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 2011 financial results.
FIRST QUARTER 2011 HIGHLIGHTS VERSUS
FIRST QUARTER PRIOR YEAR
- Revenues of $600.2 million increased
29.5 percent. First quarter bookings of approximately $756 million
were a record for any quarter and were approximately 48 percent
greater than the same period of the prior year. First quarter
orders included double digit increases for both commercial aircraft
spares and consumables.
- Operating earnings of $100.1 million
increased 39.0 percent. Operating margin of 16.7 percent expanded
120 basis points.
- Net earnings were $50.3 million;
earnings per diluted share were $0.49 and increased 44.1
percent.
- Full-year 2011 earnings per share
guidance raised by $0.05 per share to approximately $2.00 per
diluted share.
FIRST QUARTER CONSOLIDATED
RESULTS
First quarter 2011 revenues of $600.2 million increased $136.7
million, or 29.5 percent, as compared with the same period of the
prior year. First quarter 2011 results reflect the acquisitions of
TSI Group, Inc. (TSI) and Satair A/S’s aerospace fastener
distribution business (Satair) (the 2010 acquisitions). Revenue
growth for the first quarter of 2011 excluding the 2010
acquisitions from both periods was 17.3 percent.
First quarter 2011 operating earnings of $100.1 million
increased 39.0 percent on the aforementioned 29.5 percent increase
in revenues. Operating margin was 16.7 percent and expanded 120
basis points as compared with the prior year period. Operating
earnings growth and operating margin expansion were driven by the
higher sales volume, improved revenue mix and ongoing operational
efficiency initiatives.
First quarter 2011 net earnings were $50.3 million. Earnings per
diluted share of $0.49 increased 44.1 percent as compared with the
prior year period.
First quarter 2011 free cash flow was $50.5 million and
represents a free cash flow conversion ratio of 100.4 percent of
net earnings.
Commenting on the company’s recent performance, Amin J. Khoury,
Chairman and Chief Executive Officer of B/E Aerospace said, “Our
first quarter results included record quarterly bookings, up 48
percent, revenues up 30 percent, operating earnings up 39 percent
and earnings per share up 44 percent. The record bookings
performance was driven by strong orders for a broad range of
aircraft interior equipment for both new buy and aftermarket
retrofit programs and a double digit growth rate in consumables
orders. The 30 percent revenue growth was driven by 35 percent
revenue growth for the commercial aircraft segment and 24 percent
revenue growth for the consumables management segment. The 120
basis point expansion in operating margin was driven by significant
margin improvements in both the commercial aircraft and business
jet segments, and the better than expected margin performance for
our consumables management segment which reported only a 50 basis
point decline in spite of the margin drag from the Satair
acquisition.”
“Based on our record backlog, both booked and awarded but
unbooked, of approximately $6.0 billion, our expectation for
continued growth in passenger travel and attendant increases in
capacity, and on our expectation of higher levels of wide-body
aircraft deliveries in 2011, today we have raised our full year
2011 guidance to approximately $2.00 per diluted share,” concluded
Mr. Khoury.
Free cash flow and free cash flow conversion ratio are non-GAAP
financial measures. For more information see "Reconciliation of
Non-GAAP Financial Measures."
FIRST QUARTER SEGMENT
RESULTS
The following is a tabular summary and
commentary of revenues and operating earnings by segment:
REVENUES Three Months Ended March 31, ($ in
millions) Segment 2011
2010
% Change Commercial aircraft $ 310.3 $ 230.1 34.9 %
Consumables management 230.8 186.1 24.0 % Business jet 59.1
47.3 24.9 % Total $ 600.2 $ 463.5 29.5 %
OPERATING
EARNINGS Three Months Ended March 31, ($ in
millions) Segment 2011 2010
% Change Commercial aircraft $ 49.3 $ 33.8 45.9 %
Consumables management 44.6 36.8 21.2 % Business jet 6.2
1.4 342.9 % Total $ 100.1 $ 72.0 39.0 %
First quarter 2011 commercial aircraft segment
(CAS) revenues of $310.3 million increased 34.9 percent as compared
with the prior year period. CAS first quarter 2011 operating
earnings of $49.3 million increased 45.9 percent and operating
margin of 15.9 percent expanded 120 basis points as compared with
the prior year period, primarily due to an improved revenue mix and
ongoing operational efficiency initiatives. Margin expansion at CAS
was also aided by a year-over-year double digit increase in CAS
spares sales.
First quarter 2011 consumables management segment (CMS) revenues
of $230.8 million increased 24.0 percent and operating earnings of
$44.6 million increased 21.2 percent, as compared with the first
quarter of 2010. Operating margin of 19.3 percent was 50 basis
points lower than the prior year due to the margin drag from the
Satair acquisition.
First quarter 2011 business jet segment revenues of $59.1
million increased by $11.8 million or 24.9 percent as compared with
the prior year period. Operating earnings of $6.2 million increased
$4.8 million or 342.9 percent as compared with the prior year
period. Current period operating margin of 10.5 percent expanded by
750 basis points, reflecting both the increase in revenues and an
improved mix of revenues.
LIQUIDITY AND BALANCE SHEET
METRICS
First quarter 2011 free cash flow was $50.5 million and
represents a free cash flow conversion ratio of 100.4 percent. As
of March 31, 2011, cash was $120.8 million, net debt, which
represents total debt of $1.246 billion less cash, was $1.125
billion and the company’s net debt-to-net capital ratio was 40.0
percent. As of March 31, 2011, the company had no borrowings
outstanding on its $750 million revolving credit facility and has
no debt maturities until July 2018.
BOOKINGS
Bookings during the first quarter of 2011 were approximately
$756 million, a quarterly record. Backlog at the end of the quarter
was approximately $3.2 billion, an increase of approximately 19
percent as compared with the company’s March 31, 2010 backlog.
Supplier furnished equipment (SFE) awards increased to $2.8
billion. As a result, total backlog, both booked and awarded but
unbooked, expanded to a record $6.0 billion, an increase of 13
percent as compared with March 31, 2010.
OUTLOOK
Commenting on the company’s outlook, Mr. Khoury stated, “The
global economy and global passenger traffic continued to recover,
in spite of a number of challenges, including the effects of the
tragic Japanese earthquake and tsunami, unprecedented unrest in the
Middle East, the negative impact of record winter snowstorms and
the upward pressure on oil prices. Our airline customers have
responded rationally by carefully managing capacity and passing on
cost increases in an orderly fashion. U.S. airlines have
successfully implemented approximately 8 fare increases so far this
year, more or less offsetting the higher cost of fuel. Order rates
for spares and consumables continue to grow at double digit rates.
In addition, due to record wide-body backlogs at the major OEMs,
wide-body aircraft deliveries are expected to increase
approximately 25 percent in 2011 as compared to 2010 deliveries and
to continue to catalyze retrofit activity. These factors, together
with our solid first quarter 2011 financial performance formed the
basis for the increase in our financial guidance which was
announced today.”
The company’s financial guidance for 2011 is as
follows:
- The company expects orders and backlog
to continue to grow in 2011. Specifically, the company expects
increasing aftermarket demand for consumables and commercial
aircraft segment spares driven by the continuing growth in
passenger traffic and capacity. The company also expects an
increase in orders arising from the expected acceleration in
deliveries of new wide-body aircraft beginning in 2011.
- Strong orders for both commercial
aircraft segment spares and consumables in the first quarter of
2011 are sufficiently encouraging that the company is increasing
full year 2011 earnings per diluted share guidance by $0.05 per
share to approximately $2.00 per diluted share.
- The 2011 free cash flow conversion
ratio is expected to be approximately 100 percent. Free cash flow
in the second half of 2011 is expected to be stronger than the
first half of the year due to the expected timing of capital
expenditures.
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, 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, the Company does 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, 2011 2010 Revenues $ 600.2 $
463.5 Cost of sales 377.5 295.7 Selling, general and administrative
85.4 68.7 Research, development and engineering 37.2
27.1 Operating earnings 100.1 72.0
Operating earnings, as a percentage of revenues 16.7 % 15.5 %
Interest expense, net 26.2 20.8
Earnings before income taxes 73.9 51.2 Income taxes
23.6 17.4 Net earnings $ 50.3
$ 33.8 Net earnings per common share:
Basic $ 0.50 $ 0.34 Diluted $ 0.49 $ 0.34
Weighted average common shares: Basic 100.9
99.5 Diluted 101.7 100.5
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In Millions)
March 31, December 31, 2011
2010 ASSETS Current assets: Cash and
cash equivalents $ 120.8 $ 78.7 Accounts receivable, net 336.9
285.4 Inventories, net 1,412.8 1,372.0 Deferred income taxes, net
35.4 36.0 Other current assets 34.4 37.4 Total
current assets 1,940.3 1,809.5 Long-term assets 1,633.8
1,608.5 $ 3,574.1 $ 3,418.0
LIABILITIES AND
STOCKHOLDERS’ EQUITY Total current liabilities $ 513.6 $
453.9 Total long-term liabilities 1,371.0 1,360.1 Total
stockholders' equity 1,689.5 1,604.0
$
3,574.1 $ 3,418.0
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(In Millions)
Fiscal Year Ended March 31, 2011
2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net
earnings $ 50.3 $ 33.8 Adjustments to reconcile net earnings to net
cash flows provided by operating activities, net of effects from
acquisition: Depreciation and amortization 15.5 12.5 Provision for
doubtful accounts 0.1 0.3 Non-cash compensation 6.4 6.9 Loss on
disposal of property and equipment 0.2 0.4 Tax benefits realized
from prior exercises of employee stock options (5.6 ) -- Deferred
income taxes 14.2 16.1 Changes in operating assets and
liabilities: Accounts receivable (45.3 ) (45.8 ) Inventories (31.8
) (26.0 ) Other current assets and other assets 5.3 (1.7 ) Accounts
payable and accrued liabilities 51.5 51.0
Net cash flows provided by operating activities 60.8
47.5
CASH FLOWS FROM INVESTING
ACTIVITIES: Capital expenditures (10.3 ) (9.3 ) Acquisitions,
net of cash acquired (17.5 ) -- Net cash flows
used in investing activities (27.8 ) (9.3 )
CASH FLOWS FROM FINANCING ACTIVITIES: Tax benefits realized
from prior exercises of employee stock options 5.6 -- Principal
payments on long-term debt (0.1 ) (0.2 ) Borrowings on line of
credit 30.0 -- Repayments on line of credit (30.0 )
-- Net cash flows provided by (used in) financing activities
5.5 (0.2 )
Effect of foreign exchange rate changes on
cash and
cash equivalents 3.6 (4.2 )
Net
increase in cash and cash equivalents 42.1 33.8
Cash and
cash equivalents, beginning of year 78.7
120.1
Cash and cash equivalents, end of year $ 120.8
$ 153.9
BE AEROSPACE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
This release includes “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
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 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 earnings into free
cash flow.
Pursuant to the requirements of Regulation G of
the Securities and Exchange Act of 1934, we are providing the
following table that reconciles free cash flow to the most
comparable GAAP financial measure:
RECONCILIATION OF NET CASH FLOW PROVIDED BY
OPERATING ACTIVITIES TO FREE CASH FLOW (In Millions)
Three Months Ended March 31,
2011 Net cash flow provided by operating
activities $ 60.8 Capital expenditures (10.3 ) Free cash
flow $ 50.5
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