B/E Aerospace First Quarter 2013 Results Exceed Expectations; Revenues up 13%, Operating Earnings up 18%, EPS up 30%

WELLINGTON, Fla.—(BUSINESS WIRE)—B/E Aerospace, Inc. (NASDAQ: BEAV), the world’s leading manufacturer of aircraft cabin interior products and the world’s leading distributor of aerospace fasteners and consumables, today announced first quarter 2013 financial results.

FIRST QUARTER 2013 HIGHLIGHTS VERSUS FIRST QUARTER PRIOR YEAR

Revenues of $842.2 million increased 12.7 percent.
Operating earnings were $153.6 million, an increase of 18.3 percent, and operating margin of 18.2 percent increased 80 basis points.
Net earnings and earnings per diluted share were $89.9 million and $0.87 per share, increases of 30.7 percent and 29.9 percent, respectively.

FIRST QUARTER CONSOLIDATED RESULTS

First quarter 2013 revenues of $842.2 million increased $94.9 million, or 12.7 percent, as compared with the prior year period.

First quarter 2013 operating earnings were $153.6 million, an increase of 18.3 percent, and operating margin of 18.2 percent increased 80 basis points as compared to the prior year period. The growth in operating earnings and the improvement in operating margin occurred primarily as a result of operating leverage at the higher revenue level and ongoing operational efficiency initiatives. Operating earnings and operating margin, both adjusted to exclude acquisition, integration and transition (AIT) costs, were $157.7 million and 18.7 percent.

First quarter 2013 net earnings and earnings per diluted share were $89.9 million and $0.87 per share, increases of 30.7 percent and 29.9 percent, respectively, as compared with the prior year period.

Commenting on the Company’s first quarter 2013 performance, Amin J. Khoury, Chairman and Chief Executive Officer of B/E Aerospace said, “Today we reported a strong start to 2013. Our first quarter 2013 results included record quarterly revenues, bookings, operating earnings, operating margin, net earnings, and EPS. Our revenue growth continues to be driven primarily by the robust new aircraft delivery cycle. Approximately 61 percent of first quarter revenues was driven by demand for products for new-buy aircraft reflecting both robust new aircraft deliveries and continued softness in aftermarket demand.”

First quarter 2013 commercial aircraft segment (CAS) revenues increased 12.1 percent while operating earnings of $74.2 million increased 13.3 percent as compared with the prior year period, and operating margin of 17.7 percent expanded 20 basis points, due to operating leverage at the higher revenue level and ongoing operational efficiency initiatives.

First quarter 2013 consumables management segment (CMS) revenues increased 13.9 percent while operating earnings of $64.8 million increased 25.1 percent, and operating margin of 19.8 percent expanded 170 basis points as compared with the prior year period. Operating margin, adjusted to exclude AIT costs of $4.1 million, was 21.1 percent and expanded 150 basis points as compared with the prior year period similarly adjusted for AIT costs.

First quarter 2013 business jet segment (BJS) revenues increased 11.3 percent while operating earnings of $14.6 million increased 16.8 percent as compared with the prior year period. Operating margin of 15.3 percent expanded 70 basis points as compared with the prior year period, reflecting the increase in revenues, an improved mix of revenues and ongoing operational efficiency initiatives.

LIQUIDITY AND BALANCE SHEET METRICS

Free cash flow of $22.0 million in the first quarter of 2013 reflects the effects of unusually strong cash collections during the fourth quarter of 2012 (as evidenced by the 146.4 percent free cash flow conversion ratio), capital expenditures of approximately $37 million to support the Company’s record total backlog, both booked and awarded but unbooked, of approximately $8.3 billion, and the timing of various accrued liabilities. As of March 31, 2013, cash was $532 million, net debt, which represents total long term debt of $1.96 billion less cash, was $1.43 billion and the Company’s net debt-to-net capital ratio was 39 percent.

BOOKINGS/BACKLOG

Bookings during the first quarter of 2013 were a record at approximately $845 million and reflect a book-to-bill ratio of approximately 1 to 1. Backlog as of March 31, 2013 was approximately $3.8 billion, and total backlog, both booked and awarded but unbooked, was approximately $8.3 billion.

OUTLOOK

Commenting on the Company’s outlook, Mr. Khoury stated, “Our full-year 2013 guidance of approximately $3.45 per diluted share represents an increase of approximately 22 percent as compared to 2012 EPS and is based upon the expectation of strong operating earnings growth driven by margin expansion in each of the Company’s three segments. Our record total backlog, both booked and awarded but unbooked, of approximately $8.3 billion, our expectation for a 10 percent compound annual growth rate (CAGR) in wide-body aircraft deliveries over the next three years, our expectation of rapidly growing revenues from our supplier furnished equipment (SFE) program deliveries, the expectation for continued growth in global passenger travel, and the attendant increases in capacity all provide a foundation for an acceleration in revenue growth beginning in 2014 and the expectation of a double-digit revenue CAGR over the 2013-2015 time period.”

The Company’s 2013 financial guidance is as follows:

The Company expects continued strong bookings in 2013 driven by the robust wide-body aircraft delivery outlook, bookings from prior SFE awarded programs, and a modest recovery in aftermarket demand, and expects to end the year with a book-to-bill ratio in excess of 1 to 1.
2013 revenues are expected to be approximately $3.35 billion, and, based on scheduled program deliveries, are expected to be stronger in the second half of the year.
The Company expects 2013 EPS of approximately $3.45 per diluted share. The EPS guidance of $3.45 per diluted share represents an increase of approximately 22 percent as compared with 2012 EPS of $2.83 per diluted share (2012 EPS of $2.83 adjusted to exclude 2012 debt prepayment costs). The Company’s 2013 earnings per share guidance is inclusive of approximately $20 million of expected 2013 AIT costs.
2013 free cash flow conversion ratio is expected to be approximately 70 percent of net earnings, weighted more heavily toward the second half of 2013.
Adjusted operating earnings, adjusted operating margin, CMS adjusted operating earnings, CMS adjusted operating margin, free cash flow and free cash flow conversion ratio are presented in this press release; these are non-GAAP financial measures. For more information see “Reconciliation of Non-GAAP Financial Measures.”