News Details
CURTISS-WRIGHT REPORTS 2004 SECOND QUARTER AND SIX MONTH FINANCIAL RESULTS
July 29, 2004
Sales Increased 22% and 21% and Operating Income 43% & 22% in the Second Quarter and First Half of 2004, Respectively Backlog at Record Level
ROSELAND, N.J., Jul 29, 2004 /PRNewswire-FirstCall via COMTEX/ -- Curtiss-Wright Corporation (NYSE: CW, CW.B) today announced financial results for the second quarter and six months ended June 30, 2004. The highlights for the periods are as follows:
SECOND QUARTER 2004 OPERATING HIGHLIGHTS
- Net sales for the second quarter of 2004 increased 22% to $222.4 million from $182.9 million in the second quarter of 2003. Acquisitions made in the second half of 2003 and in 2004 contributed $30.2 million in incremental sales in the second quarter of 2004.
- Operating income in the second quarter of 2004 increased 43% to $25.6 million from $18.0 million in the second quarter of 2003. Acquisitions made in the second half of 2003 and in 2004 contributed $2.7 million in incremental operating income in the second quarter of 2004. The increase in operating income was achieved despite a $0.6 million decrease in pension income from the second quarter of 2003.
- Net earnings for the second quarter of 2004 increased 32% to $14.3 million, or $0.67 per diluted share, from $10.9 million, or $0.52 per diluted share, in the second quarter of 2003 (adjusted for the 2-for-1 stock split in December 2003). The increase in 2004 second quarter net earnings was achieved despite a $2.1 million increase in interest expense (approximately $0.06 per diluted share).
- New orders received in the second quarter of 2004 were $208.1 million, up 12% compared to the second quarter of 2003.
SIX MONTHS 2004 OPERATING HIGHLIGHTS
- Net sales for the first six months of 2004 increased 21% to $437.4 million from $362.8 million in the first six months of 2003. Acquisitions made in 2003 and 2004 contributed $58.4 million in incremental sales in the first six months of 2004.
- Operating income in the first six months of 2004 increased 22% to $50.9 million from $41.8 million in the first six months of 2003. Acquisitions made in 2003 and 2004 contributed $5.1 million in incremental operating income in the first six months of 2004. The increase in operating income was achieved despite a $1.1 million decrease in pension income from the first six months of 2003.
- Net earnings for the first six months of 2004 increased 20% to $29.9 million, or $1.40 per diluted share, from $25.0 million, or $1.20 per diluted share, in the first six months of 2003 (adjusted for the 2-for- 1 stock split in December 2003). In addition, the increase in 2004 net earnings was achieved despite a $3.5 million increase in interest expense (approximately $0.10 per diluted share).
- New orders received in the first six months of 2004 were $443.5 million, up 13% compared to the first six months of 2003. Backlog increased 11% to a new record high of $559.4 million from $505.5 million at December 31, 2003.
"We are pleased to again report higher sales and operating income for the second quarter and first half of 2004," commented Martin R. Benante, Chairman and CEO of Curtiss-Wright Corporation. "We continue to grow operating income faster than sales, which demonstrates our ability to successfully integrate acquisitions while continuing to grow our base businesses. Our diversification strategy has provided growth in the first half of 2004 for both our core defense markets, which grew 21%, and commercial and industrial markets, which grew 20%, over the prior year period."
SALES
Sales growth in 2004 for the three and six months ended June 30th as compared to 2003, was driven by contributions from acquisitions and organic growth in some of our base businesses. Acquisitions made in 2003 and 2004 have contributed $30.2 million and $58.4 million in incremental sales for the quarter and six months ended June 30, 2004, respectively, over the comparable periods in 2003. Excluding the contribution from these acquisitions, we experienced overall organic growth of 5% and 4% for the three and six months ended June 30, 2004, respectively, over the prior year periods. The organic sales growth was driven by our Metal Treatment and Motion Control segments, which experienced organic growth of 19% and 9%, respectively, for the first six months of 2004.
In our base businesses, higher sales from our Motion Control segment to the military aerospace market, higher sales from our Flow Control segment to the commercial power generation and oil and gas processing markets, and higher sales of global shot and laser peening by our Metal Treatment segment, all contributed to the organic growth. In addition, foreign currency translation favorably impacted sales by $3.1 million and $7.7 million for the three and six months ended June 30, 2004, respectively, compared to the prior year periods.
OPERATING INCOME
Operating income for the three and six months ended June 30, 2004 increased 43% and 22%, respectively, over the 2003 prior year periods. The increases were due to higher sales volumes, favorable sales mix and previously implemented cost control initiatives. Overall, organic growth was 31% and 13% for the three and six months ended June 30, 2004, respectively, compared to the prior year periods. The strong year-to-date performance of our Motion Control and Metal Treatment segments was slightly offset by a decrease in the Flow Control segment.
The higher segment operating income was partially offset by lower pension income of $0.6 million and $1.1 million for the three and six months ended June 30, 2004, respectively, over the comparable prior year periods. In addition, foreign currency translation favorably impacted operating income by $0.5 million and $1.2 million for the three and six months ended June 30, 2004, respectively, compared to the prior year periods.
NET EARNINGS
Net earnings increased 32% and 20% for the three and six months ended June 30, 2004, respectively, over the comparable prior year periods. This was achieved by strong operating income from our business segments, which increased $8.6 million and $10.7 million over the prior year periods. Curtiss-Wright achieved strong growth in the military aerospace, commercial power generation, and laser and shot peening markets. Additionally Curtiss- Wright achieved growth during the first six months of 2004 in oil and gas processing, commercial repair and overhaul and certain industrial markets, despite the continued softness in these markets overall.
Net earnings for the first six months include a one-time tax benefit of $1.5 million resulting from a change in legal structure of one of our subsidiaries. These improvements were partially offset by higher interest expense associated with the debt incurred to fund our acquisition program and from higher interest rates.
SEGMENT PERFORMANCE
Flow Control -- Sales for the second quarter of 2004 were $86.2 million, up 1% over the comparable period last year. Sales growth was achieved in the commercial power generation, oil and gas processing, and defense electronics markets. This growth was mostly offset by lower sales of flow control products to the US Navy primarily due to the timing of contractual revenues. Sales of this business segment also benefited from favorable foreign currency translation of $0.4 million in the second quarter of 2004 as compared to the prior year period.
Operating income for this segment increased 1% in the second quarter of 2004 compared to the prior year period. Despite the profit impact related to lower flow control product sales to the US Navy, we achieved strong growth in this segment's other businesses. Higher volume and stronger sales mix for our commercial power generation and oil and gas products, and higher volumes for our electronic products to the US Navy were the drivers of this increase.
Motion Control -- Sales of $91.6 million for the second quarter of 2004 increased 50% over last year, principally due to the contributions from the 2003 and 2004 acquisitions, and 8% organic sales growth. The organic growth was driven mainly by an increase in sales of military aerospace products for F/A-22 and V-22 production, F/A-22 spares, and the Joint Strike Fighter development. In addition, this segment experienced higher electronic sales for the 767 Refueler program and higher sales associated with the repair and overhaul services provided to the global airline industry. Sales of this business segment also benefited from favorable foreign currency translation of $1.7 million in the second quarter of 2004 as compared to the prior year period.
Operating income for this segment increased 144% for the second quarter of 2004 compared to the prior year period. The improvement was driven by higher sales volume previously mentioned, favorable sales mix on various military programs, and implemented cost control initiatives. Additionally, the operating margins for the repair and overhaul business improved slightly over the comparable period last year, mainly as a result of implemented cost control initiatives.
Metal Treatment -- Sales for the second quarter of 2004 of $44.6 million were 23% higher than the comparable period last year. The improvement was mainly due to organic growth of 19% driven by higher overall laser and shot peening revenues, and the contributions from the 2004 acquisitions. We achieved exceptional sales growth from our new laser peening technology as well as strong growth in our global shot peening businesses. Favorable foreign currency translation positively impacted sales by $1.1 million in the second quarter of 2004 as compared to the prior year period.
Operating income increased 51% for the second quarter of 2004 as compared to the prior year period. Margins improved substantially in our shot peening businesses primarily as a result of higher sales volume, especially for our higher margin laser peening sales. In addition, favorable sales mix, cost reduction programs, and favorable foreign currency translation also contributed to the higher operating income.
Mr. Benante concluded, "In 2004, we continue to demonstrate our ability to generate long-term shareholder value by growing our sales and earnings. We successfully increased sales and earnings due to our diversification and ability to deliver the high performance, technologically advanced products for which Curtiss-Wright is world renowned. Our strong performance in the first half of 2004 exemplifies our ability to execute our strategy and achieve our financial targets. We expect the second half of 2004 to be even stronger, which will continue to provide opportunities to generate growth in each of our three business segments. We look forward to providing our investors with superior returns in 2004."
The Company will host a conference call to discuss the second quarter 2004 results at 10:00 EDT Friday, July 30, 2004. 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,
2004 2003 2004 2003
Net sales $222,428 $182,857 $437,361 $362,790
Cost of sales 146,406 126,175 289,744 247,076
Gross profit 76,022 56,682 147,617 115,714
Research & development expenses 7,754 5,772 15,966 11,077
Selling expenses 14,743 10,307 27,347 19,275
General and administrative
expenses 27,789 23,166 53,038 44,580
Environmental remediation and
administrative expenses, net 51 - 291 -
Pension expense (income), net 42 (528) 82 (1,053)
Operating income 25,643 17,965 50,893 41,835
Other income (expenses), net 293 515 (196) 273
Interest expense (3,018) (942) (5,283) (1,793)
Earnings before income taxes 22,918 17,538 45,414 40,315
Provision for income taxes 8,594 6,665 15,481 15,320
Net earnings $14,324 $10,873 $29,933 $24,995
Basic earnings per share $0.68 $0.53 $1.42 $1.21
Diluted earnings per share $0.67 $0.52 $1.40 $1.20
Dividends per share $0.09 $0.08 $0.18 $0.15
Weighted average shares outstanding:
Basic 21,136 20,602 21,013 20,584
Diluted 21,460 20,862 21,330 20,834
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
Three Months Six Months
Change Change
$ % $ %
Net sales $39,571 21.64% $74,571 20.55%
Cost of sales 20,231 16.03% 42,668 17.27%
Gross profit 19,340 34.12% 31,903 27.57%
Research & development expenses 1,982 34.34% 4,889 44.14%
Selling expenses 4,436 43.04% 8,072 41.88%
General and administrative expenses 4,623 19.96% 8,458 18.97%
Environmental remediation and
administrative
expenses, net 51 N/A 291 N/A
Pension expense (income), net 570 -107.95% 1,135 -107.79%
Operating income 7,678 42.74% 9,058 21.65%
Other income (expenses), net (222) -43.11% (469) -171.79%
Interest expense (2,076) 220.38% (3,490) 194.65%
Earnings before income taxes 5,380 30.68% 5,099 12.65%
Provision for income taxes 1,929 28.95% 161 1.05%
Net earnings $3,451 31.74% $4,938 19.75%
Share and per share amounts have been restated to reflect the
Corporation's 2-for-1 stock split on December 17, 2003
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
2004 2003 $ %
Assets
Current Assets:
Cash and cash equivalents $36,830 $98,672 $(61,842) -62.7%
Receivables, net 174,538 143,362 31,176 21.7%
Inventories, net 114,769 97,880 16,889 17.3%
Deferred income taxes 24,269 23,630 639 2.7%
Other current assets 13,660 10,979 2,681 24.4%
Total current assets 364,066 374,523 (10,457) -2.8%
Property, plant, and equipment, net 248,496 238,139 10,357 4.3%
Prepaid pension costs 77,845 77,877 (32) 0.0%
Goodwill, net 316,114 220,058 96,056 43.7%
Other intangible assets, net 95,010 48,268 46,742 96.8%
Other assets 15,956 14,800 1,156 7.8%
Total Assets $1,117,487 $973,665 $143,822 14.8%
Liabilities
Current Liabilities:
Short-term debt $1,002 $997 $5 0.5%
Accounts payable 56,551 43,776 12,775 29.2%
Accrued expenses 49,144 44,938 4,206 9.4%
Income taxes payable 5,229 6,748 (1,519) -22.5%
Other current liabilities 43,486 39,424 4,062 10.3%
Total current liabilities 155,412 135,883 19,529 14.4%
Long-term debt 300,999 224,151 76,848 34.3%
Deferred income taxes 20,318 21,798 (1,480) -6.8%
Accrued pension & other
postretirement benefit costs 77,566 75,633 1,933 2.6%
Long-term portion of
environmental reserves 19,774 21,083 (1,309) -6.2%
Other liabilities 20,860 16,236 4,624 28.5%
Total Liabilities 594,929 494,784 100,145 20.2%
Stockholders' Equity
Common stock, $1 par value 16,611 16,611 0 0.0%
Class B common stock, $1 par
value 8,765 8,765 0 0.0%
Capital surplus 51,522 52,998 (1,476) -2.8%
Retained earnings 569,792 543,670 26,122 4.8%
Unearned portion of restricted
stock (45) (55) 10 -18.9%
Accumulated other comprehensive
income 22,219 22,634 (415) -1.8%
668,864 644,623 24,241 3.8%
Less: cost of treasury stock 146,306 165,742 (19,436) -11.7%
Total Stockholders' Equity 522,558 478,881 43,677 9.1%
Total Liabilities and
Stockholders' Equity $1,117,487 $973,665 $143,822 14.8%
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
% %
2004 2003 Change 2004 2003 Change
Sales:
Flow Control $86,205 $85,617 0.7% $175,600 $178,958 -1.9%
Motion Control 91,578 60,984 50.2% 174,922 118,024 48.2%
Metal Treatment 44,645 36,256 23.1% 86,839 65,808 32.0%
Total Sales $222,428 $182,857 21.6% $437,361 $362,790 20.6%
Operating Income:
Flow Control $8,846 $8,748 1.1% $19,277 $23,066 -16.4%
Motion Control 10,012 4,107 143.8% 18,301 9,197 99.0%
Metal Treatment 7,577 5,030 50.6% 14,154 8,781 61.2%
Total Segments 26,435 17,885 47.8% 51,732 41,044 26.0%
Pension Income (42) 528 -108.0% (82) 1,053 -107.8%
Corporate & Other (750) (448) 67.4% (757) (262) 188.9%
Total Operating
Income $25,643 $17,965 42.7% $50,893 $41,835 21.7%
Operating Margins:
Flow Control 10.3% 10.2% 11.0% 12.9%
Motion Control 10.9% 6.7% 10.5% 7.8%
Metal Treatment 17.0% 13.9% 16.3% 13.3%
Total Curtiss-Wright 11.5% 9.8% 11.6% 11.5%
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 5,100 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 Deignan of Curtiss-Wright Corporation,
+1-973-597-4734, [email protected]