Summary
Curtiss-Wright Corporation (CW) reported a significant decrease in net sales and operating income for the second quarter and first half of 2020 compared to the prior year, largely attributed to the impacts of the COVID-19 pandemic on commercial aerospace and general industrial markets. Despite the revenue decline, the company's Defense segment showed resilience with increased sales and new orders, benefiting from naval defense contracts and a recent acquisition. Operationally, the company implemented restructuring activities across all segments, resulting in pre-tax charges but aiming for annual cost savings. Management highlights the company's strong financial position and liquidity, supported by cash reserves and available credit facilities, which are deemed sufficient to meet near-term obligations. The company also announced plans for a $300 million senior notes offering to enhance financial flexibility.
Financial Highlights
55 data points| Revenue | $550.05M |
| Cost of Revenue | $364.02M |
| Gross Profit | $186.03M |
| R&D Expenses | $18.27M |
| Operating Income | $55.35M |
| Interest Expense | $8.52M |
| Net Income | $31.02M |
| EPS (Basic) | $0.75 |
| EPS (Diluted) | $0.74 |
| Shares Outstanding (Basic) | 41.63M |
| Shares Outstanding (Diluted) | 41.85M |
Key Highlights
- 1Total net sales decreased by 14% to $550.0 million for Q2 2020 and by 5% to $1.15 billion for the first six months of 2020, primarily driven by declines in the Commercial/Industrial and Power segments.
- 2Operating income saw a substantial decline of 48% to $55.3 million in Q2 2020 and 28% to $127.8 million for the first six months, with operating margins compressing significantly.
- 3The Defense segment was a bright spot, with net sales increasing by 7% to $170.0 million in Q2 2020 and by 15% to $336.1 million for the first six months, bolstered by naval defense orders and a recent acquisition.
- 4Restructuring activities were undertaken across all segments, resulting in $15 million and $17 million of pre-tax charges for Q2 and the first six months of 2020, respectively, with expected annual cost savings of $40 million.
- 5The company reported a net decrease in cash and cash equivalents of $235.7 million for the first six months of 2020, largely due to a significant voluntary pension contribution ($150 million) and increased inventory.
- 6The company is enhancing its financial flexibility by pricing a $300 million senior notes offering, expected to close by August 13, 2020.
- 7The COVID-19 pandemic is cited as a primary factor negatively impacting demand, particularly in commercial aerospace and general industrial markets, with uncertainty surrounding its future duration and impact.