BELLEVUE, WA--(Marketwire - May 31, 2012) - Esterline Corporation (
Highlights:
- Discrete items add $0.15 per share (see Table 1)
- FY12 guidance adjusted to reflect timing
- Updated full-year guidance: $5.10 to $5.25
- Orders solid; backlog growing
- Souriau acquisition tracking to plan
- Commercial aerospace markets strengthening; defense markets stronger than expected
Esterline Corporation (
| Table 1: Effects of Discrete Items on 2nd Quarter 2012 EPS | ||||
| (Estimated tax rate 20%; 31.3 million shares) | ||||
| Earnings Per Share | $ | 1.44 | ||
| Litigation Settlement | 0.30 | |||
| Customer Bankruptcy | (0.07 | ) | ||
| Contract Assertions | (0.08 | ) | ||
| Total Discrete Items | $ | 0.15 | ||
Brad Lawrence, Esterline's Chief Executive Officer, said that excluding the discrete items, Esterline's second quarter "...came in right about where we thought it would. We had solid performance by our Sensors & Systems and Advanced Materials segments, offset by anticipated timing issues in our Avionics & Controls segment. We're still expecting a strong finish to the year, weighted heavily to the fourth quarter." Lawrence noted that steadily growing commercial aircraft build rates will benefit the company as it moves into next fiscal year. "Our order book is growing and our backlog is solid," he said.
Lawrence noted that Souriau, Esterline's France-based connector company acquired in July 2011, is performing well, reflecting strong demand across its product lines and markets, including heavy industrial, oil and gas, and nuclear. He said the integration is going well. "I can say with confidence that the combination of Souriau and Esterline has strengthened relationships with both Airbus and Boeing. Given the early stage of the commercial build cycle, we believe the timing for growing these relationships is very good." He added that Esterline's "...strong cash flow has enabled us to pay down $115 million of debt in the nine months since the acquisition."
Lawrence said that although the company's defense-related businesses will not perform to last year's levels, "...we are seeing some unexpected pockets of strength. Our U.S. countermeasure business is looking to have a solid year, and we're seeing strong sales of embedded communication intercept receivers for signal intelligence applications."
He called the company's updated full-year guidance of $5.10 to $5.25 "...realistic given how the timing of key shipments -- including foreign countermeasures, military headsets, and avionics programs -- remains difficult to call."
One of these timing issues relates to the Hawker Beechcraft bankruptcy. Lawrence emphasized that there remains significant demand for Hawker's T-6B trainer aircraft with its Esterline glass cockpit. He said, "...we're encouraged to have received preferred supplier status during what appears to be an orderly reorganization." He noted, however, that the process is in the hands of the courts and "...until we have better visibility, it's only prudent to be cautious regarding our shorter term outlook."
Lawrence said that the company's 36.6% gross margin performance in the quarter was especially encouraging given the slowdown in the Avionics & Controls segment. Gross margin as a percent of sales in last year's second quarter was 37.0% and included exceptionally strong spare parts and retrofit program sales, and the retroactive price settlement related to the 787 program mentioned above. Selling, general and administrative (SG&A) expenses as a percent of sales were 19.6% in the second quarter of 2012, compared with 16.6% a year ago. Lawrence said that, similar to last quarter, the increase was anticipated and "...also is primarily a result of our Avionics segment's performance." The increase in research, development and engineering (R&D) expenses in the quarter to 5.9% of sales from 4.9% last year primarily reflects investments in new avionics programs. The income tax rate for the second quarter of 2012 was 19.7% compared with 20.5% last year. Lawrence pointed to the company's strong cash flow and reiterated his commitment to de-levering the balance sheet to the historic levels achieved prior to the Souriau acquisition.
New orders for the second quarter of 2012 were $566.0 million compared with $462.9 million for the same period last year. Backlog was $1.31 billion compared with $1.16 billion at the end of the prior-year period.
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 866-202-0886; outside the U.S., use 617-213-8841. The pass code for the call is: 71749026.
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 | Six Months Ended | |||||||||||||||||
| Apr 27, | Apr 29, | Apr 27, | Apr 29, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| Segment Sales | ||||||||||||||||||
| Avionics & Controls | $ | 195,025 | $ | 231,532 | $ | 374,597 | $ | 423,999 | ||||||||||
| Sensors & Systems | 184,683 | 85,181 | 356,355 | 162,236 | ||||||||||||||
| Advanced Materials | 125,123 | 118,564 | 244,761 | 219,841 | ||||||||||||||
| Net Sales | 504,831 | 435,277 | 975,713 | 806,076 | ||||||||||||||
| Cost of Sales | 320,308 | 274,330 | 633,109 | 513,007 | ||||||||||||||
| 184,523 | 160,947 | 342,604 | 293,069 | |||||||||||||||
| Expenses | ||||||||||||||||||
| Selling, general and administrative | 98,950 | 72,409 | 193,647 | 138,501 | ||||||||||||||
| Research, development and engineering | 29,545 | 21,251 | 55,940 | 40,870 | ||||||||||||||
| Gain on settlement of contingency | (11,891 | ) | -- | (11,891 | ) | -- | ||||||||||||
| Total Expenses | 116,604 | 93,660 | 237,696 | 179,371 | ||||||||||||||
| Operating Earnings From Continuing Operations | 67,919 | 67,287 | 104,908 | 113,698 | ||||||||||||||
| Interest income | (116 | ) | (430 | ) | (211 | ) | (770 | ) | ||||||||||
| Interest expense | 11,484 | 8,958 | 23,012 | 18,095 | ||||||||||||||
| Loss on extinguishment of debt | -- | 831 | -- | 831 | ||||||||||||||
| Income From Continuing Operations | ||||||||||||||||||
| Before Income Taxes | 56,551 | 57,928 | 82,107 | 95,542 | ||||||||||||||
| Income Tax Expense | 11,138 | 11,848 | 13,714 | 19,502 | ||||||||||||||
| Income From Continuing Operations Including Noncontrolling Interests | 45,413 | 46,080 | 68,393 | 76,040 | ||||||||||||||
| Income Attributable to Noncontrolling Interests | (222 | ) | (129 | ) | (414 | ) | (106 | ) | ||||||||||
| Income From Continuing Operations | 45,191 | 45,951 | 67,979 | 75,934 | ||||||||||||||
| Loss From Discontinued Operations, Net of Tax | -- | (37 | ) | -- | (29 | ) | ||||||||||||
| Net Earnings | $ | 45,191 | $ | 45,914 | $ | 67,979 | $ | 75,905 | ||||||||||
| Earnings Per Share - Basic: | ||||||||||||||||||
| Continuing Operations | $ | 1.47 | $ | 1.51 | $ | 2.22 | $ | 2.50 | ||||||||||
| Discontinued Operations | .00 | .00 | .00 | .00 | ||||||||||||||
| Earnings Per Share - Basic | $ | 1.47 | $ | 1.51 | $ | 2.22 | $ | 2.50 | ||||||||||
| Earnings Per Share - Diluted: | ||||||||||||||||||
| Continuing Operations | $ | 1.44 | $ | 1.47 | $ | 2.18 | $ | 2.44 | ||||||||||
| Discontinued Operations | .00 | .00 | .00 | .00 | ||||||||||||||
| Earnings Per Share - Diluted | $ | 1.44 | $ | 1.47 | $ | 2.18 | $ | 2.44 | ||||||||||
| Weighted Average Number of Shares Outstanding - Basic | 30,669 | 30,496 | 30,650 | 30,422 | ||||||||||||||
| Weighted Average Number of Shares Outstanding - Diluted | 31,319 | 31,160 | 31,238 | 31,086 | ||||||||||||||
| ESTERLINE TECHNOLOGIES CORPORATION | |||||||||||||||||
| Consolidated Sales and Income from Continuing Operations by Segment (unaudited) | |||||||||||||||||
| In thousands | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| Apr 27, | Apr 29, | Apr 27, | Apr 29, | ||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| Segment Sales | |||||||||||||||||
| Avionics & Controls | $ | 195,025 | $ | 231,532 | $ | 374,597 | $ | 423,999 | |||||||||
| Sensors & Systems | 184,683 | 85,181 | 356,355 | 162,236 | |||||||||||||
| Advanced Materials | 125,123 | 118,564 | 244,761 | 219,841 | |||||||||||||
| Net Sales | $ | 504,831 | $ | 435,277 | $ | 975,713 | $ | 806,076 | |||||||||
| Income From Continuing Operations | |||||||||||||||||
| Avionics & Controls | $ | 18,251 | $ | 44,915 | $ | 38,314 | $ | 75,919 | |||||||||
| Sensors & Systems | 24,710 | 11,595 | 31,525 | 22,566 | |||||||||||||
| Advanced Materials | 26,160 | 22,979 | 49,233 | 38,247 | |||||||||||||
| 69,121 | 79,489 | 119,072 | 136,732 | ||||||||||||||
| Corporate expense | (13,093 | ) | (12,202 | ) | (26,055 | ) | (23,034 | ) | |||||||||
| Gain on settlement of contingency | 11,891 | -- | 11,891 | -- | |||||||||||||
| Interest income | 116 | 430 | 211 | 770 | |||||||||||||
| Interest expense | (11,484 | ) | (8,958 | ) | (23,012 | ) | (18,095 | ) | |||||||||
| Loss on extinguishment of debt | -- | (831 | ) | -- | (831 | ) | |||||||||||
| Income From Continuing Operations Before Income Taxes | $ | 56,551 | $ | 57,928 | $ | 82,107 | $ | 95,542 | |||||||||
| ESTERLINE TECHNOLOGIES CORPORATION | |||||||||
| Consolidated Balance Sheet (unaudited) | |||||||||
| In thousands | Apr 27, | Apr 29, | |||||||
| 2012 | 2011 | ||||||||
| Assets | |||||||||
| Current Assets | |||||||||
| Cash and cash equivalents | $ | 191,095 | $ | 391,514 | |||||
| Cash in escrow | 5,012 | 5,000 | |||||||
| Accounts receivable, net | 361,304 | 308,103 | |||||||
| Inventories | 413,855 | 315,994 | |||||||
| Income tax refundable | 6,226 | 12,067 | |||||||
| Deferred income tax benefits | 49,199 | 38,232 | |||||||
| Prepaid expenses | 25,065 | 18,369 | |||||||
| Other current assets | 5,128 | 18,673 | |||||||
| Total Current Assets | 1,056,884 | 1,107,952 | |||||||
| Property, Plant and Equipment, Net | 363,557 | 287,942 | |||||||
| Other Non-Current Assets | |||||||||
| Goodwill | 1,141,347 | 835,167 | |||||||
| Intangibles, net | 652,457 | 456,648 | |||||||
| Debt issuance costs, net | 9,757 | 9,759 | |||||||
| Deferred income tax benefits | 83,381 | 95,048 | |||||||
| Other assets | 20,175 | 22,404 | |||||||
| $ | 3,327,558 | $ | 2,814,920 | ||||||
| Liabilities and Shareholders' Equity | |||||||||
| Current Liabilities | |||||||||
| Accounts payable | $ | 114,386 | $ | 84,660 | |||||
| Accrued liabilities | 259,168 | 233,727 | |||||||
| Credit facilities | -- | 110,000 | |||||||
| Current maturities of long-term debt | 13,139 | 1,782 | |||||||
| Deferred income tax liabilities | 5,095 | 10,477 | |||||||
| Federal and foreign income taxes | 11,829 | 2,451 | |||||||
| Total Current Liabilities | 403,617 | 443,097 | |||||||
| Long-Term Liabilities | |||||||||
| Credit facilities | 300,000 | -- | |||||||
| Long-term debt, net of current maturities | 660,935 | 495,719 | |||||||
| Deferred income tax liabilities | 228,603 | 153,660 | |||||||
| Pension and post-retirement obligations | 103,054 | 109,251 | |||||||
| Other liabilities | 13,809 | 27,568 | |||||||
| Total Shareholders' Equity | 1,617,540 | 1,585,625 | |||||||
| $ | 3,327,558 | $ | 2,814,920 | ||||||