Goodrich Reports Mixed Quarter - Analyst Blog


Goodrich Corporation ( GR ) reported first quarter 2012 adjusted earnings of $1.60 per share, falling short of the Zacks Consensus estimate by 7 cents.  Results also compare unfavorably with $1.69 earned in the year-ago quarter.

Including-merger-related costs, Goodrich reported net income of $188.2 million or $1.46 per share in the quarter, compared to $194.8 million or $1.52 per share in first quarter 2011. The prior year quarter includes tax benefit of 17 cents per share.

Operational Statistics

Revenue grew 14% year over year to $2.15 billion, comfortably surpassing the Zacks Consensus Estimate of $2.12 billion. The improvement was aided by double digit sales growth at Actuation and Landing Systems, and Nacelles and Interior Systems, supported by a high single digit growth at Electronic Systems.

Cost of sales escalated 15.3% year over year, while selling and administrative costs increased 11.7% over prior year quarter

Operating income improved 7.8% year over year to $323.7 million.

Segment Details

Actuation and Landing Systems : Revenue rose 17% to $802.5 million from $684.3 million in the year-ago quarter. The segment's operating income of $97 million increased 12% from $86.5 million in the first quarter 2011. Operating margin declined to 12.1% from 12.6% in the year-ago quarter.

Nacelles and Interior Systems : Revenue rose 15% to $757.4 million from $656.4 million in the year-ago quarter. Segmental operating income shot up 23.2% to $176.0 million from $157.3 million in the year-ago quarter. Operating margin slid to 23.2% from 24.0% in the year-ago quarter.

Electronic Systems : In the reported quarter, revenue rose 7% to $592.7 million from $555.2 million in the year-ago quarter. Segmental operating income declined 3% to $88.1 million from $91.0 million in the year-ago quarter. Operating margin decreased to 14.9% from 16.4% in the year-ago quarter.

Financial Update

Goodrich ended the quarter with cash and cash equivalents of $704.1 million, down from $987.0 million at the end of fiscal 2011.

Long-term debt and capital lease obligations inched down to $2.36 billion from $2.37 billion at 2011 end.

Net cash used in operating activities in the quarter was $177.4 million, compared with cash provided in operating activities of $94.6 million in the year ago quarter.

Capital expenditure soared to $71.5 million from $35.6 million in the first quarter 2011.

Free cash flow was negative $248.9 million versus positive $60.8 million in the year ago quarter.

Goodrich Shareholders OK UTX Merger

At the special meeting held on March 13, 2012, Goodrich's shareholders,  unanimously voted and approved the proposed merger with United Technologies Corp. ( UTX ).

As stated earlier, the deal is expected to be completed by the first half of 2012.

On completion of the merger, Goodrich will become a wholly owned subsidiary of United Technologies and the former's shareholders will receive $127.50 in cash for each share of Goodrich owned.

The transaction has a total enterprise value of approximately $18.4 billion, assuming approximately $1.9 billion of net debt.


Rockwell Collins Inc. ( COL ), which competes with Goodrich, reported earnings of $1.09 per share for the second quarter of the fiscal year ending March 31, 2012, in line with the Zacks Consensus Estimate. Results, however, came higher than the year-ago quarterly earnings per share of 96 cents.

Rockwell Collins' total sales fell 5% year over year to $1.16 billion, failing to meet both the Zacks Consensus Estimate of $1.18 billion and the year-ago revenue of $1.22 billion.

Zacks Rank

We retain our Neutral recommendation on Goodrich long term. The quantitative Zacks #1 Rank (Strong Buy ) indicates an upward bias on the stock over the near term.

ROCKWELL COLLIN ( COL ): Free Stock Analysis Report
GOODRICH CORP ( GR ): Free Stock Analysis Report

UTD TECHS CORP ( UTX ): Free Stock Analysis Report
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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: COL , GR , UTX

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