SOURCE: Esterline Technologies
Income From Continuing Operations $130 Million, or $4.27 per Share, on $1.53 Billion Sales
BELLEVUE, WA–(Marketwire – December 9, 2010) – Esterline Corporation (
(www.esterline.com), a leading specialty manufacturer serving
aerospace/defense markets, today reported fiscal 2010 fourth quarter and
full-year results for the period ended October 29, 2010. Income from
continuing operations for the quarter was a record $49.3 million, or $1.60
per diluted share, on sales of $430.5 million. For the same period last
year, income from continuing operations was $37.4 million, or $1.24 per
diluted share, on sales of $390.1 million. (Continuing operations exclude
results from Esterline’s Pressure Systems subsidiary, divested on September
8, 2010, and its Muirhead Aerospace subsidiary, divested on November 3,
2008.)
For the full year ended October 29, 2010, Esterline reported income from
continuing operations of $130.0 million, or $4.27 per diluted share, on
sales of $1.53 billion — an 8.5% improvement over last year, nearly all
organic. FY2009 income from continuing operations was $105.6 million, or
$3.52 per diluted share, on $1.41 billion in sales.
Brad Lawrence, Esterline CEO, said the record performance reflects several
areas of strength over last year, principally new and retrofit military
cockpit programs, control panels for medical capital equipment, and
operating efficiency with countermeasure flares. Lawrence said, “Our
Avionics & Controls business segment provided a significant boost for
Esterline in FY2010. In this segment, demand for the new T-6B military
trainer aircraft, as well as success in the international market for C-130
cockpit upgrades provided significant incremental new business for
Esterline in 2010.”
On the commercial aerospace side, in addition to seeing accelerating
activity in preparation for increased narrow body aircraft production at
Airbus and Boeing, Lawrence said, “our aftermarket spare parts business is
beginning to show definite signs of improvement across all of our
segments.”
In the company’s non-aerospace Interface Technologies operation, Lawrence
said business is benefiting from increased demand for medical imaging
equipment to replace older systems. New products, such as Esterline’s
programmable button panel, are also key growth ingredients for this
business. “With our new OLED (organic light emitting diode) switches,
customers now can create dynamic content and animation on each intelligent
button — a truly revolutionary step forward in casino gaming technology,”
he said.
Lawrence said Esterline’s focus on operational excellence, consistent
investment in R&D and good-fit acquisitions “…is clearly shaping our
performance.”
Gross margins in FY2010 were 33.8% compared with 32.2% last year, and
selling, general and administrative expenses were essentially flat in
FY2010 — 16.9% of sales compared with 16.7% in FY2009.
Fourth quarter 2010 research, development and engineering (R&D) expense
totaled $17.7 million, or 4.1% of sales, compared with $15.3 million, or
3.9% of sales, in the same quarter a year ago. Full-year 2010 R&D totaled
$69.8 million, compared with $64.5 million — 4.6% in both years. Lawrence
said the rate reflects “…a return to more normalized R&D investment
following several years of successful efforts to secure positions on a
number of major programs.” He added that, “…our constant technology
advancements have enabled us to steadily increase our total dollar content
per aircraft for the hundreds of active aircraft platforms flying today.”
In October, Esterline entered into an agreement with L-3 Communications
Avionics Systems (L-3) to acquire an exclusive license for SmartDeck®
integrated cockpit technologies. Lawrence said “…by licensing these
technologies we enable our avionics operation to expand its product
portfolio and enhance its cockpit capabilities for both OEM and retrofit
opportunities.”
Backlog at fiscal year-end was $1.1 billion, up slightly from last year.
Orders received in FY2010 totaled $1.6 billion — up 11.2% compared with
last year.
Fiscal 2010 income from discontinued operations was $0.39 per diluted
share, compared with $0.48 per diluted share in fiscal 2009, reflecting the
gain on the sale of Pressure Systems, Inc. in September 2010 and the sale
of Muirhead Aerospace in November 2008. Fiscal 2010 net income was $141.9
million or $4.66 per diluted share, compared with net income of $119.8
million or $4.00 per diluted share in fiscal 2009.
FY2011 Outlook
Throughout FY2010, Esterline generated progressively stronger quarterly
results following a soft first quarter. FY2011 is expected to unfold in
much the same way, but at a higher level. Lawrence said he expects a
relatively slow start to the year with performance gaining momentum as the
year progresses. “Esterline’s first fiscal quarter has always been the
weakest of the year, due primarily to the shorter number of work days in
November through January,” he said. The company’s FY2011 annual revenue
should grow about 5% to 8% with fully diluted earnings per share in the
range of $4.40 to $4.65. Lawrence noted that Esterline’s effective tax
rate for FY2011 is anticipated to be in the low- to mid-20% range, compared
with the 15.8% rate in FY2010.
Conference Call Information
Esterline will host a conference call to discuss this announcement today at
5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The U.S. dial-in number
is 866.783.2140; outside the U.S., use 857.350.1599. The pass code for the
call is: 66875837.
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.
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations (unaudited)
In thousands, except per share amounts
Three Months Ended Fiscal Year Ended
------------------ --------------------
Oct 29, Oct 30, Oct 29, Oct 30,
2010 2009 2010 2009
-------- -------- --------- ---------
Segment Sales
Avionics & Controls $226,740 $204,222 $ 790,016 $ 672,828
Sensors & Systems 78,539 79,377 298,559 321,753
Advanced Materials 125,171 106,549 438,026 412,878
-------- -------- --------- ---------
Net Sales 430,450 390,148 1,526,601 1,407,459
Cost of Sales 272,501 262,423 1,010,390 954,161
-------- -------- --------- ---------
157,949 127,725 516,211 453,298
Expenses
Selling, general and
administrative 69,708 64,638 258,290 235,483
Research, development
and engineering 17,741 15,255 69,753 64,456
Other (income) expense (3) 24 (8) 7,970
-------- -------- --------- ---------
Total Expenses 87,446 79,917 328,035 307,909
Operating Earnings From
Continuing Operations 70,503 47,808 188,176 145,389
Interest income (309) (685) (960) (1,634)
Interest expense 9,790 7,319 33,181 28,689
Loss on extinguishment
of debt 1,206 -- 1,206 --
-------- -------- --------- ---------
Income From Continuing Operations
Before Income Taxes 59,816 41,174 154,749 118,334
Income Tax Expense 10,427 3,712 24,504 12,549
-------- -------- --------- ---------
Income From Continuing Operations
Including Noncontrolling Interests 49,389 37,462 130,245 105,785
Income Attributable to
Noncontrolling Interests (98) (81) (206) (217)
-------- -------- --------- ---------
Income From Continuing Operations 49,291 37,381 130,039 105,568
Income (Loss) From Discontinued
Operations, Net of Tax 10,398 (2,880) 11,881 14,230
-------- -------- --------- ---------
Net Earnings $ 59,689 $ 34,501 $ 141,920 $ 119,798
======== ======== ========= =========
Earnings Per Share - Basic:
Continuing Operations $ 1.63 $ 1.26 $ 4.34 $ 3.55
Discontinued Operations .35 (.10) .39 .48
-------- -------- --------- ---------
Earnings Per Share - Basic $ 1.98 $ 1.16 $ 4.73 $ 4.03
======== ======== ========= =========
Earnings Per Share - Diluted:
Continuing Operations $ 1.60 $ 1.24 $ 4.27 $ 3.52
Discontinued Operations .34 (.09) .39 .48
-------- -------- --------- ---------
Earnings Per Share - Diluted $ 1.94 $ 1.15 $ 4.66 $ 4.00
======== ======== ========= =========
Weighted Average Number of
Shares Outstanding - Basic 30,151 29,763 29,973 29,717
Weighted Average Number of
Shares Outstanding - Diluted 30,724 30,034 30,477 29,951
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Sales and Income from Continuing Operations by Segment
(unaudited)
In thousands
Three Months Ended Fiscal Year Ended
------------------ ----------------------
Oct 29, Oct 30, Oct 29, Oct 30,
2010 2009 2010 2009
-------- -------- ---------- ----------
Segment Sales
Avionics & Controls $226,740 $204,222 $ 790,016 $ 672,828
Sensors & Systems 78,539 79,377 298,559 321,753
Advanced Materials 125,171 106,549 438,026 412,878
-------- -------- ---------- ----------
Net Sales $430,450 $390,148 $1,526,601 $1,407,459
======== ======== ========== ==========
Income from Continuing
Operations
Avionics & Controls $ 47,531 $ 36,077 $ 125,888 $ 99,313
Sensors & Systems 11,916 6,384 33,894 31,739
Advanced Materials 23,753 13,168 68,785 53,602
-------- -------- ---------- ----------
83,200 55,629 228,567 184,654
Corporate expense (12,700) (7,797) (40,399) (31,295)
Other income (expense) 3 (24) 8 (7,970)
Interest income 309 685 960 1,634
Interest expense (9,790) (7,319) (33,181) (28,689)
Loss on extinguishment
of debt (1,206) -- (1,206) --
-------- -------- ---------- ----------
Income From Continuing
Operations Before Income Taxes $ 59,816 $ 41,174 $ 154,749 $ 118,334
======== ======== ========== ==========
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Balance Sheet (unaudited)
In thousands Oct 29, Oct 30,
2010 2009
----------- -----------
Assets
Current Assets
Cash and cash equivalents $ 422,120 $ 176,794
Accounts receivable, net 309,242 270,976
Inventories 262,373 275,282
Income tax refundable 17,806 7,638
Deferred income tax benefits 37,539 31,434
Prepaid expenses 16,264 17,425
Other current assets 11,241 17,048
----------- -----------
Total Current Assets 1,076,585 796,597
Property, Plant and Equipment, Net 273,770 263,251
Other Non-Current Assets
Goodwill 739,730 736,808
Intangibles, net 389,017 422,082
Debt issuance costs, net 7,774 7,136
Deferred income tax benefits 87,622 79,114
Other assets 13,240 9,259
----------- -----------
$ 2,587,738 $ 2,314,247
=========== ===========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 82,275 $ 82,304
Accrued liabilities 215,094 191,667
Credit facilities 1,980 5,896
Current maturities of long-term debt 12,646 5,409
Deferred income tax liabilities 7,155 7,294
Federal and foreign income taxes 5,227 1,669
----------- -----------
Total Current Liabilities 324,377 294,239
Long-Term Liabilities
Long-term debt, net of current maturities 598,972 520,158
Deferred income taxes 127,081 130,456
Pension and post-retirement obligations 105,333 93,615
Other liabilities 16,476 20,027
Total Shareholders' Equity 1,415,499 1,255,752
----------- -----------
$ 2,587,738 $ 2,314,247
=========== ===========