talked about it on the call, we’ve got the supply component issue with JPF that has shifted out some of our deliveries.
So what we’re trying to account for there is, because of that, there’s a shift potentially in some deliveries later in the year. There could be some potential incremental shift there. We want to account for that as part of the guide.
And additionally, as we mentioned Larry, it’s really additional risk at Precision Products and Structures on some of our longer-term programs primarily focused on those Missile Fuze programs as well as some incremental absorption on some of our other long-term Structures programs there that could provide some challenge in the fourth quarter.
Larry Solow
And on the shift on the JPF specifically, does that the timing shift it sounds like you may still recognize a lot of that revenue in this year but you just won’t get the cash flow. Is that correct?
Jamie Coogan
Yeah.
Larry Solow
So it’s more of a cash flow hit?
Jamie Coogan
Yeah. Larry, it’s a more significant and meaningful cash flow impact for the full year just given the shift in timing of those deliveries. And what we are trying to account for is that there could potentially be one more shift in that delivery as we’re trying to recover from the supply component issue that resulted in that initial shift. The team feels confident that they’ve resolved that issue and they’re working hard to make sure that we meet those deliveries. But again, we just want to make sure that as we go to the back half of the year we’re accounting for all the relative risks.
Larry Solow
Yes, absolutely. And on the supply chain issues it sounds like it’s a little bit — it’s a mixture some external and some maybe internal as well. And maybe internally perhaps you have a better visibility or gauge on that. But Ian, sounds you guys sound pretty confident that most of these issues — I realize the environment is really tough but it sounds like where we stand today you, kind of, see light at the end of the tunnel and resolution with most of these stuff by if not the end of the year by early next year?
Ian Walsh
Yes, let me — Larry just some more color there. So we’ve had the benefit of time on our side. The supplier fire happened back in March. That kind of directly impacted our Sikorsky program. That’s meant a lot of outsourced parts there that we had to go second source. So those are all coming online now, that’s good.
Jamie mentioned that there was a single part literally for JPF, a very critical part. We had a failure. That has actually literally been corrected and approved. So now it’s just a question of production ramp-up to get those things delivered. And then we’ve got constraints around boats and paperwork and stuff like that. But again, those are all coming online.
The last one really that we’ve been wrestling with is a legacy program A-10 program. This is working with our customer. A lot of challenges there. Everything from a technical data package changes, old tooling, old design, coming online new testing. So we’ve been working through all that. And again time is on our side here. So we’re literally working through the final kind of fixes and changes right now to deliver those products between Q4 and early Q1.
Larry Solow
Okay. Great. Ian while I’ve got you here you’ve in previous calls shared gave us some updates on some of the new products maybe that’s in the pipeline. You talked a lot about the KARGO UAV this morning and it sounds like certainly some exciting upcoming milestones and moving and progress there. Anything else? I think the Titanium products you had spoken about the last couple of calls or just any newer products new introductions that we should sort of look forward to over the next if not in 2023 and 2024?
Ian Walsh
Yes, I’ll give you just kind of a range of some of our exciting kind of product developments here. First, obviously, KARGO is a big one for us. A major milestone win by the team with the Marine Corps. We are working also hand-in-hand with several commercial operators. We anticipate some really nice results there in terms of help and support and potentially orders. So a lot of opportunity there on KARGO side for sure both military and commercial.
Shifting over to some other things like we’ve got a lot of strong activity on the medical side with blood circulation pumps and micro pumps, really good technology there coming out of our Germany facilities. FireBurst coming online. New content on Gulfstream. Those are just a few examples of some of the great innovations, including quite frankly a lot of new players in the market when you look at eVTOL and some of the players there. So again, we’re laying some really strong groundwork. A lot of new platforms. [indiscernible] you guys know that that’s a program that’s coming out here hopefully this year maybe into next year. We’re well-positioned on both those OEMs.
Larry Solow
Great. I appreciate all the color. Thank you so much.
Jamie Coogan
Just a point of clarification on the Structures comment that was made. Again I was not accounting for the performance of our Vermont facility in there. They would actually be incrementally positive over at Structures as a result of the strong performance we’ve seen out of the Vermont facility.
Operator
Thank you. I’m showing no additional questions in the queue at this time. I’d like to turn the conference back over to Ms. Kary Bare for any closing comments.
Kary Bare
Thank you everyone for joining the Kaman Corporation third quarter earnings call today. We’re looking forward to talking with you next year about our fourth quarter results where we’ll also discuss our outlook for 2023. And with, that we are adjourned for the day.
Operator
Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.
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