OREANDA-NEWS. B/E Aerospace, Inc., the world’s leading manufacturer of aircraft cabin interior products, today announced its second quarter 2016 financial results and raised both its full year guidance for 2016 and its outlook for 2017.

SECOND QUARTER 2016 HIGHLIGHTS

  • Revenues of $753 million and operating earnings of $137 million each increased 7 percent as compared with prior year period
  • Operating margin was 18.1 percent
  • Net earnings per diluted share of $0.84 increased 12 percent as compared with prior year period
  • The Company raised both its 2016 financial guidance and its 2017 outlook

“I am pleased to report our strong second quarter results, as we continue to execute on our plan to deliver sustained revenue growth, and earnings per share growth that exceeds revenue growth. Second quarter revenues increased 7 percent driven by very strong performance by our commercial aircraft segment. Second quarter earnings per share increased 12 percent as compared with the prior year period reflecting robust organic revenue growth and the benefits of our capital allocation plan. As a result of our strong first half results, we are today increasing our 2016 financial guidance and raising our 2017 outlook,” stated Amin J. Khoury, Executive Chairman of B/E Aerospace.

“Based on our strong free cash flow generation and consistent with our stated capital allocation plan, we used $30 million of our cash to repurchase our shares during the second quarter, and we have used $75 million to repurchase our shares, year-to-date. For the remainder of the year, we expect to use approximately an additional $75 million for share repurchases, for a total of approximately $150 million for the full year. When combined with dividends, we expect to return more than $235 million to our shareholders this year,” Mr. Khoury continued.

SECOND QUARTER 2016 CONSOLIDATED RESULTS

Second quarter 2016 revenues were $753.1 million and operating earnings were $136.6 million. Operating margin of 18.1 percent was 10 basis points lower as compared with the prior year period as a result of lower margins within our business jet segment. Net earnings and net earnings per diluted share were $84.8 million and $0.84 per share, representing increases of 7.5 percent and 12.0 percent, respectively, as compared with the prior year period.

Bookings during the second quarter of 2016 were approximately $755 million and the book-to-bill ratio was approximately 1 to 1. As of June 30, 2016, backlog was approximately $3.3 billion, while awarded but unbooked backlog was approximately $5.6 billion. Total backlog, both booked, and awarded but unbooked, was approximately $8.9 billion.

SECOND QUARTER 2016 SEGMENT RESULTS

The following is a tabular summary and commentary of revenues and operating earnings by segment for the second quarter ended June 30, 2016 and 2015:

REVENUES
($ in millions)
Segment   2016   2015   % Change
Commercial aircraft   $   610.8   $   539.3   13.3%
Business jet       142.3       161.3   -11.8%
Total   $   753.1   $   700.6   7.5%
             
OPERATING EARNINGS
($ in millions)
Segment   2016   2015   % Change
Commercial aircraft   $   114.6   $   99.7   14.9%
Business jet       22.0       27.6   -20.3%
Total   $   136.6   $   127.3   7.3%

Second quarter 2016 commercial aircraft segment (“CAS”) revenues of $610.8 million increased 13.3 percent as compared with same period of the prior year. The revenue increase was driven primarily by higher volumes of seating products, food and beverage preparation and storage equipment, A350 galleys and B737 lavatories. Operating earnings of $114.6 million increased 14.9 percent and operating margin of 18.8 percent increased 30 basis points as compared with the prior year period.

Second quarter 2016 business jet segment (“BJS”) revenues of $142.3 million decreased 11.8 percent as compared with the same period of the prior year. The year-over-year revenue decline reflects the broad-based downturn in the new business jet and civilian helicopter markets and lower volumes of super first class seating products. Operating earnings of $22.0 million decreased 20.3 percent and operating margin was 15.5 percent as a result of lower revenues and an unfavorable mix of products as compared with the prior year period.

SIX MONTH 2016 CONSOLIDATED RESULTS

For the six months ended June 30, 2016, revenues were $1.47 billion and operating earnings were $266.0 million. Operating margin of 18.1 percent decreased 10 basis points as compared with the prior year period as a result of lower margins within our business jet segment. Net earnings and net earnings per diluted share were $167.4 million and $1.66 per share, representing increases of 7.0 percent and 11.4 percent, respectively, as compared with the prior year period.

SIX MONTH 2016 SEGMENT RESULTS

The following is a tabular summary and commentary of revenues and operating earnings by segment for the six months ended June 30, 2016 and 2015:

REVENUES
($ in millions)
Segment   2016   2015   % Change
Commercial aircraft   $   1,167.8   $   1,065.4   9.6%
Business jet       302.0       325.2   -7.1%
Total   $   1,469.8   $   1,390.6   5.7%
             
OPERATING EARNINGS
($ in millions)
Segment   2016   2015   % Change
Commercial aircraft   $   219.3   $   198.1   10.7%
Business jet       46.7       54.9   -14.9%
Total   $   266.0   $   253.0   5.1%

For the six months ended June 30, 2016, CAS revenues of $1.17 billion increased 9.6 percent. Operating earnings of $219.3 million increased 10.7 percent and operating margin of 18.8 percent increased 20 basis points as compared with the prior year period.

For the six months ended June 30, 2016, BJS revenues of $302.0 million decreased 7.1 percent. Operating earnings decreased 14.9 percent to $46.7 million and operating margin was 15.5 percent.

OUTLOOK

“Given our strong results for the first half of 2016 and excellent performance by our commercial aircraft segment, we are increasing our financial guidance for the full year 2016,” Mr. Khoury commented.

The Company’s updated 2016 financial guidance is as follows:

  • Revenues are expected to increase approximately 5 percent as compared to 2015,
  • Operating margin is expected to be in excess of 18 percent,
  • Interest expense is expected to be approximately $91 million,
  • Full year 2016 effective tax rate is expected to be about 24 percent, approximately 200 basis points higher than the Company’s original expectation,
  • Net earnings per share are expected to be approximately $3.25 per diluted share, and
  • Free cash flow conversion ratio is expected to be approximately 75 percent of net earnings.

Mr. Khoury concluded, “Based upon the strength of our backlog, we are also raising our 2017 revenue growth rate outlook to approximately 7 percent over our 2016 updated and raised revenue guidance. This represents approximately a 6 percent compound annual growth rate over the two-year period 2016 and 2017. Our outlook for 2017 is to deliver earnings per share growth in the low teens, despite the higher effective tax rate, as compared with our updated and raised 2016 earnings per share guidance. The combination of continued market success, disciplined cost control and our shareholder focused capital deployment plan supports our expectation for earnings per share to continue to grow faster than revenues.”