Esterline Technologies Corp. (ESL), a specialty manufacturer serving the aerospace and defense markets, reported Thursday a profit for the second quarter that declined from last year, which was boosted by a significant benefit from a litigation settlement.
Both earnings per share and quarterly revenues missed analysts' expectations. The company also slashed its earnings and revenue forecast for the full-year 2013.
Brad Lawrence, Esterline's Chief Executive Officer, said the company's second quarter results "...reflect stable revenues, steady margins, controlled costs, and good performance in a variety of businesses and programs."
Bellevue, Washington-based Esterline posted net earnings of $35.52 million or $1.12 per share for the second quarter, lower than $45.19 million or $1.44 per share in the prior-year quarter.
Results for the year-ago quarter included a $0.30 per share benefit from a litigation settlement.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $1.25 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter decreased to $499.56 million, from $504.83 million in the same quarter last year, and missed ten Wall Street analysts' consensus estimate of $509.57 million.
Avionics & controls sales edged down to $192.13 million from $195.03 million, while sensors & systems sales declined to $176.96 million from $184.68 million in the year-ago quarter. Sales for advanced materials grew to $130.47 million from $125.12 million last year.
Segment earnings grew to $73.30 million from $69.12 million, while consolidated operating earnings declined to $57.44 million from $67.92 million last year. Total expenses increased to $123.94 million from $116.60 million in the year-ago quarter.
Gross margin for the quarter contracted 30 basis points to 36.3 percent from last year's 36.6 percent and selling, general and administrative expenses, as a percent of sales, increased 10 basis points.
New orders for the quarter decreased to $494.1 million from $566.0 million in the year-ago quarter, primarily reflecting the reduced order rate for the defense and industrial programs that primarily impacted the avionics & controls as well as the sensors & systems segments.
Looking ahead to fiscal 2013, the company slashed its earnings guidance to a range of $5.30 to $5.50 per share on projected revenues of about $2.0 billion, from the prior forecast of $5.45 to $5.80 per share on revenues in the $2.1 billion range.
Street is currently looking for full-year 2013 earnings of $5.58 per share on annual revenues of $2.07 billion.
Lawrence added that he expects a solid second-half performance, despite headwinds in global defense markets and a slower-than-anticipated recovery of the European economy.
ESL closed Thursday's regular trading session at $73.70, down $1.96 or 2.59% on a volume of 0.64 million shares. The stock lost a further $1.41 or 1.91% in after-hours trading.
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