B/E Aerospace, Inc. (NASDAQ: BEAV), the world’s leading
manufacturer of aircraft cabin interior products and the world’s
leading provider of aerospace fasteners, consumables and logistics
services, today announced its first quarter 2014 financial
results.
FIRST QUARTER 2014 HIGHLIGHTS,
EXCLUDING ACQUISITION COSTS, COMPARED WITH FIRST QUARTER PRIOR
YEAR
- Revenues of $1.01 billion increased 20
percent.
- Operating earnings increased 21
percent.
- Earnings before income tax increased 26
percent.
- Earnings per diluted share were $1.06,
an increase of 22 percent.
- Record first quarter bookings of $1.1
billion increased 30 percent.
FIRST QUARTER CONSOLIDATED
RESULTS
First quarter 2014 revenues of $1.01 billion increased 20.1
percent as compared with the prior year period.
First quarter 2014 operating earnings, excluding $2.2 million of
costs related to first quarter acquisitions, were $185.2 million,
an increase of 20.6 percent. Operating margin, adjusted to exclude
acquisition costs, was 18.3 percent and increased 10 basis points
as compared to the prior year period. On a GAAP basis, operating
earnings of $183.0 million increased 19.1 percent.
First quarter 2014 earnings before income tax, excluding first
quarter acquisition costs, were $154.6 million, an increase of 25.7
percent. On a GAAP basis, earnings before income tax increased 23.9
percent.
First quarter 2014 net earnings and earnings per diluted share,
excluding first quarter acquisition costs, were $110.5 million and
$1.06 per share, representing increases of 22.9 percent and 21.8
percent, respectively, as compared with the prior year period. The
Company’s effective tax rate of 28.5 percent in the first quarter
of 2014 was 160 basis points higher than the first quarter of 2013
due to the expiration of the research and development tax credit in
2014 and the timing of the adoption of the 2012 research and
development tax credit in the first quarter of 2013. On a
comparable tax rate basis, excluding first quarter acquisition
costs, the Company’s earnings would have been $0.02 per diluted
share higher for the first quarter of 2014. On a GAAP basis, net
earnings and earnings per diluted share were $109.0 million and
$1.05 per share, increases of 21.2 percent and 20.7 percent,
respectively.
Commenting on the Company’s recent performance, Amin J. Khoury,
Chairman and Chief Executive Officer of B/E Aerospace said, “I am
pleased to report that our first quarter 2014 results were the best
quarterly results in the Company’s history. Our results included
record quarterly revenues, bookings, backlog, operating earnings,
net earnings and earnings per share.”
Mr. Khoury continued, “During the first quarter, we announced
record multiple seating awards, initially valued in excess of $600
million. Total first quarter 2014 bookings were $1.1 billion, a
record for any quarter.”
FIRST QUARTER SEGMENT
RESULTS
The following is a tabular summary and commentary of revenues
and operating earnings by segment for the three months ended March
31, 2014 and 2013 (consumables management segment adjusted to
exclude $2.2 million of first quarter 2014 acquisition costs):
REVENUES ($ in millions)
Segment 2014 2013 %
Change Commercial aircraft $ 523.4 $ 420.0 24.6 %
Consumables management 366.6 326.7 12.2 % Business jet 121.2
95.5 26.9 % Total $ 1,011.2 $ 842.2 20.1 %
ADJUSTED OPERATING EARNINGS ($ in
millions) Segment 2014 2013
% Change Commercial aircraft $ 93.1 $ 74.2 25.5 %
Consumables management * 71.0 64.8 9.6 % Business jet 21.1
14.6 44.5 % Total $ 185.2 $ 153.6 20.6 % * CMS
operating earnings, including $2.2 million of 2014 first quarter
acquisition costs, were $68.8 million
First quarter 2014 commercial aircraft segment (CAS) revenues
increased 24.6 percent while operating earnings of $93.1 million
increased 25.5 percent as compared with the prior year period.
Operating margin of 17.8 percent increased 10 basis points.
First quarter 2014 consumables management segment (CMS) revenues
increased 12.2 percent while operating earnings, adjusted to
exclude first quarter acquisition costs, were $71.0 million, an
increase of 9.6 percent as compared with the prior year period.
Operating margin, adjusted to exclude first quarter acquisition
costs, was 19.4 percent.
First quarter 2014 business jet segment (BJS) revenues increased
26.9 percent while operating earnings of $21.1 million increased
44.5 percent as compared with the prior year period. Operating
margin of 17.4 percent expanded 210 basis points as compared with
the prior year period, reflecting an improved mix of revenues and
ongoing operational efficiency initiatives.
RECENT ACQUISITION
ACTIVITY
The Company recently signed non-binding letters-of-intent to
acquire two important aerospace manufacturing businesses and
completed one small aerospace bolt-on transaction, all in the
business jet segment. Also, during the quarter the Company’s
consumables management segment acquired LT Energy Services and
Wildcat Wireline, and announced the acquisition of Vision Oil
Tools, which closed in the second quarter of 2014. The Company
cannot provide any assurance that the transactions contemplated by
the non-binding letters-of-intent will be completed.
LIQUIDITY AND BALANCE SHEET
METRICS
Cash flow from operations in the first quarter of 2014 of $56.3
million reflected a 20.1 percent increase in revenues and a
corresponding 5.6 percent increase in working capital as compared
with the prior year period, exclusive of cash and the impact of
acquisitions. Capital expenditures to support long-term customer
programs, as well as recent acquisitions, were $56.2 million, an
increase of approximately $19 million as compared with the prior
year period. During the first quarter of 2014 the Company used
approximately $257 million for two recently completed
acquisitions.
The Company expects a somewhat higher level of revenues, working
capital and capital expenditures in the first half of 2014 to
support its long-term customer programs, as well as recent
acquisitions. The Company continues to expect a 2014 free cash flow
conversion ratio of approximately 65 percent of net earnings for
the full year.
As of March 31, 2014, cash was $384.7 million, net debt, which
represents total long-term debt of $1.96 billion less cash, was
$1.57 billion, and the Company’s net debt-to-net capital ratio was
36.6 percent.
BOOKINGS/BACKLOG
Bookings during the first quarter of 2014 were strong at
approximately $1.1 billion, a quarterly record, and reflect a
book-to-bill ratio of 1.1 to 1. Backlog as of March 31, 2014 was
approximately $3.9 billion, while awarded but unbooked backlog was
approximately $5.0 billion, bringing total backlog, both booked and
awarded but unbooked, to a record of approximately $8.9
billion.
During the first quarter, the Company announced that it had won
super first class, business class, and main cabin seating awards
from seven major international airlines, initially valued at
approximately $600 million, only a portion of which is reflected in
current period bookings. The awards are for both new-buy and
retrofit aircraft and will outfit B777 and B787, as well as A350,
A380, and A319 aircraft. The first quarter which was a record for
the most commercial aircraft seating awards in any one quarter in
the Company’s history, reflects the Company’s continued focus on
innovation, and further solidifies the Company’s position as the
market leader for commercial aircraft seating for the airline
industry.
OUTLOOK
Commenting on the Company’s outlook, Mr. Khoury concluded, “Our
total backlog, both booked and awarded but unbooked, of
approximately $8.9 billion, our expectation for robust wide-body
aircraft deliveries, our expectation of strong revenue growth from
our SFE program deliveries, and the expectation for continued
growth in global passenger travel, all provide a basis for our
expectation of continued strong revenue growth.”
The Company’s 2014 full year financial guidance is as
follows:
- The Company expects continued strong
bookings in 2014 driven by the Company’s record backlog, the robust
wide-body aircraft delivery outlook, bookings from prior SFE
awarded programs, and a recovery in aftermarket demand.
- 2014 revenues are now expected to be in
excess of $4.0 billion.
- The Company expects 2014 earnings per
share of approximately $4.30 per diluted share, exclusive of
acquisition related costs, representing an increase of
approximately 22 percent as compared to 2013 earnings per diluted
share.
- 2014 free cash flow conversion ratio is
expected to be approximately 65 percent of net earnings.
Adjusted net earnings, adjusted diluted net earnings per common
share, adjusted earnings before income tax, adjusted operating
earnings, adjusted operating margin, CMS adjusted operating
earnings, CMS adjusted operating margin, free cash flow and free
cash flow conversion ratio are presented in this press release;
these are non-GAAP financial measures. For more information see
“Reconciliation of Non-GAAP Financial Measures.”
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements involve risks and uncertainties.
The Company’s actual experience and results may differ materially
from the experience and results anticipated in such statements.
Factors that might cause such a difference include those discussed
in the Company’s filings with the Securities and Exchange
Commission (SEC), which include its Proxy Statement, Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K. For more information, see the section entitled
“Forward-Looking Statements” contained in the Company’s Annual
Report on 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 and rules and regulations of the SEC, the Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
About B/E Aerospace, Inc.
B/E Aerospace is the world’s leading manufacturer of aircraft
cabin interior products and the world’s leading provider of
aerospace fasteners, consumables and logistics services. B/E
Aerospace designs, develops and manufactures a broad range of
products for both commercial aircraft and business jets. B/E
Aerospace manufactured products include aircraft cabin seating,
lighting systems, oxygen systems, food and beverage preparation and
storage equipment, galley systems, and modular lavatory systems.
The Company also provides cabin interior reconfiguration, program
management and certification services. The Company provides
aerospace fasteners, consumables and logistics services as well as
oilfield services and associated rental equipment. B/E Aerospace
sells and supports its products through its own global direct sales
and product support organization. For more information, visit the
B/E Aerospace website at www.beaerospace.com.
B/E AEROSPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS (UNAUDITED)
(In Millions, Except Per Share
Data)
THREE MONTHS ENDED March 31, March
31, 2014 2013 Revenues $
1,011.2 $ 842.2 Cost of sales 634.5 523.1 Selling, general and
administrative 123.0 112.2 Research, development and engineering
70.7 53.3 Operating earnings
183.0 153.6 Operating earnings, as a percentage of revenues
18.1 % 18.2 % Interest expense 30.6
30.6 Earnings before income taxes 152.4 123.0
Income taxes 43.4 33.1 Net
earnings $ 109.0 $ 89.9 Net earnings per
common share: Basic $ 1.05 $ 0.87 Diluted $ 1.05
$ 0.87 Weighted average common shares: Basic
103.9 103.1 Diluted 104.3 103.7
B/E AEROSPACE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In Millions)
March 31, December 31, 2014
2013 ASSETS Current assets: Cash and cash
equivalents $ 384.7 $ 637.8 Accounts receivable 564.0 484.1
Inventories 2,038.5 1,943.8 Deferred income taxes 29.6 29.4 Other
current assets 89.3 64.6 Total current assets 3,106.1
3,159.7 Long-term assets 2,827.7 2,536.5 $ 5,933.8 $
5,696.2
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities $ 984.8 $ 879.1 Total long-term
liabilities 2,218.1 2,207.9 Total stockholders' equity
2,730.9 2,609.2 $ 5,933.8 $ 5,696.2
B/E AEROSPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(In Millions)
Three Months Ended March 31, 2014
2013 CASH FLOWS FROM OPERATING ACTIVITIES: Net
earnings $ 109.0 $ 89.9 Adjustments to reconcile net earnings to
net cash flows provided by operating activities, net of effects
from acquisitions: Depreciation and amortization 28.1 20.4 Deferred
income taxes 4.1 8.4 Non-cash compensation 6.9 6.0 Tax benefits
realized from prior exercises of employee stock options and
restricted stock (2.4 ) (1.9 ) Provision for doubtful accounts --
0.5 Loss on disposal of property and equipment 0.3 0.7 Changes in
operating assets and liabilities: Accounts receivable (68.4 ) (88.1
) Inventories (92.7 ) (69.0 ) Other current and non-current assets
(33.8 ) 3.4 Accounts payable and accrued liabilities 105.2
88.9 Net cash flows provided by operating
activities 56.3 59.2
CASH
FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (56.2 )
(37.2 ) Acquisitions, net of cash acquired (256.4 )
-- Net cash flows used in investing activities (312.6
) (37.2 )
CASH FLOWS FROM FINANCING
ACTIVITIES: Proceeds from common stock issued 0.1 -- Purchase
of treasury stock (0.1 ) (0.1 ) Principal payments on long-term
debt -- (0.1 ) Tax benefits realized from prior exercises of
employee stock options and restricted stock 2.4
1.9 Net cash flows provided by financing activities
2.4 1.7 Effect of foreign exchange rate
changes on cash and cash equivalents 0.8 (5.9
)
Net (decrease) increase in cash and cash
equivalents (253.1 ) 17.8
Cash and cash equivalents,
beginning of year 637.8 513.7
Cash and cash equivalents, end of year $ 384.7 $
531.5
B/E AEROSPACE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
This release includes “adjusted net earnings,” “adjusted net
earnings per diluted share,” “adjusted operating earnings,”
“adjusted earnings before income tax,” “adjusted operating margin,”
“CMS adjusted operating earnings,” “CMS adjusted operating margin,”
“free cash flow,” and “free cash flow conversion ratio,” each of
which are “non-GAAP financial measures” as defined in Regulation G
of the Securities Exchange Act of 1934, as amended (Exchange
Act).
The Company defines “adjusted net earnings” as net earnings as
reported under GAAP excluding 2014 acquisition costs. The Company
defines “adjusted net earnings per diluted share” as net earnings
per diluted share, as reported under GAAP excluding 2014
acquisition costs.
The Company defines “adjusted earnings before income tax” as
earnings before income tax as reported under GAAP excluding 2014
acquisition costs.
The Company defines “adjusted operating earnings” as operating
earnings as reported under GAAP excluding 2014 acquisition costs.
“Adjusted operating margin” is adjusted operating earnings
reflected as a percentage of revenue for the relevant period on a
consolidated basis.
The Company defines “CMS adjusted operating earnings” as CMS
operating earnings excluding 2014 acquisition costs. “CMS adjusted
operating margin” is CMS adjusted operating earnings reflected as a
percentage of revenue for the relevant period.
The Company uses adjusted operating earnings, adjusted operating
margin, CMS adjusted operating earnings, CMS adjusted operating
margin, adjusted earnings before income tax, adjusted net earnings
and adjusted earnings per diluted share to evaluate and assess the
operational strength and performance of the business and of
particular segments of the business. The Company believes these
financial measures are relevant and useful for investors because it
allows investors to have a better understanding of the Company’s
actual operating performance unaffected by the 2014 acquisition
costs associated with recent acquisitions. These financial measures
should not be viewed as a substitute for, or superior to, operating
earnings, earnings before income tax, or net earnings, the most
directly comparable GAAP measures, as a measure of the Company’s
operating performance.
The Company defines “free cash flow” as net cash flows provided
by operating activities less capital expenditures. The Company uses
free cash flow to provide investors with an additional perspective
on the Company’s cash flow provided by operating activities after
taking into account reinvestments. Free cash flow does not take
into account debt service requirements and therefore does not
reflect an amount available for discretionary purposes. The Company
defines “free cash flow conversion ratio” as free cash flow
expressed as a percentage of the Company’s net earnings. The
Company uses free cash flow conversion ratio to provide investors
with a measurement of its ability to convert net earnings into free
cash flow. These financial measures should not be viewed as a
substitute for, or superior to, net cash flows provided by
operating activities, the most directly comparable GAAP measure, as
a measure of the Company’s liquidity or operating performance.
Pursuant to the requirements of Regulation G of the Exchange
Act, we are providing the following tables that reconcile the above
mentioned non-GAAP financial measures to the most directly
comparable GAAP financial measures:
RECONCILIATION OF NET EARNINGS PER DILUTED SHARE TO
ADJUSTED NET EARNINGS PER DILUTED SHARE (In Millions, Except
Per Share Data) Three Months Ended
March 31, 2014 2013 Net earnings, as
reported $ 109.0 $ 89.9 2014 acquisition costs 2.2 - Adjustment to
income taxes for 2014 acquisition costs ¹ (0.7 ) -
Adjusted net earnings $ 110.5 $ 89.9 Adjusted net earnings
per diluted share $ 1.06 $ 0.87 Diluted weighted
average shares 104.3 103.7 ¹Adjustments to income taxes are
based on an effective tax rate of ~28.5% for Q1 2014
RECONCILIATION OF EARNINGS BEFORE INCOME TAX TO ADJUSTED
EARNINGS BEFORE INCOME TAX EXCLUDING 2014 ACQUISITION COSTS
(In Millions) Three Months Ended March
31, 2014 2013 Earnings before income tax $ 152.4
$ 123.0 2014 acquisition costs 2.2 - Adjusted
earnings before income tax $ 154.6 $ 123.0
RECONCILIATION OF OPERATING EARNINGS TO ADJUSTED
OPERATING EARNINGS EXCLUDING 2014 ACQUISITION COSTS (In
Millions) Three Months Ended March 31,
2014 2013 Operating earnings $ 183.0 $ 153.6 2014
acquisition costs 2.2 - Adjusted operating earnings $
185.2 $ 153.6
RECONCILIATION OF CONSUMABLES
MANAGEMENT SEGMENT OPERATING EARNINGS TO ADJUSTED CMS
OPERATING EARNINGS EXCLUDING 2014 ACQUISITION COSTS
(In Millions) Three Months Ended March
31, 2014 2013 CMS Operating earnings $ 68.8 $
64.8 2014 acquisition costs 2.2 - Adjusted CMS
operating earnings $ 71.0 $ 64.8
B/E Aerospace, Inc.Greg Powell, 561-791-5000 ext. 1450Vice
President, Investor Relations
B/E Aerospace, Inc. (NASDAQ:BEAV)
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