10-QPeriod: Q1 FY2010

CURTISS WRIGHT CORP Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 6, 2010For Securities:CW

Summary

Curtiss-Wright Corporation reported modest revenue growth in the first quarter of 2010, with net sales increasing by 4.2% to $441.8 million compared to the prior year period. This growth was driven by a combination of organic expansion across key markets like defense, commercial aerospace, and power generation, as well as favorable foreign currency translation. While operating income remained flat year-over-year at $31.1 million, the company demonstrated improved organic operating margins, particularly in its Flow Control and Motion Control segments, reflecting successful cost reduction initiatives and a favorable product mix. The company's balance sheet shows a strengthening cash position, with cash and cash equivalents increasing by over $14 million to $79.7 million. Total assets grew to $2.19 billion, supported by increases in goodwill and current assets. Despite a rise in long-term debt, the company maintains a healthy current ratio of 1.8:1, indicating solid short-term liquidity. Investors will find the increase in new orders by 10% encouraging, signaling potential future revenue growth.

Financial Highlights

29 data points
Beta

Revenue

$441.77M

31.2% Gross Margin

Net Income

$16.34M

3.7% Net Margin

EPS (Diluted)

$0.35

Cash & Equivalents

$79.70M

Free Cash Flow

-$33.88M

Financial Statements
Beta
Revenue$441.77M
Cost of Revenue$303.79M
Gross Profit$137.98M
R&D Expenses$13.84M
Operating Income$31.08M
Interest Expense$5.67M
Net Income$16.34M
EPS (Basic)$0.36
EPS (Diluted)$0.35
Shares Outstanding (Basic)45.64M
Shares Outstanding (Diluted)46.16M

Key Highlights

  • 1Net sales increased by 4.2% to $441.8 million, driven by organic growth and favorable foreign currency translation.
  • 2Operating income was flat at $31.1 million, but organic operating income increased by approximately 14% with improved margins.
  • 3The company experienced a 10% increase in new orders, totaling $502 million, indicating positive future demand.
  • 4Cash and cash equivalents increased by $14.7 million to $79.7 million, strengthening the company's liquidity.
  • 5The Flow Control segment showed a significant 25.0% increase in operating income due to strong defense and power generation markets.
  • 6Restructuring activities are ongoing, with $1.8 million incurred in Q1 2010, aimed at achieving annualized cash savings of $10-15 million.
  • 7The company recognized a non-cash charge of $0.8 million due to changes in U.S. healthcare legislation impacting retiree health benefits.

Frequently Asked Questions

Revenue growth was driven by a combination of factors, including organic sales increases in the defense, commercial aerospace, and power generation markets, as well as favorable foreign currency translation. The Flow Control and Motion Control segments were key contributors to this growth.

While overall operating income remained flat year-over-year at $31.1 million, the company achieved improved organic operating margins, particularly in its Flow Control and Motion Control segments. This improvement was attributed to higher volumes, better absorption, cost reduction programs, and a shift towards higher-margin products.

Curtiss-Wright's liquidity remains strong, with cash and cash equivalents increasing to $79.7 million. The company has access to a $224 million unused credit line under its revolving credit agreement. While long-term debt has increased, the company maintains a healthy current ratio of 1.8:1 and believes its cash flow and available borrowings are sufficient to meet its capital needs.

The recently enacted U.S. healthcare legislation will reduce the income tax deduction for retiree prescription drug benefits starting in 2013 by the amount of the federal subsidy. Curtiss-Wright recognized a non-cash charge of approximately $0.8 million in the first quarter of 2010 to write off deferred tax assets related to this change.