Esterline Posts Profit On Lower Costs - Update

(RTTNews) - Aerospace and defense contractor Esterline Technologies Corp. (ESL), Thursday reported a swing to profit for the third quarter, helped by better gross margins and sharply lower charges.

Sales for the quarter declined as a continued slump in some defense programs hurt its Avionics & Control business which makes global positioning systems. While quarterly earnings topped Wall Street estimates, sales badly missed expectations.

Chief Executive Brad Lawrence said the company is adapting to the tough defense scenario and is leveraging positive trends in commercial markets, while striving to cut costs.

Bellevue, Washington-based Esterline posted quarterly net earnings of $38 million or $1.20 per share, compared with a net loss of $17 million or $0.55 per share last year.

Results for the quarter include goodwill charge of $0.11 per share and Directorate of Defense Trade Controls charge of $0.31 per share. The prior year included a $1.69 per share charge mainly against goodwill for the Racal Acoustics business.

Excluding items, adjusted earnings for the quarter were $51.7 million or $1.62 per share, compared with $35 million or $1.14 per share a year ago.

On average, 10 analysts polled by Thomson Reuters estimated earnings of $1.53 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter declined to $478 million from $486 million in the prior year.

Avionics & controls sales dropped $15 million to $180 million year-over-year. This business offers global positioning systems, electronic flight management systems, among others.

Results were helped by gross margin that climbed to 37.4 percent from 35.4 percent a year, and there was a decrease in tax expense by $6 million.

New orders in the quarter were $463 million, up from $415.4 million last year.

For fiscal year 2013, Esterline continues to expect adjusted earnings of $5.30 to $5.50 per share on sales of about $2 billion. Analysts estimate earnings of $5.31 per share on sales of $2.02 billion.

The company's stock closed Thursday at $80.11, up $1.01 or 1.28%, on a volume of 62 thousand shares on the NYSE.