01—Abstract
Summary
Summary of the 10-K filed February 19, 2015. Cited figures are marked; the original filing is the authoritative source.
Curtiss-Wright Corporation's 2014 10-K filing reveals a company in a growth phase, driven significantly by strategic acquisitions across its Commercial/Industrial and Energy segments.
The company reported a 6% increase in net sales to $2.24 billiona, with strong performance in its Commercial/Industrial segment (+13%) and Energy segment (+8%), while the Defense segment saw a slight decline (-4%). Net earnings from continuing operations grew by a notable 22% to $170 million, demonstrating effective cost management and operational improvements. The company's strategy centers on diversification to mitigate business cycle volatility and leveraging its position in high-performance, technically sophisticated markets.
Curtiss-Wright continued its acquisition strategy in 2014, acquiring three businesses to bolster its portfolio, and indicated plans for continued M&A activity. The report also highlights the company's commitment to returning capital to shareholders, evidenced by a 30% increase in its quarterly dividend and an authorized $300 millionb share repurchase program starting in 2015.
02—Key points
Key Highlights
- Net sales increased by 6% to $2.24 billion in 2014, driven by strong performance in the Commercial/Industrial and Energy segments.
- Net earnings from continuing operations grew by 22% to $170 million, reflecting improved profitability and operational efficiency.
- The company completed three strategic acquisitions in 2014 to expand its portfolio and market reach.
- The Defense segment experienced a 4% decrease in sales, partly due to lower production levels on certain programs and a strategic shift towards commercial markets.
- Curtiss-Wright increased its quarterly dividend by 30% and announced a significant share repurchase program for 2015.
- The company faces risks related to U.S. government defense spending, contractual obligations, competition, and the integration of acquired businesses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Curtiss Wright Corp kept $0.05.
- Revenue$2.24B100.0%
- Cost of revenue−$1.47B65.4%
- Gross profit$776.5M34.6%
- Operating costs−$494.1M22.0%
- Operating income$282.4M12.6%
- Interest, other & tax−$169.0M7.5%
- Net income$113.3M5.1%
Where FY2014 revenue went
$2.24B- Cost of revenue: $1.47B, 65% of revenue
- Other operating costs: $426.3M, 19% of revenue
- Net income: $113.3M, 5.1% of revenue
- R&D: $67.8M, 3.0% of revenue
- Interest, other & tax: $169.0M, 7.5% of revenue
Kept 5.1% as net incomeNet income $113.3M · 5.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 19, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $2.24B$2.12B | +5.9% |
| Cost of Revenue | $1.47B$1.38B | +6.1% |
| Gross Profit | $776.52M$735.84M | +5.5% |
| R&D Expenses | $67.84M$63.58M | +6.7% |
| Operating Income | $282.37M$237.12M | +19.1% |
| Interest Expense | $35.79M$37.05M | −3.4% |
| Net Income | $113.34M$137.98M | −17.9% |
| EPS (Basic) | $2.36$2.94 | −19.7% |
| EPS (Diluted) | $2.31$2.88 | −19.8% |
| Shares Outstanding (Basic) | 48.02M46.99M | +2.2% |
| Shares Outstanding (Diluted) | 49.08M47.91M | +2.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of Curtiss-Wright's sales growth in 2014?
Sales growth in 2014 was primarily driven by increases in the Commercial/Industrial segment, fueled by acquisitions and higher demand in commercial aerospace and the oil and gas markets. The Energy segment also contributed positively due to increased demand for industrial valves and pressure relief valves. The Defense segment experienced a slight decrease, impacted by lower sales in ground defense and changes in government spending priorities.
How did Curtiss-Wright's acquisition strategy impact its financial performance in 2014?
Curtiss-Wright actively pursued its acquisition strategy in 2014, acquiring three businesses for a total of $34.4 million. These acquisitions contributed $63 million in incremental sales and $5 million in incremental operating income to the Commercial/Industrial segment, significantly contributing to the segment's overall growth and profitability.
What are the key risks and uncertainties facing Curtiss-Wright?
Key risks include the cyclical nature of U.S. defense spending, potential contract terminations or penalties, intense competition, the success of integrating acquired businesses, reliance on key personnel, and fluctuations in international operations due to economic and political instability. The company also noted potential liabilities related to a significant product liability claim and ongoing environmental remediation.
How is Curtiss-Wright returning capital to shareholders?
Curtiss-Wright demonstrated its commitment to shareholder returns by increasing its quarterly dividend by 30% in the first quarter of 2014. Furthermore, the company announced a new share repurchase program authorized by its board of directors to purchase up to $300 million of its common stock, beginning in 2015.
06—Continue