B/E Aerospace, Inc. (BEAV), a maker of cabin interior products for commercial aircraft and business jets, Monday reported a 16.4% rise in its third-quarter profit, reflecting sales growth of 37.3%, driven by the acquisition of Honeywell's Consumables Solutions distribution business, or HCS, and sales increases in the distribution and business jet segments.
On an adjusted basis, earnings per share grew 22.9% and beat analysts' forecast. Moving ahead, the company provided outlook for fiscal 2008 and maintained its guidance for fiscal 2009 and 2010.
In the third quarter, B/E Aerospace reported net earnings of $51.8 million, or $0.54 per share, compared with $44.5 million, or $0.48 per share, a year ago. For the sequentially preceding second quarter, the company posted net income of $53.9 million, or $0.59 per share.
The company completed the acquisition of HCS on July 28. The latest third-quarter results included acquisition, integration and transition costs of $3.6 million and debt prepayment costs of $3.6 million. Excluding these, net earnings reached $56.6 million, $0.59 per share, up 27.2% and 22.9%, respectively, from the third quarter of 2007.
Analysts projected third-quarter earnings of $0.53 per share. The company was expecting adjusted earnings of approximately $0.58 per share.
Operating earnings rose 60.3% to $101.3 million from $63.2 million a year ago. On an adjusted basis, operating earnings were up 66% to $104.9 million in the quarter.
B/E Aerospace quarterly net sales totaled $587.8 million, a 37.3% rise from $428.2 million in the same quarter last year, reflecting the acquisition of HCS and organic revenue growth for the distribution and business jet segments. On a proforma basis, revenue rose about 11.6%. The company's second-quarter sales were $522.2 million.
Following the HCS acquisition, the company will report in three reporting segments, distribution segment, commercial aircraft segment and business jet segment, B/E Aerospace noted.
The Distribution segment's revenues climbed 134.9% in the third quarter to $219.2 million from $93.3 million in the prior-year quarter. Revenue growth for the segment on a proforma basis was 13.8%.
The Commercial aircraft segment's revenues totaled $300.8 million in the quarter, up 4.7% from $287.2 million in the previous year. The segment's results reflected scheduled deliveries of retrofit and new-buy aircraft programs and lower aftermarket spares revenues. This was in consistent with the slowdown in global passenger air travel and airline cash conservation measures, which began during the quarter, B/E Aerospace noted.
Business jet segment revenues increased 42.1% to $67.8 million from $47.7 million in the previous year, driven by higher shipments of both business jet interior equipment and Super First Class products.
During the quarter, the company's bookings reached about $600 million. Backlog at the end of the quarter was about $2.9 billion, including the addition of backlog associated with the HCS acquisition, an increase of around 45% from the September 30, 2007 backlog. The company said that about 8% of the backlog represents orders from U.S. airlines, while approximately 55% is from international customers.
For nine months ended September 30, 2008, the company earned $154.2 million, or $1.65 per share, up 46.9% and 37.5%, respectively, from $105 million, or $1.20 per share, last year. Net earnings for the latest period included $3.6 million of acquisition, integration and transition costs, and debt prepayment costs of $3.6 million. Net sales reached $1.58 billion, a 30.4% rise from $1.21 billion in the prior-year period. Revenue on a proforma basis rose 19.4%.
Going forward, the company said that global and domestic macroeconomic trends have become increasingly negative. These factors include the deteriorating global economy, increased uncertainties in the financial markets, a significant slowdown in domestic and international passenger air travel, tough cash conservation measures initiated by the airlines, and the impact of the Boeing strike. These factors have created obstacles to overcome.
For fiscal 2008, B/E Aerospace expects earnings of approximately $2.19 per share, excluding acquisition, integration and transition costs of about $0.06 per share, and debt prepayment costs of around $0.03 per share. Analysts project earnings of $2.13 per share for full-year 2008.
For fiscal 2009, the company continues to project earnings of about $2.00 per share, excluding $0.10 per share acquisition, integration and transition costs. The company also expects that higher tax rate in 2009 will negatively impact earnings per share by approximately $0.05 per share. The company's full-year 2009 revenues are expected to increase to approximately $2.5 billion. Meanwhile, analysts are of the view that the company will earn $2.16 per share in fiscal 2009 on revenues of $2.58 billion.
B/E Aerospace also forecasts that its 2010 earnings and revenue will be higher than those of 2009. Further, depending on market conditions, the company expects to invest approximately $125 million in its distribution segment inventories to complete the transition of the HCS business to its inventory stocking business model.
BEAV closed Friday's trading at $9.76, down $0.54, on a volume of 1.955 million shares.
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