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
third quarter 2011 financial results.
THIRD QUARTER 2011 HIGHLIGHTS VERSUS
THIRD QUARTER PRIOR YEAR
- Revenues of $636.0 million increased
28.5 percent.
- Operating earnings increased 34.4
percent and operating margin of 17.6 percent expanded 80 basis
points.
- Earnings before income taxes increased
38.8 percent.
- Net earnings were $65.4 million.
Earnings per diluted share were $0.64, an increase of 56.1
percent.
- Full-year 2011 guidance increased by
$0.10 per share to approximately $2.20 per diluted share,
reflecting an increase of approximately 55 percent as compared with
2010 earnings per diluted share, and approximately $0.30 per share
or 16 percent higher than the 2011 guidance the Company provided in
October of 2010.
- The Company issues initial full-year
2012 guidance of approximately $2.65 per diluted share,
representing a year-over-year increase of approximately 20 percent
(24 percent on a comparable tax rate basis).
THIRD QUARTER CONSOLIDATED
RESULTS
Third quarter 2011 revenues of $636.0 million increased $141.0
million, or 28.5 percent, as compared with the same period of the
prior year. Third 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 third quarter of 2011, excluding recent acquisitions, was
approximately 17 percent.
Third quarter 2011 operating earnings of $112.1 million
increased 34.4 percent on the aforementioned 28.5 percent increase
in revenues. Operating margin was 17.6 percent and expanded 80
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.
Third quarter 2011 earnings before income taxes of $85.9 million
increased 38.8 percent as compared with the prior year period.
Income taxes in the current year period were positively impacted by
one-time tax benefits of approximately $5.7 million.
Third quarter 2011 net earnings and earnings per diluted share
were $65.4 million and $0.64, respectively, increases of 59.5
percent and 56.1 percent, respectively, as compared with the third
quarter of 2010.
Third quarter 2011 free cash flow was $69.0 million and
represents a free cash flow conversion ratio of 105.5 percent of
net earnings. For the first nine months of 2011, free cash flow was
$178.5 million and the free cash flow conversion ratio was 104.7
percent.
Commenting on the Company’s recent performance, Amin J. Khoury,
Chairman and Chief Executive Officer of B/E Aerospace said, “Demand
for our products is increasing consistent with the start of what is
expected to be a very strong new aircraft delivery cycle. Our solid
nine month year-to-date results include revenues up 28 percent,
operating earnings up 36 percent, earnings per share up 51 percent
and a free cash flow conversion ratio of 105 percent. Our
nine-month operating margin of 17.3 percent, a 110 basis point
improvement, was driven by substantial margin expansion in both our
commercial aircraft and business jet segments which more than
offset the margin drag from the recent acquisitions in the
consumables segment which have not yet been integrated. As a result
of our solid year-to-date results we are increasing our full-year
2011 guidance to approximately $2.20 per diluted share.”
“Based on our record backlog, both booked and awarded but
unbooked, of almost $7 billion, our expectation for continued
growth in global passenger travel and attendant increases in
capacity, and our expectation of significantly higher levels of
wide-body aircraft deliveries, we have established our 2012
earnings guidance at $2.65 per diluted share, an increase of
approximately 24 percent on a comparable tax rate basis,” concluded
Mr. Khoury.
Free cash flow and free cash flow conversion ratio are non-GAAP
financial measures. For more information see "Reconciliation of
Non-GAAP Financial Measures."
THIRD QUARTER SEGMENT
RESULTS
The following is a tabular summary and commentary of revenues
and operating earnings by segment:
REVENUES Three Months Ended September 30, ($ in
millions) Segment 2011 2010
% Change Commercial aircraft $ 333.1 $ 250.2 33.1 %
Consumables management 238.7 193.1 23.6 % Business jet 64.2
51.7 24.2 % Total $ 636.0 $ 495.0 28.5 %
OPERATING
EARNINGS Three Months Ended September 30, ($ in
millions) Segment 2011 2010 %
Change Commercial aircraft $ 56.6 $ 38.7 46.3 % Consumables
management 47.6 40.5 17.5 % Business jet 7.9 4.2 88.1
% Total $ 112.1 $ 83.4 34.4 %
Third quarter 2011 commercial aircraft segment (CAS) revenues of
$333.1 million increased 33.1 percent as compared with the prior
year period. CAS third quarter 2011 operating earnings of $56.6
million increased 46.3 percent. Operating margin of 17.0 percent
expanded 150 basis points as compared with the prior year period,
due to an improved revenue mix and ongoing operational efficiency
initiatives.
Third quarter 2011 consumables management segment (CMS) revenues
of $238.7 million increased 23.6 percent. CMS operating earnings of
$47.6 million increased 17.5 percent and operating margin was 19.9
percent. Current period operating margin reflects the recent
acquisitions of Satair and LaSalle, which have lower operating
margins than the legacy CMS business. Organic operating margin,
excluding recent acquisitions, for the third quarter of 2011 was
approximately 21.2 percent, up 20 basis points as compared with the
prior year period. Organic revenue growth, excluding recent
acquisitions, was approximately 9 percent, and excluding both
recent acquisitions and sales to military and business jet
customers was approximately 15 percent.
Third quarter 2011 business jet segment revenues of $64.2
million increased 24.2 percent as compared with the prior year
period. Operating earnings of $7.9 million increased $3.7 million
or 88.1 percent as compared with the prior year period. Current
period operating margin of 12.3 percent expanded by 420 basis
points, reflecting both the increase in revenues and an improved
mix of revenues.
NINE-MONTH CONSOLIDATED
RESULTS
For the nine months ended September 30, 2011, revenues of $1.85
billion increased 27.9 percent as compared with the prior year
period. Revenue growth for the first nine months of 2011, excluding
the recent acquisitions, was approximately 15.4 percent.
For the nine months ended September 30, 2011, operating earnings
of $318.9 million increased 36.2 percent as compared with the prior
year period. Operating margin in the current period of 17.3 percent
expanded 110 basis points as compared with the prior year
period.
For the nine months ended September 30, 2011, net earnings were
$170.5 million, or $1.67 per diluted share, as compared with $112.1
million, or $1.11 per diluted share, in the prior year period,
reflecting a growth rate in earnings per diluted share of 50.5
percent.
NINE-MONTH SEGMENT
RESULTS
The following is a tabular summary and commentary of revenues
and operating earnings by segment:
REVENUES Nine Months Ended September 30, ($ in
millions) Segment 2011 2010
% Change Commercial aircraft $ 951.9 $ 716.7 32.8 %
Consumables management 709.4 572.3 24.0 % Business jet 183.8
153.4 19.8 % Total $ 1,845.1 $ 1,442.4 27.9 %
OPERATING EARNINGS Nine Months Ended September 30,
($ in millions) Segment 2011 2010 %
Change Commercial aircraft $ 157.8 $ 109.1 44.6 % Consumables
management 140.5 115.5 21.6 % Business jet 20.6 9.6
114.6 % Total $ 318.9 $ 234.2 36.2 %
For the nine months ended September 30, 2011, CAS revenues of
$951.9 million increased 32.8 percent as compared with the prior
year period. CAS operating earnings of $157.8 million increased
44.6 percent. Operating margin of 16.6 percent expanded 140 basis
points as compared with the prior year period, primarily due to an
improved revenue mix and ongoing operational efficiency
initiatives.
For the nine months ended September 30, 2011, CMS revenues of
$709.4 million increased 24.0 percent and operating earnings of
$140.5 million increased 21.6 percent, as compared with the prior
year period. Operating margin of 19.8 percent decreased 40 basis
points as compared with the same period of the prior year, due to
the margin drag from recent acquisitions. Organic operating margin,
excluding recent acquisitions, was approximately 20.8 percent, up
60 basis points as compared with the prior year period. Organic
revenue growth, excluding recent acquisitions, was approximately 8
percent, and excluding both recent acquisitions and sales to
military and business jet customers, was approximately 15
percent.
For the nine months ended September 30, 2011, business jet
segment revenues of $183.8 million increased 19.8 percent as
compared with the prior year period. Operating earnings of $20.6
million increased $11.0 million or 114.6 percent as compared with
the prior year period. Current period operating margin of 11.2
percent expanded by 490 basis points, reflecting both the increase
in revenues and an improved mix of revenues.
LIQUIDITY AND BALANCE SHEET
METRICS
Third quarter 2011 free cash flow of $69.0 million represents a
free cash flow conversion ratio of 105.5 percent. For the first
nine months of 2011, free cash flow was $178.5 million and the free
cash flow conversion ratio was 104.7 percent. As of September 30,
2011, cash was $264.9 million, net debt, which represents total
debt of $1.245 billion less cash, was $980.6 million and the
Company’s net debt-to-net capital ratio was 35.0 percent. As of
September 30, 2011, the Company had no borrowings outstanding on
its $750 million revolving credit facility and has no debt
maturities until July 2018.
BOOKINGS/BACKLOG
Bookings during the third quarter of 2011 were approximately
$660 million reflecting a book-to-bill ratio of 1.05 to 1. However,
total backlog, both booked and awarded but unbooked, expanded to a
record $6.95 billion, an increase of approximately 26 percent as
compared with September 30, 2010. Booked backlog at the end of the
quarter was approximately $3.45 billion, an increase of
approximately 21 percent as compared with the Company’s September
30, 2010 backlog and supplier furnished equipment (SFE) backlog
increased to approximately $3.5 billion.
“Demand for our products is increasing consistent with the start
of what is expected to be a very strong new aircraft delivery
cycle. Approximately 60 percent of bookings this quarter were
driven by new-buy aircraft. Orders for the nine month year-to-date
period were up 38 percent as compared to the prior year period and,
as mentioned earlier, our backlog, both booked and awarded but
unbooked, reached another record and now stands at almost $7
billion,” commented Mr. Khoury.
OUTLOOK
Commenting on the Company’s outlook, Mr. Khoury stated, “As a
result of our solid year-to-date nine-month results we have
increased full-year 2011 guidance by approximately $0.10 per share
to approximately $2.20 per diluted share, an increase of
approximately 55 percent as compared to 2010, and approximately
$0.30 per share or 16 percent higher than the 2011 guidance we
provided one year ago.”
Mr. Khoury continued, “Based on our record backlog, both booked
and awarded but unbooked, of almost $7 billion, our expectation for
continued growth in global passenger travel and attendant increases
in capacity, and our expectation of significantly higher levels of
wide-body aircraft deliveries, we expect strong full-year 2012
earnings of approximately $2.65 per diluted share, representing
earnings per share growth of approximately 24 percent on a
comparable tax rate basis. Looking further ahead we are optimistic
due to our record backlog, the expected robust wide-body delivery
cycle and continued global growth in passenger travel.”
The Company’s 2012 financial guidance is as follows:
- The Company expects continued total
backlog growth in 2012 driven by the strong wide-body aircraft
delivery cycle, additional SFE awards, and strong aftermarket
demand for retrofit, refurbishment and spares. In addition, we
expect continued growth in consumables demand driven primarily by
the expected continuing growth in global passenger traffic and
capacity.
- 2012 revenues are expected to be
approximately $2.8 billion or approximately 12 percent higher than
2011 expected revenues of approximately $2.5 billion.
- The Company expects full-year 2012
earnings of approximately $2.65 per diluted share, representing an
increase of approximately 24 percent as compared with expected 2011
earnings per diluted share on a comparable tax rate basis.
- 2012 free cash flow conversion ratio is
expected to be approximately 100 percent of net earnings.
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 NINE
MONTHS ENDED
September
September
September
September
2011 2010 2011 2010 Revenues $
636.0 $ 495.0 $ 1,845.1 $ 1,442.4 Cost of sales 398.0 311.1 1,151.3
916.4 Selling, general and administrative 86.9 71.9 261.6 210.6
Research, development and engineering 39.0
28.6 113.3 81.2 Operating
earnings 112.1 83.4 318.9 234.2 Operating earnings, as a
percentage of revenues 17.6 % 16.8 % 17.3 % 16.2 % Interest
expense 26.2 21.5 78.4 62.2 Debt prepayment costs -
- - 2.5 Earnings
before income taxes 85.9 61.9 240.5 169.5 Income taxes
20.5 20.9 70.0
57.4 Net earnings $ 65.4 $ 41.0 $ 170.5
$ 112.1 Net earnings per common share:
Basic $ 0.65 $ 0.41 $ 1.69 $ 1.13
Diluted $ 0.64 $ 0.41 $ 1.67 $ 1.11
Weighted average common shares: Basic 101.0 99.7
100.9 99.5 Diluted 102.0 101.0 101.8 100.7
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In Millions)
September 30, December 31, 2011
2010 ASSETS Current assets: Cash and
cash equivalents $ 264.9 $ 78.7 Accounts receivable 359.8 285.4
Inventories 1,469.0 1,372.0 Deferred income taxes 41.7 36.0 Other
current assets 38.6 37.4 Total current assets 2,174.0
1,809.5 Long-term assets 1,624.2 1,608.5 $ 3,798.2 $
3,418.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities $ 602.7 $ 453.9 Total long-term
liabilities 1,377.2 1,360.1 Total stockholders' equity
1,818.3 1,604.0
$ 3,798.2
$ 3,418.0
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(In Millions)
NINE MONTHS ENDED September 30,
September 30, 2011 2010 CASH FLOWS FROM
OPERATING ACTIVITIES: Net earnings $ 170.5 $ 112.1 Adjustments
to reconcile net earnings to net cash flows provided by operating
activities, net of effects from acquisitions: Depreciation and
amortization 45.9 37.6 Deferred income taxes 43.7 46.5 Non-cash
compensation 19.4 20.7 Debt prepayment costs - 2.5 Provision for
doubtful accounts 1.1 1.6 Loss on disposal of property and
equipment 0.5 6.0 Tax benefits realized from prior exercises of
employee stock options (23.5 ) (17.2 ) Changes in operating assets
and liabilities: Accounts receivable (75.7 ) (61.3 ) Inventories
(101.2 ) (42.5 ) Other current assets and other assets 2.8 2.0
Accounts payable and accrued liabilities 140.5
63.3 Net cash flows provided by operating activities
224.0 171.3
CASH FLOWS FROM
INVESTING ACTIVITIES: Capital expenditures (45.5 ) (29.3 )
Acquisitions, net of cash acquired (17.0 ) -
Net cash flows used in investing activities (62.5 )
(29.3 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issued 1.8 0.2 Tax benefits realized
from prior exercises of employee stock options 23.5 17.2 Borrowings
on line of credit 30.0 - Repayments on line of credit (30.0 ) -
Proceeds from long-term debt, net of original issue discount -
645.6 Debt origination and prepayment costs - (13.7 ) Principal
payments on long-term debt (0.5 ) (75.2 ) Net cash
flows provided by financing activities 24.8
574.1 Effect of foreign exchange rate changes on cash
and cash equivalents (0.1 ) (2.1 )
Net
increase in cash and cash equivalents 186.2 714.0
Cash and
cash equivalents, beginning of period 78.7
120.1
Cash and cash equivalents, end of period $
264.9 $ 834.1
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, as amended (Exchange Act).
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 Exchange
Act, 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 Nine Months Ended Months Ended
September 30, September 30, 2011 2011
Net cash flow provided by operating activities $ 93.4 $ 224.0
Capital expenditures (24.4 ) (45.5 ) Free cash flow $
69.0 $ 178.5
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