10-QPeriod: Q3 FY2003

CURTISS WRIGHT CORP Quarterly Report for Q3 Ended Sep 30, 2003

Filed November 14, 2003For Securities:CW

Summary

Curtiss-Wright Corporation reported strong performance for the nine months ended September 30, 2003, with a significant increase in net sales driven by strategic acquisitions and organic growth across its segments. Net earnings also saw a healthy rise, indicating effective operational management and integration of acquired businesses. The company's financial position improved, with a substantial increase in cash and cash equivalents, largely due to proceeds from a successful senior notes offering. This offering, along with proactive management of its credit facilities, strengthened the company's balance sheet and provided flexibility for future growth. The company remains focused on integrating its recent acquisitions while continuing to drive organic growth in its core markets.

Key Highlights

  • 1Net sales increased by 63% to $552.4 million for the first nine months of 2003 compared to the prior year period, largely driven by $195.5 million in incremental sales from acquisitions.
  • 2Operating income grew by 52% to $61.7 million for the first nine months of 2003, also benefiting significantly from acquisitions.
  • 3Net earnings increased by 19% to $37.5 million ($3.60 per diluted share) for the first nine months of 2003.
  • 4The company completed a significant $200 million senior notes offering in September 2003, strengthening its liquidity and extending its debt maturity profile.
  • 5Cash and cash equivalents significantly increased by 143% to $116.0 million as of September 30, 2003, compared to December 31, 2002.
  • 6Curtiss-Wright completed four acquisitions during the first nine months of 2003, totaling $37.5 million in cash and assumed liabilities, further diversifying its operations.

Frequently Asked Questions

The primary drivers were the successful integration of four acquisitions completed during the period and the prior eighteen months, contributing substantial incremental sales and operating income. Organic growth within existing businesses, particularly in defense-related products and metal treatment services, also played a key role. Favorable foreign currency translation also provided a positive impact.

Curtiss-Wright issued $200 million in Senior Notes in September 2003, which significantly boosted its cash reserves and was used to repay existing debt. This, combined with strong operating cash flow, led to a substantial increase in cash and cash equivalents and improved liquidity, as evidenced by the increase in the current asset to current liability ratio.

The Flow Control segment saw strong sales growth driven by acquisitions and demand in naval and nuclear power markets, though it experienced some cost overruns and inventory adjustments. Motion Control showed improvement, particularly in defense sales, but faced challenges in commercial aerospace and overhaul/repair services. Metal Treatment reported increased sales and operating income, benefiting from acquisitions and new technologies, despite some impact from a customer bankruptcy and startup costs.

For the remaining part of 2003, the company planned approximately $14.6 million in capital expenditures for machinery, equipment, facility expansion, and new product lines. These expenditures, along with other operational needs, are expected to be met by cash generated from operations. Internally available funds were adequate for the $24.5 million in capital expenditures made during the first nine months of 2003.