Skip to main content

Curtiss-Wright Reports 2003 Six Months Financial Results

News Details

CURTISS-WRIGHT REPORTS 2003 SIX MONTHS FINANCIAL RESULTS

July 30, 2003

Six Month and Second Quarter Sales up 65% & 50%, Respectively;

Operating Income up 46% & 16%, Respectively; First Half Net Earnings up 24%

Diversification & Acquisition Strategy Continues Company's Profitable Growth

Backlog & New Orders are at Record Levels

ROSELAND, N.J., July 30 /PRNewswire-FirstCall/ -- Curtiss-Wright Corporation (NYSE: CW; CW.B) today announced financial results for the six months and second quarter ended June 30, 2003. The highlights for the periods are as follows:

  • Net sales for the first half of 2003 increased 65% to $362,790,000 from $219,564,000 in the first half of 2002.
  • Operating income in the first half of 2003 increased 46% to $40,782,000 from $27,992,000 in the same prior year period.
  • Net earnings for the first half of 2003 of $24,995,000, or $2.40 per diluted share, were up 24% over first half 2002 net earnings of $20,132,000, or $1.93 per diluted share. However, non-operating income decreased $3,702,000 ($2,295,000 after tax) in the first half of 2003 as compared to the same prior year period, mainly resulting from lower pension income. The lower non-operating income had an adverse impact on earnings per share in 2003 of approximately $0.22 per diluted share.
  • Backlog increased 7% to a new record high of $511,501,000 from $478,494,000 at December 31, 2002.
  • Net sales increased 50% to $182,857,000 in the second quarter of this year from $121,777,000 in the second quarter of 2002.
  • Operating income in the second quarter of 2003 increased 16% to $17,437,000 from $15,078,000 in the same prior year period.
  • Net earnings for the second quarter of 2003 were $10,873,000 or $1.04 per diluted share, slightly above the $10,816,000, or $1.03 per diluted share for the same period of 2002. However, non-operating income decreased $1,659,000 ($1,029,000 after tax) in the second quarter of 2003 as compared to the same prior year period, mainly resulting from lower pension income. The lower non-operating income had an adverse impact on earnings per share in the second quarter of approximately $0.10 per diluted share.
  • New orders received in the second quarter of 2003 were $185,080,000, up 57% compared to the second quarter of 2002. New orders received in the first half of 2003 were $391,032,000, up 83% compared to the first half of 2002. Approximately 50% of the new orders received in 2003 were military related.

Overall, sales improvements in 2003 for the three and six months ended June 30th as compared to 2002, were due to both acquisitions and increases in some of our base businesses. Higher sales in the second quarter of flow control products to the non-nuclear navy, the nuclear power generation, and European valve markets, higher sales from our domestic ground defense business, and higher shot peening services, all contributed to the growth in base businesses. Sales to the commercial aerospace OEM and overhaul and repair services markets were down for the quarter. Timing issues also impacted the second quarter sales, as some shipments were expedited in the first quarter, which was earlier than planned. Excluding the contributions from the acquisitions consummated in 2002 and 2003, sales of the base businesses increased 1% and 3% for the three and six months ended June 30th, as compared to the prior year periods. In addition, foreign currency translation favorably impacted sales for the second quarter of 2003 by $4,162,000.

For the first half of 2003, sales increased 65% to $362,790,000 from $219,564,000 in last year's comparable six-month period. This increase was primarily due to the acquisitions made during 2002 and 2003, which contributed $134,772,000 in incremental sales during the first six months of 2003. Strong sales from some of our base businesses, specifically higher sales of flow control products, higher sales from our domestic ground defense business and higher shot-peening services all contributed to sales improvement over last year. In addition, foreign currency translation favorably impacted sales by $7,424,000. Operating income of $40,782,000 for the first six months of 2003 was 46% higher than operating income of $27,992,000 for the comparable period last year. The net earnings for the first six months of 2003 of $24,995,000, or $2.40 per diluted share were 24% above net earnings for the comparable period last year of $20,132,000, or $1.93 per diluted share.

Curtiss-Wright's second quarter 2003 performance was highlighted by strong results from our operating segments. Increased business segment operating income in 2003 more than offset the decrease in the Company's non-operating pension income as compared to 2002. Operating income from our business segments increased $2,343,000 for the second quarter of 2003 as compared to last year's comparable period. This increase in operating income equates to improved earnings per diluted share of $0.14 for the second quarter of 2003 as compared to the prior year. The higher operating income is mainly due to the higher sales volume as described above. The decrease in the non-operating pension income, when comparing the second quarter of 2003 to 2002, reduced net earnings in 2003 by $0.10 per diluted share.

Martin Benante, Chairman and Chief Executive Officer of Curtiss-Wright commented, "As mentioned in April, we had an exceptional first quarter, partially due to the timing of earlier than anticipated shipments. This presented a special challenge for the second quarter and we are pleased to report higher sales and operating income for the second quarter and first half of 2003 over the same periods last year. We experienced good organic growth in some of our base businesses, as well as solid performances from our acquisitions. Curtiss-Wright experienced growth in 2002 and 2003 in markets where most companies have experienced major downturns, specifically the power generation, gas and oil processing and certain industrial markets. Curtiss-Wright also experienced growth in our naval, military aerospace, land based military and laser peening markets. Achieving this growth in the current sluggish economy reflects our customers' preference to purchase our highly engineered products and services.

The commercial aerospace market has been particularly challenging, but our increase in military aerospace sales has offset the commercial downturn for the most part. In addition, the projected increase in military procurement spending should provide opportunities for us in the future. Our position on many defense programs, which includes a mix of products for aerospace, land-based and naval platforms. This balanced blend of defense programs is expected to provide both short and long-term benefits to our shareholders.

Our diversification strategy is producing the balance that has allowed us to continue achieving profitable growth from our business segments during a weak economic cycle. Our recent acquisitions have achieved better than expected results while increasing our market penetration, particularly within the defense sector, and expanded our geographic reach and technological capabilities. We remain optimistic about the rest of the year, as we expect a ramp up in a number of defense programs as well as higher sales from new products and services."

SEGMENT PERFORMANCE

Flow Control -- Second quarter 2003 sales for this segment were $85.6 million, up 146% over the comparable period last year. The higher sales reflect the acquisitions of the Electro-Mechanical Division of Westinghouse Government Services Company ("EMD") and TAPCO International, Inc. ("Tapco") in the fourth quarter of 2002. In addition to the benefits from these acquisitions, this segment experienced sales growth of 4% in base businesses, which was driven by stronger sales of products for non-nuclear naval markets, commercial power generation markets, and higher international valve sales. Sales of this business segment also benefited from favorable foreign currency translation of $0.6 million.

Overall, operating income for this segment increased 89% for the second quarter of 2003 compared to the comparable prior year period. The improvement was due to the benefit of the EMD and Tapco acquisitions, which had strong results for the second quarter of 2003. Operating income of our base businesses declined 19% from the prior year, driven mainly by unfavorable sales mix and slightly higher research and development costs for new product development. However, operating income for the first six months of our base businesses increased 7% as compared to the prior year period.

Motion Control -- Sales of $61.0 million for the second quarter of 2003 increased 2% over last year due principally to the acquisition of Collins Technologies in February 2003. The base business experienced lower sales due to the reduction in commercial aircraft production by Boeing, lower sales associated with the overhaul and repair services provided to the global airline industry and a slight drop in the European ground defense business. These lower sales were partially offset by stronger domestic ground defense sales primarily related to the expedited deliveries of the Bradley fighting vehicles (hardware and spares) and an increase in sales of military aerospace products, primarily F-16 spares. Sales of this business segment also benefited from favorable foreign currency translation of $2.2 million.

Operating income for the second quarter of 2003 was down compared to last year, which was driven by lower sales volume as mentioned above, unfavorable sales mix, higher than planned research development costs, and the timing of certain trade show expenses. However, we are expecting improvement in the operating margins for this segment in the second half of the year, primarily driven by a ramp up in certain existing military programs as well as the commencement of several new programs.

Metal Treatment -- Sales for the second quarter of 2003 of $36.3 million were 33% higher than the comparable period last year. The improvement was mainly due to the contributions from the 2002 and 2003 acquisitions and higher sales of shot peening services, particularly in the aerospace and automotive industries. Higher European shot-peening sales were mainly the result of favorable foreign currency translation, which positively impacted sales by $1.4 million. In addition, higher sales from our new laser-peening technology also contributed to the higher sales for the quarter.

Operating income increased 41% for the second quarter of 2003 as compared to the second quarter of 2002. Higher sales volumes, favorable sales mix, cost reduction programs, and favorable foreign currency translation all contributed to the higher operating margins for the second quarter and first six months of 2003. A major customer bankruptcy and new facility start-up expenses partially offset the above gains.

Mr. Benante concluded, "We are confident in our ability to continue to build on our solid business foundation and generate long-term shareholder value by continuing to increase sales and earnings. Our diversification strategy and ongoing emphasis on technology will continue to generate growth opportunities in each of our three business segments. Although 2003 is likely to continue to present a challenging business environment, the first half results illustrate our ability to increase shareholder value by executing our strategies and achieving our financial targets as we had indicated we would at the end of 2002. We look forward to the second half of this year, where we expect to see continued benefits of our strategic diversification and acquisition programs. We look forward to reporting to our investors on our continued progress."

The Company will hold a conference call to discuss the second quarter 2003 results at 10:00 am Thursday, July 31st, 2003. A live webcast of the call can be heard on the Internet by visiting the company's website at curtisswright2014.q4web.com and clicking on the investor information page or by visiting other websites that provide links to corporate webcasts.

                              (Tables to Follow)



                 CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF EARNINGS
                     (In thousands except per share data)
                                 (Unaudited)


                               Three Months Ended       Six Months Ended
                                    June 30,                June 30,
                              2003         2002         2003         2002


     Net sales             $182,857     $121,777    $ 362,790    $ 219,564
     Cost of sales          126,175       78,078      247,076      139,710
     Gross profit            56,682       43,699      115,714       79,854


     Research & development
      expenses                5,772        2,714       11,077        4,025
     Selling expenses        10,307        7,144       19,275       12,886
     General and
      administrative
      expenses               23,166       18,718       44,580       34,704
     Environmental expenses,
      net                        --           45           --          247


     Operating income        17,437       15,078       40,782       27,992


     Investment income, net      --          380           15          511
     Pension income, net        528        2,254        1,053        4,508
     Other income, net          515           68          258            9
     Interest expense          (942)        (466)      (1,793)        (659)


     Earnings before income
      taxes                  17,538       17,314       40,315       32,361
     Provision for income
      taxes                   6,665        6,498       15,320       12,229


     Net earnings           $10,873      $10,816      $24,995      $20,132


     Basic earnings per
      share                  $ 1.06        $1.06        $2.43        $1.98
     Diluted earnings per
      share                  $ 1.04        $1.03       $ 2.40        $1.93


     Dividends per share      $0.15       $ 0.15        $0.30        $0.30


     Weighted average
      shares outstanding:
       Basic                 10,301       10,203       10,292       10,163
       Diluted               10,431       10,511       10,417       10,421




                 CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                                (In thousands)
                                 (Unaudited)


                             June 30,   December 31,           Change
                               2003        2002            $            %
     Assets
     Current Assets:
      Cash and cash
       equivalents           $48,155     $47,717         $438         0.9%
      Receivables, net       142,187     142,600         (413)       -0.3%
      Inventories, net        91,346      80,524       10,822        13.4%
      Deferred income taxes   21,511      21,840         (329)       -1.5%
      Other current assets     6,495       9,005       (2,510)      -27.9%
       Total current assets  309,694     301,686        8,008         2.7%
      Property, plant and
       equipment, at cost    379,403     354,990       24,413         6.9%
       Less: accumulated
        depreciation         148,964     135,941       13,023         9.6%
      Property, plant and
       equipment, net        230,439     219,049       11,390         5.2%
      Prepaid pension costs   77,122      76,072        1,050         1.4%
      Goodwill, net          211,917     181,101       30,816        17.0%
      Other intangible
       assets, net            19,185      21,982       (2,797)      -12.7%
      Other assets            12,638      13,034         (396)       -3.0%


       Total Assets         $860,995    $812,924      $48,071         5.9%


     Liabilities
     Current Liabilities:
      Short-term debt       $ 32,887      $32,837         $50         0.2%
      Accounts payable        40,900       41,344        (444)       -1.1%
      Accrued expenses        33,064       32,446         618         1.9%
      Income taxes payable     4,369        4,528        (159)       -3.5%
      Other current
       liabilities            47,380       53,294      (5,914)      -11.1%
       Total current
        liabilities          158,600      164,449      (5,849)       -3.6%
      Long-term debt         142,055      119,041      23,014        19.3%
      Deferred income taxes    5,425        6,605      (1,180)      -17.9%
      Accrued pension &
       postretirement
       benefit costs          77,981       77,438         543         0.7%
      Long-term portion of
       environmental
       reserves               21,996       22,585        (589)       -2.6%
      Other liabilities       14,089       11,578       2,511        21.7%
       Total Liabilities     420,146      401,696      18,450         4.6%


     Stockholders' Equity
     Common stock, $1 par
      value                   10,618       10,618          --          N/A
     Class B common stock,
      $1 par value             4,382        4,382          --          N/A
     Capital surplus          52,353       52,200         153         0.3%
     Retained earnings       530,202      508,298      21,904         4.3%
     Unearned portion of
      restricted stock           (50)         (60)         10        16.7%
     Accumulated other
      comprehensive income    12,483        6,482       6,001        92.6%
                             609,988      581,920      28,068         4.8%
     Less: Common treasury
      stock, at cost         169,139      170,692      (1,553)       -0.9%
      Total Stockholders'
       Equity                440,849      411,228      29,621         7.2%


      Total Liabilities
       and Stockholders'
       Equity               $860,995     $812,924     $48,071         5.9%


    Certain prior year information has been reclassified to conform to current
presentation.




                 CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                             SEGMENT INFORMATION
                                (In thousands)


                              Three Months Ended          Six Months Ended
                                    June 30,                  June 30,
                                                %                          %
                            2003      2002   Change   2003      2002    Change
                 Sales:
           Flow Control   $85,617  $ 34,752  146.4% $178,958   $64,870  175.9%
         Motion Control    60,984    59,771    2.0%  118,024   102,023   15.7%
        Metal Treatment    36,256    27,254   33.0%   65,808    52,671   24.9%


         Total Segments $ 182,857 $ 121,777   50.2% $362,790  $219,564   65.2%


      Operating Income:
           Flow Control    $8,748    $4,634   88.8%  $23,066    $8,290  178.2%
         Motion Control     4,107     7,332  -44.0%    9,197    14,114  -34.8%
        Metal Treatment     5,030     3,576   40.7%    8,781     6,336   38.6%


         Total Segments    17,885    15,542   15.1%   41,044    28,740   42.8%
      Corporate & Other      (448)     (464)   3.4%     (262)     (748)  65.0%


        Total Operating
                 Income   $17,437 $ 15,078   15.6%  $ 40,782   $27,992   45.7%



     Operating Margins:
           Flow Control     10.2%     13.3%            12.9%     12.8%
         Motion Control      6.7%     12.3%             7.8%     13.8%
        Metal Treatment     13.9%     13.1%            13.3%     12.0%


                  Total
         Curtiss-Wright      9.5%     12.4%            11.2%     12.7%

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 additionally is a provider of metal treatment services. The firm employs approximately 4,300 people. More information on Curtiss-Wright can be found on the Internet at curtisswright2014.q4web.com.

ABOUT THE CENTENNIAL CELEBRATION OF FLIGHT

On December 17, 1903, amid the sand dunes of Kitty Hawk, North Carolina, man's quest for powered flight became a reality when a small fabric and wood craft know as the Wright Flyer ushered in the aviation age. The team behind this legendary event, Orville and Wilbur Wright, along with aircraft designer Glenn Curtiss, gave birth to a new industry and founded Curtiss-Wright Corporation, today a multinational provider of metal treatment, motion control and flow control systems for the aerospace and defense industries. For more information about the Centennial Celebration of Flight, visit curtisswright2014.q4web.com/centennial.asp.

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, 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 www.curtiss-wright.com and www.portfoliopr.com.

SOURCE Curtiss-Wright Corporation

CONTACT:
Glenn Tynan of Curtiss-Wright Corporation,
+1-973-597-4700, or
[email protected];
or Paul Holm,
[email protected],
or Matthew Karsh,
[email protected],
both of Portfolio PR,
+1-212-736-9224,
for Curtiss-Wright Corporation.