10-QPeriod: Q1 FY2011

CURTISS WRIGHT CORP Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:CW

Summary

Curtiss-Wright Corporation reported solid financial performance for the first quarter of 2011, demonstrating significant growth in net earnings, which rose to $24.5 million from $16.3 million in the prior year's quarter, representing a substantial increase of 50%. This growth was driven by a 4.5% increase in net sales to $461.9 million, primarily fueled by robust performance in the Metal Treatment and Motion Control segments. The company also saw a notable improvement in operating income, up 34.1% to $41.7 million, reflecting effective cost management and operational efficiencies. Despite a slight increase in cash used for operating activities, the company maintained a strong liquidity position and completed strategic acquisitions, positioning it for continued expansion and shareholder value creation. Key operational highlights include strong double-digit growth in the Metal Treatment segment's operating income (66.5%) and a healthy increase in the Motion Control segment's sales (8.4%). The company's diversified business model across defense and commercial markets appears to be a key strength, with defense sales showing a 5.2% increase and commercial sales growing by 4.1%. Curtiss-Wright is actively managing its capital structure, with prudent use of its revolving credit facility to fund strategic acquisitions. The company's outlook remains positive, with expectations of continued operational improvements and strategic growth initiatives.

Financial Highlights

51 data points
Beta

Revenue

$450.80M

31.9% Gross Margin

Net Income

$22.97M

5.1% Net Margin

EPS (Diluted)

$0.49

Total Assets

$2.31B

Cash & Equivalents

$51.97M

Free Cash Flow

-$62.03M

Financial Statements
Beta
Revenue$450.80M
Cost of Revenue$307.03M
Gross Profit$143.77M
R&D Expenses$13.60M
Operating Income$39.19M
Interest Expense$5.12M
Net Income$22.97M
EPS (Basic)$0.49
EPS (Diluted)$0.49
Shares Outstanding (Basic)46.20M
Shares Outstanding (Diluted)46.97M

Key Highlights

  • 1Net earnings increased by 50% year-over-year, reaching $24.5 million ($0.52 per diluted share) compared to $16.3 million ($0.35 per diluted share) in Q1 2010.
  • 2Total net sales grew by 4.5% to $461.9 million, driven by strong performance in the Metal Treatment (+17.3%) and Motion Control (+8.4%) segments.
  • 3Operating income saw a significant increase of 34.1% to $41.7 million, indicating improved operational efficiency and profitability.
  • 4The Metal Treatment segment delivered exceptional operating income growth of 66.5%, with its operating margin expanding by 470 basis points.
  • 5The company completed an acquisition of Predator Systems, Inc. for $13.3 million, adding to its Motion Control segment's capabilities and goodwill.
  • 6Despite a net decrease in cash and cash equivalents from $68.1 million to $51.9 million, the company's liquidity remains strong, supported by $204 million in unused credit under its revolving credit facility.
  • 7Defense market sales increased by 5.2% to $181.8 million, with notable growth in aerospace and naval defense, while commercial markets grew 4.1% to $280.1 million.

Frequently Asked Questions

The primary driver of the significant 50% increase in net earnings was the growth in net sales, particularly in the Metal Treatment and Motion Control segments, coupled with improved operating income resulting from increased sales volume, favorable absorption of fixed overhead, and benefits from cost reduction and restructuring programs. A lower effective tax rate compared to the prior year also contributed positively.

The company made one acquisition, Predator Systems, Inc. (PSI), for $13.3 million in January 2011, which was integrated into the Motion Control segment. This acquisition contributed to incremental sales and goodwill. The company also noted the impact of prior acquisitions in June 2010 (Hybricon Corporation and Specialist Electronics Services) on the Motion Control segment's results.

Curtiss-Wright maintains a strong liquidity position, supported by cash and cash equivalents, cash flow from operations, and available borrowings under its revolving credit facility. The company used $163 million of its credit facility in Q1 2011 and still had $204 million in unused credit available at the end of the quarter. Management believes these resources are sufficient to meet both short-term and long-term capital needs.

Performance varies by segment. The Metal Treatment segment showed exceptional growth in sales and operating income. The Motion Control segment also experienced sales growth, benefiting from acquisitions and organic demand. The Flow Control segment's sales were relatively flat, with growth in industrial and naval defense markets offset by a decline in the oil and gas market. Defense markets saw overall growth, driven by aerospace and naval, while commercial markets also expanded.