B/E Aerospace (Nasdaq: BEAV), the world’s leading manufacturer
of aircraft cabin interior products and the world’s leading
distributor of aerospace fasteners and consumables, today announced
first quarter 2010 financial results.
FIRST QUARTER 2010
HIGHLIGHTS
- First quarter 2010 revenues of
$463.5 million declined 11.5 percent as compared with the first
quarter of 2009.
- First quarter 2010 operating
earnings of $72.0 million declined 10.8 percent as compared with
the first quarter of 2009. Operating margin of 15.5 percent
expanded 10 basis points.
- First quarter 2010 net earnings
were $33.8 million or $0.34 per diluted share.
- First quarter 2010 free cash
flow of $38.2 million represented a free cash flow conversion rate
of 113.0 percent.
- First quarter 2010 book-to-bill
ratio was in excess of one for the second consecutive quarter.
Bookings for both consumables and commercial aircraft segment
spares improved substantially.
- Full-year 2010 earnings per
share guidance is raised by $0.05 per diluted share to
approximately $1.45 per diluted share.
- The company expects positive
year-over-year quarterly earnings comparisons beginning in the
second quarter of 2010.
FIRST QUARTER CONSOLIDATED
RESULTS
First quarter 2010 revenues of $463.5 million declined by $60.2
million, or 11.5 percent, as compared with first quarter 2009
revenues of $523.7 million. The $60.2 million decrease in
consolidated revenues was due to a lower level of demand for
consumables and business jet products.
First quarter 2010 operating earnings of $72.0 million declined
10.8 percent as compared with the first quarter of 2009. Operating
margin of 15.5 percent expanded 10 basis points in spite of the
lower level of revenues.
First quarter 2010 net earnings were $33.8 million or $0.34 per
diluted share.
Commenting on the company’s recent performance, Amin J. Khoury,
Chairman and Chief Executive Officer of B/E Aerospace said, “Our
first quarter results were above our earlier expectations,
primarily due to an improved demand environment for commercial
aircraft spares and consumables. On a sequential quarterly basis,
our first quarter consolidated operating margin expanded 50 basis
points on a 3 percent decline in revenues. Importantly, orders for
consumables and commercial aircraft spares have increased
substantially from the trough levels of 2009. We believe this
higher level of demand is being driven by the more than five
percent increase in global passenger traffic as compared with the
comparable period in 2009. Our first quarter operating results and
the increasing demand for global air travel buoy our optimism. As a
result, we are raising our 2010 EPS guidance by $0.05 per diluted
share to approximately $1.45 per diluted share. We continue to
expect a free cash flow conversion rate in excess of 100 percent
for the full year 2010.”
Mr. Khoury continued, “Our recent award announcements and the
expected increase in orders for cabin interior products arising
from the recent increase in RFQ activity strengthens our confidence
in a continued recovery in orders in 2010, and a book-to-bill ratio
in excess of one for the full year.”
Free cash flow and free cash flow conversion rate are non-GAAP
financial measures. For more information see "Reconciliation of
Non-GAAP Financial Measures."
FIRST QUARTER SEGMENT
RESULTS
The following is a tabular summary and commentary of revenues
and operating earnings by segment:
REVENUES Three Months Ended March 31, ($ in
millions) 2010 2009
% Change Consumables management $ 186.1
$ 239.4 -22.3 % Commercial aircraft 230.1 225.9 1.9 % Business jet
47.3 58.4 -19.0 % Total $ 463.5 $ 523.7 -11.5 %
OPERATING EARNINGS Three Months Ended March
31, ($ in millions) 2010
2009 % Change Consumables management $ 36.8 $
47.4 -22.4 % Commercial aircraft 33.8 28.5 18.6 % Business jet
1.4 4.8 -70.8 % Total $ 72.0 $ 80.7 -10.8 %
Although first quarter 2010 consumables management segment (CMS)
revenues of $186.1 million declined 22.3 percent as compared with
the first quarter of 2009, revenues increased 2.8 percent
sequentially as compared with the fourth quarter of 2009. CMS
operating earnings declined 22.4 percent as compared with the first
quarter of 2009. Nevertheless, the operating margin of 19.8 percent
was equal to the operating margin in the first quarter of 2009 on
the lower level of revenues in the current year quarter. As
compared with the fourth quarter of 2009, current period CMS
operating earnings increased 7.3 percent, operating margin expanded
by 90 basis points and bookings increased at a double digit
rate.
First quarter 2010 commercial aircraft segment (CAS) revenues of
$230.1 million increased 1.9 percent as compared with the same
period in the prior year. First quarter CAS spares revenues
increased at a double digit rate as compared with the prior year
period. CAS spares bookings increased more than 25 percent compared
to the prior year period. CAS first quarter operating earnings were
$33.8 million, or 14.7 percent of revenues, an increase of 18.6
percent as compared with first quarter 2009 operating earnings of
$28.5 million, or 12.6 percent of revenues. First quarter 2010
operating margin expanded by 210 basis points as compared with the
prior year period as a result of a higher level of spares revenues,
successful cost reduction activities and a stronger dollar as
compared with the British pound. Importantly, on a sequential
quarterly basis (compared with the fourth quarter of 2009),
operating margin increased by 170 basis points on a 3.7 percent
decrease in revenues, reflecting a double digit increase in spares
revenues and ongoing operational efficiencies.
First quarter 2010 business jet segment revenues of $47.3
million declined 19.0 percent, and operating earnings of $1.4
million decreased by $3.4 million as compared with the first
quarter of 2009, as a result of lower revenues, an unfavorable mix
of product revenues and the negative impact of reduced operating
leverage in the current year period.
LIQUIDITY AND BALANCE SHEET
METRICS
As of March 31, 2010, cash and cash equivalents were $153.9
million, an increase of $33.8 million as compared with December 31,
2009. First quarter free cash flow of $38.2 million represents a
free cash flow conversion rate of 113.0 percent. Net debt as of
March 31, 2010 was $864.5 million, which represents total debt of
$1.02 billion less cash and cash equivalents of $153.9 million. The
company’s net debt-to-net capital ratio of 37.1 percent improved
120 basis points as compared with December 31, 2009. There were no
borrowings outstanding on the company’s $350 million revolving
credit facility and the company has no debt maturities until 2014.
The company expects a free cash flow conversion rate in excess of
100 percent for the full year 2010.
BOOKINGS
Bookings during the first quarter of 2010 were approximately
$510 million representing a book-to-bill ratio of 1.1 to 1, and for
the second consecutive quarter represented a book-to-bill ratio in
excess of one. Backlog at the end of the quarter was approximately
$2.7 billion, an increase of 2 percent as compared with the
company’s December 31, 2009 backlog.
Mr. Khoury commented, “As expected, bookings continued to
improve during the first quarter. The increase in orders was
highlighted by the recently announced awards from nine airlines and
leasing companies for our new patented Pinnacle™ main cabin seating
platform, the industry’s lightest full-featured seat. These launch
awards are initially valued in excess of $250 million, and are for
economy class programs in new-buy Boeing B737, Airbus A320, and
Boeing B787 aircraft. Importantly, we experienced a substantial
increase in commercial aircraft segment spares bookings and sales
in the first quarter versus the first quarter of the prior year,
and consumables bookings increased at a double digit rate versus
the fourth quarter of 2009, which strengthens our expectation that
demand for consumables and commercial aircraft segment spares
should continue to improve in 2010 consistent with higher levels of
global airline traffic.”
OUTLOOK
Commenting on the company’s outlook, Mr. Khoury stated, “As a
result of improving global air traffic and airline yields, and
better than expected performance during the first quarter of 2010,
we are raising our 2010 full year earnings per share guidance by
$0.05 per diluted share to approximately $1.45 per diluted share.
Second quarter 2010 earnings per diluted share are expected to be
approximately $0.36. In addition, we expect to generate free cash
flow in excess of 100 percent of net earnings for the full year
2010, with the second quarter free cash flow conversion rate lower
than that of the first quarter of 2010. Our expectation for a
higher level of demand for commercial aircraft segment spares and
consumables should contribute toward favorable year-over-year
quarterly operating earnings comparisons at the commercial aircraft
and consumables management segments beginning in the second quarter
of 2010. Importantly, based upon our expectation of an expansion in
orders and backlog and a recovery in our commercial aircraft
segment spares and consumables businesses during 2010, we expect a
significant increase in revenues, earnings and cash flows beginning
in 2011.”
The company’s financial guidance for 2010 is as
follows:
- The company expects an expansion
in orders and backlog in 2010 due to improving demand for
consumables and commercial aircraft segment spares, the conversion
of a portion of unbooked supplier furnished equipment awards to
bookings, and an expected increase in orders for cabin interior
products arising from the recent increase in RFQ activity related
thereto.
- 2010 revenues are expected to be
approximately 2 percent lower than 2009 revenues of approximately
$1.94 billion, reflecting a lower level of commercial aircraft and
business jet deliveries in 2010 and the weak bookings that the
company experienced in 2009, offset somewhat by higher aftermarket
revenues.
- The company expects favorable
quarterly earnings comparisons to 2009 beginning in the second
quarter of 2010. Second quarter 2010 earnings per diluted share are
expected to be approximately $0.36.
- 2010 earnings per diluted share
are expected to be approximately $1.45 per diluted share; an
increase of $0.05 per diluted share from the company’s earlier
guidance, based on improving global air traffic and airline yields,
and better than expected performance during the first quarter of
2010.
- 2010 free cash flow is expected
to be in excess of $145 million reflecting a free cash flow
conversion rate in excess of 100 percent for the full year.
- Due to the expected expansion in
orders and backlog in 2010 and a recovery in the commercial
aircraft segment spares and consumables businesses, the company
expects a significant increase in revenues, earnings and cash flows
beginning in 2011.
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 include, but are not limited to, B/E Aerospace’s
financial guidance and industry expectations for the next several
years and the expected benefits from the HCS acquisition. 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 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
B/E Aerospace 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 approximately
50 percent of sales. 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.
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (UNAUDITED)
(In Millions, Except Per Share
Data)
THREE MONTHS ENDED March 31,
March 31, 2010 2009
Revenues $ 463.5 $ 523.7 Cost of sales 295.7 347.0
Selling, general and administrative 68.7 72.0 Research, development
and engineering 27.1 24.0 Operating earnings
72.0 80.7 Operating earnings, as percentage of revenues
15.5% 15.4% Interest expense, net 20.8 22.5
Earnings before income taxes 51.2 58.2 Income taxes
17.4 20.3 Net earnings $ 33.8 $ 37.9
Net earnings per common share: Basic $ 0.34 $ 0.39 Diluted $
0.34 $ 0.38 Weighted average common shares: Basic 99.5 98.3
Diluted 100.5 98.6
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(In Millions)
March 31, December 31,
2010 2009 ASSETS Current assets:
Cash and cash equivalents $ 153.9 $ 120.1 Accounts receivable, net
264.6 222.5 Inventories, net 1,262.0 1,247.4 Deferred income taxes,
net 0.3 12.1 Other current assets 25.2 20.5 Total
current assets 1,706.0 1,622.6 Long-term assets 1,204.4
1,217.5 $ 2,910.4 $ 2,840.1
LIABILITIES AND
STOCKHOLDERS’ EQUITY Total current liabilities $ 391.4 $
335.7 Total long-term liabilities 1,055.9 1,056.9 Total
stockholders' equity 1,463.1 1,447.5
$
2,910.4 $ 2,840.1
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Millions)
THREE MONTHS ENDED March 31, March 31,
2010 2009 CASH FLOWS FROM OPERATING
ACTIVITIES: Net earnings $ 33.8 $ 37.9 Adjustments to reconcile
net earnings to net cash flows provided by (used in) operating
activities: Depreciation and amortization 12.5 11.8 Other 0.7 0.4
Deferred income taxes 16.1 13.7 Non-cash compensation 6.9 5.3
Changes in operating assets and liabilities: Accounts receivable
(45.8 ) (28.8 ) Inventories (26.0 ) (79.9 ) Other current assets
and other assets (1.7 ) 3.9 Payables, accruals and other
liabilities 51.0 (3.8 ) Net cash flows
provided by (used in) operating activities 47.5
(39.5 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (9.3 ) (10.0 ) Net cash flows
used in investing activities (9.3 ) (10.0 )
CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on
long term debt (0.2 ) (1.4 ) Net cash flows used in
financing activities (0.2 ) (1.4 ) Effect of
foreign exchange rate changes on cash and cash equivalents
(4.2 ) (1.9 )
Net increase (decrease) in cash and
cash equivalents 33.8 (52.8 )
Cash and cash equivalents,
beginning of year 120.1 168.1
Cash and cash equivalents, end of year $ 153.9 $
115.3
BE AEROSPACE, INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
This release includes the financial measures "free cash flow"
and “free cash flow conversion rate,” which are “non-GAAP financial
measures” as defined in Regulation G of the Securities and Exchange
Act of 1934. 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 rate” as free cash
flow expressed as a percentage of the company’s net earnings. The
company uses free cash flow conversion rate to provide investors
with a measurement of its ability to convert earnings into free
cash flow.
Pursuant to the requirements of Regulation G, the company is
providing the following table which reconciles net cash flow
provided by operating activities to free cash flow, which is the
most comparable GAAP measure.
RECONCILIATION OF NET CASH FLOW FROM OPERATIONS TO FREE CASH
FLOW (In Millions) Three Months Ended
March 31, 2010 Net cash flow provided by operating
activities $ 47.5 Less: capital expenditures (9.3) Free cash flow $
38.2
B/E Aerospace, Inc. (NASDAQ:BEAV)
Historical Stock Chart
From May 2024 to Jun 2024
B/E Aerospace, Inc. (NASDAQ:BEAV)
Historical Stock Chart
From Jun 2023 to Jun 2024