SOURCE: Esterline Technologies

Esterline Technologies

December 10, 2009 16:00 ET

Esterline Reports FY09 Earnings From Continuing Operations $107.2 Million -- $3.58 per Share -- on $1.43 Billion Sales

Performance Includes an $.08 Fourth Quarter Tax Benefit

BELLEVUE, WA--(Marketwire - December 10, 2009) - Esterline Corporation, (NYSE: ESL) (www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2009 fourth quarter and full-year results for the period ended October 30, 2009. Income from continuing operations for the quarter was $37.9 million, or $1.26 per diluted share, on sales of $394.7 million. Earnings include year-end tax adjustments resulting in a benefit of $.08 per share. Year-ago income from continuing operations was $41.4 million, or $1.38 per diluted share, on sales of $404.4 million. Including discontinued operations, fourth quarter fiscal 2009 net earnings were $34.5 million, or $1.15 per share, compared with $43.9 million, or $1.46 per share, last year.

For the full year, Esterline reported income from continuing operations of $107.2 million, or $3.58 per diluted share, compared with $113.5 million, or $3.80 per diluted share last year. Net earnings were $119.8 million, or $4.00 per share in FY2009, compared with $120.5 million, or $4.03 per share last year. FY2009 net sales were $1.43 billion compared with $1.48 billion a year ago.

Brad Lawrence, Esterline CEO, said the company's performance "...exceeded our expectations due primarily to a strong finish from our Canada-based avionics operation where R&D investments in the new T-6B military trainer cockpit and C-130 avionics retrofit programs are beginning to pay off." Lawrence added that the seamless integration of UK-based Racal Acoustics, acquired earlier in the year, enabled that operation to "...outperform our first-year expectations."

He also said that a tight focus on cost control and pricing discipline at all of our operations "...helped us sustain margins and keep a lid on expenses during the year."

Gross margins in FY2009 were 32.4% compared with 33.1% last year, and selling, general and administrative expenses held at $239 million for both years. FY2009 research, development and engineering expenses (R&D) totaled $66.3 million, or 4.6% of sales, compared with $86.8 million, or 5.9% of sales, in FY2008. This continued a trend toward more normalized R&D levels following several years of significant investments to secure important positions on a number of new programs. Lawrence added that the company "...continues to invest in the consolidation of our capabilities to improve operational efficiencies."

Lawrence said that Esterline's solid balance sheet, ability to generate cash from operations, and its $1.1 billion backlog "...puts us in a strong position to benefit as market conditions improve." He also noted that Esterline's balanced business mix helped dampen the impact of the commercial air transport and business jet market downturn in FY2009, saying that Esterline expects these headwinds to lessen in the second half of FY2010.

FY2010 Outlook

Throughout FY2009, the company generated progressively stronger quarterly results following a soft first quarter. We expect FY2010 to unfold in a similar manner. Anticipated lower margin sales mix early in the year, combined with extended holiday shutdowns and a higher tax rate indicate similar results to last year's first quarter. We expect to be well positioned for improved performance in the remainder of the year. FY2010 annual revenue is expected to grow 3% to 5% with fully diluted earnings per share in the range of $3.20 to $3.45. The effective tax rate for FY2010 is anticipated to be in the low- to mid-20% range, compared with the 11.2% rate in FY2009.

Conference Call Information

Esterline will host a conference call to discuss this announcement today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The U.S. dial-in number is 866.543.6405; outside the U.S., use 617.213.8897. The pass code for the call is: 94459594.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should" or "will," or the negative of such terms, or other comparable terminology. These forward-looking statements are only predictions based on the current intent and expectations of the management of Esterline, are not guarantees of future performance or actions, and involve risks and uncertainties that are difficult to predict and may cause Esterline's or its industry's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Esterline's actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements due to risks detailed in Esterline's public filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K.

ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations (unaudited)
In thousands, except per share amounts


                              Three months ended      Fiscal year ended
                              Oct 30,     Oct 31,     Oct 30,   Oct 31,
                               2009        2008        2009       2008
                            ----------  ----------  ----------  ----------
Segment Sales
  Avionics & Controls       $  204,222  $  173,459  $  672,828  $  611,467
  Sensors & Systems             83,962      89,987     339,732     384,180
  Advanced Materials           106,549     140,904     412,878     487,525
                            ----------  ----------  ----------  ----------

Net Sales                      394,733     404,350   1,425,438   1,483,172

Cost of Sales                  264,781     263,989     963,589     992,853
                            ----------  ----------  ----------  ----------
                               129,952     140,361     461,849     490,319
Expenses
  Selling, general and
   administrative               65,592      61,200     239,630     239,282
  Research, development and
   engineering                  15,710      18,660      66,270      86,798
                            ----------  ----------  ----------  ----------
  Total Expenses                81,302      79,860     305,900     326,080

Other
  Other expense                     24          --       7,970          86
                            ----------  ----------  ----------  ----------
  Total Other                       24          --       7,970          86
                            ----------  ----------  ----------  ----------

Operating Earnings From
 Continuing Operations          48,626      60,501     147,979     164,153

  Interest income                 (685)     (1,077)     (1,634)     (4,374)
  Interest expense               7,319       7,405      28,689      29,922
  Gain on derivative
   financial instruments            --          --          --      (1,850)
                            ----------  ----------  ----------  ----------
Other Expense, Net               6,634       6,328      27,055      23,698
                            ----------  ----------  ----------  ----------

Income From Continuing
 Operations Before Income
 Taxes                          41,992      54,173     120,924     140,455
Income Tax Expense               4,018      12,582      13,511      26,563
                            ----------  ----------  ----------  ----------
Income From Continuing
 Operations Before Minority
 Interest                       37,974      41,591     107,413     113,892
Minority Interest                  (81)       (154)       (217)       (383)
                            ----------  ----------  ----------  ----------

Income From Continuing
 Operations                     37,893      41,437     107,196     113,509

Income (Loss) From
 Discontinued Operations,
 Net of Tax                     (3,392)      2,445      12,602       7,024
                            ----------  ----------  ----------  ----------

Net Earnings                $   34,501  $   43,882  $  119,798  $  120,533
                            ==========  ==========  ==========  ==========


Earnings Per Share - Basic:
  Continuing Operations     $     1.27  $     1.40  $     3.61  $     3.85
  Discontinued Operations         (.11)        .08         .42         .23
                            ----------  ----------  ----------  ----------

Earnings Per Share - Basic  $     1.16  $     1.48  $     4.03  $     4.08
                            ==========  ==========  ==========  ==========

Earnings Per Share - Diluted:
  Continuing Operations     $     1.26  $     1.38  $     3.58  $     3.80
  Discontinued Operations         (.11)        .08         .42         .23
                            ----------  ----------  ----------  ----------

Earnings Per Share
 - Diluted                  $     1.15  $     1.46  $     4.00  $     4.03
                            ==========  ==========  ==========  ==========

Weighted Average Number
 of Shares Outstanding
 - Basic                        29,763      29,635      29,717      29,507

Weighted Average Number
 of Shares Outstanding
 - Diluted                      30,034      29,955      29,951      29,908




Consolidated Balance Sheet (unaudited)
In thousands                                       Oct 30,       Oct 31,
                                                    2009          2008
                                                ------------  ------------

Assets
Current Assets
  Cash and cash equivalents                     $    176,794  $    160,645
  Accounts receivable, net                           270,976       297,506
  Inventories                                        275,282       261,973
  Income tax refundable                                7,638         5,567
  Deferred income tax benefits                        31,434        37,702
  Prepaid expenses                                    17,425        13,040
  Other current assets                                17,048           897
                                                ------------  ------------
     Total Current Assets                            796,597       777,330

Property, Plant and Equipment, Net                   263,251       204,462

Other Non-Current Assets
  Goodwill                                           736,808       576,861
  Intangibles, net                                   422,082       290,440
  Debt issuance costs, net                             7,136         7,587
  Deferred income tax benefits                        79,114        55,821
  Other assets                                         9,259         9,601
                                                ------------  ------------
                                                $  2,314,247  $  1,922,102
                                                ============  ============

Liabilities and Shareholders' Equity
Current Liabilities
  Accounts payable                              $     82,304  $     89,807
  Accrued liabilities                                191,667       210,422
  Credit facilities                                    5,896         5,171
  Current maturities of long-term debt                 5,409         8,388
  Deferred income tax liabilities                      7,294         2,889
  Federal and foreign income taxes                     1,669         4,442
                                                ------------  ------------
     Total Current Liabilities                       294,239       321,119

Long-Term Liabilities
  Long-term debt, net of current maturities          520,158       388,248
  Deferred income taxes                              130,456        97,830
  Pension and post-retirement obligations             94,308        68,966
  Other liabilities                                   19,334        16,801

Minority Interest                                      2,731         2,797

Shareholders' Equity                               1,253,021     1,026,341
                                                ------------  ------------
                                                $  2,314,247  $  1,922,102
                                                ============  ============