10-QPeriod: Q1 FY2008

CURTISS WRIGHT CORP Quarterly Report for Q1 Ended Mar 31, 2008

Filed May 8, 2008For Securities:CW

Summary

Curtiss-Wright Corporation (CW) reported a solid first quarter for 2008, with net sales increasing by a substantial 30.3% year-over-year to $433.4 million. This growth was driven by both organic expansion and the impact of acquisitions made in 2007. Net earnings also saw a healthy increase of 11.6% to $21.8 million, translating to diluted earnings per share of $0.48, up from $0.44 in the prior year's first quarter. The company's diverse segment structure, including Flow Control, Motion Control, and Metal Treatment, contributed to this performance, with strong contributions from defense and power generation markets. Despite the overall positive results, investors should note a slight decline in operating margins to 9.4% from 10.6% in the prior year. This was attributed to lower gross margins on new, strategically priced programs (like the AP1000 nuclear reactor pumps and IBAS program) and unfavorable foreign currency translations. However, the company's strategic focus on niche markets and disciplined growth through acquisitions continues to position it for future success. The company also noted a significant increase in its backlog, providing a positive outlook for future revenue.

Key Highlights

  • 1Net sales surged 30.3% to $433.4 million in Q1 2008 compared to Q1 2007, driven by acquisitions and organic growth.
  • 2Net earnings increased by 11.6% to $21.8 million, with diluted EPS rising to $0.48 from $0.44.
  • 3Operating income grew 15.9% to $40.7 million, though operating margins slightly compressed to 9.4% from 10.6%.
  • 4The company saw significant growth in its Flow Control segment (up 53.2%) and Motion Control segment (up 18.0%), while Metal Treatment grew 6.2%.
  • 5Acquisitions made in 2007 contributed $68 million to sales and $3 million to operating income in Q1 2008.
  • 6Backlog increased 1% to $1.32 billion as of March 31, 2008, with approximately 40% from defense markets.
  • 7The company made capital expenditures of $24 million in Q1 2008 and expects to spend approximately $85 million for the remainder of 2008.

Frequently Asked Questions

The 30.3% increase in net sales to $433.4 million was primarily driven by the incremental revenue from acquisitions made in 2007, which contributed $68 million. Additionally, the company achieved 10% organic sales growth, particularly in its Motion Control and Flow Control segments.

Operating margins decreased to 9.4% from 10.6% due to several factors. These include lower gross margins on new, strategically priced programs like the AP1000 reactor coolant pumps and the IBAS program, which are in their early stages. Unfavorable foreign currency translations also negatively impacted margins, as did the initial intangible asset amortization from recent acquisitions.

The company's backlog increased by 1% to $1.32 billion as of March 31, 2008. Approximately 40% of this backlog is derived from defense-related markets, indicating a stable base of future revenue. The company also highlighted strong demand in the power generation sector, particularly for sales related to the AP1000 nuclear reactors in China.

All three segments showed growth. The Flow Control segment saw the most significant increase in sales (53.2%), largely due to acquisitions and sales of reactor coolant pumps. Motion Control sales grew 18.0%, boosted by defense contracts like the Bradley Fighting Vehicle upgrades. Metal Treatment sales increased by 6.2%, with positive contributions from commercial aerospace and general industrial markets, though automotive sales declined.