Net Income $11.2 Million, on $248.4 Million Sales
BELLEVUE, Wash., August 31, 2006 — Esterline Corporation (NYSE/ESL www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2006 third quarter (ended July 28) net income of $11.2 million, or $.43 per diluted share, on $248.4 million sales. Net income in the same period last year was $11.9 million, or $.46 per diluted share, on sales of $209.9 million.
Robert W. Cremin, Esterline CEO said, “…the results for the quarter are in line with our recent guidance.” That guidance included the impact of a shutdown of a recently acquired military countermeasure flares operation in the UK following an accident there during the quarter. Cremin said that the majority of that operation’s production volume is coming back on line in the portion of the facility less affected by the explosion. He added, however, that “…the newer, more profitable facility is still closed and will remain so until the formal investigation concludes sometime in 2007.”
Cremin stressed that Esterline’s underlying fundamentals remain solid. New order intake during the quarter continued strong at $250.6 million, and backlog was $635.6 million — over 25% higher than last year. He also emphasized that “…Esterline continues to invest in the research, development and engineering necessary to ensure the long-term health of the company.” He noted that R&D expenditures during the quarter were nearly 32% ahead of last year. “The majority of the R&D increase is in our Sensors & Systems segment where we are in the midst of two major development programs for the Airbus A400M military transport,” he said. “We expect investment in this program to remain at current levels for the next several quarters before tapering off to our more historic levels.”
In addition, Cremin said that Esterline’s Sensors & Systems segment had been particularly impacted by the inefficiencies and supply chain pressures associated with a major industry cycle ramp-up. He said, “…over the last few quarters we’ve been hiring and training new people and generally running to keep up with accelerating business.”
The effective tax rate for the third quarter of 2006 was 29.8%, before a $1.6 million reduction in previously estimated tax liabilities. The effective tax rate for the same period a year ago was 28.8% before a $2.0 million reduction in previously estimated tax liabilities.
Year-to-date income from continuing operations was $37.2 million, or $1.44 per diluted share, on sales of $702.0 million. For the first nine months of fiscal 2005, comparable earnings were
$35.7 million, or $1.42 per diluted share, on sales of $611.3 million.
Net earnings in the fiscal 2006 third quarter and first nine months were unaffected by discontinued operations. Net earnings for the first nine months of 2005 included income from discontinued operations principally from the sale of the company’s Fluid Regulators subsidiary. That sale resulted in a gain of approximately $7.0 million, net of tax of $2.4 million, or $.27 per diluted share, in the first quarter of 2005. Net earnings for the fiscal third quarter and first nine months of 2005 were $11.9 million, or $.46 per diluted share, and $42.6 million, or $1.69 per diluted share, respectively.
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.
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