Third Quarter Conference Call – Fiscal 2003
07 / 30 / 2003Highlights
AircraftSpace & MissilesIndustrialRecent Conference Calls
(INTRODUCTION FOR CONFERENCE CALL)
Before we begin, we call your attention to the fact that we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors that could cause actual performance to differ materially from such statements. A description of these risks, uncertainties and other factors is contained in our news release of today’s date, our Form 10Q for the quarter ended March 31, 2003, and in certain of our other public filings with the SEC.
Good morning, everybody. Thanks for joining us today. Today, we’ll describe in some detail the results for the third quarter of ’03 and we’ll discuss our prospects for the balance of ’03 and then our forecast for fiscal 2004.
The third quarter was another strong quarter. Once again, growth in military aircraft and improving Industrial performance led the way in a quarter wherein sales and earnings per share were both up 9%. Given the market conditions in commercial aircraft and in the space business, we’re extremely pleased with that set of results.
Sales for the quarter were $193 million, up from $177 million last year. Net earnings of $10.8 million are up $1 million from last year.
For the nine months of ’03, sales of $563 million are up almost 6% and earnings per share of $2.00 are up 9%. During the last half of last year and throughout the first three quarters of this year, our Aircraft business has been quite strong, all because of what’s going on in the military side. Our Space business has been weak. Our Industrial business has been holding and is now showing promise. That’s been the pattern and it’s persisting. Now, let me describe what’s going on in the segments in a little more detail.
Sales in the Aircraft segment were $104 million, up 20%, or $18 million, from a year ago. Of that increase, almost $12 million was the build-up of the Joint Strike Fighter, the F-35. Last year, at this time, we were gathering momentum. Our team on the primary flight controls, which includes Parker Hannifin and Hamilton Sundstrand, was preparing for a preliminary design review, which occurred in August. A year later, that team is really rolling. We’re conducting critical design reviews and flight test hardware is in work. From a schedule point of view, we’re doing quite well, which is remarkable because it’s a very aggressive schedule. Our design is underweight, which is very important. The contract for the primary flight controls is a cost-plus contract, the appropriate contract type for a program that’s developing aircraft technology that’s never been used before.
In addition to the primary flight controls, we’ve also begun work on a $38 million fixed-price contract for the leading edge flap actuation system. In this program, we’re teamed with Curtiss-Wright. Lastly, we’ve started the design for the Navy JSF of the wingfold actuation system under a $10 million contract for BAE (with no teammates). So, all told, the F-35 is a major focus of activity in our Company and the timing is fortunate for us.
We had a total of about $6 million in increased sales on other growth programs, the F-18 and the V-22. We also had a very big quarter in sales of parts for Japanese production of the F-15. I mentioned last quarter that we’re about to restart work on flight controls for the Indian Light Combat Aircraft, and we have. Also, we had sales in the quarter of over $1 million on the Japanese F-2.
Before we begin, we call your attention to the fact that we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors that could cause actual performance to differ materially from such statements. A description of these risks, uncertainties and other factors is contained in our news release of today’s date, our Form 10Q for the quarter ended March 31, 2003, and in certain of our other public filings with the SEC.
Good morning, everybody. Thanks for joining us today. Today, we’ll describe in some detail the results for the third quarter of ’03 and we’ll discuss our prospects for the balance of ’03 and then our forecast for fiscal 2004.
The third quarter was another strong quarter. Once again, growth in military aircraft and improving Industrial performance led the way in a quarter wherein sales and earnings per share were both up 9%. Given the market conditions in commercial aircraft and in the space business, we’re extremely pleased with that set of results.
Sales for the quarter were $193 million, up from $177 million last year. Net earnings of $10.8 million are up $1 million from last year.
For the nine months of ’03, sales of $563 million are up almost 6% and earnings per share of $2.00 are up 9%. During the last half of last year and throughout the first three quarters of this year, our Aircraft business has been quite strong, all because of what’s going on in the military side. Our Space business has been weak. Our Industrial business has been holding and is now showing promise. That’s been the pattern and it’s persisting. Now, let me describe what’s going on in the segments in a little more detail.
Aircraft
Sales in the Aircraft segment were $104 million, up 20%, or $18 million, from a year ago. Of that increase, almost $12 million was the build-up of the Joint Strike Fighter, the F-35. Last year, at this time, we were gathering momentum. Our team on the primary flight controls, which includes Parker Hannifin and Hamilton Sundstrand, was preparing for a preliminary design review, which occurred in August. A year later, that team is really rolling. We’re conducting critical design reviews and flight test hardware is in work. From a schedule point of view, we’re doing quite well, which is remarkable because it’s a very aggressive schedule. Our design is underweight, which is very important. The contract for the primary flight controls is a cost-plus contract, the appropriate contract type for a program that’s developing aircraft technology that’s never been used before.
In addition to the primary flight controls, we’ve also begun work on a $38 million fixed-price contract for the leading edge flap actuation system. In this program, we’re teamed with Curtiss-Wright. Lastly, we’ve started the design for the Navy JSF of the wingfold actuation system under a $10 million contract for BAE (with no teammates). So, all told, the F-35 is a major focus of activity in our Company and the timing is fortunate for us.
We had a total of about $6 million in increased sales on other growth programs, the F-18 and the V-22. We also had a very big quarter in sales of parts for Japanese production of the F-15. I mentioned last quarter that we’re about to restart work on flight controls for the Indian Light Combat Aircraft, and we have. Also, we had sales in the quarter of over $1 million on the Japanese F-2.
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