Curtiss-Wright Reports Second Quarter 2023 Financial Results and Raises Full-Year 2023 Guidance

DAVIDSON, N.C.--()--Curtiss-Wright Corporation (NYSE: CW) reports financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Highlights:

  • Reported sales of $704 million, up 16%;
  • Reported operating income of $113 million, operating margin of 16.0%, and diluted earnings per share (EPS) of $2.10;
  • Adjusted operating income of $115 million, up 18%;
  • Adjusted operating margin of 16.4%, up 30 basis points;
  • Adjusted diluted EPS of $2.15, up 18%;
  • New orders of $842 million, up 8%, reflecting strong Aerospace & Defense (A&D) market demand, and book-to-bill of 1.2;
  • Backlog of $2.8 billion, up 9% year-to-date; and
  • Free cash flow (FCF) of $99 million, generating 119% Adjusted FCF conversion.

Raised Full-Year 2023 Adjusted Financial Guidance:

  • Sales increased to new range of 7% to 9% growth (previously 4% to 6%), now reflecting growth in all A&D and Commercial end markets;
  • Operating income increased to new range of 8% to 11% growth (previously 5% to 8%);
  • Maintained operating margin range of 17.4% to 17.6%, up 10 to 30 basis points compared with the prior year;
  • Diluted EPS increased to new range of $8.90 to $9.15, up 10% to 13% (previously $8.65 to $8.90); and
  • Free cash flow increased to new range of $370 to $400 million (previously $360 to $400 million) and continues to reflect greater than 110% FCF conversion.

"Curtiss-Wright delivered stronger-than-expected second quarter results, highlighted by top-line growth in all of our A&D and Commercial end markets and continued operating margin expansion, as we successfully execute on our Pivot to Growth strategy," said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. "We also experienced solid order activity, yielding a book-to-bill of 1.2, and continued to grow our backlog driven by strong demand across all three segments."

"Based on the strong first half results and our expectations for continued easing in the defense electronics supply chain, we have increased our full-year sales, operating income, diluted EPS and free cash flow guidance. We now expect growth in all of our A&D and Commercial markets, as we maintain strong alignment with the favorable secular growth trends influencing our business. We remain committed to delivering on our investor day targets through a strong focus on operational excellence and continued investment in Curtiss-Wright's future growth to drive long-term shareholder value.”

Second Quarter 2023 Operating Results

(In millions)

Q2-2023

Q2-2022

Change

Reported

 

 

 

Sales

$

704

 

$

609

 

16%

Operating income

$

113

 

$

98

 

15%

Operating margin

 

16.0

%

 

16.1

%

(10 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

704

 

$

609

 

16%

Operating income

$

115

 

$

98

 

18%

Operating margin

 

16.4

%

 

16.1

%

30 bps

(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.

  • Sales of $704 million increased 16% compared with the prior year;
  • Total A&D market sales increased 23%, while total Commercial market sales increased 4%;
  • In our A&D markets, our results reflected strong organic sales growth driven by the continued easing of defense electronics supply chain headwinds in our defense markets and higher sales in the commercial aerospace market, as well as the contribution from the acquisition of our engineered arresting systems business;
  • In our Commercial markets, we experienced solid growth in the power & process markets, despite the wind down on the China Direct AP1000 program, and higher sales in the general industrial market; and
  • Adjusted operating income of $115 million increased 18%, while Adjusted operating margin increased 30 basis points to 16.4%, principally driven by favorable overhead absorption on higher revenues in all three segments; Those increases were partially offset by unfavorable mix in the Aerospace & Industrial and Naval & Power segments.

Second Quarter 2023 Segment Performance

Aerospace & Industrial

(In millions)

Q2-2023

Q2-2022

Change

Reported

 

 

 

Sales

$

226

 

$

209

 

8%

Operating income

$

36

 

$

32

 

10%

Operating margin

 

15.8

%

 

15.6

%

20 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

226

 

$

209

 

8%

Operating income

$

36

 

$

32

 

10%

Operating margin

 

15.8

%

 

15.6

%

20 bps

(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.

  • Sales of $226 million, up $18 million, or 8%;
  • Commercial aerospace market revenue increases reflected strong demand and higher OEM sales of sensors products and surface treatment services on narrowbody and widebody platforms;
  • Higher general industrial market revenue was principally driven by increased sales of industrial automation products and surface treatment services;
  • Higher revenue in the aerospace and naval defense markets reflected the timing of sales for our actuation equipment supporting various programs; and
  • Adjusted operating income was $36 million, up 10% from the prior year, while Adjusted operating margin increased 20 basis points to 15.8%, mainly due to solid absorption on higher sales, partially offset by unfavorable mix in actuation and sensors products.

Defense Electronics

(In millions)

Q2-2023

Q2-2022

Change

Reported

 

 

 

Sales

$

198

 

$

150

 

32%

Operating income

$

43

 

$

24

 

77%

Operating margin

 

21.8

%

 

16.4

%

540 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

198

 

$

150

 

32%

Operating income

$

43

 

$

24

 

77%

Operating margin

 

21.8

%

 

16.4

%

540 bps

(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.

  • Sales of $198 million, up $48 million, or 32%;
  • Higher revenue in the aerospace defense market was primarily driven by increased sales of our embedded computing and flight test instrumentation equipment on various fighter jet programs;
  • Strong revenue growth in the ground defense market reflected higher sales of tactical battlefield communications equipment;
  • Higher commercial aerospace market revenue reflected increased sales of avionics and flight test equipment on various domestic and international platforms; and
  • Adjusted operating income was $43 million, up 77% from the prior year, while adjusted operating margin increased 540 basis points to 21.8%, primarily due to favorable absorption on higher A&D revenues.

Naval & Power

(In millions)

Q2-2023

Q2-2022

Change

Reported

 

 

 

Sales

$

280

 

$

251

 

12%

Operating income

$

47

 

$

50

 

(6%)

Operating margin

 

16.7

%

 

19.9

%

(320 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

280

 

$

251

 

12%

Operating income

$

49

 

$

50

 

(1%)

Operating margin

 

17.6

%

 

19.9

%

(230 bps)

(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.

  • Sales of $280 million, up $29 million, or 12%;
  • Higher aerospace defense market revenues reflected a solid contribution from the arresting systems acquisition and strong demand from international customers;
  • Naval defense market revenue increases principally reflected higher revenues on Columbia-class and Virginia-class submarines, partially offset by the timing of revenues on aircraft carrier programs;
  • Higher power & process market revenues reflected strong growth in industrial valve sales in the process market as well as solid growth in commercial nuclear aftermarket revenues supporting the maintenance of existing operating reactors; Those increases were partially offset by lower China Direct AP1000 program revenues; and
  • Adjusted operating income was $49 million, down 1% from the prior year, while adjusted operating margin decreased 230 basis points to 17.6%, as favorable absorption on higher organic revenues and the contribution from the arresting systems acquisition were offset by an unfavorable mix of products.

Free Cash Flow

(In millions)

Q2-2023

Q2-2022

Change

Net cash provided by operating activities

$

111

 

$

31

 

257

%

Capital expenditures

 

(12

)

 

(9

)

40

%

Reported free cash flow

$

99

 

$

22

 

341

%

Adjusted free cash flow (1)

$

99

 

$

22

 

341

%

(1) A reconciliation of Reported to Adjusted free cash flow is available in the Appendix.

  • Reported free cash flow of $99 million increased $77 million year over year, primarily due to improvements in working capital;
  • Adjusted free cash flow of $99 million; and
  • Capital expenditures increased $3 million compared with the prior year.

New Orders and Backlog

  • New orders of $842 million increased 8% compared with the prior year and generated an overall book-to-bill of approximately 1.2x, principally driven by strong demand for defense electronics and naval defense products within our A&D markets, and for nuclear aftermarket products within our Commercial markets; and
  • Backlog of $2.8 billion, up 9% from December 31, 2022, reflects higher demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

  • During the second quarter, the Company repurchased 72,703 shares of its common stock for approximately $12 million; and
  • The Company also declared a quarterly dividend of $0.20 a share, an increase of 5% from the previous quarter.

Full-Year 2023 Guidance

The Company is updating its full-year 2023 Adjusted financial guidance(1) as follows:

($ in millions, except EPS)

2023 Adjusted
Non-GAAP Guidance (Prior)

2023 Adjusted
Non-GAAP Guidance (Current)

Change vs 2022 Adjusted (Current)

Total Sales

$2,655 - $2,710

$2,730 - $2,790

Up 7% - 9%

Operating Income

$463 - $477

$476 - $490

Up 8% - 11%

Operating Margin

17.4% - 17.6%

17.4% - 17.6%

Up 10 - 30 bps

Diluted EPS

$8.65 - $8.90

$8.90 - $9.15

Up 10% - 13%

Free Cash Flow

$360 - $400

$370 - $400

Up 25% - 36%

(1)

Reconciliations of Reported to Adjusted 2022 operating results and 2023 financial guidance are available in the Appendix, and exclude first year purchase accounting costs in both periods associated with acquisitions.

A more detailed breakdown of the Company’s 2023 financial guidance by segment and by market, as well as all reconciliations of Reported GAAP amounts to Adjusted Non-GAAP amounts, can be found in the accompanying schedules. Historical financial results are available in the Investor Relations section of Curtiss-Wright’s website.

Conference Call & Webcast Information

The Company will host a conference call to discuss its second quarter 2023 financial results and updates to 2023 guidance at 10:00 a.m. ET on Thursday, August 3, 2023. A live webcast of the call and the accompanying financial presentation, as well as a webcast replay of the call, will be made available on the internet by visiting the Investor Relations section of the Company’s website at www.curtisswright.com.

(Tables to Follow)

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

($'s in thousands, except per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

Product sales

$

583,036

 

 

$

505,416

 

 

$

1,107,917

 

 

$

958,837

 

Service sales

 

121,360

 

 

 

103,941

 

 

 

227,339

 

 

 

209,981

 

Total net sales

 

704,396

 

 

 

609,357

 

 

 

1,335,256

 

 

 

1,168,818

 

 

 

 

 

 

 

 

 

Cost of product sales

 

369,549

 

 

 

316,389

 

 

 

713,306

 

 

 

610,916

 

Cost of service sales

 

75,274

 

 

 

64,454

 

 

 

140,969

 

 

 

127,986

 

Total cost of sales

 

444,823

 

 

 

380,843

 

 

 

854,275

 

 

 

738,902

 

 

 

 

 

 

 

 

 

Gross profit

 

259,573

 

 

 

228,514

 

 

 

480,981

 

 

 

429,916

 

 

 

 

 

 

 

 

 

Research and development expenses

 

20,210

 

 

 

23,868

 

 

 

42,234

 

 

 

44,417

 

Selling expenses

 

34,273

 

 

 

30,407

 

 

 

66,698

 

 

 

58,499

 

General and administrative expenses

 

92,315

 

 

 

76,134

 

 

 

180,659

 

 

 

163,734

 

Loss on divestiture

 

 

 

 

 

 

 

 

 

 

4,651

 

 

 

 

 

 

 

 

 

Operating income

 

112,775

 

 

 

98,105

 

 

 

191,390

 

 

 

158,615

 

 

 

 

 

 

 

 

 

Interest expense

 

14,992

 

 

 

9,788

 

 

 

27,936

 

 

 

19,318

 

Other income, net

 

7,954

 

 

 

4,555

 

 

 

15,721

 

 

 

7,552

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

105,737

 

 

 

92,872

 

 

 

179,175

 

 

 

146,849

 

Provision for income taxes

 

(24,738

)

 

 

(22,000

)

 

 

(41,330

)

 

 

(35,292

)

Net earnings

$

80,999

 

 

$

70,872

 

 

$

137,845

 

 

$

111,557

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

Basic earnings per share

$

2.11

 

 

$

1.84

 

 

$

3.60

 

 

$

2.90

 

Diluted earnings per share

$

2.10

 

 

$

1.83

 

 

$

3.58

 

 

$

2.89

 

 

 

 

 

 

 

 

 

Dividends per share

$

0.20

 

 

$

0.19

 

 

$

0.39

 

 

$

0.37

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

38,329

 

 

 

38,429

 

 

 

38,309

 

 

 

38,438

 

Diluted

 

38,555

 

 

 

38,654

 

 

 

38,528

 

 

 

38,657

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($'s in thousands, except par value)

 

 

 

 

 

June 30,

 

December 31,

 

2023

 

2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

158,737

 

 

$

256,974

 

Receivables, net

 

751,532

 

 

 

724,603

 

Inventories, net

 

545,596

 

 

 

483,113

 

Other current assets

 

67,693

 

 

 

52,623

 

Total current assets

 

1,523,558

 

 

 

1,517,313

 

Property, plant, and equipment, net

 

340,857

 

 

 

342,708

 

Goodwill

 

1,555,908

 

 

 

1,544,635

 

Other intangible assets, net

 

589,932

 

 

 

620,897

 

Operating lease right-of-use assets, net

 

143,814

 

 

 

153,855

 

Prepaid pension asset

 

232,557

 

 

 

222,627

 

Other assets

 

54,472

 

 

 

47,567

 

Total assets

$

4,441,098

 

 

$

4,449,602

 

 

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

 

 

$

202,500

 

Accounts payable

 

233,602

 

 

 

266,525

 

Accrued expenses

 

144,073

 

 

 

177,536

 

Deferred revenue

 

264,766

 

 

 

242,483

 

Other current liabilities

 

78,486

 

 

 

82,395

 

Total current liabilities

 

720,927

 

 

 

971,439

 

Long-term debt

 

1,176,066

 

 

 

1,051,900

 

Deferred tax liabilities, net

 

117,882

 

 

 

123,001

 

Accrued pension and other postretirement benefit costs

 

58,267

 

 

 

58,348

 

Long-term operating lease liability

 

122,939

 

 

 

132,275

 

Long-term portion of environmental reserves

 

13,497

 

 

 

12,547

 

Other liabilities

 

93,256

 

 

 

107,973

 

Total liabilities

$

2,302,834

 

0

$

2,457,483

 

 

 

 

 

Stockholders' equity

 

 

 

Common stock, $1 par value

$

49,187

 

 

$

49,187

 

Additional paid in capital

 

130,846

 

 

 

134,553

 

Retained earnings

 

3,297,281

 

 

 

3,174,396

 

Accumulated other comprehensive loss

 

(225,375

)

 

 

(258,916

)

Less: cost of treasury stock

 

(1,113,675

)

 

 

(1,107,101

)

Total stockholders' equity

$

2,138,264

 

 

$

1,992,119

 

 

 

 

 

Total liabilities and stockholders' equity

$

4,441,098

 

 

$

4,449,602

 

Use and Definitions of Non-GAAP Financial Information (Unaudited)

The Corporation supplements its financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial information. Curtiss-Wright believes that these Adjusted (non-GAAP) measures provide investors with improved transparency in order to better measure Curtiss-Wright’s ongoing operating and financial performance and better comparisons of our key financial metrics to our peers. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. Curtiss-Wright encourages investors to review its financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. Reconciliations of “Reported” GAAP amounts to “Adjusted” non-GAAP amounts are furnished within this release.

The following definitions are provided:

Adjusted Sales, Operating Income, Operating Margin, Net Earnings and Diluted EPS

These Adjusted financials are defined as Reported Sales, Operating Income, Operating Margin, Net Earnings and Diluted Earnings per Share under GAAP excluding: (i) the impact of first year purchase accounting costs associated with acquisitions, specifically one-time inventory step-up, backlog amortization, deferred revenue adjustments and transaction costs; (ii) the sale or divestiture of a business or product line; (iii) pension settlement charges; and (iv) significant legal settlements, impairment costs, and costs associated with shareholder activism, as applicable.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

RECONCILIATION OF AS REPORTED TO ADJUSTED (UNAUDITED)

($'s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

 

June 30, 2023

 

June 30, 2022

 

% Change

 

As

Reported

 

Adjustments

 

Adjusted

 

As

Reported

 

Adjustments

 

Adjusted

 

As

Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

226,260

 

 

$

 

$

226,260

 

 

$

208,572

 

 

$

 

$

208,572

 

 

8

%

 

8

%

Defense Electronics

 

197,722

 

 

 

 

 

197,722

 

 

 

149,549

 

 

 

 

 

149,549

 

 

32

%

 

32

%

Naval & Power

 

280,414

 

 

 

 

 

280,414

 

 

 

251,236

 

 

 

 

 

251,236

 

 

12

%

 

12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

704,396

 

 

$

 

$

704,396

 

 

$

609,357

 

 

$

 

$

609,357

 

 

16

%

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

35,665

 

 

$

 

$

35,665

 

 

$

32,464

 

 

$

 

$

32,464

 

 

10

%

 

10

%

Defense Electronics

 

43,180

 

 

 

 

 

43,180

 

 

 

24,460

 

 

 

 

 

24,460

 

 

77

%

 

77

%

Naval & Power(1)

 

46,782

 

 

 

2,659

 

 

49,441

 

 

 

50,001

 

 

 

 

 

50,001

 

 

(6

)%

 

(1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

125,627

 

 

$

2,659

 

$

128,286

 

 

$

106,925

 

 

$

 

$

106,925

 

 

17

%

 

20

%

Corporate and other

 

(12,852

)

 

 

 

 

(12,852

)

 

 

(8,820

)

 

 

 

 

(8,820

)

 

(46

)%

 

(46

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

$

112,775

 

 

$

2,659

 

$

115,434

 

 

$

98,105

 

 

$

 

$

98,105

 

 

15

%

 

18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

As

Reported

 

 

 

Adjusted

 

As

Reported

 

 

 

Adjusted

 

As

Reported

 

Adjusted

Aerospace & Industrial

 

15.8

%

 

 

 

 

15.8

%

 

 

15.6

%

 

 

 

 

15.6

%

 

20 bps

 

20 bps

Defense Electronics

 

21.8

%

 

 

 

 

21.8

%

 

 

16.4

%

 

 

 

 

16.4

%

 

540 bps

 

540 bps

Naval & Power

 

16.7

%

 

 

 

 

17.6

%

 

 

19.9

%

 

 

 

 

19.9

%

 

(320 bps)

 

(230 bps)

Total Curtiss-Wright

 

16.0

%

 

 

 

 

16.4

%

 

 

16.1

%

 

 

 

 

16.1

%

 

(10 bps)

 

30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

17.8

%

 

 

 

 

18.2

%

 

 

17.5

%

 

 

 

 

17.5

%

 

30 bps

 

70 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes first year purchase accounting adjustments in the current period.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

RECONCILIATION OF AS REPORTED TO ADJUSTED (UNAUDITED)

($'s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

 

 

 

 

June 30, 2023

 

June 30, 2022

 

% Change

 

As

Reported

 

Adjustments

 

Adjusted

 

As

Reported

 

Adjustments

 

Adjusted

 

As

Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

428,707

 

 

$

 

$

428,707

 

 

$

399,684

 

 

$

 

$

399,684

 

 

7

%

 

7

%

Defense Electronics

 

359,876

 

 

 

 

 

359,876

 

 

 

292,618

 

 

 

 

 

292,618

 

 

23

%

 

23

%

Naval & Power

 

546,673

 

 

 

 

 

546,673

 

 

 

476,516

 

 

 

 

 

476,516

 

 

15

%

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

1,335,256

 

 

$

 

$

1,335,256

 

 

$

1,168,818

 

 

$

 

$

1,168,818

 

 

14

%

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

62,210

 

 

$

 

$

62,210

 

 

$

57,317

 

 

$

 

$

57,317

 

 

9

%

 

9

%

Defense Electronics

 

66,548

 

 

 

 

 

66,548

 

 

 

47,750

 

 

 

 

 

47,750

 

 

39

%

 

39

%

Naval & Power (1)(2)

 

84,719

 

 

 

5,335

 

 

90,054

 

 

 

77,289

 

 

 

5,427

 

 

82,716

 

 

10

%

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

213,477

 

 

$

5,335

 

$

218,812

 

 

$

182,356

 

 

$

5,427

 

$

187,783

 

 

17

%

 

17

%

Corporate and other (3)

 

(22,087

)

 

 

 

 

(22,087

)

 

 

(23,741

)

 

 

4,876

 

 

(18,865

)

 

7

%

 

(17

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

$

191,390

 

 

$

5,335

 

$

196,725

 

 

$

158,615

 

 

$

10,303

 

$

168,918

 

 

21

%

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

As

Reported

 

 

 

Adjusted

 

As

Reported

 

 

 

Adjusted

 

As

Reported

 

Adjusted

Aerospace & Industrial

 

14.5

%

 

 

 

 

14.5

%

 

 

14.3

%

 

 

 

 

14.3

%

 

20 bps

 

20 bps

Defense Electronics

 

18.5

%

 

 

 

 

18.5

%

 

 

16.3

%

 

 

 

 

16.3

%

 

220 bps

 

220 bps

Naval & Power

 

15.5

%

 

 

 

 

16.5

%

 

 

16.2

%

 

 

 

 

17.4

%

 

(70 bps)

 

(90 bps)

Total Curtiss-Wright

 

14.3

%

 

 

 

 

14.7

%

 

 

13.6

%

 

 

 

 

14.5

%

 

70 bps

 

20 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

16.0

%

 

 

 

 

16.4

%

 

 

15.6

%

 

 

 

 

16.1

%

 

40 bps

 

30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes first year purchase accounting adjustments in the current period.

(2) Excludes the results of operations from our German valves business, which was sold in January 2022, and the loss on divestiture in the prior year period.

(3) Excludes costs associated with shareholder activism in the prior year period.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

RECONCILIATION OF AS REPORTED SALES TO ADJUSTED SALES BY END MARKET (UNAUDITED)

($'s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

 

June 30, 2023

 

June 30, 2022

 

% Change

 

 

As Reported

 

Adjustments

 

Adjusted Sales

 

As Reported

 

Adjustments

 

Adjusted Sales

 

Change in As Reported Sales

Change in Adjusted Sales

Aerospace & Defense markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace Defense

 

$

132,192

 

$

 

$

132,192

 

$

94,545

 

$

 

$

94,545

 

40

%

40

%

Ground Defense

 

 

70,875

 

 

 

 

70,875

 

 

44,393

 

 

 

 

44,393

 

60

%

60

%

Naval Defense

 

 

180,956

 

 

 

 

180,956

 

 

172,786

 

 

 

 

172,786

 

5

%

5

%

Commercial Aerospace

 

 

82,033

 

 

 

 

82,033

 

 

68,192

 

 

 

 

68,192

 

20

%

20

%

Total Aerospace & Defense

 

$

466,056

 

$

 

$

466,056

 

$

379,916

 

$

 

$

379,916

 

23

%

23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process

 

$

131,000

 

$

 

$

131,000

 

$

125,355

 

$

 

$

125,355

 

5

%

5

%

General Industrial

 

 

107,340

 

 

 

 

107,340

 

 

104,086

 

 

 

 

104,086

 

3

%

3

%

Total Commercial

 

$

238,340

 

$

 

$

238,340

 

$

229,441

 

$

 

$

229,441

 

4

%

4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

704,396

 

$

 

$

704,396

 

$

609,357

 

$

 

$

609,357

 

16

%

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

 

 

 

 

June 30, 2023

 

June 30, 2022

 

% Change

 

 

As Reported

 

Adjustments

 

Adjusted Sales

 

As Reported

 

Adjustments

 

Adjusted Sales

 

Change in As Reported Sales

Change in Adjusted Sales

Aerospace & Defense markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace Defense

 

$

232,071

 

$

 

$

232,071

 

$

192,549

 

$

 

$

192,549

 

21

%

21

%

Ground Defense

 

 

137,132

 

 

 

 

137,132

 

 

83,501

 

 

 

 

83,501

 

64

%

64

%

Naval Defense

 

 

352,912

 

 

 

 

352,912

 

 

335,753

 

 

 

 

335,753

 

5

%

5

%

Commercial Aerospace

 

 

152,523

 

 

 

 

152,523

 

 

129,084

 

 

 

 

129,084

 

18

%

18

%

Total Aerospace & Defense

 

$

874,638

 

$

 

$

874,638

 

$

740,887

 

$

 

$

740,887

 

18

%

18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process

 

$

251,338

 

$

 

$

251,338

 

$

230,143

 

$

 

$

230,143

 

9

%

9

%

General Industrial

 

 

209,280

 

 

 

 

209,280

 

 

197,788

 

 

 

 

197,788

 

6

%

6

%

Total Commercial

 

$

460,618

 

$

 

$

460,618

 

$

427,931

 

$

 

$

427,931

 

8

%

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

1,335,256

 

$

 

$

1,335,256

 

$

1,168,818

 

$

 

$

1,168,818

 

14

%

14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

RECONCILIATION OF AS REPORTED TO ADJUSTED DILUTED EARNINGS PER SHARE (UNAUDITED)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

Diluted earnings per share - As Reported

$

2.10

 

$

1.83

 

$

3.58

 

$

2.89

First year purchase accounting adjustments

 

0.05

 

 

 

 

0.10

 

 

Divested German valves business

 

 

 

 

 

 

 

0.11

Costs associated with shareholder activism

 

 

 

 

 

 

 

0.10

Former executive pension settlement expense

 

 

 

 

 

 

 

0.04

Diluted earnings per share - Adjusted (1)

$

2.15

 

$

1.83

 

$

3.68

 

$

3.14

 

 

 

 

 

 

 

 

(1) All adjustments are presented net of income taxes.

Organic Sales and Organic Operating Income

The Corporation discloses organic sales and organic operating income because the Corporation believes it provides investors with insight as to the Company’s ongoing business performance. Organic sales and organic operating income are defined as sales and operating income, excluding contributions from acquisitions and results of operations from divested businesses or product lines during the last twelve months, loss from sale of our industrial valves business in Germany, and foreign currency fluctuations.

 

Three Months Ended

 

June 30,

 

2023 vs. 2022

 

Aerospace & Industrial

 

Defense Electronics

 

Naval & Power

 

Total Curtiss-Wright

 

Sales

 

Operating
income

 

Sales

 

Operating
income

 

Sales

 

Operating
income

 

Sales

 

Operating
income

As Reported

8%

 

10%

 

32%

 

77%

 

12%

 

(6%)

 

16%

 

15%

Less: Acquisitions

0%

 

0%

 

0%

 

0%

 

(9%)

 

0%

 

(4%)

 

0%

Foreign Currency

1%

 

1%

 

0%

 

(8%)

 

0%

 

(1%)

 

0%

 

(2%)

Organic

9%

 

11%

 

32%

 

69%

 

3%

 

(7%)

 

12%

 

13%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

June 30,

 

2023 vs. 2022

 

Aerospace & Industrial

 

Defense Electronics

 

Naval & Power

 

Total Curtiss-Wright

 

Sales

 

Operating
income

 

Sales

 

Operating
income

 

Sales

 

Operating
income

 

Sales

 

Operating
income

As Reported

7%

 

9%

 

23%

 

39%

 

15%

 

10%

 

14%

 

21%

Less: Acquisitions

0%

 

0%

 

0%

 

0%

 

(8%)

 

0%

 

(3%)

 

0%

Loss on divestiture

0%

 

0%

 

0%

 

0%

 

0%

 

(7%)

 

0%

 

(3%)

Foreign Currency

1%

 

(1%)

 

0%

 

(7%)

 

0%

 

(1%)

 

0%

 

(4%)

Organic

8%

 

8%

 

23%

 

32%

 

7%

 

2%

 

11%

 

14%

Free Cash Flow and Free Cash Flow Conversion

The Corporation discloses free cash flow because it measures cash flow available for investing and financing activities. Free cash flow represents cash available to repay outstanding debt, invest in the business, acquire businesses, return capital to shareholders and make other strategic investments. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Adjusted free cash flow excludes: (i) payments associated with the Westinghouse legal settlement in both the current and prior year periods and (ii) executive pension payments in the prior year period. The Corporation discloses adjusted free cash flow conversion because it measures the proportion of net earnings converted into free cash flow and is defined as adjusted free cash flow divided by adjusted net earnings.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NON-GAAP FINANCIAL DATA (UNAUDITED)

($'s in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

Net cash provided by (used for) operating activities

$

110,952

 

 

$

31,044

 

 

$

19,353

 

 

$

(93,271

)

Capital expenditures

 

(12,003

)

 

 

(8,596

)

 

 

(22,664

)

 

 

(19,492

)

Free cash flow

$

98,949

 

 

$

22,448

 

 

$

(3,311

)

 

$

(112,763

)

Westinghouse legal settlement

 

 

 

 

 

 

 

10,000

 

 

 

15,000

 

Pension payment to former executive

 

 

 

 

 

 

 

 

 

 

8,214

 

Adjusted free cash flow

$

98,949

 

 

$

22,448

 

 

$

6,689

 

 

$

(89,549

)

Adjusted free cash flow conversion

 

119

%

 

 

32

%

 

 

5

%

 

 

(74

%)

CURTISS-WRIGHT CORPORATION

2023 Guidance

As of August 2, 2023

($'s in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

Reported

(GAAP)

 

2022

Adjustments

(Non-GAAP)(1,3)

 

2022

Adjusted

(Non-GAAP)(1,3)

 

2023

Reported Guidance

(GAAP)

 

2023

Adjustments

(Non-GAAP)(2,3)

 

2023

Adjusted Guidance

(Non-GAAP)(2,3)

 

 

 

 

 

 

 

Low

High

 

 

 

Low

High

 

2023 Chg

vs 2022

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

836

 

 

$

 

 

$

836

 

 

$

865

 

$

885

 

 

$

 

 

$

865

 

$

885

 

 

4 - 6%

Defense Electronics

$

690

 

 

$

 

 

$

690

 

 

$

755

 

$

775

 

 

$

 

 

$

755

 

$

775

 

 

9 - 12%

Naval & Power

$

1,031

 

 

$

 

 

$

1,031

 

 

$

1,110

 

$

1,130

 

 

$

 

 

$

1,110

 

$

1,130

 

 

8 - 10%

Total sales

$

2,557

 

 

$

 

 

$

2,557

 

 

$

2,730

 

$

2,790

 

 

$

 

 

$

2,730

 

$

2,790

 

 

7 - 9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

137

 

 

$

1

 

 

$

138

 

 

$

145

 

$

150

 

 

$

 

 

$

145

 

$

150

 

 

5 - 9%

Defense Electronics

$

155

 

 

$

 

 

$

155

 

 

$

174

 

$

180

 

 

$

 

 

$

174

 

$

180

 

 

13 - 17%

Naval & Power

$

178

 

 

$

14

 

 

$

192

 

 

$

187

 

$

192

 

 

$

8

 

 

$

195

 

$

200

 

 

2 - 4%

Total segments

$

469

 

 

$

15

 

 

$

484

 

 

$

506

 

$

521

 

 

$

8

 

 

$

514

 

$

529

 

 

 

Corporate and other

 

(46

)

 

 

5

 

 

 

(41

)

 

 

(37

)

 

(40

)

 

 

 

 

 

(37

)

 

(40

)

 

 

Total operating income

 

423

 

 

 

20

 

 

 

443

 

 

 

468

 

 

482

 

 

 

8

 

 

 

476

 

 

490

 

 

8 - 11%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(47

)

 

 

 

 

 

(47

)

 

 

(52

)

 

(54

)

 

 

 

 

 

(52

)

 

(54

)

 

 

Other income, net

 

13

 

 

 

4

 

 

 

17

 

 

 

27

 

 

28

 

 

 

 

 

 

27

 

 

28

 

 

 

Earnings before income taxes

 

389

 

 

 

24

 

 

 

413

 

 

 

443

 

 

455

 

 

 

8

 

 

 

451

 

 

463

 

 

 

Provision for income taxes

 

(95

)

 

 

(4

)

 

 

(99

)

 

 

(106

)

 

(109

)

 

 

(2

)

 

 

(108

)

 

(111

)

 

 

Net earnings

 

294

 

 

 

20

 

 

 

314

 

 

 

337

 

 

346

 

 

 

6

 

 

 

343

 

 

352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

7.62

 

 

$

0.51

 

 

$

8.13

 

 

$

8.75

 

$

8.99

 

 

$

0.16

 

 

$

8.90

 

$

9.15

 

 

10 - 13%

Diluted shares outstanding

 

38.6

 

 

 

 

 

38.6

 

 

 

38.5

 

 

38.5

 

 

 

 

 

38.5

 

 

38.5

 

 

 

Effective tax rate

 

24.4

%

 

 

 

 

24.0

%

 

 

24.0

%

 

24.0

%

 

 

 

 

24.0

%

 

24.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

 

16.4

%

 

 

 

 

16.5

%

 

 

16.7

%

 

16.9

%

 

 

 

 

16.7

%

 

16.9

%

 

20 - 40 bps

Defense Electronics

 

22.4

%

 

 

 

 

22.4

%

 

 

23.0

%

 

23.2

%

 

 

 

 

23.0

%

 

23.2

%

 

60 - 80 bps

Naval & Power

 

17.2

%

 

 

 

 

18.6

%

 

 

16.8

%

 

16.9

%

 

 

 

 

17.5

%

 

17.7

%

 

(110) - (90) bps

Total operating margin

 

16.6

%

 

 

 

 

17.3

%

 

 

17.2

%

 

17.3

%

 

 

 

 

17.4

%

 

17.6

%

 

10 - 30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

$

257

 

 

$

39

 

 

$

296

 

 

$

360

 

$

390

 

 

$

10

 

 

$

370

 

$

400

 

 

25 - 36%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes: Full year amounts may not add due to rounding.

(1) 2022 Adjusted financials exclude the impact of first year purchase accounting adjustments, the loss on sale of our German valves business, costs associated with shareholder activism and pension settlement charges related to the retirement of two former executives.

(2) 2023 Adjusted financials exclude the impact of first year purchase accounting adjustments.

(3) Free Cash Flow is defined as cash flow from operations less capital expenditures. 2022 Adjusted Free Cash Flow excluded one-time pension settlement payments of $24 million and a legal settlement payment of $15 million. 2023 Adjusted Free Cash Flow guidance excludes a legal settlement payment of $10 million.

CURTISS-WRIGHT CORPORATION

2023 Sales Growth Guidance by End Market

As of August 2, 2023

 

 

 

 

 

2023 % Change vs. 2022 Adjusted(1)

 

 

 

 

 

 

 

 

 

Prior

 

Current

 

% Total Sales

Aerospace & Defense Markets

 

 

 

 

 

Aerospace Defense

9 - 11%

 

9 - 11%

 

20%

Ground Defense

4 - 6%

 

16 - 18%

 

9%

Naval Defense

4 - 6%

 

6 - 8%

 

27%

Commercial Aerospace

5 - 7%

 

9 - 11%

 

11%

Total Aerospace & Defense

6 - 8%

 

9 - 11%

 

67%

 

 

 

 

 

 

Commercial Markets

 

 

 

 

 

Power & Process

Flat

 

3 - 5%

 

18%

General Industrial

2 - 4%

 

3 - 5%

 

16%

Total Commercial

0 - 2%

 

3 - 5%

 

33%

 

 

 

 

 

 

Total Curtiss-Wright Sales

4 - 6%

 

7 - 9%

 

100%

 

 

 

 

 

 

Note: Sales percentages may not add due to rounding.

(1) 2023 and 2022 Sales include the contribution from the engineered arresting systems business, acquired on June 30, 2022, to the Aerospace Defense market.

About Curtiss-Wright Corporation

Curtiss-Wright Corporation (NYSE:CW) is a global integrated business that provides highly engineered products, solutions and services mainly to Aerospace & Defense markets, as well as critical technologies in demanding Commercial Power, Process and Industrial markets. We leverage a workforce of approximately 8,400 highly skilled employees who develop, design and build what we believe are the best engineered solutions to the markets we serve. Building on the heritage of Glenn Curtiss and the Wright brothers, Curtiss-Wright has a long tradition of providing innovative solutions through trusted customer relationships. For more information, visit www.curtisswright.com.

Certain statements made in this press release, including statements about future revenue, financial performance guidance, quarterly and annual revenue, net income, operating income growth, future business opportunities, cost saving initiatives, the successful integration of the Company’s acquisitions, and future cash flow from operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements present management's expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to: a reduction in anticipated orders; an economic downturn; changes in the competitive marketplace and/or customer requirements; a change in government spending; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, defense contracting, electronics, marine, and industrial companies. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and subsequent reports filed with the Securities and Exchange Commission.

This press release and additional information are available at www.curtisswright.com.

Contacts

Jim Ryan
(704) 869-4621
Jim.Ryan@curtisswright.com

Release Summary

CURTISS-WRIGHT REPORTS STRONG SECOND QUARTER 2023 FINANCIAL RESULTS AND RAISES FULL-YEAR 2023 SALES, OPERATING INCOME, DILUTED EPS AND FCF GUIDANCE

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Contacts

Jim Ryan
(704) 869-4621
Jim.Ryan@curtisswright.com