Goodrich Announces 41 Percent Increase in Fourth Quarter 2010 Net Income per Diluted Share, Increases Outlook for Full Year 2011 Net Income per Diluted Share to $5.30 - $5.45

CHARLOTTE, N.C., Feb. 3, 2011 /PRNewswire via COMTEX/ —

Fourth quarter 2010 net income per diluted share of $1.16 increased 41 percent compared to fourth quarter 2009 net income per diluted share of $0.82.

Fourth quarter 2010 sales grew 10 percent to $1,806 million, compared to fourth quarter 2009 sales of $1,642 million.

Full year 2011 outlook for net income per diluted share increased to $5.30 – $5.45. Sales outlook remains at $7.7 – $7.8 billion. No change to the outlook for net cash provided by operating activities, minus capital expenditures, which is expected to exceed 85 percent of net income.

Goodrich Corporation (NYSE: GR) announced results today for the fourth quarter and full year 2010, and updated its full year outlook for 2011.

Commenting on the company’s performance and its 2011 outlook, Marshall Larsen, Chairman, President and Chief Executive Officer said, "With very strong fourth quarter 2010 performance, we closed out a solid 2010 with a dramatic improvement over 2009. During the year our sales increased each quarter, providing us with a strong growth trajectory as we enter 2011. During the fourth quarter, we experienced commercial aftermarket sales growth of 12 percent, compared to the fourth quarter 2009, and overall sales growth of 10 percent. This strong sales growth was outpaced by excellent growth in net income per diluted share of 41 percent during the fourth quarter 2010.

“We believe these strong growth trends will continue in 2011, and we expect significant sales growth for each of our major market channels. Based on the recent improvements in airline capacity trends, improving airline profitability, and increasing demand trends for our commercial aftermarket products late in the fourth quarter, we are raising our sales growth expectations for commercial aftermarket sales to a range of 7 – 9 percent for 2011, compared to 2010.

“Overall, we expect sales to grow about 11 percent, which would provide us with record sales of $7.7 – $7.8 billion in 2011. Our increased expectations for commercial aftermarket sales were largely offset by decreased growth expectations for large commercial airplane original equipment sales, which we now expect to grow about 15 percent. This adjustment is primarily a result of the slide in expected 787 deliveries recently announced by Boeing.

“This strong sales growth should result in even better growth in net income per diluted share. Largely driven by the increased expectations for commercial aftermarket sales and lower pension expense, we now expect 2011 net income per diluted share to be in the range of $5.30 – $5.45, a growth rate of 18 – 21 percent, compared to 2010.”

Fourth Quarter 2010 Results

Goodrich reported fourth quarter net income of $148 million, or $1.16 per diluted share, on sales of $1,806 million. In the fourth quarter 2009, the company reported net income of $105 million, or $0.82 per diluted share, on sales of $1,642 million.

For the fourth quarter 2010 compared with the fourth quarter 2009, Goodrich sales changes by market channel were as follows:

Large commercial airplane original equipment sales increased by 2 percent,

Regional, business and general aviation airplane original equipment sales increased by 52 percent, including sales associated with the recent acquisition of DeCrane’s cabin management assets. Organic growth in this market channel was approximately 21 percent,

Large commercial, regional, business and general aviation airplane aftermarket sales increased by 12 percent. Sequentially, commercial aftermarket sales were 2 percent lower than the third quarter 2010, and

Defense and space sales of both original equipment and aftermarket products and services increased by 9 percent, including organic growth of about 2 percent.

The increase in net income is attributable primarily to the impact of sales growth in all of the company’s major market channels, strong operational performance, continued success on cost containment initiatives, a lower effective tax rate and favorable changes in estimates for certain long-term contracts, partially offset by a charge for costs associated with the early retirement of debt. Several of these factors are noted below:

The fourth quarter 2010 results included pre-tax debt redemption costs of approximately $35 million, $22 million after-tax or $0.17 per diluted share. There were no similar charges during the fourth quarter 2009.

The company reported an effective tax rate of 8.5 percent for the fourth quarter 2010, compared to an effective tax rate of 29.5 percent during the fourth quarter 2009. The fourth quarter 2010 tax rate includes a previously announced tax benefit of approximately $0.18 per diluted share related to a settlement with the California Franchise Tax Board concerning issues related to Goodrich and Rohr for all tax years through 2001 and approximately $0.11 per diluted share for the full year 2010 benefit of the R&D tax credit, which was renewed by the U.S. Congress in late 2010.

The fourth quarter 2010 results included higher pre-tax income of $8 million, $5 million after-tax or $0.04 per diluted share, related to the changes in estimates for certain long-term contracts primarily in our aerostructures and aircraft wheels and brakes businesses, compared to the fourth quarter 2009. Total changes in estimates for the fourth quarter 2010 were $27 million, pre-tax. Changes in both periods were primarily related to favorable cost and operational performance, changes in volume expectations and sales pricing improvements and finalization of contract terms on current and/or follow-on contracts.

The fourth quarter 2010 included total pre-tax restructuring charges of $7 million, $4 million after tax, or $0.03 per diluted share, compared to the fourth quarter 2009 total pre-tax restructuring charges of $6 million, $4 million after tax, or $0.03 per diluted share.

Net cash provided by operating activities, minus capital expenditures, for the fourth quarter 2010 was a use of cash of $114 million, a decrease of $290 million from the same period in 2009. The lower cash flow was due primarily to higher incremental pension plan contributions in the fourth quarter 2010, as previously disclosed. During the fourth quarter 2010, Goodrich contributed $313 million to its worldwide pension plans, compared to contributions of $64 million during the fourth quarter 2009. Capital expenditures were $123 million in the fourth quarter 2010, compared with capital expenditures of $54 million in the fourth quarter 2009.

Full Year 2010 Results

For the full year of 2010, the company reported income from continuing operations of $577 million, or $4.50 per diluted share, on sales of $6,967 million, compared to income from continuing operations of $563 million, or $4.43 per diluted share, on sales of $6,686 million for the full year of 2009.

For the full year of 2010 compared with the full year of 2009, Goodrich sales changes by market channel were as follows:

Large commercial airplane original equipment sales increased by 4 percent,

Regional, business and general aviation airplane original equipment sales increased by 2 percent, including sales associated with the acquisition of DeCrane’s cabin management assets. Organically, sales in this market channel fell by approximately 5 percent,

Large commercial, regional, business and general aviation airplane aftermarket sales were approximately flat, and

Defense and space sales of both original equipment and aftermarket products and services increased by 11 percent, including organic growth of about 3 percent.

The increase in income from continuing operations is attributable primarily to the impact of higher overall sales, continued success on cost containment initiatives, increased favorable changes in estimates on certain long-term contracts and several other factors, which were partially offset by a higher effective tax rate. Some of these factors are noted below:

The full year of 2010 results included higher pre-tax income of $53 million, $33 million after-tax or $0.26 per diluted share, related to changes in estimates for certain long-term contracts primarily in our aerostructures and aircraft wheels and brakes businesses, compared to the full year of 2009. Total changes in estimates for the full year of 2010 were $98 million, pre-tax. Changes in both periods were related primarily to favorable cost and operational performance, changes in volume expectations and sales pricing improvements and finalization of contract terms on current and/or follow-on contracts.

The full year of 2010 results included pre-tax debt redemption costs of approximately $35 million, $22 million after-tax or $0.17 per diluted share. There were no similar charges during 2009.

The full year of 2010 included higher corporate general and administrative pre-tax expenses of $29 million, $18 million after-tax or $0.14 per diluted share, compared to the full year of 2009. The higher expenses were related primarily to higher incentive compensation expense, unfavorable foreign exchange impacts and higher medical costs.

The company reported an effective tax rate of 27.4 percent for the full year of 2010, compared to an effective tax rate of 26.5 percent for the full year of 2009.

For the full year of 2010, the company reported net income of $579 million, or $4.51 per diluted share, on sales of $6,967 million, compared to the full year of 2009 net income of $597 million, or $4.70 per diluted share, on sales of $6,686 million. The full year of 2009 results included after-tax income from discontinued operations totaling $35 million, or $0.27 per diluted share, primarily associated with resolution of a past environmental claim. There were no significant items related to discontinued operations during the full year of 2010.

Net cash provided by operating activities, minus capital expenditures, for the full year of 2010 was $292 million, a decrease of $196 million from the same period in 2009. During the full year of 2010, Goodrich contributed $444 million to its worldwide pension plans, compared to contributions of $238 million in the full year of 2009. Capital expenditures were $222 million in the full year of 2010, compared with capital expenditures of $169 million in the full year of 2009.

Business Highlights

On December 17, 2010, Goodrich announced that it had begun environmental testing of ORS-1, the first satellite in the Operationally Responsive Space program designed to support Combatant Command operations. The testing will validate satellite performance in a test-as-you-fly environment.

On December 13, 2010, Goodrich announced that it has signed a 10-year nacelle services agreement with Air Arabia for support of nacelles and thrust reversers in the airline’s fleet of more than 50 Airbus A320 aircraft powered by CFM56-5B engines.

On November 18, 2010, Goodrich announced that it has been selected by Airbus to provide the main landing gear for the -1000 variant of the A350 XWB aircraft. The contract is expected to generate more than $2 billion in original equipment and aftermarket revenue for Goodrich over the life of the program.

On November 3, 2010, Goodrich announced that it has received a production contract from Lockheed Martin to supply 160 pylons for the U.S. Air Force C-5 Galaxy strategic airlifter Reliability Enhancement and Re-engining Program (RERP). Goodrich content is expected to generate $300 million in revenue for the additional 40 C-5B/C aircraft planned to be upgraded in the RERP, excluding any aftermarket revenue.
2011 Outlook

The company’s 2011 sales outlook is based on market assumptions for each of its major market channels. The current market assumptions for the full year 2011, compared with the full year 2010 outlook, include:

Large commercial airplane original equipment sales are expected to increase by about 15 percent. This outlook assumes all announced production rate increases are implemented, and Boeing 787 and 747-8 deliveries are consistent with the latest schedule announced by Boeing,
Regional, business and general aviation airplane original equipment sales are expected to grow by about 30 percent, including incremental sales associated with the DeCrane acquisition. Excluding the sales from the DeCrane acquisition, sales would be expected to increase by about 6 percent,
Large commercial, regional, business and general aviation airplane aftermarket sales are expected to increase by about 7 – 9 percent, and
Defense and space sales of both original equipment and aftermarket products and services are expected to increase by about 7 – 9 percent.

The company’s full year 2011 sales expectations are unchanged at approximately $7.7 – $7.8 billion, representing growth of about 11 percent from the full year 2010 results. Organic growth is expected to be approximately 8 – 9 percent. The outlook for 2011 net income per diluted share has been increased to a range of $5.30 – $5.45, an increase of 18 – 21 percent compared to 2010 net income per diluted share.

The sales and net income outlook for 2011 does not include the impact of potential acquisitions or divestitures or potential restructuring activities. The 2011 outlook includes, among other factors:

Lower worldwide pre-tax pension expense of approximately $74 million, $46 million after-tax or $0.37 per diluted share. The estimate for 2011 pension expense is based on the 2010 actual return on U.S. plan assets of 14 percent and a 2011 U.S. discount rate of 5.67 percent. The company has reduced its expected long-term rate of return on U.S. plan assets assumptions to 8.25 percent, as of January 1, 2011, compared to its prior assumption of 8.75 percent. For 2011, the company expects total worldwide pre-tax pension expense of approximately $88 million, compared to $162 million in 2010.

A full-year effective tax rate of approximately 30 percent for 2011.

For 2011, Goodrich continues to expect net cash provided by operating activities, minus capital expenditures, to exceed 85 percent of net income. This outlook reflects ongoing investments to support the current schedule for the Boeing 787 and Airbus A350 XWB airplane programs, fixed assets and working capital to support announced production rate increases associated with the Boeing 737 and Airbus A320 airplanes, and competitive cost country manufacturing and productivity initiatives that are expected to enhance margins over the near and long term. The company expects capital expenditures for 2011 to be in a range of $300 – $350 million. Pre-tax worldwide pension plan contributions are expected to be approximately $100 million.

The supplemental discussion and tables that follow provide more detailed information about the fourth quarter 2010 segment results.

Goodrich will hold a conference call on February 3, 2011 at 10:00 AM U.S. Eastern Time to discuss this announcement. Interested parties can listen to a live webcast of the conference call, and view the related presentation materials, at http://www.goodrich.com/, or listen via telephone by dialing 913-312-1277.

Goodrich Corporation, a Fortune 500 company, is a global supplier of systems and services to aerospace, defense and homeland security markets. With one of the most strategically diversified portfolios of products in the industry, Goodrich serves a global customer base with significant worldwide manufacturing and service facilities. For more information visit http://www.goodrich.com/.