10-QPeriod: Q1 FY2003

CURTISS WRIGHT CORP Quarterly Report for Q1 Ended Mar 31, 2003

Filed May 14, 2003For Securities:CW

Summary

Curtiss-Wright Corporation (CW) reported a strong first quarter in 2003, with net sales increasing by 84% to $179.9 million compared to the prior year period, driven significantly by strategic acquisitions completed in 2002 and 2003. Excluding these acquisitions, organic growth was still positive at 7%, indicating a healthy performance in core business operations. The company also experienced a substantial 81% increase in operating income, reaching $23.3 million, reflecting effective integration of acquired businesses and margin improvements in key segments. Diluted earnings per share rose to $1.36 from $0.90 in the prior year, showcasing improved profitability. The company continues to invest in growth, with new orders up 114% and a record backlog of $509.3 million. Cash flow from operations remained solid, supporting capital expenditures and dividend payments. Management expects continued strength in certain end markets, particularly defense and aerospace, while noting some headwinds in commercial aerospace. Overall, the results demonstrate a company successfully executing its growth strategy through acquisitions and organic expansion, leading to significant financial performance improvements.

Key Highlights

  • 1Net sales surged by 84% to $179.9 million in Q1 2003, largely driven by recent acquisitions contributing $75.3 million to revenue.
  • 2Operating income increased by 81% to $23.3 million, reflecting strong contributions from acquisitions and organic growth in core businesses.
  • 3Diluted earnings per share (EPS) grew to $1.36 from $0.90 in the prior year's quarter, a 52% increase.
  • 4New orders received more than doubled, increasing by 114% to $206.0 million, and the company's backlog reached a record high of $509.3 million.
  • 5The Flow Control segment experienced a significant 210% sales increase due to acquisitions and organic growth in naval, oil & gas, and power generation markets.
  • 6Two new acquisitions were completed in the first quarter of 2003: Collins Technologies and Advanced Material Process, expanding the company's capabilities.
  • 7Cash generated from operations was sufficient to cover capital expenditures, debt repayments, and dividends, indicating healthy liquidity.

Frequently Asked Questions

The substantial increase in sales and operating income was primarily driven by the successful integration of strategic acquisitions completed in 2002 and early 2003. These acquisitions contributed significantly to revenue and operating income. Additionally, organic growth in key segments like Flow Control, particularly in defense, oil & gas, and power generation markets, also played a crucial role.

Curtiss-Wright maintains healthy liquidity, with cash and cash equivalents totaling $41.7 million at the end of the quarter. The company has access to significant credit facilities, including a revolving credit agreement and a short-term credit agreement, providing substantial unused credit capacity. Internally generated cash flow from operations is deemed adequate to meet anticipated needs for capital expenditures, debt repayments, and dividends.

The company sees continued strength in its Flow Control segment, driven by defense, power generation, and oil & gas markets. The Metal Treatment segment is benefiting from higher sales of shot peening services and new laser peening technology. However, the Motion Control segment experienced a decline in its base business due to reduced commercial aircraft production, though this was partially offset by strong domestic ground defense sales and military aerospace products. Management expects pension income to decrease due to lower investment returns and interest rates.

Yes, the company completed two acquisitions in the first quarter of 2003: Collins Technologies (Motion Control segment) and Advanced Material Process (Metal Treatment segment). Additionally, subsequent to the quarter, on April 2, 2003, the company acquired E/M Engineered Coatings Solutions, further expanding its Metal Treatment segment. These acquisitions are a key part of the company's growth strategy.