EXHIBIT 99.1
[GRAPHIC OMITTED]
#06-18
News Release
CONTACT:
Doug Dean
Director, Investor Relations
B/E Aerospace, Inc.
(561) 791-5000 ext. 1450
B/E AEROSPACE SECOND QUARTER 2006 FINANCIAL RESULTS EXCEED
EXPECTATIONS; 2006 GUIDANCE RAISED
WELLINGTON, FL, July 26, 2006 - 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 financial
results for the second quarter of 2006.
HIGHLIGHTS
o Record second quarter revenues of $271.5 million reflect 30.8 percent
year-over-year organic growth.
o Second quarter operating earnings of $35.3 million were 46.5 percent
higher than the same period in the prior year. Second quarter operating
margin of 13.0 percent expanded by 140 basis points versus the same period
in the prior year.
o Earnings before income taxes of $26.6 million nearly tripled versus the
same period in the prior year.
o Net earnings for the current quarter were $18.7 million, which is up by
$10.3 million or more than double the $8.4 million earned in the same
period in the prior year. Diluted earnings per share of $0.24 were up
$0.10, or 71 percent, versus the same period in the prior year, despite a
$7.2 million increase in income taxes and an 19.9 million, or 35 percent,
increase in shares outstanding.
o Bookings for the quarter ended June 30, 2006 were strong, approximating
$375 million, and represent a book-to-bill ratio of 1.4:1. Year-to-date
bookings for the six-month period ended June 30, 2006 were nearly $900
million, which is a record for any six-month period and represents a book-
to-bill ratio of approximately 1.7:1. Record backlog at June 30, 2006
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stood at over $1.45 billion, an approximate increase of 75 percent as
compared to backlog at June 30, 2005.
o Company raised its 2006 earnings guidance by $0.02 per diluted share to
$1.19 per diluted share exclusive of the debt prepayment charge.
SECOND QUARTER PERFORMANCE
For the second quarter of 2006 consolidated sales of $271.5 million
increased $63.9 million or 30.8 percent over the second quarter of 2005.
Operating earnings for the second quarter of 2006 of $35.3 million
increased by $11.2 million or 46.5 percent as compared to the same period last
year. The second quarter operating margin of 13.0 percent expanded by 140 basis
points. The substantial increase in operating earnings was driven by continued
revenue and earnings growth as well as margin expansion in each of B/E's
Commercial Aircraft, Distribution and Business Jet segments.
Interest expense for the second quarter of 2006 of $8.7 million was $6.3
million lower than interest expense recorded in the same period in the prior
year, resulting from the retirement in January 2006 of all of B/E's $250 million
of senior subordinated notes due 2008.
Earnings before income taxes of $26.6 million were nearly three times
higher than the prior year's pre-tax earnings of $9.1 million. Income taxes for
the second quarter of 2006 were $7.9 million, or approximately 30 percent of
earnings before income taxes, and were $7.2 million greater than income taxes in
the same period in the prior year.
Net earnings for the second quarter of 2006 were $18.7 million, or $0.24
per diluted share based on approximately 78.1 million fully diluted shares,
versus net earnings of $8.4 million, or $0.14 per diluted share based on 60.1
million fully diluted shares in the same period in the prior year.
SECOND QUARTER SEGMENT DISCUSSION
Net sales by segment were as follows:
NET SALES
---------------------------------------------------------
Three Months Ended June 30,
($ in millions)
---------------------------------------------------------
Percent
2006 2005 Change Change
---------------------------------------------------------
Commercial aircraft $182.1 $136.4 $45.7 33.5%
Distribution 55.0 45.0 10.0 22.2%
Business jet 34.4 26.2 8.2 31.3%
---------------------------------------------------------
Total $271.5 $207.6 $63.9 30.8%
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The Commercial Aircraft Segment ("CAS") generated revenues of $182.1
million in the second quarter of 2006, an increase of $45.7 million or 33.5
percent versus the same period in the prior year. The increase in sales was
primarily due to a higher sales volume of commercial aircraft passenger cabin
equipment. The Distribution Segment delivered revenue growth of 22.2 percent in
the second quarter of 2006, driven by a broad-based increase in aftermarket
demand for aerospace fasteners, as well as continued market share gains. In the
Business Jet Segment, revenues increased by 31.3 percent in the second quarter
of 2006, reflecting a substantial increase in shipments of super first class
products and strong business jet deliveries.
The following is a summary of the growth in operating earnings by
segment:
OPERATING EARNINGS
---------------------------------------------------------
Three Months Ended June 30,
($ in millions)
---------------------------------------------------------
Percent
2006 2005 Change Change
---------------------------------------------------------
Commercial aircraft $21.7 $14.2 $7.5 52.8%
Distribution 11.8 9.0 2.8 31.1%
Business jet 1.8 0.9 0.9 100.0%
---------------------------------------------------------
Total $35.3 $24.1 $11.2 46.5%
CAS operating earnings of $21.7 million increased by $7.5 million or 52.8
percent versus the same period in the prior year. CAS operating margin for the
quarter expanded to 11.9 percent, a 150 basis point improvement over the same
period in the prior year. The CAS margin expansion was primarily the result of
ongoing manufacturing efficiencies and operating leverage at the higher level of
sales. CAS backlog at June 30, 2006 reached another record level.
The Distribution Segment generated record revenues of $55.0 million in the
second quarter of 2006, an increase of $10.0 million or 22.2 percent versus the
same period in the prior year. Operating earnings at the Distribution Segment in
the second quarter of 2006 were a record $11.8 million, which was 31.1 percent
greater than the same period last year and represented a 21.5 percent operating
margin.
The Business Jet Segment generated second quarter revenues of $34.4
million, an increase of 31.3 percent as compared to the second quarter of 2005.
Operating earnings at the
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Business Jet Segment during the quarter of $1.8 million were $0.9 million
greater than operating earnings in the same period last year. The increase in
operating earnings reflects the higher level of revenues associated with
increased production volumes of the new super first class product line and the
strong recovery in the business jet industry.
SIX-MONTH CONSOLIDATED RESULTS
For the six months ended June 30, 2006, B/E reported consolidated sales of
$518.7 million, a 28.4 percent increase over the same period last year.
Operating earnings of $66.4 million for the first six months of 2006 were $22.4
million or 50.9 percent greater than the same period last year, due to both the
28.4 percent revenue growth and a 190 basis point expansion in operating margin
to 12.8 percent of sales. Interest expense of $18.2 million for the current
six-month period decreased by $11.9 million versus the same period in the prior
year. Earnings before income taxes for the current six month period of $46.4
million were over three times the prior year's earnings before income taxes of
$13.9 million. Net earnings for the current six-month period were $32.5 million
or $0.42 per diluted share, increases of 160 percent and 100 percent,
respectively, versus the same period last year. Bookings for the current
six-month period were nearly $900 million, a record for any six month period,
and represent a book-to-bill ratio of 1.7:1.
For the six months ended June 30, 2006, CAS operating earnings of $37.2
million increased by 60.3 percent, due to both a 27.2 percent increase in
revenue and a 230 basis point expansion in operating margin to 11.1 percent of
sales. The margin expansion was primarily due to ongoing manufacturing
efficiencies and operating leverage at the higher sales volume. Distribution
Segment's operating earnings of $23.6 million during the six months ended June
30, 2006 increased by $5.8 million or 32.6 percent on a 23.5 percent increase in
sales, reflecting further operating efficiencies at the higher sales level.
Business Jet Segment's operating earnings of $5.6 million in the current
six-month period were up $2.6 million or 86.7 percent as compared to the same
period in 2005.
LIQUIDITY AND BALANCE SHEET METRICS
At June 30, 2006 B/E's net debt-to-net capital ratio was 32 percent. Net
debt at June 30, 2006 stood at $294 million, which represents total debt of
approximately $429 million, less cash and cash equivalents of approximately $135
million. Cash and cash equivalents increased by approximately $29 million from
the December 31, 2005 balance of approximately $106 million, as adjusted for the
prepayment of $250 million of senior subordinated notes in January 2006.
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At June 30, 2006 there were no bank borrowings outstanding under the
company's revolving credit facility, and no principal payments are due on the
company's long-term debt until 2010. Depreciation and amortization for the six
months ended June 30, 2006 and 2005 were $14.0 million and $14.4 million,
respectively. Capital expenditures for the six months ended June 30, 2006 and
2005 were $10.8 million and $7.1 million, respectively.
RECENT WINS AND RECORD BACKLOG STRENGTHEN OUTLOOK; 2006 GUIDANCE RAISED
Backlog at the end of the quarter was a record $1.45 billion, representing
an increase of approximately $650 million or over 75 percent as compared to
backlog at June 30, 2005. The strong bookings for the quarter were primarily
driven by an expansion of aftermarket premium class retrofit awards, comprised
of a variety of seating products, a broad array of food and beverage preparation
and storage equipment, and engineering services.
"Our bookings performance this quarter is particularly noteworthy given
the absence of any single, major customer award during the quarter. The strong
level of bookings reflects the high level of customer activity in the
marketplace and continued traction on acceptance of B/E's portfolio of new
products. Bookings in the quarter also further strengthened the quality of our
record backlog with orders for higher margin products. Our growing and improving
backlog further bolsters our confidence in the outlook for the next few years,"
said Amin J. Khoury, Chairman and Chief Executive Officer of B/E Aerospace.
"We are encouraged by the strength of aftermarket demand which has been
the primary driver of both revenue and backlog growth. We now expect 2007 to be
a year in which backlog will again grow due to the expected orders associated
with new aircraft deliveries in the 2008 to 2010 period. Robust industry
conditions coupled with stronger than expected bookings and backlog during the
first half of 2006 further bolster our confidence in an acceleration in earnings
in the second half of this year and significant additional operating margin
expansion in the second half of 2006 and in 2007. Accordingly, we are raising
our full-year earnings guidance by $0.02 per diluted share to $1.19 per diluted
share exclusive of the after-tax impact of the debt prepayment costs which will
be approximately $0.16 per diluted share," concluded Mr. Khoury.
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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 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
intend to publicly update or revise any forward-looking statements to reflect
subsequent events or circumstances.
About B/E Aerospace, Inc.
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
aircraft cabin 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 and supports its products through its own global direct sales and
product support organization. For more information, visit B/E's website at
www.beaerospace.com.
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*T*
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
THREE MONTHS ENDED
------------------------------
June 30, June 30,
(In millions, except per share data) 2006 2005
------------------------------
Net sales $271.5 $207.6
Cost of sales 175.1 134.8
------ ------
Gross profit 96.4 72.8
Gross margin 35.5% 35.1%
Operating expenses:
Selling, general and administrative 39.4 32.1
Research, development and engineering 21.7 16.6
------ ------
Total operating expenses 61.1 48.7
------ ------
Operating earnings 35.3 24.1
Operating margin 13.0% 11.6%
Interest expense, net 8.7 15.0
------ ------
Earnings before income taxes 26.6 9.1
Income taxes 7.9 0.7
------ ------
NET EARNINGS $ 18.7 $ 8.4
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NET EARNINGS PER COMMON SHARE
Basic $ 0.24 $ 0.15
====== ======
Diluted $ 0.24 $ 0.14
====== ======
Common shares:
Basic
Weighted average 77.5 57.1
End of period 77.6 57.7
Diluted
Weighted average 78.1 60.1
End of period 77.6 60.7
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*T*
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
SIX MONTHS ENDED
------------------------------
June 30, June 30,
(In millions, except per share data) 2006 2005
------------------------------
Net sales $518.7 $404.1
Cost of sales 335.8 263.3
------ ------
Gross profit 182.9 140.8
Gross margin 35.3% 34.8%
Operating expenses:
Selling, general and administrative 76.4 63.8
Research, development and engineering 40.1 33.0
------ ------
Total operating expenses 116.5 96.8
------ ------
Operating earnings 66.4 44.0
Operating margin 12.8% 10.9%
Interest expense, net 18.2 30.1
Loss on debt extinguishment 1.8 --
------ ------
Earnings before income taxes 46.4 13.9
Income taxes 13.9 1.4
------ ------
NET EARNINGS $ 32.5 $ 12.5
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NET EARNINGS PER COMMON SHARE
Basic $ 0.43 $ 0.22
====== ======
Diluted $ 0.42 $ 0.21
====== ======
Common shares:
Basic
Weighted average 76.4 57.0
End of period 77.6 57.7
Diluted
Weighted average 77.6 59.8
End of period 77.6 60.7
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*T*
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions)
June 30, December 31,
2006 2005
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 134.8 $ 356.0
Accounts receivable, net 145.6 131.9
Inventories, net 285.3 223.7
Deferred income taxes 17.5 17.5
Other current assets 19.1 15.1
-------- --------
Total current assets 602.3 744.2
Long-term assets 670.7 682.3
-------- --------
$1,273.0 $1,426.5
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 200.3 $ 170.8
Long-term liabilities 436.4 686.1
-------- --------
636.7 856.9
Total stockholders' equity 636.3 569.6
-------- --------
$1,273.0 $1,426.5
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*T*
B/E Aerospace, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
SIX MONTHS ENDED
------------------------------
June 30, June 30,
2006 2005
------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 32.5 $ 12.5
Adjustments to reconcile net earnings to net
cash flows provided by (used in) operating
activities:
Depreciation and amortization 14.0 14.4
Provision for doubtful accounts 0.9 0.4
Non-cash compensation 0.4 1.4
Loss on debt extinguishment 1.8 --
Deferred income taxes 11.1 --
Changes in operating assets and liabilities,
net of acquisitions (46.8) (31.1)
------ ------
Net cash flows provided by (used in) operating
activities 13.9 (2.4)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (10.8) (7.1)
Proceeds from sale of property and equipment -- 0.8
Other, net (.1) 3.0
------ ------
Net cash flows used in investing activities (10.9) (3.3)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock, net of
expenses 24.7 5.9
Principal payments on long-term debt (250.2) (0.2)
------ ------
Net cash flows (used in) provided by financing
activities (225.5) 5.7
------ ------
Effect of exchange rate changes on cash flows 1.3 (1.3)
------ ------
Net decrease in cash and cash equivalents (221.2) (1.3)
Cash and cash equivalents at beginning of
period 356.0 76.3
------ ------
Cash and cash equivalents at end of period $134.8 $ 75.0
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