Tags: Goodrich | aircraft | parts | GR

Goodrich Soaring On Aircraft Parts

By    |   Tuesday, 25 Oct 2011 02:57 PM

Goodrich Corporation (GR), made famous for making tires in Ohio a century ago, is shooting for the heavens. Today the company is an aerospace leader and demand for defense, space and aircraft parts is fueling business, aircraft parts especially. Second quarter sales hit $2 billion, soaring 17 percent from $1.7 billion in the second quarter of 2010. Net income rose 11 percent to $176.6 million.

"As expected, our large commercial airplane (original equipment) market experienced a much higher growth rate in the second quarter than in the first quarter. Our 17 percent second quarter growth rate was indicative of the positive impact of the production rate increases announced by the aircraft manufacturers over the last two years," Goodrich CEO Marshall Larsen says in an earnings statement.

Alongside demand for the company's products and services, past acquisitions and cost-cutting measures will pay off and reflect in 2011 yearly earnings, says management.

"We announced a very significant increase in our sales and earnings expectations for 2011. For the full year of 2011, we now expect sales to be about $8.1 billion, including about $150 million in sales from the recent acquisition of Microtecnica, a growth rate of about 16 percent compared to 2010," Larsen adds. Microtecnica provides flight control and missile systems.

Not only will the top line grow but the bottom line should rise as well. "Net income per diluted share is expected to grow significantly faster than sales as we further demonstrate the success of our continuous improvement initiatives," Larsen says.

Takeover target

In September, United Technologies (UTC) announced a tender offer to acquire Goodrich in a deal worth $18.4 billion, including assumed debt. United Technologies executives like Goodrich for its growth potential.

"Goodrich delivers on all of our acquisition criteria. It is strategic to our core, has great technology and people, and strengthens our position in growth markets," says United Technologies Chairman and CEO Louis Chenevert in a statement.

"We are very excited to bring the capabilities of two great companies together, making us more competitive and better able to provide value to both customers and shareholders."

That's good news for Goodrich shareholders — and the company's debt ratings. "We expect the higher-rated UTC will either assume or repay Goodrich's rated debt as part of the transaction," says Standard & Poor's credit analyst Christopher DeNicolo.

United Technologies is offering $127.50 in cash for each Goodrich share, a move that prompted three Wall Street banks — DA Davidson, Barclays Capital and FBR Capital — to downgrade their Goodrich recommendations to bring share-price estimates in line with the tender offer price.

Stay tuned to see how the tender offer unfolds, and keep an eye on Washington, too. Enormous U.S. deficits are prompting lawmakers to consider spending cuts and calls for slashing defense spending are sure to continue.

The company will release third quarter results on Oct. 27.

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Goodrich Corporation (GR), made famous for making tires in Ohio a century ago, is shooting for the heavens. Today the company is an aerospace leader and demand for defense, space and aircraft parts is fueling business, aircraft parts especially. Second quarter sales hit $2...
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2011-57-25
Tuesday, 25 Oct 2011 02:57 PM
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