BE Aerospace (BEAV)

TOP CONTRIBUTORS

Jonathan Sheets

Andrew Lewis

John Simon

www.zacks.com

BE Aerospace (NASDAQ: BEAV) is the largest manufacturer of cabin interior products for commercial aircraft and business jets as well as an aftermarket distributor of aerospace fasteners.^[1] The company sells its manufactured products directly to nearly all of the world's airlines and airframe manufacturers as well as other aviation customers.^[1]

Business Overview

BE manufactures seats, oxygen storage and delivery systems, other interior components and food preparation products for commercial and business jets.^[1] The company sells all of its products directly to airplane manufacturers and airlines.^[2] The company also distributes a range of aerospace grade fasteners.^[1]

Business & Financial Metrics^[3]

In 2009, BEAV generated a net income of $155.3 million on revenues of $1.94 billion. This represents a turnaround from 2008, when the company incurred a net loss of $99.4 million on revenues of $2.11 billion.

Business Segments^[4]

• Commercial Aircraft (47.0% of revenue): This segment manufactures first, business and coach class seats. The segment's first and business class seats are generally more expensive than their coach class seats because of added features such as laptop power sockets, adjustable lumbar supports and leg rests.^[5] In addition to manufacturing and selling new airplane seats, it supplies spares and replacements to its customers.^[5] Seating competes with companies like Zodiac S.A. and Premium Aircraft Interiors Group.

• Consumables Management (41.2% of revenue):This segment manufactures aerospace fasteners.^[6] Roughly 60% of the segment's orders are for the aftermarket.^[6] Commercial Aircraft stocks over 200,000 different kinds of fasteners making BE an easy one stop shop for airline maintenance crews.^[6]

• Business Jet (11.8% of revenue): This segment manufactures furnishings and interior systems for business jets.^[7] The segment's furnishings include seats, beds, sofas, credenzas, closets and kitchen structures.^[7] Its interior systems include walls, oxygen supply systems, lighting and air valves.^[7] BE is the largest supplier of furnishings for business jets and supplies its products to almost all business jet manufacturers.^[7] Business Jet competes with companies like Astronics (ATRO).

Key Trends and Forces

Increased orders of wide-body aircraft increased the demand for BE's products

The number of wide-body airplanes sold is excepted to grow at roughly 20% in 2011. ^[8] According to BE wide-body planes use five to eight times more of BE's products in dollar value than standard jets.^[8] If this occurs, BE will have an opportunity to significantly increase its sales.

Key Competitors

• Astronics (ATRO) manufactures cabin lighting, electronics and power systems for commercial, business and military aircraft. The company's cabin lighting for business jets competes with the cabin lighting produced by BE's Business Jet segment.^[9]
• Zodiac S.A. manufactures inflatable boats and pool equipment as well as aeronautical equipment. The company's aeronautical products include fuel circulation, hydraulics and electrical power systems as well as passenger seats and commercial aircraft interiors. Zodiac's passenger seats compete with BE's Seating Segment and their aircraft interiors compete with BE's Interior Systems segment.^[10][11]
• Premium Aircraft Interiors Group is a private company that manufactures seating, interiors, bathrooms and galley supplies for commercial passenger aircraft. The company's seating products compete with BE's Seating Segment and their aircraft interiors and galley supplies compete with BE's Interior Systems segment.^[12]

References

1. ↑ ^{1.0 1.1 1.2 1.3} BEAV 2007 10-K Item 1: General, pgs 1-2
2. ↑ BEAV 2007 10-K Item 1: Marketing and Customers, pg 11
3. ↑ BEAV 2009 10-K pg. F-4  
4. ↑ BEAV 2009 10-K pg. 8  
5. ↑ ^{5.0 5.1} BEAV 2007 10-K Item 1: Seating Segment, pg 8-9
6. ↑ ^{6.0 6.1 6.2} BEAV 2007 10-K Item 1: Distribution Segment, pg 9
7. ↑ ^{7.0 7.1 7.2 7.3} BEAV 2007 10-K Item 1: Business Jet Segment, pg 10
8. ↑ ^{8.0 8.1}
9. ↑ Google Finance: ATRO
10. ↑ Zodiac 2007 Annual Report: Consolidated Income Statement, pg 80
11. ↑ Google Finance: ZC
12. ↑ PAIG: Homepage