Exhibit 99.1
Contact: Max Kuniansky
Director of Investor Relations
561-791-5000
B/E AEROSPACE REPORTS THIRD QUARTER RESULTS,
CONFIRMS EARNINGS OUTLOOK
WELLINGTON, FL, December 17, 2001 - B/E Aerospace, Inc. (Nasdaq: BEAV) today
announced financial results for the third fiscal quarter ending November 24,
2001 and confirmed the earnings outlook for both the current and next fiscal
years.
HIGHLIGHTS
o Facility consolidation program underway
o Recorded restructuring charges, primarily non-cash, for a number of facility
consolidations
o Company expects to return to profitability in first quarter of
next year with strong growth in profitability beginning in third quarter
"Our airline customers continue to face very difficult operating conditions,"
said Mr. Robert J. Khoury, President and Chief Executive Officer of B/E
Aerospace. "Air travel has not yet recovered from the aftermath of the tragic
events of September 11. Airlines' operating losses for the full year 2001 will
likely be the largest ever recorded. As announced in October, we are responding
by aggressively reducing our costs, facilities and workforce to levels
consistent with projected demand.
"After putting considerable effort into our facility consolidation plan, we now
have better visibility on the earnings outlook," Mr. Khoury said. "We expect to
earn about $0.85 per share for our next fiscal year (March 2002 to February
2003), with the second half of the year providing about $0.60 per share of the
projected earnings." Earnings expectations for fiscal 2003 exclude transition
costs associated with the facility consolidation program, most of which will
impact the balance of this year and the first half of next year.
THIRD QUARTER OVERVIEW
For the third fiscal quarter ended November 24, 2001, B/E Aerospace reported a
net loss of ($106.2) million or ($3.08) per share, compared to net earnings of
$7.9 million or $0.30 per share for the third quarter a year ago. The net loss
reported today includes approximately $100 million of costs associated with the
facility consolidation program. Excluding these costs, as well as
acquisition-related expenses, net earnings for the third quarter of fiscal 2002
were $0.5 million, or $0.01 per share.
Putting the third quarter results into perspective, Mr. Khoury stated:
"Approximately $84 million of the $100 million of facility consolidation costs
were non-cash, affecting net income but not cash flow."
Net sales for the third quarter were 3 percent higher compared to the same
quarter last year. However, pro forma sales decreased 16 percent compared to a
year ago, reflecting substantially lower demand from airline customers in the
current difficult environment. Pro forma sales exclude revenues from
acquisitions completed after the third quarter of last year.
"Airlines worldwide are feeling the combined effects of the aftermath of the
September 11 attacks and a weak economy," said Mr. Khoury. "It appears that U.S.
carriers' domestic revenues were down 35-40
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percent for the months of October and November compared to a year ago. High
labor costs and fixed costs are compounding their financial pressures.
"Airlines are stringently conserving cash," Mr. Khoury said. "As we've stated in
the past, this is adversely affecting demand for our cabin interior products."
FACILITY CONSOLIDATION UPDATE
Consistent with the outlook for reduced demand, in October 2001 B/E announced
plans to close five facilities and reduce its workforce by about 1,000 people.
This plan is intended to reconfigure operations to generate substantially higher
profitability in both the near term and the longer term. In connection with
these actions, the company recorded the following charges in the third quarter:
o cash charges of $15.6 million associated with workforce reductions and
facility closures,
o non-cash charges of $63.9 million to write down property, equipment and
inventory which were impaired as a result of industry conditions and the
facility closures, and
o non-cash charges of $20.4 million related to the impairment of related
intangible assets.
"We are moving aggressively to size our organization consistent with expected
demand," said Mr. Khoury. "These actions are extremely painful and directly
impact many loyal and long-standing employees. However, the actions are
necessary to position B/E for solid profitability at the current lower level of
demand and to generate substantially greater relative profitability when demand
recovers."
To further reduce costs, B/E's senior executive management personnel have agreed
to accept reductions in compensation ranging from 35 percent to 50 percent for
this year.
THIRD QUARTER: OTHER FACTORS
Gross profit margin in the third quarter was 35.9 percent, compared to 38.0
percent a year ago.
B/E reported EBITDA (earnings before interest, taxes, depreciation and
amortization) of $28.4 million for the third quarter, excluding facility
consolidation and acquisition-related expenses.
B/E's backlog was approximately $520 million as of the end of November 2001,
down from $635 million as of the end of August 2001. "Our backlog declined due
to lower bookings during the past quarter, combined with order cancellations
and/or deferrals to uncertain periods in the future," Mr. Khoury said.
Shares outstanding increased to 35.2 million shares at the end of the third
quarter, reflecting the May 2001 common stock offering and shares issued in
connection with the acquisition of M&M Aerospace Hardware, Inc.
NINE-MONTH REVIEW
For the nine months ended November 24, 2001, B/E recorded a net loss of ($98.9)
million, or ($3.08) per share, compared to net earnings of $17.1 million or
$0.67 per share a year ago. The net loss includes approximately $100 million of
facility consolidation costs. Excluding such costs, as well as
acquisition-related expenses and extraordinary debt extinguishment costs,
earnings for the nine months ended November 2001 were $17.2 million, or $0.52
per share.
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Net sales for the nine-month period were 6 percent higher compared to the same
period last year. However, pro forma sales decreased 7 percent compared to a
year ago, reflecting substantially lower demand from airline customers. Pro
forma sales exclude revenues from acquisitions completed after the third quarter
of last year. B/E's gross margin was 37.3 percent, up from 37.1 percent last
year.
CASH EXCEEDS $135 MILLION, BANK FACILITY AMENDED
B/E had cash on hand of $135.7 million as of November 24. Net debt was $719.6
million, or 84 percent of total capital, at the end of the third quarter.
Interest coverage for the twelve months ended November was 2.4 times, excluding
the aforementioned charges. B/E's bank credit facility, which requires no
principal payments until 2006, was recently amended to provide additional
flexibility in its financial covenants.
OUTLOOK: FISCAL 2002
Consistent with B/E's prior public statements made shortly after the September
11 attacks, B/E expects sales of approximately $700 million for the full fiscal
year ending in February 2002, and approximately break-even net earnings for the
second half of the fiscal year excluding previously announced charges and
transition costs associated with facility consolidations.
OUTLOOK: FISCAL 2003
"After putting considerable effort into our facility consolidation plan, we now
have better visibility on our earnings outlook," Mr. Khoury said. Confirming
previous guidance, expected financial results for B/E's next fiscal year ending
in February 2003 are:
o revenues of about $650 million, down from projected revenues of $700 million
for fiscal 2002, and down approximately 20 percent from fiscal 2001 pro forma
revenues including revenues from all acquired businesses in both periods,
o earnings of about $0.85 per share excluding approximately $10-12 million of
transition costs associated with facility consolidations, most of which will
impact the first and second quarters of fiscal 2003, and
o EBITDA of about $135 million excluding the aforementioned charges.
The second half of the year should provide about $0.60 per share of the
projected $0.85 per share full year earnings forecast, driven primarily by
margin improvements from facility consolidations. Operating profit margin is
expected to expand substantially over the course of the year.
Consistent with guidance furnished in October, expected financial results for
fiscal 2003 include estimated benefits from implementing Financial Accounting
Standard 142 regarding amortization of intangible assets as of the beginning of
fiscal 2003.
"While it appears that airline spending on both new aircraft and aftermarket
programs will be constrained for the foreseeable future, several factors will
aid us in this environment," Mr. Khoury said. "Our senior management team has
successfully steered B/E Aerospace through difficult times in the past,
including the adverse industry conditions of the early 1990s. This is the same
management team which has so successfully consolidated multiple facilities in
the past. Our current organizational structure reflects the earlier elimination
of 17 facilities and related headcount reductions of approximately 3,000
persons.
"Over 60 percent of our costs are variable, providing substantial financial
flexibility. Our bank facility requires no principal payments until maturity in
2006, and our publicly traded debt requires no principal payments until 2008.
Our sales mix is favorable, and when airline spending rebounds, it is likely to
begin
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with aftermarket investments in existing fleets. Finally, prospects for our
Business Jet Group remain positive.
"We remain confident that we will eventually see a resurgence in the growth
drivers of our business," he said. "At present, airlines are deferring retrofits
and refurbishments of cabin interiors. Pent-up demand should cause aftermarket
sales of B/E's products to rebound well before new aircraft deliveries. This is
significant for our outlook because the aftermarket -- cabin interior retrofits
and refurbishments -- provided 60 percent of our sales last year.
"When demand returns to more normal levels, we expect to have greatly enhanced
earnings power, producing more output with fewer facilities and lower fixed
costs. In fact, after closing five principal facilities, our reconfigured
capacity should still be sufficient to generate revenues 50 percent greater than
next year's expected level. The productivity improvements are a direct result of
lessons learned through the initiatives of the last 2 or 3 years which were so
important to our recent financial performance -- lean manufacturing, continuous
improvement and the leveraging of our information technology investments," Mr.
Khoury concluded.
As previously announced, B/E will hold a conference call to discuss the third
quarter results on Tuesday, December 18 at 10:30 a.m. Eastern time. To listen to
the conference call live via the Internet, visit the Investors section of B/E's
website at www.beaerospace.com and follow the Conference Calls link.
This news release contains forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve risks and uncertainties, and B/E's actual experience may differ
materially from that anticipated in such statements. Factors that might cause
such a difference include those discussed in B/E's filings with the Securities
and Exchange Commission, including but not limited to its most recent proxy
statement, Form 10-K and Form 10-Q. For more information, see the section
entitled "Forward-Looking Statements" contained in B/E's Form 10-K and in other
filings.
B/E Aerospace, Inc. is the world's leading manufacturer of aircraft cabin
interior products, and a leading aftermarket distributor of aircraft component
parts. The company serves virtually all the world's airlines and aircraft
manufacturers. B/E designs, develops, manufactures, sells and services a broad
line of passenger cabin interior products for both commercial aircraft and
business jets and provides interior design, reconfiguration and conversion
services to its customers throughout the world. For more information, visit
B/E's web site at www.beaerospace.com.
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B/E Aerospace, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
--------------------------
(In thousands, except per share data) November 24, November 25,
- ------------------------------------- ------------ ------------
2001 2000
---- ----
Net sales $ 172,788 $ 167,410
Cost of sales 110,724 103,862
------- -------
Gross profit 62,064 63,548
Gross margin 35.9% 38.0%
Operating expenses:
Selling, general and 28,658 23,177
administrative
Research, development and 10,576 12,054
engineering
Amortization 6,316 5,820
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Facility consolidation and 106,740 -
acquisition-related ------- -
Total operating expenses 152,290 41,051
------- ------
Operating earnings (90,226) 22,497
Operating margin - 13.4%
Interest expense, net 15,966 13,698
------ ------
(Loss) earnings before income taxes (106,192) 8,799
Income taxes 55 880
-- ---
Net (loss) earnings $(106,247) $ 7,919
---------- -------
Net (loss) earnings per common share:
Diluted $ (3.08) $ 0.30
Cash basis (1) $ (2.91) $ 0.50
Common shares:
Weighted average and potentially 34,548 26,381
dilutive
End of period 35,222 25,480
Other data: before facility consolidation
and acquisition-related expenses:
Earnings $ 493 $ 7,919
Earnings per common share:
Diluted $ 0.01 $ 0.30
Cash basis(1) $ 0.18 $ 0.50
(1) Excludes tax-effected amortization expense
B/E Aerospace, Inc.
Consolidated Statements of Operations
(Unaudited)
Nine Months Ended
--------------------------
November 24, November 25,
(In thousands, except per share data) 2001 2000
- ------------------------------------- ---- ----
Net sales $528,714 $500,651
Cost of sales 331,764 314,792
------- -------
Gross profit 196,950 185,859
Gross margin 37.3% 37.1%
Operating expenses:
Selling, general and 81,437 71,159
administrative
Research, development and 33,629 37,263
engineering
Amortization 19,077 17,535
Facility consolidation and 106,740 -
acquisition-related ------- -
Total operating expenses 240,883 125,957
------- -------
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Operating (loss) earnings (43,933) 59,902
Operating margin - 12.0%
Interest expense, net 43,730 40,917
------ ------
(Loss) earnings before income taxes (87,663) 18,985
Income taxes 1,908 1,899
----- -----
(Loss) earnings before extraordinary item (89,571) 17,086
Extraordinary item (1) 9,309 -
----- -
Net (loss) earnings $ (98,880) $ 17,086
---------- --------
Net (loss) earnings per common share:
Diluted $ (3.08) $ 0.67
Cash basis (2) $ (2.55) $ 1.28
Common shares (weighted average and 32,096 25,588
potentially dilutive)
Other data: before extraordinary item,
facility consolidation and
acquisition-related expenses:
Earnings $ 17,169 $ 17,086
Earnings per common share:
Diluted $ 0.52 $ 0.67
Cash basis(1) $ 1.04 $ 1.28
(1) Expenses related to early extinguishment of 9.875% Senior Subordinated Notes
and bank credit facility.
(2) Excludes tax-effected amortization expense
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