BELLEVUE, WA--(Marketwire - December 6, 2007) - Esterline Corporation (
NYSE:
ESL)
(
www.esterline.com), a leading specialty manufacturer serving
aerospace/defense markets, today reported fourth quarter (ended October 26)
net earnings of $20.9 million, or $.78 per diluted share, on sales of
$370.7 million. In the same period last year, net earnings were
$18.4 million, or $.71 per diluted share, on $270.3 million sales.
Full-year 2007 net earnings were $92.3 million, or $3.52 per diluted share,
on sales of $1.27 billion, compared with net earnings of $55.6 million, or
$2.15 per diluted share, on $972.3 million sales last year. Fiscal years
2007 and 2006 included insurance recoveries of $37.5 million and
$4.9 million, respectively. Excluding the insurance recoveries, full-year
operating earnings were up 24% over last year, and net earnings were up
27%.
Robert W. Cremin, Esterline CEO, said the performance "...capped a
transformational year for Esterline. The March acquisition of Canada-based
CMC Electronics not only helped boost revenues by more than 30% over last
year, it was an important move up the value chain for us." He said that
"...adding high technology avionic systems integration capability to our
market leading toolkit of component solutions significantly increased the
value we bring to our customers."
Cremin said that as the company has expanded its critical mass organically
(nearly 15% in 2007) and through strategic acquisitions like CMC, "...we've
been able to surge R&D and are now positioned to benefit as these efforts
begin to bear fruit." Cremin said that Esterline's R&D spending as a
percent of sales peaked in 2007 at 5.6%, compared with 5.4% in 2006.
Cremin said he expects 2008 R&D expense to be about 5% of sales. He also
explained that although CMC's gross level of R&D spending as recorded under
U.S. GAAP will drive the rate higher than Esterline's historical average of
about 4%, "...this difference is substantially offset by R&D tax credits."
In mid-October 2007, the company issued 3.45 million shares of common
stock. Cremin said that the "...proceeds from the stock offering along
with strong cash generation enabled us to pay down a significant portion of
our outstanding debt and repositioned Esterline's balance sheet to pre-CMC
ratios." In 2007, the company generated EBITDA* of $203 million, an
increase of 49% from 2006, and cash flow from operations of $122 million.
The company closed the year with debt of $476 million, a debt-to-EBITDA
coverage ratio of 2.3 times and a debt-to-equity ratio of 42%. Cremin
said, "...these metrics provide us with optimal flexibility to take
advantage of changes in capital markets."
Cremin said he anticipates another solid year ahead for Esterline, and
provided a 2008 EPS guidance range of $3.00 to $3.20 per share. He said,
"...excluding the insurance effect on 2007 EPS, the mid-point of our 2008
guidance is a respectable 23% improvement over last year." He said the
company's order books are strong and backlog at year-end was $985 million
compared with $654 million last year. He pointed to robust industry
fundamentals saying, "...whether you're talking commercial or military
aviation, it's hard to find a platform that Esterline is not on, and our
content per aircraft is increasing rapidly."
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.
* EBITDA for fiscal 2007 of $202,937,000 equals operating earnings of
$147,977,000 plus depreciation and amortization of $54,960,000. EBITDA is
a measurement not calculated in accordance with GAAP. We define EBITDA as
operating earnings plus depreciation and amortization (excluding
amortization of debt issuance costs). We do not intend EBITDA to represent
cash flows from operations or any other items calculated in accordance with
GAAP, or as an indicator of Esterline's operating performance. Our
definition of EBITDA may not be comparable with EBITDA as defined by other
companies. We believe EBITDA is commonly used by financial analysts and
others in the aerospace and defense industries and thus provides useful
information to investors. Our management and certain financial creditors
use EBITDA as one measure of our leverage capacity and debt servicing
ability, and is shown here with respect to Esterline for comparative
purposes. EBITDA is not necessarily indicative of amounts that may be
available for discretionary uses by us.
Esterline Reports Fourth Quarter Earnings
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations
In thousands, except per share amounts
Three months ended Fiscal year ended
Oct 26, Oct 27, Oct 26, Oct 27,
2007 2006 2007 2006
--------- --------- --------- ---------
(unaudited)(unaudited)(unaudited)
Segment Sales
Avionics & Controls $ 149,189 $ 77,514 $ 454,520 $ 283,011
Sensors & Systems 101,745 91,938 383,477 333,257
Advanced Materials 119,721 100,821 428,558 356,007
--------- --------- --------- ---------
Net Sales 370,655 270,273 1,266,555 972,275
Cost of Sales 253,203 188,372 876,030 671,419
--------- --------- --------- ---------
117,452 81,901 390,525 300,856
Expenses
Selling, general and
administrative 61,223 40,415 209,460 159,624
Research, development and
engineering 20,946 14,860 70,531 52,612
--------- --------- --------- ---------
Total Expenses 82,169 55,275 279,991 212,236
Other
Other (income) expense -- (45) 24 (490)
Insurance recovery (153) (4,104) (37,467) (4,890)
--------- --------- --------- ---------
Total Other (153) (4,149) (37,443) (5,380)
--------- --------- --------- ---------
Operating Earnings 35,436 30,775 147,977 94,000
Interest income (1,271) (392) (3,381) (2,642)
Interest expense 10,260 5,409 35,302 21,290
Loss on extinguishment of debt 1,100 -- 1,100 2,156
--------- --------- --------- ---------
Other Expense, Net 10,089 5,017 33,021 20,804
--------- --------- --------- ---------
Income Before Income Taxes 25,347 25,758 114,956 73,196
Income Tax Expense 4,423 7,277 22,519 16,716
--------- --------- --------- ---------
Income Before Minority Interest 20,924 18,481 92,437 56,480
Minority Interest (36) (112) (153) (865)
--------- --------- --------- ---------
Net Earnings $ 20,888 $ 18,369 $ 92,284 $ 55,615
========= ========= ========= =========
Earnings Per Share:
Basic $ .79 $ .72 $ 3.57 $ 2.19
Diluted $ .78 $ .71 $ 3.52 $ 2.15
Weighted Average Number of
Shares Outstanding--Basic 26,484 25,482 25,824 25,413
Weighted Average Number of
Shares Outstanding--Diluted 26,940 25,845 26,252 25,818
Esterline Reports Fourth Quarter Earnings
Consolidated Balance Sheet
In thousands Oct 26, Oct 27,
2007 2006
----------- -----------
(unaudited)
Assets
Current Assets
Cash and cash equivalents $ 147,069 $ 42,638
Cash in escrow -- 4,409
Accounts receivable, net 262,087 191,737
Inventories 258,176 185,846
Income tax refundable 11,580 6,231
Deferred income tax benefits 37,830 27,932
Prepaid expenses 13,256 9,545
----------- -----------
Total Current Assets 729,998 468,338
Property, Plant and Equipment, Net 217,421 170,442
Other Non-Current Assets
Goodwill 656,865 366,155
Intangibles, net 365,317 241,657
Debt issuance costs, net 9,192 4,469
Deferred income tax benefits 43,670 14,790
Other assets 29,715 24,600
----------- -----------
$ 2,052,178 $ 1,290,451
=========== ===========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 90,257 $ 62,693
Accrued liabilities 186,761 121,419
Credit facilities 8,634 8,075
Current maturities of long-term debt 12,166 5,538
Federal and foreign income taxes 11,247 2,874
----------- -----------
Total Current Liabilities 309,065 200,599
Long-Term Liabilities
Long-term debt, net of current maturities 455,002 282,307
Deferred income taxes 123,758 72,349
Other liabilities 39,559 23,629
Commitments and Contingencies -- --
Minority Interest 2,968 3,578
Shareholders' Equity 1,121,826 707,989
----------- -----------
$ 2,052,178 $ 1,290,451
=========== ===========
Contact Information: Contact:
Brian Keogh
425/453-9400