Earnings Per Share of $.70; Includes $.10 from Sale of Product Line
BELLEVUE, Wash., Dec. 9, 2004 — Esterline Corporation (NYSE/ESL www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fourth quarter income from continuing operations of $15.2 million, or $.70 per diluted share, on sales of $194.8 million. The quarter’s results included a $2.2 million net of tax, or $.10 per share, gain on the sale of a non-core product line with in the company’s Sensors & Systems segment. In the same period last year, income from continuing operations was $9.4 million, or $.44 per diluted share, on $160.3 million sales. Orders received in the fourth quarter totaled $296.7 million, including $89 million of backlog from an acquisition completed in the quarter. This compared with orders of $140.0 million a year ago. Backlog at year end was $433.1 million compared with $300.9 million at the end of the prior-year period.
Full year 2004 income from continuing operations was $33.4 million, or $1.55 per diluted share, including the one-time gain described above. Full-year earnings also included a $.09 per diluted share tax benefit from a favorable resolution of an income tax audit, and a $.14 per diluted share severance expense, both reported in the first quarter. The prior year’s income from continuing operations was $29.7 million, or $1.41 per diluted share, including a $.09 per diluted share foreign currency gain . Sales in fiscal 2004 were $628.2 million compared with last year’s sales of $562.5 million.
Robert W. Cremin , Esterline CEO, said the company’s fourth quarter performance “…was robust and reflected good balance across all of the company’s markets and operating segments.” He said “…the commercial aerospace industry is now clearly coming off the bottom of its cycle, and defense markets continue to look solid for us into the foreseeable future. “
Looking forward, Cremin said that he is optimistic about the coming year, anticipating earnings per share of $1.70 to $1.80. He said, “…even with the additional shares from our recent equity offering, this is year-over-year EPS growth in the 15% to 25% range on an operating basis.”
He added “…that last year, we absorbed some significant costs associated with the integration of several acquisitions — activity that is now behind us. The Weston acquisition, for example, is beginning to pay solid dividends, as evidenced by the recent win on the TP400M engine program, the engine that will power the new Airbus A400M military transport.” Cremin added that, “…the successful integration of Weston into our existing sensor operation enabled us to win this Tier I contract for the entire sensor suite — a first for Esterline, and a win that would not have been possible without the acquisition.”
Esterline recently completed a public offering of 3.7 million shares of its common stock, generating net proceeds of approximately $109 million. Cremin said that the funds provide the additional financial resources and flexibility to grow, including continuing the company’s acquisition activities.
During the quarter, Esterline completed a $145 million cash acquisition of Leach Holding Corporation. Leach is a leading worldwide producer of high-performance electromechanical relays, solid-state switching devices and advanced power distribution assemblies primarily for aerospace applications. The operation employs more than 1,000 people in North America , Europe and Asia . Cremin said that unlike some recent acquisitions, “…we do not plan any personnel or facility integration initiatives; Leach is already operating smoothly as an integral part of Esterline.”
During the quarter, the company completed the sale of the last operation declared discontinued in 2002. Cremin characterized the transaction as an important milestone for the company. “Going forward,” he said, “we are now able to focus all of our resources building on our core technologies.” Including income from discontinued operations of $9.2 million net of tax, fiscal 2004 net earnings were $42.6 million, or $1.98 per diluted share. This compared with $23.9 million, or $1.13 per diluted share, for fiscal 2003.
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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