Attached files
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| 8-K - FORM 8-K - ESTERLINE TECHNOLOGIES CORP | d8k.htm |
Exhibit 99.1
| FOR IMMEDIATE RELEASE | ||||
| Contact: | Brian D. Keogh | |||
| (425) 453-9400 | ||||
ESTERLINE REPORTS RECORD PERFORMANCE FOR FISCAL 2010;
EARNINGS UP 23.2% ON 8.5% SALES IMPROVEMENT
Income from continuing operations $130 million, or $4.27 per share, on $1.53 billion sales
BELLEVUE, Wash., December 09, 2010 – Esterline Corporation (NYSE: ESL 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
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Page 2 of 6 Esterline Reports Fiscal 2010 Results
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 late 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.”
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Page 3 of 6 Esterline Reports Fiscal 2010 Results
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 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.
Page 4 of 6 Esterline Reports Fiscal 2010 Results
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations (unaudited)
In thousands, except per share amounts
| Three Months Ended | Fiscal Year Ended | |||||||||||||||
| Oct 29, 2010 |
Oct 30, 2009 |
Oct 29, 2010 |
Oct 30, 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 | ||||||||||||
Page 5 of 6 Esterline Reports Fiscal 2010 Results
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Sales and Income from Continuing Operations by Segment (unaudited)
In thousands
| Three Months Ended | Fiscal Year Ended | |||||||||||||||
| Oct 29, 2010 |
Oct 30, 2009 |
Oct 29, 2010 |
Oct 30, 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 | ||||||||
Page 6 of 6 Esterline Reports Fiscal 2010 Results
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Balance Sheet (unaudited)
| In thousands | Oct 29, 2010 |
Oct 30, 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 | |||||