Curtiss-Wright (CW) Q3 Earnings and Sales Beat Estimates

Shares of Curtiss-Wright Corporation CW increased 0.5% to reach $84.17 on Oct 29, reflecting the optimism of investors following the company's solid Q3 results.

The company reported third-quarter 2020 adjusted earnings of $1.85 per share, which surpassed the Zacks Consensus Estimate of $1.53 by 20.9%. The bottom line, however, declined 5.1% from the prior-year quarter’s earnings of $1.95.

Excluding one-time items, GAAP earnings came in at $1.55 per share, down 19% from $1.92 recorded in the year-ago quarter.

Operational Performance

In the quarter under review, the company’s total sales of $571.6 million declined 7% year over year. The top line, however, surpassed the Zacks Consensus Estimate of $565 million by 1.2%.

Gross profit declined 6% year over year to $212.8 million. Operating income of $84.6 million decreased 20% from $105.6 million a year ago.
Curtiss-Wright’s total backlog at the end of the third quarter was $2.2 billion, increasing 1% from Dec 31, 2019. New orders of $559 million were down 14% year over year.

Segmental Performance

Commercial/Industrial: Sales in this segment decreased 20% year over year to $222.5 million. The decline in sales was primarily due to reduced Original Equipment Manufacturer (OEM) sales of actuation and sensors equipment as well as surface treatment services.

While operating income plunged 25% to $32.5 million, operating margin contracted 100 basis points (bps) to 14.6%.

Defense: Sales in this segment improved 12% year over year to $180.3 million. This can be attributed to increased sales of embedded computing equipment on various programs, most notably on Unmanned Aerial Vehicle (UAV) platforms.

Meanwhile, adjusted operating income increased 11% to $45.2 million, whereas adjusted operating margin contracted 40 bps to 25%.

Power: Sales in this segment declined 4% year over year to $168.8 million on account of lower service center sales.

While adjusted operating income slightly increased 0.3% to $29.9 million, operating margin expanded 70 bps to 17.7%.

CurtissWright Corporation Price, Consensus and EPS Surprise

CurtissWright Corporation Price, Consensus and EPS Surprise

CurtissWright Corporation price-consensus-eps-surprise-chart | CurtissWright Corporation Quote

Financial Update

Curtiss-Wright ended the third quarter with cash and cash equivalents of $426.8 million, up 9% from $391 million as of Dec 31, 2019.

Long-term debt was $1,058.7 million compared with $760.6 million as of Dec 31, 2019.

Operating cash outflow from continuing operations totaled $56 million at the end of the reported quarter compared with $118.6 million at the end of the prior-year quarter.

Adjusted free cash flow at the end of the quarter was $55.3 million compared with the year-ago quarter’s $107 million.

2020 Guidance

Curtiss-Wright reiterated its financial guidance for 2020. The company has narrowed its adjusted earnings to $6.70-$6.85 per share from the previous guidance of $6.60-$6.85. The Zacks Consensus Estimate for the company’s full-year earnings is pegged at $6.79 per share, above the midpoint of the company’s guidance range.

Apart from this, Curtiss-Wright continues to expect adjusted free cash flow in the range of $350-$380 million for the current year.

Zacks Rank

Curtiss-Wright has a Zacks Rank #4 (Sell).

Recent Defense Releases

Lockheed Martin LMT, a Zacks Rank #3 (Hold) company, reported third-quarter 2020 earnings from continuing operations of $6.25 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Boeing Company BA, a Zacks Rank #3 company, incurred an adjusted loss of $1.39 per share for third-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of $2.33.

General Dynamics Corporation GD, a Zacks Rank #4 company, reported third-quarter 2020 earnings from continuing operations of $2.90 per share, which beat the Zacks Consensus Estimate of $2.85 by 1.8%.

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