B/E Aerospace Reports Fourth Quarter and Full Year 2013 Results

WELLINGTON, Fla.—(BUSINESS WIRE)—Jan. 30, 2014— B/E Aerospace, Inc. (NASDAQ:BEAV), the world’s leading manufacturer of aircraft cabin interior products and the world’s leading provider of aerospace fasteners, consumables and logistics services, today announced its fourth quarter and full year 2013 financial results.

FOURTH QUARTER 2013 HIGHLIGHTS COMPARED WITH FOURTH QUARTER PRIOR YEAR

Revenues increased 12 percent.
Operating earnings, excluding 2013 acquisition costs, increased 18 percent.
Earnings per diluted share, excluding 2013 acquisition costs, were $0.90, an increase of 23 percent.
Strong bookings of approximately $920 million.
FULL YEAR 2013 HIGHLIGHTS COMPARED WITH FULL YEAR 2012

Revenues of $3.48 billion increased 13 percent.
Operating earnings of $629 million increased 17 percent and operating margin of 18.1 percent expanded 60 basis points.
Earnings per diluted share, excluding 2013 acquisition costs, were $3.55, an increase of 25 percent as compared with the prior year period adjusted to exclude 2012 debt prepayment costs.

FOURTH QUARTER CONSOLIDATED RESULTS

Fourth quarter 2013 revenues of $903.1 million increased 12.4 percent, as compared with the prior year period.

Fourth quarter 2013 operating earnings, excluding $5.2 million of costs related to recent acquisitions (2013 acquisition costs), were $162.1 million, an increase of 17.4 percent, and operating margin, adjusted to exclude 2013 acquisition costs, was 17.9 percent, representing an increase of 70 basis points as compared to the prior year period. GAAP operating earnings of $156.9 million increased 13.6 percent and GAAP operating margin of 17.4 percent expanded by 20 basis points.

Fourth quarter 2013 net earnings and earnings per diluted share, excluding 2013 acquisition costs, were $94.3 million and $0.90 per share, representing increases of 25.4 percent and 23.3 percent, respectively, as compared with the prior year period. GAAP fourth quarter 2013 net earnings and GAAP earnings per diluted share were $90.6 million and $0.87 per share, increases of 20.5 percent and 19.2 percent, respectively.

Commenting on the Company’s recent performance, Amin J. Khoury, Chairman and Chief Executive Officer of B/E Aerospace said, “I am pleased to report that our 2013 results were the best in the Company’s history, and included record revenues, bookings, backlog, operating earnings, operating margin, net earnings and earnings per share.”

Mr. Khoury continued, “Our revenue growth for the full year was primarily driven by demand related to the strong commercial aircraft delivery cycle, further aided by strong growth in wide-body aircraft deliveries, and strengthening shipments of supplier furnished equipment (SFE) products from our awarded but unbooked backlog. In addition, we are pleased to report that aftermarket demand, which began to pick up in the second quarter of 2013, has continued to reflect solid growth in demand.”

FOURTH QUARTER SEGMENT RESULTS

Fourth quarter 2013 commercial aircraft segment (CAS) revenues increased 19.6 percent while operating earnings of $84.0 million increased 22.4 percent as compared with the prior year period. Operating margin of 17.6 percent expanded 40 basis points as compared to the same period of the prior year, due to operating leverage at the higher revenue level and ongoing operational efficiency initiatives.

Fourth quarter 2013 consumables management segment (CMS) revenues increased 7.2 percent while operating earnings, adjusted to exclude 2013 acquisition costs, were $60.3 million, an increase of 10.0 percent as compared to the fourth quarter of the prior year. Operating margin adjusted to exclude both 2013 acquisition costs and $5.0 million of integration and transition (AIT) costs related to acquisitions completed in earlier periods, was 20.2 percent, an increase of 70 basis points as compared with the prior year period similarly adjusted to exclude AIT costs.

Fourth quarter 2013 business jet segment (BJS) operating earnings of $17.8 million increased 21.1 percent as compared with the prior year period and operating margin of 17.3 percent expanded 300 basis points as compared with the prior year period reflecting an improved mix of revenues and ongoing operational efficiency initiatives. Fourth quarter BJS revenues were adversely impacted by customer requests to pull forward previously scheduled fourth quarter deliveries into the third quarter to meet customers’ requirements. For the full year BJS revenues increased 15.3 percent as compared with the prior year and BJS revenue is expected to show strong year-over-year revenue growth in the first quarter of 2014.

FULL YEAR CONSOLIDATED RESULTS

For the year ended December 31, 2013, revenues of $3.48 billion increased 12.9 percent while GAAP operating earnings of $629.3 million increased 16.5 percent and GAAP operating margin of 18.1 percent expanded 60 basis points, all as compared with the prior year.

For the year ended December 31, 2013, earnings per diluted share, excluding 2013 acquisition costs, were $3.55 per share, an increase of 25.4 percent, as compared with prior year period adjusted to exclude 2012 debt prepayment costs. GAAP net earnings and GAAP earnings per diluted share were $365.6 million and $3.52 per share, increases of 25.5 percent and 24.4 percent, respectively, as compared with full year 2012 adjusted to exclude third quarter 2012 debt prepayment costs.

FULL YEAR SEGMENT RESULTS

For the year ended December 31, 2013, CAS operating earnings of $320.3 million increased 18.1 percent as compared with the prior year and operating margin of 17.9 percent expanded 40 basis points due to operating leverage at the higher revenue level and ongoing operational efficiency initiatives.

For the year ended December 31, 2013, CMS operating earnings of $240.0 million increased 10.8 percent, and operating margin of 18.7 percent expanded 20 basis points as compared with the prior year. Operating earnings, adjusted to exclude 2013 acquisition costs, were $245.2 million, an increase of 13.2 percent. Operating margin, adjusted to exclude both 2013 acquisition costs and AIT costs, was 20.6 percent, an increase of 60 basis points as compared with the prior year similarly adjusted to exclude AIT costs.

For the year ended December 31, 2013, BJS operating earnings of $69.0 million increased 32.7 percent as compared with the prior year period. Operating margin of 16.5 percent expanded 220 basis points, reflecting the increase in revenues, an improved mix of revenues and ongoing operational efficiency initiatives.

RECENT ACQUISITION ACTIVITY

The Company’s consumables management segment completed two acquisitions, one in the third quarter, Blue Dot Energy Services, one in the fourth quarter, Bulldog Rentals, and reached agreement to acquire two additional companies, LT Energy Services and Wildcat Wireline, all in the oilfield rental equipment and services business. Revenues from the companies associated with the fourth quarter acquisition and agreements were approximately $145 million for all of 2013, none of which is included in 2013 results. The Company expects to pay approximately $310 million, including acquisition costs, for these three businesses. As a result of these transactions, the Company will have established rental equipment and services businesses in both the northeast and southwest regions of the United States. 2013 proforma aggregate revenues, assuming the acquisitions were completed on January 1, 2013, from all of these transactions as well as Blue Dot would have comprised approximately 5 percent of the Company’s proforma 2013 revenues.

LIQUIDITY AND BALANCE SHEET METRICS

Free cash flow of $98.5 million in the fourth quarter represents a free cash flow conversion ratio of 108.7 percent of net earnings. For the year ended December 31, 2013, free cash flow of $224.2 million represents a free cash flow conversion ratio of 61.3 percent of net earnings. During the fourth quarter of 2013, the Company used approximately $42 million of cash related to the acquisitions discussed above.

As of December 31, 2013, cash was $638 million, net debt, which represents total long-term debt of $1.96 billion less cash, was $1.32 billion and the Company’s net debt-to-net capital ratio was 33.6 percent.

BOOKINGS/BACKLOG

Bookings during the fourth quarter of 2013 were strong at approximately $920 million, a quarterly record, and reflect a book-to-bill ratio of 1.02 to 1. Backlog as of December 31, 2013 was approximately $3.8 billion, while awarded but unbooked backlog was approximately $5.0 billion, bringing total backlog, both booked and awarded but unbooked, to approximately $8.8 billion.

During the fourth quarter, the consumables management segment won two significant long-term programs. The first was a contract extension and enhancement with United Technologies Corp. (UTC) in which B/E Aerospace will provide aerospace fasteners, hardware, consumables, and logistical services to UTC’s aerospace business units (Goodrich, Hamilton Sundstrand, Pratt & Whitney and Sikorsky Aircraft) through 2022. The total value of the UTC program is expected to be approximately $950 million. The second program was an award from AgustaWestland to supply aerospace fasteners, consumables, and logistical services for their global operations through 2018. The majority of this award was a market share gain. The total value of the AgustaWestland program is expected to be approximately $200 million.

OUTLOOK

Commenting on the Company’s outlook, Mr. Khoury concluded, “Our total backlog, both booked and awarded but unbooked, of approximately $8.8 billion, our expectation for robust wide-body aircraft deliveries, our expectation of strong revenue growth from our SFE program deliveries, and the expectation for continued growth in global passenger travel, all provide a basis for our expectation of continued strong revenue growth.”

The Company’s 2014 financial guidance is as follows:

The Company expects continued strong bookings in 2014 driven by the Company’s record backlog, the robust wide-body aircraft delivery outlook, bookings from prior SFE awarded programs, and a continuing recovery in aftermarket demand.
2014 revenues are expected to be approximately $4.0 billion.
The Company expects 2014 earnings per share of approximately $4.25 per diluted share representing an increase of approximately 21 percent as compared to 2013 earnings per diluted share.
2014 free cash flow conversion ratio is expected to be approximately 65 percent of net earnings.
Adjusted net earnings, adjusted diluted net earnings per common share, 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”.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve risks and uncertainties. The Company’s actual experience and results may differ materially from the experience and results anticipated in such statements. Factors that might cause such a difference include those discussed in the Company’s filings with the Securities and Exchange Commission (SEC), which include its Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. For more information, see the section entitled “Forward-Looking Statements” contained in the Company’s Annual Report on 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 and rules and regulations of the SEC, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.