B/E Aerospace Reports Third Quarter 2005 Financial Results.WELLINGTON Wellington, city (1996 pop. 157,647; urban agglomeration 334,051), capital of New Zealand, extreme S North Island, on Port Nicholson, an inlet of Cook Strait. , Fla. -- B/E B/E abbr. 1. bill of entry 2. bill of exchange Aerospace, Inc.: --Revenues of $217 Million up 18 Percent, Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.16 Exceeds Consensus --Record Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. Reaches $1 Billion --Confirms 2006 Guidance and Establishes Preliminary 2007 Earnings Guidance B/E Aerospace, Inc. (Nasdaq: BEAV BEAV Binary Editor and Viewer ), the world's leading manufacturer of aircraft cabin An aircraft cabin is the section of an aircraft in which passengers travel, often just called the cabin. At cruising altitudes, the surrounding atmosphere is too thin to breathe without an oxygen mask, so cabin pressurization adapts the cabin to atmospheric pressures. interior products and a leading aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. distributor of aerospace fasteners fasteners In construction, connectors between structural members. Bolted connections are used when it is necessary to fasten two elements tightly together, especially to resist shear and bending, as in column and beam connections. , today announced its financial results for the three and nine-month periods ended September September: see month. 30, 2005. HIGHLIGHTS --Reported third quarter revenues of $217.1 million, representing year- over- over- pref. 1. Above or upon in position: overpass; overcoat. 2. Superior in rank or importance: overlord. 3. year organic growth of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 18 percent. --Third quarter gross margin of 35.3 percent expanded by 250 basis points versus the same period in the prior year. --Third quarter operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before of $25.4 million were 45 percent higher than the same period in the prior year. Third quarter operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 11.7 percent expanded by 220 basis points versus the same period in the prior year. The 45 percent operating earnings growth rate was driven by continued revenue and earnings growth at each of B/E's commercial aircraft, business jet and distribution segments. --Net earnings for the quarter were $10.0 million, or $0.16 per diluted share (versus consensus estimates of $0.15 per diluted share) and represents increases of $12.7 million and $0.23 per diluted share, respectively, versus the same period in the prior year. --Record backlog at September 30, 2005 stood at over $1 billion, an increase of approximately 63 percent from backlog at September 30, 2004 and an increase of over $180 million or approximately 22 percent as compared to the immediately preceding quarter. Bookings for the three and nine month periods ended September 30, 2005 were in excess of $400 million and $900 million, respectively. --Management expects, for 2006, revenues and earnings per share of approximately $1 billion and $1.10, respectively; and for 2007, earnings per share to grow at a double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" rate, on a fully taxed (35 percent rate) basis, driven by strong revenue growth and additional margin expansion. THIRD QUARTER SEGMENT SALES AND OPERATING EARNINGS For the third quarter, consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: sales were $217.1 million, a $33.6 million or 18.3 percent increase over the third quarter of 2004. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight by segment were as follows:
NET SALES
--------------------------------------------
Three Months Ended September 30
($ in millions)
--------------------------------------------
Percent
2005 2004 Change Change
--------------------------------------------
Commercial aircraft $140.6 $126.0 $14.6 11.6%
Distribution 43.0 36.6 6.4 17.5%
Business jet 33.5 20.9 12.6 60.3%
--------------------------------------------
Total $217.1 $183.5 $33.6 18.3%
The commercial aircraft segment generated revenues of $140.6 million in the third quarter of 2005, up 11.6 percent versus the same period in the prior year, primarily due to a higher volume of commercial aircraft passenger cabin equipment and engineering, integration and certification services. The distribution segment delivered strong revenue growth of 17.5 percent in the third quarter of 2005, driven by a broad-based broad-based Of or relating to an index or average that provides a good representation of the overall market. The S&P 500 and NYSE Composite are generally regarded as broad-based stock indexes, while the popular Dow Jones Industrial Average is biased increase in aftermarket demand for aerospace fasteners and continued market share gains. In the business jet segment, revenues increased by 60.3 percent in the third quarter of 2005, reflecting the ongoing recovery of the business jet industry and initial shipments of super first class products. Operating earnings for the third quarter of 2005 of $25.4 million increased by 45 percent, as compared to the same period last year. The operating margin of 11.7 percent in the third quarter of 2005 was 220 basis points greater than the operating margin realized in the third quarter of 2004. The substantial increase in operating earnings was driven by continued revenue and earnings growth at each of B/E's commercial aircraft, distribution and business jet segments. Interest expense for the third quarter of 2005 of $14.8 million was $4.9 million lower than interest expense recorded in the same period in the prior year. Interest expense decreased in the third quarter of 2005 as a result of the early retirement of $200 million of senior subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes during the fourth quarter of 2004. The interest coverage ratio, which is determined by dividing the sum of operating earnings plus depreciation and amortization by interest expense, was 2.2:1 for the third quarter of 2005, as compared to 1.3:1 in the third quarter of 2004. Net earnings for the third quarter were $10.0 million or $0.16 per diluted share, a $12.7 million or $0.23 per diluted share improvement as compared to the same period in the prior year. THIRD QUARTER SEGMENT DISCUSSION The following is a summary of the change in operating earnings by segment:
OPERATING EARNINGS
-----------------------------------------------
Three Months Ended September 30
($ in millions)
-----------------------------------------------
Percent
2005 2004 Change Change
-----------------------------------------------
Commercial aircraft $14.0 $11.3 $2.7 23.9%
Distribution 8.7 6.2 2.5 40.3%
Business jet 2.7 --- 2.7 NM
-----------------------------------------------
Total $25.4 $17.5 $7.9 45.1%
The commercial aircraft segment's ("CAS") operating results and order book continued to improve during the third quarter of 2005. Compared to the third quarter of 2004, CAS operating earnings of $14.0 million increased by 23.9 percent on an 11.6 percent increase in sales. The operating margin for the quarter expanded to 10.0 percent, a 100 basis point improvement over the same period in the prior year. This margin expansion was primarily the result of an improved mix of products sold and ongoing manufacturing efficiencies. CAS bookings for the third quarter of 2005 nearly tripled versus the same period last year as backlog during the third quarter of 2005 reached a record level. The distribution segment generated revenues of $43.0 million in the third quarter of 2005, which were 17.5 percent greater than the same period in the prior year. Operating earnings at the distribution segment in the third quarter of 2005 were $8.7 million, 40.3 percent higher than the same period last year and represented a 20.2 percent operating margin. The distribution segment's excellent performance was in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite three lost days of operations and sales due to hurricane hurricane, tropical cyclone in which winds attain speeds greater than 74 mi (119 km) per hr. Wind speeds reach over 190 mi (289 km) per hr in some hurricanes. activity in the third quarter. The business jet segment generated third quarter revenues of $33.5 million, up 60.3 percent as compared to the third quarter of 2004. Operating earnings at the business jet segment during the quarter were $2.7 million higher than operating earnings in the same period last year. The substantial increase in operating earnings reflects the higher level of revenues associated with an improving business jet industry and operational improvements in the new super first class product line. NINE-MONTH CONSOLIDATED RESULTS For the nine months ended September 30, 2005, B/E reported consolidated sales of $621.2 million, a 14.2 percent increase over the same period last year. Gross profit of $217.4 million for this nine-month period was 23.9 percent higher versus the same period in the prior year, as gross margin expanded by 270 basis points to 35.0 percent. Operating earnings of $69.4 million for the nine-month period were up 44 percent compared to the same period last year, primarily due to the 14 percent increase in revenues and a 240 basis point expansion in operating margin to 11.2 percent of sales. Interest expense of $44.9 million for the current nine-month period decreased by $14.5 million versus the same period in the prior year. Net earnings for the nine-month period were $22.5 million or $0.37 per diluted share, increases of $35.2 million and $0.71 per diluted share versus the same period last year. For the nine months ended September 30, 2005 compared to the same period in 2004, CAS generated operating earnings of $37.2 million, an increase of 23.2 percent on a 6.3 percent increase in sales, reflecting a 130 basis point expansion in operating margin to 9.2 percent of sales. The margin expansion was primarily due to an improved mix of products sold and ongoing manufacturing efficiencies. For the nine months ended September 30, 2005 compared to the same period in 2004, distribution segment operating earnings of $26.5 million were up 35.9 percent on a 21.9 percent increase in sales. Similarly, for the nine months ended September 30, 2005 compared to the same period in 2004, business jet segment operating earnings of $5.7 million were up $7.3 million on a $29.8 million or 53 percent increase in sales. LIQUIDITY, BALANCE SHEET AND CASH FLOWS At the end of the quarter, the company's liquidity remained solid with cash balances totaling approximately $87 million, up $11 million from the December December: see month. 31, 2004 balance. Net debt at the end of the third quarter stood at approximately $592 million, which represents total debt of approximately $680 million less cash and cash equivalents of approximately $87 million. The company has no debt maturities until 2008. RECENT PROGRAM WINS, RECORD BACKLOG, STRENGTHEN OUTLOOK Record bookings for the third quarter of over $400 million drove backlog levels at September 30, 2005 to a level in excess of $1 billion, which was 63 percent greater versus the company's September 30, 2004 backlog and was up 22 percent on a sequential One after the other in some consecutive order such as by name or number. quarterly basis. Bookings for the quarter were driven by strong demand for international fleet retrofit ret·ro·fit v. ret·ro·fit·ted or ret·ro·fit, ret·ro·fit·ting, ret·ro·fits v.tr. 1. To provide (a jet, automobile, computer, or factory, for example) with parts, devices, or equipment not in and refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur programs, follow-on fol·low-on adj. Following as a related or consequent aspect or development: "Such contracts involve follow-on sales of maintenance services" Christian Science Monitor. orders for our super first class products, as well as other key program awards. Significant bookings during the quarter included: --A fleet-wide premium class retrofit program for a major international carrier. This program is initially valued at approximately $160 million with deliveries scheduled to start in mid- mid- pref. Middle: midbrain. 2006. --A major ICON(TM) premium coach class seat retrofit program for a major international carrier. In addition to representing the launch customer for the ICON(TM) premium coach class seat, this $40 million program represents a follow-on award to a previously awarded $90 million premium class program. --Two additional super first class programs initially valued at approximately $60 million with deliveries scheduled to commence in 2006. --A major international carrier selected B/E for a narrow-body Noun 1. narrow-body - a commercial airliner with a single aisle narrow-body aircraft, narrowbody aircraft airliner - a commercial airplane that carries passengers fleet-wide seating upgrade on its entire A320 fleet in a program initially valued at approximately $30 million. This program is particularly significant in that it represents only the second major coach class retrofit program in recent years, potentially signaling the onset on·set n. A beginning; a start, as of a cold. of the long-awaited coach class retrofit cycle. --Airbus and three major business jet manufacturers selected B/E Aerospace for oxygen systems in programs initially valued at approximately $45 million. These programs will expand B/E's oxygen technology into military platforms and into the emerging Very Light Jet segment. --Selected by Boeing (language) BOEING - An early system on the IBM 1130. [Listed in CACM 2(5):16, May 1959]. for the integration, certification and kit production of "Connexion by Boeing Connexion by Boeing (CBB) was an in-flight online connectivity service from Boeing. This service allowed travellers to access a high-speed internet connection while on board a plane in flight through a wired Ethernet or a wireless 802.11 Wi-Fi connection. "; in-flight in-flight adj. 1. Occurring, carried out, or present while in flight: in-flight refueling. 2. Provided or offered during a flight: in-flight meals. , high-speed internet See broadband. service systems for Boeing 777 and 767 aircraft. There are approximately 1,400 of these aircraft in service today. "Program awards to date have primarily consisted of retrofit programs for the existing fleets of wide-body aircraft with premium products including the introduction of our super first class product offerings. The coach class seating award referred to above is particularly significant in that it represents only the second major coach class retrofit program in recent years, potentially signaling the onset of the long-awaited coach class retrofit cycle. Additionally, the international airlines are now beginning to address not only their coach class retrofit needs but also premium class and coach class requirements for their new buy wide-body aircraft. These aircraft are expected to deliver in volume during the 2007 to 2010 time period. It has been primarily retrofit activity which has resulted in stronger than expected orders and a record $1 billion backlog. This activity has enhanced our visibility into 2008 and is driving our revenue and earnings expectations upward," stated Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. J. Khoury Khoury (occasionally Khouri or Coury; Arabic: خوري) is an Arabic surname that is unique to Arab Christians. The term Khoury means "priest" in Arabic. , President and Chief Executive Officer of B/E Aerospace, Inc. Mr. Khoury concluded, "Cabin interiors for wide-body aircraft require five to eight times the dollar value of the cabin interior equipment used to outfit OUTFIT. An allowance made by the government of the United States to a minister plenipotentiary, or charge des affaires, on going from the United States to any foreign country. 2. narrow-body aircraft Noun 1. narrow-body aircraft - a commercial airliner with a single aisle narrow-body, narrowbody aircraft airliner - a commercial airplane that carries passengers . Industry experts anticipate that Boeing and Airbus will ship approximately 950 wide-body and super wide-body aircraft over the four year period from 2007 through 2010. The scheduled deliveries of these wide-body aircraft coupled with the continued recovery in the business jet sector bode bode 1 v. bod·ed, bod·ing, bodes v.tr. 1. To be an omen of: heavy seas that boded trouble for small craft. 2. well for continued strong revenue growth for at least the next three years." FINANCIAL GUIDANCE Financial guidance is now as follows: --For the full year 2005, notwithstanding any negative impacts from the Boeing strike and several hurricane related lost shipping days at our distribution segment during the third quarter, management expects revenue in excess of $800 million and earnings of $0.50 per share. --For 2006, management expects revenue of approximately $1 billion and to report earnings of $1.10 per share for the full year. Orders and backlog are expected to continue to be strong in 2006 consistent with the new aircraft delivery cycle. --2007 earnings per share are expected to grow at a double digit rate (versus 2006) on a fully taxed (35% rate) basis, driven by strong revenue growth and additional margin expansion. Commenting on the company's outlook, Mr. Khoury stated, "The addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be aircraft cabin interior products market is expected to grow at a compounded annual growth rate of approximately 15% over the 2005 to 2010 period. We expect our CAS revenues to grow at a rate in excess of the expected compounded annual growth rate for the cabin interior products market. "We expect to generate revenues and earnings per share during 2006 of approximately $1 billion and $1.10, respectively, and expect that our 2007 earnings per share will grow at a double digit rate on a fully taxed (35% rate) basis, driven by strong revenue growth and additional margin expansion." B/E Aerospace, Inc. is the world's leading manufacturer of aircraft cabin interior products, and a leading aftermarket distributor of aerospace fasteners. B/E designs, develops and manufactures a broad range of products for both commercial aircraft and business jets. B/E manufactured products include seating, lighting, oxygen, and food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. preparation and storage equipment. The company also provides cabin interior design, reconfiguration and passenger-to-freighter conversion services. Products for the existing aircraft fleet -- the aftermarket -- generate about 60 percent of sales. B/E sells its products through its own global direct sales organization. For more information, visit B/E's website at www.beaerospace.com. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties. B/E's actual experience may differ materially from that anticipated in such statements. Factors that might cause such a difference include those discussed in B/E's filings with the Securities and Exchange Commission, including but not limited to its most recent proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. , Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Form 10-Q Form 10-Q See 10-Q. . For more information, see the section entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Forward-Looking Statements" contained in B/E's Form 10-K and in other filings. The forward-looking statements included in this news release are made only as of the date of this news release and, except as required by federal securities laws, we do not have any obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
THREE MONTHS ENDED
---------------------------
September 30, September 30,
(In millions, except per share data) 2005 2004
----------------------------------------------------------------------
Net sales $ 217.1 $ 183.5
Cost of sales 140.5 123.4
---------- -----------
Gross profit 76.6 60.1
Gross margin 35.3% 32.8%
Operating expenses:
Selling, general and administrative 34.0 29.8
Research, development and engineering 17.2 12.8
---------- -----------
Total operating expenses 51.2 42.6
---------- -----------
Operating earnings 25.4 17.5
Operating margin 11.7% 9.5%
Interest expense, net 14.8 19.7
---------- -----------
Earnings (loss) before income taxes 10.6 (2.2)
Income taxes 0.6 0.5
---------- -----------
NET EARNINGS (LOSS) $ 10.0 $ (2.7)
========== ===========
NET EARNINGS (LOSS) PER COMMON SHARE
Basic $ 0.17 $ (0.07)
========== ===========
Diluted $ 0.16 $ (0.07)
========== ===========
Common shares:
Basic
Weighted average 58.2 37.5
End of period 58.5 37.8
Diluted
Weighted average 61.2 37.5
End of period 61.5 37.8
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
NINE MONTHS ENDED
----------------------------
September 30, September 30,
(In millions, except per share data) 2005 2004
----------------------------------------------------------------------
Net sales $ 621.2 $ 543.9
Cost of sales 403.8 368.4
--------- -----------
Gross profit 217.4 175.5
Gross margin 35.0% 32.3%
Operating expenses:
Selling, general and administrative 97.8 88.4
Research, development and engineering 50.2 39.0
--------- -----------
Total operating expenses 148.0 127.4
--------- -----------
Operating earnings 69.4 48.1
Operating margin 11.2% 8.8%
Interest expense, net 44.9 59.4
--------- -----------
Earnings (loss) before income taxes 24.5 (11.3)
Income taxes 2.0 1.4
--------- -----------
NET EARNINGS (LOSS) $ 22.5 $ (12.7)
========= ===========
NET EARNINGS (LOSS) PER COMMON SHARE
Basic $ 0.39 $ (0.34)
========= ===========
Diluted $ 0.37 $ (0.34)
========= ===========
Common shares:
Basic
Weighted average 57.4 37.1
End of period 58.5 37.8
Diluted
Weighted average 60.3 37.1
End of period 61.5 37.8
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions)
September 30, December 31,
2005 2004
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 87.3 $ 76.3
Accounts receivable, net 121.5 91.6
Inventories, net 222.1 197.8
Other current assets 12.8 13.4
----------- ----------
Total current assets 443.7 379.1
Long-term assets 622.7 645.7
----------- ----------
$ 1,066.4 $ 1,024.8
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 175.3 $ 154.1
Long-term liabilities 684.8 687.9
----------- ----------
860.1 842.0
Total stockholders' equity 206.3 182.8
----------- ----------
$ 1,066.4 $ 1,024.8
=========== ==========
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
NINE MONTHS ENDED
---------------------
September September
30, 30,
2005 2004
---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 22.5 $ (12.7)
Adjustments to reconcile net earnings (loss)
to net cash flows provided by (used in)
operating activities:
Depreciation and amortization 21.7 21.0
Provision for doubtful accounts 0.5 0.7
Non-cash employee benefit plan
contributions 2.1 1.7
Changes in operating assets and
liabilities, net of
acquisitions (37.3) (11.6)
------- -------
Net cash flows provided by (used in)
operating activities 9.5 (0.9)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (10.9) (10.7)
Proceeds from sale of property and equipment 0.2 0.5
Acquisitions, net of cash acquired --- (12.5)
Other, net 4.0 0.8
------- -------
Net cash flows used in investing activities (6.7) (21.9)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock options exercised 10.0 3.1
Repayment of long-term debt (0.3) (1.7)
------- -------
Net cash flows provided by financing activities 9.7 1.4
------- -------
Effect of exchange rate changes on cash flows (1.5) ---
------- -------
Net increase (decrease) in cash and cash
equivalents 11.0 (21.4)
Cash and cash equivalents at beginning of period 76.3 147.6
------- -------
Cash and cash equivalents at end of period $ 87.3 $ 126.2
======= =======
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion