[GRAPHIC OMITTED]
Exhibit 99.1
#05-14
News Release
CONTACT:
Doug Dean
Director, Investor Relations
B/E Aerospace, Inc.
(561) 791-5000 ext. 1450
B/E AEROSPACE REPORTS SECOND QUARTER 2005 FINANCIAL RESULTS;
REVENUES OF $208 MILLION UP 12.0 PERCENT; EARNINGS PER DILUTED SHARE OF $0.14
EXCEED EXPECTATIONS; RECORD BOOKINGS AND BACKLOG IMPROVE OUTLOOK
WELLINGTON, FL, July 27, 2005 - B/E Aerospace, Inc. (Nasdaq: BEAV), the
world's leading manufacturer of aircraft cabin interior products and a leading
aftermarket distributor of aerospace fasteners, today announced its financial
results for the quarter ended June 30, 2005.
HIGHLIGHTS
o Reported second quarter revenues of $207.6 million, representing year
over year growth of 12 percent.
o Second quarter gross margin of 35.1 percent expanded by 170 basis
points versus the same period of the prior year.
o Second quarter operating earnings of $24.1 million were nearly 35
percent higher than the same period of the prior year. Second quarter
operating margin of 11.6 percent expanded by 190 basis points versus
the same period of the prior year and was up 150 basis points compared
to the immediately preceding quarter. Operating earnings growth was
driven primarily by expanding margins at the commercial aircraft
segment, as well as continued growth in revenue and earnings at both
our business jet and distribution segments.
o Net earnings for the quarter were $8.4 million, or $0.14 per diluted
share, representing increases of $10.8 million and $0.20 per diluted
share, respectively, versus the same period in the prior year and were
double those of the immediately preceding quarter.
o Record backlog at June 30, 2005 stood at $820 million, an increase of
33 percent from backlog at June 30, 2004 and an increase of $60
million or 8 percent as compared to the immediately preceding quarter.
Year-to-date bookings for the six months through June 30, 2005 were
$524 million and were a record for any six month period.
SECOND QUARTER SEGMENT SALES AND OPERATING EARNINGS 2
- ---------------------------------------------------
For the second quarter, consolidated sales were $207.6 million, a $22.3
million or 12.0 percent increase over the second quarter of 2004.
Net sales by segment were as follows:
NET SALES
-----------------------------------------------------
Three Months Ended June 30
($ in millions)
-----------------------------------------------------
Percent
2005 2004 Change Change
-----------------------------------------------------
Commercial aircraft $136.4 $128.4 $8.0 6.2%
Distribution 45.0 37.1 7.9 21.3%
Business jet 26.2 19.8 6.4 32.3%
----------------------------------------------------
Total $207.6 $185.3 $22.3 12.0%
The commercial aircraft segment generated revenues of $136.4 million in the
second quarter of 2005, up 6 percent versus the same period of the prior year,
primarily due to a higher level of shipments of seating products and food and
beverage preparation and storage equipment. The distribution segment delivered
strong revenue growth of 21 percent in the second quarter of 2005, driven by a
broad-based increase in aftermarket demand for aerospace fasteners and continued
market share gains. In the business jet segment, revenues increased by 32
percent in the second quarter of 2005, reflecting the nascent recovery within
the business jet industry and initial shipments of super first class products.
Operating earnings for the second quarter of 2005 of $24.1 million
increased by nearly 35 percent, as compared to the same period last year. The
operating margin of 11.6 percent in the second quarter of 2005 was 190 basis
points greater than the operating margin realized in the second quarter of 2004,
and 150 basis points greater as compared to the immediately preceding quarter.
The substantial increase in operating earnings was driven primarily by
significant margin expansion at the commercial aircraft segment, as well as
continued growth in revenue and earnings at both the business jet and
distribution segments.
3
The following is a summary of the change in operating earnings by segment:
OPERATING EARNINGS
-----------------------------------------------------
Three Months Ended June 30
($ in millions)
-----------------------------------------------------
Percent
2005 2004 Change Change
-----------------------------------------------------
Commercial aircraft $14.2 $10.5 $3.7 35.2%
Distribution 9.0 7.0 2.0 28.6%
Business jet 0.9 0.4 0.5 125.0%
-----------------------------------------------------
Total $24.1 $17.9 $6.2 34.6%
Interest expense for the second quarter of 2005 of $15.0 million was $4.9
million lower than interest expense recorded in the same period of the prior
year. Interest expense decreased in the second quarter of 2005 as a result of
the early retirement of $200 million of senior subordinated notes during the
fourth quarter of 2004. The interest coverage ratio, which is determined by
dividing the sum of operating earnings plus depreciation and amortization by
interest expense, was 2.1:1 for the second quarter of 2005, as compared to 1.2:1
in the second quarter of 2004 and 1.8:1 in the immediately preceding quarter.
Net earnings for the second quarter were $8.4 million or $0.14 per diluted
share, a $10.8 million or $0.20 per diluted share improvement as compared to the
same period of the prior year, and double the level of earnings reported in the
immediately preceding quarter.
SECOND QUARTER SEGMENT DISCUSSION
- ---------------------------------
The commercial aircraft segment's ("CAS") operating results and order book
continued to improve during the second quarter of 2005. Compared to the second
quarter of 2004, CAS operating earnings of $14.2 million increased by 35 percent
on a 6 percent increase in sales, driven by a 220 basis point expansion in
operating margin to 10.4 percent of sales. The margin expansion was primarily a
result of an improved mix of products sold and ongoing manufacturing
efficiencies. Commercial aircraft segment gross margin, bookings and backlog all
showed strong improvements versus the same quarter of the prior year. Bookings
for the second quarter of 2005 were up nearly 100 percent versus the same period
last year and backlog during the second quarter of 2005 reached a record level.
The distribution segment generated record revenues of $45.0 million in the
second quarter of 2005, which were 21 percent greater than the same period in
the prior year. Operating earnings at the distribution segment in the second
quarter of 2005 were a record $9.0 million, 28.6 percent higher than the same
period last year and represented a 20.0 percent operating margin.
4
The business jet segment generated second quarter revenues of $26.2
million, up 32 percent as compared to second quarter of 2004. Operating earnings
at the business jet segment during the quarter of $0.9 million were $0.5 million
or 125 percent higher than operating earnings in the same period last year. The
substantial increase in operating earnings reflects the higher level of revenues
associated with an improving business jet industry and initial shipments of
super first class products. Operating earnings, although substantially improved
versus the second quarter of the prior year, reflected lower than normal
earnings on the initial shipments of super first class products.
SIX-MONTH CONSOLIDATED RESULTS
- ------------------------------
For the six months ended June 30, 2005, B/E reported consolidated sales of
$404.1 million, a 12.1 percent increase over the same period last year. Gross
profit of $140.8 million for this six-month period was 22 percent higher versus
the same period in the prior year, as gross margin expanded by 280 basis points
to 34.8 percent. Operating earnings of $44.0 million for the six-month period
were up 44 percent compared to the same period last year, primarily due to a 240
basis point expansion in operating margin to 10.9 percent of sales. Interest
expense of $30.1 million for the current six-month period decreased by $9.6
million versus the same period in the prior year. Net earnings for the current
six-month period were $12.5 million or $0.21 per diluted share, increases of
$22.5 million and $0.48 per diluted share versus the same period last year.
For the six months ended June 30, 2005 compared to the same period in 2004,
the commercial aircraft segment's operating earnings of $23.2 million were up 23
percent on a 4 percent increase in sales, primarily due to a 140 basis point
expansion in operating margin to 8.8 percent of sales. The margin expansion was
primarily due to an improved mix of products sold and ongoing manufacturing
efficiencies.
For the six months ended June 30, 2005 compared to the same period in 2004,
distribution segment operating earnings of $17.8 million were up 34 percent on a
24 percent increase in sales.
Similarly, for the six months ended June 30, 2005 compared to the same
period in 2004, business jet segment operating earnings of $3.0 million were up
$5.0 million on a $17.2 million or 49 percent increase in sales.
5
LIQUIDITY, BALANCE SHEET AND CASH FLOWS
- ---------------------------------------
At the end of the quarter, the company's liquidity remained solid with cash
balances totaling approximately $75 million, up $11.6 million from the first
quarter balance of $63.4 million. Net debt at the end of the second quarter
stood at approximately $605 million, which represents total debt of $680 million
less cash and cash equivalents of approximately $75 million. The company has no
debt maturities until 2008.
RECENT PROGRAM WINS, RECORD BACKLOG, STRENGTHEN OUTLOOK
- -------------------------------------------------------
Strong bookings for the second quarter of $269 million drove backlog at
June 30, 2005 to another record level of approximately $820 million, which was
33 percent greater versus the company's June 30, 2004 backlog and was up eight
percent on a sequential quarterly basis. Orders for the quarter were driven both
by strong international fleet refurbishment programs and the first major North
American coach class retrofit program since the events of September 11, 2001.
"Our investments in new product development over the past several years continue
to convert into market share gains and backlog growth," said Robert Khoury,
President and Chief Executive Officer of B/E Aerospace, Inc.
These investments have generated a host of new products including:
o Electric lie-flat seats
o The MiniPod(R) seating product suite for wide-body aircraft---selected
by 14 major international carriers
o Super first class compartments---selected by 5 international airlines
to date
o Next generation steam oven---selected by 10 airlines including the
first four A380 customers
o Spectrum(R) platform seats, including first class, tourist class and
regional jets---selected by nearly 50 customers
o New ICON(TM) long-haul, wide-body tourist class seat---successfully
launched with two major international carriers
o LED lighting systems---selected by over 80 customers
o New beverage making systems---selected by over 20 customers, and
o B/E's new patent-protected Pulse Oxygen(R) system---which was recently
selected by Boeing for installation on all 787 Dreamliner aircraft
6
We believe the many customer program awards we have won during the quarter
support our belief that our new product innovations are contributing to our
recent results in the marketplace. Some of the programs awarded during the
quarter include the following:
Air Canada selected B/E to upgrade its fleets of narrow-body, wide-body and
regional jets with B/E's Spectrum seats in a program valued in excess of $50
million. This represents the product launch for our Spectrum first class seat,
which is a product line extension of the existing Spectrum platform which has
now been ordered by nearly 50 customers for their narrow-body aircraft. Under
this program, B/E will manufacture and deliver its Spectrum family of coach
class and first class seating products for all of Air Canada's Airbus and Boeing
narrow-body aircraft as well as its fleet of Bombardier regional jets. In
addition, B/E will also retrofit Air Canada's fleet of wide-body aircraft with
its coach class Spectrum product. Mr. Khoury commented "Air Canada is the first
North American airline to undertake a major fleet-wide retrofit program since
the events of September 11, 2001."
During the second quarter the company also successfully launched ICON, its
next generation long-haul wide-body, tourist class seat with two major
international carriers in programs initially valued at approximately $50
million. This premium coach seat platform includes numerous product innovations
designed to increase passenger comfort while reducing airlines' total cost of
ownership. We believe this new product and these two programs favorably position
B/E for future upgrade opportunities in the emerging long-haul coach class
seating segment.
In addition, during the second quarter, Boeing selected B/E's recently
developed, patent-protected aircraft oxygen system, the Pulse Oxygen system, for
all Boeing 787 Dreamliners. The Pulse Oxygen system utilizes B/E's proprietary
technology. This award enhances B/E's competitive position and sets the stage
for additional future awards on other new generation aircraft platforms.
Mr. Khoury commented, "This clearly is the most vibrant marketing period in
our history. The company has been generating record backlogs over the past
twelve months, while reporting substantial revenue and earnings growth, all at
the outset of the recovery in our industry. The second quarter has been our best
quarter ever in terms of customer program awards, totaling approximately $375
million, and, as a result, we expect to continue to see robust growth in our
backlog during the balance of 2005, which we believe will result in new records
for backlog at the end of the third and fourth quarters and rising to
approximately $1 billion by year-end. We are increasingly confident in our
ability to generate revenues in excess of $800 million during 2005 and to
generate revenues in excess of $900 million in 2006. The company is maintaining
2005 earnings guidance of $0.50 per share in spite of overperformance on
revenue, bookings and backlog, electing to spend more on product development and
marketing. In addition, as announced on June 20, 2005, the company is raising
its 2006 earnings guidance to a range of $1.00 - $1.10 per share."
7
FINANCIAL GUIDANCE FOR 2005 AND 2006
- ------------------------------------
Financial guidance for 2005 and 2006 is now as follows:
o For the full year 2005, management expects revenue in excess of $800
million, a 45 percent increase in operating earnings driven by both
revenue growth and additional margin expansion, and full year earnings
of approximately $0.50 per share. Based on second quarter awards,
several of which will book in the second half of the year, management
expects full year 2005 bookings to exceed $1 billion, and for year-end
backlog to approximate $1 billion. The company's 2005 earnings
performance is expected to be driven by substantially expanded margins
in the commercial aircraft segment, significant revenue growth and
margin expansion in the business jet segment and strong revenue and
earnings growth in the distribution segment.
o The company's calendar year 2006 outlook has improved due to recent
marketing wins. Management expects revenue in excess of $900 million,
and to report earnings of approximately $1.00 to $1.10 per share for
the full year. Orders and backlog are expected to continue to be
strong in 2006 consistent with the new aircraft delivery cycle.
B/E Aerospace, Inc. is the world's leading manufacturer of aircraft cabin
interior products, and a leading aftermarket distributor of aerospace fasteners.
B/E designs, develops and manufactures a broad range of products for both
commercial aircraft and business jets. B/E manufactured products include
seating, lighting, oxygen, and food and beverage preparation and storage
equipment. The company also provides cabin interior design, reconfiguration and
passenger-to-freighter conversion services. Products for the existing aircraft
fleet -- the aftermarket -- generate about 60 percent of sales. B/E sells its
products through its own global direct sales organization. For more information,
visit B/E's website at www.beaerospace.com.
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements involve risks and
uncertainties. 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.
The forward-looking statements included in this news release are made only as of
the date of this news release and, except as required by federal securities
laws, we do not have any obligation to publicly update or revise any
forward-looking statements to reflect subsequent events or circumstances.
8
*T*
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
THREE MONTHS ENDED
------------------------------------
June 30, June 30,
(In millions, except per share data) 2005 2004
- --------------------------------------------------------------------------------
Net sales $ 207.6 $ 185.3
Cost of sales 134.8 123.5
-------- --------
Gross profit 72.8 61.8
Gross margin 35.1% 33.4%
Operating expenses:
Selling, general and administrative 32.1 29.9
Research, development and engineering 16.6 14.0
-------- --------
Total operating expenses 48.7 43.9
-------- --------
Operating earnings 24.1 17.9
Operating margin 11.6% 9.7%
Interest expense, net 15.0 19.9
-------- --------
Earnings (loss) before income taxes 9.1 (2.0)
Income taxes 0.7 0.4
-------- --------
NET EARNINGS (LOSS) $ 8.4 $ (2.4)
======== ========
NET EARNINGS (LOSS) PER COMMON SHARE
Basic $ 0.15 $ (0.06)
======== =========
Diluted $ 0.14 $ (0.06)
======== =========
Common shares:
Basic
Weighted average 57.1 37.0
End of period 57.7 37.3
Diluted
Weighted average 60.1 37.0
End of period 60.7 37.3
9
*T*
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
SIX MONTHS ENDED
---------------------------------
June 30, June 30,
(In millions, except per share data) 2005 2004
- -------------------------------------------------------------------------------
Net sales $ 404.1 $ 360.4
Cost of sales 263.3 245.0
-------- --------
Gross profit 140.8 115.4
Gross margin 34.8% 32.0%
Operating expenses:
Selling, general and administrative 63.8 58.6
Research, development and engineering 33.0 26.2
-------- --------
Total operating expenses 96.8 84.8
-------- --------
Operating earnings 44.0 30.6
Operating margin 10.9% 8.5%
Interest expense, net 30.1 39.7
-------- --------
Earnings (loss) before income taxes 13.9 (9.1)
Income taxes 1.4 0.9
-------- ---------
NET EARNINGS (LOSS) $ 12.5 $ (10.0)
======== =========
NET EARNINGS (LOSS) PER COMMON SHARE
Basic $ 0.22 $ (0.27)
======== =========
Diluted $ 0.21 $ (0.27)
======== =========
Common shares:
Basic
Weighted average 57.0 37.0
End of period 57.7 37.3
Diluted
Weighted average 59.8 37.0
End of period 60.7 37.3
10
*T*
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions)
June 30, December 31,
2005 2004
-------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 75.0 $ 76.3
Accounts receivable, net 105.9 91.6
Inventories, net 220.2 197.8
Other current assets 14.8 13.4
---------- -----------
Total current assets 415.9 379.1
Long-term assets 623.8 645.7
---------- -----------
$ 1,039.7 $ 1,024.8
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 160.5 $ 154.1
Long-term liabilities 686.3 687.9
---------- -----------
846.8 842.0
Total stockholders' equity 192.9 182.8
---------- -----------
$ 1,039.7 $ 1,024.8
========== ===========
11
*T*
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
SIX MONTHS ENDED
---------------------------
June 30, June 30,
2005 2004
-------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 12.5 $ (10.0)
Adjustments to reconcile net earnings (loss) to net cash flows
(used in) provided by operating activities:
Depreciation and amortization 14.4 13.8
Provision for doubtful accounts 0.4 0.5
Non-cash employee benefit plan contributions 1.4 1.1
Changes in operating assets and liabilities, net of
acquisitions (31.1) (2.2)
--------- --------
Net cash flows (used in) provided by operating activities (2.4) 3.2
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7.1) (7.1)
Proceeds from sale of property and equipment 0.8 0.2
Acquisitions, net of cash acquired -- (12.5)
Other, net 3.0 0.1
--------- --------
Net cash flows used in investing activities (3.3) (19.3)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of common stock, net of expenses 5.9 2.0
Repayment of long-term debt (0.2) (0.9)
--------- --------
Net cash flows provided by financing activities 5.7 1.1
--------- --------
Effect of exchange rate changes on cash flows (1.3) (0.1)
--------- --------
Net decrease in cash and cash equivalents (1.3) (15.1)
Cash and cash equivalents at beginning of period 76.3 147.6
--------- --------
Cash and cash equivalents at end of period $ 75.0 $ 132.5
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