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25% Q1 revenue boom at B/E Aerospace

B/E Aerospace has announced record first quarter 2012 financial results, with revenues, operating earnings, net earnings, net earnings per diluted share, bookings and backlog all at the highest level of any quarter in the company's 25-year history.

 

Compared to Q4 2011, the new quarterly results showed revenues of US$747.3 million (an increase of 24.5%; operating earnings of US$129.8 million (an increase of 29.7%; and an operating margin of 17.4% (an expansion of 70 basis points).

Net earnings and earnings per diluted share were US$68.8 million and US$0.67 per share, respectively, increases of 36.8% and 36.7%, respectively. Record bookings were approximately US$850 million (book-to-bill ratio of 1.1 to 1), while record backlog increased approximately 16% and record total backlog, including both booked and awarded but unbooked, increased 35% as compared to March 31, 2011.

The company states that it is guiding to a substantially improved 2012 earnings outlook of approximately US$2.75 per diluted share, including approximately US$0.13 per share interest expense drag on earnings from undeployed capital due to the company's recent issuance of US$500 million of 5.25% senior unsecured notes due 2022.

 

The first quarter 2012 revenues of US$747.3 million were a record for any quarter, and increased US$147.1 million, or 24.5%, as compared with the same period of 2011. Pro forma revenue growth, giving effect to all 2011 and 2012 acquisitions as if they had occurred on January 1, 2011, was 16.9%.

 

First quarter 2012 operating earnings of US$129.8 million were also a record and increased 29.7% on the aforementioned 24.5% increase in revenues. The operating margin was 17.4% and expanded 70 basis points as compared with 2011. Operating earnings, adjusted to exclude acquisition, integration and transition (AIT) costs, were US$134.1 million, an increase of 34.0%, and adjusted operating margin of 17.9% expanded 120 basis points. Operating earnings growth and operating margin expansion were driven by the higher sales volume, improved revenue mix and ongoing operational efficiency initiatives.

 

First quarter 2012 net earnings and net earnings per diluted share were US$68.8 million and US$0.67 per share, increases of 36.8% and 36.7%, respectively, as compared with the first quarter of 2011. Adjusted net earnings per diluted share, exclusive of AIT costs, were approximately US$0.70 per share, an increase of 43% as compared to 2011.

 

First quarter 2012 free cash flow of US$24.4 million reflects a US$66.7 million investment in inventories, exclusive of acquired inventories, to support the company's anticipated revenue growth. The full year 2012 free cash flow conversion ratio is expected to be approximately 80 to 85% of net earnings.

 

Commenting on the company's first quarter 2012 performance, Amin J. Khoury, chairman and CEO of B/E Aerospace said, "Our first quarter 2012 results included record revenues up 25%, record operating earnings up 30%, operating margin expanded 70 basis points to 17.4% (17.9% adjusted), record earnings per share up 37%, and record total backlog up 35%. The substantial margin expansion was driven by our commercial aircraft and business jet segments which more than offset the margin drag from the consumables management segment acquisitions. Market share gains driven by our successful R&D innovations, together with accretive strategic acquisitions and successful operational efficiency initiatives drove both the 37% earnings growth and the US$8.1 billion backlog."

 

"Based on our record backlog, both booked and awarded but unbooked, of approximately US$8.1 billion, our expectation for continued growth in global passenger travel, attendant increases in capacity and our expectation of significantly higher levels of wide-body aircraft deliveries, we are guiding to a substantially improved 2012 earnings outlook of approximately US$2.75 per diluted share, including approximately US$0.13 per share interest expense drag on earnings from undeployed capital due to the company's recent issuance of US$500 million of 5.25% senior unsecured notes due 2022," added Khoury.

 

Outlook

Commenting on the company's outlook, Khoury stated, "Based on our record backlog, both booked and awarded but unbooked, of approximately $8.1 billion, our expectation for continued growth in global passenger travel, attendant increases in capacity and our expectation of significantly higher levels of wide-body aircraft deliveries, we are guiding to a substantially improved 2012 earnings outlook of approximately US$2.75 per diluted share, including the US$0.13 per share interest expense drag as a result of our recent opportunistic senior notes offering. This represents earnings per share growth of approximately 23% (38% on a comparable interest expense and comparable tax rate basis)."

 

2012 financial guidance

The company expects continued strong orders in 2012 driven by the robust wide-body aircraft delivery outlook and solid aftermarket demand. In addition, the company expects continued growth in consumables demand driven primarily by the expected continuing growth in global passenger traffic and capacity.

2012 revenues are expected to be approximately US$2.95 billion or approximately 18% higher than 2011 revenues. The company's full-year 2012 guidance is approximately US$2.75 per diluted share, representing an increase of approximately 23% (38% on a comparable interest expense and comparable tax rate basis).

The 2012 free cash flow conversion ratio is expected to be approximately 80 to 85% of net earnings. Free cash flow is expected to be weaker in the first half of 2012 and significantly stronger in the second half of the year.

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