Click here to close now.


Microsoft Cloud Authors: Jordan Sanders, Carmen Gonzalez, Pat Romanski, Keith Mayer, Jayaram Krishnaswamy

News Feed Item

Esterline Reports Fourth Quarter and Full Fiscal Year Results; Q4 Net Earnings of $61.7 Million, or $1.97 per Share; $531 Million Sales

Company Issues Full-Year 2013 Guidance of $5.45 to $5.80 per Diluted Share

BELLEVUE, WA -- (Marketwire) -- 12/06/12 -- Esterline Corporation (NYSE: ESL) (, a leading specialty manufacturer serving the global aerospace and defense markets, today reported fiscal 2012 fourth quarter (ended October 26) income from continuing operations of $61.7 million, or $1.97 per diluted share, on sales of $530.7 million.

Brad Lawrence, Esterline's Chief Executive Officer, said, "Esterline ended the year on a strong note. Even without the benefit of several discrete items, our core underlying business was strong in the quarter." The quarter's performance included the items detailed in Table 1 below.

Table 1: Effects of Discrete Items on 4th Quarter 2012 EPS
(Estimated tax rate 20%; 31.3 million shares)

Earnings Per Share - GAAP                             $ 1.97

Foreign Exchange Benefit - Avionics & Controls          0.02
Change Orders; R&D Tax Credits                          0.02
Income Tax Benefit                                      0.04
Urgent Customer Requirements                            0.12
Total Discrete Items                                  $ 0.20

Lawrence reiterated that the business challenge in the fourth quarter was execution, and "...uniformly, our business leaders met that challenge." He further confirmed that "...Esterline is in a healthy position, poised for another strong year."

The company provided fully diluted earnings per share (EPS) guidance for fiscal 2013 in a range of $5.45 to $5.80, and currently expects organic sales growth of approximately 4% over fiscal 2012. Lawrence noted that the estimates "...include our best analysis of the impact of anticipated defense spending reductions and exclude any potential sales in fiscal 2013 from a second tranche of C-130 cockpit retrofits from a large international customer." He added that "...although the order could still come to fruition, we aren't building it into our current plan and are making appropriate infrastructure adjustments. However, we're looking at a robust year with or without it."

The full-year EPS range for fiscal 2013 incorporates first quarter EPS in the range of $0.45 to $0.60. First quarter sales are expected to be in the range of $450 million to $480 million, in line with the expectation of steadily improving quarterly results as the year progresses. Lawrence noted that the first quarter results will also include the severance impact of selective workforce reductions related to the slowdown in defense activity at several operations.

With regard to the overall defense market in fiscal 2013, Lawrence said despite uncertainty related to sequestration, "...we see promise in our defense programs and technologies that we believe will hold up well as budget dollars are allocated in the coming year." These programs include the Boeing P-8 and Airbus A400M that are planned to come online next year.

Lawrence said "...we are confident that the continued strength of the commercial aerospace market will contribute to Esterline's performance in fiscal 2013. Some of our most important commercial customers, including Boeing and Airbus, are still increasing build rates."

In addition, Lawrence said Esterline continues to pursue applications of its aerospace technology in many adjacent markets which are showing growth potential, such as medical capital equipment, high-speed rail, oil and gas exploration, and casino gaming consoles.

For the full fiscal year 2012, Esterline reported record sales of $2.0 billion, with income from continuing operations of $164.7 million, or $5.27 per diluted share, excluding a previously announced third quarter, non-cash charge against goodwill of $52.2 million, or $1.67 per diluted share, related to its U.K.-based Racal Acoustics defense business. Fiscal 2011 income from continuing operations was $133.1 million, or $4.27 per diluted share, on $1.7 billion in sales. Including the charge, full-year fiscal 2012 income from continuing operations was $112.5 million, or $3.60 per diluted share.

New orders increased 23% in the fourth quarter compared with the same period last year. Fiscal 2012 fourth quarter new orders were $607 million compared with $492 million in the prior-year period. For the full-year fiscal 2012, new orders were $2.06 billion, up 10.2% compared with $1.87 billion for fiscal 2011. Backlog increased to $1.32 billion at October 26, 2012, compared with $1.25 billion at the end of the prior year.

Gross margin as a percentage of sales in the fourth quarter of fiscal 2012 was 38.5% compared to the year-ago level of 30.5%. The prior-year period included the effect of purchase accounting related to the Souriau acquisition that lowered gross margin performance in that period. Gross margin for the full fiscal year ended October 26, 2012, was 36.1% compared to the fiscal 2011 level of 34.3%.

Fiscal 2012 fourth quarter selling, general and administrative (SG&A) expenses as a percent of sales were 18.3%, compared with 17.8% in the prior-year period. Full-year SG&A expenses for fiscal 2012 were 19.2%, compared with 17.7% in fiscal 2011; the full-year increase was mainly due to incremental SG&A expenses following the Souriau acquisition in mid-fiscal year 2011. Lawrence reiterated that "...the company is continuing to focus on operational enhancements to further improve operating margins."

Research, development and engineering spending in the fourth quarter was $24.6 million, or 4.6% of sales, compared with $30.6 million, or 6.1% of sales, a year ago. This year's level was favorably impacted by customer-funded engineering and foreign investment tax credits. The year-ago period included higher research and development expenses for avionics products. For the full fiscal year of 2012, research, development and engineering expenses were $107.7 million, or 5.4% of sales, compared with $94.5 million, or 5.5% of sales, in fiscal 2011. Lawrence said the company expects R&D expense levels " remain in the five to five and-a-half percent range in fiscal 2013."

The company's income tax rate in the fourth quarter of 2012 was 13.0% compared with 11.8% for the prior-year period. The rates for both periods benefited from various tax credits and foreign interest expense deductions. Total debt decreased by $83.7 million from the end of the third quarter. Lawrence noted that cash flow remains strong and the company will "...continue to pay down debt in addition to having broader opportunities to invest and create value for shareholders in 2013."

Conference Call Information

Esterline will host a conference call to discuss this announcement today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The U.S. dial-in number is 866-510-0712; outside the U.S., use 617-597-5380. The pass code for the call is: 84022046.

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.

Consolidated Statement of Operations (unaudited)
In thousands, except per share amounts

                               Three Months Ended       Fiscal Year Ended
                             ----------------------  ----------------------
                               Oct 26,     Oct 28,     Oct 26,     Oct 28,
                                2012        2011        2012        2011
                             ----------  ----------  ----------  ----------
Segment Sales
  Avionics & Controls        $  220,359  $  209,919  $  790,015  $  841,939
  Sensors & Systems             174,436     163,768     702,394     414,609
  Advanced Materials            135,861     128,710     499,909     461,437
                             ----------  ----------  ----------  ----------

Net Sales                       530,656     502,397   1,992,318   1,717,985

Cost of Sales                   326,403     349,285   1,273,365   1,128,265
                             ----------  ----------  ----------  ----------
                                204,253     153,112     718,953     589,720
  Selling, general and
   administrative                97,371      89,235     382,887     304,154
  Research, development and
   engineering                   24,607      30,560     107,745      94,505
  Gain on settlement of
   contingency                       --          --     (11,891)         --
  Goodwill impairment                --          --      52,169          --
  Other income                       --        (487)     (1,263)     (6,853)
                             ----------  ----------  ----------  ----------
    Total Expenses              121,978     119,308     529,647     391,806
                             ----------  ----------  ----------  ----------

Operating Earnings From
 Continuing Operations           82,275      33,804     189,306     197,914

  Interest income                  (145)       (187)       (465)     (1,615)
  Interest expense               11,067      11,835      46,238      40,216
  Loss on extinguishment of
   debt                              --          --          --         831
                             ----------  ----------  ----------  ----------

Income From Continuing
Before Income Taxes              71,353      22,156     143,533     158,482
Income Tax Expense                9,281       2,615      29,958      24,938
                             ----------  ----------  ----------  ----------
Income From Continuing
 Operations Including
 Noncontrolling Interests        62,072      19,541     113,575     133,544
Income Attributable to
 Noncontrolling Interests          (412)       (129)     (1,040)       (457)
                             ----------  ----------  ----------  ----------
Income From Continuing
 Operations                      61,660      19,412     112,535     133,087

Income (Loss) From
 Discontinued Operations,
 Net of Tax                          --          28          --         (47)
                             ----------  ----------  ----------  ----------

Net Earnings                 $   61,660  $   19,440  $  112,535  $  133,040
                             ==========  ==========  ==========  ==========

Earnings Per Share - Basic:
  Continuing Operations      $     2.00  $      .64  $     3.66  $     4.36
  Discontinued Operations           .00         .00         .00         .00
                             ----------  ----------  ----------  ----------

Earnings Per Share - Basic   $     2.00  $      .64  $     3.66  $     4.36
                             ==========  ==========  ==========  ==========

Earnings Per Share -
  Continuing Operations      $     1.97  $      .62  $     3.60  $     4.27
  Discontinued Operations           .00         .00         .00         .00
                             ----------  ----------  ----------  ----------

Earnings Per Share - Diluted $     1.97  $      .62  $     3.60  $     4.27
                             ==========  ==========  ==========  ==========

Weighted Average Number of
 Shares Outstanding - Basic      30,860      30,613      30,749      30,509

Weighted Average Number of
 Shares Outstanding -
 Diluted                         31,330      31,183      31,282      31,154

Consolidated Sales and Income from Continuing Operations by Segment
In thousands

                            Three Months Ended        Fiscal Year Ended
                          ----------------------  -------------------------
                            Oct 26,     Oct 28,     Oct 26,        Oct 28,
                             2012        2011        2012           2011
                          ----------  ----------  ----------     ----------

Segment Sales
  Avionics & Controls     $  220,359  $  209,919  $  790,015     $  841,939
  Sensors & Systems          174,436     163,768     702,394        414,609
  Advanced Materials         135,861     128,710     499,909        461,437
                          ----------  ----------  ----------     ----------

Net Sales                 $  530,656  $  502,397  $1,992,318     $1,717,985
                          ==========  ==========  ==========     ==========

Income From Continuing
  Avionics & Controls     $   42,214  $   30,664  $   54,917 (1) $  135,187
  Sensors & Systems           21,060     (10,867)     70,890         22,536
  Advanced Materials          27,020      25,263      93,546         82,307
                          ----------  ----------  ----------     ----------
                              90,294      45,060     219,353        240,030

  Corporate expense           (8,019)    (11,743)    (43,201)       (48,969)
  Other income                    --         487       1,263          6,853
  Gain on settlement of
   contingency                    --          --      11,891             --
  Interest income                145         187         465          1,615
  Interest expense           (11,067)    (11,835)    (46,238)       (40,216)
  Loss on extinguishment
   of debt                        --          --          --           (831)
                          ----------  ----------  ----------     ----------

Income From Continuing
 Operations Before Income
 Taxes                    $   71,353  $   22,156  $  143,533     $  158,482
                          ==========  ==========  ==========     ==========

(1) Includes a $52.2 million charge against goodwill of Racal Acoustics.

Consolidated Balance Sheet (unaudited)
In thousands                                        Oct 26,        Oct 28,
                                                     2012           2011
                                                 ------------   ------------
Current Assets
  Cash and cash equivalents                      $    160,675   $    185,035
  Cash in escrow                                        5,016          5,011
  Accounts receivable, net                            383,362        369,826
  Inventories                                         409,837        402,548
  Income tax refundable                                 4,832          2,857
  Deferred income tax benefits                         46,000         48,251
  Prepaid expenses                                     21,340         19,245
  Other current assets                                  4,631          6,540
                                                 ------------   ------------
    Total Current Assets                            1,035,693      1,039,313

Property, Plant and Equipment, Net                    356,401        368,416

Other Non-Current Assets
  Goodwill                                          1,098,962      1,163,725
  Intangibles, net                                    609,045        693,915
  Debt issuance costs, net                              8,818         10,695
  Deferred income tax benefits                         97,952         79,605
  Other assets                                         20,246         22,917
                                                 ------------   ------------
                                                 $  3,227,117   $  3,378,586
                                                 ============   ============

Liabilities and Shareholders' Equity
Current Liabilities
  Accounts payable                               $    108,689   $    119,888
  Accrued liabilities                                 269,553        270,422
  Credit facilities                                        --          5,000
  Current maturities of long-term debt                 10,610         11,595
  Deferred income tax liabilities                       5,125          9,538
  Federal and foreign income taxes                      2,369          1,918
                                                 ------------   ------------
    Total Current Liabilities                         396,346        418,361

Long-Term Liabilities
  Credit facilities                                   240,000        360,000
  Long-term debt, net of current maturities           598,060        660,028
  Deferred income tax liabilities                     205,198        238,709
  Pension and post-retirement obligations             132,074        107,877
  Other liabilities                                    34,904         19,693

Total Shareholders' Equity                          1,620,535      1,573,918
                                                 ------------   ------------
                                                 $  3,227,117   $  3,378,586
                                                 ============   ============

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@ThingsExpo Stories
Countless business models have spawned from the IaaS industry – resell Web hosting, blogs, public cloud, and on and on. With the overwhelming amount of tools available to us, it's sometimes easy to overlook that many of them are just new skins of resources we've had for a long time. In his general session at 17th Cloud Expo, Harold Hannon, Sr. Software Architect at SoftLayer, an IBM Company, broke down what we have to work with, discussed the benefits and pitfalls and how we can best use them to design hosted applications.
Most of the IoT Gateway scenarios involve collecting data from machines/processing and pushing data upstream to cloud for further analytics. The gateway hardware varies from Raspberry Pi to Industrial PCs. The document states the process of allowing deploying polyglot data pipelining software with the clear notion of supporting immutability. In his session at @ThingsExpo, Shashank Jain, a development architect for SAP Labs, discussed the objective, which is to automate the IoT deployment process from development to production scenarios using Docker containers.
We all know that data growth is exploding and storage budgets are shrinking. Instead of showing you charts on about how much data there is, in his General Session at 17th Cloud Expo, Scott Cleland, Senior Director of Product Marketing at HGST, showed how to capture all of your data in one place. After you have your data under control, you can then analyze it in one place, saving time and resources.
The Internet of Things (IoT) is growing rapidly by extending current technologies, products and networks. By 2020, Cisco estimates there will be 50 billion connected devices. Gartner has forecast revenues of over $300 billion, just to IoT suppliers. Now is the time to figure out how you’ll make money – not just create innovative products. With hundreds of new products and companies jumping into the IoT fray every month, there’s no shortage of innovation. Despite this, McKinsey/VisionMobile data shows "less than 10 percent of IoT developers are making enough to support a reasonably sized team....
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
As organizations realize the scope of the Internet of Things, gaining key insights from Big Data, through the use of advanced analytics, becomes crucial. However, IoT also creates the need for petabyte scale storage of data from millions of devices. A new type of Storage is required which seamlessly integrates robust data analytics with massive scale. These storage systems will act as “smart systems” provide in-place analytics that speed discovery and enable businesses to quickly derive meaningful and actionable insights. In his session at @ThingsExpo, Paul Turner, Chief Marketing Officer at...
DevOps is about increasing efficiency, but nothing is more inefficient than building the same application twice. However, this is a routine occurrence with enterprise applications that need both a rich desktop web interface and strong mobile support. With recent technological advances from Isomorphic Software and others, rich desktop and tuned mobile experiences can now be created with a single codebase – without compromising functionality, performance or usability. In his session at DevOps Summit, Charles Kendrick, CTO and Chief Architect at Isomorphic Software, demonstrated examples of com...
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
In his General Session at 17th Cloud Expo, Bruce Swann, Senior Product Marketing Manager for Adobe Campaign, explored the key ingredients of cross-channel marketing in a digital world. Learn how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects).
The Internet of Everything is re-shaping technology trends–moving away from “request/response” architecture to an “always-on” Streaming Web where data is in constant motion and secure, reliable communication is an absolute necessity. As more and more THINGS go online, the challenges that developers will need to address will only increase exponentially. In his session at @ThingsExpo, Todd Greene, Founder & CEO of PubNub, exploreed the current state of IoT connectivity and review key trends and technology requirements that will drive the Internet of Things from hype to reality.
Two weeks ago (November 3-5), I attended the Cloud Expo Silicon Valley as a speaker, where I presented on the security and privacy due diligence requirements for cloud solutions. Cloud security is a topical issue for every CIO, CISO, and technology buyer. Decision-makers are always looking for insights on how to mitigate the security risks of implementing and using cloud solutions. Based on the presentation topics covered at the conference, as well as the general discussions heard between sessions, I wanted to share some of my observations on emerging trends. As cyber security serves as a fou...
With all the incredible momentum behind the Internet of Things (IoT) industry, it is easy to forget that not a single CEO wakes up and wonders if “my IoT is broken.” What they wonder is if they are making the right decisions to do all they can to increase revenue, decrease costs, and improve customer experience – effectively the same challenges they have always had in growing their business. The exciting thing about the IoT industry is now these decisions can be better, faster, and smarter. Now all corporate assets – people, objects, and spaces – can share information about themselves and thei...
The cloud. Like a comic book superhero, there seems to be no problem it can’t fix or cost it can’t slash. Yet making the transition is not always easy and production environments are still largely on premise. Taking some practical and sensible steps to reduce risk can also help provide a basis for a successful cloud transition. A plethora of surveys from the likes of IDG and Gartner show that more than 70 percent of enterprises have deployed at least one or more cloud application or workload. Yet a closer inspection at the data reveals less than half of these cloud projects involve production...
Discussions of cloud computing have evolved in recent years from a focus on specific types of cloud, to a world of hybrid cloud, and to a world dominated by the APIs that make today's multi-cloud environments and hybrid clouds possible. In this Power Panel at 17th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists addressed the importance of customers being able to use the specific technologies they need, through environments and ecosystems that expose their APIs to make true change and transformation possible.
Microservices are a very exciting architectural approach that many organizations are looking to as a way to accelerate innovation. Microservices promise to allow teams to move away from monolithic "ball of mud" systems, but the reality is that, in the vast majority of organizations, different projects and technologies will continue to be developed at different speeds. How to handle the dependencies between these disparate systems with different iteration cycles? Consider the "canoncial problem" in this scenario: microservice A (releases daily) depends on a couple of additions to backend B (re...
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
Container technology is shaping the future of DevOps and it’s also changing the way organizations think about application development. With the rise of mobile applications in the enterprise, businesses are abandoning year-long development cycles and embracing technologies that enable rapid development and continuous deployment of apps. In his session at DevOps Summit, Kurt Collins, Developer Evangelist at, examined how Docker has evolved into a highly effective tool for application delivery by allowing increasingly popular Mobile Backend-as-a-Service (mBaaS) platforms to quickly crea...
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound effect on the world, and what should we expect to see over the next couple of years.
Growth hacking is common for startups to make unheard-of progress in building their business. Career Hacks can help Geek Girls and those who support them (yes, that's you too, Dad!) to excel in this typically male-dominated world. Get ready to learn the facts: Is there a bias against women in the tech / developer communities? Why are women 50% of the workforce, but hold only 24% of the STEM or IT positions? Some beginnings of what to do about it! In her Day 2 Keynote at 17th Cloud Expo, Sandy Carter, IBM General Manager Cloud Ecosystem and Developers, and a Social Business Evangelist, wil...
PubNub has announced the release of BLOCKS, a set of customizable microservices that give developers a simple way to add code and deploy features for realtime apps.PubNub BLOCKS executes business logic directly on the data streaming through PubNub’s network without splitting it off to an intermediary server controlled by the customer. This revolutionary approach streamlines app development, reduces endpoint-to-endpoint latency, and allows apps to better leverage the enormous scalability of PubNub’s Data Stream Network.