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
second quarter 2011 financial results.
SECOND QUARTER 2011 HIGHLIGHTS VERSUS
SECOND QUARTER PRIOR YEAR
- Revenues of $608.9 million increased
25.8 percent. Second quarter bookings of approximately $800 million
were a record for any quarter and were approximately 45 percent
greater than the same period of the prior year.
- Operating earnings of $106.7 million
increased 35.4 percent. Operating margin of 17.5 percent expanded
120 basis points.
- Net earnings were $54.8 million;
earnings per diluted share were $0.54 and increased 45.9
percent.
- Full-year 2011 earnings per share
guidance increased by $0.10 per share to approximately $2.10 per
diluted share.
SECOND QUARTER CONSOLIDATED
RESULTS
Second quarter 2011 revenues of $608.9 million increased $125.0
million, or 25.8 percent, as compared with the same period of the
prior year. Second quarter 2011 results reflect the acquisitions of
TSI Group, Inc., Satair A/S’s aerospace fastener distribution
business and LaSalle Lighting (recent acquisitions). Revenue growth
for the second quarter of 2011, excluding recent acquisitions from
both periods, was approximately 12.8 percent.
Second quarter 2011 operating earnings of $106.7 million
increased 35.4 percent on the aforementioned 25.8 percent increase
in revenues. Operating margin was 17.5 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.
Second quarter 2011 net earnings were $54.8 million. Earnings
per diluted share of $0.54 increased 45.9 percent as compared with
the prior year period.
Second quarter 2011 free cash flow was $59.0 million and
represents a free cash flow conversion ratio of 107.7 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
second quarter results included record quarterly bookings, up 45
percent, representing a book to bill ratio of 1.3 to 1. In
addition, revenues were up 26 percent, operating earnings were up
35 percent, earnings per share were up 46 percent and the free cash
flow conversion ratio was in excess of 100 percent of net earnings.
The record bookings performance was driven by strong orders for a
broad range of aircraft interior equipment for both new-buy and
aftermarket programs. The 120 basis point expansion in operating
margin was driven by margin improvements in each of our three
business segments.”
“Based on our record backlog, both booked and awarded but
unbooked, of approximately $6.5 billion, our expectation for
continued growth in passenger travel and attendant increases in
capacity, and our expectation of significantly higher levels of
wide-body aircraft deliveries, we expect the second half of 2011 to
be stronger than the first half of 2011 and accordingly, we have
raised our full-year 2011 guidance to approximately $2.10 per
diluted share,” concluded Mr. Khoury.
Free cash flow and free cash flow conversion ratio are non-GAAP
financial measures. For more information see "Reconciliation of
Non-GAAP Financial Measures."
SECOND QUARTER SEGMENT
RESULTS
The following is a tabular summary and commentary of revenues
and operating earnings by segment:
REVENUES Three Months Ended June 30, ($ in
millions) Segment
2011 2010
% Change Commercial aircraft $ 308.5 $ 236.4 30.5 %
Consumables management 239.9 193.1 24.2 % Business jet 60.5
54.4 11.2 % Total $ 608.9 $ 483.9 25.8 %
OPERATING
EARNINGS Three Months Ended June 30, ($ in
millions) Segment 2011 2010 %
Change Commercial aircraft $ 51.9 $ 36.6 41.8 %
Consumables management 48.3 38.2 26.4 % Business jet 6.5
4.0 62.5 % Total $ 106.7 $ 78.8 35.4 %
Second quarter 2011 commercial aircraft segment (CAS) revenues
of $308.5 million increased 30.5 percent as compared with the prior
year period. CAS second quarter 2011 operating earnings of $51.9
million increased 41.8 percent and operating margin of 16.8 percent
expanded 130 basis points as compared with the prior year period,
primarily due to an improved revenue mix and ongoing operational
efficiency initiatives.
Second quarter 2011 consumables management segment (CMS)
revenues of $239.9 million increased 24.2 percent and operating
earnings of $48.3 million increased 26.4 percent, as compared with
the second quarter of 2010. Operating margin of 20.1 percent
increased 30 basis points as compared with the same period of the
prior year in spite of the margin drag from recent acquisitions.
Organic revenue growth, excluding recent acquisitions from both
periods and excluding sales to military and business jet customers,
increased by 13.0 percent. Organic operating margin, excluding
recent acquisitions from both periods, expanded by 140 basis points
to 21.2 percent.
Second quarter 2011 business jet segment revenues of $60.5
million increased 11.2 percent as compared with the prior year
period. Operating earnings of $6.5 million increased $2.5 million
or 62.5 percent as compared with the prior year period. Current
period operating margin of 10.7 percent expanded by 330 basis
points, reflecting both the increase in revenues and an improved
mix of revenues.
SIX-MONTH CONSOLIDATED
RESULTS
For the six months ended June 30, 2011, revenues of $1.209
billion increased 27.6 percent as compared with the prior year
period. Revenue growth for the first six months of 2011, excluding
the recent acquisitions from both periods, was approximately 14.6
percent.
For the six months ended June 30, 2011, operating earnings of
$206.8 million increased 37.1 percent as compared with the prior
year period. Operating margin in the current period of 17.1 percent
expanded 120 basis points as compared to the prior year period.
For the six months ended June 30, 2011, net earnings were $105.1
million, or $1.03 per diluted share, as compared with $71.1
million, or $0.71 per diluted share, in the prior year period,
reflecting a growth rate in earnings per share of 45.1 percent.
SIX-MONTH SEGMENT
RESULTS
The following is a tabular summary and commentary of revenues
and operating earnings by segment:
REVENUES Six Months Ended June 30, ($ in
millions) Segment 2011
2010 % Change Commercial aircraft $ 618.8 $
466.5 32.6 % Consumables management 470.7 379.2 24.1 % Business jet
119.6 101.7 17.6 % Total $ 1,209.1 $ 947.4 27.6 %
OPERATING EARNINGS Six Months Ended June 30,
($ in millions) Segment 2011 2010 %
Change Commercial aircraft $ 101.2 $ 70.4 43.8 %
Consumables management 92.9 75.0 23.9 % Business jet 12.7
5.4 135.2 % Total $ 206.8 $ 150.8 37.1 %
For the six months ended June 30, 2011, CAS revenues of $618.8
million increased 32.6 percent as compared with the prior year
period. CAS operating earnings of $101.2 million increased 43.8
percent and operating margin of 16.4 percent expanded 130 basis
points as compared with the prior year period, primarily due to an
improved revenue mix and ongoing operational efficiency
initiatives.
For the six months ended June 30, 2011, CMS revenues of $470.7
million increased 24.1 percent and operating earnings of $92.9
million increased 23.9 percent, as compared with the prior year
period. Operating margin of 19.7 percent decreased 10 basis points
as compared with the same period of the prior year due to the
margin drag from recent acquisitions. Organic revenue growth,
excluding recent acquisitions from both periods and excluding sales
to military and business jet customers, increased by 14.1 percent.
Organic operating margin, excluding recent acquisitions from both
periods, expanded by 40 basis points to 20.2 percent.
For the six months ended June 30, 2011, business jet segment
revenues of $119.6 million increased 17.6 percent as compared with
the prior year period. Operating earnings of $12.7 million
increased $7.3 million or 135.2 percent as compared with the prior
year period. Current period operating margin of 10.6 percent
expanded by 530 basis points, reflecting both the increase in
revenues and an improved mix of revenues.
LIQUIDITY AND BALANCE SHEET
METRICS
Second quarter 2011 free cash flow was $59.0 million and
represents a free cash flow conversion ratio of 107.7 percent. For
the first six months of 2011, free cash flow was $109.5 million and
the free cash flow conversion ratio was 104.2 percent. As of June
30, 2011, cash was $193.2 million, net debt, which represents total
debt of $1.246 billion less cash, was $1.052 billion and the
company’s net debt-to-net capital ratio was 37.3 percent. As of
June 30, 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 second quarter of 2011 were approximately
$800 million, a quarterly record, and represented a book to bill
ratio of approximately 1.3 to 1. Backlog at the end of the quarter
was approximately $3.4 billion, an increase of approximately 21
percent as compared with the company’s June 30, 2010 backlog.
Supplier furnished equipment (SFE) awards increased to $3.1
billion. As a result, total backlog, both booked and awarded but
unbooked, expanded to a record $6.5 billion, an increase of
approximately 20 percent as compared with June 30, 2010.
OUTLOOK
Commenting on the company’s outlook, Mr. Khoury stated, “Based
on our record backlog, both booked and awarded but unbooked, of
approximately $6.5 billion, our expectation for continued growth in
passenger travel and attendant increases in capacity, and our
expectation of significantly higher levels of wide-body aircraft
deliveries, we expect the second half of 2011 to be stronger than
the first half of 2011 and accordingly, we have raised our
full-year 2011 guidance to approximately $2.10 per diluted
share.”
The company’s financial guidance is as follows:
- The company expects increasing
aftermarket demand for consumables and commercial aircraft segment
spares driven by the continuing growth in passenger traffic and
capacity. In addition, the company expects an increase in orders
and revenues arising from the expected acceleration in deliveries
of new wide-body aircraft.
- 2011 revenues are expected to be
approximately $2.5 billion or approximately 25 percent higher than
2010 revenues.
- 2011 earnings per diluted share
guidance is increased by $0.10 per share to approximately $2.10 per
diluted share or approximately 48 percent higher than 2010 earnings
per diluted share.
- 2011 free cash flow is expected to be
approximately $210 million representing a free cash flow conversion
ratio of approximately 100 percent.
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 SIX MONTHS
ENDED June 30, June 30, June 30, June
30, 2011 2010 2011
2010 Revenues $ 608.9 $ 483.9 $ 1,209.1 $
947.4 Cost of sales 375.8 309.6 753.3 605.3 Selling, general and
administrative 89.3 70.0 174.7 138.7 Research, development and
engineering 37.1 25.5 74.3
52.6 Operating earnings 106.7 78.8
206.8 150.8 Operating earnings, as a percentage of revenues
17.5 % 16.3 % 17.1 % 15.9 % Interest expense 26.0 19.9 52.2
40.7 Debt prepayment costs - 2.5
- 2.5 Earnings before income taxes 80.7
56.4 154.6 107.6 Income taxes 25.9 19.1
49.5 36.5 Net earnings $
54.8 $ 37.3 $ 105.1 $ 71.1 Net
earnings per common share: Basic $ 0.54 $ 0.37
$ 1.04 $ 0.71 Diluted $ 0.54 $ 0.37 $
1.03 $ 0.71 Weighted average common shares:
Basic 100.9 99.5 100.9 99.5 Diluted 101.8 100.7 101.7 100.6
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In Millions)
June 30, December 31, 2011
2010 ASSETS Current assets: Cash and
cash equivalents $ 193.2 $ 78.7 Accounts receivable 347.8 285.4
Inventories 1,424.1 1,372.0 Deferred income taxes 37.4 36.0 Other
current assets 33.6 37.4 Total current assets 2,036.1
1,809.5 Long-term assets 1,645.4 1,608.5 $ 3,681.5 $
3,418.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities $ 527.2 $ 453.9 Total long-term
liabilities 1,382.6 1,360.1 Total stockholders' equity
1,771.7 1,604.0
$ 3,681.5
$ 3,418.0
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(In Millions)
Six Months Ended June 30, 2011
2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net
earnings $ 105.1 $ 71.1 Adjustments to reconcile net earnings to
net cash flows provided by operating activities, net of effects
from acquisitions: Depreciation and amortization 30.3 25.0 Deferred
income taxes 31.0 24.7 Non-cash compensation 12.8 13.9 Debt
prepayment costs - 2.5 Provision for doubtful accounts 1.0 1.0 Loss
on disposal of property and equipment 0.4 0.5 Tax benefits realized
from prior exercises of employee stock options (15.2 ) (5.4 )
Changes in operating assets and liabilities: Accounts receivable
(58.4 ) (36.0 ) Inventories (43.9 ) (28.8 ) Other current assets
and other assets 7.1 2.4 Accounts payable and accrued liabilities
60.4 25.4 Net cash flows provided by
operating activities 130.6 96.3
CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures
(21.1 ) (16.9 ) Acquisitions, net of cash acquired (17.1 )
- Net cash flows used in investing activities
(38.2 ) (16.9 )
CASH FLOWS FROM FINANCING
ACTIVITIES: Proceeds from common stock issued 1.8 1.4 Tax
benefits realized from prior exercises of employee stock options
15.2 5.4 Principal payments on long-term debt (0.3 ) (75.2 )
Borrowings on line of credit 30.0 - Repayments on line of credit
(30.0 ) - Net cash flows provided by (used in)
financing activities 16.7 (68.4 ) Effect of
foreign exchange rate changes on cash and cash equivalents
5.4 (7.2 )
Net increase in cash and
cash equivalents 114.5 3.8
Cash and cash equivalents,
beginning of year 78.7 120.1
Cash and cash equivalents, end of year $ 193.2 $
123.9
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 tables
that reconcile 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 Six Months Ended Months Ended
June 30, June 30, 2011 2011
Net cash flow provided by operating activities $ 69.8 $
130.6 Capital expenditures (10.8 ) (21.1 ) Free cash
flow $ 59.0 $ 109.5
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