B/E Aerospace Comments on Strong 2008 Third Quarter Results; Updates Financial Guidance
October 13 2008 - 2:01AM
Business Wire
B/E Aerospace, Inc. (Nasdaq:BEAV), the world's leading manufacturer
of aircraft cabin interior products and the world�s leading
distributor of aerospace fasteners and consumables, today commented
on its expected results for the third quarter of 2008 and on its
outlook for the remainder of 2008, 2009 and 2010. The company
expects to report strong results for the third quarter of 2008 with
revenues and operating earnings up in excess of 35 percent and 65
percent, respectively, as compared with the third quarter of 2007,
exclusive of approximately $0.02 per diluted share of acquisition,
transition and integration costs associated with the acquisition of
Honeywell�s Consumables Solutions distribution business (HCS). The
company expects to report third quarter earnings per diluted share
of approximately $0.58 exclusive of the aforementioned HCS
acquisition related costs, as well as debt prepayment costs of
approximately $0.03 per diluted share. These results are well in
excess of consensus expectations. The company plans to release its
third quarter financial results on Monday, October 27, 2008. "We
expect to report excellent financial results for the third quarter
of 2008, but the near-term outlook has significantly deteriorated,�
commented Amin J. Khoury, Chairman and Chief Executive Officer of
B/E Aerospace, Inc. �Global macroeconomic trends have become
increasingly negative over the past couple of months. The weakened
global economy, the impact of the high cost of energy on consumers,
high jet fuel costs, and high ticket prices are negatively
impacting global passenger air travel. In response to declining air
travel, airlines are significantly reducing capacity and
implementing tough cash conservation measures. The business jet
industry has also begun to be negatively impacted by the weakened
global economy, lower corporate profitability, high jet fuel costs,
and difficulty in arranging new aircraft financing. These
conditions are negatively impacting demand for our products. As
such, the company is lowering its financial guidance for the
remainder of 2008, 2009 and 2010.� Commenting on the company�s
outlook, Mr. Khoury stated, �Airlines around the world are
experiencing very substantial year-over-year traffic declines, and
business jet cycles (takeoffs and landings) were down 18 percent in
August (8 percent on a year-to-date basis). The impact of these
changes in market conditions have resulted in more subdued
expectations for demand for our products. We now expect fourth
quarter earnings per diluted share of approximately $0.50,
exclusive of acquisition, transition and integration costs of
approximately $0.04 per diluted share. We currently expect these
conditions to continue into 2009 and as such are establishing
preliminary guidance for revenues of approximately $2.5 billion in
2009 and for earnings per diluted share for 2009 of approximately
$2.00 per diluted share, exclusive of acquisition, integration and
transition costs, of approximately $0.10 per diluted share. We
anticipate that revenues and earnings for 2010 will be higher than
2009. We will provide more details on our guidance when the company
reports its third quarter results.� Commenting on major third
quarter activities, Mr. Khoury said, �The recently completed
acquisition of HCS has significantly strengthened our strategic
position in the distribution market. We financed this acquisition,
which closed on July 28, 2008, with $1.4 billion of new debt
financing. We believe the financing for this transaction was
obtained on favorable terms in a very difficult market due to the
strategic advantage which we have created by combining the HCS
business with our own, and the longer-term value we expect to
create as we complete the integration of the two businesses. We
continue to believe the outlook for B/E Aerospace is substantially
improved as a result of the acquisition of HCS.� The company
expects total acquisition, integration and transition costs of
approximately $25 million through 2010. The lion�s share of these
costs will be incurred in 2009 as the company completes the planned
reductions-in-force, lease buy-outs and other integration related
activities. As a result of the financing arrangements completed
during the third quarter, the company has no debt maturing until
2014 and has a $350 million undrawn revolving credit facility. In
addition, as of September 30, 2008 the company had over $115
million of cash on hand. Separately, the company announced today
that Airbus has selected B/E Aerospace as its supplier of next
generation galley systems for the new A350 XWB aircraft. This award
is the largest award the company has ever received and is valued at
more than $1 billion. Program deliveries are scheduled to begin in
2013. �Today�s $1 billion A350 XWB galley award taken together with
other awards such as the company�s oxygen award to equip the A350
XWB and the oxygen/PSU award for the B787 as well as numerous
awards from international airlines for our commercial aircraft
products on the B787, B747-8 and A380 provide an excellent
long-term platform for revenue growth over the coming years for our
commercial aircraft segment. Future revenue growth within our
business jet segment will be driven by the introduction of several
new business jet aircraft types. We have been selected to deliver
major new programs for a number of these new aircraft types. Our
exceptionally strong position on these new aircraft platforms along
with other current awards form the basis for our expectation of
increasing revenue growth in our commercial aircraft and business
jet segments beginning in 2010. While the value of these long-term
awards currently totals over $2 billion, only a very small portion
has been included in our record backlog,� concluded Mr. Khoury.
This news release contains forward-looking statements 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 Aerospace�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 related to the expected
benefits from the HCS acquisition, changes in market and industry
conditions and those discussed in B/E Aerospace�s filings with the
Securities and Exchange Commission, 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 B/E
Aerospace�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, we do not intend to publicly update or
revise any forward-looking statements to reflect subsequent events
or circumstances. About B/E Aerospace, Inc. B/E Aerospace, Inc. is
the world�s leading manufacturer of aircraft cabin interior
products and the world�s leading distributor of aerospace fasteners
and consumables. 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, oxygen, and food and beverage 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 Aerospace sells and
supports its products through its own global direct sales and
product support organization.
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