Summary
Curtiss-Wright Corporation (CW) reported a decrease in net sales for the third quarter and the first nine months of 2015 compared to the prior year periods, driven primarily by lower sales in the Commercial/Industrial segment. Despite the sales decline, operating income saw a significant increase in the Defense segment, while the Power segment experienced a rebound in the third quarter due to reduced costs associated with the AP1000 program. The company also reported a substantial net loss from discontinued operations, primarily related to asset impairments and divestitures. Cash flow from operations was negative for the nine-month period, largely due to a significant voluntary pension contribution, though the company maintains a strong liquidity position with ample availability under its revolving credit facility.
Financial Highlights
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Financial Statements
Beta
| Revenue | $525.53M |
| Cost of Revenue | $340.04M |
| Gross Profit | $185.49M |
| R&D Expenses | $15.05M |
| Operating Income | $63.81M |
| Interest Expense | $8.97M |
| Net Income | $33.88M |
| EPS (Basic) | $0.73 |
| EPS (Diluted) | $0.71 |
| Shares Outstanding (Basic) | 46.37M |
| Shares Outstanding (Diluted) | 47.40M |
Key Highlights
- 1Net sales decreased by 6% to $525.5 million for the third quarter and 3% to $1,616.9 million for the first nine months of 2015, compared to the prior year periods.
- 2Operating income for the third quarter decreased by 14% to $63.8 million, primarily due to lower sales in the Commercial/Industrial segment and a pension settlement charge.
- 3The Defense segment showed strong performance with a 13% increase in operating income for the third quarter and a 21% increase for the nine-month period, driven by margin expansion initiatives and favorable foreign currency translation.
- 4Net loss from discontinued operations was significant, totaling $4.2 million for the third quarter and $45.9 million for the nine months ended September 30, 2015, primarily due to impairments and divestiture losses.
- 5Cash flow from operating activities was negative at $(4.7) million for the nine months ended September 30, 2015, a sharp decline from $153.2 million in the prior year, mainly due to a $145 million voluntary pension contribution.
- 6The company repurchased $185.2 million of its common stock during the first nine months of 2015, significantly more than the $44.6 million repurchased in the same period of 2014.
- 7Total assets decreased to $3,014.7 million as of September 30, 2015, from $3,399.5 million as of December 31, 2014, largely driven by decreases in cash, goodwill, and assets held for sale.
Frequently Asked Questions
The decrease in net sales for both the third quarter and the first nine months of 2015 was primarily attributed to lower sales in the Commercial/Industrial segment, resulting from decreased international project sales of severe-service industrial valves and reduced sales of industrial vehicle products. Additionally, lower sales of surface technology services, particularly to Airbus, also contributed.
Discontinued operations resulted in a significant net loss for the period. For the nine months ended September 30, 2015, the loss was $45.9 million, which included impairment charges of approximately $41 million related to businesses held for sale and losses on divestitures. These activities reflect the company's strategic portfolio review to divest non-core businesses.
As of September 30, 2015, Curtiss-Wright had $247.9 million in cash and cash equivalents. The company reported negative cash flow from operations for the nine-month period, largely due to a voluntary pension contribution. However, it maintains a strong liquidity position with $460 million in unused capacity under its revolving credit facility and was in compliance with all debt covenants, including a debt-to-capitalization limit of 60%.
While overall operating income decreased due to lower sales, the Defense segment showed a significant increase driven by margin improvement initiatives and favorable foreign currency. The Power segment's operating income improved in the third quarter due to reduced costs on the AP1000 program. However, a one-time pension settlement charge related to the retirement of the former Chairman negatively impacted consolidated operating income.