Saturday, September 16, 2017

Kaydon to pay special dividend; shares jump

Kaydon to pay special dividend; shares jump

Stock Market Predictions

(Global Markets) - Specialty ball-bearing maker Kaydon Corp (KDN.N) posted weaker-than-expected quarterly results, but declared a special dividend that sent its shares up as much as 9 percent.

The company -- which has returned $105 million to shareholders through regular cash dividends in the last five years -- will pay a special dividend of $10.50 a share.

"People are likely looking through the near-term operating performance and at the special dividend, and trading the stock up on that," William Blair & Co analyst Samuel Eisner said.

Kaydon will fund the $337 million special dividend through available cash and existing credit.

The company, which makes specialty ball bearings for wind turbines, also forecast 30 percent growth in wind energy revenue for the year, helped by a pick up in turbine installations before a production tax credit expires in 2012.

The production tax credit (PTC) gives a credit of 2.1 cents per kilowatt-hour to an owner of a wind-energy project once a wind turbine begins to produce electricity, and has been a major driver of growth of wind energy in the United States.

"There's normally a rush to get wind energy installations in before the expiration of the tax credit," Eisner said.

He added that the benefit the company was seeing in 2012 was from the industry stocking up before the credit runs out.

For 2012, Kaydon, which also caters to the industrial, aerospace, medical and electronic equipment industries, expects wind energy sales to grow at least 30 percent to $70 million, versus a 44 percent drop in 2011.

Net sales for the fourth quarter rose 3 percent to $108.1 million, but missed analysts' estimates of $122.1 million, as wind energy sales fell more than a fifth and some shipments were deferred.

The deferred wind energy shipments are expected to be released in the first half of 2012, Kaydon said.

Net profit fell by a fourth to $8.7 million, or 27 cents a share.

The Ann Arbor, Michigan-based company's shares jumped to $38.62 on the New York Stock Exchange, their highest since July last year. The stock has gained a third of its value since its year-low last October, excluding Friday's gains.

(Additional reporting by Sayantani Ghosh in Bangalore; Editing by Viraj Nair, Maju Samuel)

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