News Details
CURTISS-WRIGHT CORPORATION REPORTS THIRD-QUARTER FINANCIAL RESULTS INCLUDING 51% INCREASE IN SALES AND 30% INCREASE IN NET EARNINGS
October 29, 2002
LYNDHURST, N.J., Oct 29, 2002 /PRNewswire-FirstCall via COMTEX/ -- Curtiss-Wright Corporation (NYSE: CW CW.B) today announced financial results for the third quarter of 2002.
THE HIGHLIGHTS FOR THE THIRD QUARTER ARE AS FOLLOWS:
- Sales increased 51% to $119,641,000 in the third quarter of this year from $79,420,000 in 2001.
- Operating income of $12,551,000 for the third quarter of 2002 increased 13% from operating income of $11,098,000 a year ago.
- Net earnings for the third quarter of $11,312,000 or $1.08 per diluted share were 30% above net earnings last year of $8,723,000 or $0.85 per diluted share. Normalized net earnings for the third quarter of 2002 were $9,157,000 or $0.87 per diluted share. An increase in the number of diluted shares outstanding has caused a $0.03 decrease in EPS for the third quarter as compared to last year.
- Backlog increased 17% to $283,406,000 from $242,257,000 at December 31, 2001.
Sales of $119,641,000 for the third quarter of 2002 represented a 51% increase from sales of the same period last year of $79,420,000. This increase was due primarily to the acquisitions made during the last fifteen months, which contributed $41,301,000 to sales in the quarter. In addition, foreign currency translation had a favorable impact on sales of approximately $1,466,000 for the third quarter.
Curtiss-Wright's 2002 performance continues to reflect a deliberate shift in the components of earnings from non-operating to operating elements. Increased business segment operating income (before Corporate and Other) in 2002 more than offset the decrease in 2001 non-operating net rental and net investment income. Operating income from our business segments increased $2,721,000 and $6,597,000 for the third quarter and first nine months of 2002, respectively, over the comparable prior-year periods. The increase in business segment operating income after tax equates to $0.16 per diluted share and $0.39 per diluted share for the third quarter and first nine months of 2002, respectively.
Last year's performance included rental income associated with a property that was sold in December 2001 and higher investment income generated from cash resources which have since been utilized for acquisitions. These non-operating items contributed to higher net earnings in 2001 of $790,000 or $0.08 per diluted share and $2,790,000 or $0.27 per diluted share for the three months and nine months, respectively, as compared to the comparable periods this year.
Curtiss-Wright's third quarter 2002 performance included several non-recurring non-operating items. A reserve associated with an indemnification provided to the purchaser of the Company's Wood-Ridge rental property, which was sold last December, was no longer required and reversed during the quarter. In addition, the Company recorded a net gain associated with the sale of property that closed in the third quarter. Lastly, the Company recorded a net gain relating to the reallocation of postretirement medical benefits for certain active employees to our over funded pension plan resulting in a benefit to the employees, the Company and our shareholders. These items are presented in the table below, but the total effect was to increase pre-tax income for the third quarter by $3.5 million with an after tax impact of $2.2 million or $0.21 per diluted share.
NORMALIZED NET EARNINGS:
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands except
per share figures) 2002 2001 2002 2001
Net earnings $ 11,312 $8,723 $31,444 $28,407
Release of
indemnification
reserve (800) -- (800) --
Postretirement
medical benefits, net (984) -- (984) --
Realized loss on
demutualization -- -- 49 --
Facility consolidation
costs -- -- 277 --
Gain on sale of
non-operating property (371) -- (435) --
Normalized net earnings $9,157 $8,723 $29,551 $28,407
Normalized net earnings
per diluted share $0.87 $0.85 $2.83 $2.78
Sales of $339,205,000 for the first nine months of 2002 represented a 38% increase from sales of the same period last year of $245,941,000. This increase was due primarily to the acquisitions made during the last fifteen months, which contributed $94,704,000 to sales during the first nine months of 2002. In addition, foreign currency translation had a favorable impact on sales of approximately $1,651,000 for the year to date 2002 period. Operating income of $40,543,000 for the first nine months of 2002 was 14% higher than operating income of $35,429,000 for the comparable period last year. The first nine months net earnings of $31,444,000 or $3.01 per diluted share for 2002 were 11% above net earnings for the comparable period last year of $28,407,000 or $2.78 per diluted share.
Operating income for the third quarter and first nine months of 2001 included goodwill amortization in the amounts of $455,000 and $1,338,000, respectively, which amounted to $0.03 and $0.08 per diluted share, respectively. With the implementation of SFAS Nos. 141 and 142, goodwill amortization was discontinued effective January 1, 2002.
Martin Benante, Chairman and CEO of Curtiss-Wright Corporation stated, "We are pleased to report that the integration of our recent acquisitions continues to progress as planned. In addition to having improved operating margins for almost all of our recent acquisitions, we have initiated cross marketing of products and the sharing of new technologies from our new businesses. We have been extremely pleased with the businesses we have added to our portfolio.
"We continue to experience strong overall performance in our Flow Control and Motion Control segments. In the Motion Control segment, margins in our aerospace component overhaul and repair services, which have been pressured by lower demand from commercial airlines, continue to show improvement over last year. Although operating margins have been somewhat impacted by the lower sales volume for aerospace OEM commercial products, increased shipments of aerospace defense products helped to partially offset this decline. Although operating margins for our Metal Treatment segment are still below those levels of a year ago, we have seen a steady improvement in the profitability of this business segment as we have progressed through the year."
SEGMENT PERFORMANCE:
Motion Control -- Third quarter sales more than doubled, reflecting an increase of 106% over the comparable period last year and 4% from the second quarter of 2002. While acquisitions accounted for $33,852,000 of the sales increase from the prior year, sales for most of those business units we have acquired since last November have shown a strong improvement in the third quarter compared to the second quarter of this year. However, as expected, commercial OEM sales related to Boeing declined offsetting the favorable impact of acquisitions. In addition, sales to the F-22 program and military spares increased when compared to the third quarter of 2001. Foreign currency translation favorably impacted sales by approximately $690,000 and $1,074,000 for the third quarter and year to date periods of 2002, respectively.
The third quarter operating income results for 2002 improved over the same period last year due primarily to higher sales levels. Operating income in the third quarter of 2001 included $152,000 of goodwill amortization. Operating margin percentages as compared to last year were lower primarily due to reduced activity for commercial OEM products and the effect of recent acquisitions. While we have seen quarter over quarter margin improvement for our recent acquisitions, as we have previously explained, their margin levels are below that of our traditional businesses, which has an effect on the overall segment margins when comparing operating margins to last year's third quarter. Our overhaul and repair operations have returned to profitability compared to last year's third quarter when they were at breakeven.
Metal Treatment -- The third quarter sales, when compared to the same period last year, were up 2% as the result of the addition of three new facilities. Sales in the automotive sector have increased as the result of the addition of new programs. Sales also benefited from the advancement of the commercialization of our laser-peening technology. These gains were offset by a decline in the aerospace sector. In addition, foreign currency translation favorably impacted sales by approximately $655,000 and $640,000 for the 2002 third quarter and year to date periods, respectively.
While profit margins continue to be below prior year's level, the third quarter has seen continued improvement from the first and second quarters of this year.
Flow Control -- Sales for the third quarter of 2002 were up 34% from the same period last year due to acquisitions, which contributed $5,635,000 to sales in the quarter, and strength in our commercial areas. Most notably, higher sales in commercial nuclear power generation due to a major project, increased sales to the oil and gas market, increased activity in the heavy truck OEM market and cross marketing activities all have contributed to the strong sales performance.
Third quarter operating margins in the Flow Control segment were consistent with those of the same period last year. Operating income in the third quarter of 2001 included $248,000 of goodwill amortization. For the third quarter of 2002, strong performance in commercial nuclear power generation and heavy truck markets and from our acquisitions offset lower margins in the quarter for sales to the commercial nuclear and oil and gas markets which were negatively impacted by unfavorable sales mix.
Mr. Benante stated, "As previously indicated, although the new acquisitions continue to have an effect on the operating margins of the overall Company because their margins are below those of our traditional businesses, we consider this to be a short-term cost that will be more than offset by the benefits of diversification and increased future profitability. Our shareholders have and will continue to see the benefits of our activities to diversify and broaden our customer and product bases."
Benante concluded, "As we announced last Friday, for the fourth consecutive year Forbes magazine has listed Curtiss-Wright as one of America's 200 best small companies. Forbes also recognized our corporate governance profile and our Board of Directors as receiving very high marks in their survey. We are proud of these acknowledgements of our successful long-term strategy. We are also enthusiastic about our recently announced teaming agreement with Advanced Biometric Security to deliver a full suite of integrated software security solutions incorporating fingerprints, voice patterns, facial recognition, iris scanning, and hand geometry into a single networked solution with a continuously updated database.
"Finally, we are excited about our most recent acquisition announced yesterday of the Electro-Mechanical Division of Westinghouse Government Services Company, a major designer and manufacturer of highly engineered critical function components for the U.S. Navy and commercial nuclear utility markets. We strongly believe that this acquisition will provide us with unique, significant, and state-of-the-art products for the U.S. Navy, commercial nuclear power, petrochemical and hazardous waste industries, thereby expanding our future growth opportunities."
The Company will hold a conference call with financial analysts to discuss the third-quarter results at 10:00 a.m. eastern time tomorrow, October 30, 2002. A live web cast 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 web casts.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(In thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001(1) 2002 2001(1)
Net sales $119,641 $79,420 $339,205 $245,941
Cost of sales 78,442 49,233 218,152 152,906
Gross profit 41,199 30,187 121,053 93,035
Research & development
expenses 3,092 1,257 7,604 3,179
Selling expenses 8,245 4,375 21,131 13,455
General and
administrative
expenses 16,312 13,403 50,529 40,875
Environmental
remediation and
administrative
expenses, net of
recoveries 999 54 1,246 97
Operating income 12,551 11,098 40,543 35,429
Investment income, net 118 834 629 2,327
Rental income, net 49 608 148 2,950
Pension income, net 2,254 2,864 6,762 7,551
Other income (expenses),
net 3,641 (381) 3,551 (908)
Interest expense (380) (272) (1,039) (917)
Earnings before income
taxes 18,233 14,751 50,594 46,432
Provision for income
taxes 6,921 6,028 19,150 18,025
Net earnings $11,312 $8,723 $31,444 $28,407
Basic earnings per
share $1.10 $0.87 $3.09 $2.82
Diluted earnings per
share $1.08 $0.85 $3.01 $2.78
Dividends per share $0.15 $0.13 $0.45 $0.39
Weighted average shares
outstanding:
Basic 10,238 10,073 10,188 10,057
Diluted 10,470 10,224 10,430 10,208
(1) Certain prior year information has been reclassified to conform to
current presentation
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31, Change
2002 2001(1) $ %
Assets
Current Assets:
Cash and cash
equivalents $37,486 $25,495 $11,991 47.0%
Short-term
investments 164 41,658 (41,494) -99.6%
Receivables, net 99,610 86,354 13,256 15.4%
Inventories, net 66,481 57,115 9,366 16.4%
Deferred income taxes 8,964 9,565 (601) -6.3%
Other current assets 8,193 5,770 2,423 42.0%
Total current assets 220,898 225,957 (5,059) -2.2%
Property, plant and
equipment, at cost 276,314 226,435 49,879 22.0%
Accumulated
depreciation 149,430 121,914 27,516 22.6%
Property, plant and
equipment, net 126,884 104,521 22,363 21.4%
Prepaid pension costs 75,437 70,796 4,641 6.6%
Goodwill and other
intangible assets,
net 136,541 92,630 43,911 47.4%
Other assets 6,036 6,524 (488) -7.5%
Total Assets $565,796 $500,428 $65,368 13.1%
Liabilities
Current Liabilities:
Current portion of
long-term debt $36 $-- $36 n/a
Accounts payable 25,427 19,362 6,065 31.3%
Accrued expenses 29,544 23,163 6,381 27.5%
Income taxes
payable 7,378 17,704 (10,326) -58.3%
Other current
liabilities 13,689 15,867 (2,178) -13.7%
Total current
liabilities 76,074 76,096 (22) 0.0%
Long-term debt 47,036 21,361 25,675 120.2%
Deferred income taxes 28,912 26,043 2,869 11.0%
Other liabilities 22,469 26,974 (4,505) -16.7%
Total Liabilities 174,491 150,474 24,017 16.0%
Stockholders' Equity
Common stock, $1 par
value 10,618 10,618 -- 0.0%
Class B common stock,
$1 par value 4,382 4,382 -- 0.0%
Capital surplus 49,796 52,532 (2,736) -5.2%
Retained earnings 496,146 469,303 26,843 5.7%
Unearned portion of
restricted stock (64) (78) 14 -17.9%
Accumulated other
comprehensive
income 2,326 (6,831) 9,157 -134.1%
563,204 529,926 33,278 6.3%
Less: cost of
treasury stock 171,899 179,972 (8,073) -4.5%
Total Stockholders'
Equity 391,305 349,954 41,351 11.8%
Total Liabilities
and Stockholders'
Equity $ 565,796 $500,428 $65,368 13.1%
(1) Certain prior year information has been reclassified to conform to
current presentation
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
SEGMENT INFORMATION
(UNAUDITED)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
% %
2002 2001 Change 2002 2001 Change
Sales:
Motion Control $61,895 $30,006 106.3% $163,918 $95,691 71.3%
Metal Treatment 27,067 26,501 2.1% 79,738 81,422 -2.1%
Flow Control 30,679 22,913 33.9% 95,549 68,828 38.8%
Total Segments $119,641 $79,420 50.6% $339,205 $245,941 37.9%
Operating Income:
Motion Control $6,325 $4,076 55.2% $20,439 $14,658 39.4%
Metal Treatment 4,234 4,605 -8.1% 10,570 14,985 -29.5%
Flow Control 3,267 2,424 34.8% 11,557 6,326 82.7%
Total Segments 13,826 11,105 24.5% 42,566 35,969 18.3%
Corporate & Other (1,275) (7) N/A (2,023) (540) N/A
Total Operating
income $12,551 $11,098 13.1% $40,543 $35,429 14.4%
Operating Margins:
Motion Control 10.2% 13.6% 12.5% 15.3%
Metal Treatment 15.6% 17.4% 13.3% 18.4%
Flow Control 10.6% 10.6% 12.1% 9.2%
Total
Curtiss-Wright 10.5% 14.0% 12.0% 14.4%
Curtiss-Wright Corporation is a diversified provider of highly engineered products and services to the Motion Control, Flow Control and Metal Treatment industries. The firm employs approximately 4,100 people. More information on Curtiss-Wright can be found on the Internet 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. 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 the need for additional machinery and equipment and/or in the cost for the expansion of the Corporation's operations; changes in the 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, marine, and industrial companies. Please refer to the Company's SEC filings under the Securities and Exchange Act of 1934, as amended, for further information.
SOURCE Curtiss-Wright Corporation
CONTACT:
Gary Benschip of Curtiss-Wright Corporation, +1-201-896-8520,
[email protected]