Aircraft cabin interior products maker B/E Aerospace, Inc. (BEAV) reported Tuesday a decline in profit for the third quarter, as revenues dropped nearly 27% on weak demand from airline customers amid high fuel costs, lower ticket prices and shrinking yields. However, both earnings and revenue came in above analysts' expectations. The company also provided forecasts for the fourth quarter and fiscal 2010.
The Wellington, Florida-based company's third quarter net income was $36.1 million or $0.36 per share versus $51.8 million or $0.54 per share a year ago.
On an adjusted basis, which excludes foreign exchange impacts, earnings were $37.4 million or $0.38 per share, which compares to pro forma adjustes net income of $48.2 million or $0.50 per share last year. On average, fourteen analysts polled by Thomson Reuters expected the company to report earnings of $0.32 per share. Analysts' estimates typically exclude special items.
B/E Aerospace's quarterly net sales fell to $459.8 million from $587.8 million last year, yet surpassed consensus estimate of $458.14 million. The revenue decline reflects reduction in revenues across consumables management segment, commercial aircraft segment and business jet segment.
The group's consumables management segment suffered from reduced activity at airline and MRO maintenance facilities, reduced aircraft capacity, a decrease in revenue passenger miles flown, and substantially reduced activity at business jet manufacturers. Quarterly revenues dipped to $181.0 million from $219.2 million in the prior year.
Commercial aircraft division was affected by retrofit program push outs, reduced activity at airline and MRO maintenance facilities, reduced aircraft capacity and a decrease in revenue passenger miles flown. Quarterly revenue plunged to $222.5 million from $300 million in 2008.
Meanwhile, business jet arm was hurt by severance costs, an unfavorable mix of products and the negative impact of reduced operating leverage in the current year period. Revenues were $56.3 million, lower than prior year's $67.8 million.
Bookings during the third quarter of 2009 were around $400 million, with a book-to-bill ratio of approximately 0.9 to 1. Backlog at the end of the quarter was nearly $2.65 billion, down 9% from last year.
During the latest third quarter, cost of sales was $297.7 million, down from previous year's $394.4 million, while selling general and administrative expenses rose to $65.2 million from last year's $58.6 million. Capital expenditure for the 2009 third-quarter was $6.3 million.
The recent third quarter suffered adverse foreign exchange translation to the tune of $1.7 million versus a benefit of $7.3 million in 2008. Excluding this impact, adjusted operating margin expanded marginally to 15.5% of sales, up 30 basis points from the same period in 2008.
For the nine-month period ended September 30, 2009, net profit declined to $108.7 million or $1.10 per share from $154.2 million or $1.65 per share in 2008. On a year-to date basis, net sales slumped to $1.45 billion from earlier year's $1.58 billion.
Looking ahead, for the fourth quarter, the company expects earnings to be approximately $0.31 per share, including a $0.02 charge, while revenues and operating earnings are expected to be approximately equal to that of the third quarter.
Due to a planned prepayment of a long-term debt of $100 million, the company would take a charge of $0.02 per share in the fourth quarter, excluding which, it would have cash in hand of around $200 million. The group expects its book-to-bill ratio to improve to 1:1.
Consensus estimates calls for earnings of $0.33 per share on revenues of $460.74 million for the fourth quarter.
For the full year, the company expects earnings to be flat at $1.40 per share, including acquisition, integration and transition costs of approximately $0.03 per diluted share, on revenues of $1.75 billion.
Wall Street analysts currently expect earnings of $1.44 per share on revenues of $1.85 billion.
The company expects favorable quarterly improvement in earnings from second quarter 2010, as it expects an expansion in orders and backlog in the year due to an expected improvement in demand for consumables and spares, conversion of a portion of unbooked SFE awards to bookings and increased in orders for cabin interior products for both new build and retrofit aircraft.
Further, B/E Aerospace said it sees substantial increase in both revenues and earnings in 2011.
BEAV closed Monday's trading at $20.15 on the Nasdaq.
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