Esterline Q4 Profit Tops View, But Revenues Miss; Guides 2014 EPS Below View

(RTTNews) - Aerospace and defense manufacturer Esterline Technologies Corp. (ESL) reported Thursday a profit for the fourth quarter that increased from last year, reflecting lower expenses and sales growth. Earnings per share from continuing operations topped analysts' expectations, while quarterly net sales missed their estimates. The company also provided initial earnings and revenues guidance for the full-year 2014.

"As we expected, Esterline ended the year on a strong note, with record-high revenue and earnings. We were particularly pleased with these results given the challenging defense environment," CEO Curtis Reusser said in a statement.

Reusser added that continuing strength in the commercial aircraft market and positive resolutions both to contract assertions and other matters offset expected weakness in certain domestic defense programs.

Bellevue, Washington-based Esterline posted net earnings of $65.86 million or $2.06 per share for the fourth quarter, higher than $61.66 million or $1.97 per share in the prior-year quarter. Earnings from continuing operations for the latest quarter was $66.19 million or $2.07 per share.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $1.79 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased to $534.16 million from $530.66 million in the same quarter last year, but missed nine Wall Street analysts' consensus estimate of $551.48 million.

Avionics & controls sales increased to $225 million from $220 million, and sensors & systems sales edged up to $177 million from $174 million in the year-ago quarter. Meanwhile, sales for advanced materials declined to $131 million from $136 million last year.

Total expenses decreased to $113 million from $122 million in the year-ago quarter.

Gross margin for the quarter remained flat with last year at 38.4 percent and selling, general and administrative expenses, as a percent of sales, declined 100 basis points.

For fiscal 2013, Esterline posted net earnings of $164.73 million or $5.19 per share, higher than $112.54 million or $3.60 per share in the prior year. Earnings from continuing operations for the latest period was $166.03 million or $5.23 per share, and adjusted earnings from continuing operations were $179.5 million or $5.65 per share.

Net sales for the full year decreased to $1.97 billion from $1.99 billion in the previous year. Analysts expected the company to report full-year 2013 earnings of $5.30 per share on annual revenues of $1.99 billion.

Looking ahead to fiscal 2014, the company expects adjusted earnings in a range of $5.40 to $5.70 per share, on projected revenues between $2.0 billion and $2.1 billion.

Street is currently looking for full-year 2014 earnings of $5.82 per share on annual revenues of $2.07 billion.

The company announced it would accelerate plans to consolidate certain facilities, and create greater cost-efficiency through shared services in sales, general administrative and support functions. The actions will result in one-time charges and expenses of about $40 million, of which $25 million to $30 million will be incurred in fiscal 2014 and yhe balance incurred in fiscal 2015.

The company also expects these projects to build to anticipated savings in excess of $15 million annually starting in fiscal 2016.

Reusser continued, "In the year ahead, it is essential that we continue to constantly strive to improve efficiency, streamline our operations, enhance our competitiveness and drive value into all aspects of our business."

ESL closed Thursday's regular trading session at $88.75, down $1.09 or 1.21% on a volume of 0.36 million shares. The stock lost a further $0.14 or 0.16% in after-hours trading.