BELLEVUE, WA--May 30, 2013 - Esterline Corporation (NYSE: ESL), a leading specialty manufacturer serving global aerospace/defense markets, today reported second fiscal quarter (ended April 26, 2013) net earnings of $35.5 million, or $1.12 per diluted share, on sales of $499.6 million. Net earnings in the second quarter of fiscal 2012 were $45.2 million, or $1.44 per diluted share including a $0.30 per share benefit from a litigation settlement. Sales in the year-ago quarter were $504.8 million.
Brad Lawrence, Esterline's Chief Executive Officer, said the company's second quarter results "...reflect stable revenues, steady margins, controlled costs, and good performance in a variety of businesses and programs." Lawrence said he expects a solid second-half performance, despite headwinds in global defense markets and a slower-than-anticipated recovery of the European economy. He said the company "...adjusted full-year guidance to reflect these headwinds, but we're still expecting a strong finish to the year, especially in the fourth quarter," adding that a number of positive trends should be contributing factors. These include "...a steadily growing commercial aerospace market, solid margin performance, and a stable $1.3 billion backlog." He also emphasized the company's continued "...record cash flow from operations should exceed $200 million this fiscal year."
The updated full-year guidance puts earnings per share (EPS) in the range of $5.30 to $5.50 on sales of approximately $2.0 billion. Lawrence noted the midpoint of the guidance represents "...an increase of nearly 9% over last year's adjusted EPS and is realistic, especially in light of prolonged defense program uncertainty." He said defense customers continue to "...slide programs to the right in order to keep their options open. Beechcraft, for example, after implementing rolling furloughs earlier in the year, reduced the build rate for the T-6B Navy trainer by nearly 15%." Esterline makes the integrated glass cockpit for the T-6B.
Lawrence said the company's "...unrelenting focus on operational efficiencies" will be another key contributing factor to Esterline's second-half strength. Gross margin, at 36.3% in the second quarter of fiscal 2013, was steady with the fiscal 2012 second quarter level of 36.6%. Selling, general and administrative (SG&A) expenses as a percent of sales remained relatively unchanged at 19.7% in the second quarter of fiscal 2013, compared with 19.6% in the prior year's second quarter. R&D expenses were down in the second quarter of fiscal 2013 to 5.1% of sales compared with 5.9% in the same period last year. The income tax rate for the second fiscal quarter was 21.0% compared with 19.7% in last year's period.
New orders for the second fiscal quarter of 2013 were $494.1 million compared with $566.0 million for the same period last year, primarily reflecting the reduced order rate for the defense and industrial programs mentioned above. This impact was felt primarily in the Avionics & Controls and Sensors & Systems segments.
For the first half of fiscal 2013, Esterline reported net earnings of $60.6 million, or $1.92 per diluted share, on sales of $957.5 million, compared with net earnings of $68.0 million, or $2.18 per diluted share, on $975.7 million in sales in the same period last year.
New orders for the first six months of fiscal 2013 were $967.7 million compared with $1.03 billion for the same period last year. Total backlog grew to $1.33 billion compared with $1.31 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 877-415-3186; outside the U.S., use 857-244-7329. The pass code for the call is: 73152565.
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.