Wednesday September 19, 2:01 am Eastern Time
Press Release
SOURCE: B/E Aerospace, Inc.
B/E Aerospace Reports Second Quarter Earnings Up 89 Percent, Comments On Earnings Outlook
WELLINGTON, Fla.--(BUSINESS WIRE)--Sept. 19, 2001--B/E Aerospace, Inc. (Nasdaq:BEAV - news) today announced financial results for the second quarter of its fiscal year 2002 and commented on the company's earnings outlook for fiscal 2002 and 2003.
HIGHLIGHTS: SECOND QUARTER
- Net earnings increased 89 percent compared to the second quarter
of last year
- Earnings per share increased 42 percent to $0.27 on the greater
number of shares outstanding
- Cash basis earnings increased to $0.44 per share
- Revenues increased 9 percent; up 6 percent on a pro forma basis
- Backlog increased to $635 million as of August 2001
SECOND QUARTER RESULTS
Net earnings were $8.9 million for the second quarter of fiscal 2002, up 89 percent compared to $4.7 million in the second quarter a year ago. Earnings per share (diluted) were $0.27 for the second quarter of fiscal 2002, a 42 percent increase compared to $0.19 for the same period last year. Cash basis earnings, at $0.44 per share, were substantially higher than reported earnings. Cash basis earnings exclude amortization and related tax effects.
Shares outstanding increased to 33.2 million (weighted average for the quarter), reflecting the common stock offering completed in May 2001.
Higher revenues and improved profit margins drove the strong second quarter results. Sales increased by 9 percent compared to the same quarter last year, reflecting higher sales of both commercial aircraft products and business jet products.
Sales for the quarter increased by 6 percent on a pro forma basis compared to last year. Pro forma sales include sales from acquisitions completed in fiscal 2001 and 2002, but exclude prior-year revenues from the service operations, which were discontinued as earlier reported. Pro forma sales also exclude both current and prior-year revenues from the company's Advanced Thermal Sciences subsidiary.
MARGIN IMPROVEMENT CONTINUES
B/E continued to improve its profit margins in the second quarter. The company's operating profit margin increased by 180 basis points compared to the same period last year, and by 40 basis points compared to the quarter ended May 2001.
OPERATING GROSS
MARGIN MARGIN
Current fiscal year:
- Second quarter 13.2% 38.5%
- First quarter 12.8% 37.3%
Prior fiscal year:
- Second quarter 11.4% 37.0%
B/E has increased its gross margin by 730 basis points since fiscal 1996, after adjusting for merger and consolidation costs. The improvement reflects the effective rationalization of product lines and facilities, and the success of management's continuous improvement and lean manufacturing initiatives. Aided by effective leveraging of information technology systems, these initiatives are enabling operating management to drive down costs and improve both quality and productivity.
B/E's commercial aircraft products segment performed well in the second quarter, with sales up 12 percent and operating margin up 300 basis points compared to the second quarter of last year. The business jet and engineering services segments generally performed in line with management's expectations. Sales of business jet products increased by 10 percent, while the engineering services segment expanded its operating earnings by 5 percent.
SIX-MONTH REVIEW
Net earnings for the first half of fiscal 2002 excluding an extraordinary item (debt extinguishment costs) were $16.7 million, an 82 percent increase compared to the same period last year. Earnings per share excluding the extraordinary item were $0.52, up 44 percent compared to the same period a year ago. Common shares outstanding increased by 27 percent compared to last year. Higher sales and improved profit margins contributed to the substantial increases in earnings before the extraordinary item.
OTHER ACHIEVEMENTS
B/E's other achievements include:
- generated $38 million of net cash flow from operations for the
quarter, up from $14 million last year and significantly exceeding
reported earnings of $8.9 million;
- improved liquidity, increasing cash on hand by almost $15 million
for the quarter, and established a new 5-year, $150 million bank
credit facility;
- strengthened its balance sheet, reducing net debt to 73 percent of
net capital as compared to 90 percent one year ago; and
- announced a strategic expansion into the aerospace fastener
distribution market with the acquisition of M & M Aerospace
Hardware, Inc. for an initial purchase price of $177 million. The
M & M acquisition was completed after the end of the second
quarter. Consequently, M & M's revenues and expenses are not
included in the financial results announced today.
AIRLINES FACE DIFFICULT OPERATING ENVIRONMENT
``The U.S. airline industry is experiencing its steepest financial decline of the past 35 years, '' said Mr. Robert J. Khoury, President and Chief Executive Officer of B/E Aerospace. ``This year has seen airlines unfavorably impacted by high labor and fuel costs, compounded by a steep drop in business travel. U.S. airlines lost almost a billion dollars in the second quarter. For the usually strong third quarter, analysts were projecting losses of approximately $450 million even before the tragic events of last week.
``In the wake of last week's events, U.S. airlines face a period of protracted and severe financial stress and decreased air travel. Clearly, the airline industry is headed for its largest annual loss ever in calendar 2001.
``Airframe manufacturers will likely see new aircraft deliveries decrease significantly for the next several years,'' Mr. Khoury said. ``B/E is primarily an aftermarket company, and is likely to be less impacted than most by fluctuations in new aircraft deliveries. However, our airline customers will undoubtedly implement emergency cash conservation measures which will have a negative impact on our business.''
EARNINGS OUTLOOK
``Although the decline in airline financial results has been swift and sharp, B/E's business remains fundamentally sound,'' said Mr. Khoury. ``Each of our segments is solidly profitable. Each is benefiting from our ongoing continuous improvement and lean manufacturing initiatives.
``We have strengthened our balance sheet in the past year and have good liquidity, with cash and available bank credit of $156 million as of the end of August and adjusted for completion of the M & M acquisition.
``Our management team has honed its skills during comparable airline industry conditions in the early 90's. In addition, we are not solely dependent on the U.S. airline industry. B/E is truly a global supplier, doing business with all the world's major airlines and we have a substantial presence in the business jet cabin interior market as well.
``With these attributes, and the largest installed product base in the industry, we expect to emerge from this downturn with strengthened market shares. However, given the unprecedented conditions in the airline industry, we are unlikely to achieve the level of earnings growth anticipated in our previous guidance, either this year or next.
``At the present time, we don't have enough information to provide quantitative guidance on the earnings outlook,'' Mr. Khoury concluded. ``Within 3 to 6 months, we expect to have a clearer picture of how the airlines' austerity measures will impact our business. However, with our market leadership, lean manufacturing culture, seasoned management team and excellent liquidity, we believe we will be able to remain profitable and cash flow positive through the downturn.''
This news release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties, and B/E's actual experience may differ materially from that anticipated in such statements. Factors that might cause such a difference include those discussed in B/E's filings with the Securities and Exchange Commission, including but not limited to its most recent proxy statement, Form 10-K and Form 10-Q. For more information, see the section entitled ``Forward-Looking Statements'' contained in B/E's Form 10-K and in other filings.
B/E Aerospace, Inc. is the world's leading manufacturer of aircraft cabin interior products, serving virtually all the world's airlines and aircraft manufacturers. B/E designs, develops, manufactures, sells and services a broad line of passenger cabin interior products for both commercial and business/VIP aircraft and provides interior design, reconfiguration and conversion services to its customers throughout the world. With annual revenues exceeding $700 million, the company employs more than 4,000 people worldwide. For more information, visit B/E's web site at beaerospace.com.
B/E AEROSPACE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED
------------------
August 25, August 26,
(In thousands, except per share data) 2001 2000
----------------------------------------------------------------------
Net sales $179,093 $164,116
Cost of sales 110,113 103,358
-------- --------
Gross profit 68,980 60,758
Gross margin 38.5% 37.0%
Operating expenses:
Selling, general and administrative 27,896 23,941
Research, development and engineering 10,973 12,228
Amortization 6,412 5,847
-------- --------
Total operating expenses 45,281 42,016
-------- --------
Operating earnings 23,699 18,742
Operating margin 13.2% 11.4%
Interest expense, net 13,790 13,488
-------- --------
Earnings before income taxes 9,909 5,254
Income taxes 991 525
-------- --------
NET EARNINGS $ 8,918 $ 4,729
======== ========
NET EARNINGS PER COMMON SHARE:
Diluted $ 0.27 $ 0.19
Cash basis (1) $ 0.44 $ 0.39
Common shares (weighted average and
potentially dilutive) 33,227 25,367
(1) Excludes tax-effected amortization expense
B/E AEROSPACE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
SIX MONTHS ENDED
----------------
August 25, August 26,
(In thousands, except per share data) 2001 2000
----------------------------------------------------------------------
Net sales $355,926 $333,241
Cost of sales 221,040 210,930
-------- --------
Gross profit 134,886 122,311
Gross margin 37.9% 36.7%
Operating expenses:
Selling, general and administrative 52,779 47,982
Research, development and engineering 23,053 25,209
Amortization 12,761 11,715
-------- --------
Total operating expenses 88,593 84,906
-------- --------
Operating earnings 46,293 37,405
Operating margin 13.0% 11.2%
Interest expense, net 27,764 27,219
-------- --------
Earnings before income taxes 18,529 10,186
Income taxes 1,853 1,019
-------- --------
Earnings before extraordinary item 16,676 $ 9,167
Extraordinary item (1) 9,309 --
-------- --------
NET EARNINGS $ 7,367 $ 9,167
======== ========
EARNINGS PER COMMON SHARE BEFORE
EXTRAORDINARY ITEM:
Diluted $ 0.52 $ 0.36
Cash basis (2) $ 0.88 $ 0.78
NET EARNINGS PER COMMON SHARE:
Diluted $ 0.23 $ 0.36
Cash basis (2) $ 0.59 $ 0.78
Common shares (weighted average and
potentially dilutive) 32,063 25,168
(1) Expenses related to early extinguishment of 9.875% Senior
Subordinated Notes and bank credit facility.
(2) Excludes tax-effected amortization expense
--------------------------------------------------------------------------------
Contact:
B/E Aerospace, Inc., Wellington
Max Kuniansky, Director of Investor Relations
561/791-5000
max_kuniansky@beaerospace.com
Home Page: beaerospace.com |
