Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Esterline guides to 12% earnings growth

|Includes: Esterline Technologies Corporation (ESL)

Esterline Corporation, a leading specialty manufacturer serving aerospace/defense markets, on June 1 reported fiscal 2011 second quarter (ended April 29) income from continuing operations of $46.0 million, or $1.47 per diluted share, on sales of $435.3 million.  Representing 13.8% growth in sales over last year’s $382.5 million, and a 57.9% growth in income over last year’s $29.1 million.  Diluted earnings per share of $1.47 were up 50% over the prior year’s level of $0.96 per diluted share.


Brad Lawrence, Esterline’s Chief Executive Officer, said “…all three of our business segments continued to post solid performance improvement over last year due primarily to commercial aircraft market strength – including spare parts, retrofit programs and growing OEM positions.”  Lawrence said, “Our spare parts business was particularly strong in the first half of the year due to pent-up demand from airlines recovering from the downturn.”  He said, “Although spare parts business is difficult to forecast, we are expecting demand to moderate somewhat over the remainder of our fiscal year.”  He added that Esterline’s second quarter also benefitted from a retroactive price settlement regarding scope changes to the 787 program and two ongoing retrofit programs of Boeing 737s.


On the defense side of Esterline’s business, Lawrence said federal budget deliberations, which took place during the quarter, have affected several programs, particularly those not related to aircraft, namely “…our international countermeasure flares and military headset businesses.”  He said the company expects this trend to continue as these program delivery schedules “are clearly being stretched and moved to the right.”  He emphasized confidence, however, in Esterline’s strong overall defense sales funnel and solid order book for both new and retrofit aircraft.  “The new production F-35 Joint Strike Fighter and T-6B trainer programs should continue to be solid contributors to Esterline’s performance,” Lawrence said, “and the need to extend the life of older aircraft through avionic retrofits plays right to our strengths.”


In addition to Esterline’s principal aerospace and defense business, Lawrence cited the relatively broad-based strength from applications of its core technology into such diverse end-markets as medical capital equipment and high-speed rail networks.


“Overall,” Lawrence said, “as markets improve and new growth opportunities emerge, Esterline is in a very good position to benefit.”  He added that the company expects significantly improved performance this year over last year’s record levels, and raised full-year earnings guidance to the range of $4.80 to $4.95 per share compared to $4.27 in 2010.  The stock closed on Friday at $74.70.


Disclosure: The author has no long or short positions in Esterline.


Forward-Looking Statements: Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially.