Michelle DeGrand 2/24/2011
BELLEVUE, Wash., February 24, 2011 – Esterline Corporation (NYSE: ESL www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2011 first quarter (ended January 28) income from continuing operations of $30.0 million, or $0.97 per diluted share, on sales of $370.8 million. This represents a 10.6% growth in sales over last year’s $335.3 million, and a 142.1% growth in income over last year’s $12.4 million. Diluted earnings per share of $0.97 were up 136.6% over the prior year’s level of $0.41 per diluted share. Brad Lawrence, Esterline’s Chief Executive Officer, said he was encouraged by the revenue strength that materialized in the quarter and was “…pleased with our ability to leverage that strength into enhanced levels of profitability in all three of our business segments.” Lawrence said, “…the combination of increased activity in military retrofit programs with a healthier commercial aircraft market – including strong OEM positions, important retrofit programs and improving spare parts trends – is driving our performance.” On the commercial aerospace side, Lawrence said the stronger spare parts market was a key driver of Esterline’s results in the first quarter of 2011. While the company continues to have some exposure to the timing of certain new production models, including the Boeing 787 and the slow recovery of the business jet market, Lawrence said he “…remains optimistic about expected production rates for new aircraft.” He noted increasing build rates for both Airbus and Boeing single-aisle aircraft and also pointed to recent contract wins for Gulfstream aircraft as well as the recent certification of Esterline’s Flight Management System for the Sukhoi Super Jet 100. With respect to aerospace business for defense customers, Lawrence noted that the company continued to benefit from strength in retrofit work for C130s, UH-60 Blackhawks and other legacy platforms. Similar strength was also evident across a variety of international customers, including those in Brazil, India and other countries where defense budgets continue to increase. Regarding new platform work, Lawrence said that Esterline remains well positioned on several platforms, including the F-35 Joint Strike Fighter and the T-6B military trainer. Lawrence noted that the current uncertainty surrounding the U.S. defense budget could “…affect the timing of certain programs, including our combustible ordnance and countermeasure flares businesses.” However, he said, “We believe that this is a manageable risk that should not prevent us from delivering overall solid financial results in this fiscal year.” Lawrence reiterated the company’s recently raised full-year earnings guidance range of $4.55 to $4.80 per share. In addition to Esterline’s principal aerospace/defense business, Lawrence cited the relatively broad-based strength from applications of its core technology into such diverse end-markets as medical capital equipment, high-speed rail networks and nuclear power generation. Lawrence emphasized that as markets improve and new growth opportunities emerge, “…Esterline is focused on operational excellence. We are clearly demonstrating continuous progress in achieving both world-class product quality and service for our customers and increased profitability and returns for our shareholders.” Gross profit dollars increased 28.7% compared to the same period last year. Gross margin as a percentage of sales increased to 35.6% in the first quarter compared with 30.6% in the first quarter of last year. Selling, general and administrative expenses were 17.8% of sales in the first quarter compared with 18.3% in the first quarter of FY10. First quarter research, development and engineering (R&D) expense totaled $19.6 million, or 5.3% of sales, compared with $16.7 million, or 5.0% of sales in the same quarter a year ago. Lawrence said, “We continue to regard a forward-leaning research and development effort as key to our competitive advantage, a point reflected in our solid backlog of business. These efforts have enabled Esterline to capture new programs, keep our incumbency status intact on existing programs, and open doors to new categories and markets.” New orders for the first quarter rose 18.1% to $399.3 million, compared with $338.0 million for the same period in 2010. Backlog held steady at $1.1 billion. Net income was $30.0 million, or $0.97 per diluted share compared with $12.7 million or $0.42 per diluted share in the prior year period, which includes $0.01 per diluted share of income from discontinued operations.
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 800.706.7749; outside the U.S., use 617.614.3474. The pass code for the call is: 96512840.
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.
Contact: Brian D. Keogh (425) 453-9400
ESTERLINE TECHNOLOGIES CORPORATION Consolidated Statement of Operations (unaudited) In thousands, except per share amounts Three months ended ----------------------- Jan 28, Jan 29, 2011 2010 ---------- --------- Segment Sales Avionics & Controls $ 192,467 $ 170,257 Sensors & Systems 77,055 70,692 Advanced Materials 101,277 94,361 ---------- --------- Net Sales 370,799 335,310 Cost of Sales 238,677 232,639 ---------- --------- 132,122 102,671 Expenses Selling, general and administrative 66,092 61,295 Research, development and engineering 19,619 16,749 Other expense -- 41 ---------- --------- Total Expenses 85,711 78,085 ---------- --------- Operating Earnings From Continuing Operations 46,411 24,586 Interest income (340) (383) Interest expense 9,137 7,961 ---------- --------- Income From Continuing Operations Before Income Taxes 37,614 17,008 Income Tax Expense 7,654 4,569 ---------- --------- Income From Continuing Operations Including Noncontrolling Interests 29,960 12,439 Loss (Income) Attributable to Noncontrolling Interests 23 (54) ---------- --------- Income From Continuing Operations 29,983 12,385 Income From Discontinued Operations, Net of Tax 8 340 ---------- --------- Net Earnings $ 29,991 $ 12,725 ========== ========= Earnings Per Share - Basic: Continuing Operations $ .99 $ .42 Discontinued Operations -- .01 ---------- --------- Earnings Per Share - Basic $ .99 $ .43 ========== ========= Earnings Per Share - Diluted: Continuing Operations $ .97 $ .41 Discontinued Operations -- .01 ---------- --------- Earnings Per Share - Diluted $ .97 $ .42 ========== ========= Weighted Average Number of Shares Outstanding - Basic 30,349 29,789 Weighted Average Number of Shares Outstanding - Diluted 31,011 30,218 ESTERLINE TECHNOLOGIES CORPORATION Consolidated Sales and Income from Continuing Operations by Segment (unaudited) In thousands Three months ended ------------------------ Jan 28, Jan 29, 2011 2010 ---------- --------- Segment Sales Avionics & Controls $ 192,467 $ 170,257 Sensors & Systems 77,055 70,692 Advanced Materials 101,277 94,361 ---------- --------- Net Sales $ 370,799 $ 335,310 ========== ========= Income from Continuing Operations Avionics & Controls $ 31,004 $ 19,432 Sensors & Systems 10,971 4,556 Advanced Materials 15,268 8,730 ---------- --------- 57,243 32,718 Corporate expense (10,832) (8,091) Other expense -- (41) Interest Income 340 383 Interest expense (9,137) (7,961) ---------- --------- Income From Continuing Operations Before Income Taxes $ 37,614 $ 17,008 ========== ========= ESTERLINE TECHNOLOGIES CORPORATION Consolidated Balance Sheet (unaudited) In thousands Jan 28, Jan 29, 2011 2010 ----------- ----------- Assets Current Assets Cash and cash equivalents $ 351,481 $ 187,050 Cash in escrow 14,000 -- Accounts receivable, net 263,666 245,527 Inventories 303,605 271,989 Income tax refundable 22,084 7,581 Deferred income tax benefits 38,644 31,059 Prepaid expenses 16,464 19,291 Other current assets 10,617 11,635 ----------- ----------- Total Current Assets 1,020,561 774,132 Property, Plant and Equipment, Net 280,349 270,367 Other Non-Current Assets Goodwill 806,338 731,792 Intangibles, net 447,644 409,204 Debt issuance costs, net 7,413 6,659 Deferred income tax benefits 88,866 79,593 Other assets 10,677 12,307 ----------- ----------- $ 2,661,848 $ 2,284,054 =========== =========== Liabilities and Shareholders' Equity Current Liabilities Accounts payable $ 76,225 $ 76,980 Accrued liabilities 228,378 172,636 Credit facilities -- 1,439 Current maturities of long-term debt 14,259 6,816 Deferred income tax liabilities 6,843 5,932 Federal and foreign income taxes 4,513 936 ----------- ----------- Total Current Liabilities 330,218 264,739 Long-Term Liabilities Long-term debt, net of current maturities 594,145 525,737 Deferred income tax liabilities 149,990 127,571 Pension and post-retirement obligations 107,047 93,665 Other liabilities 25,955 21,984 Total Shareholders' Equity 1,454,493 1,250,358 ----------- ----------- $ 2,661,848 $ 2,284,054 =========== ===========