10-QPeriod: Q1 FY2014

CURTISS WRIGHT CORP Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 1, 2014For Securities:CW

Summary

Curtiss-Wright Corporation reported a strong first quarter for 2014, with net sales increasing by 8% to $641.4 million and net earnings rising significantly by 68% to $35.2 million, or $0.72 per diluted share. This growth was driven by robust performance in the Commercial/Industrial and Energy segments, which saw sales increases of 21% and 7% respectively, alongside strong operating income growth across all segments. The company also benefited from strategic acquisitions, contributing to revenue and order growth, and successfully integrated new businesses. Despite a slight decrease in defense segment sales, overall operational improvements, productivity gains, and favorable cost absorption contributed to a substantial 55% increase in total operating income. The company also demonstrated effective capital allocation by increasing its quarterly dividend and continuing its share repurchase program. Management expressed confidence in the company's financial health, with sufficient liquidity to meet its capital needs and compliance with debt covenants.

Financial Highlights

56 data points
Beta

Revenue

$542.96M

34.0% Gross Margin

Net Income

$35.16M

6.5% Net Margin

EPS (Diluted)

$0.72

Total Assets

$3.46B

Cash & Equivalents

$127.97M

Free Cash Flow

-$32.96M

Financial Statements
Beta
Revenue$542.96M
Cost of Revenue$358.35M
Gross Profit$184.61M
R&D Expenses$16.88M
Operating Income$61.03M
Interest Expense$9.05M
Net Income$35.16M
EPS (Basic)$0.73
EPS (Diluted)$0.72
Shares Outstanding (Basic)47.98M
Shares Outstanding (Diluted)49.13M

Key Highlights

  • 1Net sales increased 8% year-over-year to $641.4 million in Q1 2014.
  • 2Net earnings surged 68% to $35.2 million, translating to $0.72 diluted EPS, up from $0.44 in Q1 2013.
  • 3Operating income showed significant improvement, increasing 55% to $59.1 million.
  • 4Commercial/Industrial segment sales grew by 21%, driven by strong performance in commercial aerospace and industrial markets, boosted by recent acquisitions.
  • 5Defense segment sales experienced a slight decline of 4%, though operating income increased by 25% due to productivity improvements.
  • 6Energy segment sales increased by 7%, with operating income growing by 16%, benefiting from in-sourcing manufacturing and organizational realignment.
  • 7The company repurchased shares and increased its quarterly dividend by 30% in Q1 2014, signaling confidence in its financial position.

Frequently Asked Questions

Revenue growth was primarily driven by the Commercial/Industrial and Energy segments. The Commercial/Industrial segment saw a 21% increase due to strong demand in commercial aerospace and general industrial markets, further bolstered by acquisitions like Arens and Phönix. The Energy segment grew 7%, mainly from increased sales in the oil and gas market.

Profitability saw a substantial improvement. Net earnings increased by 68% to $35.2 million, and diluted earnings per share rose to $0.72 from $0.44 in the prior year. Operating income grew by 55% to $59.1 million, reflecting improved operational efficiencies, favorable cost absorption, and the impact of acquisitions.

Curtiss-Wright maintained compliance with all debt agreements and covenants. As of March 31, 2014, the company had $414 million in unused credit availability under its revolving credit agreement. Management expressed confidence in its liquidity position, stating that cash, cash flow from operations, and available borrowings are sufficient to meet short-term and long-term capital needs.

The company is involved in ongoing litigation, notably a claim from Canadian Natural Resources Limited (CNRL) related to a refinery incident, with damages estimated over $1 billion, where the outcome is uncertain and could materially affect financial results. There are also asbestos-related lawsuits, which the company believes will not result in material liability due to minimal asbestos use and insurance coverage. Environmental liabilities were stable at $16.2 million.