10-QPeriod: Q1 FY2016

CURTISS WRIGHT CORP Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 5, 2016For Securities:CW

Summary

Curtiss-Wright Corporation's first quarter 2016 results showed a notable shift in profitability, with net earnings significantly increasing to $32.8 million ($0.73 diluted EPS) from $15.9 million ($0.33 diluted EPS) in the prior year period. This improvement was largely driven by the absence of a substantial loss from discontinued operations in the current quarter, which had negatively impacted the prior year's net income. While total net sales decreased by 8% to $503.5 million, primarily due to lower sales volumes across its Commercial/Industrial and Power segments, operating income also declined by 21% to $57.3 million. The company experienced a substantial increase in operating cash flow, largely due to a voluntary pension contribution in the prior year not repeating and a one-time benefit from interest rate swap termination.

Financial Highlights

54 data points
Beta

Revenue

$503.51M

34.1% Gross Margin

Net Income

$32.82M

6.5% Net Margin

EPS (Diluted)

$0.73

Total Assets

$2.96B

Cash & Equivalents

$337.26M

Free Cash Flow

$61.44M

Financial Statements
Beta
Revenue$503.51M
Cost of Revenue$331.60M
Gross Profit$171.90M
R&D Expenses$15.16M
Operating Income$57.26M
Interest Expense$9.93M
Net Income$32.82M
EPS (Basic)$0.74
EPS (Diluted)$0.73
Shares Outstanding (Basic)44.58M
Shares Outstanding (Diluted)45.24M

Key Highlights

  • 1Net earnings significantly increased to $32.8 million in Q1 2016 from $15.9 million in Q1 2015, primarily due to the cessation of losses from discontinued operations.
  • 2Total net sales decreased by 8% to $503.5 million, with declines seen across the Commercial/Industrial, Defense, and Power segments.
  • 3Operating income decreased by 21% to $57.3 million, impacted by lower sales volumes and $3 million in restructuring costs within the Commercial/Industrial segment.
  • 4The company reported a substantial increase in net cash provided by operating activities to $70.3 million, a significant improvement from the $171.1 million used in the prior year, largely due to the absence of a prior year pension contribution.
  • 5New orders remained flat at approximately $628.6 million, with growth in the Commercial/Industrial and Power segments offset by a decline in the Defense segment.
  • 6The company repurchased approximately $30 million of its common stock in the first quarter of 2016.

Frequently Asked Questions

The primary driver for the substantial increase in net earnings was the absence of a significant loss from discontinued operations that was present in the first quarter of 2015. While net sales and operating income saw declines, the elimination of the prior year's discontinued operations loss led to a higher reported net income.

Net sales decreased by 8% primarily due to lower sales volumes across the Commercial/Industrial segment (driven by reduced sales of severe service valves and industrial vehicle products) and the Power segment (impacted by a prior year one-time benefit from a termination change order and lower aftermarket sales). Operating income was also affected by these lower sales volumes and included $3 million in restructuring costs within the Commercial/Industrial segment.

The company experienced a significant improvement in operating cash flow, generating $70.3 million in the first quarter of 2016 compared to using $171.1 million in the prior year period. This was largely due to the fact that a substantial voluntary pension contribution made in the prior year did not recur, and the company benefited from a one-time $20 million payment related to the termination of its interest rate swaps.

New orders were essentially flat year-over-year at approximately $628.6 million. While the Commercial/Industrial and Power segments saw order growth, the Defense segment experienced a decline, primarily due to the timing of orders for certain products.