Solid Sales to Defense and Other Specialty Markets Help Outpace Earlier Forecast
BELLEVUE, Wash., Dec. 4, 2003 — Esterline Technologies (NYSE/ESL www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported strong fourth quarter performance, exceeding forecasted results for the quarter and fiscal year ended October 31. Fourth quarter income from continuing operations was $9.4 million, or $.44 per diluted share, on sales of $160.3 million. In the same period last year, income from continuing operations was $10.5 million, or $.50 per diluted share including $.14 per share from the favorable resolution of income tax audits, on sales of $124.9 million. Net income for the fourth quarter was $9.4 million, or $.44 per diluted share, compared with $7.6 million, or $.36 per share.
Full year 2003 income from continuing operations was $29.7 million, or $1.41 per diluted share, including a third quarter foreign currency gain of approximately $1.9 million net of tax, or $.09 per share. The prior year’s income from continuing operations was $31.3 million, or $1.49 per diluted share, including the favorable tax resolution of tax audits. Fiscal 2003 sales were $562.5 million compared with last year’s sales of $434.8 million.
Robert W. Cremin, Esterline CEO, noted that the company continues to perform well despite commercial aerospace market conditions that remain sluggish. Cremin said that the company is focused on consolidating recent acquisitions—transactions that added about $90 million in incremental sales during the year. “As consolidation progresses, combined with slowly improving market conditions, we expect to begin to see steady performance improvement.” And he emphasized that even without acquisitions, “…the performance was solid, with organic growth of roughly 10%.”
He attributed this performance principally to improved sales volumes of technology interface systems, including specialized switches, displays and controls for aircraft and land-based military vehicles and high-end medical equipment, as well as increased shipments of combustible ordnance components.
Cremin said he was encouraged by the results, including two consecutive quarters of improving margins. He remained cautious about the near-term, however, reminding shareholders that Esterline’s first quarter results are typically weaker than other quarters due to holiday plant closures and customer buying patterns. In addition, he said the company anticipates “…a one-time charge of about $.10 per share in the first half for severance expense related to the merger of recently acquired Weston Aerospace and our Auxitrol operation.”
He added though, that commercial aerospace “…appears to be at the bottom of the cycle, and we expect defense markets to remain strong and key industrial business to improve.” He said that “…all in all, a reasonable earnings expectation for fiscal 2004 would be in the “…$1.50 to $1.60 range.”
Including charges for discontinued operations of $5.8 million net of tax, fiscal 2003 net earnings were $23.9 million, or $1.13 per diluted share. This compared with a loss of $1.3 million, or ($.06) per diluted share, for fiscal 2002, including a loss from discontinued operations of $25.0 million, or ($1.19) per diluted share, and a $7.6 million charge, or ($.36) per diluted share, for the cumulative effect of an accounting change as a result of the adoption of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”
Orders received in the fourth quarter totaled $140.0 million compared with $155.2 million a year ago. Backlog at October 31, 2003, was $300.9 million compared with $281.7 million at the end of the prior-year period.
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, 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 changes in aerospace/defense industry demand or because of current uncertainties associated with other risks detailed in the company's public filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended October 25, 2002.
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