10-QPeriod: Q2 FY2007

CURTISS WRIGHT CORP Quarterly Report for Q2 Ended Jun 30, 2007

Filed August 9, 2007For Securities:CW

Summary

Curtiss-Wright Corporation (CW) reported a solid performance for the six months ended June 30, 2007, with net sales increasing by 18% year-over-year to $698.2 million. This growth was driven by robust organic expansion across its key segments and the successful integration of recent acquisitions, particularly in the Flow Control and Motion Control divisions. The company also saw significant increases in new orders and backlog, indicating strong future demand, with approximately 50% of its backlog defense-related. Profitability saw a notable increase, with net earnings rising 23% to $40.9 million, and diluted earnings per share grew to $0.91 from $0.75 in the prior year period. This improvement was fueled by higher sales volumes, cost reduction initiatives, and positive impacts from foreign currency translation. Despite some cost overruns in specific contracts and integration expenses impacting margins in the Flow Control segment, the company's overall operational efficiency and strategic acquisitions contributed to a positive financial trajectory. The company also strengthened its financial position through prudent management of its revolving credit facility and completed significant acquisitions post-period.

Key Highlights

  • 1Net sales increased by 18% to $698.2 million for the six months ended June 30, 2007, compared to $592.2 million in the prior year period.
  • 2Net earnings rose by 23% to $40.9 million for the six months ended June 30, 2007, with diluted EPS growing to $0.91 from $0.75.
  • 3The company completed two strategic acquisitions in the first six months of 2007: Valve Systems and Controls (VSC) and Scientech, LLC, contributing to revenue growth and expanding its market reach.
  • 4Backlog increased significantly to $1,042.0 million at June 30, 2007, up from $875.5 million at December 31, 2006, indicating strong future demand.
  • 5The Flow Control segment experienced strong sales growth in the oil and gas market, driven by coker valve products and increased refinery activity, but saw a decrease in operating income due to cost overruns and integration expenses.
  • 6The Motion Control segment showed robust organic growth in both sales and operating income, particularly in commercial aerospace and ground defense markets.
  • 7The company's liquidity remains strong, with $66.8 million in cash and cash equivalents and $306.4 million in unused credit available under its revolving credit agreement as of June 30, 2007.

Frequently Asked Questions

Revenue growth was driven by a combination of strong organic sales increases across all segments (13% for the first six months of 2007) and the contribution from two acquisitions made during the period. Key markets like oil and gas, commercial aerospace, and ground defense showed significant demand.

Profitability improved significantly. Net earnings increased by 23% to $40.9 million, and diluted earnings per share grew to $0.91 from $0.75 in the same period last year. This improvement was attributed to higher sales volumes, effective cost reduction initiatives, and favorable foreign currency translation, although partially offset by specific cost overruns and integration expenses.

The backlog at June 30, 2007, increased to $1,042.0 million from $875.5 million at the end of 2006, representing a substantial increase. Approximately 50% of this backlog is defense-related, suggesting a strong demand pipeline and stability for a significant portion of its business.

The Flow Control segment showed strong sales, especially in the oil and gas sector, but faced challenges with operating income due to cost overruns on U.S. Navy contracts and integration costs. Conversely, the Motion Control segment demonstrated robust organic growth in both sales and operating income, driven by commercial aerospace and ground defense markets. The Metal Treatment segment also showed steady organic growth across its markets.