BELLEVUE, Wash., March 5, 2007 — Esterline Technologies (NYSE/ESL www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2007 first quarter (ended January 26) net earnings of $12.8 million, or $.49 per diluted share. This includes a $2.1 million tax benefit resulting from the retroactive extension of U.S. Research and Experimentation tax credits signed into law on December 21, 2006. Year-ago net earnings were $8.4 million, or $.32 per diluted share. First quarter 2007 sales were $257.2 million compared with $205.7 million a year ago.
Robert W. Cremin, Esterline CEO, said that the performance reflected in a 38% year-over-year increase in pretax earnings was “…essentially in line with company expectations,” and that Esterline’s “…growth prospects for the year remain on track.”
On February 1, 2007, Esterline announced an agreement to acquire CMC Electronics, a Canadian designer/manufacturer of high-technology electronics products for aerospace/defense applications, including global positioning, enhanced vision and flight management systems. Cremin said that he expects the transaction to close in the first part of March, pending certain governmental approvals. He said the acquisition of CMC is a natural evolution for Esterline that will “…significantly expand our avionics capability and better enable us to respond to our customers’ higher technology demands.”
Cremin said that CMC’s anticipated contributions to Esterline earnings in the remainder of the fiscal year would be influenced by the timing of the transaction’s completion and the effect of purchase accounting rules. In this context, and including the previously reported tax benefits, the company is maintaining its full-year earnings guidance range of $2.45 to $2.60 per share.
Consolidated gross margin in the quarter was 29% compared with 30.6% a year ago. Several events effected this change, including quality issues caused by vendor supplied materials at a California plant, and a contract overrun at a Illinois unit that manufactures data concentrators—both operations are within Esterline’s Sensors & Systems business segment. In the company’s Advanced Materials segment, a continued shut-down of part of the company’s UK countermeasure flares facility following a June 2006 explosion also impacted margins.
Selling, general and administrative expenses (SG&A) totaled $42.4 million in the first quarter of 2007, compared with $35.9 million a year ago, primarily due to incremental SG&A expenses from acquisitions. As a percent of sales, SG&A declined a full percentage point to 16.5% in the first quarter of 2007 compared with 17.5% in the prior-year period.
Research, development and engineering (RD&E) expense during the quarter was $13.6 million, or 5.3% of sales, compared with $10.3 million, or 5.0% of sales in the year-ago quarter. RD&E spending is expected to return to more historical levels during the second half of fiscal 2007.
Backlog at the end of the first quarter was $656.5 million compared with $546.2 million at the end of the prior-year period, and $653.5 million at the end of fiscal 2006.
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.
For the full release* including the Consolidated Statement of Operations and the Consolidated Balance Sheet Click Here
Requires the Free Adobe Acrobat Reader