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On May 28, 2009,
reported an increase of 2.1% in its Q2 FY09 earnings, driven by improved revenues year-over-year, dragged down by customers reducing inventory levels. Net income increased to $25.71 million or $0.86 per share from $25.19 million or $0.84 per share a year ago. Income from continuing operations grew 5.8% to $25.34 million or $0.85 per share, which missed the most recent consensus estimate of $0.96 per share.
Total revenue increased to $359.50 million from $358.03 million in Q2 FY08, led by a surge in its Avionics and Controls segment sales, partially offset by declining orders on the back of decreasing commercial aviation demand. Revenue from Avionics and Controls rose 14.9% to $169.11 million from $147.17 million. However, revenue from Sensors and Systems declined 10.9% to $86.76 million from $97.33 million, and that from Advanced Materials decreased 8.7% to $103.64 million from $113.53 million on a year-over-year basis.
Cost of sales increased 4.3% to $246.90 million from $236.65 million. Gross profit margin declined 260 basis points to 31.30% from 33.90% in Q2 FY08. This decline was due to currency related mark-to-market requirements, adjustments to long-term contracts and the impact of starting a new manufacturing facility in Mexico. Additionally, selling, general, and administrative expenses fell 5.3% to $54.62 million from $57.70 million, while research, development, and engineering expenses plummeted 27.0% to $18.29 million from $25.05 million in same quarter a year ago.
Meanwhile, the company emphasized that its backlog exceeds $1.00 billion. ESL added that the 787, the Joint Strike Fighter and the T-6B military trainer will be successful programs for the company.
For FY09, the company reduced its earnings per share guidance to range between $3.00 and $3.20 due to uncertainty in the industry, declining business jet and spare parts demand, and potential timing issues with foreign shipments of countermeasure flares.