News Details
CURTISS-WRIGHT REPORTS FIRST QUARTER 2005 FINANCIAL RESULTS
April 28, 2005
Sales up 20%; Backlog at Record Level; Reaffirms Full-Year Guidance
ROSELAND, N.J., April 28, 2005 /PRNewswire-FirstCall via COMTEX/ -- Curtiss-Wright Corporation (NYSE: CW, CW.B) today reports financial results for the quarter ended March 31, 2005. The highlights are as follows:
- Net sales for the first quarter of 2005 increased 20% to $258.5 million from $214.9 million in the first quarter of 2004. Acquisitions made in 2005 and 2004 contributed $35.8 million in incremental sales in the first quarter of 2005.
- Operating income in the first quarter of 2005 decreased 3% to $24.6 million from $25.3 million in the first quarter of 2004. Acquisitions made in 2005 and 2004 contributed $0.1 million in incremental operating income in the first quarter of 2005.
- Net earnings for the first quarter of 2005 decreased 7% to $14.5 million, or $0.67 per diluted share, from $15.6 million, or $0.74 per diluted share, in the first quarter of 2004. Net earnings for the first quarter of 2005 include a net after tax gain of $1.5 million (approximately $0.07 per diluted share), related to the sale of non-operating property. In addition, the net earnings for the first quarter of 2004 included nonrecurring tax benefits of $1.5 million (approximately $0.07 per diluted share).
- New orders received in the first quarter of 2005 were $325.8 million, up 38% compared to the first quarter of 2004.
- Backlog reached a new record high level of $748.2 million, up 19% from $627.7 million at December 31, 2004.
"We are pleased to report continued sales growth in 2005 and again attaining a new record level of backlog," commented Martin R. Benante, Chairman and CEO of Curtiss-Wright Corporation. "Our new orders were strong in both the first quarter of 2005 and fourth quarter of last year which provides us with good momentum for the rest of the year. We experienced strong organic sales and operating income growth of 13% and 17%, respectively, from our Metal Treatment segment in the first quarter of 2005. In addition, we also had strong organic sales growth in the oil and gas, commercial aerospace, and power generation markets. Many of our military programs are in the early stages of the procurement cycle and the ramp-up in the second half of the year will improve those margins. In addition, we recently won several developmental contracts that have begun but generally produce lower margins than production contracts; however, these contracts should provide us future opportunities. We are continuing to integrate our acquisitions and experience some business consolidation costs during the first quarter. However, we expect these integration efforts to lead to reduced costs and improved profitability in the future."
SALES
Sales growth in first quarter of 2005 as compared to the prior year period was mainly driven by the contributions from our 2004 and 2005 acquisitions. Acquisitions made in 2004 and 2005 contributed $35.8 million in incremental sales for the quarter ended March 31, 2005 over the comparable period in 2004. The base businesses generated overall organic growth of 4% in the first quarter of 2005. This organic sales growth was driven by our Metal Treatment and Motion Control segments, which experienced organic growth of 13% and 5%, respectively, compared to the prior year period. Our Flow Control segment's organic sales declined 1% in the first quarter of 2005 as compared to the prior year period.
In our base businesses, higher sales from our Metal Treatment segment of global shot peening services, higher global commercial aerospace and general industrial sales from our Motion Control segment, 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 addition, foreign currency translation favorably impacted sales by $2.2 million for the quarter ended March 31, 2005, compared to the prior year period.
OPERATING INCOME
Operating income for the first quarter of 2005 decreased 3% over the comparable prior year period. The decline was due to lower organic operating income of 2%, offset somewhat by our 2004 and 2005 acquisitions, which contributed $0.1 million of incremental operating income in the first quarter of 2005. The decline in organic operating income was caused primarily by unfavorable sales mix in our Flow Control and Motion Control segments. This decline was partially offset by organic operating income growth of 17% in the Metal Treatment segment. Operating income was also negatively impacted by $0.5 million higher pension expense from the Curtiss-Wright pension plans in the first quarter 2005 as compared to the prior year. In addition, foreign currency translation favorably impacted operating income by $0.4 million for the first quarter 2005, as compared to the prior year period.
NET EARNINGS
Net earnings decreased 7% for the quarter ended March 31, 2005, from the comparable prior year period. Net earnings for the first quarter of 2005 include a net after tax gain of $1.5 million (approximately $0.07 per diluted share), related to the sale of non-operating property. Higher interest expense, due to both higher debt levels and higher interest rates, lowered net earnings in the first quarter of 2005. In addition, net earnings for the first quarter of 2004 included nonrecurring tax benefits of $1.5 million (approximately $0.07 per diluted share).
SEGMENT PERFORMANCE
Flow Control -- Sales for the first quarter of 2005 were $109.4 million, up 22% over the comparable period last year due to contributions from the 2004 acquisitions. This segment experienced an overall decline in organic growth of 1% primarily resulting from lower overall sales to the U.S. Navy due to timing of customer driven delivery schedules, offset partially by higher sales to the oil and gas and commercial power generation markets. Sales of this business segment also benefited from favorable foreign currency translation of $0.4 million in the first quarter of 2005 compared to the prior year period.
Operating income for this segment decreased 1% in the first quarter of 2005 compared to the prior year period. The decline was due to the lower sales volume to the U.S. Navy, decreased higher margin spares sales to the oil and gas market, increased sales of generic electronics products and development programs, which generate lower margins, mostly offset by contributions from the 2004 acquisitions.
Motion Control -- Sales for the first quarter of 2005 of $100.1 million increased 20% over last year, principally due to the contributions from the 2004 and 2005 acquisitions. Sales from the base businesses increased 5% in the first quarter of 2005 as compared to the prior year period. This organic growth increase was due primarily to higher sales of industrial sensor products, higher sales of electronic products for military helicopters and mobile gun systems, and higher sales of OEM and spares products and repair and overhaul services to the commercial 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 first quarter of 2005 as compared to the prior year period.
Operating income for this segment decreased 23% for the first quarter of 2005 compared to the prior year period. The decline was driven primarily by decreased higher margin sales, such as the F-16 spares and tilting train program, and higher development work which generates lower margins. In addition, this segment experienced increased business consolidation costs, primarily in the embedded computing group, which are anticipated to produce reduced costs and improved profitability in the future.
Metal Treatment -- Sales for the first quarter of 2005 of $49.0 million were 16% higher than the comparable period last year. The improvement was mainly due to organic growth of 13% driven by higher global shot peening revenues from the aerospace and automotive markets. Favorable foreign currency translation positively impacted sales by $0.8 million in the first quarter of 2005 as compared to the prior year period.
Operating income increased 19% for the first quarter of 2005 as compared to the prior year period, primarily as a result of the higher sales volume. The 2004 acquisitions and favorable foreign currency translation also contributed to the increase in operating income.
2005 MANAGEMENT GUIDANCE
We reaffirm our 2005 full-year guidance of revenues in the range of $1.05 billion to $1.10 billion; operating income in the range of $130 - $138 million, which includes $2 million of pension expense from the Curtiss-Wright pension plan; and earnings per share in the range of $3.24 to $3.45 per share. This guidance reflects our expectations of 10-15% growth in revenue, 15-20% growth in operating income, and 10-15% growth in EPS, excluding $0.16 per share of nonrecurring tax benefits reported in 2004.
Full year free cash flow (defined as cash flow from operating activities less capital expenditures) is expected to be between $55 and $60 million for 2005.
EPS guidance is based on estimated fully diluted shares outstanding of 22 million shares for the full year 2005. 2005 guidance includes an estimate for costs associated with the continuation of Sarbanes-Oxley compliance, but it does not assume any acquisitions completed in 2005.
Mr. Benante concluded, "Much of our revenues are dependant upon customer delivery schedules which result in variability from quarter to quarter. We anticipated and previously indicated that our first quarter would be the lightest in 2005 and we have reaffirmed our full year 2005 guidance. Our backlog is strong and at a new record level. In 2005, we should once again demonstrate our ability to generate long-term shareholder value by growing our sales and earnings. Over the past several years our operating income has been growing faster than our sales while we executed a very active, yet disciplined, acquisition program. Our historical performance demonstrates our ability to execute our strategy and achieve our financial targets. We continue to experience increasing demand for our new technologies, many of which are only at the beginning of their life cycles, which should continue to provide superior returns to our shareholders into the future. Our diversification strategy, the continued successful integration of our acquisitions, and ongoing emphasis on technology will 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 first quarter 2005 results at 9:00 EDT Friday, April 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 Three Months
March 31, Change
2005 2004 $ %
Net sales $258,487 $214,933 $43,554 20.26%
Cost of sales 172,718 143,338 29,380 20.50%
Gross profit 85,769 71,595 14,174 19.80%
Research & development expenses 10,228 8,212 2,016 24.55%
Selling expenses 16,924 12,604 4,320 34.27%
General and administrative expenses 33,468 25,249 8,219 32.55%
Environmental remediation and
administrative expenses, net 83 240 (157) -65.42%
Pension expense (income), net 500 40 460 1150.00%
Operating income 24,566 25,250 (684) -2.71%
Other income (expenses), net 2,789 (489) 3,278 -670.35%
Interest expense (4,303) (2,265) (2,038) 89.98%
Earnings before income taxes 23,052 22,496 556 2.47%
Provision for income taxes 8,529 6,887 1,642 23.84%
Net earnings $14,523 $15,609 ($1,086) -6.96%
Basic earnings per share $0.68 $0.75
Diluted earnings per share $0.67 $0.74
Dividends per share $0.09 $0.09
Weighted average shares outstanding:
Basic 21,511 20,881
Diluted 21,814 21,206
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31, Change
2005 2004 $ %
Assets
Current Assets:
Cash and cash equivalents $41,783 $41,038 $745 1.8%
Receivables, net 251,917 214,084 37,833 17.7%
Inventories, net 128,144 115,979 12,165 10.5%
Deferred income taxes 23,699 25,693 (1,994) -7.8%
Other current assets 11,923 12,460 (537) -4.3%
Total current assets 457,466 409,254 48,212 11.8%
Property, plant, and equipment,
net 269,235 265,243 3,992 1.5%
Prepaid pension costs 77,313 77,802 (489) -0.6%
Goodwill, net 392,240 364,313 27,927 7.7%
Other intangible assets, net 155,872 140,369 15,503 11.0%
Other assets 14,565 21,459 (6,894) -32.1%
Total Assets $1,366,691 $1,278,440 $88,251 6.9%
Liabilities
Current Liabilities:
Short-term debt $981 $1,630 $(649) -39.8%
Accounts payable 64,158 65,364 (1,206) -1.8%
Accrued expenses 47,245 63,413 (16,168) -25.5%
Income taxes payable 18,324 13,895 4,429 31.9%
Other current liabilities 52,405 52,793 (388) -0.7%
Total current liabilities 183,113 197,095 (13,982) -7.1%
Long-term debt 419,083 340,860 78,223 22.9%
Deferred income taxes 46,934 40,043 6,891 17.2%
Accrued pension & other
postretirement benefit costs 82,317 80,612 1,705 2.1%
Long-term portion of
environmental reserves 24,194 23,356 838 3.6%
Other liabilities 22,651 20,860 1,791 8.6%
Total Liabilities 778,292 702,826 75,466 10.7%
Stockholders' Equity
Common stock, $1 par value 16,682 16,646 36 0.2%
Class B common stock, $1 par value 8,765 8,765 0 0.0%
Capital surplus 56,005 55,885 120 0.2%
Retained earnings 613,649 601,070 12,579 2.1%
Unearned portion of restricted
stock (28) (34) 6 -17.6%
Accumulated other comprehensive
income 33,004 36,797 (3,793) -10.3%
728,077 719,129 8,948 1.2%
Less: cost of treasury stock 139,678 143,515 (3,837) -2.7%
Total Stockholders' Equity 588,399 575,614 12,785 2.2%
Total Liabilities and
Stockholders' Equity $1,366,691 $1,278,440 $88,251 6.9%
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
Three Months Ended
March 31,
%
2005 2004 Change
Sales:
Flow Control $109,413 $89,395 22.4%
Motion Control 100,084 83,344 20.1%
Metal Treatment 48,990 42,194 16.1%
Total Sales $258,487 $214,933 20.3%
Operating Income:
Flow Control $10,349 $10,431 -0.8%
Motion Control 6,390 8,289 -22.9%
Metal Treatment 7,817 6,577 18.9%
Total Segments 24,556 25,297 -2.9%
Pension (Expense)/Income (500) (40) 1150.0%
Corporate & Other 510 (7) -7385.7%
Total Operating Income $24,566 $25,250 -2.7%
Operating Margins:
Flow Control 9.5% 11.7%
Motion Control 6.4% 9.9%
Metal Treatment 16.0% 15.6%
Total Curtiss-Wright 9.5% 11.7%
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 5,800 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. 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. Please refer to the Company's current SEC filings under the Securities and Exchange Act of 1934, as amended, for further information.
This press release and additional information is available at http://curtisswright2014.q4web.com.
SOURCE Curtiss-Wright Corporation
Alexandra M. Deignan of Curtiss-Wright Corporation,
+1-973-597-4734,
[email protected]