BELLEVUE, WA--(Marketwire - February 25, 2010) - Esterline Corporation (
NYSE:
ESL)
Highlights:
-- Income from continuing operations up 10.8% year over year
-- Sales up 9.6% year over year
-- Full-year EPS guidance range maintained at $3.20 to $3.45
-- Backlog -- $1.1 billion
Esterline Corporation (
NYSE:
ESL) (
www.esterline.com), a leading specialty
manufacturer serving aerospace/defense markets, today reported fiscal 2010
first quarter (ended January 29) income from continuing operations and net
income of $12.7 million, or $.42 per diluted share, on sales of $339.4
million. Year-ago income from continuing operations was $11.5 million, or
$.38 per diluted share, including a pretax foreign currency loss of
$7.9 million related to the funding of an acquisition. Income from
discontinued operations in the prior-year period was $.52 per diluted
share, reflecting gains on the sale of a U.K.-based operation in November
2008. Year-ago sales were $309.7 million.
Brad Lawrence, Esterline CEO, said, "...our quarterly results were
essentially what we expected," and he reiterated the company's full-year
earnings per share guidance range of $3.20 to $3.45. Lawrence said, "...a
very solid performance from our Avionics & Controls segment was offset by
softness in our Sensors & Systems segment and the effect of a significantly
higher tax rate compared with last year."
He said, "...our Avionics & Controls segment benefited particularly from
the T-6B military trainer cockpit production ramp-up, international C-130
cockpit retrofit programs, and solid demand for our military communications
equipment." He also pointed to pockets of improved demand for commercial
air transport spare parts in the segment. In addition, he said, "...we
continue to explore adjacent markets for our user interface technologies.
Most recently, demand for our custom input systems for casino gaming
machines is running ahead of expectations."
Lawrence said Esterline's Sensors & Systems and Advanced Materials segments
continue to be affected by sluggish commercial air transport and business
jet activity, but he said, "...we are beginning to see signs of aftermarket
improvement as global commercial airline capacity improves." He also said
that the company's cost reduction measures taken over the last several
quarters will lead to enhanced profitability going forward.
As the company's December guidance to investors anticipated, gross margins
in the first quarter were impacted by the mix of products shipped during
the period. Lawrence said, "...we expect margin performance to improve
steadily as the year progresses." Gross margin was 30.8% compared with
33.0% last year.
Selling, general and administrative expenses as a percent of sales were
18.4% in the first quarter of 2010, compared with 19.3% a year ago.
Research, development and engineering (R&D) expenses continued to ratchet
down from the mid-2008 peak of 7.0%. R&D spending in the first quarter of
2010 was $17.0 million, or 5.0% of sales, compared with $17.4 million, or
5.6% of sales a year ago. Lawrence said, "The programs we invested in over
the last several years are beginning to pay off." He said, "T-6B
production is ramping up rapidly for the U.S. Navy trainer program, and
foreign military sales of this aircraft are accelerating." He said
Esterline recently received an initial order from Hawker Beechcraft to
supply the integrated avionics suite for twenty-four T-6C trainer aircraft
for the Royal Moroccan Air Force.
Lawrence added, "Our investments in the development of open architecture
integrated glass cockpits are creating opportunities in retrofit markets."
During the quarter, the Chilean Air Force selected Esterline to upgrade the
complete cockpit avionics systems of its C-130 fleet. As prime contractor,
Esterline's Canada-based CMC Electronics subsidiary is responsible for
delivery of the complete equipment suite, including the supply of turnkey
installation kits as well as all in-country activities, including touch
labor, training and support.
The income tax rate for the first quarter of 2010 was 27.2% compared with
15.8% last year. The increase primarily reflects a change in French tax
law, the expiration of U.S. R&D credits and changes in the U.S.-Canada tax
treaty. In addition, the prior-year period reflected a tax benefit
associated with a foreign currency loss.
New orders for the first quarter of 2010 were $342.8 million compared with
$370.2 million for the same period in 2009. Orders in the 2009 period
included acquired backlog of $65.2 million. Backlog was $1.1 billion
compared with $1.2 billion at the end of the prior-year period and
$1.1 billion at the end of fiscal 2009.
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
--------------------
Jan 29, Jan 30,
2010 2009
-------- --------
Segment Sales
Avionics & Controls $170,257 $128,468
Sensors & Systems 74,742 84,555
Advanced Materials 94,361 96,694
-------- --------
Net Sales 339,360 309,717
Cost of Sales 234,831 207,565
-------- --------
104,529 102,152
Expenses
Selling, general and administrative 62,315 59,725
Research, development and engineering 17,047 17,398
Other expense 41 5,014
-------- --------
Total Expenses 79,403 82,137
-------- --------
Operating Earnings From Continuing Operations 25,126 20,015
Interest income (383) (411)
Interest expense 7,961 6,736
-------- --------
Income From Continuing Operations Before Income
Taxes 17,548 13,690
Income Tax Expense 4,769 2,168
-------- --------
Income From Continuing Operations Including
Noncontrolling Interests 12,779 11,522
Income Attributable to Noncontrolling Interests (54) (35)
-------- --------
Income From Continuing Operations 12,725 11,487
Income From Discontinued Operations, Net of Tax -- 15,456
-------- --------
Net Earnings $ 12,725 $ 26,943
======== ========
Earnings Per Share - Basic:
Continuing Operations $ .43 $ .39
Discontinued Operations -- .52
-------- --------
Earnings Per Share - Basic $ .43 $ .91
======== ========
Earnings Per Share - Diluted:
Continuing Operations $ .42 $ .38
Discontinued Operations -- .52
-------- --------
Earnings Per Share - Diluted $ .42 $ .90
======== ========
Weighted Average Number of Shares Outstanding
- Basic 29,789 29,664
Weighted Average Number of Shares Outstanding
- Diluted 30,218 29,865
Consolidated Balance Sheet (unaudited)
In thousands Jan 29, Jan 30,
2010 2009
---------- ----------
Assets
Current Assets
Cash and cash equivalents $ 187,050 $ 81,231
Accounts receivable, net 245,527 270,974
Inventories 271,989 275,271
Income tax refundable 7,581 4,066
Deferred income tax benefits 31,059 34,781
Prepaid expenses 19,291 15,141
Other current assets 11,635 468
---------- ----------
Total Current Assets 774,132 681,932
Property, Plant and Equipment, Net 270,367 201,562
Other Non-Current Assets
Goodwill 731,792 696,624
Intangibles, net 409,204 384,492
Debt issuance costs, net 6,659 7,213
Deferred income tax benefits 79,593 58,127
Other assets 12,307 36,495
---------- ----------
$2,284,054 $2,066,445
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 76,980 $ 78,656
Accrued liabilities 172,636 201,716
Credit facilities 1,439 118,858
Current maturities of long-term debt 6,816 8,352
Deferred income tax liabilities 5,932 1,759
Federal and foreign income taxes 936 9,458
---------- ----------
Total Current Liabilities 264,739 418,799
Long-Term Liabilities
Long-term debt, net of current maturities 525,737 382,446
Deferred income taxes 127,571 112,932
Pension and post-retirement obligations 93,665 88,673
Other liabilities 21,984 30,038
Shareholders' Equity 1,250,358 1,033,557
---------- ----------
$2,284,054 $2,066,445
========== ==========