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BreezeEastern Corp. Reports Operating Results (10-Q)

February 03, 2009 | About:

BreezeEastern Corp. (BZC) filed Quarterly Report for the period ended 2008-12-28.

Breeze-Eastern Corporation is the world's leading designer and manufacturer of sophisticated lifting devices for military and civilian aircraft including rescue hoists cargo hooks and weapons-lifting systems. Breeze-Eastern is the worldwide supplier of electric and hydraulic Rescue Hoist Systems for helicopters. On many customer programs companies products are supplied on a sole source basis and are utilized throughout the long life-cycle of these products. There position principally as a sole source supplier continues as they support there customers with the sales of spare parts and product upgrades. Breeze-Eastern Corporation aggressively updates its existing products in keeping with changing mission and customer requirements to maintain and increase market share for systems products and spare parts. These qualified and proprietary products support our long-term growth objectives. BreezeEastern Corp. has a market cap of $75.95 million; its shares were traded at around $7.8 with a P/E ratio of 12.67 and P/S ratio of 1.

Highlight of Business Operations:

Net Sales. Our net sales increased to $23.5 million in the third quarter of fiscal 2009, an increase of $5.5 million from net sales of $18.1 million in the third quarter of fiscal 2008. The $1.7 million increase in sales of new equipment for the third quarter of fiscal 2009 as compared to the same period last year was driven primarily by $0.9 million higher shipments in the cargo hook operating segment and $0.2 million in the hoist and winch operating segment. New equipment sales in the weapons handling operating segment increased $0.6 million in the third quarter

Backlog. Backlog at December 28, 2008 was $131.3 million, an increase of $7.0 million from the $124.3 million at March 31, 2008. Increases in backlog are mainly attributable to a $5.1 million order for the manufacture of the probe hoist for the MH-60R Naval Hawk, a $3.4 million order for the manufacture of the electric rescue hoist system for the H-60 Black Hawk MEDEVAC helicopter, and a $4.9 million order for the manufacture of the cargo hook for the CH-47F Chinook helicopter. The offsetting decrease is attributable to previously scheduled shipments. The backlog at December 28, 2008 includes approximately $65.0 million relating to the Airbus A400M military transport aircraft, which is scheduled to commence shipping in late calendar 2009 and continue through 2020. There have been recent reports by analysts that there is a delay in the production schedule for the Airbus A400M military transport aircraft. Notwithstanding these reports, we have not to date received notification from Airbus that there is a significant delay in delivering our equipment for this program.

New orders. New orders received during the first nine months of fiscal 2009 totaled $59.0 million, as compared with $54.8 million in the first nine months of fiscal 2008. Orders for new equipment increased $8.6 million in the cargo hook operating segment, which was the result of a $4.9 million order for the manufacture of the cargo hook for the CH-47F Chinook helicopter. Orders for new equipment in the hoist and winch operating segment decreased $0.7 million in the first nine months of fiscal 2009 as compared to the same period in the prior year, despite orders that were received in the first quarter of fiscal 2009 for $5.1 million for the manufacture of the probe hoist for the MH-60R Naval Hawk and a $3.4 million order for the manufacture of the electric rescue hoist system for the H-60 Black Hawk MEDEVAC helicopter.

Backlog. Backlog at December 28, 2008 was $131.3 million, an increase of $7.0 million from the $124.3 million at March 31, 2008. Increases in backlog are mainly attributable to a $5.1 million order for the manufacture of the probe hoist for the MH-60R Naval Hawk and a $3.4 million order for the manufacture of the electric rescue hoist system for the H-60 Black Hawk MEDEVAC helicopter, and a $4.9 million order for the manufacture of the cargo hook for the CH-47F Chinook helicopter. The offsetting decrease is attributable to previously scheduled shipments. The backlog at December 28, 2008 includes approximately $65.0 million relating to the Airbus A400M military transport aircraft which is scheduled to commence shipping in late calendar 2009 and continue through 2020. There have been recent reports by analysts that there is a delay in the production schedule for the Airbus A400M military transport aircraft. Notwithstanding these reports, we have not to date received notification from Airbus that there is a significant delay in delivering our equipment for this program.

During the second quarter of fiscal 2009, we refinanced and paid in full the Former Senior Credit Facility with a new 60 month, $33.0 million Senior Credit Facility consisting of a $10.0 million revolving line of credit and term loans totaling $23.0 million. Through this facility, and assuming stable interest rates, we expect to lower our annualized interest expense on our debt in fiscal 2009 by an amount in excess of $1.5 million. At December 28, 2008, there were $2.4 million in outstanding borrowings, $0.8 million in outstanding (standby) letters of credit, and $6.8 million in availability under the revolving portion of the Senior Credit Facility. At December 28, 2008, we were in compliance with the provisions of the Senior Credit Facility.

loans totaling $23.0 million (the Senior Credit Facility). The blended interest rate at December 28, 2008, on the Senior Credit Facility was 4.22%. As a result of this refinancing, in the second quarter of fiscal 2009, we recorded a pre-tax charge of $0.6 million consisting of $0.2 million for the write-off of unamortized debt issue costs and $0.4 million for the payment of a pre-payment premium. The term loan requires quarterly principal payments of approximately $0.8 million over the term of the loan, the first of which was paid in October 2008. The remainder of the term loan is due at maturity. Accordingly, the balance sheet reflects $3.3 million of current maturities due under the term loan of the Senior Credit Facility as of December 28, 2008.

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