Breeze-Eastern Corporation (BZC) research, news, and more from GeoInvesting

Company description

Wed, 30 Jul 2008 04:00:00 GMT

Breeze-Eastern Corporation is the world’s leading designer and manufacturer of high performance lifting and pulling devices for military and civilian aircraft, including rescue hoists, winches and cargo hooks, and weapons-lifting systems. The Company employs approximately 160 people at its facilities in Whippany, New Jersey.

Research

Mon, 04 Jan 2016 15:39:53 GMT

TransDigm Completes Tender Offer For Shares of BZC

On November 19, 2015, we stated that Breeze-Eastern Corporation (BZC) announced an acquisition agreement with TransDigm for $19.61 per share.

“BZC and TransDigm Group announced a definitive merger agreement providing for Breeze-Eastern to become an indirect wholly-owned subsidiary of TransDigm. TransDigm and Breeze-Eastern both design, manufacture and supply highly engineered aircraft components.

Under the terms of the agreement, a subsidiary of TransDigm will commence a tender offer to acquire all of the outstanding shares of Breeze-Eastern common stock for $19.61 per share in cash.”

We stated it was our belief that BZC shareholders should not tender their shares, considering the transaction was 6% lower than the November 16, 2015 closing price and it appears BZC management only accounts for 17% of shares outstanding.

It was our hope that shareholders would not tender enough shares, therefore possibly forcing TransDigm to increase the offer. Unfortunately, 72.6% of the outstanding shares were tendered. Our only recourse now is to join or administer a class action lawsuit, which we are currently discussing with counsel in order to decide if this is our best course of action.

Research

Thu, 19 Nov 2015 17:37:45 GMT

BZC ($21.00, marked down pre-market) Announced Acquisition Agreement For $19.61

Under the terms of the agreement, a subsidiary of TransDigm will commence a tender offer to acquire all of the outstanding shares of Breeze-Eastern common stock for $19.61 per share in cash.”

It is our belief that BZC shareholders should not tender their shares, considering the transaction is 6% lower than yesterday’s closing price and it appears BZC management only accounts for 17% of shares outstanding. However, it seems two large institutional firms account for 64%. We are reaching out to these firms to discuss what seems to us to be a low-ball offer considering the company’s recent growth and current multiples. Recall, in our October 30, 2015 research note, we had placed a $27 price target on the company by applying a P/E of 20X on trailing non-GAAP EPS of $1.35.

Research

Mon, 02 Nov 2015 15:45:17 GMT

Initiated A Long Position In BZC

On Friday, via premium Tweet, we stated that we were initiating a long position in BZC ($20.40) as shares hit a new 52 week high. Friday’s tweets:

Taking closer look at BZC; strong Q2 2016 results yesterday. Will publish our reasons for tracking shortly. http://yhoo.it/1GB7n9R

BZC shares hit new 52 week high. See our reasons for tracking here. http://bit.ly/1jX5QRm

We took a gamble on $BZC with a small long position. #GeoCallToAction

Recently reported strong Q2 2016 earnings, strong backlog, bullish commentary and a slight information arbitrage opportunity has piqued our interest. See our reasons for tracking here.

Research

Fri, 30 Oct 2015 16:06:06 GMT

BZC designs, develops, manufactures, sells, and services engineered mission equipment for specialty aerospace and defense applications worldwide. It primarily offers mission-critical helicopter rescue hoist and cargo hook systems and manufactures weapons handling systems. We have been tracking BZC for several years but its recently reported strong Q2 2016 results has brought it back to the forefront of our watch-list.

Reported Q2 2016 results on October 28, 2015:
- Sales of $23.9 million, compared with $17.7 million for the prior year period.
- EPS of $0.29 vs $0.06 in the prior year period.

Backlog up strong vs prior year period. Bookings in the second quarter of fiscal 2016 amounted to $39.1 million, versus $24.2 million in the fiscal 2015 second quarter.

Company uncharacteristically offers bullish commentary. Management has a history of offering little to no commentary about future periods or taking a more conservative/cautious approach when talking about the future. It seems as fiscal 2016 progresses (Fiscal year ends March 31), management is becoming more confident they can continue to report strong results.

We closed the quarter with a strong cash position and are confident that we can deliver solid results in the months ahead.

Information arbitrage: Second half of the year is historically stronger for the company and the company see's this trend continuing for 2016. We confirmed this relationship by looking back at pass financial data since 2008. On average, based on GAAP results, the second half of the year was signifcanlty stronger than that of the first half. (We are still performing non-GAAP analysis) From the 10-Q:

Over the past several years, revenues in the second half of the fiscal year exceeded revenues in the first half of the fiscal year. We expect fiscal 2016 revenues will be consistent with this historical pattern.

Stock chart is strong, recently hitting a new high of $18.57

Trailing non-GAAP EPS of $1.35. Applying a P/E multiple of 20 on trailing non-GAAP EPS equates to a near term price target of $27.00.

Caveats:

Majority of revenues is from government. The timing of U.S. Government awards, availability of U.S. Government funding, and product delivery schedules are among the factors that affect the period of recording revenues.
Tough revenue and EPS comparison for the next 2 quarters. However, the increased backlog indicates the company can report favorable comps. *Note: Q3 and Q4 2015 non-GAAP EPS were $0.33 and $0.49 respectively.

Reasons For Tracking

Fri, 30 Oct 2015 04:00:00 GMT

Reported Q2 2016 results on October 28, 2015:
- Sales of $23.9 million, compared with $17.7 million for the prior year period.
- EPS of $0.29 vs $0.06 in the prior year period.

Backlog up strong vs prior year period. Bookings in the second quarter of fiscal 2016 amounted to $39.1 million, versus $24.2 million in the fiscal 2015 second quarter.

Company uncharacteristically offers bullish commentary. Management has a history of offering little to no commentary about future periods or taking a more conservative/cautious approach when talking about the future. It seems as fiscal 2016 progresses (Fiscal year ends March 31), management is becoming more confident they can continue to report strong results.

We closed the quarter with a strong cash position and are confident that we can deliver solid results in the months ahead.

Information arbitrage: Second half of the year is historically stronger for the company and the company see's this trend continuing for 2016. We confirmed this relationship by looking back at pass financial data since 2008. On average, based on GAAP results, the second half of the year was signifcanlty stronger than that of the first half. (We are still performing non-GAAP analysis) From the 10-Q:

Over the past several years, revenues in the second half of the fiscal year exceeded revenues in the first half of the fiscal year. We expect fiscal 2016 revenues will be consistent with this historical pattern.

Stock chart is strong, recently hitting a new high of $18.57

Trailing non-GAAP EPS of $1.35. Applying a P/E multiple of 20 on trailing non-GAAP EPS equates to a near term price target of $27.00.

Caveats:

Majority of revenues is from government. The timing of U.S. Government awards, availability of U.S. Government funding, and product delivery schedules are among the factors that affect the period of recording revenues.
Tough revenue and EPS comparison for the next 2 quarters. However, the increased backlog indicates the company can report favorable comps. *Note: Q3 and Q4 2015 non-GAAP EPS were $0.33 and $0.49 respectively.

13D and 13G Activity

Wed, 15 Oct 2014 04:00:00 GMT

VN Capital Fund increasedstake in BZC to 12.4% from 9%. VN Capital believes shares are significantly undervalued.

Comments & Business Outlook

Thu, 02 Feb 2012 05:00:00 GMT

Third Quarter 2012 Results

Net sales: $19.6 million, even with the Fiscal 2011 third quarter
Net income: $1.1 million, or $0.11 per diluted share, up 11% from $1.0 million, or $0.10 per diluted share, for the Fiscal 2011 third quarter
Adjusted EBITDA (as described under “Non-GAAP Financial Measures” in this press release): $2.3 million for both the Fiscal 2012 and Fiscal 2011 third quarters
Total debt: $10.7 million, $2.5 million lower than a year ago
Cash: $7.8 million, versus $3.4 million a year ago
Bookings: $14.0 million, versus $15.8 million in the Fiscal 2011 third quarter

Mike Harlan, C.E.O. and President, said, "Our total sales continue to be strong as our cumulative sales over the last four quarters exceeded $80 million for the first time. Third Quarter bookings and net backlog at the end of the quarter were lower than last year, as we continue to work to secure several large orders; when we secure these orders, we expect our backlog to increase significantly.

“Our total engineering expenses (excluding cost reimbursements from Airbus) were clearly higher this quarter compared to the same quarter last year. We recently hired a new VP of Engineering to provide stronger technical leadership, hire fresh talent and improve our engineering processes and program management. We expect that our engineering costs will continue to be relatively high for the current quarter and into the next Fiscal Year as we continue to fulfill our commitments to our customers.

Our inventory was about $1 million higher at the end of the quarter than at the end of the Second Quarter and $2.5 million higher than the Third Quarter last year, but we expect it to be lower by the end of the Fourth Quarter. Our overall balance sheet and cash position is strong. Despite the higher engineering spending and the growth in inventory, we finished our Third Quarter with $7.8 million in cash and our net debt (deducting cash from current and long-term debt) is $2.9 million, $2.2 million lower than when we began the year," Mr. Harlan concluded.

Comments & Business Outlook

Thu, 04 Aug 2011 04:00:00 GMT

Breeze-Eastern Corporation (NYSE Amex: BZC) today reported its Fiscal 2012 First Quarter financial results.

Net sales: $18.2 million, a new record for First Quarter sales - up 10% over $16.5 million for the Fiscal 2011 First Quarter.
Net income: $0.6 million, or $0.06 per diluted share, equal to the Fiscal 2011 First Quarter.
Adjusted EBITDA, as described under “Non-GAAP Financial Measures” in this press release: $1.6 million, versus $2.0 million in the Fiscal 2011 First Quarter.
Current debt: zero

Long-term debt (total): $10.7 million, $0.8 million lower than three months ago, and $6.6 million lower than a year ago.
Cash: $10.5 million, versus $2.4 million a year ago.

Bookings: $13.6 million, versus $19.7 million in Fiscal 2011 First Quarter. The book-to-bill ratio for the Fiscal 2012 First Quarter was 0.7.

Mike Harlan, President and Chief Executive Officer, said, "We are pleased to have started our Fiscal year with record First Quarter sales and continued strong cash flow. We continued to accelerate debt principal pre-payments during the quarter, and, after subtracting cash, our net debt was down to $0.2 million."

Outlook

Mr. Harlan continued, “We are getting to the final stages for several major development programs; we completed final qualification testing for the C-27J Cargo Winch last quarter and will be providing initial qualified products for the CH-53K, AW-159, and A400M later this Fiscal year. Bookings in the First Quarter were less than expected due to a variety of delays, but we still expect to get more orders than shipments by the end of our Fiscal year. We expect our Fiscal Second Quarter sales to be stronger than the Fiscal 2011 Second Quarter and stronger than our Fiscal 2012 First Quarter. Our projected cash flow is still very strong."

Investor Alert

Tue, 19 Jul 2011 04:00:00 GMT

July. 19, 2011 (Business Wire) -- Breeze-Eastern Corporation (NYSE Amex:BZC), a leading designer and manufacturer of high performance lifting and pulling devices for military and civilian aircraft, including rescue hoists, winches and cargo hooks, and weapons-lifting systems, announced today that its Board of Directors has adopted a Shareholder Rights Plan (the “Rights Plan”). The Rights Plan has been adopted to ensure the fair treatment of all shareholders in connection with any take-over bid for the common stock of the Company. The Rights Plan seeks to provide shareholders with adequate time to properly assess a take-over bid without undue pressure. It also is intended to provide the Board of Directors with time to fully consider an unsolicited take-over bid and, if appropriate, to take requisite action to maximize shareholder value.

The Rights Plan was unanimously approved by the Board of Directors. It is not being adopted in response to any proposal to acquire control of the Company, however, the Board of Directors has recognized that there are certain concentrations of ownership of the common stock of the Company and deemed it to be in the best interests of the Company’s shareholders to take action which would protect the interests of the minority shareholders of the Company in a transaction involving a change of control of the Company.

The terms of the Rights Plan provide for the Company’s shareholders to receive one right for each outstanding common share held. In general, the rights will become exercisable if a person or group acquires 10% or more of the Company’s common stock or announces a tender offer or exchange offer for 10% or more of the Company’s common stock. The Rights Plan grandfathers in the existing interest of shareholders who currently own in excess of 10%, but would be triggered by any additional purchases.

When the rights initially become exercisable, as described above, each holder of a Right will be allowed to purchase one one-thousandth of a share of a newly created series of the Company’s preferred shares at an exercise price of $14.00. However, if a person acquires 10% or more of the Company’s common stock in a transaction that was not approved by the Board of Directors, each right would entitle the holder (other than such an acquiring person) to purchase common stock in an amount equivalent to the exercise price at a 75% discount to the market price of the Company’s common stock at that time the rights Plan is triggered.

The rights will expire on July 18, 2014. The Company may redeem the rights for $0.01 each at any time until the tenth business day following public announcement that a person or group has acquired 10% or more of its outstanding common stock or one of the grandfathered common stock holders has purchased additional common stock.

The Rights Plan will terminate if it is not ratified by the Company’s shareholders within 12 months of its adoption. The Company intends to submit the Rights Plan for approval by its shareholders at its 2011 Annual Meeting of Shareholders.

Comments & Business Outlook

Fri, 03 Jun 2011 04:00:00 GMT

WHIPPANY, N.J.---Breeze-Eastern Corporation (NYSE Amex: BZC) today reported its Fiscal 2011 financial results.

• Net sales: $78.2 million, a company record high, versus $69.0 million for Fiscal 2010.

• Net income: $5.0 million, or $0.53 per diluted share, versus a net loss of ($6.0) million, or ($0.64) per diluted share, last year.

• Adjusted EBITDA, a "Non-GAAP Financial Measure" as described below in this press release: $11.9 million, versus a negative ($4.3) million in Fiscal 2010.

• Net debt: $5.1 million, $9.6 million lower than a year ago.

• Bookings: $79.2 million, versus $68.2 million in Fiscal 2010. The book-to-bill ratio for Fiscal 2011 was 1.0.

Even after excluding unusual non-recurring costs from Fiscal 2010, Fiscal 2011 profits were significantly better than last year Fiscal 2010 results included non-cash charges in the fourth quarter of $12.2 million for inventory obsolescence, environmental liabilities, and estimated losses on engineering project commitments, and also included $1.5 million of one-time costs related to the factory shutdown during the relocation in March, 2010. Excluding these amounts, adjusted Fiscal 2010 net income would have been $2.3 million, or $0.25 per diluted share, and Adjusted EBITDA would have been $9.5 million. Fiscal 2011 net income was more than double the adjusted Fiscal 2010 net income and Adjusted EBITDA was up more than 25%.

For the Fiscal 2011 fourth quarter, the financial results follow.

• Net sales: $26.9 million, a company record high, versus $18.1 million in last year’s Fiscal fourth quarter.

• Net income: $2.8 million, or $0.30 per diluted share, versus a loss of ($8.9) million, or ($0.95) per diluted share, in the Fiscal 2010 fourth quarter.

• Adjusted EBITDA: $5.8 million, versus a negative ($11.5) million in the Fiscal 2010 fourth quarter.

• Bookings: $25.3 million, versus $21.7 million in the Fiscal 2010 fourth quarter.

Mike Harlan, Chief Executive Officer and President, said, "Our Fiscal 2011 and fourth quarter sales set new company records. We are proud of this accomplishment and the extra effort by many of our employees to achieve these records. Our bookings were much higher than last year, benefiting from higher spare parts orders from the U.S. Government. Our overall profitability was clearly better than the prior year, but was impacted by our relocation and other factors and still has room for improvement. I regard our Fiscal 2011 income statement results as a good step toward the level of performance we expect to deliver.

"Our balance sheet and cash flow continue to be strong. In addition to a good increase in Adjusted EBITDA, a broad team effort increased working capital turnover, which resulted in over $11 million in operating cash flow. We used this strong cash flow to make four debt principal pre-payments, while still funding significant new product development and completion of our relocation to Whippany. Our debt net of cash was $5.1 million at the end of Fiscal 2011 versus $14.7 million a year ago. When our debt was over $60 million, it was an overriding issue for our company; but after extensive efforts, our balance sheet is now a strategic asset. I am also glad to report that after recent evaluations, we believe our environmental reserves are still appropriate and we are not making any adjustments.

"Looking ahead to Fiscal 2012, first quarter shipments are doing well and we are on-track to make significant milestone deliveries for the C-27J, CH-53K, and A400M programs this summer. We will continue to invest in new product development, IT improvements, and improved customer responsiveness during Fiscal 2012, and still improve our net profitability."