10-QPeriod: Q2 FY2009

CURTISS WRIGHT CORP Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 7, 2009For Securities:CW

Summary

Curtiss-Wright Corporation's (CW) Q2 2009 filing shows a slight decline in revenue and net earnings compared to the prior year, reflecting ongoing weak economic conditions impacting certain industrial and aerospace markets. Total sales were $447.4 million for the quarter, down 1.3% year-over-year, while net earnings decreased by 10% to $24.5 million. The company saw a significant drop in new orders, largely due to a large, non-recurring order in the prior year. However, defense-related markets, particularly naval and ground defense, demonstrated resilience and growth, contributing positively to the Motion Control and Flow Control segments. Acquisitions in 2009 provided a revenue boost, partially offsetting organic sales declines in segments like Metal Treatment. The company's financial position remains solid, with a healthy current ratio of 2.1:1. While cash and cash equivalents saw a slight decrease, working capital increased due to inventory build-up and changes in payables. Curtiss-Wright continues to manage costs through restructuring initiatives and focuses on its core competencies and strategic acquisitions to navigate the challenging economic environment, with a notable portion of its backlog in defense. Key areas of focus for investors include the performance of its diversified segments, the impact of ongoing economic pressures versus the strength of defense end-markets, and the successful integration of recent acquisitions. The company's ability to manage costs and maintain a strong balance sheet will be critical in the near term.

Financial Highlights

30 data points
Beta

Revenue

$447.37M

32.3% Gross Margin

Net Income

$24.45M

5.5% Net Margin

EPS (Diluted)

$0.54

Cash & Equivalents

$59.21M

Free Cash Flow

-$3.26M

Financial Statements
Beta
Revenue$447.37M
Cost of Revenue$302.79M
Gross Profit$144.58M
R&D Expenses$13.20M
Operating Income$43.76M
Interest Expense$6.54M
Net Income$24.45M
EPS (Basic)$0.54
EPS (Diluted)$0.54
Shares Outstanding (Basic)45.13M
Shares Outstanding (Diluted)45.54M

Key Highlights

  • 1Total revenue for Q2 2009 decreased by 1.3% to $447.4 million compared to $453.5 million in Q2 2008.
  • 2Net earnings for Q2 2009 decreased by 10% to $24.5 million ($0.54 per diluted share) from $27.1 million ($0.60 per diluted share) in Q2 2008.
  • 3New orders received significantly decreased by 54% to $404 million in Q2 2009 from $877 million in Q2 2008, primarily due to a large, non-recurring order in the prior year.
  • 4Defense markets showed strength, with increases in sales within naval and ground defense contributing to the Motion Control and Flow Control segments.
  • 5The Metal Treatment segment experienced a significant sales decline of 29.8% year-over-year, impacting overall company performance.
  • 6Two acquisitions in 2009 (EST Group and Nu-Torque) contributed $17 million in incremental sales for the quarter, helping to offset organic declines.
  • 7The company is actively managing costs through business consolidation and restructuring plans, with annualized cash savings estimated at $10 million.

Frequently Asked Questions

The significant decrease in new orders by 54% in the second quarter of 2009 compared to the prior year is primarily attributed to a large order exceeding $300 million received in Q2 2008 for reactor coolant pumps for domestic AP1000 nuclear power plants, which did not recur in the current period.

These acquisitions, completed in early 2009, contributed $17 million in incremental sales during the second quarter of 2009. While they helped offset some of the organic sales declines, they also incurred incremental losses primarily due to amortization expenses, which are common in the early periods of ownership.

Defense markets, particularly naval and ground defense, remain a strong point for Curtiss-Wright, showing increased sales driven by programs like the Ford class aircraft carrier and the Bradley Fighting Vehicle. This contrasts with segments like Metal Treatment, which experienced significant declines due to weak economic conditions in general industrial and commercial aerospace markets.

Curtiss-Wright is implementing business consolidation and restructuring plans across its segments, which are expected to result in annualized cash savings of approximately $10 million upon completion. These initiatives aim to reduce operating expenses and overhead costs, particularly in segments facing declining sales.