Curtiss-Wright Corporation (NYSE:CW) reported financial results for
the fourth quarter and full-year ended December 31, 2014.
Fourth Quarter 2014 Operating
Highlights from Continuing Operations
- Net sales decreased 3% to $573 million, from $588 million in
2013;
- Operating income increased 5% to $75 million, from $72 million
in 2013;
- Operating margin increased 90 basis points to 13.1%, from 12.2%
in 2013;
- Net earnings from continuing operations increased 3% to $46
million, or $0.94 per diluted share, from $45 million, or $0.92 per
diluted share, in 2013;
- Free cash flow increased 86% to $166 million, from $89 million
in 2013, generating a free cash flow conversion of 360%; and
- New orders totaled $534 million, down 8% from 2013, primarily
due to lower demand within the aerospace and ground defense markets
following strong year-to-date results.
Full-Year 2014 Operating Highlights from Continuing
Operations
- Net sales increased 6% to $2.2 billion, from $2.1 billion in
2013;
- Operating income increased 19% to $282 million, from $237
million in 2013;
- Operating margin increased 140 basis points to 12.6%, from
11.2% in 2013;
- Net earnings from continuing operations increased 22% to $170
million, or $3.46 per diluted share, from $139 million, or $2.91
per diluted share, in 2013;
- Free cash flow increased 60% to $265 million, from $166 million
in 2013, generating a free cash flow conversion of 156%;
- New orders totaled $2.4 billion, up 11% from 2013, primarily
due to higher demand within the aerospace and naval defense
markets, as well as the contribution from acquisitions; and Backlog
grew to approximately $1.67 billion, up 5% from December 31,
2013.
"We were pleased with our fourth quarter results as we continue
to drive solid operating margin expansion and free cash flow
generation that produced $0.94 in diluted earnings per share and
free cash flow conversion of 360%," said David C. Adams, Chairman
and CEO of Curtiss-Wright Corporation. "Our full-year 2014 results
reflect robust improvements in operating income, operating margin,
diluted EPS and free cash flow, and are a testament to all that we
have accomplished under the first year of the 'One Curtiss-Wright'
vision. Full-year operating margin of 12.6% represents a one-year
increase of more than 300 basis points over 2013 reported
results.
"We are delivering on our long-term strategy and have made great
strides in our pursuit of upper quartile metrics compared to our
peer group. Our operational teams remain intensely focused on
driving efficiencies throughout the business, enabling CW to become
leaner and more profitable, while also increasing our long-term
value to customers and shareholders. As a result, we are
forecasting operating margin of 13.3% to 13.4%, diluted EPS of
$3.80 to $3.90, and free cash flow of $245 to $265 million in
2015.
"Furthermore, following the Board's re-initiation of our share
repurchase program in early 2014 and our commitment to a balanced
capital allocation strategy, we returned more than $90 million to
our shareholders through consistent share repurchases and dividend
distributions in 2014. For 2015, we are actively repurchasing
shares under our new buyback program and expect to repurchase at
least $200 million this year.
"Overall, we remain dedicated to enhancing shareholder value by
improving profitability, generating strong free cash flow and
maintaining a balanced capital allocation strategy."
Fourth Quarter 2014 Operating Results from Continuing
Operations
(In thousands) |
4Q-2014 |
4Q-2013 |
% Change |
Sales |
$ 572,586 |
$ 588,167 |
(3%) |
Operating income |
74,931 |
71,529 |
5% |
Operating margin |
13.1% |
12.2% |
90 bps |
Sales
Sales of $573 million in the fourth quarter decreased $16
million, or 3%, compared to the prior year period, primarily driven
by lower organic growth in the Defense segment, partially offset by
gains in the Commercial/Industrial and Energy segments.
From a market perspective, fourth quarter sales to the
commercial markets decreased 2% compared to the prior year period,
while sales to the defense markets decreased approximately 5%.
Please refer to the table on page 10 for a full breakdown of sales
by end market.
Operating Income
Operating income in the fourth quarter was $75 million, an
increase of 5% compared to the prior year period, primarily driven
by solid organic growth (excluding effects of foreign currency
translation, acquisitions and divestitures) in the
Commercial/Industrial and Energy segments and reduced corporate
expenses.
Operating margin was 13.1%, an increase of 90 basis points over
the prior year period reflecting higher operating income in the
Commercial/Industrial and Energy segments. Our results continue to
reflect the ongoing margin improvement initiatives benefiting each
of our segments, which included lower corporate costs resulting
primarily from our organizational realignment.
Non-segment operating expense
Non-segment costs were lower by $8 million as compared with the
prior year period, primarily due to lower pension costs and other
corporate expenses in the current quarter.
Net Earnings
Fourth quarter net earnings increased 3% from the comparable
prior year period. Interest expense of approximately $9 million
decreased slightly compared to the prior year period, primarily due
to lower average debt levels. Our effective tax rate for the
current quarter was 30.8%, an increase from 28.3% in the prior year
period, which had benefitted from favorable adjustments to certain
tax valuation allowances and state tax return filing true-ups.
Free Cash Flow
(In thousands) |
4Q-2014 |
4Q-2013 |
Net cash generated from operating
activities |
$ 178,593 |
$ 103,441 |
Capital expenditures |
(12,635) |
(14,366) |
Free cash flow |
$ 165,958 |
$ 89,075 |
Free cash flow was $166 million for the fourth quarter of 2014,
compared to $89 million in the prior year period, or an increase of
approximately $77 million. Net cash generated from operating
activities increased by $75 million from the prior year period
primarily due improvements in working capital as it relates to cash
collections and the timing of vendor payments. Capital
expenditures of $13 million were more than $1 million lower than
the prior year period. Free cash flow is defined as cash flow
from operations less capital expenditures.
Other Items – Update on Discontinued
Operations
During the fourth quarter of 2014, the Company completed the
previously announced sale of its upstream oil and gas business
(Cimarron) for $100 million in cash.
In addition, during the first quarter of 2015, the Company
completed the sale of its aviation ground support equipment
business (Douglas) serving the commercial aerospace market for
approximately $5 million in cash.
Other Items – Share Repurchase
The Company repurchased approximately 301,000 and 975,500 shares
of its common stock during the fourth quarter and year-to-date
periods, for approximately $21 million and $65 million,
respectively.
Beginning in January 2015, the Company began to repurchase
shares under its previously announced $200 million share repurchase
program, which it expects to complete by year-end.
Other Items – Segment Realignment
As a result of the previously announced discontinued operations,
the Corporation is realigning certain segments and businesses, as
follows:
- The Energy segment will be renamed as the Power segment.
- The businesses serving the nuclear naval defense and new build
(AP1000) power generation markets, which had previously operated
within the Defense segment, will join with the Nuclear aftermarket
business in the new Power segment.
- The remaining Oil and Gas businesses, which had previously
operated within the Energy segment, will join the Commercial /
Industrial segment, specifically the industrial valves group of
companies. As a result, all of our industrial and severe service
valve businesses will operate within a single division.
- The Defense segment will be comprised primarily of the
electronics businesses serving the aerospace and ground defense
markets.
- Historical financial results in the new segment structure for
2014 and 2013 periods can be found on page 13 in this release and
will be downloadable from the Investor Relations section of our
website.
Full-Year 2015 Guidance
The Company is issuing full-year 2015 financial guidance as
follows:
|
2015 Guidance |
Chg vs. 2014 |
Total sales |
$2.28 - $2.33 billion |
2% - 4% |
Operating income |
$303 - $312 million |
7% - 10% |
Operating margin |
13.3% - 13.4% |
+ 70 - 80 bps |
Interest expense |
$37 - 38 million |
|
Effective tax rate |
~32% |
|
Diluted earnings per share |
$3.80 - $3.90 |
10% - 13% |
Diluted shares outstanding |
47.8 million |
|
Free cash flow |
$100 - $120 million |
|
Adjusted free cash flow * |
$245 - $265 million |
|
Notes: A more detailed breakdown of our 2015 guidance by
segment and by market can be found in the attached accompanying
schedules.
Effective January 30, 2015, Curtiss-Wright elected to make a
$145 million contribution to its corporate defined benefit pension
plan, which will significantly reduce annual pension expense and
annual cash contributions going forward.
*Adjusted free cash flow excludes the aforementioned pension
contribution of $145 million.
Fourth Quarter 2014 Segment Performance
Commercial/Industrial
(In thousands) |
4Q-2014 |
4Q-2013 |
% Change |
Sales |
$ 265,462 |
$ 254,590 |
4% |
Operating income |
35,743 |
28,992 |
23% |
Operating margin |
13.5% |
11.4% |
210 bps |
Sales for the fourth quarter were approximately $265 million, an
increase of $11 million, or 4%, over the comparable prior year
period. Within the commercial aerospace market, higher sales
were driven by the ramp up in OEM production rates, particularly on
the Boeing 737 and 787 programs, as well as solid demand for our
sensors and controls products. Higher industrial valve sales
to the naval defense market were partially offset by lower sales of
shot peening and engineered coatings services to the automotive
industry within the general industrial market. The 2014
acquisition of CCRS contributed approximately $3 million to sales
in the current quarter, primarily related to coating and repair
services for industrial gas turbines in the power generation
market, which was offset by $3 million in unfavorable foreign
currency translation.
Operating income in the fourth quarter was $36 million, an
increase of $7 million, or 23%, from the comparable prior year
period, while operating margin increased 210 basis points to
13.5%. The improvement in operating income and
operating margin was driven by higher sales volumes related to
industrial valve products, surface treatment services and
industrial vehicle products, as well as improved profitability
resulting from our ongoing margin improvement initiatives.
Defense
(In thousands) |
4Q-2014 |
4Q-2013 |
% Change |
Sales |
$ 199,658 |
$ 232,877 |
(14%) |
Operating income |
28,757 |
44,890 |
(36%) |
Operating margin |
14.4% |
19.3% |
(490 bps) |
Sales for the fourth quarter were approximately $200 million, a
decrease of $33 million, or 14%, over the comparable prior year
period. Within the defense markets, we experienced lower naval
sales, primarily due to decreased production on the Ford-class
aircraft carrier and DDG-51 destroyer programs, which more than
offset higher sales of pumps and generators supporting the
Virginia-class submarine program. Within the power generation
market, our results primarily reflect lower revenues on the
domestic and China AP1000 programs compared to the prior year
period. We also experienced lower quarter-over-quarter
revenues related to the licensing of certain non-strategic products
within the commercial aerospace market.
Operating income in the fourth quarter was $29 million, a
decrease of approximately $16 million, or 36%, compared to the
prior year period, while operating margin declined 490 basis points
to 14.4%. Our results were primarily impacted by an increase
in costs on the AP1000 program as well as the reduced benefit of
product licensing agreements. Those decreases were partially
offset by the benefits of our ongoing margin improvement
initiatives.
Energy
(In thousands) |
4Q-2014 |
4Q-2013 |
% Change |
Sales |
$ 107,466 |
$ 100,700 |
7% |
Operating income |
16,343 |
11,621 |
41% |
Operating margin |
15.2% |
11.5% |
370 bps |
Sales for the fourth quarter were approximately $107 million, an
increase of approximately $7 million, or 7%, compared to the prior
year period. In the oil and gas market, higher sales were
driven by strong global aftermarket demand for severe-service
industrial and pressure relief valves. Within the power
generation market, we experienced lower aftermarket sales
supporting domestic nuclear operating reactors, as a result of
ongoing deferred spending on maintenance and upgrades, which more
than offset higher sales supporting international reactors.
Operating income in the fourth quarter was $16 million, a 41%
increase from the comparable prior year period, while operating
margin increased 370 basis points to 15.2%. This improvement
in operating income and operating margin was primarily driven by
higher sales volumes for severe-service valves in the oil and gas
market as well as the benefit of our ongoing margin improvement
initiatives.
Conference Call Information
The Company will host a conference call to discuss the fourth
quarter and full-year 2014 financial results and expectations for
2015 guidance at 9:00 a.m. EST on Thursday, February 19,
2015. A live webcast of the call and the accompanying
financial presentation will be made available on the internet by
visiting the Investor Relations section of the Company's website at
www.curtisswright.com.
(Tables to Follow)
CURTISS-WRIGHT
CORPORATION and SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (UNAUDITED) |
($'s in thousands, except per
share data) |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Year
Ended |
|
|
December
31 |
Change |
December
31 |
Change |
|
2014 |
2013 |
$ |
% |
2014 |
2013 |
$ |
% |
Product sales |
$ 463,902 |
$ 487,255 |
$ (23,353) |
(5%) |
$ 1,815,028 |
$ 1,719,591 |
$ 95,437 |
6% |
Service sales |
108,684 |
100,912 |
7,772 |
8% |
428,098 |
398,490 |
29,608 |
7% |
Total net sales |
572,586 |
588,167 |
(15,581) |
(3%) |
2,243,126 |
2,118,081 |
125,045 |
6% |
|
|
|
|
|
|
|
|
|
Cost of product sales |
300,663 |
313,342 |
(12,679) |
(4%) |
1,190,714 |
1,123,291 |
67,423 |
6% |
Cost of service sales |
71,583 |
65,770 |
5,813 |
9% |
275,896 |
258,951 |
16,945 |
7% |
Total cost of sales |
372,246 |
379,112 |
(6,866) |
(2%) |
1,466,610 |
1,382,242 |
84,368 |
6% |
|
|
|
|
|
|
|
|
|
Gross profit |
200,340 |
209,055 |
(8,715) |
(4%) |
776,516 |
735,839 |
40,677 |
6% |
|
|
|
|
|
|
|
|
|
Research and development expenses |
16,692 |
18,185 |
(1,493) |
(8%) |
67,842 |
63,580 |
4,262 |
7% |
Selling expenses |
32,665 |
33,368 |
(703) |
(2%) |
128,005 |
128,473 |
(468) |
(0%) |
General and administrative expenses |
76,052 |
85,973 |
(9,921) |
(12%) |
298,296 |
306,663 |
(8,367) |
(3%) |
|
|
|
|
|
|
|
|
|
Operating income |
74,931 |
71,529 |
3,402 |
5% |
282,373 |
237,123 |
45,250 |
19% |
|
|
|
|
|
|
|
|
|
Interest expense |
(8,740) |
(9,352) |
612 |
7% |
(35,794) |
(37,053) |
1,259 |
3% |
Other income, net |
435 |
144 |
291 |
NM |
365 |
980 |
(615) |
NM |
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
66,626 |
62,321 |
4,305 |
7% |
246,944 |
201,050 |
45,894 |
23% |
Provision for income taxes |
20,494 |
17,621 |
2,873 |
16% |
76,995 |
61,646 |
15,349 |
25% |
Earnings from continuing operations |
$ 46,132 |
$ 44,700 |
$ 1,432 |
3% |
$ 169,949 |
$ 139,404 |
$ 30,545 |
22% |
|
|
|
|
|
|
|
|
|
Gain (loss) from discontinued operations, net
of tax |
$ (29,382) |
$ 2,607 |
$ (31,989) |
NM |
$ (56,611) |
$ (1,423) |
$ (55,188) |
NM |
|
|
|
|
|
|
|
|
|
Net earnings |
$ 16,750 |
$ 47,307 |
$ (30,557) |
(65%) |
$ 113,338 |
$ 137,981 |
$ (24,643) |
(18%) |
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
|
|
|
|
|
|
|
Earnings from continuing operations |
$ 0.96 |
$ 0.95 |
|
|
$ 3.54 |
$ 2.97 |
|
|
Earnings (loss) from discontinued
operations |
(0.61) |
0.05 |
|
|
(1.18) |
(0.03) |
|
|
Total |
$ 0.35 |
$ 1.00 |
|
|
$ 2.36 |
$ 2.94 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
Earnings from continuing operations |
$ 0.94 |
$ 0.92 |
|
|
$ 3.46 |
$ 2.91 |
|
|
Earnings (loss) from discontinued
operations |
(0.60) |
0.05 |
|
|
(1.15) |
(0.03) |
|
|
Total |
$ 0.34 |
$ 0.97 |
|
|
$ 2.31 |
$ 2.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
$ 0.13 |
$ 0.10 |
|
|
$ 0.52 |
$ 0.39 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
47,927 |
47,443 |
|
|
48,019 |
46,991 |
|
|
Diluted |
48,905 |
48,591 |
|
|
49,075 |
47,912 |
|
|
|
|
|
|
|
|
|
|
|
NM- not meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURTISS-WRIGHT
CORPORATION and SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED) |
($'s In thousands, except par
value) |
|
|
|
|
|
December 31, |
December 31, |
Change |
|
2014 |
2013 |
% |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 450,116 |
$ 175,294 |
157% |
Receivables, net |
495,480 |
603,592 |
(18%) |
Inventories, net |
388,670 |
452,087 |
(14%) |
Deferred tax assets, net |
44,311 |
47,650 |
(7%) |
Assets held for sale |
147,347 |
-- |
NM |
Other current assets |
45,151 |
58,660 |
(23%) |
Total current assets |
1,571,075 |
1,337,283 |
17% |
Property, plant, and equipment, net |
458,919 |
515,718 |
(11%) |
Goodwill |
998,506 |
1,110,429 |
(10%) |
Other intangible assets, net |
349,227 |
471,379 |
(26%) |
Other assets |
21,784 |
23,465 |
(7%) |
Total assets |
$ 3,399,511 |
$ 3,458,274 |
(2%) |
|
|
|
|
Liabilities |
|
|
|
Current liabilities: |
|
|
|
Current portion of long-term and short
term debt |
$ 1,069 |
$ 1,334 |
(20%) |
Accounts payable |
152,266 |
186,941 |
(19%) |
Accrued expenses |
145,938 |
142,935 |
2% |
Income taxes payable |
22,472 |
789 |
2748% |
Deferred revenue |
176,693 |
164,343 |
8% |
Liabilities held for sale |
35,392 |
-- |
NM |
Other current liabilities |
38,163 |
38,251 |
(0%) |
Total current liabilities |
571,993 |
534,593 |
7% |
Long-term debt |
953,279 |
958,604 |
(1%) |
Deferred tax liabilities, net |
51,554 |
123,644 |
(58%) |
Accrued pension and other postretirement
benefit costs |
226,687 |
138,904 |
63% |
Long-term portion of environmental
reserves |
14,911 |
15,498 |
(4%) |
Other liabilities |
102,654 |
134,326 |
(24%) |
Total liabilities |
1,921,078 |
1,905,569 |
1% |
|
|
|
|
Stockholders' equity |
|
|
|
Common stock, $1 par value |
49,190 |
49,190 |
0% |
Additional paid in capital |
158,043 |
150,618 |
5% |
Retained earnings |
1,469,306 |
1,380,981 |
6% |
Accumulated other comprehensive income
(loss) |
(128,411) |
25,259 |
NM |
Less: cost of treasury stock |
(69,695) |
(53,343) |
31% |
Total stockholders' equity |
1,478,433 |
1,552,705 |
(5%) |
|
|
|
|
Total liabilities and
stockholders' equity |
$ 3,399,511 |
$ 3,458,274 |
(2%) |
|
|
|
|
NM-not meaningful |
|
|
|
|
|
|
|
|
CURTISS-WRIGHT
CORPORATION and SUBSIDIARIES |
SEGMENT INFORMATION
(UNAUDITED) |
($'s In thousands) |
|
|
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December |
December |
|
|
|
Change |
|
|
Change |
|
2014 |
2013 |
% |
2014 |
2013 |
% |
Sales: |
|
|
|
|
|
|
Commercial/Industrial |
$ 265,462 |
$ 254,590 |
4% |
$ 1,074,772 |
$ 950,698 |
13% |
Defense |
199,658 |
232,877 |
(14%) |
737,566 |
767,499 |
(4%) |
Energy |
107,466 |
100,700 |
7% |
430,788 |
399,884 |
8% |
|
|
|
|
|
|
|
Total sales |
$ 572,586 |
$ 588,167 |
(3%) |
$ 2,243,126 |
$ 2,118,081 |
6% |
|
|
|
|
|
|
|
Operating income
(expense): |
|
|
|
|
|
|
Commercial/Industrial |
$ 35,743 |
$ 28,992 |
23% |
$ 142,831 |
$ 105,245 |
36% |
Defense |
28,757 |
44,890 |
(36%) |
102,252 |
116,618 |
(12%) |
Energy |
16,343 |
11,621 |
41% |
67,602 |
57,204 |
18% |
|
|
|
|
|
|
|
Total segments |
$ 80,843 |
$ 85,503 |
(5%) |
$ 312,685 |
$ 279,067 |
12% |
Corporate and other |
(5,912) |
(13,974) |
58% |
(30,312) |
(41,944) |
28% |
|
|
|
|
|
|
|
Total operating income |
$ 74,931 |
$ 71,529 |
5% |
$ 282,373 |
$ 237,123 |
19% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margins: |
|
|
|
|
|
|
Commercial/Industrial |
13.5% |
11.4% |
|
13.3% |
11.1% |
|
Defense |
14.4% |
19.3% |
|
13.9% |
15.2% |
|
Energy |
15.2% |
11.5% |
|
15.7% |
14.3% |
|
Total Curtiss-Wright |
13.1% |
12.2% |
|
12.6% |
11.2% |
|
|
|
|
|
|
|
|
Segment margins |
14.1% |
14.5% |
|
13.9% |
13.2% |
|
|
|
|
|
|
|
|
|
CURTISS-WRIGHT
CORPORATION and SUBSIDIARIES |
SALES BY END MARKET
(UNAUDITED) |
($'s In thousands) |
|
|
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December
31, |
December
31, |
|
|
|
Change |
|
|
Change |
|
2014 |
2013 |
% |
2014 |
2013 |
% |
Defense markets: |
|
|
|
|
|
|
Aerospace |
$ 83,811 |
$ 81,628 |
3% |
$ 285,576 |
$ 262,914 |
9% |
Ground |
18,739 |
21,215 |
(12%) |
74,066 |
80,064 |
(7%) |
Naval |
100,054 |
107,996 |
(7%) |
381,336 |
370,748 |
3% |
Other |
2,406 |
4,107 |
(41%) |
8,612 |
16,370 |
(47%) |
Total Defense |
$ 205,010 |
$ 214,946 |
(5%) |
$ 749,590 |
$ 730,096 |
3% |
|
|
|
|
|
|
|
Commercial markets: |
|
|
|
|
|
|
Commercial Aerospace |
$ 105,874 |
$ 109,519 |
(3%) |
$ 428,083 |
$ 398,870 |
7% |
Oil and Gas |
52,423 |
45,971 |
14% |
232,360 |
186,638 |
24% |
Power Generation |
111,094 |
119,572 |
(7%) |
427,460 |
461,574 |
(7%) |
General Industrial |
98,185 |
98,159 |
0% |
405,633 |
340,903 |
19% |
Total Commercial |
$ 367,576 |
$ 373,221 |
(2%) |
$ 1,493,536 |
$ 1,387,985 |
8% |
|
|
|
|
|
|
|
Total Curtiss-Wright |
$ 572,586 |
$ 588,167 |
(3%) |
$ 2,243,126 |
$ 2,118,081 |
6% |
|
|
|
|
|
|
|
Use of Non-GAAP Financial Information
The Corporation supplements our financial information determined
under U.S. generally accepted accounting principles (GAAP) with
certain non-GAAP financial information. We believe that these
non-GAAP measures provide investors with additional insight into
the company's ongoing business performance. These non-GAAP measures
should not be considered in isolation or as a substitute for the
related GAAP measures, and other companies may define such measures
differently. We encourage investors to review our financial
statements and publicly-filed reports in their entirety and not to
rely on any single financial measure. The following definitions are
provided:
Organic Revenue and Organic Operating income
The Corporation discloses organic revenue and organic operating
income because the Corporation believes it provides investors with
insight as to the Company's ongoing business performance.
Organic revenue and organic operating income are defined as revenue
and operating income excluding the impact of foreign currency
fluctuations and contributions from acquisitions made during the
last twelve months.
|
Three Months
Ended |
|
2014 vs
2013 |
|
Commercial |
Defense |
Energy |
Total
Curtiss-Wright |
|
Sales |
Operating income |
Sales |
Operating income |
Sales |
Operating income |
Sales |
Operating income |
Organic |
4% |
25% |
(13%) |
(39%) |
3% |
36% |
(3%) |
2% |
Acquisitions |
1% |
1% |
0% |
0% |
4% |
2% |
1% |
1% |
Foreign Currency |
(1%) |
(3%) |
(1%) |
3% |
(0%) |
3% |
(1%) |
2% |
Total |
4% |
23% |
(14%) |
(36%) |
7% |
41% |
(3%) |
5% |
|
|
|
|
|
|
|
|
|
|
Year
Ended |
|
2014 vs
2013 |
|
Commercial |
Defense |
Energy |
Total
Curtiss-Wright |
|
Sales |
Operating income |
Sales |
Operating income |
Sales |
Operating income |
Sales |
Operating income |
Organic |
6% |
32% |
(6%) |
(18%) |
6% |
17% |
2% |
14% |
Acquisitions |
7% |
5% |
2% |
3% |
2% |
(1%) |
4% |
3% |
Foreign Currency |
0% |
(1%) |
(0%) |
3% |
(0%) |
2% |
0% |
2% |
Total |
13% |
36% |
(4%) |
(12%) |
8% |
18% |
6% |
19% |
Free Cash Flow
The Corporation discloses free cash flow because the Corporation
believes it measures cash flow available for investing and
financing activities. Free cash flow is defined as net cash flow
provided by operating activities less capital expenditures. Free
cash flow represents cash generated after paying for interest on
borrowings, income taxes, capital expenditures, and working capital
requirements, but before repaying outstanding debt and investing
cash or utilizing debt credit lines to acquire businesses and make
other strategic investments.
CURTISS-WRIGHT
CORPORATION and SUBSIDIARIES |
NON-GAAP FINANCIAL DATA
(UNAUDITED) |
($'s In thousands) |
|
|
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
|
December
31 |
December
31 |
|
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
Net cash provided by operating
activities |
$ 178,593 |
$ 103,441 |
$ 331,766 |
$ 237,827 |
Capital expenditures |
|
(12,635) |
(14,366) |
(67,115) |
(72,242) |
Free cash flow |
|
$ 165,958 |
$ 89,075 |
$ 264,651 |
$ 165,585 |
|
|
|
|
|
|
Cash conversion * |
|
360% |
199% |
156% |
119% |
|
|
|
|
|
|
*Cash conversion is calculated as
free cash flow divided by earnings from continuing operations |
|
|
CURTISS-WRIGHT
CORPORATION and SUBSIDIARIES |
HISTORICAL SEGMENT
INFORMATION (UNAUDITED) |
($'s In thousands) |
The Corporation is issuing the
below supplemental financial information by reportable segment for
the 2014 and 2013 prior quarterly reporting periods to reflect the
Corporation's first quarter 2015 segment reorganization. |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
3/31/2014 |
6/30/2014 |
9/30/2014 |
12/31/2014 |
FY 2014 |
Sales: |
|
|
|
|
|
|
Commercial/Industrial |
|
$ 300,953 |
$ 313,798 |
$ 312,808 |
$ 300,538 |
$ 1,228,097 |
Defense |
|
112,371 |
118,507 |
127,061 |
131,918 |
489,857 |
Power |
|
129,635 |
136,893 |
118,514 |
140,130 |
525,172 |
Total sales |
|
$ 542,959 |
$ 569,198 |
$ 558,383 |
$ 572,586 |
$ 2,243,126 |
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
Commercial/Industrial |
|
$ 38,496 |
$ 45,750 |
$ 51,069 |
$ 43,369 |
$ 178,684 |
Defense |
|
15,784 |
18,002 |
22,480 |
26,286 |
82,552 |
Power |
|
14,275 |
14,865 |
11,121 |
11,188 |
51,449 |
Total segments |
|
$ 68,555 |
$ 78,617 |
$ 84,670 |
$ 80,843 |
$ 312,685 |
Corporate and other |
|
(7,521) |
(6,458) |
(10,421) |
(5,912) |
(30,312) |
Total operating income |
|
$ 61,034 |
$ 72,159 |
$ 74,249 |
$ 74,931 |
$ 282,373 |
|
|
|
|
|
|
|
Operating margins: |
|
|
|
|
|
|
Commercial/Industrial |
|
12.8% |
14.6% |
16.3% |
14.4% |
14.5% |
Defense |
|
14.0% |
15.2% |
17.7% |
19.9% |
16.9% |
Power |
|
11.0% |
10.9% |
9.4% |
8.0% |
9.8% |
Total Curtiss-Wright |
|
11.2% |
12.7% |
13.3% |
13.1% |
12.6% |
|
|
|
|
|
|
|
Segment margins |
|
12.6% |
13.8% |
15.2% |
14.1% |
13.9% |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
3/31/2013 |
6/30/2013 |
9/30/2013 |
12/31/2013 |
FY 2013 |
Sales: |
|
|
|
|
|
|
Commercial/Industrial |
|
$ 249,204 |
$ 272,829 |
$ 272,678 |
$ 281,386 |
$ 1,076,097 |
Defense |
|
108,060 |
113,385 |
105,760 |
153,023 |
480,228 |
Power |
|
137,131 |
137,925 |
132,942 |
153,758 |
561,756 |
Total sales |
|
$ 494,395 |
$ 524,139 |
$ 511,380 |
$ 588,167 |
$ 2,118,081 |
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
Commercial/Industrial |
|
$ 25,304 |
$ 33,556 |
$ 39,019 |
$ 33,426 |
$ 131,305 |
Defense |
|
8,266 |
19,078 |
18,637 |
28,379 |
74,360 |
Power |
|
16,924 |
18,435 |
14,345 |
23,698 |
73,402 |
Total segments |
|
$ 50,494 |
$ 71,069 |
$ 72,001 |
$ 85,503 |
$ 279,067 |
Corporate and other |
|
(9,755) |
(12,077) |
(6,138) |
(13,974) |
(41,944) |
Total operating income |
|
$ 40,739 |
$ 58,992 |
$ 65,863 |
$ 71,529 |
$ 237,123 |
|
|
|
|
|
|
|
Operating margins: |
|
|
|
|
|
|
Commercial/Industrial |
|
10.2% |
12.3% |
14.3% |
11.9% |
12.2% |
Defense |
|
7.6% |
16.8% |
17.6% |
18.5% |
15.5% |
Power |
|
12.3% |
13.4% |
10.8% |
15.4% |
13.1% |
Total Curtiss-Wright |
|
8.2% |
11.3% |
12.9% |
12.2% |
11.2% |
|
|
|
|
|
|
|
Segment margins |
|
10.2% |
13.6% |
14.1% |
14.5% |
13.2% |
|
|
|
|
|
|
|
|
CURTISS-WRIGHT
CORPORATION |
2015 Earnings Guidance
(from Continuing Operations) |
As of February 18,
2015 |
($'s in millions, except per
share data) |
|
|
|
2014 Pro |
2015
Guidance |
|
Forma |
Low |
High |
Sales: |
|
|
|
Commercial/Industrial |
$ 1,228 |
$ 1,265 |
$ 1,285 |
Defense |
490 |
500 |
515 |
Power |
525 |
515 |
530 |
Total sales |
$ 2,243 |
$ 2,280 |
$ 2,330 |
|
|
|
|
Operating income: |
|
|
|
Commercial/Industrial |
$ 179 |
$ 188 |
191 |
Defense |
83 |
90 |
93 |
Power |
51 |
59 |
61 |
Total segments |
313 |
337 |
345 |
Corporate and other |
(30) |
(33) |
(33) |
Total operating income |
$ 282 |
$ 303 |
$ 312 |
|
|
|
|
Interest expense |
$ (36) |
$ (37) |
$ (38) |
Earnings before income
taxes |
247 |
267 |
274 |
Provision for income taxes |
(77) |
(85) |
(88) |
Net earnings |
$ 170 |
$ 181 |
$ 187 |
|
|
|
|
Reported diluted earnings per
share |
$ 3.46 |
$ 3.80 |
$ 3.90 |
Diluted shares outstanding |
49.0 |
47.8 |
47.8 |
Effective tax rate |
31.2% |
32.0% |
32.0% |
|
|
|
|
Operating margins: |
|
|
|
Commercial/Industrial |
14.5% |
14.8% |
14.9% |
Defense |
16.9% |
18.0% |
18.1% |
Power |
9.8% |
11.4% |
11.5% |
|
|
|
|
Note: Full year amounts
may not add due to rounding |
|
* Information has been revised
from that previously presented to reflect segment change announced
in first quarter 2015. |
|
|
|
|
CURTISS-WRIGHT
CORPORATION |
2015 Sales Guidance by
End Market (from Continuing Operations) |
As of February 18,
2015 |
|
|
|
|
2015 Guidance %
Change |
|
Low |
High |
|
|
|
Defense Markets |
|
|
Aerospace |
(2%) |
2% |
Ground |
18% |
22% |
Navy |
(2%) |
2% |
Total Defense (Including Other
Defense) |
2% |
4% |
|
|
|
Commercial Markets |
|
|
Commercial Aerospace |
(2%) |
2% |
Power Generation |
(2%) |
2% |
General Industrial |
5% |
9% |
Total Commercial |
2% |
4% |
|
|
|
Total Curtiss-Wright
Sales |
2% |
4% |
|
|
|
Note: Full year amounts
may not add due to rounding |
|
|
|
About Curtiss-Wright Corporation
Curtiss-Wright Corporation (NYSE:CW) is a global innovative
company that delivers highly engineered, critical function products
and services to the commercial, industrial, defense and energy
markets. Building on the heritage of Glenn Curtiss and the
Wright brothers, Curtiss-Wright has a long tradition of providing
reliable solutions through trusted customer relationships. The
company employs approximately 9,000 people worldwide. For more
information, visit www.curtisswright.com.
Certain statements made in this release, including statements
about future revenue, financial performance guidance, quarterly and
annual revenue, net income, operating income growth, future
business opportunities, cost saving initiatives, the successful
integration of our acquisitions, the successful sale of our
businesses held for sale, and future cash flow from operations, are
forward-looking statements within the meaning 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, 2013,
and subsequent reports filed with the Securities and Exchange
Commission.
This press release and additional information are available at
www.curtisswright.com.
CONTACT: Jim Ryan
(973) 541-3766
Jim.Ryan@curtisswright.com
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