Esterline Reports a 17% Earnings Improvement

Esterline Corporation (ESL 51.35, +2.29, +4.67%) (www.esterline.com), a leading
specialty manufacturer serving aerospace/defense markets, today reported fiscal 2010 second quarter (ended April 30) income from continuing operations of $29.6 million, or $.98 per diluted share, on sales of $387.6 million. Year-ago income from continuing operations was $25.3 million, or $.85 per diluted share, on sales of $359.5 million. Income from discontinued operations in last year's second quarter was $.01 per diluted share, bringing net income per diluted share to $.86.
Brad Lawrence, Esterline's CEO, said the company's solid performance -- year-over-year sales up nearly 8% and earnings from continuing operations up 17% -- reflected strength from the Avionics & Controls segment, where sales improved nearly 18% and segment income was up 31% compared with last year. He said, "...sales and gross margin improvement in this segment reflects a particularly successful ramp up of T-6B military trainer cockpit production and good progress on military transport retrofit projects." In addition, he said Esterline's military markets continue to show strength, specifically from "...increased Advanced Materials segment sales at our U.S. and non-U.S. countermeasure flare operations." 
Lawrence noted that Esterline's commercial air transport spare parts business "... showed only sporadic improvement during the quarter, while business jet markets continue to struggle." He said that although market conditions appear to be improving, "...we are still experiencing plenty of market volatility and some of our operations have yet to turn the corner." Overall, however, he said, "...many elements are beginning to move into place, giving us more confidence in our full-year outlook." The company is raising its full-year earnings per share guidance range to $3.45 to $3.65 from its earlier range of $3.20 to $3.45. 
Lawrence said one source of strength is improved performance at certain operations serving markets adjacent to Esterline's core aerospace and defense business. He said the company is benefiting primarily from "...solid sales of interface technologies devices to medical equipment markets and casino gaming machine manufacturers." 
Consolidated gross margin in the quarter was 33.3% compared with 31.3% a year ago. The increase in gross margin mainly reflected cost control measures, improved recovery of fixed costs due to higher sales volumes, and a favorable sales mix of military and commercial aerospace products. 
Selling, general and administrative expenses (SG&A) as a percent of sales were 16.8% in the quarter compared with 15.2% in the prior-year period. The increase in SG&A expenses was due principally to the effect of exchange rates on operating expenses at our non-U.S. operations. In addition, last year's SG&A benefited from foreign currency gains on forward contracts. 
Research, development and engineering expense declined during the quarter to 4.8% of sales compared with 5.1% a year ago. Lawrence said R&D has stabilized in the 4.5% to 5% range. 
For the first half of fiscal 2010, Esterline reported income from continuing operations and net income of $42.4 million, or $1.40 per diluted share, on sales of $727.0 million. Income from continuing operations in the same period last year was $36.8 million, or $1.23 per diluted share. Income from discontinued operations in the first half of 2009 was $.53 per diluted share. Net income in that period was $52.7 million, or $1.76 per diluted share, on $669.2 million in sales. 
Backlog at quarter-end totaled $1.1 billion, about even with last year. New orders in the first half of FY10 totaled $743.3 million, up nearly 10% compared with the same period a year ago. 
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should" or "will," or the negative of such terms, or other comparable terminology. These forward-looking statements are only predictions based on the current intent and expectations of the management of Esterline, are not guarantees of future performance or actions, and involve risks and uncertainties that are difficult to predict and may cause Esterline's or its industry's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Esterline's actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements due to risks detailed in Esterline's public filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K. 
SOURCE: Esterline Technologies

http://www.marketwatch.com/story/esterline-reports-a-17-earnings-improvement-from-continuing-operations-in-second-quarter-2010-2010-05-27?reflink=MW_news_stmp