Curtiss-Wright (CW) Q4 Earnings Top Estimates, Revenues Miss

Shares of Curtiss-Wright Corporation CW decline 6.1% to reach $112.38 on Feb 25, reflecting investors’ skepticism following the company's fourth-quarter results.

The company reported fourth-quarter 2020 adjusted earnings of $2.39 per share, which surpassed the Zacks Consensus Estimate of $2.34 by 2.1%. The bottom line also improved 12.7% from the prior-year quarter’s earnings of $2.12.

Including one-time items, GAAP earnings came in at $1.30 per share compared with $2.08 recorded in the year-ago quarter.

For 2020, the company reported adjusted earnings of $6.87 per share, which missed the Zacks Consensus Estimate of $7.31 by 6%. The full-year bottom line also declined 5.5% from the prior-year figure.

Operational Performance

In the quarter under review, the company’s total sales of $668.4 million inched up 2% year over year, led by strong 15% organic growth in defense markets. The top line, however, missed the Zacks Consensus Estimate of $672 million by 0.5%.

In 2020, the company’s total sales of $2.39 billion declined 4% from the year-ago figure. The top line, also, missed the Zacks Consensus Estimate of $2.55 billion by 6.3%.

Gross profit declined 2% year over year to $241.8 million in the reported quarter. Operating income of $76.5 million plunged 37% from $120.7 million a year ago.

Curtiss-Wright’s total backlog at the end of 2020 was $2.2 billion. New orders of $573 million decreased 2% compared with the prior-year period.

CurtissWright Corporation Price, Consensus and EPS Surprise

CurtissWright Corporation Price, Consensus and EPS Surprise

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

Segmental Performance

Commercial/Industrial: Sales in this segment declined 16% year over year to $249.2 million. This can be attributed to reduced OEM sales of actuation and sensors equipment as well as surface treatment services.

While operating income declined 4% to $47.3 million, operating margin expanded 230 basis points (bps) to 19%.

Defense: Sales in this segment grew 26% year over year to $217.5 million. This can be attributed to higher sales of embedded computing and flight test instrumentation equipment on various fighter jet programs.

Meanwhile, adjusted operating income improved 20% to $52.9 million and adjusted operating margin contracted 130 bps to 24.2%.

Power: Sales in this segment improved 8% year over year to $201.8 million on account of higher production revenues on Virginia and Columbia class submarines, CVN-80 and CVN-81 aircraft carriers and higher service center sales.

While adjusted operating income rose 12% to $42.6 million, operating margin expanded 70 bps to 21.1%.

Financial Update

Curtiss-Wright ended 2020 with cash and cash equivalents of $198.2 million, down 49% from $391 million as of Dec 31, 2019.

Long-term debt as of Dec 31, 2020, was $958.3 million compared with $760.6 million as of Dec 31, 2019.

Operating cash inflow from continuing operations totaled $261.2 million at the end of 2020 compared with $421.4 million at the end of 2019.

Guidance

Curtiss-Wright issued its financial guidance for 2021. The company currently expects adjusted earnings of $7.00-$7.20 per share.

The Zacks Consensus Estimate for the company’s full-year earnings is pegged at $7.91 per share, higher than the company’s guided range.

The company currently expects to generate sales of $2,445-$2,495 million. The Zacks Consensus Estimate for the company’s full-year sales is pegged at $2,670 million, above the company’s guided range.

Apart from these, Curtiss-Wright currently expects its adjusted free cash flow in the range of $330-$360 million.

Zacks Rank

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

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin Corp. LMT reported fourth-quarter 2020 earnings from continuing operations of $6.38 per share, which came in line with the Zacks Consensus Estimate.

Hexcel Corporation HXL reported fourth-quarter 2020 loss of 18 cents per share, in line with the Zacks Consensus Estimate.

General Dynamics Corp. GD reported fourth-quarter 2020 earnings from continuing operations of $3.49 per share, which missed the Zacks Consensus Estimate of $3.55 by 1.7%.

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