Esterline Technologies 8-K Esterline Reports Fiscal 2018 Third Quarter Financial Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact: Investor Relations – John Hobbs

Media – Michelle DeGrand

+1425-453-9400

ESTERLINE REPORTS FISCAL 2018 THIRD QUARTER FINANCIAL RESULTS

• Fiscal 2018 Third Quarter Results

• Sales of $499.9 million

• Income from continuing operations of $29.7 million, or $1.00 per diluted share

• Free cash flow of $80.1 millionyear-to-date

• Reiterate FY18 full-year revenue, earnings and cash flow guidance

BELLEVUE, Wash., August 2, 2018 – Esterline Corporation (NYSE:ESL) (www.esterline.com), a leading specialty manufacturer serving global aerospace and defense markets, today reported results for the fiscal 2018 third quarter ended June 29, 2018.

Consolidated third quarter revenue was $499.9 million compared with the prior-year result of $504.1 million. Prior-year results included $23.4 million in sales from the recently divested Kirkhill business.

Consolidated earnings from continuing operations in the third fiscal quarter of 2018 were $29.7 million, or $1.00 per diluted share. The results for the third quarter period of 2017 were $31.8 million, or $1.06 per diluted share. Adjusted earnings from continuing operations for the third fiscal quarter of 2017 were $33.0 million, or $1.10 per diluted share, excluding discrete advanced displays integration and compliance costs.

“We completed the quarter ahead of our most recent expectations,” said Curtis Reusser, Esterline’s Chairman, President & Chief Executive Officer. “Our avionics team successfully mitigated a significant portion of the effect of a previously reported13-day work stoppage in Montreal. We expect to recapture the balance of the impacted sales volume in the fiscal fourth quarter. In addition, other Esterline businesses fulfilled more orders in the third quarter than planned, shifting some sales from the fourth quarter into the third. We remain focused on driving revenue growth across our global operations, supported by a very healthy backlog andyear-to-datebook-to-bill ratio of 1.15.”

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Third Quarter Results of Operations

The company reported consolidated operating earnings before interest and tax in the third quarter of fiscal 2018 of $48.3 million, or 9.7% of sales, compared with $49.9 million, or 9.9% of sales, reported in the prior year.

The Avionics & Controls segment reported fiscal third quarter operating earnings of $23.8 million on sales of $210.8 million. This compares with operating earnings of $22.5 million on sales of $209.2 million in the same period of fiscal 2017. Solid performance in the recent quarter across the businesses within this segment more than offset lower year-over-year sales and profits resulting from the previously mentioned strike. Segment R&D spending was lower in the 2018 period as the company’s efforts on the Embraer E2 family of airliners shift from development to production.

The Sensors & Systems segment reported fiscal third quarter operating earnings of $22.1 million on sales of $190.9 million. The segment’s operating earnings in the same period of 2017 were $25.6 million on sales of $184.8 million. The fiscal 2017 results benefited from strong sales and above-average margins on anFAA-mandated GFI retrofit program that ended in the fourth quarter of fiscal 2017. Segment operating profit moderated with the completion of the GFI program but has returned to growth over the last two quarters.

The Advanced Materials segment reported fiscal third quarter operating earnings of $21.2 million on sales of $98.2 million. During the same period of fiscal 2017, the segment reported operating earnings of $17.8 million on sales of $110.1 million. The fiscal 2017 performance includes the operating results from the Kirkhill business, which was divested in the second quarter of fiscal 2018. Excluding $23.4 million in sales and a $2.6 million operating loss from the Kirkhill operations, adjusted segment sales in the fiscal 2017 third quarter were $86.7 million and adjusted operating earnings were $20.4 million. Sales growth in the fiscal 2018 third quarter was driven by strong performance across the segment.

Year-to-Date Results of Operations

Consolidated operating results for the first nine months of fiscal 2018 include discrete tax expenses of $48.6 million, or $1.63 per diluted share, related to the U.S. Tax Cuts and Jobs Act of 2017 (TCJA). Including that impact, the company reported earnings from continuing operations for the first nine months of fiscal 2018 of $18.9 million, or $0.63 per diluted share. Excluding the discrete impact of the TCJA, the company generated adjusted earnings from continuing operations during the first nine months of this fiscal year of $67.5 million, or $2.26 per diluted share. Earnings from continuing operations for the first nine months of fiscal 2017 were $87.3 million, or $2.92 per diluted share. Adjusted earnings from continuing operations for the first nine months of fiscal 2017 were $92.4 million, or $3.09 per diluted share (see further details in theNon-GAAP Financial Information section below).

Cash flow from operations through the first nine months of fiscal 2018 was $119.4 million, compared with $138.9 million through the first nine months of fiscal 2017. Capital expenditures during the first

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Page 3 of 8    Esterline Reports Fiscal 2018 Third Quarter Financial Results

nine months of fiscal 2018 were $39.2 million, resulting in free cash flow of $80.1 million for the 2018 period compared with $96.7 million for the same period in 2017. The decline in free cash flow is primarily attributable to lower net earnings in the fiscal 2018 period.

Booking Activity

The company has booked more than $1.7 billion of new orders on ayear-to-date basis, resulting in ayear-to-datebook-to-bill ratio of 1.15. The company’s backlog has increased over the past twelve months, standing at $1.47 billion at the end of the fiscal 2018 third quarter, compared with a $1.24 billion backlog at the end of the fiscal 2017 third quarter. The current backlog has greater depth with a higher proportion of system andsub-system orders, many with scheduled deliveries twelve months or more into the future.                

Capital Allocation

During the third quarter of fiscal 2018, the company paid down $23.1 million of U.S. debt, resulting in a leverage ratio of 2.7 as of the end of the quarter.

Fiscal 2018 Outlook

The company reiterated its guidance for fiscal year 2018, continuing to expect revenue in the range of $2.00 billion to $2.05 billion and anticipating fiscal 2018 earnings in the range of $3.65 to $3.85 per diluted share, excluding the $1.63 impact from the TCJA. The company expects to generate free cash flow between $115 million and $140 million for the full year.

Additional information about the company’s financial results is available in a presentation on the company’s website (www.esterline.com) in the Investor Relations section under “Presentations.” The presentation is also included as Exhibit 99.2 to the company’s report on Form8-K, which is being submitted today to the SEC.

Conference Call Information

Esterline will host a conference call to discuss this announcement today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The U.S.dial-in number is877-307-0078; outside the U.S., use531-289-2890. The pass code for the call is: 9167058.

Non-GAAP Financial Information

This press release and the related presentation providing supplemental financial information may includenon-GAAP financial measures—adjusted earnings from continuing operations, adjusted earnings from continuing operations per diluted share, adjusted operating earnings from continuing operations (EBIT), adjusted earnings before interest, tax, depreciation and amortization (EBITDA), adjusted segment sales, adjusted segment operating earnings (before income taxes) and free cash flow—that have not been calculated in accordance with generally accepted accounting principles

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(GAAP) in the U.S. Adjusted earnings from continuing operations consist of earnings from continuing operations attributable to Esterline less the costs associated with incremental compliance costs (described further below), discrete items associated with our acquisition of the Advanced Displays business in January 2015, and theone-time expenses associated with the TCJA. Adjusted earnings from continuing operations per diluted share divides each element of adjusted earnings from continuing operations by the weighted average number of shares outstanding, diluted for the periods presented. EBIT is defined as operating earnings from continuing operations. Adjusted EBIT excludes the same costs excluded from adjusted earnings from continuing operations set forth in the table below. EBITDA from continuing operations is defined as net earnings plus loss from discontinued operations plus earnings attributable to noncontrolling interests plus income tax expense less interest income plus interest expense plus depreciation & amortization (excluding amortization of debt issuance costs) of $25.2 million in the third quarter of fiscal 2018 and $25.5 million in the third quarter of fiscal 2017. Adjusted segment sales consist of net sales of our Advanced Materials segment reduced by the sales from our Kirkhill business. Adjusted segment operating earnings consist of operating earnings (before income taxes) of our Advanced Materials segment reduced by the operating earnings from our Kirkhill business. Free cash flow is defined as cash flow from operations of $119.4 million less capital expenditures of $39.2 million in the first nine months of fiscal 2018, and cash flow from operations of $138.9 million less capital expenditures of $42.2 million in the first nine months of fiscal 2017. In accordance with the SEC’s requirements, below is the reconciliation of thenon-GAAP adjusted earnings from continuing operations to the comparable GAAP earnings from continuing operations in the applicable periods. Additional relevant reconciliations are included in the presentation providing supplemental financial information.

In millions, except per share amounts

	Three Months Ended June 29, 2018				Three Months Ended June 30, 2017
	Diluted EPS				Diluted EPS
Earnings from Continuing Operations Attributable to Esterline (GAAP), Net of Tax	$	29.7	$	1.00	$	31.8	$	1.06
Advanced Displays Integration Costs, Net of Tax of $0.1		—		—		0.1		0.00
Compliance Costs1, Net of Tax of $0.4		—		—		1.1		0.04
Adjusted Earnings from Continuing Operations (non-GAAP), Net of Tax	$	29.7	$	1.00	$	33.0	$	1.10

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In millions, except per share amounts

	Nine Months Ended June 29, 2018				Nine Months Ended June 30, 2017
	Diluted EPS				Diluted EPS
Earnings from Continuing Operations Attributable to Esterline (GAAP), Net of Tax	$	18.9	$	0.63	$	87.3	$	2.92
Advanced Displays Integration Costs, Net of Tax of $0.2		—		—		0.9		0.03
Compliance Costs1, Net of Tax of $1.1		—		—		4.2		0.14
Provisional Tax Expense Due to TCJA		48.6		1.63		—		—
Adjusted Earnings from Continuing Operations (non-GAAP), Net of Tax	$	67.5	$	2.26	$	92.4	$	3.09

¹ See explanation of these costs in Exhibit 99.2 to the company’s Form8-K filed today with the SEC.

The company provides thesenon-GAAP financial measures as supplemental information to the GAAP financial measures. Management uses thesenon-GAAP financial measures to (a) evaluate the company’s historical and prospective financial performance and its performance relative to its competitors, (b) allocate resources, and (c) measure the operational performance of the company’s business units.

In addition, management believes including thesenon-GAAP financial measures enhances investors’ and financial analysts’ understanding of the company’s performance as well as their ability to assess and compare the company’s historical results of operations.

Thesenon-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measures, and free cash flow is not necessarily indicative of amounts available for discretionary use. There are limitations to thesenon-GAAP financial measures because they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items that comprise the calculation. The company compensates for these limitations by using thesenon-GAAP financial measures as a supplement to the GAAP measures and by providing reconciliations of thenon-GAAP and comparable GAAP financial measures. Thenon-GAAP financial measures should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or the company’s future financial performance. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should” or “will,” or the negative of such terms or other comparable terminology. These forward-looking statements are only predictions based on the current intent and expectations of the management of Esterline, are not guarantees of future performance or actions, and involve risks and uncertainties that are difficult to predict and may cause Esterline’s or its industry’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Esterline’s actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements due to risks detailed in Esterline’s public filings with the Securities and Exchange Commission including its most recent Report on Form10-K/A.

See attached Consolidated Statement of Operations, Consolidated Sales and

Earnings from Continuing Operations by Segment, and Consolidated Balance Sheet

Page 6 of 8    Esterline Reports Fiscal 2018 Third Quarter Financial Results

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Statement of Operations (unaudited)

In thousands, except per share amounts

	Three Months Ended						Nine Months Ended
	June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Segment Sales
Avionics & Controls	$	210,787		$	209,168		$	626,304		$	615,143
Sensors & Systems		190,895			184,804			564,516			535,287
Advanced Materials		98,189			110,135			308,725			321,224
Net Sales		499,871			504,107			1,499,545			1,471,654
Cost of Sales		329,951			330,408			1,017,562			977,837
		169,920			173,699			481,983			493,817
Expenses
Selling, general and administrative		98,895			93,615			299,817			286,649
Research, development and engineering		22,830			30,190			73,397			80,937
Insurance recovery		—			—			—			(7,789	)
License fee income		—			—			(5,293	)		—
Loss (Gain) on sale of business		(97	)		—			5,213			—
Total Expenses		121,628			123,805			373,134			359,797
Operating Earnings from Continuing Operations		48,292			49,894			108,849			134,020
Interest Income		(579	)		(150	)		(1,326	)		(346	)
Interest Expense		7,902			7,299			23,673			22,645
Earnings from Continuing Operations Before Income Taxes		40,969			42,745			86,502			111,721
Income Tax Expense		11,094			10,703			66,962			23,320
Earnings from Continuing Operations Including Noncontrolling Interests		29,875			32,042			19,540			88,401
Earnings Attributable to Noncontrolling Interests		(158	)		(278	)		(684	)		(1,069	)
Earnings from Continuing Operations Attributable to Esterline, Net of Tax		29,717			31,764			18,856			87,332
Gain (Loss) from Discontinued Operations, Attributable to Esterline, Net of Tax		(1,894	)		(815	)		(2,137	)		(6,185	)
Net Earnings Attributable to Esterline	$	27,823		$	30,949		$	16,719		$	81,147
Earnings (Loss) Per Share — Basic:
Continuing Operations	$	1.01		$	1.07		$	0.63		$	2.94
Discontinued Operations		(0.06	)		(0.03	)		(0.07	)		(0.21	)
Earnings (Loss) Per Share — Basic	$	0.95		$	1.04		$	0.56		$	2.73
Earnings (Loss) Per Share — Diluted:
Continuing Operations	$	1.00		$	1.06		$	0.63		$	2.92
Discontinued Operations		(0.06	)		(0.03	)		(0.07	)		(0.21	)
Earnings (Loss) Per Share — Diluted	$	0.94		$	1.03		$	0.56		$	2.71
Weighted Average Number of Shares Outstanding — Basic		29,430			29,830			29,649			29,698
Weighted Average Number of Shares Outstanding — Diluted		29,548			30,068			29,775			29,953

Page 7 of 8    Esterline Reports Fiscal 2018 Third Quarter Financial Results

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Sales and Earnings From Continuing Operations by Segment (unaudited)

In thousands

	Three Months Ended						Nine Months Ended
	June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Segment Sales
Avionics & Controls	$	210,787		$	209,168		$	626,304		$	615,143
Sensors & Systems		190,895			184,804			564,516			535,287
Advanced Materials		98,189			110,135			308,725			321,224
Net Sales	$	499,871		$	504,107		$	1,499,545		$	1,471,654
Earnings from Continuing Operations Before Income Taxes
Avionics & Controls	$	23,781		$	22,496		$	67,839		$	61,185
Sensors & Systems		22,135			25,587			53,119			70,087
Advanced Materials		21,152			17,780			45,288			55,982
Segment Earnings		67,068			65,863			166,246			187,254
Corporate expense		(18,776	)		(15,969	)		(57,397	)		(53,234	)
Interest income		579			150			1,326			346
Interest expense		(7,902	)		(7,299	)		(23,673	)		(22,645	)
Earnings from Continuing Operations Before Income Taxes	$	40,969		$	42,745		$	86,502		$	111,721

Page 8 of 8    Esterline Reports Fiscal 2018 Third Quarter Financial Results

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Balance Sheet (unaudited)

In thousands

	June 29, 2018		September 29, 2017
Assets
Current Assets
Cash and cash equivalents	$	351,039	$	307,826
Accounts receivable, net		401,244		430,524
Inventories		479,494		477,969
Income tax refundable		18,503		12,814
Prepaid expenses		23,778		19,239
Other current assets		4,574		13,836
Current assets of businesses held for sale		4,052		6,501
Total Current Assets		1,282,684		1,268,709
Property, Plant and Equipment, Net		316,876		348,634
OtherNon-Current Assets
Goodwill		1,031,234		1,053,573
Intangibles, net		318,169		359,166
Deferred income tax benefits		55,532		56,793
Other assets		17,323		19,804
Non-current assets of businesses held for sale		12,632		13,334
	$	3,034,450	$	3,120,013
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	133,470	$	138,595
Accrued liabilities		218,953		230,007
Current maturities of long-term debt		15,245		17,424
U.S. and foreign income taxes		7,151		582
Current liabilities of businesses held for sale		3,212		7,184
Total Current Liabilities		378,031		393,792
Long-Term Liabilities
Credit facilities		25,000		50,000
Long-term debt, net of current maturities		695,884		709,424
Deferred income tax liabilities		34,927		43,978
Pension and post-retirement obligations		65,443		66,981
Long-term U.S. income taxes payable		38,640		—
Other liabilities		17,703		18,838
Non-current liabilities of businesses held for sale		2,910		1,724
Total Shareholders’ Equity		1,775,912		1,835,276
	$	3,034,450	$	3,120,013