BELLEVUE, WA--(Marketwire - August 30, 2007) - Esterline Corporation (
NYSE:
ESL)
(
www.esterline.com), a leading specialty manufacturer serving
aerospace/defense markets, today reported fiscal 2007 third quarter (ended
July 27) net earnings of $38.8 million, or $1.49 per diluted share,
including $23.0 million after tax, or $.88 per share, from a previously
announced insurance recovery. Sales in the third quarter of FY07 were
$326.4 million, including $40.9 million from recently acquired CMC
Electronics. Year-ago net earnings were $11.2 million, or $.43 per diluted
share, on sales of $248.4 million.
Robert W. Cremin, Esterline CEO, characterized the quarter as "... another
solid performance for Esterline, with organic sales up 15% and earnings
from operations up 41% over last year." Cremin added that on a
year-over-year-basis, "... all three Esterline business segments
contributed to the growth." He also emphasized that the quarter's
performance absorbed nearly $3.4 million of acquisition-related accounting
expense associated with the CMC acquisition. "We like the way the quarter
came together, and more importantly, many elements are now in place for an
excellent fourth quarter." On that note, the company raised its full-year
operating earnings guidance by $.05 to a range of $2.55 to $2.65 per share,
excluding the insurance recovery of $.88 in the third quarter.
Regarding CMC, Cremin said that the final impact of acquisition accounting
"... was booked in the third quarter, so the purchase accounting anomalies
are now behind us." He added that since the date of the acquisition, the
company has reduced its term loan credit facility by $35 million, "...
reflecting Esterline's strong cash flow generation."
Backlog at quarter end totaled $978 million. Cremin said, "... at this
point, the backlog number includes only a few million dollars from such
high-profile new programs as the 787, A400M or A380. What this says to me
is regardless of what may or may not happen to the schedules of these
platforms, we have plenty of good things happening on hundreds of other
programs."
Consolidated gross margin in the quarter was 30.5% compared with 30.3% a
year ago. The primary reason for the level margin performance was the
purchase accounting effect on inventory costs associated with the
acquisition of CMC. Selling, general and administrative expenses (SG&A) as
a percent of sales were 17.0% in the third quarter of 2007 compared with
16.7% in the prior-year period. Cremin said, "... the company's operations
have done a good job keeping our overhead slim and a lid on our capital
spending."
Cremin noted that, "... as anticipated, research, development and
engineering expense during the quarter declined to 5.2% of sales. That
level compares with 6.1% last quarter and 5.8% a year ago." He said he
anticipates R&D spending to continue to decline as the 787 and A400M
programs move closer to production. R&D spending in the company's fourth
fiscal quarter is anticipated to be about 5% of sales.
The insurance recovery relates to property damage and business interruption
claims related to last year's explosion at Esterline's UK-based
countermeasure flares operation. During the third quarter of fiscal 2007,
the company recorded insurance recoveries of $23.0 million, net of tax of
$9.9 million. Year-to-date, insurance recoveries totaled $26.1 million,
net of tax of $11.2 million. The insurance recovery reimburses Esterline
for damage and the loss of earnings at the affected facility. The company
expects the damaged facility to be back in operation at the end of its
fiscal 2008.
Interest expense for the third fiscal quarter of 2007 was $10.8 million
compared with $5.6 million a year ago, reflecting increased borrowings to
finance acquisitions and working capital requirements.
Year-to-date net earnings were $71.4 million, or $2.74 per diluted share,
on sales of $895.9 million, compared with $37.2 million, or $1.44 per
diluted share, on sales of $702.0 million last year.
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 and uncertainties detailed
in Esterline's public filings with the Securities and Exchange Commission.
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations (unaudited)
In thousands, except per share amounts
Three months ended Nine months ended
July 27, July 28, July 27, July 28,
2007 2006 2007 2006
-------- -------- -------- --------
Segment Sales
Avionics & Controls $121,512 $ 71,191 $305,331 $205,497
Sensors & Systems 97,418 84,672 281,732 241,319
Advanced Materials 107,446 92,535 308,837 255,186
-------- -------- -------- --------
Net Sales 326,376 248,398 895,900 702,002
Cost of Sales 226,734 173,041 622,827 483,047
-------- -------- -------- --------
99,642 75,357 273,073 218,955
Expenses
Selling, general and
administrative 55,461 41,560 148,237 118,423
Research, development and
engineering 16,952 14,480 49,585 37,752
-------- -------- -------- --------
Total Expenses 72,413 56,040 197,822 156,175
Other
Other (income) expense 7 17 24 (445)
Insurance recovery (32,857) -- (37,314) --
-------- -------- -------- --------
Total Other (32,850) 17 (37,290) (445)
-------- -------- -------- --------
Operating Earnings 60,079 19,300 112,541 63,225
Interest income (821) (393) (2,110) (2,250)
Interest expense 10,790 5,586 25,042 15,881
Loss on extinguishment
of debt -- -- -- 2,156
-------- -------- -------- --------
Other Expense, Net 9,969 5,193 22,932 15,787
-------- -------- -------- --------
Income Before Income Taxes 50,110 14,107 89,609 47,438
Income Tax Expense 11,217 2,576 18,096 9,439
-------- -------- -------- --------
Income Before Minority Interest 38,893 11,531 71,513 37,999
Minority Interest (58) (308) (117) (753)
-------- -------- -------- --------
Net Earnings $ 38,835 $ 11,223 $ 71,396 $ 37,246
======== ======== ======== ========
Earnings Per Share:
Basic $ 1.51 $ .44 $ 2.79 $ 1.47
Diluted $ 1.49 $ .43 $ 2.74 $ 1.44
Weighted Average Number of
Shares Outstanding - Basic 25,691 25,448 25,604 25,390
Weighted Average Number of
Shares Outstanding - Diluted 26,139 25,867 26,022 25,809
Consolidated Balance Sheet (unaudited)
In thousands July 27, July 28,
2007 2006
---------- ----------
Assets
Current Assets
Cash and cash equivalents $ 83,682 $ 38,642
Cash in escrow -- 4,345
Accounts receivable, net 223,157 167,766
Inventories 251,612 185,150
Income tax refundable 15,601 3,291
Deferred income tax benefits 36,893 27,275
Prepaid expenses 14,056 8,205
---------- ----------
Total Current Assets 625,001 434,674
Property, Plant and Equipment, Net 214,550 170,641
Other Non-Current Assets
Goodwill 604,230 361,968
Intangibles, net 371,080 244,265
Debt issuance costs, net 10,691 4,638
Deferred income tax benefits 16,547 17,766
Other assets 31,372 25,691
---------- ----------
$1,873,471 $1,259,643
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 83,468 $ 68,569
Accrued liabilities 164,571 108,031
Credit facilities 28,622 5,181
Current maturities of long-term debt 10,245 4,099
Federal and foreign income taxes 7,973 2,861
---------- ----------
Total Current Liabilities 294,879 188,741
Long-Term Liabilities
Long-term debt, net of current
maturities 555,385 280,775
Deferred income taxes 120,991 73,748
Other liabilities 42,956 30,374
Commitments and Contingencies -- --
Minority Interest 2,932 3,466
Shareholders' Equity 856,328 682,539
---------- ----------
$1,873,471 $1,259,643
========== ==========
Contact Information: Contact:
Brian Keogh
425-453-9400