10-QPeriod: Q2 FY2001

CURTISS WRIGHT CORP Quarterly Report for Q2 Ended Jun 30, 2001

Filed August 15, 2001For Securities:CW

Summary

Curtiss-Wright Corporation (CW) reported its financial results for the second quarter and the first half of 2001. For the quarter ended June 30, 2001, the company saw a modest increase in net sales to $86.6 million, up 4% from the prior year, driven by demand in aerospace, defense, and oil & gas markets, partially offset by softening automotive sectors and unfavorable foreign exchange rates. While reported net earnings slightly decreased to $10.5 million ($1.02 per diluted share) from $10.6 million ($1.05 per diluted share) in the prior year quarter, management highlighted that normalized earnings showed a 10% improvement year-over-year. The company continues to manage its financial position with a strong working capital and an improved current ratio. Strategic initiatives include the acquisition of Solent & Pratt Ltd. to expand its Flow Control business and plans to sell its industrial park to redeploy capital. For the six months ended June 30, 2001, net sales remained relatively flat at $166.5 million. Net earnings were $19.7 million ($1.92 per diluted share), a slight decrease from $19.9 million ($1.96 per diluted share) in the comparable period of 2000. However, on a normalized basis, net earnings increased by 13%. The company's financial condition remains robust, with ample liquidity from its credit facilities and internally generated funds to meet operational and capital expenditure needs. Management expects to complete its proposed recapitalization in the fourth quarter of 2001 and is also pursuing the sale of its industrial park.

Key Highlights

  • 1Net sales for the second quarter of 2001 increased by 4% to $86.6 million compared to the prior year, driven by strong performance in aerospace, defense, and oil & gas sectors.
  • 2Despite a slight decrease in reported net earnings, normalized net earnings showed a 10% improvement year-over-year for the second quarter and a 13% improvement for the first half of 2001.
  • 3The company acquired Solent & Pratt Ltd. for approximately $1.5 million to enhance its Flow Control business segment and gain a European manufacturing presence.
  • 4Curtiss-Wright is pursuing the sale of its industrial park in Wood-Ridge, New Jersey, to re-deploy capital into strategic initiatives, expecting to realize a gain from the sale.
  • 5The company maintains strong liquidity with $67.2 million in cash and short-term investments and $35.3 million in unused credit available under its revolving credit agreement as of June 30, 2001.
  • 6Capital expenditures for the first half of 2001 were $7.6 million, with an additional $10.0 million planned for the remainder of the year, funded by internal sources.
  • 7The proposed recapitalization is expected to be brought to a shareholder vote in the fourth quarter of 2001.

Frequently Asked Questions

Sales for the second quarter of 2001 increased by 4% to $86.6 million, primarily driven by higher demand for aerospace OEM and global defense products, as well as products supplied to the oil & gas markets. These increases were partially offset by softening in automotive-related businesses, lower demand in aerospace overhaul and repair services, and unfavorable foreign exchange rates.

While reported net earnings slightly decreased in the second quarter of 2001, management emphasized that normalized earnings showed a 10% improvement year-over-year. This improvement was attributed to higher margins from a favorable sales mix and the benefits of profit improvement/cost reduction programs, despite unfavorable foreign exchange rates and higher energy costs.

Curtiss-Wright recently acquired Solent & Pratt Ltd. for approximately $1.5 million to bolster its Flow Control segment and strengthen its European presence. Additionally, the company is actively pursuing the sale of its non-core industrial park in Wood-Ridge, New Jersey, to free up capital for strategic initiatives and expects to recognize a gain from this transaction.

The company demonstrated strong financial health with working capital of $161.1 million and a current ratio of 4.79 to 1 as of June 30, 2001. Total cash, cash equivalents, and short-term investments stood at $67.2 million. Curtiss-Wright also has access to significant credit facilities, with $35.3 million available under its revolving credit agreement, ensuring ample liquidity to meet its obligations.