Curtiss-Wright Reports 2004 Third Quarter and Nine Month Financial
Results Sales Increased 25% and 22% and Operating Income 19% &
21% in the Third Quarter and First Nine Months of 2004,
Respectively ROSELAND, N.J., Oct. 28 /PRNewswire-FirstCall/ --
Curtiss-Wright Corporation (NYSE:CWNYSE:CW.B) today reports
financial results for the quarter and nine months ended September
30, 2004. The highlights are as follows: Third Quarter 2004
Operating Highlights * Net sales for the third quarter of 2004
increased 25% to $236.6 million from $189.6 million in the third
quarter of 2003. Acquisitions made in the second half of 2003 and
in 2004 contributed $43.0 million in incremental sales in the third
quarter of 2004. * Operating income in the third quarter of 2004
increased 19% to $25.5 million from $21.4 million in the third
quarter of 2003. Acquisitions made in the second half of 2003 and
in 2004 contributed $2.8 million in incremental operating income in
the third quarter of 2004. The increase in operating income was
achieved despite a $0.8 million decrease in pension income from the
third quarter of 2003 and approximately $1.3 million of costs
related to compliance with Sarbanes-Oxley Section 404. * Net
earnings for the third quarter of 2004 increased 18% to $14.7
million, or $0.68 per diluted share, from $12.5 million, or $0.60
per diluted share, in the third quarter of 2003 (adjusted for the
2-for-1 stock split in December 2003). The net earnings for the
third quarter of 2004 include a tax benefit of $0.6 million
(approximately $0.03 per diluted share) resulting from the
recognition of a previously unprovided for deferred tax asset. In
addition, the increase in net earnings in the third quarter of 2004
was achieved despite a decrease in pension income (approximately
$0.02 per diluted share) and Sarbanes-Oxley costs (approximately
$0.04 per diluted share). * New orders received in the third
quarter of 2004 were $239.7 million, up 89% compared to the third
quarter of 2003. Nine Months 2004 Operating Highlights * Net sales
for the first nine months of 2004 increased 22% to $673.9 million
from $552.4 million in the first nine months of 2003. Acquisitions
made in 2003 and 2004 contributed $101.4 million in incremental
sales in the first nine months of 2004. * Operating income in the
first nine months of 2004 increased 21% to $76.4 million from $63.2
million in the first nine months of 2003. Acquisitions made in 2003
and 2004 contributed $7.5 million in incremental operating income
in the first nine months of 2004. The increase in operating income
was achieved despite a $2.0 million decrease in pension income from
the first nine months of 2003 and approximately $1.7 million of
costs related to compliance with Sarbanes-Oxley Section 404. * Net
earnings for the first nine months of 2004 increased 19% to $44.7
million, or $2.08 per diluted share, from $37.5 million, or $1.80
per diluted share, in the first nine 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 decrease in
pension income (approximately $0.06 per diluted share) and
Sarbanes-Oxley costs (approximately $0.05 per diluted share). * New
orders received in the first nine months of 2004 were $683.2
million, up 32% compared to the first nine months of 2003. Backlog
increased 13% to a new record high of $570.9 million from $505.5
million at December 31, 2003. "We are pleased to again report
higher sales and operating income for the third quarter and first
nine months of 2004," commented Martin R. Benante, Chairman and CEO
of Curtiss-Wright Corporation. "We experienced organic growth in
some of our base businesses, as well as solid performance from our
acquisitions. Overall our acquisitions are meeting our
expectations, however, they do generate lower operating margins
than those of our base businesses during the early periods of
ownership. Our diversification strategy has provided growth in the
first nine months of 2004 for both our core defense markets, which
grew 21%, and commercial and industrial markets, which grew 23%,
over the prior year period. We also experienced strong organic
sales growth from our Metal Treatment segment, which grew 21%
year-to-date, and strong organic operating income growth in our
Metal Treatment and Motion Control segments, which grew 67% and
24%, respectively, for the first nine months of 2004." Sales Sales
growth in 2004 for the three and nine months ended September 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 $43.0 million and $101.4
million in incremental sales for the quarter and nine months ended
September 30, 2004, respectively, over the comparable periods in
2003. Excluding the overall sales from these acquisitions, we
experienced organic growth of 2% and 4% for the three and nine
months ended September 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
21% and 4%, respectively, for the first nine months of 2004. In our
base businesses, higher sales of global shot and laser peening from
our Metal Treatment segment, higher sales from our Flow Control
segment to the commercial power generation and oil and gas markets,
and higher repair and overhaul sales from our Motion Control
segment to the global commercial aerospace market, all contributed
to the organic growth. In addition, foreign currency translation
favorably impacted sales by $4.1 million and $11.8 million for the
three and nine months ended September 30, 2004, respectively,
compared to the prior year periods. Operating Income Operating
income for the three and nine months ended September 30, 2004
increased 19% and 21%, 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 7% and 12% for the three and nine
months ended September 30, 2004, respectively, compared to the
prior year periods. The strong year-to-date performance was driven
by our Metal Treatment and Motion Control segments, which produced
organic growth of 67% and 24%, respectively. The solid segment
operating income growth was achieved despite the absorption of
consulting costs associated with Sarbanes- Oxley Rule 404
compliance which primarily occurred in the third quarter. The
higher segment operating income was partially offset by lower
pension income of $0.8 million and $2.0 million for the three and
nine months ended September 30, 2004, respectively, over the
comparable prior year periods. In addition, foreign currency
translation favorably impacted operating income by $0.7 million and
$1.9 million for the three and nine months ended September 30,
2004, respectively, compared to the prior year periods. On a
consolidated basis, our operating margin was 10.8% in the third
quarter of 2004 versus 11.3% in the prior year. Our year to date
operating margin was 11.3% versus 11.4% last year. Our operating
margins continue to be affected by higher amortization expense due
to our robust acquisition activity over the past couple of years.
Approximately 40% of the amortization expense for the first nine
months of 2004, or $2.6 million, occurred in the third quarter and
caused a drag on our earnings. Net Earnings Net earnings increased
18% and 19% for the three and nine months ended September 30, 2004,
respectively, over the comparable prior year periods. This was
achieved as a result of strong operating income from our business
segments, which increased $6.1 million and $16.8 million for the
three and nine months ended September 30, 2004, respectively, over
the prior year periods. Net earnings for the first nine months
includes two one-time tax benefits totaling $2.1 million, a change
in legal structure of one of our subsidiaries in the first quarter
($1.5 million) and the recognition of a previously unprovided for
deferred tax asset in the third quarter ($0.6 million). 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 third quarter of 2004 were $94.2 million, up 12% over
the comparable period last year, principally due to the
contributions from the 2004 acquisitions. Sales growth was achieved
in the commercial power generation, oil and gas, 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 $0.5
million in the third quarter of 2004 as compared to the prior year
period. Operating income for this segment increased 39% in the
third quarter of 2004 compared to the prior year period. The
improvement was due to strong organic growth of 47%, lead by
favorable sales mix, implemented cost reduction initiatives, and
higher sales volume of our commercial power generation, oil and
gas, and defense electronic products. The improvement was partially
offset by the profit impact related to lower sales of flow control
product to the US Navy. Motion Control - Sales for the third
quarter of 2004 of $97.7 million increased 39% over last year,
principally due to the contributions from the 2003 and 2004
acquisitions. Sales from the base businesses decreased 5% in the
third quarter of 2004 as compared to the prior year period. This
reduction was due to lower sales of F-16 spares and lower ground
defense sales associated with the Bradley Fighting Vehicle. Higher
sales associated with repair and overhaul services and our
integrated sensor group partially offset the decrease in military
sales. Sales of this business segment also benefited from favorable
foreign currency translation of $2.0 million in the third quarter
of 2004 as compared to the prior year period. Operating income for
this segment increased 9% for the third quarter of 2004 compared to
the prior year period. The improvement was driven by higher sales
volume previously mentioned, favorable sales mix, and implemented
cost control initiatives. Additionally, the operating margins for
the repair and overhaul business improved substantially over the
comparable period last year, mainly as a result of higher volume
and implemented cost control initiatives. Metal Treatment - Sales
for the third quarter of 2004 of $44.6 million were 26% higher than
the comparable period last year. The improvement was mainly due to
organic growth of 21% driven by higher overall laser and shot
peening revenues, and the contributions from the 2004 acquisitions.
This segment 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 $1.6 million in the third quarter of
2004 as compared to the prior year period. Operating income
increased 58% for the third 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 business. 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. Our strong
performance in the first nine months of 2004 exemplifies our
ability to execute our strategy and achieve our financial targets.
We expect the fourth quarter of 2004 to be strong as it has been
historically, and the full year results to be in line with our
guidance. Our successful growth is the result of our
diversification and ability to deliver the high performance,
technologically advanced products for which Curtiss-Wright is world
renowned. We continue to experience increasing demand for our new
technologies, many of which are only at the beginning of their life
cycle, which should continue to provide superior returns to our
shareholders into the future." The Company will host a conference
call to discuss the third quarter 2004 results at 10:00 EDT Friday,
October 29, 2004. A live webcast of the call can be heard on the
Internet by visiting the company's website at
http://www.curtisswright.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 Nine Months Ended September 30, September
30, 2004 2003 2004 2003 Net sales $236,574 $189,618 $673,935
$552,408 Cost of sales 154,725 132,601 444,469 379,677 Gross profit
81,849 57,017 229,466 172,731 Research & development expenses
8,443 5,417 24,409 16,494 Selling expenses 17,413 9,612 44,760
28,887 General and administrative expenses 30,033 20,740 83,071
65,320 Environmental remediation and administrative expenses, net
200 380 491 380 Pension expense (income), net 295 (527) 377 (1,580)
Operating income 25,465 21,395 76,358 63,230 Other income
(expenses), net 185 (91) (11) 182 Interest expense (3,135) (1,113)
(8,418) (2,906) Earnings before income taxes 22,515 20,191 67,929
60,506 Provision for income taxes 7,795 7,672 23,276 22,992 Net
earnings $14,720 $12,519 $44,653 $37,514 Basic earnings per share
$0.69 $0.61 $2.11 $1.82 Diluted earnings per share $0.68 $0.60
$2.08 $1.80 Dividends per share $0.09 $0.08 $0.27 $0.23 Weighted
average shares outstanding: Basic 21,359 20,656 21,122 20,608
Diluted 21,715 20,936 21,476 20,856 CURTISS-WRIGHT CORPORATION and
SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (In thousands,
except per share data) Three Months Nine Months Change Change $ % $
% Net sales $46,956 24.76% $121,527 22.00% Cost of sales 22,124
16.68% 64,792 17.07% Gross profit 24,832 43.55% 56,735 32.85%
Research & development expenses 3,026 55.86% 7,915 47.99%
Selling expenses 7,801 81.16% 15,873 54.95% General and
administrative expenses 9,293 44.81% 17,751 27.18% Environmental
remediation and administrative expenses, net (180) N/A 111 N/A
Pension expense (income), net 822 -155.98% 1,957 -123.86% Operating
income 4,070 19.02% 13,128 20.76% Other income (expenses), net 276
-303.30% (193) -106.04% Interest expense (2,022) 181.67% (5,512)
189.68% Earnings before income taxes 2,324 11.51% 7,423 12.27%
Provision for income taxes 123 1.61% 284 1.24% Net earnings $2,201
17.58% $7,139 19.03% 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) September
December 30, 31, Change 2004 2003 $ % Assets Current Assets: Cash
and cash equivalents $38,537 $98,672 $(60,135) -60.9% Receivables,
net 184,559 143,362 41,197 28.7% Inventories, net 116,837 97,880
18,957 19.4% Deferred income taxes 24,307 23,630 677 2.9% Other
current assets 13,697 10,979 2,718 24.8% Total current assets
377,937 374,523 3,414 0.9% Property, plant, and equipment, net
251,086 238,139 12,947 5.4% Prepaid pension costs 77,821 77,877
(56) -0.1% Goodwill, net 346,367 220,058 126,309 57.4% Other
intangible assets, net 110,063 48,268 61,795 128.0% Other assets
18,846 14,800 4,046 27.3% Total Assets $1,182,120 $973,665 $208,455
21.4% Liabilities Current Liabilities: Short-term debt $957 $997
$(40) -4.0% Accounts payable 55,716 43,776 11,940 27.3% Accrued
expenses 47,441 44,938 2,503 5.6% Income taxes payable 4,975 6,748
(1,773) -26.3% Other current liabilities 45,103 39,424 5,679 14.4%
Total current liabilities 154,192 135,883 18,309 13.5% Long-term
debt 348,226 224,151 124,075 55.4% Deferred income taxes 20,618
21,798 (1,180) -5.4% Accrued pension & other postretirement
benefit costs 79,427 75,633 3,794 5.0% Long-term portion of
environmental reserves 19,364 21,083 (1,719) -8.2% Other
liabilities 21,183 16,236 4,947 30.5% Total Liabilities 643,010
494,784 148,226 30.0% Stockholders' Equity Common stock, $1 par
value 16,646 16,611 35 0.2% Class B common stock, $1 par value
8,765 8,765 0 0.0% Capital surplus 52,911 52,998 (87) -0.2%
Retained earnings 582,579 543,670 38,909 7.2% Unearned portion of
restricted stock (39) (55) 16 -29.1% Accumulated other
comprehensive income 23,037 22,634 403 1.8% 683,899 644,623 39,276
6.1% Less: cost of treasury stock 144,789 165,742 (20,953) -12.6%
Total Stockholders' Equity 539,110 478,881 60,229 12.6% Total
Liabilities and Stockholders' Equity $1,182,120 $973,665 $208,455
21.4% CURTISS-WRIGHT CORPORATION and SUBSIDIARIES SEGMENT
INFORMATION (In thousands) Three Months Ended September 30, % 2004
2003 Change Sales: Flow Control $94,204 $84,167 11.9% Motion
Control 97,727 70,157 39.3% Metal Treatment 44,643 35,294 26.5%
Total Sales $236,574 $189,618 24.8% Operating Income: Flow Control
$9,845 $7,110 38.5% Motion Control 10,399 9,537 9.0% Metal
Treatment 6,817 4,321 57.8% Total Segments 27,061 20,968 29.1%
Pension (Expense)/Income (295) 527 -156.0% Corporate & Other
(1,301) (100) 1201.0% Total Operating Income $25,465 $21,395 19.0%
Operating Margins: Flow Control 10.5% 8.4% Motion Control 10.6%
13.6% Metal Treatment 15.3% 12.2% Total Curtiss-Wright 10.8% 11.3%
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES SEGMENT INFORMATION (In
thousands) Nine Months Ended September 30, % 2004 2003 Change
Sales: Flow Control $269,804 $263,125 2.5% Motion Control 272,649
188,181 44.9% Metal Treatment 131,482 101,102 30.0% Total Sales
$673,935 $552,408 22.0% Operating Income: Flow Control $29,122
$30,176 -3.5% Motion Control 28,700 18,734 53.2% Metal Treatment
20,971 13,102 60.1% Total Segments 78,793 62,012 27.1% Pension
(Expense)/Income (377) 1,580 -123.9% Corporate & Other (2,058)
(362) 468.5% Total Operating Income $76,358 $63,230 20.8% Operating
Margins: Flow Control 10.8% 11.5% Motion Control 10.5% 10.0% Metal
Treatment 15.9% 13.0% Total Curtiss-Wright 11.3% 11.4% 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 5,500 people. More
information on Curtiss-Wright can be found at
http://www.curtisswright.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://www.curtisswright.com/. DATASOURCE:
Curtiss-Wright Corporation CONTACT: Alexandra M. Deignan of
Curtiss-Wright Corporation, +1-973-597-4734, or Web site:
http://www.curtisswright.com/
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