View all news

Curtiss-Wright Reports 2005 Second Quarter and Six Month Financial Results

July 28, 2005

Sales Increased 27%, Operating Income 31%, and Net Earnings 37% in the Second Quarter of 2005, Respectively

Full Year Guidance Increased

ROSELAND, N.J., July 28 /PRNewswire-FirstCall/ -- Curtiss-Wright Corporation (NYSE: CW) today reports financial results for the second quarter and six months ended June 30, 2005. The highlights are as follows:

Second Quarter 2005 Operating Highlights

  • Net sales for the second quarter of 2005 increased 27% to $283.2 million from $222.4 million in the second quarter of 2004. Acquisitions made since March 31, 2004 contributed $31.6 million in incremental sales in the second quarter of 2005.
  • Operating income in the second quarter of 2005 increased 31% to $33.2 million from $25.4 million in the second quarter of 2004. Acquisitions made since March 31, 2004 contributed $1.1 million in incremental operating income in the second quarter of 2005.
  • Net earnings for the second quarter of 2005 increased 25% to $17.9 million, or $0.82 per diluted share, from $14.3 million, or $0.67 per diluted share, in the second quarter of 2004. The increase in the 2005 second quarter net earnings was achieved despite a $1.1 million after-tax increase in interest expense (approximately $0.05 per diluted share).
  • New orders received in the second quarter of 2005 were $284.9 million, up 37% compared to the second quarter of 2004.

Six Months 2005 Operating Highlights

  • Net sales for the first six months of 2005 increased 24% to $541.7 million from $437.4 million in the first six months of 2004. Acquisitions made in 2005 and 2004 contributed $67.4 million in incremental sales in the first six months of 2005.
  • Operating income in the first six months of 2005 increased 20% to $60.7 million from $50.6 million in the first six months of 2004. Acquisitions made in 2005 and 2004 contributed $1.2 million in incremental operating income in the first six months of 2005. Operating income in the first six months of 2005 included a gain of $2.8 million related to the sale of non-operating property.
  • Net earnings for the first six months of 2005 increased 8% to $32.5 million, or $1.49 per diluted share, from $29.9 million, or $1.40 per diluted share, in the first six months of 2004. The increase in the 2005 net earnings was achieved despite a $2.4 million after-tax increase in interest expense (approximately $0.11 per diluted share).
  • New orders received in the first six months of 2005 were $610.8 million, up 38% compared to the first six months of 2004. At June 30, 2005, backlog was $740.6 million, up 18% from $627.7 million at December 31, 2004.
  • "We are pleased to report increased sales, operating income, and net earnings for the second quarter and first half of 2005," commented Martin R. Benante, Chairman and CEO of Curtiss-Wright Corporation. "Our new orders were strong for the first half of 2005 which provides us with good momentum for the second half of the year and into 2006. We experienced strong overall organic sales and operating income growth of 8% and 17%, respectively, in the first half of 2005. The strong organic sales growth was in the oil and gas, commercial aerospace, and power generation markets. Many of our military programs are progressing through the procurement cycle and we expect a ramp-up in the second half of the year. In addition, we continue to progress on several developmental contracts that generally produce lower margins than production contracts; however, these contracts should provide us future opportunities. We are continuing to integrate our acquisitions and experienced some integration costs; however, these integration efforts are beginning to produce reduced costs and improved profitability that is expected to continue throughout the remainder of the year."

    Sales

    Sales growth in 2005 for the three and six months ended June 30th compared to 2004 was mainly driven by the contributions from our 2004 and 2005 acquisitions and organic growth in some of our base businesses. Acquisitions made since March 31, 2004 contributed $31.6 million and $67.4 million in incremental sales for the quarter and six months ended June 30, 2005, respectively, over the comparable prior year periods. The base businesses generated overall organic growth of 12% and 8% for the three and six months ended June 30, 2005, respectively, over the prior year periods. This organic sales growth was led by our Metal Treatment segment, which experienced strong organic growth of 13%, followed by our Motion Control and Flow Control segments at 8% and 5%, respectively, for the first six months of 2005.

    In our base businesses, higher sales from our Metal Treatment segment of global shot peening services, higher sales from our Motion Control segment to the global commercial aerospace, general industrial, and military aerospace markets, and higher sales from our Flow Control segment to the oil and gas and commercial power generation markets, all contributed to the organic growth in the first six months of 2005. In addition, foreign currency translation favorably impacted sales by $2.1 million and $4.3 million for the three and six months ended June 30, 2005, compared to the prior year periods.

    Operating Income

    Operating income for the three and six months ended June 30, 2005 increased 31% and 20%, respectively, over the 2004 prior year periods. The increases were due to higher sales volumes, favorable sales mix, and previously implemented cost control initiatives. Overall, operating income organic growth was 24% and 17% for the three and six months ended June 30, 2005, respectively, compared to the prior year periods. All three operating segments experienced strong organic operating income growth, led by our Metal Treatment segment, which grew 23% and 17% for the three and six months ended June 30, 2005, respectively, over the prior year periods. Operating income for the six months ended June 30, 2005 includes a gain of $2.8 million related to the sale of non-operating property. The higher segment operating income was partially offset by higher pension expense from the Curtiss-Wright Plans of $0.5 million and $0.9 million for the three and six months ended June 30, 2005, respectively, over the comparable prior year periods. In addition, foreign currency translation favorably impacted operating income by $0.3 million and $0.7 million for the three and six months ended June 30, 2005, respectively, compared to the prior year periods.

    Net Earnings

    Net earnings increased 25% and 8% for the three and six months ended June 30, 2005, respectively, over the comparable prior year periods. The improvement was due to strong operating income from our business segments, which increased $8.5 million and $7.7 million for the three and six months ended June 30, 2005, respectively, over the prior year periods. Curtiss-Wright achieved strong growth in the oil and gas, shot peening, military aerospace, and commercial power generation markets. Higher interest expense, due to both higher debt levels and higher interest rates, lowered net earnings in the second quarter and first six months of 2005 by $1.1 million and $2.4 million, respectively.

    Segment Performance

    Flow Control -- Sales for the second quarter of 2005 were $114.3 million, up 33% over the comparable period last year due to solid organic growth and the contributions from the 2004 acquisitions. Sales from the base businesses increased 12% in the second quarter of 2005 as compared to the prior year period. The organic sales growth was primarily from higher sales to the oil and gas market, led by higher demand for the Coker valve products, and higher sales of valves to the U.S. Navy. The improvement was partially offset by lower sales of electromechanical pump products to the U.S. Navy due to the timing of customer driven delivery schedules. Sales of this business segment also benefited from favorable foreign currency translation of $0.5 million in the second quarter of 2005 compared to the prior year period.

    Operating income for this segment increased 47% in the second quarter of 2005 compared to the prior year period. The improvement was due to the higher sales volume and favorable sales mix for our oil and gas products, previously implemented cost control initiatives, higher sales volume for our valve products to the U.S. Navy, and the contributions from the 2004 acquisitions.

    Motion Control -- Sales for the second quarter of 2005 of $117.9 million increased 29% over last year, principally due to solid organic growth and the contributions from the 2004 and 2005 acquisitions. Sales from the base businesses increased 14% in the second quarter of 2005 as compared to the prior year period. This organic sales growth was due primarily to higher sales of OEM and spares products and repair and overhaul services to the commercial aerospace market, higher sales of industrial sensor products, and higher sales of embedded computing products to the defense aerospace market, as compared to the prior year period. Partially offsetting these increases are lower sales of F-16 spares, and lower sales of tilting train systems in Europe due to expiration of this program in 2004. Sales of this business segment also benefited from favorable foreign currency translation of $1.0 million in the second quarter of 2005 as compared to the prior year period.

    Operating income for this segment increased 27% for the second quarter of 2005 compared to the prior year period. The increase was driven primarily by higher sales volume mentioned above and previously implemented cost control initiatives. The improvement was partially offset by less favorable sales mix resulting from decreased higher margin sales, such as the F-16 spares and tilting train program, and higher development work which generate lower margins. In addition, this segment continued to experience some business consolidation costs in the embedded computing group; however, these integration efforts have begun to produce reduced costs and improved profitability which are expected to continue in the future.

    Metal Treatment -- Sales for the second quarter of 2005 of $51.0 million were 14% higher than the comparable period last year. The improvement, all of which was organic, was driven by higher global shot peening revenues from the aerospace and automotive markets. Favorable foreign currency translation positively impacted sales by $0.6 million in the second quarter of 2005 as compared to the prior year period.

    Operating income increased 23% for the second quarter of 2005 as compared to the prior year period, primarily as a result of the higher sales volume. Favorable foreign currency translation also contributed to the increase in operating income.

    2005 Management Guidance

    We are increasing our 2005 full-year guidance to reflect improved market conditions and incorporate our 2005 acquisition. We expect revenues in the range of $1.10 billion to $1.15 billion, operating income in the range of $135 - $145 million, and earnings per share in the range of $3.30 to $3.50 per share. This guidance reflects our expectations of 15-20% growth in revenue and operating income, and 10-15% growth in EPS. EPS guidance is based on estimated fully diluted shares outstanding of 22 million shares for the full year 2005.

    Mr. Benante concluded, "In 2005, we will once again demonstrate our ability to generate long-term shareholder value by growing our sales and earnings. Our historical performance demonstrates our ability to execute our strategy and achieve our financial targets. Our strong performance in the first half of 2005 continues this trend. We expect the second half of 2005 to be even stronger as many of our defense programs ramp up, our commercial markets continue to strengthen, and we realize the benefits of integration efforts. Our diversification strategy and emphasis on new technologies, many of which are only at the beginning of their life cycles, should continue to generate growth opportunities in each of our three business segments in 2005 and beyond."

    The Company will host a conference call to discuss the second quarter 2005 results at 9:00 EDT Friday, July 29, 2005. A live webcast of the call can be heard on the Internet by visiting the company's website at http://curtisswright2014.q4web.com and clicking on the investor information page or by visiting other websites that provide links to corporate webcasts.

                     CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF EARNINGS
                        (In thousands, except per share data)
    
    
                                 Three Months Ended          Six Months Ended
                                      June 30,                   June 30,
                                 2005         2004         2005         2004
    
    
        Net sales             $283,193     $222,428     $541,680     $437,361
        Cost of sales          182,894      146,406      355,612      289,744
          Gross profit         100,299       76,022      186,068      147,617
    
    
        Research &
         development
         expenses               11,580        7,754       21,808       15,966
        Selling expenses        17,971       14,743       34,895       27,347
        General and
         administrative
         expenses               36,501       27,789       69,969       53,038
        Environmental
         remediation and
         administrative
         expenses, net             573           51          656          291
        Pension expense
         (income), net             500           42        1,000           82
        (Gain) Loss on sale
         of real estate and
         fixed assets              (12)         230       (2,925)         317
    
    
          Operating income      33,186       25,413       60,665       50,576
    
    
        Other income
         (expenses), net          (576)         523         (700)         121
        Interest expense        (4,778)      (3,018)      (9,081)      (5,283)
    
    
        Earnings before
         income taxes           27,832       22,918       50,884       45,414
        Provision for
         income taxes            9,898        8,594       18,427       15,481
    
    
        Net earnings           $17,934      $14,324      $32,457      $29,933
    
    
        Basic earnings
         per share               $0.83        $0.68       $ 1.51       $ 1.42
        Diluted earnings
         per share               $0.82        $0.67       $ 1.49       $ 1.40
    
    
        Dividends per share      $0.09        $0.09       $ 0.18       $ 0.18
    
    
        Weighted average shares
         outstanding:
          Basic                 21,608       21,136       21,557       21,013
          Diluted               21,888       21,460       21,844       21,330
    
    
    
    
                                     Three Months            Six Months
                                        Change                  Change
                                   $            %           $             %
    
    
        Net sales              $60,765        27.32%    $104,319        23.85%
        Cost of sales           36,488        24.92%      65,868        22.73%
          Gross profit          24,277        31.93%      38,451        26.05%
    
    
        Research &
         development expenses    3,826        49.34%       5,842        36.59%
        Selling expenses         3,228        21.90%       7,548        27.60%
        General and
         administrative
         expenses                8,712        31.35%      16,931        31.92%
        Environmental
         remediation and
         administrative
         expenses, net             522      1023.53%         365       125.43%
        Pension expense
         (income), net             458      1090.48%         918      1119.51%
        (Gain) Loss on sale
         of real estate and
         fixed assets             (242)     -105.22%      (3,242)    -1022.71%
    
    
          Operating income       7,773        30.59%      10,089        19.95%
    
    
        Other income
         (expenses), net        (1,099)     -210.13%        (821)     -678.51%
        Interest expense        (1,760)       58.32%      (3,798)       71.89%
    
    
        Earnings before
         income taxes            4,914        21.44%       5,470        12.04%
        Provision for
         income taxes            1,304        15.17%       2,946        19.03%
    
        Net earnings            $3,610        25.20%      $2,524         8.43%
    
    
        Basic earnings
         per share
    
    
        Diluted earnings
         per share
    
    
        Dividends per share
    
    
        Weighted average shares
         outstanding:
          Basic
           Diluted
    
    
        Certain prior year information has been reclassified to conform to current
    presentation.
    
    
                     CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                                    (In thousands)
    
    
                                            June 30,  December 31,      Change
                                              2005        2004        $        %
        Assets
          Current Assets:
          Cash and cash equivalents         $47,983     $41,038   $6,945    16.9%
          Receivables, net                  243,138     214,084   29,054    13.6%
          Inventories, net                  137,370     115,979   21,391    18.4%
          Deferred income taxes              26,123      25,693      430     1.7%
          Other current assets               10,416      12,460   (2,044)  -16.4%
    
    
            Total current assets            465,030     409,254   55,776    13.6%
          Property, plant, and
           equipment, net                   267,619     265,243    2,376     0.9%
          Prepaid pension costs              76,865      77,802     (937)   -1.2%
          Goodwill, net                     388,132     364,313   23,819     6.5%
          Other intangible assets, net      152,111     140,369   11,742     8.4%
          Other assets                       17,542      21,459   (3,917)  -18.3%
    
    
            Total Assets                 $1,367,299  $1,278,440  $88,859     7.0%
    
    
        Liabilities
          Current Liabilities:
          Short-term debt                      $934      $1,630    $(696)  -42.7%
          Accounts payable                   66,626      65,364    1,262     1.9%
          Accrued expenses                   62,054      63,413   (1,359)   -2.1%
          Income taxes payable               12,517      13,895   (1,378)   -9.9%
          Other current liabilities          49,818      52,793   (2,975)   -5.6%
    
    
            Total current liabilities       191,949     197,095   (5,146)   -2.6%
    
    
          Long-term debt                    402,561     340,860   61,701    18.1%
          Deferred income taxes              48,317      40,043    8,274    20.7%
          Accrued pension & other
           postretirement benefit costs      81,545      80,612      933     1.2%
          Long-term portion of
           environmental reserves            24,282      23,356      926     4.0%
          Other liabilities                  23,267      20,860    2,407    11.5%
    
    
            Total Liabilities               771,921     702,826   69,095     9.8%
    
    
    
        Stockholders' Equity
          Common stock, $1 par value         25,447      16,646    8,801    52.9%
          Class B common stock, $1 par
           value                                -         8,765   (8,765) -100.0%
          Capital surplus                    57,360      55,885    1,475     2.6%
          Retained earnings                 629,636     601,070   28,566     4.8%
          Unearned portion of restricted
           stock                                (23)        (34)      11   -32.4%
          Accumulated other
           comprehensive income              21,311      36,797  (15,486)  -42.1%
                                            733,731     719,129   14,602     2.0%
          Less:  cost of treasury stock     138,353     143,515   (5,162)   -3.6%
    
    
            Total Stockholders' Equity      595,378     575,614   19,764     3.4%
    
    
            Total Liabilities and
             Stockholders' Equity        $1,367,299  $1,278,440  $88,859     7.0%
    
    
    
    
    
                     CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                                 SEGMENT INFORMATION
                                    (In thousands)
    
    
                             Three Months Ended         Six Months Ended
                                 June 30,                   June 30,
                                                %                          %
                          2005       2004     Change    2005     2004     Change
        Sales:
        Flow Control    $114,324   $86,205     32.6% $223,737  $175,600     27.4%
        Motion Control   117,854    91,578     28.7%  217,938   174,922     24.6%
        Metal Treatment   51,015    44,645     14.3%  100,005    86,839     15.2%
    
    
        Total Sales     $283,193  $222,428     27.3% $541,680  $437,361     23.9%
    
    
        Operating Income:
        Flow Control     $12,756    $8,654     47.4%  $23,105   $19,085     21.1%
        Motion Control    12,738    10,025     27.1%   19,128    18,314      4.4%
        Metal Treatment    9,112     7,439     22.5%   16,929    14,016     20.8%
    
    
        Total Segments    34,606    26,118     32.5%   59,162    51,415     15.1%
        Pension (Expense)
         /Income            (500)      (42)  1090.5%   (1,000)      (82)  1119.5%
        Corporate & Other   (920)     (663)    38.8%    2,503      (757)  -430.6%
    
        Total Operating
         Income          $33,186   $25,413    30.6%   $60,665   $50,576     19.9%
    
    
    
        Operating Margins:
        Flow Control        11.2%     10.0%              10.3%     10.9%
        Motion Control      10.8%     10.9%               8.8%     10.5%
        Metal Treatment     17.9%     16.7%              16.9%     16.1%
        Total
         Curtiss-Wright     11.7%     11.4%              11.2%     11.6%
    
    

    About Curtiss-Wright

    Curtiss-Wright Corporation is a diversified company headquartered in Roseland, New Jersey. The Company designs, manufactures and overhauls products for motion control and flow control applications and provides a variety of metal treatment services. The firm employs approximately 5,900 people. More information on Curtiss-Wright can be found at http://curtisswright2014.q4web.com.

    Forward-looking statements in this release are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements present management's expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward- looking and accordingly involve estimates, assumptions, judgments and uncertainties. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to: a reduction in anticipated orders; an economic downturn; changes in competitive marketplace and/or customer requirements; a change in government spending; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, defense contracting, electronics, marine, and industrial companies. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and subsequent reports filed with the Securities and Exchange Commission.

    This press release and additional information is available at http://curtisswright2014.q4web.com.

    SOURCE Curtiss-Wright Corporation 07/28/2005

    CONTACT:
    Alexandra M. Deignan of Curtiss-Wright Corporation
    +1-973-597-4734, adeignan@curtisswright.com

    Multimedia Files:

    Categories: Press Releases
    View all news