Goodrich Corporation(GR) announced strong second quarter 2011 results, including earnings of $1.38 per share that beat the Zacks Consensus Estimate of $1.33.
The result also improved from $1.24 in the year-ago quarter.
The performance were driven by sales growth in all the major market channels of the company, especially general and commercial aftermarket sales.
Operational Statistics
Goodrich's revenue in the reported quarter grew 17% year over year to slightly above $2 billion, surpassing the Zacks Consensus Estimate of $1.9 billion. Operating margin was 17.2% versus 17.9% last year. The company reported net income of $177 million versus $159 million in the year-ago quarter. The 11% upsurge was on sales growth for aircraft parts, driven by regional and business aviation aftermarket products.
Segment Details
Actuation and Landing Systems: In the reported quarter, revenue rose 21% to $736.7 million from $608.1 million in the year-ago quarter. The segment’s operating income of $76.5 million increased 26% from $60.5 million in second quarter 2010. Operating margin rose to 10.4% from 9.9%.
Nacelles and Interior Systems: In the reported quarter, revenue rose 19% to $688.8 million from $577.4 million in the year-ago quarter. Segmental operating income rose 18% to $178.2 million from $151.4 million. Operating margin, however, fell to 25.9% from 26.2% in the year-ago quarter.
Electronic Systems: In the reported quarter, revenue rose 8% to $575.9 million from $532.0 million in the year-ago quarter. Segmental operating income fell 6% to $89.8 million from $95.1 million in the year-ago quarter. Operating margin also declined to 15.6% from 17.9%.
Financial Update
Goodrich ended the reported quarter with cash and cash equivalents of $518.0 million versus $798.9 million at fiscal-end 2010. Long-term debt and capital lease obligations at the end of the reported period rose by $31.8 million from fiscal-end 2010 to $2.4 billion. Net cash provided by operating activities, minus capital expenditures, for second quarter 2011 was $179 million, reflecting a decrease of $14 million from the same period in 2010.
The decrease was due primarily to higher capital expenditures during the reported quarter than in second quarter 2010. Capital expenditures were $62 million in the second quarter of 2011, compared with $31 million in the second quarter of 2010.
Outlook
Looking forward, Goodrich expects large commercial airplane original equipment sales to increase about 15% in 2011. The bullishness stems from The Boeing Company’s (BA) announcement to raise production rates for its 787 and 747-8 series airlines.
Other important programs supporting the strong growth are Airbus’s A350 XWB and A320neo series airplanes, Canadian Conglomerate Bombardier Inc.’s CSeries and Japanese aircraft manufacturer Mitsubishi Aircraft Corporation’s Mitsubishi Regional Jet aircraft programs.
Overall, Goodrich expects regional, business and general aviation airplane original equipment sales in 2011 to grow by about 40%, of which about 16% is expected to be organic. Large commercial, regional, business and general aviation airplane aftermarket sales are expected to increase by about 13% and defense and space sales of both original equipment and aftermarket products and services are expected to increase by about 15%, including sales associated with the Microtecnica acquisition in May.
Microtecnica is a leading provider of flight control actuation systems for helicopter, regional and business aircraft, missile actuation, and aircraft thermal and environmental control systems. Post acquisition, Microtecnica is a part of Goodrich's Actuation Systems business, which is within its Actuation and Landing Systems segment.
Goodrich raised its revenue guidance for 2011 to around $8.1 billion, including about $150 million in sales from the recent acquisition of Microtecnica from the previous guidance range of $7.7 billion to $7.8 billion. Goodrich expects 2011 capital expenditures in the range of $300 million to $350 million.
Goodrich also raised its 2011 net income per share guidance range to $5.85–$6.00 from its prior outlook of $5.40–$5.55. The sales and net income per share outlook for 2011 includes the impact of the Microtecnica acquisition, which is expected to increase sales in 2011 by about $150 million.
Goodrich currently retains a Zacks #3 Rank (Hold rating), which is supported by our longer-term Neutral recommendation.
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