BELLEVUE, Wash., August 28, 2008 — Esterline Corporation, (NYSE/ESL www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2008 third quarter (ended August 1) net earnings of $20.5 million, or $.68 per diluted share. Year-ago net earnings were $38.8 million, or $1.49 per diluted share, including $23.0 million after tax, or $.88 per diluted share, from an insurance recovery. Sales in the third quarter of 2008 were $382.1 million compared with $326.4 million a year ago.
Previously, the company estimated third quarter earnings would be $.55 to $.60 per share, reflecting postponed research and development assistance discussions with the Canadian government.
Robert W. Cremin, Esterline CEO, said, “…third quarter results were stronger than we expected, principally due to strong performance from our European operations during the month of July.” Cremin also said that sales of spare parts and other aftermarket activity remained robust in both commercial aerospace and defense markets.
Cremin advised that the company was increasing its full-year (ended October 31) earnings guidance range to $3.50 to $3.60 per share, up from the previous guidance range of $3.45 to $3.55. Regarding the discussions in Canada, Cremin said, “…although we are optimistic, we have excluded any results of those talks from our full-year earnings estimate.” Formal talks are expected to resume in September.
Overall research, development and engineering (R&D) expense in the third quarter was $22.4 million, or 5.9% of sales. Cremin noted that R&D spending as a percent of sales was down in the quarter “…from the 7% peak level in the prior quarter, reflecting Esterline’s residual efforts on several major development programs, including the Boeing 787 and Airbus A400M.” He said that Esterline’s R&D will “…trend down somewhat on a percent of sales basis as we move forward.” He emphasized that “…investment in new product development remains essential to our delivering the value our customers have come to expect.”
Backlog at the end of the third quarter was $1.06 billion compared with $977.9 million at the end of the prior-year period. Orders in the quarter increased to $380.4 million from $349.8 million a year ago.
Year-to-date net earnings were $76.7 million, or $2.56 per diluted share. For the first nine months of fiscal 2007, comparable earnings were $71.4 million, or $2.74 per diluted share, including $26.1 million after tax, or $1.00 per share, from an insurance recovery. Sales for the first nine months of 2008 were $1.13 billion compared with $895.9 million a year ago. The effective tax rate in the first nine months reflects $5.9 million in discrete tax benefits.
Esterline is a leading world-wide supplier to the aerospace and defense industry specializing in three core areas: Avionics & Controls, Sensors & Systems, and Advanced Materials.
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