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FOR IMMEDIATE RELEASE
December 6 th , 2007
ESTERLINE ENDS YEAR ON HIGH NOTE
Fourth Quarter Net Earnings $20.9 Million, or $.78 per Diluted Share, on $370.7 Million Sales
BELLEVUE, Wash., Dec. 6, 2007 — Esterline Corporation (NYSE/ESL www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fourth quarter (ended October 26) net earnings of $20.9 million, or $.78 per diluted share, on sales of $370.7 million. In the same period last year, net earnings were $18.4 million, or $.71 per diluted share, on $270.3 million sales.
Full-year 2007 net earnings were $92.3 million, or $3.52 per diluted share, on sales of $1.27 billion, compared with net earnings of $55.6 million, or $2.15 per diluted share, on $972.3 million sales last year. Fiscal years 2007 and 2006 included insurance recoveries of $37.5 million and $4.9 million, respectively. Excluding the insurance recoveries, full-year operating earnings were up 24% over last year, and net earnings were up 27%.
Robert W. Cremin, Esterline CEO, said the performance “…capped a transformational year for Esterline. The March acquisition of Canada-based CMC Electronics not only helped boost revenues by more than 30% over last year, it was an important move up the value chain for us.” He said that “…adding high technology avionic systems integration capability to our market leading toolkit of component solutions significantly increased the value we bring to our customers.”
Cremin said that as the company has expanded its critical mass organically (nearly 15% in 2007) and through strategic acquisitions like CMC, “…we’ve been able to surge R&D and are now positioned to benefit as these efforts begin to bear fruit.” Cremin said that Esterline’s R&D spending as a percent of sales peaked in 2007 at 5.6%, compared with 5.4% in 2006. Cremin said he expects 2008 R&D expense to be about 5% of sales. He also explained that although CMC’s gross level of R&D spending as recorded under U.S. GAAP will drive the rate higher than Esterline’s historical average of about 4%, “…this difference is substantially offset by R&D tax credits.”
In mid-October 2007, the company issued 3.45 million shares of common stock. Cremin said that the “…proceeds from the stock offering along with strong cash generation enabled us to pay down a significant portion of our outstanding debt and repositioned Esterline’s balance sheet to pre-CMC ratios.” In 2007, the company generated EBITDA* of $203 million, an increase of 49% from 2006, and cash flow from operations of $122 million. The company closed the year with debt of $476 million, a debt-to-EBITDA coverage ratio of 2.3 times and a debt-to-equity ratio of 42%. Cremin said, “...these metrics provide us with optimal flexibility to take advantage of changes in capital markets.”
Cremin said he anticipates another solid year ahead for Esterline, and provided a 2008 EPS guidance range of $3.00 to $3.20 per share. He said, “…excluding the insurance effect on 2007 EPS, the mid-point of our 2008 guidance is a respectable 23% improvement over last year.” He said the company’s order books are strong and backlog at year-end was $985 million compared with $654 million last year. He pointed to robust industry fundamentals saying, “…whether you’re talking commercial or military aviation, it’s hard to find a platform that Esterline is not on, and our content per aircraft is increasing rapidly.”
This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
A copy of the final prospectus supplement relating to the offering may be obtained, when available, from Jefferies & Company, Inc., Equity Capital Markets, 520 Madison Avenue, New York, NY 10022: 1-888-449-2342.
About Esterline
Esterline is a leading world-wide supplier to the aerospace and defense industry specializing in three core areas: Avionics & Controls, Sensors & Systems, and Advanced Materials.
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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