Bookings, Revenues and Profits Continue to Strengthen; Order Intake Up 30%
BELLEVUE, Wash., May 26, 2005 — Esterline Corporation (NYSE/ESL www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2005 second quarter (ended April 29) income from continuing operations of $14.7 million, or $.58 per diluted share, on $211.6 million sales. Year-ago income from continuing operations was $9.0 million, or $.42 per diluted share, on sales of $146.5 million.
Robert W. Cremin, Esterline CEO said, “…the second quarter was strong across the board, and continued the trend from Q1. Our bookings, revenues, and profits continue to strengthen.” Cremin said that order intake, for example, is ahead of last quarter by nearly 30%, and year-to-date organic sales growth is nearly 17%. “With all things considered,” he said, “we’re raising the company’s full-year earnings guidance range for continuing operations to $1.90 - $2.05 per share from the previous range of $1.70 - $1.80 per share.”
He said that the company’s acquisition efforts are bearing fruit. “Leach International, which was acquired nine months ago, is now a solid contributor,” Cremin said. “They were selected to supply the primary power distribution system on the Airbus A400M, a major step forward for this operation.” Similarly, he said the company’s new embedded software operation has grown more than 50% in the last year. Other wins underscoring the success of past acquisition efforts include a contract to provide the majority of U.S. Air Force countermeasure flares, and the Tier I win for the entire sensor suite on the Rolls Royce-led TP400 turboprop engine that will power Europe’s new military transport aircraft.
In addition to Esterline’s expanding defense work, conditions continue to improve in its commercial aerospace business. Strong aftermarket spare parts growth is being driven by gains in worldwide air traffic and increases in OEM build rates.
Cremin reiterated that Esterline’s success at winning Tier I contracts will lead to increased research, development and engineering costs in the short term, but noted that as a percent of total sales “…the increase will be modest and the long-term potential return is high.” R&D spending in the quarter rose to $9.9 million, or 4.7% of sales, compared with $6.0 million, or 4.1% of sales, for the second quarter of fiscal 2004. “And, as we reported last quarter,” Cremin added, “we continue to see the potential for some slowing in the growth of our medical business; but the long-term strategy to expand our technologies into medical markets continues to be a sound one.”
Year-to-date income from continuing operations was $24.3 million, or $.97 per diluted share, on sales of $401.4 million. For the first six months of fiscal 2004, comparable earnings were $10.7 million, or $.50 per diluted share, on sales of $275.8 million.
Including discontinued operations, net earnings in the second quarter of fiscal 2005 of $14.1 million, or $.55 per diluted share, compared with $9.9 million, or $.46 per diluted share, in the prior-year period. Year-to-date net earnings were $31.3 million, or $1.25 per diluted share, compared with $11.8 million, or $.55 per diluted share a year ago. Fiscal year 2005 income from discontinued operations principally reflect 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 $.28 per diluted share, in the first quarter of 2005. Fiscal 2004 income from discontinued operations principally reflect the earnings of Fluid Regulators and Esterline’s discontinued Automation segment.
Backlog at the end of the second quarter was up more than 50% to $489.6 million compared with $323.7 million at the end of the prior-year period, and $423.8 million at the end of fiscal 2004.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are 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. 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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