Curtiss-Wright's Increased Guidance May Yet Prove Conservative

When we previewed the earnings for Curtiss-Wright (CW), we said “PPI data suggests they should beat big, but it suggested the same last quarter.” Well, better late than never.

Curtiss-Wright Reports First Quarter 2007 Financial Results; Increases Guidance

Curtiss-Wright Corporation reports financial results for the quarter ended March 31, 2007. The highlights are as follows:

- Net sales for the first quarter of 2007 increased 18% to $332.6 million from $282.6 million in the first quarter of 2006.

- Operating income in the first quarter of 2007 increased 43% to $35.1 million from $24.6 million in the first quarter of 2006.

- Net earnings for the first quarter of 2007 increased 59% to $19.5 million, or $0.44 per diluted share, from $12.3 million, or $0.28 per diluted share, in the first quarter of 2006.

Analysts were expecting the company to earn $0.35 per share on $307 million in sales. For the year, they are expecting $2.10 on $1.39 billion in sales.

[CEO Martin] Benante concluded, “As we begin the year 2007, we are confident in our ability to generate long-term shareholder value by continuing to grow our sales and earnings. Much of our revenues are dependent upon customer delivery schedules which result in variability from quarter to quarter. However, our operational efficiencies were better than expected in the first quarter and, as a result, we are increasing our full year 2007 guidance to revenues in the range of $1.385 billion and $1.41 billion; operating income in the range of $168 million and $175 million; and fully diluted earnings per share in the range of $2.05 and $2.15. The revised 2007 guidance does not include any potential impact resulting from the recently announced selection of the AP- 1000 design to be used in power plants by China.”

We’re not sure if the analyst expectations include any contribution from the design win. And regardless of any quarterly volatility, one would like to see guidance for the year well ahead of the street when the first quarter EPS has beaten by a dime. But we think the company may be playing its cards close to its vest, and that another solid quarter in Q2 could lead to an even bigger increase to guidance.

CW 1-yr chart: