Second Quarter Conference Call -- Fiscal 2006
04 / 28 / 2006Highlights
Aircraft Q2'06Space & DefenseIndustrial Q2'06Components Group Q2'06.Summary of Current GuidanceAttachments
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(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 most recent Form 10Q filed on February 9, 2006, and in certain of our other public filings with the SEC.
Good morning. Thank you for joining us today. We'll report our results for the second quarter of fiscal '06 and we'll update our guidance for the year.
We're told that compared to a lot of companies, our guidance is pretty specific and pretty reliable. One analyst concludes, therefore, that there's not much likelihood of an upside surprise. Well, today will be an exception that disproves that hypothesis. The last three months produced a number of results that are surprising, mostly good, a few not so good. The overall result, though, is very positive. In our most recent guidance, we had projected this quarter at 45 cents a share. It came in at 53 cents per share, up 33% from a year ago. Our guidance for the year described a range with a midpoint at $1.85 and today we'll raise that midpoint to $1.95. As always there were lots of puts and takes in the quarter, but when we sort through all those, the important message is that all four of our segments are doing very well.
Now, let me be a little more specific. Sales for the quarter were $322 million, up 26% from a year ago. Of the $67 million sales increase, $26 million came from three recent acquisitions, which means that our organic growth was 16%.
Net earnings for the quarter were $21.5 million, up 36% from last year. And as I said, earnings per share were 53 cents, up 33%.
In the quarter, gross profit was up over 28%, a slightly higher percentage than the sales increase and more than enough to cover a 58% increase in R&D. R&D for the quarter was $16 million and, of that, $6.7 million was spent on the new Boeing 787. On the other hand, our SG&A expense was up only 17%. This reflects the fact that much of our technical staff has moved from bid and proposal activity, which is SG&A, to actual design and development which is charged as R&D. Interest expense was up $1.7 million, the result of increased borrowings to make acquisitions. Our tax rate was down slightly to 31.5%. And, net earnings, at $21.5 million, were 6.7% of sales.
This was a very strong sales quarter. Three of our segments benefited from recent acquisitions, but even setting that impact aside, all four segments had organic growth ranging from 10% to 23%. And, three of our four segments had improving margins compared to a year ago.
So, now let me move to the segment results.
Total Aircraft sales of $128 million were up 17%. Military aircraft sales were up 12% and Commercial up 26%.
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 most recent Form 10Q filed on February 9, 2006, and in certain of our other public filings with the SEC.
Good morning. Thank you for joining us today. We'll report our results for the second quarter of fiscal '06 and we'll update our guidance for the year.
We're told that compared to a lot of companies, our guidance is pretty specific and pretty reliable. One analyst concludes, therefore, that there's not much likelihood of an upside surprise. Well, today will be an exception that disproves that hypothesis. The last three months produced a number of results that are surprising, mostly good, a few not so good. The overall result, though, is very positive. In our most recent guidance, we had projected this quarter at 45 cents a share. It came in at 53 cents per share, up 33% from a year ago. Our guidance for the year described a range with a midpoint at $1.85 and today we'll raise that midpoint to $1.95. As always there were lots of puts and takes in the quarter, but when we sort through all those, the important message is that all four of our segments are doing very well.
Now, let me be a little more specific. Sales for the quarter were $322 million, up 26% from a year ago. Of the $67 million sales increase, $26 million came from three recent acquisitions, which means that our organic growth was 16%.
Net earnings for the quarter were $21.5 million, up 36% from last year. And as I said, earnings per share were 53 cents, up 33%.
In the quarter, gross profit was up over 28%, a slightly higher percentage than the sales increase and more than enough to cover a 58% increase in R&D. R&D for the quarter was $16 million and, of that, $6.7 million was spent on the new Boeing 787. On the other hand, our SG&A expense was up only 17%. This reflects the fact that much of our technical staff has moved from bid and proposal activity, which is SG&A, to actual design and development which is charged as R&D. Interest expense was up $1.7 million, the result of increased borrowings to make acquisitions. Our tax rate was down slightly to 31.5%. And, net earnings, at $21.5 million, were 6.7% of sales.
This was a very strong sales quarter. Three of our segments benefited from recent acquisitions, but even setting that impact aside, all four segments had organic growth ranging from 10% to 23%. And, three of our four segments had improving margins compared to a year ago.
So, now let me move to the segment results.
Aircraft Q2'06
Total Aircraft sales of $128 million were up 17%. Military aircraft sales were up 12% and Commercial up 26%.
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