01—Abstract
Summary
Summary of the 10-K filed March 18, 2002. Cited figures are marked; the original filing is the authoritative source.
Curtiss-Wright's fiscal 2001 10-K shows a company that grew reported net sales 4% to $343.2 milliona, but reported net earnings jumped 53% to $62.9 million ($6.14 diluted EPS), a figure inflated by nonrecurring items.
The largest of these was a $23 millionb after-tax gain from the December 2001 sale of the Wood-Ridge business complex. On a 'normalized' basis (excluding nonrecurring items), net earnings rose 7% to $40.6 million, or $3.97 per diluted share. Investors should treat the normalized figures as the better guide to underlying performance, while noting that the company is still reporting positive, consistent growth in revenue and earnings.
The company operates three segments: Motion Control (aerospace and defense actuation systems, about 40% of 2001 sales), Metal Treatment (shot-peening and heat-treating, about 31%), and Flow Control (nuclear and industrial valves, about 29%). Growth came in large part from seven acquisitions in 2001, including Lau Defense Systems and Vista Controls, which strengthen the defense electronics franchise. Management guides to continued growth in 2002 despite weak commercial aerospace markets, and the company announced a $60 millionc acquisition of Penny & Giles/Autronics aerospace businesses in February 2002.
The balance sheet is conservative, with $67 milliond in cash and short-term investments against $21 million in total debt at year-end. Other significant items include a 2001 recapitalization in which Unitrin distributed its roughly 44% stake to shareholders through a new Class B common stock, which carries 80% of board seats. Government-related revenue was about 25% of 2001 sales, and a single commercial customer, Boeing, accounted for about 13% of consolidated revenue.
02—Key points
Key Highlights
- Reported net sales rose 4% to $343.2 million, and reported net earnings rose 53% to $62.9 million ($6.14 diluted EPS).
- Normalized net earnings were $40.6 million ($3.97 diluted EPS), up 7% from $37.9 million in 2000; the reported figure is inflated by a $23 million after-tax gain on the Wood-Ridge property sale.
- Seven acquisitions in 2001 (including Lau Defense Systems, Vista Controls, Solent & Pratt, and Peerless Instrument) added $13.9 million in sales; 2001 new orders were $326.5 million, up 9%.
- Year-end backlog reached $242.3 million, up from $182.6 million, with the Motion Control and Flow Control segments showing the strongest order visibility.
- Balance sheet is strong: $67 million in cash and short-term investments versus $21 million in total debt, with $76 million of unused credit available.
- Unitrin's distribution of its ~44% stake created a broader shareholder base (about 8,000 registered holders) and a new Class B stock that elects 80% of the board.
- A pending $60 million acquisition of Penny & Giles and Autronics aerospace businesses, announced February 2002, signals continued expansion of the Motion Control segment.
03—Questions
Frequently Asked Questions
How much of the 2001 earnings increase was due to one-time items?
Most of it. Reported net earnings were $62.9 million versus $41.1 million in 2000, but the $23 million after-tax gain on the Wood-Ridge sale accounts for a large portion of the increase. Excluding nonrecurring items, normalized earnings were $40.6 million, up 7%.
What drove the revenue growth in 2001?
Mainly acquisitions. Sales increased 4% overall, with the seven 2001 acquisitions contributing $13.9 million. Organic growth was offset by declines in aerospace repair and overhaul services and automotive-related businesses, and by a $3.0 million negative currency impact.
How concentrated is the customer base?
Government-related revenue (direct and indirect, primarily U.S.) was about 25% of 2001 sales. Boeing was the largest commercial customer at about 13% of consolidated revenue, and the company states that losing Boeing would have a material adverse effect on the Motion Control segment.
What does the Unitrin recapitalization mean for shareholders?
Unitrin distributed its roughly 44% stake to its own shareholders, creating a broader public shareholder base and improving liquidity. The new Class B common stock elects 80% of the board, while holders of the regular common stock elect up to 20%. Both classes vote together on other matters and are otherwise equal.
What are the main outlook risks for 2002?
Management expects another year of growth but acknowledges below-average global economic activity and weakness in commercial aerospace. Risks noted in the filing include dependence on defense budgets and contract awards, reliance on key customers such as Boeing and the U.S. Navy, the integration of recent acquisitions, and possible environmental remediation costs.
04—Continue