EX-99.1 2 l84870aex99-1.txt EXHIBIT 99.1 1 Exhibit 99.1 FINANCIAL REPORT Rick Schmidt Senior VP and Chief Financial Officer The BFGoodrich Company November 7, 2000 [BFGOODRICH LOGO] 2 AREAS OF DISCUSSION ------------------------------------------------- - 3RD QUARTER AND YTD RESULTS ------------------------------------------------- - 2000 Outlook - 2000 Free cash flow - Methodology for Performance Materials as a discontinued operation - 2001 outlook - Credit rating update [BFGOODRICH LOGO] 3 3RD QUARTER SEGMENT RESULTS 1999 2000 Change Sales Actual Actual % ------- -------- ------ Aerospace $ 855M $ 926M 8% Performance Mtls. $ 306 $ 285 (7%) Eng. Industrial $ 171 $ 167 (2%) -------------------------------------------------------------------------------- Total Sales $1,332M $ 1,378M 3% -------------------------------------------------------------------------------- Operating Income Aerospace $ 131M $ 154M 18% Performance Mtls. $ 36 $ 26 (28%) Eng. Industrial $ 28 $ 29 3% -------------------------------------------------------------------------------- Total Operating Income $ 195M $ 209M 7% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- OI Margins - % 14.6% 15.2% 4% -------------------------------------------------------------------------------- Excludes special items [BFGOODRICH LOGO] 4 THIRD QUARTER - FINANCIAL RESULTS 1999 2000 Change Actual Actual % -------- --------- --------- Sales $1,332M $1,378M 3% Segment Ops Income $ 195 $ 209 7% -------------------------------------------------------------------------------- OI % of Sales 14.6% 15.2% 4% -------------------------------------------------------------------------------- Corp. G&A/Other ($ 23) ($ 25) 9% Merger/Special Charges ($ 202) ($ 8) (96%) Net Interest Exp. ($ 33) ($ 43) 30% -------------------------------------------------------------------------------- Pre-Tax Income ($ 63) $ 133 N/M Taxes/Tides ($ 8) ($ 53) N/M ------ ------ --- Net Income - as reported ($ 71)M $ 80M N/M -------------------------------------------------------------------------------- Net Income ex. special items $ 83 M $ 85M 3% -------------------------------------------------------------------------------- EPS - Diluted Reported ($ 0.64) $ 0.77 N/M Excluding Special Charges $ 0.74 $ 0.82 11% N/M - Not meaningful [BFGOODRICH LOGO] 5 NINE MONTHS - SEGMENT RESULTS 1999 2000 Change Sales Actual Actual % ------ ------ - Aerospace $2,747M $2,719M (1%) Performance Mtls. $ 917 $ 891 (3%) Eng. Industrial $ 543 $ 527 (3%) -------------------------------------------------------------------------------- Total Sales $4,207M $4,137M (2%) -------------------------------------------------------------------------------- Operating Income Aerospace $ 418M $ 435M 4% Performance Mtls. $ 105 $ 91 (13%) Eng. Industrial $ 99 $ 95 (4%) -------------------------------------------------------------------------------- Total Operating Income $ 622M $ 621M --- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- OI Margins - % 14.8% 15.0% 1% -------------------------------------------------------------------------------- Excludes special items [BFGOODRICH LOGO] 6 NINE MONTHS 2000 REVENUE AND OPERATING INCOME (DOLLARS IN MILLIONS) [PIE CHART] NINE MONTHS 2000 REVENUES - $4,137 PERFORMANCE MATERIALS 21% ENGINEERED INDUSTRIAL 13% AEROSPACE 66% [PIE CHART] NINE MONTHS 2000 SEGMENT OPERATING INCOME $621 PERFORMANCE MATERIALS 15% ENGINEERED INDUSTRIAL 15% AEROSPACE 70% 15.0% MARGIN 3 PROFITABLE SEGMENTS Excludes special items [BFGOODRICH LOGO] 7 NINE MONTHS - FINANCIAL RESULTS 1999 2000 Change Actual Actual % ------ ------ ------ Sales $4,207M $4,137M (2%) Segment Ops Income $ 623 $ 621 ---- -------------------------------------------------------------------------------- OI % of Sales 14.8% 15.0% 1% -------------------------------------------------------------------------------- Corp. G&A/Other ($ 68) ($ 66) (3%) Merger/Special Charges ($ 233) ($ 29) (88%) Net Interest Exp. ($ 99) ($ 114) 15% -------------------------------------------------------------------------------- Pre-Tax Income $ 223 $ 412 85% Taxes/Tides ($ 120) ($ 164) 37% -------- -------- ---- Net Income - as reported $ 103M $ 248M 140% -------------------------------------------------------------------------------- Net Income ex. special items $ 276M $ 266M (4%) -------------------------------------------------------------------------------- EPS - Diluted Reported $ 0.93 $ 2.30 147% Excluding Special Charges $ 2.47 $ 2.46 --- [BFGOODRICH LOGO] 8 AREAS OF DISCUSSION - 3rd Quarter and YTD results ----------------------------------------------------------------------- - 2000 OUTLOOK ----------------------------------------------------------------------- - 2000 Free cash flow - Methodology for Performance Materials as a discontinued operation - 2001 outlook - Credit rating update [BFGOODRICH LOGO] 9 4TH QUARTER OUTLOOK - FINANCIAL RESULTS 4Q1999 4Q2000 Actual Outlook --------- ---------- Sales $1,330M $ 1,420 - 1,470M Segment Ops Income $ 191 $210 - 215 -------------------------------------------------------------------------------- OI % of Sales 14.4% 14.5 - 15.0% -------------------------------------------------------------------------------- Corp. G&A/Other ($ 15) Merger/Special Charges ($ 30) (Around $12) Net Interest Exp. ($ 34) -------------------------------------------------------------------------------- Pre-Tax Income $ 112 Taxes/Tides ($ 46) -------------------------------------------------------------------------------- Net Income - as reported $ 66M Around $80M -------------------------------------------------------------------------------- Net Income ex. special items $ 87M Around $88M -------------------------------------------------------------------------------- EPS - Diluted Reported $ 0.60 Around $0.76 Excluding Special Charges $ 0.78 Around $0.84 [BFGOODRICH LOGO] 10 FULL YEAR OUTLOOK - FINANCIAL RESULTS 1999 2000 Actual Outlook --------- ---------------- Sales $5,538 $ 5,550 - 5,600M Segment Ops Income $ 814 $830 - 835 -------------------------------------------------------------------------------- OI % of Sales 14.7% 14.8 - 15.0% -------------------------------------------------------------------------------- Corp. G&A/Other ($ 82) Merger/Special Charges ($ 263) (Around $41) Net Interest Exp. ($ 134) -------------------------------------------------------------------------------- Pre-Tax Income $ 335 Taxes/Tides ($ 165) Net Income - as reported $ 170 Around $334M -------------------------------------------------------------------------------- Net Income ex. special items $ 362 Around $360M -------------------------------------------------------------------------------- EPS - Diluted Reported $ 1.53 Around $3.06 Excluding Special Charges $ 3.24 Around $3.30 [BFGOODRICH LOGO] 11 AREAS OF DISCUSSION - 3rd Quarter and YTD results - 2000 Outlook ---------------------------------------------------------------- - 2000 FREE CASH FLOW ---------------------------------------------------------------- - Methodology for Performance Materials as a discontinued operation - 2001 outlook - Credit rating update [BFGOODRICH LOGO] 12 2000 FREE CASH FLOW (DOLLARS IN MILLIONS) Actual 3Q YTD Target 1999 2000 2000 2000 ----- ----- ----- ---------- Cash flow from Operations $373 $(16) $80 $325 - 345 PLUS: Merger & Consolidations* 207 8 71 75 - 80 Special Tax Payment -- 114 114 114 ----- ----- ----- ---------- Adjusted Operating Cash Flow $ 580 $ 106 $ 265 $520 - 540 MINUS: Capital Expenditures (246) (43) (132) (200 - 210) Dividends (92) (29) (90) (117) ----- ----- ----- ---------- Free Cash Flow $ 242 $ 34 $ 43 $200 - 220 * Includes BEP Payment of $24M in YTD 2000 [BFGOODRICH LOGO] 13 4TH QUARTER OPERATING CASH FLOW TARGETS (DOLLARS IN MILLIONS) Adjusted Operating Cash Flow Nine months YTD $ 265 Total Year Target $ 520 - 540 ------------ 4Q Target $ 255 - 275 Trade Receivable Collections $M DSO -------- 12/31/99 687 48 9/30/00 794 49 12/31/00 EST. 700 48 Sources of 4th Quarter Operating Cash Flow Trade Receivable Collections $ 90 - 100 Super 727 Receivables $ 45 - 50 Asbestos Insurance Proceeds $ 25 - 30 All Other $ 95 - 100* ------------ Total $ 255 - 275 * 3Q EBITDA excluding specials = $246M [BFGOODRICH LOGO] 14 AREAS OF DISCUSSION - 3rd Quarter and YTD results - 2000 Outlook - 2000 Free cash flow -------------------------------------------------------------------------------- - METHODOLOGY FOR PERFORMANCE MATERIALS AS A DISCONTINUED OPERATION -------------------------------------------------------------------------------- - 2001 outlook - Credit rating update [BFGOODRICH LOGO] 15 PERFORMANCE MATERIALS AS A DISCONTINUED OPERATION - Methodology used to restate results - Based on APB 30 Guidelines - Interest expense allocated based on relative PM net asset values - Certain Corporate G&A allocations to PM reclassed to continuing operations - Separate PM tax provision calculated - New 2000 estimated effective tax rate for BFGoodrich, excluding PM, is 35.5% versus 36.5% - Methodology reviewed by Ernst & Young [BFGOODRICH LOGO] 16 AREAS OF DISCUSSION - 3rd Quarter and YTD results - 2000 Outlook - 2000 Free cash flow - Methodology for Performance Materials as a discontinued operation -------------------------------------------------------------------------------- - 2001 OUTLOOK -------------------------------------------------------------------------------- - Credit rating update [BFGOODRICH LOGO] 17 2001 OUTLOOK 2001 Outlook 2000 Including PM ------------- -------------------------- Aerospace $3.7B 7% organic growth plus complementary acquisitions Engineered Industrial 0.7 Relatively flat Performance Materials 1.2 Flat/modest growth ------------- -------------------------- Total Sales $5.6B $5.9 - 6.1B Operating Margins 14.8-15.0% +6% to 8% growth in segment operating income dollars Diluted EPS Around $3.30 +6% to 9% (excluding special items) 2001 WITHOUT PERFORMANCE MATERIALS AS DISCONTINUED IS UNCERTAIN, BASED ON NET PROCEEDS, TIMING OF CLOSING AND USE OF PROCEEDS [BFGOODRICH LOGO] 18 AREAS OF DISCUSSION - 3rd Quarter and YTD results - 2000 Outlook - 2000 Free cash flow - Methodology for Performance Materials as a discontinued operation - 2001 outlook -------------------------------------------------------------------------------- - CREDIT RATING UPDATE -------------------------------------------------------------------------------- [BFGOODRICH LOGO] 19 FINANCING STRATEGY - Current ratings are A-,Baa1, and A- by S&P, Moody's, and Fitch (Duff & Phelps) - Rating provides excellent access to debt markets, including commercial paper - Allows flexibility to take advantage of significant strategic opportunities - Investment grade avoids restrictive covenants seen with non-investment grade debt - Expect to manage to A/BBB range over the long-term [BFGOODRICH LOGO] 20 AEROSPACE/INDUSTRIAL PEER GROUP (Dollars in Millions) MARKET CAPITALIZATION 1999 NET S&P AS OF 10/27/00 SALES CREDIT RATING -------------- -------- ------------- Boeing (BA) 57,088 57,993 AA- Rockwell (ROK) 6,848 7,043 A+ United Technologies (UTX) 31,175 23,844 A+ Honeywell (HON) 41,204 23,735 A Parker Hannifin (PH) 4,753 5,355 A ------------------------------------------------------------------------- BFGOODRICH 3,824 5,537 A- ------------------------------------------------------------------------- Textron (TXT) 6,705 11,579 A- TRW (TRW) 4,933 16,969 BBB Litton Industries (LIT) 2,299 4,827 BBB Lockheed Martin (LMT) 14,687 25,530 BBB- Raytheon (RTN/B) 11,006 19,841 BBB- Northrop Grumman (NOC) 5,598 8,995 BBB- Sequa (SQA/A) 435 1,699 BB BE Aerospace (BEAV) 397 723 B Moog (MOG/A) 274 630 B Fairchild (FA) 147 635 B- [BFGOODRICH LOGO] 21 CONCLUSIONS - Pleased with 2000 results to date - 2000 expectations for around $3.30 diluted EPS, excluding special items - Expect 6% to 9% EPS growth in 2001 - Strategically well positioned for growth in sales and earnings beyond 2001 - Working to complete PM divestiture [BFGOODRICH LOGO] 22 Part of this presentation contains forward-looking statements that involve risks and uncertainties, and actual results could differ materially from those projected in the forward-looking statements. The risks and uncertainties are detailed from time to time in reports filed with the Securities and Exchanges Commission, including but not limited to the last section of the Management's Discussion and Analysis entitled "Forward-Looking Information is Subject to Risk and Uncertainty" contained in the company's Annual Report on Form 10-K and in other filings.