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CurtissWright Corp. Reports Operating Results (10-Q)

November 04, 2010 | About:
10qk

10qk

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CurtissWright Corp. (CW) filed Quarterly Report for the period ended 2010-09-30.

Curtisswright Corp. has a market cap of $1.45 billion; its shares were traded at around $31.33 with a P/E ratio of 14.5 and P/S ratio of 0.8. The dividend yield of Curtisswright Corp. stocks is 1.1%. Curtisswright Corp. had an annual average earning growth of 18.4% over the past 10 years.CW is in the portfolios of Richard Aster Jr of Meridian Fund, Mario Gabelli of GAMCO Investors, Richard Pzena of Pzena Investment Management LLC, Paul Tudor Jones of The Tudor Group, David Dreman of Dreman Value Management, Kenneth Fisher of Fisher Asset Management, LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

For the third quarter of 2010, sales for our Metal Treatment segment were $54 million. This was an increase of approximately $5 million, or 10%, from $50 million for the third quarter of 2009. Organic sales increased $6 million, or 12%, over the same period from the prior year; however, organic sales increases in the general industrial market of $5 million and commercial aerospace market of $2 million were partially offset by a decrease in our defense market of $1 million. The increase in sales in the general industrial market was mainly due to increases in demand for shot peening, heat treating, and coating services. Increased sales in the commercial aerospace market were driven by higher demand for heat treating services. The remaining sales decrease of $1 million was due to the unfavorable effect of foreign currency translation.

For the third quarter of 2010, operating income for our Metal Treatment segment was $6 million. This was an increase of approximately $1 million, or 30%, from $4 million for the third quarter of 2009. Organic operating income increased by approximately $2 million for the quarter, while incremental operating income and foreign currency translation were both flat. Organic operating margin increased 190 basis points. The increase was mainly due to higher volumes resulting in favorable absorption in our shot peening and heat treating businesses as well as benefits generated by our cost reduction and restructuring programs, which were partially offset by higher compensation expenses and start-up costs for expansion into international markets.

For the first nine months of 2010, sales for our Metal Treatment segment were $163 million. This was an increase of approximately $11 million, or 7%, from $151 million for the first nine months of 2009. Organic sales increased $11 million, or 8%, over the same period from the prior year. The organic sales increase was mainly due to a strong increase in the general industrial market of $11 million. In addition, we experienced an increase in the commercial aerospace market of $2 million which was partially offset by a decline in our defense market of $1 million. The increase in sales in the general industrial market was mainly due to increases in demand for shot peening, heat treating, and coating services. Increased sales in the commercial aerospace market were driven by higher demand for heat treating services. Foreign currency translation had an unfavorable impact of less than $1 million on our results in 2010 versus 2009.

For the first nine months of 2010, operating income for our Metal Treatment segment was $18 million. This was an increase of $3 million, or 18%, from $15 million for the first nine months of 2009. Organic operating income increased by approximately $3 million for the quarter, while incremental operating income and foreign currency translation were both flat. Organic operating margin increased 110 basis points. The increase was mainly due to benefits generated by our cost reduction and restructuring programs which were partially offset by higher compensation expenses and start-up costs for expansion into international markets.

Our working capital was $543 million at September 30, 2010, an increase of $230 million from $313 million at December 31, 2009. Excluding cash, working capital increased $211 million from December 31, 2009. Working capital changes were mainly affected by the repayment of $75 million in senior notes that matured in September 2010 as well as an increase in accounts receivable of $68 million due to both higher trade receivables and unbilled receivables on long-term contracts. In addition, accounts payable decreased by $19 million due primarily to lower days payable outstanding, while inventory increased $16 million due to a build up for future sales, stocking of new programs and purchase of long-lead time materials.

During the first nine months of 2010 we incurred additional liabilities of $3 million related to business restructuring costs. These costs were in addition to the $7 million established in 2008 and $6 million in 2009. The majority of the restructuring liability has been paid and was funded through normal operations. Any remaining payments are expected to occur in 2010. We estimate annualized cash savings from these initiatives to be approximately $20 to $25 million after the completion of the restructuring activities. Please refer to Note 9 to the Condensed Consolidated Financial Statements for more information regarding our restructuring.

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