10-KPeriod: FY2005

CURTISS WRIGHT CORP Annual Report, Year Ended Dec 31, 2005

Filed March 7, 2006For Securities:CW

Summary

Curtiss-Wright Corporation's 2005 10-K filing reveals a robust year of growth, largely driven by strategic acquisitions and organic expansion across its three key segments: Flow Control, Motion Control, and Metal Treatment. The company reported significant increases in net sales and net earnings, signaling successful integration of acquired businesses and strong performance in both defense and commercial markets. The defense sector continues to be a major contributor, accounting for approximately half of the company's revenues, with particular strength in naval programs. The commercial aerospace market showed signs of recovery, benefiting the Motion Control and Metal Treatment segments. Financially, the company demonstrated improved liquidity and managed its debt effectively, partly through a new Senior Note issuance. Management highlighted a positive outlook for continued growth, driven by ongoing defense spending, potential expansion in the power generation sector (particularly nuclear), and recovery in commercial aerospace. Key risks identified include dependence on U.S. government defense spending, potential impacts from geopolitical events, and the success of future acquisitions. The company is actively investing in research and development, including advanced technologies like laser peening, to maintain its competitive edge.

Key Highlights

  • 1Net sales increased by 18% to $1.13 billion in 2005, with acquisitions contributing significantly to this growth.
  • 2Net earnings rose by 16% to $75.3 million, or $3.44 per diluted share.
  • 3The company's business is heavily weighted towards the defense sector, with approximately 50% of revenues derived from defense programs, particularly U.S. Navy procurements (24% of total revenue).
  • 4Strategic acquisitions were a key driver of growth, with several businesses acquired in 2004 and 2005 contributing substantially to revenue increases.
  • 5The Flow Control segment saw strong performance in oil and gas markets driven by coker valve products, while Motion Control benefited from commercial aerospace recovery.
  • 6Metal Treatment experienced robust organic growth, particularly in shot peening services for commercial aerospace and automotive markets.
  • 7The company's backlog stood at $805.6 million at year-end 2005, up from $627.7 million in 2004, indicating strong future demand.
  • 8Curtiss-Wright increased its quarterly dividend by 33% to $0.12 per share, demonstrating confidence in its financial performance and commitment to returning value to shareholders.

Frequently Asked Questions

Curtiss-Wright Corporation's revenue is significantly driven by the defense sector, which accounted for approximately 50% of its revenues in 2005. Within this, U.S. Navy procurements were a substantial portion. Additionally, the company serves commercial aerospace, power generation, oil and gas, and general industrial markets.

Acquisitions were a major contributor to Curtiss-Wright's financial performance in 2005. The company stated that acquisitions made in 2004 and 2005 contributed $100.5 million in incremental sales, representing 57% of the total sales increase from 2004. Organic sales growth in the base businesses was 8%.

The primary risks highlighted include a substantial dependence on U.S. government defense spending and contractors, which could be affected by budget changes or contract terminations. Other risks include fluctuations in operating results due to defense industry cycles, potential adverse impacts from future terror attacks or wars on commercial businesses, the ability to successfully integrate future acquisitions, intense market competition, reliance on key personnel, foreign currency exchange rate volatility, intellectual property protection, and extensive government regulations.

Curtiss-Wright has a positive outlook for its defense business in the near to intermediate term. For commercial aerospace, the company anticipates continued improvement driven by increased aircraft production. In power generation, particularly nuclear power, it sees expansion opportunities due to life extensions and new plant construction globally. The oil and gas market is expected to see increased capital expenditures, benefiting the company's flow control products.