BELLEVUE, WA--(Marketwire - May 31, 2007) - Esterline Corporation (
NYSE:
ESL)
(
www.esterline.com), a leading specialty manufacturer serving
aerospace/defense markets, today reported fiscal 2007 second quarter (ended
April 27) net earnings of $19.8 million, or $.76 per diluted share, on
$312.3 million sales. Year-ago net earnings were $17.7 million, or $.68
per diluted share, on sales of $247.9 million.
Robert W. Cremin, Esterline CEO said, "...we really like the way fiscal
2007 is shaping up.
The 12% earnings improvement in the quarter was particularly gratifying
given a more than 50% year-over-year increase in interest expense
associated with the financing of the recent CMC acquisition, and the
initial impact of acquisition accounting that requires revaluing acquired
inventories as of the acquisition date."
Regarding the acquisition, Cremin said Esterline's fiscal third quarter
will be burdened with the majority of the acquisition accounting costs.
However, he said "...the more exposure we have to CMC the more we like it,
and more importantly, the combined strength of Esterline's and CMC's fourth
quarter will absorb the short-term dilution of the CMC acquisition."
Underscoring this performance, the company increased its full-year earnings
guidance to a range of $2.50 - $2.60 per share.
Backlog at quarter end totaled $954 million. Cremin said, "...backlog
strength is one of the markers we use to judge forward momentum." He noted
that CMC contributed $252 million to backlog in the quarter, and pointed
out that "...even without the CMC contribution, Esterline's backlog grew 7%
in the past three months and 11% compared to last year." He noted that the
company's backlog reflects only fully funded orders with firm release
dates.
Consolidated gross margin in the quarter was 31.7% compared with 32.6% a
year ago. The purchase accounting costs associated with CMC were the
primary cause of the change. Selling, general and administrative expenses
(SG&A) totaled $50.4 million in the second quarter of 2007, compared with
$41.0 million a year ago, again principally due to incremental SG&A
expenses from acquisitions. As a percent of sales, SG&A continued to
decline, dropping to 16.1% in the second quarter of 2007 compared with
16.5% in the prior-year period.
Research, development and engineering expense during the quarter was
$19.1 million, or 6.1% of sales, reflecting CMC's cockpit integration
activity on the T-6 military trainer program, and a spike in activity
levels on both the 787 and the A400M as Boeing and Airbus push toward
critical program dates. R&D spending is expected to decline during the
second half of fiscal 2007.
Interest expense for the second fiscal quarter of 2007 was $8.7 million
compared with $5.8 million a year ago, reflecting increased borrowings to
finance acquisitions and working capital requirements.
Year-to-date net earnings were $32.6 million, or $1.25 per diluted share,
on sales of $569.5 million. For the first six months of fiscal 2006,
comparable earnings were $26.0 million, or $1.01 per diluted share, on
sales of $453.6 million.
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.
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations
------------------------------------
In thousands, except per share amounts
Three months ended Six months ended
April 27, April 28, April 27, April 28,
2007 2006 2007 2006
-------- -------- -------- --------
Segment Sales
Avionics & Controls $108,314 $ 71,864 $183,819 $134,306
Sensors & Systems 98,123 83,177 184,314 156,647
Advanced Materials 105,843 92,898 201,391 162,651
-------- -------- -------- --------
Net Sales 312,280 247,939 569,524 453,604
Cost of Sales 213,418 167,200 396,093 310,006
-------- -------- -------- --------
98,862 80,739 173,431 143,598
Expenses
Selling, general and
administrative 50,401 40,973 92,776 76,863
Research, development
and engineering 19,082 12,939 32,633 23,272
-------- -------- -------- --------
Total Expenses 69,483 53,912 125,409 100,135
Other
Other (income) expense 27 (263) 17 (462)
Insurance recovery (2,810) -- (4,457) --
-------- -------- -------- --------
Total Other (2,783) (263) (4,440) (462)
-------- -------- -------- --------
Operating Earnings 32,162 27,090 52,462 43,925
Interest income (785) (998) (1,289) (1,857)
Interest expense 8,728 5,790 14,252 10,295
Loss on extinguishment
of debt -- -- -- 2,156
-------- -------- -------- --------
Other Expense, Net 7,943 4,792 12,963 10,594
-------- -------- -------- --------
Income Before Income
Taxes 24,219 22,298 39,499 33,331
Income Tax Expense 4,494 4,307 6,879 6,863
-------- -------- -------- --------
Income Before Minority
Interest 19,725 17,991 32,620 26,468
Minority Interest 35 (332) (59) (445)
-------- -------- -------- --------
Net Earnings $ 19,760 $ 17,659 $ 32,561 $ 26,023
======== ======== ======== ========
Earnings Per Share:
Basic $ .77 $ .70 $ 1.27 $ 1.03
Diluted $ .76 $ .68 $ 1.25 $ 1.01
Weighted Average Number
of Shares Outstanding
--Basic 25,590 25,385 25,560 25,361
Weighted Average Number
of Shares Outstanding
--Diluted 25,997 25,817 25,964 25,780
Consolidated Balance Sheet
--------------------------
In thousands April 27, April 28,
2007 2006
---------- ----------
Assets
Current Assets
Cash and cash equivalents $ 60,662 $ 46,256
Cash in escrow 1,275 4,315
Accounts receivable, net 238,878 171,236
Inventories 241,670 168,679
Income tax refundable 14,391 --
Deferred income tax benefits 31,183 26,672
Prepaid expenses 13,366 10,469
---------- ----------
Total Current Assets 601,425 427,627
Property, Plant and Equipment, Net 213,840 166,679
Other Non-Current Assets
Goodwill 583,054 360,784
Intangibles, net 374,315 245,845
Debt issuance costs, net 10,418 5,824
Deferred income tax benefits 13,465 17,773
Other assets 29,114 25,555
---------- ----------
$1,825,631 $1,250,087
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 79,824 $ 59,975
Accrued liabilities 168,311 108,790
Credit facilities 49,573 18,413
Current maturities of long-term debt 8,760 3,077
Federal and foreign income taxes 8,220 5,751
---------- ----------
Total Current Liabilities 314,688 196,006
Long-Term Liabilities
Long-term debt, net of current
maturities 559,061 279,756
Deferred income taxes 115,708 74,806
Other liabilities 43,956 34,527
Commitments and Contingencies -- --
Minority Interest 3,283 3,158
Shareholders' Equity 788,935 661,834
---------- ----------
$1,825,631 $1,250,087
========== ==========
Contact Information: Contact:
Brian Keogh
425-453-9400
Esterline Corporation
500 108th Avenue NE
Suite 1500
Bellevue, WA 98004
Tel: 425-453-9400
Fax: 425-453-2916
www.esterline.com