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Published:
Esterline Reports 3Q Earnings of $20.5 Million, or $.68 per Share, on $382.1 Million Sales
Previously, the company estimated third quarter earnings would be $.55 to $.60 per share, reflecting postponed research and development assistance discussions with the Canadian government. Robert W. Cremin, Esterline CEO, said, "...third quarter results were stronger than we expected, principally due to strong performance from our European operations during the month of July." Cremin also said that sales of spare parts and other aftermarket activity remained robust in both commercial aerospace and defense markets. Cremin advised that the company was increasing its full-year (ended October 31) earnings guidance range to $3.50 to $3.60 per share, up from the previous guidance range of $3.45 to $3.55. Regarding the discussions in Canada, Cremin said, "...although we are optimistic, we have excluded any results of those talks from our full-year earnings estimate." Formal talks are expected to resume in September. Overall research, development and engineering (R&D) expense in the third quarter was $22.4 million, or 5.9% of sales. Cremin noted that R&D spending as a percent of sales was down in the quarter "...from the 7% peak level in the prior quarter, reflecting Esterline's residual efforts on several major development programs, including the Boeing 787 and Airbus A400M." He said that Esterline's R&D will "...trend down somewhat on a percent of sales basis as we move forward." He emphasized that "...investment in new product development remains essential to our delivering the value our customers have come to expect." Backlog at the end of the third quarter was $1.06 billion compared with $977.9 million at the end of the prior-year period. Orders in the quarter increased to $380.4 million from $349.8 million a year ago. Year-to-date net earnings were $76.7 million, or $2.56 per diluted share. For the first nine months of fiscal 2007, comparable earnings were $71.4 million, or $2.74 per diluted share, including $26.1 million after tax, or $1.00 per share, from an insurance recovery. Sales for the first nine months of 2008 were $1.13 billion compared with $895.9 million a year ago. The effective tax rate in the first nine months reflects $5.9 million in discrete tax benefits. 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 including its most recent Annual Report on Form 10-K. EDITOR: See attached Consolidated Statement of Operations and Consolidated Balance Sheet
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations (unaudited)
In thousands, except per share amounts
Three months ended Nine months ended
Aug 1, Jul 27, Aug 1, Jul 27,
2008 2007 2008 2007
--------- --------- --------- ---------
Segment Sales
Avionics & Controls $ 147,925 $ 123,410 $ 438,008 $ 310,379
Sensors & Systems 121,927 95,520 343,825 276,684
Advanced Materials 112,218 107,446 346,621 308,837
--------- --------- --------- ---------
Net Sales 382,070 326,376 1,128,454 895,900
Cost of Sales 262,668 226,734 762,421 622,827
--------- --------- --------- ---------
119,402 99,642 366,033 273,073
Expenses
Selling, general
and administrative 63,183 55,461 184,804 148,237
Research, development
and engineering 22,396 16,952 71,328 49,585
--------- --------- --------- ---------
Total Expenses 85,579 72,413 256,132 197,822
Other
Other expense -- 7 86 24
Insurance recovery -- (32,857) -- (37,314)
--------- --------- --------- ---------
Total Other -- (32,850) 86 (37,290)
--------- --------- --------- ---------
Operating Earnings 33,823 60,079 109,815 112,541
Interest income (1,125) (821) (3,512) (2,110)
Interest expense 7,339 10,790 22,517 25,042
Gain on derivative
financial instrument -- -- (1,850) --
--------- --------- --------- ---------
Other Expense, Net 6,214 9,969 17,155 22,932
--------- --------- --------- ---------
Income Before Income Taxes 27,609 50,110 92,660 89,609
Income Tax Expense 7,091 11,217 15,780 18,096
--------- --------- --------- ---------
Income Before Minority
Interest 20,518 38,893 76,880 71,513
inority Interest (36) (58) (229) (117)
--------- --------- --------- ---------
Net Earnings $ 20,482 $ 38,835 $ 76,651 $ 71,396
========= ========= ========= =========
Earnings Per Share:
Basic $ .69 $ 1.51 $ 2.60 $ 2.79
Diluted $ .68 $ 1.49 $ 2.56 $ 2.74
Weighted Average Number
of Shares Outstanding-Basic 29,575 25,691 29,466 25,604
Weighted Average Number
of Shares Outstanding-Diluted 29,994 26,139 29,894 26,022
Consolidated Balance Sheet (unaudited)
In thousands Aug 1, July 27,
2008 2007
------------ ------------
Assets
Current Assets
Cash and cash equivalents $ 162,552 $ 83,682
Accounts receivable, net 249,083 223,157
Inventories 298,461 251,612
Income tax refundable 6,495 15,601
Deferred income tax benefits 31,907 36,893
Prepaid expenses 15,774 14,056
------------ ------------
Total Current Assets 764,272 625,001
Property, Plant and Equipment, Net 215,909 214,550
Other Non-Current Assets
Goodwill 651,381 604,230
Intangibles, net 339,146 371,080
Debt issuance costs, net 7,957 10,691
Deferred income tax benefits 46,041 16,547
Other assets 25,715 31,372
------------ ------------
$ 2,050,421 $ 1,873,471
============ ============
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 88,763 $ 83,468
Accrued liabilities 181,583 164,571
Credit facilities 8,550 28,622
Current maturities of long-term debt 8,649 10,245
Federal and foreign income taxes 14,173 7,973
------------ ------------
Total Current Liabilities 301,718 294,879
Long-Term Liabilities
Long-term debt, net of current
maturities 390,221 555,385
Deferred income taxes 118,307 120,991
Other liabilities 54,051 42,956
Commitments and Contingencies -- --
inority Interest 2,643 2,932
Shareholders' Equity 1,183,481 856,328
------------ ------------
$ 2,050,421 $ 1,873,471
============ ============
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