Executives
Greg Powell - VP of IR
Amin J. Khoury - Chairman and CEO
Thomas P. McCaffrey - Sr. VP and CFO
Michael B. Baughan - President and COO
Analysts
Robert Spingarn - Credit Suisse
Myles Walton - Oppenheimer & Co.
Patrick McCarthy - Friedman, Billings, Ramsey & Co
Karl Oehlschlaeger - Banc of America Securities
Peter Arment - American Technology Research
Eric Hugel - Stephens Inc.
Troy Lahr - Stifel Nicolaus & Co., Inc.
J.B Groh - D.A. Davidson & Co.
David Strauss - UBS
B/E Aerospace, Inc. (BEAV) Q4 FY07 Earnings Call February 4, 2008 9:00 AM ET
Operator
Good morning. My name is John Daniels, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the B/E Aerospace Fourth Quarter 2007 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions]. As a reminder ladies and gentlemen, this conference is being recorded this day, February 4, 2008. Thank you.
I would now like to introduce to you, B/E's Vice President of Investor Relations, Greg Powell. Mr. Powell, you may begin your conference.
Greg Powell - Vice President of Investor Relations
Thank you John. Good morning and thank you for joining us today. My name is Greg Powell, Vice President, Investor Relations for B/E Aerospace. Today, we are here to discuss our financial results for the fourth quarter and the year ended December 31, 2007. By now, you should have received the copy of the news release we issued this morning. If you haven't received it, you will find a copy of it on our website.
We will begin with remarks from Amin Khoury, Founder, Chairman and Chief Executive Officer of B/E Aerospace and then we will take your questions. We have prepared a few slides for you to follow-on this morning with our discussion. You will be able to find our presentation by logging on to the B/E Aerospace website at www.beaerospace.com. Please go to our Investor Relations page and follow the webcast link. In addition, copies of the slides will be posted on our website for you to refer to after the call.
Joining us for the question-and-answer session are Mike Baughan, President and Chief Operating Officer; and Tom McCaffrey, Senior Vice President and Chief Financial Officer. As always in our prepared remarks and our responses to your questions, we rely on the Safe Harbor exemptions under the various securities acts and our Safe Harbor statements in the company's filings with the SEC.
We will address questions following our prepared remarks. At that time the operator will provide instructions. As in the past, please limit your questions to not more than two at a time, so that we can get to as many of you as possible during our call this morning. And now, I will turn the call over to Amin Khoury.
Amin J. Khoury - Chairman and Chief Executive Officer
Thank you Greg and good morning everyone. I would like to start this morning by discussing our industry and the outlook for the next two years. In case you haven't noticed, it's booming. Both Boeing and Airbus will deliver at maximum production rates on all aircraft types, with very few open slots for the next two to three years.
The full year forward compound annual growth rate for new wide-body aircraft deliveries is a whopping 20% and a new Boeing 787 order today won't get delivered for about five years. The visibility in the Aerospace sector is much better than in any other industry and B/E Aerospace's visibility is quite possibly the best in the sector.
The financial performance of B/E Aerospace and our commercial aerospace peers has been outstanding and B/E Aerospace shares have been the number-one performer for the last one and three-year periods. The commercial aerospace peer group has performed fabulously over the last three years. The sector has done great and we've done even better.
In addition and perhaps more importantly, the earnings growth outlook for the commercial aerospace peer group is very strong in a macroenvironment, where many other industrial sectors cannot be relied upon to deliver consistent earnings growth. Meanwhile, B/E Aerospace is poised to deliver 30% compound annual growth rate in earnings per share over the next three years.
What are we all worried about? The earnings outlook is very good, balance sheets are strong, the shares of the group have corrected to bargain levels and B/E Aerospace is poised to delivering approximately 38% increase in 2008 earnings per share with excellent quarterly financial comparisons, followed by an approximately 25% EPS growth rate in 2009 and 2010.
The sell-off in Aerospace shares precipitated by news external to our sector, together with Boeing 787 schedule delays, represents an opportunity to really make some money by investing in the group shares. 787 concern by the way, is absolutely overblown. The 787 will be the most successful new product launch in the history of commercial aviation. Boeing is going to ship well over 1000 of these aircrafts with a smooth production flow starting sometime before the end of 2009. It is almost irrelevant to B/E Aerospace, whether they ship a 109 or 59 aircraft by the end of 2009. 2009 Boeing 787 shipment shortfalls will not have a material impact on B/E Aerospace, one way or the other.
We'd given you guidance for 2008, which we are raising today and we are confirming 2009 and 2010 guidance. For competitive reasons, airlines must retrofit their fleets on a regular basis, especially their premium classes. It is also important to note that we are not aware of any retrofit program that has ever been skipped/cancelled once begun. In significant airline downturn environments, the airlines push out new airplane deliveries but they don't cancel retrofit programs. And in the current environment, if they were a push-out of new aircraft deliveries, it would likely be narrow bodies, which would get pushed out. We have a record backlog, dominated by international premium retrofit programs, which together with associated backlog and follow-on programs will be the most important driver of revenue growth over the next few years.
In addition, there are going to be 1100 wide-body aircrafts, shipped over the four-year period from 2008 to 2011. That represents a 20% compound annual growth rate in new wide-body aircraft deliveries over the next four years.
Ladies and gentlemen, we are highly confident that B/E Aerospace is poised to turn an excellent performance for at least the next three years. I thank you for having allowed me to spend these past few minutes discussing the macroenvironment and our position in it. And I am now ready to discuss B/E Aerospace financial and operational performance for the fourth quarter and for the full year 2007. Thereafter, we will discuss the outlook for B/E Aerospace, an outlook that I am pleased to report continues to improve.
As Greg noted in his introduction, we are providing selective slides for you to refer to during and after this call. We hope you will find these materials helpful. 2007 marked the 20th year in the company's history. I am pleased to report that 2007 was an exceptionally good year for B/E Aerospace. In fact, all of our financial metrics were substantially improved as compared to any prior year.
In 2007, we delivered record revenues, record operating earnings, record net earnings, and record earnings per share. All of these metrics were records for any year in the company's history. During 2007, the company also achieved record bookings and a record backlog, due to the strength of the international premium class retrofit market and market share gains made possible by our ongoing investments in new product development. Through the coordinated execution of our account management and business unit management teams, we were able to drive backlog at year-end to $2.2 billion, up 30% versus December 2006.
Our commercial aircraft products group, which includes our seating, interior systems and engineering services segment had excellent bookings and showed strong backlog growth, especially in the developing markets of Asia and the Middle East. During 2007, we were successful in strengthening our position with many of the most important airlines in the world. In addition, we've built strong relationships with a number of global carriers with an eye toward future opportunities, which we believe will reap benefits for a number of years to come.
Our distribution segment also had an outstanding year. We continued to expand our distribution product line as well as our customer base. We grew our military base, doubling our revenue in this market segment and our sales in Europe increased by 43%, while revenues in Asia Pacific were up 41%. We believe our broad and deep product offering positions us well for 2008 and beyond.
The business jet segment also had a strong performance in 2007 and is beginning to reap the benefits from our investments in the Super First Class business. We made substantial progress in working through startup and learning-curve issues in the business jet segment. And for the year, our operating margin expanded by 380 basis points on revenues of nearly $200 million.
The business jet segment has a large and high-end quality backlog and the demand for business jets and our Super First Class products is very healthy. In fact, we captured 80% of the 2007 Super First Class available awards. We expect our business jet segment to deliver strong revenue growth and further significant margin expansion in 2008 and beyond. While we are proud of our accomplishments to-date, we are continuing to raise the bar for each of our business segments.
Before we review our 2007 operating performance, I would like to share with you the status of three important strategic initiatives which we discussed with you at the beginning of 2007. First, the integration of the acquisition of Draeger, the Draeger oxygen products business, which we acquired in third quarter of 2006. Second, the integration of acquisition of New York Fasteners; and third the margin improvement initiatives in our business jet segment.
We've largely completed the integration of Draeger into our interiors system segment. And as a result the number of operational and marketing synergies, we expect a very significant uptick in our interiors system segment margins beginning in the first quarter of 2008. As the sole source supplier of oxygen systems for essentially all in-production Boeing and Airbus aircraft, we are very well positioned. This strong market position together with the cost synergies arising from our integration activities clearly bodes well for the future. We've also worked through a number of new products start-up issues in our interior systems segment and as result, we are both expanding new product margins plus our successful Draeger integration, driving significant expected margin expansion for this segment beginning in Q1 of 2008.
Secondly, the New York Fasteners integration is now complete. The New York Fasteners acquisition allowed us to significantly increase our presence in the military market. As we leveraged New York Fasteners presence in that sector and at the same time, we leveraged our broad product portfolio and our JIT systems, to substantially expand both revenues and margins organically.
The distribution segment's significant fourth quarter revenue and operating margin improvements reflect most of the synergies from the integration of the NYF acquisition, and the completion of the cost associated with the start-up of two new distribution points in Connecticut and New Jersey. For the fourth quarter, the distribution segment operating margin expanded by 490 basis points to 22.6% and for the full year 2007, the operating margin expanded by 210 basis points to 22.1%, despite the aforementioned integration and start-up costs, reflecting the segments highly efficient information technology and automated sales and retrieval systems.
Our outlook for the distribution segment in 2008 calls for strong revenue growth and further margin expansion, driven by further market share gains and an expansion in both product lines and customer base.
Finally, I am pleased to report the substantial operational efficiency initiatives which we had undertaken in our business jet segment have now began to produce significant margin expansion. As you know, this segment has experienced start-up and learning curve issues on major new programs. Our business jet segment and especially our super first class operations are today much improved.
For the full year 2007, the business jet segment operating margin expanded by 380 basis points to 10.2% and for the fourth quarter, the operating margin was 230 basis points higher than that at 12.5% of sales, reflecting substantially improved operations for both our business jet products and the Super First Class product line. We expect this momentum to continue into 2008 and we expect both strong revenue growth and further significant margin expansion for the segment.
With that brief overview highlighting the progress on the three important operational initiatives which we addressed early last year, let's turn to slide two in order to review our financial results for the fourth quarter of 2007.
We hope you are as pleased as we are with our record fourth quarter 2007 financial performance, which was $0.05 per share better than our most recent guidance and was $0.02 per share better than consensus expectations. The fourth quarter was a record quarter for the company in terms of bookings, backlog, revenues and operating earnings. All five of our operating segments turned in strong financial results.
The bar chart on slide two graphically illustrates our fourth quarter 2007 financial performance versus fourth quarter 2006. It can be seen that fourth quarter revenues increased by 44% to $464 million. That's a 44% organic growth rate. Operating earnings were up 58% on the 44% revenue growth. Our operating margin of 14.6% expanded by 120 basis points as compared to the fourth quarter of last year, reflecting our high-end quality backlog and operating leverage at the higher revenue level. The 120-basis point improvement was delivered despite start-up and learning curve cost on new programs, primarily in the CD engineering services and business jet segments, as well as acquisition integration costs in the interior system segment.
Fourth quarter net earnings were $42 million and were 95% better than net earnings in the fourth quarter of the prior year. Net earnings per diluted share of $0.46, increased by 64% as compared with the prior-year period, in spite of the 380-basis point increase in the effective tax rate and the 17% increase in weighted average shares outstanding in the 2007 period.
The bar chart on slide three graphically illustrates our full year 2007 financial performance versus 2006. As I mentioned earlier, 2007 was a record year for the company in terms of bookings, backlog, revenues, operating earnings, and earnings per share, as all five of our operating segments turned in strong financial results for the year.
2007 revenues of $1.68 billion were 49% higher than the prior year. Operating earnings for 2007 were $247 million and were 67% greater than the prior year. The 67% operating earnings growth was driven primarily by the 49% increase in revenue and a 160-basis point expansion in operating margin to 14.7% of sales. Reflecting the high-end quality backlog and operating leverage at the higher revenue level, despite the Draeger and NYF acquisitions and integration costs related thereto and start up and learning curve costs in the other three segments.
Earnings before income taxes of $215 million were 139% better than in 2006. Net earnings of $147 million increased by 72%. Full year 2007 net earnings per diluted share of a $1.66 increased by 51%, reflecting the $99 million or 67% increase in operating earnings in 2007 of 31.5% effective tax rate in 2007 versus a 5% effective tax rate in 2006 and a 14% increase in weighted average shares outstanding during 2007.
Adjusted full year 2007 earnings per diluted share, exclusive of debt pre-payment costs were a $1.47 per share, $0.05 per share higher than our most recent guidance. On a comparable tax rate basis, adjusting 2006 EPS, using the 2007 effective tax rate of 31.5%, EPS increased on an apples-to-apples basis by 110%. The organic growth rates of revenues and operating earnings were 41% and 69% respectively.
Now let's turn to slide four; slide four summarizes our continuing backlog growth. The fourth quarter was another record bookings quarter during which we achieved a number of strategic marketing successes. Fourth quarter orders were approximately $600 million, and represent a book-to-bill ratio of approximately 1.321.
The bar chart on slide four graphically illustrates the year-over-year increase in backlog. Backlog at quarter end was approximately $2.2 billion, up approximately 30% over December 2006 and was also a new record. It is important to note that the high quality of the backlog supports our expectation for continued margin expansion, while the size of the backlog plus the robustness of current RFP activity support our expectation of strong revenue growth in 2008 through 2010.
The strong bookings performance in the quarter was broad based and of high quality and encompassed all of the company's business segments. Order activity was especially strong in Europe, the Middle East and Latin America as a number of the existing customers expanded current programs and/or placed orders for cabin interior equipment for additional aircraft types. Aftermarket and spares depend was robust in all geographic regions, as airlines continued to make investments to maintain and upgrade their existing fleets.
In addition the pie chart on slide four, indicates that the backlog continues to be very well balanced geographically. 62% of backlog is with international customers and over 39% of the backlog is with customers in the emerging markets, particularly in Asia and in the Middle East. Clearly, the length and breadth of the current cycle is being driven by the developing nations of the world.
So, fourth quarter bookings were strong and of high quality and the geographical diversity of our customer base is expected to provide excellent future revenue stability. Importantly, the large sizes of our backlog provide multiyear visibility in our revenue outlook, while the quality of the backlog supports our expectations of continued margin expansion.
Finally, as we've discussed in the past, we have large and growing shadow backlog which represents expected follow-on orders from current customers for their existing fleets and not yet placed orders for their new aircraft on order of the same aircraft type and for programs awarded for which we don't yet have purchase orders to enter into our system. An example of the latter are the oxygen awards for the B787 and the A350. We are the sole source supplier on both aircraft. These programs will generate well over $0.5 billion of revenues; none of this is in our backlog. Tom would you pick-up the record backlog supports growth slide?
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
Sure. Yes our record backlog was approximately $2.2 billion at December 31, 2007 with a substantial improved mix of new products. Our Q4 bookings were approximately $600 million, they are driven by retrofit programs, follow-on orders and start-up orders for the interior equipments associated with the new buy aircraft. Historically, about half of our backlog is deliverable over the next 12-month period and we have a large and growing shadow backlog, providing us with unparalleled visibility.
Now, I'd like to briefly review the operating performance for each of our business segments, we are starting with slide five. So you can see it from slide five, the seating segment turned-in solid operating results for the fourth quarter. Revenues grew by 69%, as compared to the prior year. Operating earnings were up a very strong 90%. The seating segment operating margin up 11.5%, increased by 130 basis points compared to the same period in the prior year, the reflecting the high-end quality backlog and the operating leverage at the higher revenue level. This margin expansion was despite start-up and learning-curve costs and new programs.
The seating segment operating margin, which expanded by 180 basis points for the full year 2007, is expected to expand significantly beginning in the second quarter of 2008 as we move to higher volumes on several new programs. Revenue growth of 69% reflect significant market share gains and was driven by substantially higher level of aftermarket, retrofit and refurbishment activity, as well as demand created by new aircraft deliveries. Revenue growth during 2008 through 2010 will be driven by large backlog, additional follow-on programs, new retrofit orders, and demand created by 1100 wide-body aircrafts expected to be delivered in 2008 through 2011. Operating margins from 2008 through 2010 continue to expand significantly, primarily due to improved product mix, operating leverage inherent in the business and continuous improvement initiatives.
If you turn to slide six, you will see our interior systems segment also had a very strong quarter. The 12% revenue growth reflects our high aftermarket demand, as well as a higher level of new aircraft deliveries despite an unusually high level of deliveries of military oxygen products in the 2006, Q4 period. Operating earnings grew by 13% to $17 million as the operating margin of 18.6% increased 10 basis points, reflecting the negative impact of the Draeger acquisition and the integration costs related thereto. The operating margin is expected to begin to expand significantly in the first quarter of 2008, now that the Draeger acquisition and integration activities are substantially completed and as a result of the significant... of the segment having successfully worked through a number of new programs start-up issues and as a result of the high-end quality backlog, operational efficiency initiatives and the operating leverage.
Current RFP activity is very strong. And the outlook is for accelerating revenue growth driven by large number of wide-body aircraft deliveries for the 2008 through 2011 period, all of which requires significant quantities of food and beverage preparation storage equipment.
Now let me turn to slide seven. The businesses... distribution business is executing very well operationally. It's hitting on all cylinders, reflecting the synergies of the now substantially completed integration of the NYF acquisition, and the segment highly-efficient information technology and automated sales and retrievable systems. Revenues of a $100 million for the quarter grew by 27%, over the prior year, reflecting the significant expansion of product line and broad based increase in aftermarket demand for aerospace fasteners and continued market share gains.
Operating earnings were up 63% for the quarter. The operating margin expanded by 490 basis points as compared with the fourth quarter 2006, reflecting the synergies in the now substantially completed NYF acquisition as well as the now completed start-ups and integration of new facilities in New Jersey and Connecticut, and also the effective integration of approximately 50,000 new SKUs into our product offering. Significant revenue growth and further margin expansions are expected to continue in 2008 through 2010 period, driven by increased worldwide air traffic, further market share gains and expansion of both product lines and the customer base.
As I mentioned earlier, the business jet segment is beginning to reap the benefits of the investments we have made in both our traditional business jet facilities, as well as our Super First Class product line and this is beginning to be reflected in first -- in the fourth quarter results. Revenues of $57 million increased by 47%, over the prior year. Operating earnings increased by 97% compared to the prior year on a 320-basis point expansion on operating margin to 12.5%. It reflects a substantially improved operational efficiency for both business jet and super first class operations.
The business jet segment is expected to deliver strong revenue growth, driven by robust demand for new business jet aircraft and as a the result of having captured 80% of the available super first class orders for 2007. Strong revenue growth and more efficient operating results will drive substantial margin expansion over the 2008 through 2010 period. Business jet demand continues to grow with international buyers expected to account for almost 50% of new business jet orders projected over the next five years.
The slide nine summarizes the fourth quarter performance for engineering services segment. Revenue of 37 million were up 114% reflecting a high level of engineering design, program management and certification activities. Operating earnings in the engineering services segment improved modestly as the segment continues its transition from a cost centered to a profit contributor. However the rapid growth in this business which is approximately 8%, consolidated fourth quarter, B/E Aerospace revenues negatively impacted corporate consolidated gross margins by about 90 basis points and operating margins by about 40 basis points. There are a lot of their major Lean and Six Sigma initiatives underway which should improve engineering services margin by the end of 2008.
If you please turn to slide ten, which reflects our financial position as of December 31st, I will briefly review our capital structure. It's important to note that our balance sheet is healthy and our earnings growth continues to strengthen our capital structure.
At December 31, 2007, the debt-to-capital ratio was 11%. Net debts stood at $70 million, which represents total debt of $152 million, less cash and cash equivalents of $82 million. As of the end of the year, the company has no borrowings on its $200 million revolving credit facility. Working capital at December 31, 2007 was $712 million increased by $256 million or 56% as compared with the prior year, consistent with the nearly 50% increase in revenues, substantial investments in inventories associated with product line expansion in the distribution segment and to support the expected strong growth in 2008 through 2010 as a result of the record $2.2 billion backlog.
For the quarter, cash flow from operations of $40 million increased by approximately 70% on a sequential quarterly basis. We expect to generate a very substantial level of cash from operations in 2008. Working capital in 2008 should increase consistent with our revenue growth rate. Capital expenditures will increase to about $40 million in 2008, reflecting our ongoing activities to expand our capacity and improve the efficiency of our manufacturing operations.
Now, I would like to ask Mike Baughan to jump in and give you some color regarding current market conditions in RFP activity.
Michael B. Baughan - President and Chief Operating Officer
Thank you Tom. I would say that our sales force and management team continue to be impressed with the strength and breadth of our marketplace. RFP activity across the company is as strong as we'd ever seen. Our seating in business jet segments continues to track and pursue an exceptional number of qualified opportunities, both in the retrofit market and in support of new aircraft buys. We are starting to see more 787 opportunities for seating and our strong initial position with key super first class customers like Emirates and Jet Airways is creating opportunities from other carriers who feel a need to offer a competitive response.
In our interior systems segment, RFP activity is the highest we have ever seen. Traditionally, sales in this segment have been driven almost totally by new aircraft deliveries. Recently, however, we've begun to see some significant retrofit opportunities which served to boost to total market.
Our transactional business seems to support this outlook. Daily sales for our distribution business continued to grow, as the routine orders for spare parts across our other product segments. Since we have a global customer base and a global installed base, demand for our spares and distribution business is driven by global demand and is not tied solely to the domestic airlines. As airline loads and aircraft utilization rates continue to climb, airlines continue to make investments to maintain and upgrade their existing fleet.
I think you know that B/E Aerospace enjoys leading market shares in all of its principle product lines and from this strong position, we've been able to gain additional share in recent years, due in large part to the investments we have made and new products developed. Our patented Pulse Oxygen System is a prime example. Our system delivers oxygen more efficiently than traditional passenger systems, which means we can reduce overall system weight on the aircraft and fuel burn and also reduce maintenance.
Last week, Airbus selected us as the sole source supplier of passenger and crew oxygen systems on the A350 XWB, a program that is worth more than a $125 million to the company. This follows our selection by Boeing last year to provide a similar system, sole source [ph] on the 787 Dreamliner. The 787 program has since expanded to include the entire PSU or Passenger Service Unit, worth some $400 million. Combined, these two awards are worth more than $0.5 billion and reinforces B/E Aerospace's position as the leading provider of oxygen-systems worldwide. As noted by Amin earlier, none of this work is currently in backlog.
Each of our business segments can point to similar success stories for newer products and along with robust market growth is a significant reason we are growing our backlog so successfully.
I'll turn it back over to Amin.
Amin J. Khoury - Chairman and Chief Executive Officer
Thanks Mike. I would like to conclude our prepared remarks this morning by noting that the outlook continues to look strong. We believe market forces will continue to drive demands for our cabin interior products, for both retrofit programs and new buy aircraft for many years to come.
RFQ and order activity are robust and we expect continued backlog growth through 2010. It is important to note that the date of backlog and revenues have been driven primarily by retrofit programs associated with the existing international wide-body fleet. Aftermarket retrofit programs are, and are expected to continue to be the most powerful driver of demand for B/E Aerospace. We expect retrofit programs to continue strong for a number of years to come.
Regarding new aircraft deliveries, we expect approximately 1100 new wide-body aircraft to be delivered, over the full year 2008 through 2011 time period, and with the market potential of approximately $2 billion to $3 billion of cabin interior products for these 1100 aircrafts. With respect to the Boeing 787 announced delays, to-date more that 850, these B787 have been ordered, making the 787 the most successful product launch in Boeing's history.
Boeing is world-class manufacturer. We've a very high degree of confidence that Boeing will sort out their current production issues. And when they do, we expect that they will manufacture well over a 1000 of these aircraft, each of will be equipped with a variety of B/E Aerospace cabin interior products. As we have stated in the past, our long-term visibility arising from our current backlog and associated expected follow-on orders, the expected strong new aircraft delivery rates particularly for wide-body aircraft and continuing aftermarket retrofit demand from carriers globally, service the foundation for our expectation of continued strong revenue and earnings growth for the next several years. As a result, we had increased our guidance for 2008 and we are confirming our guidance for 2009 and 2010 notwithstanding B787 delays.
We are increasing our guidance for 2008 to approximately $2.29 per share. First quarter 2008 revenue growth, earnings growth and margin expansion is expected to be driven by exceptional performance by the interior systems, distribution and business jet segments, with a lower relative contribution to revenues and earnings in the seating segment, as a result of the start-up of additional new programs in the first quarter. We expect revenue and earnings growth and margin expansion to accelerate in the second quarter with excellent performance in the seating segment as well.
In addition, notwithstanding B787 delays, we are confirming our guidance for 2009 and 2010. Our expectation for 2009 and 2010 is for earnings per share to grow by approximately 25% per year to approximately $2.80 per share in 2009 and approximately $3.50 per share in 2010. This EPS growth is expected to be driven by double digit revenue growth and continued operating margin improvement. In addition to the strong growth for 2008 through 2010, we expect continued healthy revenue and EPS growth for 2011 and beyond. This expectation is based not only on the current and the expected strength of both the newbuilt commercial aircraft and business jets markets, but also on the continuing strength of the retrofit market.
With that, I will now turn it back to Greg to begin the Q&A portion of our call.
Greg Powell - Vice President of Investor Relations
Thank you Amin. This completes our prepared remarks and now we will be glad to take your questions. As usual please limit your questions to no more than two at a time, so that we can get to as many of you as possible. John will now provide instructions on how to submit your questions. John?
Question And Answer
Operator
Thank you Mr. Powell. [Operator Instructions]. Your first question comes from the line of Robert Spingarn of Credit Suisse.
Robert Spingarn - Credit Suisse
Good morning guys.
Amin J. Khoury - Chairman and Chief Executive Officer
Good morning.
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
Good morning.
Robert Spingarn - Credit Suisse
I don't know if this question is more for Amin or for Mike, so I'll just throw it out there. It's kind of a hybrid question, having to do with backlog and orders. You talked about capturing 80% of the available Super First Class awards in 07. What kind of share should we think about going forward? Why are you getting such a large share relative to your overall market share and then on the backend of that, can you quantify for us in your $2.2 billion of backlog, roughly how much of that is OE versus retrofit?
Amin J. Khoury - Chairman and Chief Executive Officer
Well the reason for the 80% I think is that we have the most innovative products and I think that the customers respect us for that are, we are known for it. They perceive us as having the most innovative products and those customers that placed orders during 2007 were customers with which we have had a strong relationship for a while. I think you should generally think about us having a market share in excess of 50%, certainly not 80%. I mean we won't be able to do every year what we have done this year, but you should expect us to continue to have a market share in excess of 50% with the rest of the participants in the industry sharing the other 50%.
Robert Spingarn - Credit Suisse
Okay. And then as for as the backlog, just Amin, what's the right way to think about the trend. You have talked about the retrofit driving in the past but the OE is going to start to fill in here.
Amin J. Khoury - Chairman and Chief Executive Officer
Well the most powerful driver of demand for B/E Aerospace is the retrofit market and international carriers all over the globe continue to place orders to upgrade the interiors, especially the premium cabins of their wide-body airplanes. That is expected to continue to be the most powerful driver of demand for us for the next several years. On the other hand, there is also, beginning in 2008 a very nice ramp-up in wide-body airplane deliveries. It's about a 20% compound annual growth rate from 2008 through 2011. Those airplanes carry a lot of first and business class seating products, food and beverage preparation and storage equipment and expensive oxygen delivery and distribution systems, somewhere between $2 million to $3 million per airplane or roughly $2 billion to $3 billion dollars of total demand. Both deliveries are going be delivered at a 20% CAGR over the next four years and we are a major recipient of the awards that will come from that business, very little of that is in our backlog now. But those will be the two most important drivers of both orders and revenue growth over the next four years.
Robert Spingarn - Credit Suisse
Okay, so you are expecting both of those drivers to continue to grow those components and backlog. We will see retrofit backlog rise as well as OE rise?
Amin J. Khoury - Chairman and Chief Executive Officer
Yes we believe so.
Robert Spingarn - Credit Suisse
Okay, by the way thank you very much for the macro color at the front-end of the call. I thought that was very, very helpful. A final question for Tom on the cash flow side; Tom you spoke the working capital growth and the inventory that drives that and you had said in third quarter and I didn't catch if you said it here you were talking about a $150 million I think, plus or minus 20%. Does that sound about right?
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
It does. I mean ... may it will be helpful just to recap what we've talked about and hope what we are seeing now, is that during the second half of 07 we showed a nice improvement in our cash flow from operations. The fourth quarter cash flow was about $40 million, increased 70% on the sequential quarterly basis and with respect to 2008, we expect free cash flow to be in the range of $150 million plus or minus 10% to 20% and that will depend upon the rate of our revenue growth, the size and rate of growth of our backlog and the inventories necessary that support the businesses. Working capital in 2008 should increase consistent with our revenue growth rate. CapEx will increase to about $40 million in 2008 and that's to support the ongoing activities to expand our capacity for the $3 billion revenue level; and to improve our efficiency for the manufacturing operations.
Robert Spingarn - Credit Suisse
I have here ... just doing some quick back of the envelope math, I have you using cash for working capital about a $150 million, $160 million in 08 based on what you just said about the revenue growth and if that number is roughly accurate, the way I have been looking at it and the thing that I noticed in the quarter that seems to be a positive is your sequential increase in inventory was roughly the same growth rate about 7% relative to your fastener revenue growth. Is that the way, even though the inventories are larger number than fasteners, is that a good way to think about it?
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
Well, we don't give working capital growth by segment in the entire Q. I think the best way to think about it is the way that I described to you Rob?
Robert Spingarn - Credit Suisse
Okay, but I guess, I would point out, that's seems to be the best controlled growth in inventory of the entire year, what we saw in the fourth quarter.
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
Yes, it was... it was a good quarter. Now, the free cash flow in the first quarter will likely to be a used to cash. We're just consistent with the timing of our program shipments, scheduled deliveries of fasteners that we have on order, which tend to be lumpy and the timing of the cash payments related to incentive comp and the higher level of CapEx. So free cash flow will be particularly strong in Q3 and Q4 of 2008.
Robert Spingarn - Credit Suisse
Thank you.
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
So I hope that helps you.
Robert Spingarn - Credit Suisse
The high level of macro detail. Thank you.
Operator
From Oppenheimer Fund, we move to Myles Walton.
Myles Walton - Oppenheimer & Co.
Thanks, good morning. Good quarter.
Amin J. Khoury - Chairman and Chief Executive Officer
Thanks, good morning Myles.
Myles Walton - Oppenheimer & Co.
And it's actually Oppenheimer Capital... that's Oppenheimer & Co. rather, but that's not an issue. Amin could you comment perhaps on the capital deployment strategy in 2008 and obviously, you are little more quite on the acquisition front in 2007, but certainly didn't need it, given the outstanding growth in the company. I am just curious, as you look out and Tom mentioned the positive move in cash, which only make this question more important as to, what you are going to do in terms of deploying your balance sheet which certainly looks likes its in good position as we speak today?
Amin J. Khoury - Chairman and Chief Executive Officer
While Tom mentioned earlier that we will spend about $40 million this year on CapEx and that is primarily to expand and upgrade manufacturing capacity, sort of get ready for the next milestone for us, which for a $3 billion in revenues. So that's the most important use of capital. I think it is likely that we will do one or two bolt-on transactions during 2008, no guarantees, one way or the other. But the balance sheet is strong, we can usually handle it. And it depends on... depends on whether or not we find something that is accretive that creates shareholder a value, that works strategically for us and the bar is very high for us on acquisition. So, at this point in time, it appears that we'll probably generate enough cash here to have no indebtedness by the end of 2008. But let's see how we go through the year.
Myles Walton - Oppenheimer & Co.
And throughout the $3 billion bogey, which I'm curious where in time do you see that landing?
Amin J. Khoury - Chairman and Chief Executive Officer
We are not ready to make that. We are not ready to make that as of yet.
Myles Walton - Oppenheimer & Co.
Alright, and then if I can squeeze one more on the R&D front maybe for Tom, do you expect R&D to trade, trend down towards the bottom end of the 7% to 8% range in '08?
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
Our R&D expense as a percentage of sales was little over 7.5% in the current quarter, it's down from 8... little over 8% the sales last year. The year-over-year aggregate increase in spending reflects the high level of certification activities related to a number of new projects that we currently have underway, particularly for the 787. R&D spending will moderate over the next couple of quarters and then decrease as a percentage of sales over the 2008 through 2010 period. So you should expect to see that the dollar amount may increase, but it is going to go down as percentage of sales.
Myles Walton - Oppenheimer & Co.
Alright, great. Thanks.
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
Yes.
Operator
Patrick McCarthy signals from FBR Capital Markets.
Patrick McCarthy - Friedman, Billings, Ramsey & Co
Hi, good morning and congratulations on the quarter as well. I was hoping you could comment on the backlog from a geographic perspective. It looks like the Europe business really exploded during the fourth quarter and I was wondering, if there was anything in particular there that you are seeing?
Amin J. Khoury - Chairman and Chief Executive Officer
I will turn the question over to Mike, but I would say this that only about 15% of the backlog now is with domestic carriers. So the backlog continues to be very broadly based with strength everywhere and I think Mike mentioned a little bit about spares throughout the world. Mike why don't you talk about this a little bit?
Michael B. Baughan - President and Chief Operating Officer
Yes I just I think expanding on your comments, I mean we've had enormous growth in not just Europe but in the Pac Rim and the Middle East. Latin America was a really strong performance for us in the last few months. So we are seeing strength throughout. There was not anything particular that drove Europe, but we are positioned with many of the leading carriers of virtually all of them in Europe. I think if you think about the kind of things that are happening in the retrofit market, what's been our dynamic is strengthen one area, we have been able to leverage into another area. So, if we take Emirates as an example or Air France as example so oftentimes have a long history of our relationship with one or more product lines, for instance at Emirates it was inserts or ovens or beverage makers, which over time we were able to leverage in to Super First Class wins which then we were able to expand in the business class wins and continue on, as those airlines continue to bring other fleets to the table.
That's happened in Europe as well. If you look forward to the 1100 new wide bodies that Amin talked to, those aircrafts that we are delivering in 2008 through 2011. If you think about who those airlines are, the airlines that we are working with in large part are the people who are going to buying a big part of those 1100 aircrafts and that's people like British Airways and Air France and Lufthansa, Koreans, Emirates cycle goes on. So we are positioned with ... well, with most of the leading carriers in the world and I think, you saw that in the fourth quarter and throughout the year in the growth of that international backlog.
Patrick McCarthy - Friedman, Billings, Ramsey & Co
Thanks Mike. My second question is could you comment on the mix of revenues that you saw in the business jet business in this quarter. I think in the past you have implied that it's kind of 50% traditional business jet and may be 50% super first class. And did that persist in the quarter, or was there a change in the mix?
Amin J. Khoury - Chairman and Chief Executive Officer
Tom, I don't know if we reported that, Tom?
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
We don't report it. But I think people have asked directionally where it is... What does super first class ...?
Amin J. Khoury - Chairman and Chief Executive Officer
Yes, it's about the same.
Patrick McCarthy - Friedman, Billings, Ramsey & Co
About the same. Okay, thank you very much.
Operator
Thank you. And from Banc of America, Karl Oehlschlaeger.
Karl Oehlschlaeger - Banc of America Securities
Hey, good morning guys.
Amin J. Khoury - Chairman and Chief Executive Officer
Good morning.
Karl Oehlschlaeger - Banc of America Securities
Congratulations on the quarter.
Amin J. Khoury - Chairman and Chief Executive Officer
Thank you.
Karl Oehlschlaeger - Banc of America Securities
I just wanted to ask about, as we look into the guidance that you have given over the next couple of years. What sort of ... do you have it baked in, in terms of U.S. retrofit activity, and how should we think about that in terms of what's in the backlog, in your shadow backlog. What's based on RFP and what's a different plan?
Amin J. Khoury - Chairman and Chief Executive Officer
Well when you talk about 2008 through 2010 revenue forecasts, there isn't a whole lot baked in for new orders from new airlines for retrofit which is what you are talking about here in the domestic market. Most of what's in that time period is already in the backlog. We've got a two-year backlog roughly, okay, plus follow-on orders associated with the orders we've already got, I am talking about the basically the shadow backlog, here, where we've already booked the programs, but don't have the orders on the books, as they haven't been placed yet. So, for the next two or three years, what is going to be driving the revenue growth is orders primarily from existing customers, where we already have programs underway, which is already a part of our backlog. The backlog growth may well be driven by orders from new carriers on which we don't have major programs yet. But the revenue growth per se in 2008 through 2011 was primarily what we already got, rather than looking at new orders from new airlines, domestically or whatever.
Karl Oehlschlaeger - Banc of America Securities
Okay, thank you very much.
Amin J. Khoury - Chairman and Chief Executive Officer
Sure.
Operator
From the officers of American Technology Research, Peter Arment.
Peter Arment - American Technology Research
Guys nice quarter.
Amin J. Khoury - Chairman and Chief Executive Officer
Thank you.
Peter Arment - American Technology Research
You have answered a lot of the questions. But just quickly may be Tom, this one is for you on the just margin side. Obviously we expect margins expand into '08 on the operating basis. Can you give us a little color on the Q4 gross margin and SG&A? It seems like the margin was a little lower in this quarter. I mean if it's related to the volume and the mix or just give us a little color there that would be great.
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
Sure, the gross margin for the current quarter was about 32%, was about 300 basis points lower than the prior year and that was due to a more than doubling of sales in our engineering services business, which has a substantially lower gross margin than the corporate average. So, exclusive of this year-over-year increase at the engineering services segment, our gross margin would have been about 90 basis points higher, the balance of about 220 basis points was... it was related to the seating segment, which negatively impacted... was negatively impacted by start-up and learning-curve costs associated with two major new programs for the year. The corporate consolidated margins are expect to show a nice improvement in 2008 and beyond and the seating segment operations are expected to generate significant further expansion beginning in the second quarter of '08.
Peter Arment - American Technology Research
Okay. So it just sounds like more of a function of mix than anything else?
Thomas P. McCaffrey - Senior Vice President and Chief Financial Officer
Yes.
Peter Arment - American Technology Research
Okay. Great thanks guys, nice quarter.
Amin J. Khoury - Chairman and Chief Executive Officer
That's not to say that, Tom that the first quarter won't continue to show the margin expansion that we've been showing pretty much on the quarter-by-quarter basis, but more to say that there is an acceleration in margin expansion beginning in the second quarter.
Peter Arment - American Technology Research
Thanks Amin.
Amin J. Khoury - Chairman and Chief Executive Officer
Okay.
Operator
From Stephens Incorporated, Eric Hugel.
Eric Hugel - Stephens Inc.
Hey guys, good quarter. Tom, Amin, just a follow-up on your comment, you were talking about an expansion, I'm assuming from that 32 base as you climb up the learning-curve again and seeing a very nice expansion in the Q2 as you get through most of the learning-curve costs?
Amin J. Khoury - Chairman and Chief Executive Officer
Yes. We were talking about... while you're focused on gross margin and my focus is operating margin, but yes there will be an improvement, a nice improvement in operating margin, in the first quarter. We expect a nice improvement in operating margin and then acceleration of the margin expansion beginning in Q2. First quarter margin, the margin improvement is going to be driven, we expect it to be driven by excellent performance from interior systems, from the biz jet segment and from distribution, with the seating business because they have got additional new programs coming on in the first quarter, not really contributing in fact, offsetting some of the wonderful margin improvement performance by the other segments. But then beginning in the second quarter, seating will also jump in and contribute and so they will have an acceleration of margin... actually a break out in margin expansion beginning in Q2.
Eric Hugel - Stephens Inc.
And then would you think that and if you look at where you have you been tracking on your gross margin line over the last couple of quarters in the high 34-35 range. By Q2, Q3 would you expect to be back in those levels, from this dip down or should get this start-up cost that's what we should be thinking?
Amin J. Khoury - Chairman and Chief Executive Officer
Yes, I think you should.
Eric Hugel - Stephens Inc.
Okay with regards to your SG&A costs for the quarter, down nicely. Is that timing or you guys are really kicking up in terms of cutting costs and things like that. How we should think about that going forward?
Amin J. Khoury - Chairman and Chief Executive Officer
You know, as a percentage of sales Eric, it will continue to decline, which is consistent with the guidance that we have regarding the fourth quarter, a little bit of it is just timing.
Eric Hugel - Stephens Inc.
Okay and my final question with regards to capital deployment, any thoughts here with regards to share repurchase, given... Amin what you've talked about in terms of unwanted pull back in the share price?
Amin J. Khoury - Chairman and Chief Executive Officer
As I mentioned earlier, we should generate something like what Tom mentioned, we should generate something like a $150 million in cash during the year. We have got a $150 million in debt. We got $82 million in cash on hand now. It's something we can think about sometime in 2008, but we are not thinking about it right now. But with respect to your question about G&A ... SG&A the number is going to up in 2008 including in the first quarter, but as a percentage of sales it's going to go down.
Eric Hugel - Stephens Inc.
Right. That's was I thought. Thanks a lot Amin and feel better.
Amin J. Khoury - Chairman and Chief Executive Officer
Okay thanks.
Operator
Transitioning to Troy Lahr, Stifel Nicolaus.
Troy Lahr - Stifel Nicolaus & Co., Inc.
Thanks. Just had question about the pricing environment and how that relates to market share gains. Do you see your competitors really trying to maybe cut prices or introducing new products to counteract the market share gains that you have made?
Amin J. Khoury - Chairman and Chief Executive Officer
Well in the commercial aircraft group, which includes the seating interior systems and engineering services segments, basically we are winning the business through innovation. And most of the business is in the premium cabins of the airplanes, where price is not the major driver of business awards. It is really creativity and innovation. With respect to our competitors, we are doing pretty well as well. I mean demand is so strong that everybody is participating in this growth. So, I think we are gaining share, they are doing okay and they are growing, we are just growing faster than everyone else because we are gaining share and we are gaining share through the innovation in our products.
In the distribution segment, which is a little different, I mean there is nothing innovative or creative about our products but there is innovation and creativity in the way we deliver our service and we were gaining share not through price... not at all through price. No, we are gaining share because of our availability to deliver within 24 hours and that accounts for sort of two-thirds of our volume and we are delivering with a 96% on-time rate. So it is a function of being able to perform better in the customers' eyes than any other competitors, which is allowing us to grow our business as quickly as it's growing.
Troy Lahr - Stifel Nicolaus & Co., Inc.
Okay and then just on the seating side you are earning pricing there, could you elaborate a little more. I mean are you getting... are you seeing much higher pricing year-over-year or what's just the general pricing trends there?
Amin J. Khoury - Chairman and Chief Executive Officer
The prices of the new products which are being delivered are much higher than the prices of the older products which used to be delivered, because the newer products have so many more features than the older products had. And the airlines penchant for more luxury, furniture and surrounds and larger screens and back massagers which require electronic actuation and so forth, the seating products have so many more features in the premium cabins and they are so much more luxurious that the prices are much higher. So it's not a function of having raised the prices on older products, it's a function of having replaced the older products with newer higher priced products. Did that help?
Troy Lahr - Stifel Nicolaus & Co., Inc.
Yes, that's great. And then just on the 787, you mentioned have really no material impact. Is that just because, instead of shipping 787 seats you're going to fill other customer demand out there, you are really redirecting manufacturing capacity?
Amin J. Khoury - Chairman and Chief Executive Officer
Mike, do you want to talk about 787?
Michael B. Baughan - President and Chief Operating Officer
Yes, I think that's partially yes. But... I mean the 787, we've taken a somewhat conservative set of assumptions, learning from the A380 experience. So whether there are 60 or 100 delivered in 09 really isn't that material for us. The retrofit market is driving so much of our growth. The growth in wide bodies in short term in areas other than the 787 are very significant. So, I think that when we put that all together, the 787 just really isn't that material to us in the short term. Long term, it's a tremendous opportunity for us. I mean if you think about it from a macro standpoint, 850 aircrafts have been sold, biggest launch ... new aircraft success, I think in the industry, and our position is excellent. We talked earlier about starting with the oxygen systems on that aircraft. That's expanded now to be the entire PSU system, which includes a collaboration of three of our businesses, both of our oxygen businesses in Kansas and in Draeger in Germany, who also are our lighting group and our position with inserts and seating is quite strong. So, when we look at all of that together, we are looking at about a $1.5 billion of B/E content on a 1000 aircrafts.
So, in the context of that tremendous opportunity, whether there is 60 or a 100 aircrafts in '09, isn't that significant to us. The ramp happens in '09, it becomes very significant in '10, and beyond. And in the context of everything else that's happening in the market, a very global retrofit market that's extremely robust. It really isn't a big factor to us.
Troy Lahr - Stifel Nicolaus & Co., Inc.
Okay fair enough. But just aren't clear though. I mean are you saying maybe you are putting T10. I am estimating may be 65% of 787s, or how should we think about general market share on that particular program?
Amin J. Khoury - Chairman and Chief Executive Officer
Why don't we wait until we see the 787s delivery. We can talk about this in 2009.
Troy Lahr - Stifel Nicolaus & Co., Inc.
I'll hold the question.
Amin J. Khoury - Chairman and Chief Executive Officer
Answer on 787s.
Troy Lahr - Stifel Nicolaus & Co., Inc.
Okay we'll talk about it later.
Amin J. Khoury - Chairman and Chief Executive Officer
Okay.
Operator
From D.A. Davidson, JB Groh.
J.B Groh - D.A. Davidson & Co.
Good morning guys.
Amin J. Khoury - Chairman and Chief Executive Officer
Good morning.
J.B Groh - D.A. Davidson & Co.
Most of my questions have been answered, but may be you could talk about where you are now in terms of capacity utilization. You threw out this number about your capital expansion projects, it probably gets you to $3 billion kind of run rate, but where are you now?
We are between 65% and 70% and our intention by spending at this rate is to stay right about there.
J.B Groh - D.A. Davidson & Co.
So you got plenty of room on the cost.
Amin J. Khoury - Chairman and Chief Executive Officer
Yes, it is right. So we got this issue with, I mean someone asked the question about European orders and I was thinking at time that the three biggest carriers. BA, Lufthansa and Air France are all our customers. And then I asked about the Middle East and Emirates are most important customer and larger buyer in the world right now. And then if you look the world, Japan, is Japan Airlines and Australia, it's Qantas, these are the largest customers in the world and we've have major programs going on with all of them. And if they want to buy a couple of extra airplanes, buy them from different carrier, take them from a leasing company or whatever, we need to enable them to have out-of-sequence products from us. And we need to be able to respond quickly and so we do that. We try to stay ahead of the curve by continuing to expand on capacity. And we're not, it's not a capital-intensive business, so by spending at $40 million rate, we are able to maintain capacity utilization in the 65% to 70% range and get ourselves ready to go to a $3 billion revenue run rate.
J.B Groh - D.A. Davidson & Co.
That's great. And then one more, another way to look at this backlog and I look at the un-build aircraft between Boeing and Airbus it's something 800 planes. How many planes would you say OE planes are in that backlog that you have now? I mean it's probably what may be not even 20% of that or how should we think about it from that angle?
Amin J. Khoury - Chairman and Chief Executive Officer
I think 787 is like less than 5% of our backlog, I don't know about whole, all wide bodies. I don't know what the number is. We just don't know, I mean... I just literally do not know what the numbers is at this point. But it's a tiny fraction of the airplanes to be delivered over the next term four years.
J.B Groh - D.A. Davidson & Co.
So total backlog versus total planes that are in the backlog at Boeing and Airbus is a pretty small fraction?
Amin J. Khoury - Chairman and Chief Executive Officer
For sure.
J.B Groh - D.A. Davidson & Co.
Okay. Good that's what I suspected. Thank you.
Amin J. Khoury - Chairman and Chief Executive Officer
Thank you and ladies and gentlemen, as we have exceeded our allotted time we take our final question from David Strauss, UBS.
David Strauss - UBS
Thank you, good morning.
Amin J. Khoury - Chairman and Chief Executive Officer
Good morning.
David Strauss - UBS
Just so that I am clear on gross margin, are you saying that gross margin will be higher in '08 than '07, or it will just accelerate off the 32% that you was in the fourth quarter.
Amin J. Khoury - Chairman and Chief Executive Officer
Gross margin should be higher in '08 than it was in '07 and operating margins should be substantially higher in '08 than it was in '07.
David Strauss - UBS
Great, and my last question Amin, you talked about the real full environment that you have with interior systems, do you to think that business gets through 20% margins in '08?
Amin J. Khoury - Chairman and Chief Executive Officer
Again, we don't project margin by business, but look for a really nice margin expansion in Q1 and accelerating margins in the... beginning in Q2 for the company and with interior systems playing an very important role both the first quarter and the full year. It is a business where we have more than 50% market share in essentially all the products which we manufacture and sell in that business. And so the likelihood of achieving your question number is pretty high.
David Strauss - UBS
Great, thanks very much.
Greg Powell - Vice President of Investor Relations
Okay that was our final question. Thank you for joining our call today and if anyone has any further questions, please feel free to give me a call.
Amin J. Khoury - Chairman and Chief Executive Officer
Thanks everyone have a good day.
Operator
Ladies and gentlemen that concludes today's B/E Aerospace conference call. Thank you for participating in the call and have a good day.
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