10-QPeriod: Q3 FY2008

CURTISS WRIGHT CORP Quarterly Report for Q3 Ended Sep 30, 2008

Filed November 7, 2008For Securities:CW

Summary

Curtiss-Wright Corporation (CW) demonstrated robust financial performance in the nine months ended September 30, 2008, with net sales increasing by 20.8% to $1.32 billion and net earnings growing by 15.6% to $76.4 million, or $1.68 per diluted share. This growth was driven by strong organic expansion across all segments, particularly in the Flow Control segment bolstered by significant reactor coolant pump orders for China's AP1000 nuclear reactors. The company also successfully integrated recent acquisitions, contributing to overall sales and order growth. Despite a challenging economic environment, Curtiss-Wright maintained a healthy liquidity position, with cash and cash equivalents increasing to $77.3 million. Capital expenditures focused on expanding capabilities and supporting new product lines, notably the AP1000 program. The company also engaged in strategic acquisitions, including Mechetronics Ltd. and VMetro ASA in October 2008, to further enhance its market position in the Motion Control segment. Management expressed confidence in their ability to navigate economic uncertainties through diversified operations and strong customer relationships.

Key Highlights

  • 1Net sales increased 20.8% to $1.32 billion for the first nine months of 2008, compared to $1.09 billion in the same period of 2007.
  • 2Net earnings rose 15.6% to $76.4 million for the first nine months of 2008, translating to $1.68 per diluted share, up from $1.47 in the prior year.
  • 3The Flow Control segment showed significant growth, driven by substantial orders for reactor coolant pumps for China's AP1000 nuclear reactors.
  • 4Operating income increased by 17.4% to $138.6 million for the first nine months of 2008.
  • 5The company completed two significant acquisitions post-quarter: Mechetronics Ltd. and VMetro ASA, expanding its Motion Control segment.
  • 6Cash and cash equivalents increased to $77.3 million as of September 30, 2008, indicating solid liquidity.
  • 7Backlog grew to $1.73 billion, with approximately 34% related to defense markets, providing visibility for future revenue.

Frequently Asked Questions

Revenue and earnings growth were primarily driven by strong organic sales growth across all three segments (Flow Control, Motion Control, and Metal Treatment), significant contributions from acquisitions made in 2007, and particularly strong demand for reactor coolant pumps for China's AP1000 nuclear reactors within the Flow Control segment.

Recent acquisitions contributed positively to revenue and orders. For the first nine months of 2008, acquisitions made in 2007 added $111 million in incremental new orders and $127 million in incremental sales. The company also completed two significant acquisitions in October 2008 (Mechetronics Ltd. and VMetro ASA) which are expected to further enhance its portfolio.

While acknowledging current economic uncertainties, management expressed confidence due to the company's diversified operations across various industries and strong customer relationships. The significant backlog provides revenue visibility. The company also has access to credit markets to ensure sufficient discretionary funding capacity.

Total assets increased to $2.03 billion from $1.99 billion. Key changes include an increase in cash and cash equivalents to $77.3 million, a rise in inventories to $283.0 million, and an increase in long-term debt to $518.5 million. Stockholders' equity also saw a notable increase to $968.7 million.