10-QPeriod: Q1 FY2015

CURTISS WRIGHT CORP Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 30, 2015For Securities:CW

Summary

Curtiss-Wright Corporation's first quarter 2015 results show a modest increase in total net sales to $546.2 million, up 1% year-over-year, driven by growth in the Power segment. The company reported operating income of $72.8 million, a significant 19% increase, primarily due to strong performance in the Power and Commercial/Industrial segments, the latter benefiting from operational improvements. Net earnings from continuing operations rose 19% to $43.2 million, or $0.89 per diluted share, reflecting improved profitability across most segments. A notable event in the quarter was the voluntary pension contribution of $145 million, which significantly impacted operating cash flow, leading to a substantial increase in net cash used by operating activities. The company also continued its share repurchase program, deploying $47 million in the first quarter. Significant strategic actions were taken, including a realignment of reportable segments into Commercial/Industrial, Defense, and Power, and continued efforts to divest non-core businesses. The company recognized an impairment charge of $40 million in its Downstream Refining business due to market uncertainties. Despite these adjustments and a decrease in cash and cash equivalents from $450.1 million to $215.6 million, Curtiss-Wright maintains a strong liquidity position with ample borrowing capacity under its credit facility and compliance with debt covenants.

Financial Highlights

55 data points
Beta

Revenue

$546.20M

35.0% Gross Margin

Net Income

$15.99M

2.9% Net Margin

EPS (Diluted)

$0.33

Total Assets

$3.13B

Cash & Equivalents

$215.59M

Free Cash Flow

-$180.19M

Financial Statements
Beta
Revenue$546.20M
Cost of Revenue$355.10M
Gross Profit$191.10M
R&D Expenses$15.26M
Operating Income$72.83M
Interest Expense$9.00M
Net Income$15.99M
EPS (Basic)$0.34
EPS (Diluted)$0.33
Shares Outstanding (Basic)47.72M
Shares Outstanding (Diluted)48.73M

Key Highlights

  • 1Total net sales increased by 1% to $546.2 million for the three months ended March 31, 2015, compared to $542.9 million in the prior year period.
  • 2Operating income increased by 19% to $72.8 million, with operating margins improving to 13.3%, driven by strong performance in the Power segment, including a one-time termination change order benefit.
  • 3Net earnings from continuing operations rose 19% to $43.2 million ($0.89 per diluted share) from $36.4 million ($0.74 per diluted share) in the prior year.
  • 4A significant voluntary pension contribution of $145 million was made in Q1 2015, contributing to a substantial increase in net cash used by operating activities to $171.1 million.
  • 5The company divested one non-core business in Q1 2015 and recognized a $40 million impairment charge in its Downstream Refining business, which is classified as held for sale.
  • 6Share repurchases totaled $47 million in the first quarter of 2015, with $253 million remaining under the authorized program.
  • 7The company realigned its reportable segments to Commercial/Industrial, Defense, and Power for improved operational focus and reporting.

Frequently Asked Questions

The primary driver for the significant increase in net cash used by operating activities to $171.1 million in Q1 2015 was a voluntary pension contribution of $145 million. This substantial cash outflow, coupled with other operating working capital adjustments, led to the notable decrease in operating cash flow compared to the prior year.

The company continued to classify certain businesses as held for sale, including its Downstream Refining business. In Q1 2015, an impairment charge of $40 million was recognized in the Downstream Refining business due to market uncertainties. The results of these discontinued operations, including the impairment charge, are reported separately and contributed to a loss from discontinued operations.

Curtiss-Wright reported no borrowings outstanding under its revolving credit agreement as of March 31, 2015, with $442 million in unused credit available. The company remains in compliance with all debt covenants, including a debt-to-capitalization limit. Management believes its cash position, operating cash flow, and credit facility provide sufficient resources to meet its short-term and long-term capital needs.

Yes, the company realigned its reportable segments beginning in the first quarter of 2015. The previous Energy segment was renamed Power, and businesses serving naval defense and commercial nuclear power generation were moved into the Power segment. The remaining oil and gas businesses were moved into the Commercial/Industrial segment. The new segments are Commercial/Industrial, Defense, and Power. Prior period financial information has been reclassified to conform to this new presentation.