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July 28, 2009
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Curtiss-Wright Corp. (CW), which makes products for motion and flow control applications, reported second-quarter results late yesterday. Earnings per share came in at 54 cents per share, edging past the consensus estimate by a penny.
The Parsippany, NJ-based company caters to defense, commercial aerospace, power generation, oil and gas and general industrial markets through manufacturing facilities spread across the U.S., Canada and Europe. Curtiss-Wright stated that sales dipped 1.3% year over year to $447.4 million, missing the consensus forecast by 1.5%.
Sales from Flow Control, contributing 54.1% of total quarterly revenue, expanded 2.2% to $242.4 million primarily driven by the acquisition of EST Group Inc. and Nu-Torque. Motion Control segment recorded a growth of 6.5% year over year to $155.7 million on higher organic sales especially in defense markets related to platforms such as the Bradley Fighting Vehicle, F-22, JSF, Global Hawk and various military helicopter programs.
However, the performance of the Metal Treatment segment slumped 30% year over year to $49.2 million, as recessionary conditions affected demand for its products in key markets. New orders dropped 54% to $404 million as the prior-year period included a $300 million order for nuclear power plants.
The company also reported gross margin of 32.3% in the quarter, a decline of 240 basis points compared to last year as cost of sales increased 2.2%. Operating expenses fell 6.3% year over year to $100.8 million. The company’s operating margin dipped 120 bps to 9.8% compared to the year-ago quarter. The decline in operating margin was primarily attributable to the sluggish performance of the Metal Treatment division, which witnessed significant under-absorption of overhead costs.
Meanwhile, Curtiss-Wright’s inventories grew 1.6% compared to the previous quarter, while DSOs [Device Software Optimization] increased to 80 days from 76 days. The company also reduced its long-term debt by $50 million from the last quarter.
Looking ahead, management offered a bearish outlook as it expects the weak performance of the Metal Treatment segment to persist through the second half of the year. Moreover, continued order delays in oil and gas market is likely to improve slowly during 2009.
Accordingly, the company now expects full-year sales to range between $1.83 billion and $1.85 billion, down from the previous guidance of $1.87 billion to $1.91 billion. Operating income is anticipated between $194 million and $201 million, compared to the earlier projection of $209 million to $216 million. Diluted earnings per share is expected between $2.35 and $2.45, against the prior outlook of $2.48 to $2.58.
The updated earnings forecast is well below the consensus forecast of $2.48 derived from 8 covering analysts, which has remained steady over the past 2 months.
Read the full analyst report on "CW"
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