10-QPeriod: Q1 FY2013

CURTISS WRIGHT CORP Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 2, 2013For Securities:CW

Summary

Curtiss-Wright Corporation (CW) reported a solid first quarter for 2013, demonstrating growth driven by strategic acquisitions and a recovering commercial market. Net sales increased by 18% year-over-year to $592.7 million, bolstered by strong performance in the Flow Control and Controls segments. The company successfully integrated the Phönix acquisition, contributing to revenue growth and expanding its presence in key industrial sectors. While defense market sales saw a slight decline, the robust increase in commercial sales, up 34%, highlights the diversification strategy's effectiveness. Net earnings from continuing operations were $20.9 million, or $0.44 per diluted share, showing resilience despite increased interest expenses related to new debt issuances. The company's liquidity remains strong, with significant availability under its revolving credit facility. Curtiss-Wright continues to manage its debt effectively, maintaining compliance with covenants. The company's focus on higher-margin, technologically advanced products and services, coupled with disciplined cost management and ongoing acquisitions, positions it for continued growth and value creation for shareholders.

Financial Highlights

55 data points
Beta

Revenue

$494.39M

33.5% Gross Margin

Net Income

$20.94M

4.2% Net Margin

EPS (Diluted)

$0.44

Total Assets

$3.23B

Cash & Equivalents

$118.80M

Free Cash Flow

-$16.09M

Financial Statements
Beta
Revenue$494.39M
Cost of Revenue$408.98M
Gross Profit$165.73M
R&D Expenses$17.61M
Operating Income$38.03M
Interest Expense$8.66M
Net Income$20.94M
EPS (Basic)$0.45
EPS (Diluted)$0.44
Shares Outstanding (Basic)46.62M
Shares Outstanding (Diluted)47.48M

Key Highlights

  • 1Net sales increased 18% to $592.7 million, driven by acquisitions and organic commercial growth.
  • 2Flow Control segment sales grew 16% to $310.6 million, supported by the Phönix acquisition and strength in power generation.
  • 3Controls segment sales increased 24% to $204.6 million, benefiting from recent acquisitions in the general industrial market.
  • 4Surface Technologies segment sales rose 11% to $77.5 million, with contributions from the Gartner acquisition.
  • 5Net earnings from continuing operations were $20.9 million ($0.44 per diluted share), up from $19.8 million in the prior year.
  • 6The company issued $400 million in Senior Notes to fund acquisitions and manage its debt structure.
  • 7Strong new orders growth of 17% year-over-year to $617.1 million indicates positive future revenue trends.

Frequently Asked Questions

Revenue growth in the first quarter of 2013 was primarily driven by the incremental impact of acquisitions, particularly the Phönix acquisition, and a strong increase in organic commercial sales across most segments. While defense market sales experienced a slight decrease, the substantial growth in commercial sales more than offset this.

The acquisition of Phönix Holding GmbH in February 2013 significantly contributed to Curtiss-Wright's revenue growth, adding $4.8 million in net sales and operating within the Flow Control segment. While the acquisition involved goodwill, the company reported it was funded through its revolving credit facility and excess cash, and did not materially impact the consolidated financial position or results, as indicated by the lack of pro forma data being presented.

Curtiss-Wright acknowledged the potential impact of U.S. Government defense budget changes, including sequestration. While specific reductions were undetermined at the time of the report, the company noted that any decrease in DoD spending, cancellations, or delays could materially affect its results of operations, financial position, or cash flows. Approximately 30% of its 2013 revenue was expected from defense markets.

The company issued $400 million in Senior Notes in February 2013, which were used in part to pay down borrowings under its revolving credit agreement. This strategic move strengthened its capital structure and maintained significant availability under its credit facility. Curtiss-Wright reported compliance with all its debt covenants.