Vought Reports Third Quarter 2009 Financial Results
http://www.businesswire.com/news/home/20091110005983/en
DALLAS--(Business Wire)--
Vought Aircraft Industries, Inc.
Third Quarter 2009 Highlights:
* Completed sale of 787 operations in South Carolina to Boeing for approximately
$590 million
* Operating income for the quarter increased 15 percent to $40.5 million
Summary of Financial Results
$ in millions
Three Months Ended Nine Months Ended
September 27, September 28, September 27, September 28,
2009 2008 $Change 2009 2008 $Change
Revenue $ 446.7 $ 477.3 $ (30.6 ) $ 1,322.3 $ 1,362.0 $ (39.7 )
Operating income $ 40.5 $ 35.3 $ 5.2 $ 111.6 $ 146.8 $ (35.2 )
Income (loss) from continuing operations $ 19.2 $ 20.6 $ (1.4 ) $ 66.8 $ 147.4 $ (80.6 )
Income (loss) from discontinued operations $ 219.4 $ (5.0 ) $ 224.4 $ 213.8 $ (23.8 ) $ 237.6
Net Income (loss) $ 238.6 $ 15.6 $ 223.0 $ 280.6 $ 123.6 $ 157.0
Adjusted EBITDA1 $ 58.6 $ 54.9 $ 3.7 $ 185.1 $ 205.2 $ (20.1 )
Net cash provided by (used in) operating activities $ 224.4 $ (109.3 ) $ 333.7 $ 129.3 $ (147.0 ) $ 276.3
Free Cash Flow1 $ 221.5 $ (118.2 ) $ 339.7 $ 101.1 $ (188.7 ) $ 289.8
1 Non-GAAP financial measure. A complete definition and reconciliation of non-GAAP financial measures, identified by the number 1, is provided later in the release.
Vought Aircraft Industries, Inc. reported third quarter earnings today with
increased operating income on revenues slightly lower than last year. Current
period results include the previously announced sale of the company`s 787
operations in South Carolina. "Vought recorded a profitable third quarter in the
face of continued economic pressures facing our industry," said Vought President
and Chief Executive Officer Elmer Doty. "Even with the improvement of our
balance sheet and liquidity from the 787 transaction, we must continue to focus
on driving improvements throughout our operations, while adjusting to
instability in the marketplace."
Net income for the third quarter was higher than last year primarily due to
$219.4 million of income from discontinued operations recorded in the quarter to
reflect the previously announced 787 transaction. This transaction included both
the settlement of 787 contractual matters as well as the sale of Vought`s South
Carolina-based 787 operations to Boeing. Going forward, under a newly negotiated
contract, Vought will manufacture certain components for the 787 program as well
as provide engineering services to Boeing pursuant to an engineering services
agreement. Income from continuing operations for the third quarter of 2009 was
$19.2 million, which was $1.4 million lower than last year.
Third Quarter Results
Revenue for the third quarter of 2009 was $446.7 million, a decrease of $30.6
million or 6 percent, compared with revenue of $477.3 million for the same
period last year.
* Commercial revenue decreased $22.4 million or 9 percent primarily due to a
$20.4 million decrease in sales resulting from the completion of an Airbus
program in the second quarter of 2009.
* Military revenue increased $23.5 million or 16 percent mainly due to increased
deliveries on the V-22 and C-130 programs as well as increased spares deliveries
for the C-17 program.
* Business jet revenue decreased $31.7 million or 38 percent, primarily due to
reduced delivery rates directed by customers.
Funded backlog of $2.6 billion at the end of the quarter was flat when compared
with last year (adjusted to reflect the 787 transaction). An increase due to the
non-recurring start-up and development activities for Boeing 747-8 was offset by
the termination of the Cessna Citation Columbus 850 program. Vought`s
calculation of backlog includes only funded orders, which results in backlog
being substantially lower than the estimated aggregate dollar value of our
contracts and may not be comparable to the calculation methods used to state the
backlogs of others in the industry.
Operating income from continuing operations for the third quarter was $40.5
million, an increase of $5.2 million or 15 percent compared with $35.3 million
last year. This increase was primarily due to lower amortization of the
intangible asset related to the 747-400 program in 2008.
Net income for the third quarter was $238.6 million, an increase of $223.0
million compared with the same period last year, primarily due to $219.4 million
of income from discontinued operations recorded in the quarter related to the
previously announced 787 transaction.
Income from continuing operations was $19.2 million a decrease of $1.4 million
compared with the same period last year. The decrease largely resulted from the
operating income improvement discussed above offset by a $7.1 million
acceleration of debt origination costs associated with the $355.0 million debt
pay down that occurred during the third quarter.
Adjusted EBITDA1, as defined in the company`s senior credit agreement, was $58.6
million for the third quarter of 2009, compared with $54.9 million for the same
period last year. The $3.7 million increase is principally due to the operating
margin improvements discussed above.
Vought had positive Free Cash Flow1 of $221.5 million for the third quarter of
2009 compared with negative $118.2 million in 2008. The current period includes
cash received from the 787 transaction on July 30, 2009. The improvement is
primarily due to cash received from the 787 transaction as well as lower capital
expenditures in 2009. Vought`s cash flows also continue to be impacted by the
timing of customer payments and ongoing pension funding requirements. Vought
ended the quarter with $150.4 million of unrestricted cash and cash equivalents.
Nine Months Ended Results
Revenue for the nine months ended Sept. 27, 2009 was $1,322.3 million, a
decrease of $39.7 million or 3 percent, compared with revenue of $1,362.0
million for the same period last year.
* Commercial revenue decreased by $37.4 million or 6 percent, primarily due to a
$42.5 million decrease in sales for Airbus programs resulting from the
completion of an Airbus program in the second quarter of 2009.
* Military revenue increased $35.9 million or 8 percent primarily due to
increased deliveries on the V-22 and C-130 programs and spares deliveries for
the C-17 program.
* Business jet revenue decreased $38.2 million or 16 percent, primarily due to
reduced delivery rates directed by customers.
Operating income for the nine months ended Sept. 27, 2009 was $111.6 million, a
decrease of $35.2 million or 24 percent compared with the same period last year.
Several unusual items contributed to the decrease, including the one-time
release in 2008 of $22.6 million of purchase accounting reserves reflecting the
end of production of the 747-400 model. Also, non-recurring benefit plan costs
of $9.6 million were recorded in 2009, reflecting the impact of the pension and
other post-retirement benefits curtailment resulting from the 2009 IAM
collective bargaining agreement in Nashville. In addition to these items,
overall program margins were lower due to increasing costs including higher
pension and material costs, as well as labor inefficiencies related to delivery
rate slowdown on several programs and the ramp up of other programs. Also
contributing to the decrease were lower margins on non-recurring sales.
Net income for the nine months ended Sept. 27, 2009 was $280.6 million and
included $219.4 million of income from discontinued operations related to the
787 transaction Income from continuing operations was $66.8 million, a decrease
of $80.6 million compared with the same period last year. In addition to the
decrease in operating income discussed above, the absence of the $47.1 million
gain recorded in 2008 on the sale of Vought`s equity interest in Global
Aeronautica, as well as the $7.1 million acceleration of debt origination costs
recorded this period contributed to the overall decrease in income from
continuing operations.
Adjusted EBITDA1, as defined in the company`s senior credit agreement, was
$185.1 million for the nine months ended Sept. 27, 2009, a reduction of $20.1
million compared with $205.2 million for the same period last year. This
decrease is principally due to the absence in 2009 of the one-time release of
$22.6 million of purchase accounting reserves for the 747 program discussed
above.
Vought had positive Free Cash Flow1 of $101.1 million for the nine months ended
Sept. 27, 2009 compared with negative $188.7 million in 2008. The improvement is
primarily due to cash received from the 787 transaction as well as lower capital
expenditures in 2009.
Non-GAAP Financial Measure Disclosure
EBITDA, Adjusted EBITDA and Free Cash Flow (indicated by the number 1) as
presented in this press release are supplemental measures of performance and our
ability to satisfy our debt covenants. None of these measures are required by,
or presented in accordance with, Generally Accepted Accounting Principles (GAAP)
in the United States. EBITDA, Adjusted EBITDA and Free Cash Flow are not
measurements of our financial performance under GAAP and should not be
considered as alternatives to net income, operating income or any other
performance measures derived in accordance with GAAP or as alternatives to cash
flow from operating activities as measures of our liquidity. The senior secured
credit facility contains maintenance ratios and other financial covenants that
are based on the calculation of Adjusted EBITDA. We believe it is necessary to
present Adjusted EBITDA to enable investors to assess the strength of our
underlying business. Reconciliation between these non-GAAP financial measures
and the most directly comparable GAAP financial measures is presented at the end
of this press release.
Conference Call Details
Vought will host a conference call on Tuesday, Nov. 10 at 2 p.m. Eastern time (1
p.m. Central time) to discuss its third quarter results. To access the
conference call, dial (800) 259-0251(United States) or (617) 614-3671
(International) with pass code 73524098. Please call 10 minutes prior to the
start time.
A replay of the conference call will be available through Nov. 17, which can be
accessed by dialing (888) 286-8010 (United States) or (617) 801-6888
(International) with pass code 26671644.
Vought`s conference call will be supplemented by a series of slides appearing on
the company`s Web site. Listeners are encouraged to view these materials in
conjunction with the call. The presentation will be posted on the home page of
the Web site on the morning of the call.
About Vought
Vought Aircraft Industries, Inc. (www.voughtaircraft.com) is one of the world`s
largest independent suppliers of aerostructures. Headquartered in Dallas, the
company designs and manufactures major airframe structures such as wings,
fuselage subassemblies, empennages, nacelles and other components for prime
manufacturers of aircraft. Vought has annual revenue of approximately $1.8
billion and about 6,000 employees in eight U.S. locations.
Disclaimer on Forward Looking Statements
This release contains forward-looking statements within the meaning of section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934, as amended. These forward-looking statements involve known and unknown
risks and uncertainties. Vought`s actual financial results could differ
materially from those anticipated due to the company`s dependence on conditions
in the airline industry, the level of new commercial aircraft orders, production
rates for commercial and military aircraft, the level of defense spending,
competitive pricing pressures, manufacturing inefficiencies, start-up costs and
possible overruns on new contracts, technology and product development risks and
uncertainties, availability of materials and components from suppliers and other
factors beyond the company`s control. Additional risk factors are described in
the company`s filings with the SEC.
Vought Aircraft Industries, Inc.
Consolidated Balance Sheets
(dollars in millions, except par value per share ) (unaudited)
September 27, December 31,
Assets 2009 2008
Current assets:
Cash and cash equivalents $ 150.4 $ 86.7
Restricted cash 43.7 -
Trade and other receivables 127.1 138.5
Inventories 479.0 311.8
Assets related to discontinued operations - 460.7
Other current assets 5.6 4.7
Total current assets 805.8 1,002.4
Property, plant and equipment, net 272.8 279.2
Goodwill 404.8 404.8
Identifiable intangible assets, net 22.1 27.2
Debt origination costs, net and other assets 6.2 14.0
Total assets $ 1,511.7 $ 1,727.6
Liabilities and stockholders` equity (deficit)
Current liabilities:
Accounts payable, trade $ 126.4 $ 148.5
Accrued and other liabilities 81.8 57.5
Accrued payroll and employee benefits 46.9 48.1
Accrued post-retirement benefits-current 42.2 42.0
Accrued pension-current 0.6 0.3
Current portion of long-term bank debt 5.9 5.9
Liabilities related to discontinued operations - 156.7
Accrued contract liabilities 112.4 141.1
Total current liabilities 416.2 600.1
Long-term liabilities:
Accrued post-retirement benefits 368.5 405.3
Accrued pension 658.1 710.7
Long-term bank debt, net of current portion 316.6 594.0
Long-term bond debt 270.0 270.0
Other non-current liabilities 79.0 81.6
Total liabilities 2,108.4 2,661.7
Stockholders` equity (deficit):
Common stock, par value $.01 per share; 50,000,000 shares authorized, 24,818,806 and 24,798,382 issued and outstanding at September 27, 2009 and December 31, 2008, respectively 0.3 0.3
Additional paid-in capital 422.2 420.5
Shares held in rabbi trust (1.6 ) (1.6 )
Accumulated deficit (220.7 ) (501.3 )
Accumulated other comprehensive loss (796.9 ) (852.0 )
Total stockholders` equity (deficit) $ (596.7 ) $ (934.1 )
Total liabilities and stockholders` equity (deficit) $ 1,511.7 $ 1,727.6
Vought Aircraft Industries, Inc.
Consolidated Statements of Operations
(unaudited, in millions)
For the Three Months Ended For the Nine Months Ended
September 27, September 28, September 27, September 28,
2009 2008 2009 2008
Revenue $ 446.7 $ 477.3 $ 1,322.3 $ 1,362.0
Costs and expenses
Cost of sales 376.0 407.1 1,109.5 1,089.1
Selling, general and administrative expenses 30.2 34.9 101.2 126.1
Total costs and expenses 406.2 442.0 1,210.7 1,215.2
Operating income 40.5 35.3 111.6 146.8
Other income (expense)
Interest income 0.2 1.3 0.6 2.3
Other gain (loss) - 1.6 - 48.7
Equity in loss of joint venture - - - (0.6 )
Interest expense (20.6 ) (17.4 ) (44.5 ) (49.6 )
Income before income taxes 20.1 20.8 67.7 147.6
Income tax expense 0.9 0.2 0.9 0.2
Income from continuing operations 19.2 20.6 66.8 147.4
Income (loss) from discontinued operations, net of tax 219.4 (5.0 ) 213.8 (23.8 )
Net income $ 238.6 $ 15.6 $ 280.6 $ 123.6
Vought Aircraft Industries, Inc.
Consolidated Statements of Cash Flows
(unaudited, in millions)
Nine Months Ended
September 27, September 28,
2009 2008
Operating activities
Net income $ 280.6 $ 123.6
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 55.7 50.1
Stock compensation expense 1.2 2.2
Equity in losses of joint venture - 0.6
(Gain) Loss from asset disposals 41.7 (50.1 )
Changes in current assets and liabilities:
Trade and other receivables 1.8 (81.6 )
Inventories (169.6 ) (32.2 )
Other current assets (0.9 ) 0.4
Accounts payable, trade (28.4 ) (36.8 )
Accrued payroll and employee benefits (0.6 ) (0.4 )
Accrued and other liabilities 24.9 (10.0 )
Accrued contract liabilities (41.3 ) (33.0 )
Other assets and liabilities-long-term (35.8 ) (79.8 )
Net cash provided by (used in) operating activities 129.3 (147.0 )
Investing activities
Capital expenditures (28.2 ) (41.7 )
Proceeds from sale of assets 289.2 55.0
Net cash provided by (used in) investing activities 261.0 13.3
Financing activities
Proceeds from short-term bank debt 135.0 153.0
Payments on short-term bank debt (135.0 ) (153.0 )
Proceeds from long-term bank debt 75.0 184.6
Payments on long-term bank debt (357.9 ) (2.0 )
Changes in restricted cash (43.7 ) -
Proceeds from sale of common stock - 0.1
Net cash provided by (used in) financing activities (326.6 ) 182.7
Net increase (decrease) in cash and cash equivalents 63.7 49.0
Cash and cash equivalents at beginning of period 86.7 75.6
Cash and cash equivalents at end of period $ 150.4 $ 124.6
Vought Aircraft Industries Inc.
Supplemental Financial Data
($ in millions)
(Unaudited)
Three Months Nine Months
Ended Ended
September 29, September 28, September 29, September 28,
2009 2008 Change 2009 2008 Change
Revenue as Reported:
Commercial $ 226.3 $ 248.7 $ (22.4 ) $ 642.5 $ 679.9 $ (37.4 )
Military 168.3 144.8 23.5 476.1 440.2 35.9
Business jets 52.1 83.8 (31.7 ) 203.7 241.9 (38.2 )
Total $ 446.7 $ 477.3 $ (30.6 ) $ 1,322.3 $ 1,362.0 $ (39.7 )
Three Months Nine Months
Ended Ended
September 29, September 28, September 29, September 28,
2009 2008 2009 2008
% Mix for Revenue
Commercial 51 % 52 % 49 % 50 %
Military 38 % 30 % 36 % 32 %
Business jets 11 % 18 % 15 % 18 %
Total 100 % 100 % 100 % 100 %
Nine Months
Ended
September 29, September 28,
2009 2008 Change
Revenue Backlog
Commercial $ 1,160.7 $ 1,014.5 $ 146.2
Military 844.4 787.9 56.5
Business jets 570.1 756.0 (185.9 )
Total revenue backlog $ 2,575.2 $ 2,558.4 $ 16.8
Vought Aircraft Industries, Inc.
Reconciliation of Non-GAAP Measures
Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures that our
management uses to assess our operating performance and, in the case of Adjusted
EBITDA, to assess our compliance with the covenants in our senior secured credit
agreement, our ongoing ability to meet our obligations and manage our levels of
indebtedness.
Adjusted EBITDA is calculated in accordance with our senior secured credit
agreement and includes adjustments that are material to our operations but that
our management does not consider reflective of our ongoing core operations.
Pursuant to our senior secured credit agreement, Adjusted EBITDA is calculated
by making adjustments to our net income (loss) to eliminate the effect of our
(1) net income tax expense, (2) net interest expense, (3) any amortization or
write-off of debt discount and debt issuance costs and commissions, discounts
and other fees and charges associated with indebtedness, (4) depreciation and
amortization expense, (5) any extraordinary, unusual or non-recurring expenses
or losses (including losses on sales of assets outside of the ordinary course of
business, non-recurring expenses associated with the 787 program and certain
expenses associated with our facilities consolidation efforts) net of any
extraordinary, unusual or non-recurring income or gains, (6) any other non-cash
charges, expenses or losses, restructuring and integration costs, (7)
stock-option based compensation expenses and (8) all fees and expenses paid
pursuant to our Management Agreement with Carlyle.
We believe that each of the adjustments made in order to calculate Adjusted
EBITDA is meaningful to investors because it gives them the ability to assess
our compliance with the covenants in our senior secured credit agreement, our
ongoing ability to meet our obligations and manage our levels of indebtedness.
The use of Adjusted EBITDA as an analytical tool has limitations and you should
not consider it in isolation, or as a substitute for analysis of our results of
operations as reported in accordance with GAAP. Some of these limitations are:
* it does not reflect our cash expenditures, or future requirements, for all
contractual commitments;
* it does not reflect our significant interest expense, or the cash requirements
necessary to service our indebtedness;
* it does not reflect cash requirements for the payment of income taxes when
due;
* it does not reflect working capital requirements;.
* although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future and
Adjusted EBITDA does not reflect any cash requirements for such replacements;
and
* it does not reflect the impact of earnings or charges resulting from matters
we consider not to be indicative of our ongoing operations, but may nonetheless
have a material impact on our results of operations.
Because of these limitations, Adjusted EBITDA should not be considered as a
measure of discretionary cash available to us to invest in the growth of our
business or as an alternative to net income or cash flow from operations
determined in accordance with GAAP. Management compensates for these limitations
by not viewing Adjusted EBITDA in isolation, and specifically by using other
GAAP measures, such as cash flow provided by (used in) operating activities and
capital expenditures, to measure our liquidity. Our calculation of Adjusted
EBITDA may not be comparable to the calculation of similarly titled measures
reported by other companies.
Free Cash Flow is calculated by subtracting our capital expenditures from our
net cash provided by or used in operating activities. We believe that Free Cash
Flow is useful to investors because it gives them an insight into how our
operating cash flows are affected by the capital that is invested to continue
and improve business operations, such as our investment in new programs. Because
not all companies use identical calculations, the presentation of Free Cash Flow
may not be comparable to other similarly titled measures of other companies.
Additionally, Free Cash Flow has limitations as an analytical tool and such
measure should not be considered in isolation or as a substitute for analysis of
our results as reported under GAAP. Some of the limitations of this non-GAAP
financial measure are that it does not represent the residual cash flow
available for discretionary expenditures as it does not incorporate certain cash
payments including payments made on capital lease obligations or cash payments
for business acquisitions.
Vought Aircraft Industries, Inc.
Reconciliation of Non-GAAP Measures
Adjusted EBITDA
(Unaudited)
($ in millions)
For the Three Months Ended For the Nine Months Ended
September 27, September 28, September 27, September 28,
2009 2008 2009 2008
Net cash provided by (used in) operating activities $ 224.4 $ (109.3 ) $ 129.3 $ (147.0 )
Interest expense, net 20.5 16.1 43.9 47.3
Income tax expense (benefit) 0.9 0.2 0.9 0.2
Stock compensation expense (0.5 ) (0.8 ) (1.2 ) (2.2 )
Equity in losses of joint venture - - - (0.6 )
Gain (loss) from asset sales and other losses (39.8 ) 1.6 (41.7 ) 50.1
Debt amortization costs (8.4 ) (1.8 ) (12.1 ) (4.1 )
787 tooling amortization 0.3 - 1.1 0.8
Changes in operating assets and liabilities 74.7 141.4 249.9 273.4
EBITDA $ 272.1 $ 47.4 $ 370.1 $ 217.9
Investment in Boeing 787 and sale of 787 business (216.9 ) 6.0 (213.8 ) 28.0
Unusual charges - Plant consolidation & other non-recurring program costs 4.0 1.7 14.6 5.7
(Gain) Loss on disposal of property, plant and equipment - (1.5 ) 1.9 (50.1 )
Pension & OPEB curtailment and non-cash expense - - 9.6 -
Other (0.6 ) 1.3 2.7 3.7
Adjusted EBITDA $ 58.6 $ 54.9 $ 185.1 $ 205.2
Vought Aircraft Industries, Inc.
Reconciliation of Non-GAAP Measures
Free Cash Flow
(Unaudited)
($ in millions)
For the Three Months Ended For the Nine Months Ended
September 27, September 28, September 27, September 28,
2009 2008 2009 2008
Net cash provided by (used in) operating activities $ 224.4 $ (109.3 ) $ 129.3 $ (147.0 )
Less: Capital expenditures (2.9 ) (8.9 ) (28.2 ) (41.7 )
Free Cash Flow $ 221.5 $ (118.2 ) $ 101.1 $ (188.7 )
Vought Aircraft Industries, Inc.
Investor Contact:
Wendy Hargus, 972-946-5030
Investor_Relations@voughtaircraft.com
or
Media Contact:
Lynne Warne, 615-974-6003
warnely@voughtaircraft.com
Copyright Business Wire 2009
