DAVIDSON, N.C.--(BUSINESS WIRE)--
Curtiss-Wright Corporation (NYSE: CW) reports financial results for the
first quarter ended March 31, 2018.
First Quarter 2018 Highlights
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Diluted earnings per share (EPS) of $0.98, up 35% compared with the
prior year;
-
Net sales of $548 million, up 5%, including 3% organic growth;
-
Operating income of $64 million, up 35%;
-
Operating margin of 11.8%, up 270 basis points;
-
Backlog of $2.1 billion, up 2% from December 31, 2017; and
-
Share repurchases of approximately $12 million.
Full-Year 2018 Business Outlook
-
Full-year 2018 organic guidance reflects
a $0.06 increase in full-year EPS driven by the benefit of solid first
quarter performance and improved outlook in the Commercial/Industrial
segment, which added $10 million to sales and approximately $3 million
to operating income;
-
Full-year 2018 organic guidance reflects
higher sales (up 3-5%), operating income (up 10-13%), operating margin
(up 90-110 bps) and diluted EPS (up 19-22%);
-
Full-year 2018 guidance updated to include the acquisition of the
Dresser-Rand government business (Dresser-Rand) within the Power
segment, which added $70 million in sales and $10 million in free cash
flow, but reduced operating income by approximately $14 million,
operating margin by 100 basis points and diluted EPS by $0.24, due to
first year purchase accounting costs associated with the acquisition.
Excluding first year purchase accounting costs, the acquisition would
otherwise be accretive to 2018 diluted EPS; and
-
Overall, we increased full-year 2018 sales guidance by $80 million;
reduced operating income guidance by approximately $12 million,
reduced operating margin guidance by 100 basis points, and reduced
diluted EPS guidance by $0.18 to new range of $5.47 to $5.62 (up
14-17%).
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EPS Guidance
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Prior Guidance
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$ 5.65 - $5.80
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Increase driven by solid 1Q performance
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$0.06
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Guidance prior to impact of acquisition
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$ 5.71 - $5.86
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Dresser-Rand impact including first year purchase accounting costs
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($0.24
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)
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Current Guidance
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$ 5.47 - $5.62
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“First quarter diluted EPS of $0.98 was ahead of our expectations, as we
delivered solid 5% top-line growth, led by increased defense and
industrial sales, and improved profitability, driven by the benefits of
our ongoing margin improvement initiatives,” said David C. Adams,
Chairman and CEO of Curtiss-Wright Corporation.
“We are off to a solid start to 2018 and anticipate steady, sequential
margin and EPS improvement over the remainder of the year. We are
projecting another solid organic
operational performance this year and expect higher sales in all end
markets, double-digit growth in operating income, strong margin
expansion and free cash flow conversion in excess of 100%. The recently
completed acquisition of Dresser-Rand significantly expands our naval
defense business and supports our objective for long-term profitable
growth and strong free cash flow generation. Excluding the purchase
accounting costs associated with the acquisition, we expect Dresser-Rand
to be accretive to 2018 diluted earnings per share. Overall, we are
executing on our long-term strategy and continuing to drive solid
operating margin expansion and free cash flow generation to deliver
significant value for our shareholders.”
First Quarter 2018 Operating Results
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(In thousands)
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1Q-2018
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1Q-2017
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Change
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Sales
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$
|
547,522
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$
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523,591
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5%
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Operating income
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64,498
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47,692
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35%
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Operating margin
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11.8%
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9.1%
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270 bps
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Sales
Sales of $548 million in the first quarter increased $24 million, or 5%,
compared with the prior year, reflecting a $15 million, or 3%, increase
in organic sales, and a $9 million, or 2%, benefit from favorable
foreign currency translation.
Higher organic revenues were principally driven by solid defense sales
in all three segments. In addition, we also experienced improved
industrial demand in the Commercial/Industrial segment and lower power
generation revenues in the Power segment.
From an end market perspective, sales to the defense markets increased
12%, 11% of which was organic, while sales to the commercial markets
were flat compared with the prior year, as increased sales to the
general industrial market were mainly offset by reduced sales to the
power generation market. Please refer to the accompanying tables for a
breakdown of sales by end market.
Operating Income
Operating income in the first quarter was $64 million, an increase of
$17 million, or 35%, compared with the prior year. These results
primarily reflect higher defense and industrial sales, the benefits of
our margin improvement initiatives, most notably in the
Commercial/Industrial segment, and increased profitability in the
Defense segment as we moved beyond the first year purchase accounting
costs associated with the Teletronics Technology Corporation (TTC)
acquisition, which negatively impacted prior year results.
Operating margin was 11.8%, an increase of 270 basis points over the
prior year, primarily reflecting higher revenues and favorable overhead
absorption, the benefits of our ongoing margin improvement initiatives,
as well as the aforementioned increase in profitability in the Defense
segment associated with the TTC acquisition.
Non-segment Expense
Non-segment expenses of $10 million were essentially flat compared with
the prior year.
Net Earnings
First quarter net earnings increased 34% compared with the prior year,
as higher operating income and lower interest expense more than offset a
higher tax rate. The effective tax rate (ETR) for the first quarter was
28.4%, an increase from 20.9% in the prior year quarter, primarily
driven by an additional provisional tax expense associated with the 2017
Tax Cuts and Jobs Act (TCJA) for foreign withholding taxes, partially
offset by a discrete tax benefit related to share based compensation.
Free Cash Flow
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(In thousands)
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1Q-2018
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1Q-2017
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Net cash used for operating activities
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$
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(71,262
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)
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$
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(24,941
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)
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Capital expenditures
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(8,971
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)
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(10,374
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)
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Free cash flow
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$
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(80,233
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)
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$
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(35,315
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)
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Pension payment
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50,000
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-
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Adjusted free cash flow
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$
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(30,233
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)
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$
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(35,315
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)
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Free cash flow, defined as cash flow from operations less capital
expenditures, was ($80 million) for the first quarter of 2018, a
decrease of $45 million compared with the prior year. Adjusted free cash
flow, defined as free cash flow excluding a $50 million voluntary
contribution to the Company’s corporate defined benefit pension plan,
increased approximately $5 million to ($30 million), primarily due to
higher cash earnings. Capital expenditures decreased by $1 million to $9
million compared with the prior year period.
New Orders and Backlog
New orders of $605 million in the first quarter decreased 6% compared
with the prior year, primarily due to the timing of naval defense orders
received within the Commercial/Industrial and Power segments, compared
with the prior year period. Backlog of $2.1 billion increased 2% from
December 31, 2017.
Other Items – Share Repurchase
During the first quarter, the Company repurchased 93,438 shares of its
common stock for approximately $12 million.
Full-Year 2018 Guidance
The Company is updating its full-year 2018 financial guidance to include
the recently completed acquisition of the Dresser-Rand government
business as well as increased sales and operating income in the
Commercial/Industrial segment:
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Prior Guidance
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Current Guidance
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Total sales
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$2.335 - $2.375 billion
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$2.415 - $2.455 billion
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Operating income
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$355 - $365 million
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$343 - $353 million
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Operating margin
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15.2% - 15.4%
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14.2% - 14.4%
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Interest expense
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$37 - $38 million
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$36 - $37 million
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Effective tax rate
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24.0%
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24.0%
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Diluted earnings per share
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$5.65 - $5.80
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$5.47 - $5.62
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Diluted shares outstanding
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44.7 million
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44.7 million
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Free cash flow
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$230 - $250 million
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$240 - $260 million
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Adjusted free cash flow
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$280 - $300 million
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$290 - $310 million
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Notes:
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Full-year 2018 guidance includes the impact from the adoption of
Accounting Standards Update (ASU) 2017-07 that requires the
reclassification of the non-service components of Pension expense from
Operating Income to Other Income/Expense effective for fiscal years
beginning after December 15, 2017. Because our non-service components
are a benefit, this accounting change lowered full-year 2018 operating
income by $14.0 million and operating margin by 60 basis points. This
change is neutral to earnings per share.
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Adjusted free cash flow for full-year 2018 excludes a $50 million
voluntary contribution to the Company’s corporate defined benefit
pension plan that it elected to make in February 2018.
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A more detailed breakdown of the Company’s 2018 guidance by segment
and by market can be found in the accompanying schedules.
First Quarter 2018 Segment Performance
Commercial/Industrial
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(In thousands)
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1Q-2018
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1Q-2017
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Change
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Sales
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$
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296,641
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$
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278,822
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6%
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Operating income
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39,225
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30,552
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28%
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Operating margin
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13.2%
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11.0%
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220 bps
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Sales for the first quarter were $297 million, an increase of $18
million, or 6%, over the prior year. Organic sales increased $11
million, or 4%, while favorable foreign currency translation added $7
million, or 2%. Our results reflect strong sales growth in the aerospace
and naval defense markets, led by higher sales of actuation systems on
fighter jets and increased valve revenues on the CVN-80 Ford class
aircraft carrier program. We also experienced higher sales in the
general industrial market, due to solid demand for industrial vehicle
products and increased sales of surface treatment services. Sales to the
commercial aerospace market were flat, as higher sales of sensors,
actuation systems and surface treatment services on narrowbody airplanes
were offset by lower revenues resulting from FAA directives.
Operating income in the first quarter was $39 million, an increase of $9
million, or 28%, compared with the prior year, while operating margin
increased 220 basis points to 13.2%. The increase in operating income
and margin primarily reflects higher sales and favorable overhead
absorption for industrial vehicle products, naval valve products,
sensors and controls products, and surface treatment services, and
includes the benefits of our ongoing margin improvement initiatives.
Defense
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(In thousands)
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1Q-2018
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1Q-2017
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Change
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Sales
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$
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118,901
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$
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114,662
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4%
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Operating income
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19,728
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11,097
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78%
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Operating margin
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16.6%
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9.7%
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690 bps
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Sales for the first quarter were $119 million, an increase of $4
million, or 4%, from the prior year. These results reflect a $2 million,
or 2%, increase in organic sales, and a $2 million, or 2%, benefit from
favorable foreign currency translation. In the aerospace defense market,
our results reflect higher sales of data acquisition and flight test
equipment, most notably on the F-18 program. We also experienced higher
domestic vehicle product sales, most notably on the G/ATOR program, in
the ground defense market.
Operating income in the first quarter was $20 million, an increase of $9
million, or 78%, compared with the prior year, while operating margin
increased 690 basis points to 16.6%. This performance reflects increased
profitability as we moved beyond the first year purchase accounting
costs associated with the TTC acquisition which impacted prior year
results, as well as the benefits of our ongoing margin improvement
initiatives. Meanwhile, unfavorable foreign currency translation reduced
current quarter operating income by approximately $1 million, or 7%.
Power
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(In thousands)
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1Q-2018
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1Q-2017
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Change
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Sales
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$
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131,980
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|
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$
|
130,107
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1%
|
Operating income
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15,342
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15,545
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(1%)
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Operating margin
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11.6%
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11.9%
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(30 bps)
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Sales for the first quarter were $132 million, an increase of $2
million, or 1%, from the prior year. In the naval defense market, our
results reflect higher aircraft carrier revenues, partially offset by
lower revenues on the Columbia class submarine, as this program
transitions from the development to the production phase. In the power
generation market, our results reflect lower revenues on the domestic
AP1000 program and lower domestic aftermarket sales supporting currently
operating nuclear reactors, which were partially offset by higher
revenues on the AP1000 China Direct program and increased international
aftermarket sales.
Operating income in the first quarter was $15 million, essentially flat
compared with the prior year, while operating margin decreased 30 basis
points to 11.6%. This performance reflects reduced sales and
profitability in the nuclear aftermarket business and lower revenues on
the domestic AP1000 program, partially offset by higher production and
profitability on the AP1000 China Direct program.
Conference Call & Webcast Information
The Company will host a conference call to discuss first quarter 2018
financial results at 9:00 a.m. EDT on Thursday, May 3, 2018. A live
webcast of the call and the accompanying financial presentation, as well
as a replay of the call, will be made available on the internet by
visiting the Investor Relations section of the Company’s website at www.curtisswright.com.
(Tables to Follow)
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CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
|
($'s in thousands, except per share data)
|
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Three Months Ended
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March 31,
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Change
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2018
|
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|
2017
|
|
|
$
|
|
|
%
|
Product sales
|
|
|
$
|
444,687
|
|
|
|
$
|
423,229
|
|
|
|
$
|
21,458
|
|
|
|
5
|
%
|
Service sales
|
|
|
102,835
|
|
|
|
100,362
|
|
|
|
2,473
|
|
|
|
2
|
%
|
Total net sales
|
|
|
547,522
|
|
|
|
523,591
|
|
|
|
23,931
|
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales
|
|
|
299,311
|
|
|
|
289,610
|
|
|
|
9,701
|
|
|
|
3
|
%
|
Cost of service sales
|
|
|
67,020
|
|
|
|
67,046
|
|
|
|
(26
|
)
|
|
|
0
|
%
|
Total cost of sales
|
|
|
366,331
|
|
|
|
356,656
|
|
|
|
9,675
|
|
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|
3
|
%
|
|
|
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|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
181,191
|
|
|
|
166,935
|
|
|
|
14,256
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|
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|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
|
15,941
|
|
|
|
15,591
|
|
|
|
350
|
|
|
|
2
|
%
|
Selling expenses
|
|
|
31,520
|
|
|
|
29,458
|
|
|
|
2,062
|
|
|
|
7
|
%
|
General and administrative expenses
|
|
|
69,232
|
|
|
|
74,194
|
|
|
|
(4,962
|
)
|
|
|
(7
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
64,498
|
|
|
|
47,692
|
|
|
|
16,806
|
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
8,204
|
|
|
|
10,377
|
|
|
|
(2,173
|
)
|
|
|
(21
|
%)
|
Other income, net
|
|
|
4,683
|
|
|
|
3,847
|
|
|
|
836
|
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes
|
|
|
60,977
|
|
|
|
41,162
|
|
|
|
19,815
|
|
|
|
48
|
%
|
Provision for income taxes
|
|
|
(17,334
|
)
|
|
|
(8,615
|
)
|
|
|
(8,719
|
)
|
|
|
(101
|
%)
|
Net earnings
|
|
|
$
|
43,643
|
|
|
|
$
|
32,547
|
|
|
|
$
|
11,096
|
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
$
|
0.99
|
|
|
|
$
|
0.74
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
$
|
0.98
|
|
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share
|
|
|
$
|
0.15
|
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
44,188
|
|
|
|
44,246
|
|
|
|
|
|
|
|
Diluted
|
|
|
44,678
|
|
|
|
44,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
($'s in thousands, except par value)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
Change
|
|
|
|
2018
|
|
|
2017
|
|
|
%
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
396,518
|
|
|
|
$
|
475,120
|
|
|
|
(17
|
%)
|
Receivables, net
|
|
|
518,784
|
|
|
|
494,923
|
|
|
|
5
|
%
|
Inventories, net
|
|
|
386,787
|
|
|
|
378,866
|
|
|
|
2
|
%
|
Other current assets
|
|
|
50,688
|
|
|
|
52,951
|
|
|
|
(4
|
%)
|
Total current assets
|
|
|
1,352,777
|
|
|
|
1,401,860
|
|
|
|
(4
|
%)
|
Property, plant, and equipment, net
|
|
|
385,287
|
|
|
|
390,235
|
|
|
|
(1
|
%)
|
Goodwill
|
|
|
1,099,450
|
|
|
|
1,096,329
|
|
|
|
0
|
%
|
Other intangible assets, net
|
|
|
322,856
|
|
|
|
329,668
|
|
|
|
(2
|
%)
|
Other assets
|
|
|
18,689
|
|
|
|
18,229
|
|
|
|
3
|
%
|
Total assets
|
|
|
$
|
3,179,059
|
|
|
|
$
|
3,236,321
|
|
|
|
(2
|
%)
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Current portion of long-term and short term debt
|
|
|
$
|
982
|
|
|
|
$
|
150
|
|
|
|
555
|
%
|
Accounts payable
|
|
|
165,413
|
|
|
|
185,176
|
|
|
|
(11
|
%)
|
Accrued expenses
|
|
|
102,602
|
|
|
|
150,406
|
|
|
|
(32
|
%)
|
Income taxes payable
|
|
|
8,810
|
|
|
|
4,564
|
|
|
|
93
|
%
|
Deferred revenue
|
|
|
217,959
|
|
|
|
214,891
|
|
|
|
1
|
%
|
Other current liabilities
|
|
|
45,519
|
|
|
|
35,810
|
|
|
|
27
|
%
|
Total current liabilities
|
|
|
541,285
|
|
|
|
590,997
|
|
|
|
(8
|
%)
|
Long-term debt, net
|
|
|
813,576
|
|
|
|
813,989
|
|
|
|
0
|
%
|
Deferred tax liabilities, net
|
|
|
58,486
|
|
|
|
49,360
|
|
|
|
18
|
%
|
Accrued pension and other postretirement benefit costs
|
|
|
67,984
|
|
|
|
121,043
|
|
|
|
(44
|
%)
|
Long-term portion of environmental reserves
|
|
|
14,681
|
|
|
|
14,546
|
|
|
|
1
|
%
|
Other liabilities
|
|
|
104,072
|
|
|
|
118,586
|
|
|
|
(12
|
%)
|
Total liabilities
|
|
|
1,600,084
|
|
|
|
1,708,521
|
|
|
|
(6
|
%)
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
|
|
|
Common stock, $1 par value
|
|
|
$
|
49,187
|
|
|
|
$
|
49,187
|
|
|
|
0
|
%
|
Additional paid in capital
|
|
|
116,221
|
|
|
|
120,609
|
|
|
|
(4
|
%)
|
Retained earnings
|
|
|
1,979,051
|
|
|
|
1,944,324
|
|
|
|
2
|
%
|
Accumulated other comprehensive loss
|
|
|
(198,807
|
)
|
|
|
(216,840
|
)
|
|
|
8
|
%
|
Less: cost of treasury stock
|
|
|
(366,677
|
)
|
|
|
(369,480
|
)
|
|
|
1
|
%
|
Total stockholders' equity
|
|
|
1,578,975
|
|
|
|
1,527,800
|
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
3,179,059
|
|
|
|
$
|
3,236,321
|
|
|
|
(2
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
|
SEGMENT INFORMATION (UNAUDITED)
|
($'s in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
2018
|
|
|
2017
|
|
|
%
|
Sales:
|
|
|
|
|
|
|
|
|
|
Commercial/Industrial
|
|
|
$
|
296,641
|
|
|
|
$
|
278,822
|
|
|
|
6
|
%
|
Defense
|
|
|
118,901
|
|
|
|
114,662
|
|
|
|
4
|
%
|
Power
|
|
|
131,980
|
|
|
|
130,107
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
Total sales
|
|
|
$
|
547,522
|
|
|
|
$
|
523,591
|
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating income (expense):
|
|
|
|
|
|
|
|
|
|
Commercial/Industrial
|
|
|
$
|
39,225
|
|
|
|
$
|
30,552
|
|
|
|
28
|
%
|
Defense
|
|
|
19,728
|
|
|
|
11,097
|
|
|
|
78
|
%
|
Power
|
|
|
15,342
|
|
|
|
15,545
|
|
|
|
(1
|
%)
|
|
|
|
|
|
|
|
|
|
|
Total segments
|
|
|
$
|
74,295
|
|
|
|
$
|
57,194
|
|
|
|
30
|
%
|
Corporate and other
|
|
|
(9,797
|
)
|
|
|
(9,502
|
)
|
|
|
(3
|
%)
|
|
|
|
|
|
|
|
|
|
|
Total operating income
|
|
|
$
|
64,498
|
|
|
|
$
|
47,692
|
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margins:
|
|
|
|
|
|
|
|
|
|
Commercial/Industrial
|
|
|
13.2
|
%
|
|
|
11.0
|
%
|
|
|
|
Defense
|
|
|
16.6
|
%
|
|
|
9.7
|
%
|
|
|
|
Power
|
|
|
11.6
|
%
|
|
|
11.9
|
%
|
|
|
|
Total Curtiss-Wright
|
|
|
11.8
|
%
|
|
|
9.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment margins
|
|
|
13.6
|
%
|
|
|
10.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
|
SALES BY END MARKET (UNAUDITED)
|
($'s in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
2018
|
|
|
2017
|
|
|
%
|
Defense markets:
|
|
|
|
|
|
|
|
|
|
Aerospace
|
|
|
$
|
75,941
|
|
|
|
$
|
65,293
|
|
|
|
16
|
%
|
Ground
|
|
|
22,011
|
|
|
|
19,737
|
|
|
|
12
|
%
|
Naval
|
|
|
102,782
|
|
|
|
90,970
|
|
|
|
13
|
%
|
Other
|
|
|
4,581
|
|
|
|
7,041
|
|
|
|
(35
|
%)
|
Total Defense
|
|
|
$
|
205,315
|
|
|
|
$
|
183,041
|
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
Commercial markets:
|
|
|
|
|
|
|
|
|
|
Aerospace
|
|
|
$
|
99,404
|
|
|
|
$
|
98,614
|
|
|
|
1
|
%
|
Power Generation
|
|
|
99,012
|
|
|
|
105,551
|
|
|
|
(6
|
%)
|
General Industrial
|
|
|
143,791
|
|
|
|
136,385
|
|
|
|
5
|
%
|
Total Commercial
|
|
|
$
|
342,207
|
|
|
|
$
|
340,550
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
Total Curtiss-Wright
|
|
|
$
|
547,522
|
|
|
|
$
|
523,591
|
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use 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
non-GAAP measures provide investors with additional insight into the
Company’s ongoing business performance. 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. The following definitions are provided:
Organic Revenue and Organic Operating Income
The Corporation discloses organic revenue and organic operating income
because the Corporation believes it provides investors with insight as
to the Company’s ongoing business performance. Organic revenue and
organic operating income are defined as revenue and operating income
excluding the impact of foreign currency fluctuations and contributions
from acquisitions made during the last twelve months.
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2018 vs. 2017
|
|
|
|
Commercial/Industrial
|
|
Defense
|
|
Power
|
|
Total Curtiss-Wright
|
|
|
|
Sales
|
|
Operating income
|
|
Sales
|
|
Operating income
|
|
Sales
|
|
Operating income
|
|
Sales
|
|
Operating income
|
Organic
|
|
|
4%
|
|
28%
|
|
2%
|
|
85%
|
|
1%
|
|
(1%)
|
|
3%
|
|
37%
|
Acquisitions
|
|
|
0%
|
|
0%
|
|
0%
|
|
0%
|
|
0%
|
|
0%
|
|
0%
|
|
0%
|
Foreign Currency
|
|
|
2%
|
|
0%
|
|
2%
|
|
(7%)
|
|
0%
|
|
0%
|
|
2%
|
|
(2%)
|
Total
|
|
|
6%
|
|
28%
|
|
4%
|
|
78%
|
|
1%
|
|
(1%)
|
5%
|
|
35%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 cash flow
provided by operating activities less capital expenditures. Adjusted
free cash flow excludes contributions made to the Company’s corporate
defined benefit pension plan. The Corporation discloses free cash flow
conversion because it measures the proportion of net earnings converted
into free cash flow and is defined as free cash flow divided by net
earnings from continuing operations.
|
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
|
NON-GAAP FINANCIAL DATA (UNAUDITED)
|
($'s in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
Net cash used for operating activities
|
|
$
|
(71,262
|
)
|
|
|
$
|
(24,941
|
)
|
Capital expenditures
|
|
|
(8,971
|
)
|
|
|
(10,374
|
)
|
Free cash flow
|
|
|
$
|
(80,233
|
)
|
|
|
$
|
(35,315
|
)
|
Pension payment
|
|
|
50,000
|
|
|
|
—
|
|
Adjusted free cash flow
|
|
|
$
|
(30,233
|
)
|
|
|
$
|
(35,315
|
)
|
|
|
|
|
|
|
|
Free Cash Flow Conversion
|
|
|
(69
|
%)
|
|
|
(109
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURTISS-WRIGHT CORPORATION
|
2018 Guidance (1) (2) (3)
|
As of May 2, 2018
|
($'s in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Guidance (Prior)
|
|
|
|
2018 Guidance (Current)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Guidance
|
|
|
|
|
|
|
|
|
2017 Adjusted
|
|
|
|
Low
|
|
|
|
High
|
|
|
|
2018 % Change vs 2017 Adjusted
|
|
|
|
Low
|
|
|
|
High
|
|
|
|
2018 % Change vs 2017 Adjusted
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial/Industrial
|
|
|
|
$
|
1,163
|
|
|
|
|
$
|
1,183
|
|
|
|
|
$
|
1,203
|
|
|
|
|
|
|
|
|
$
|
1,193
|
|
|
|
|
$
|
1,213
|
|
|
|
|
|
Defense
|
|
|
|
|
555
|
|
|
|
|
|
565
|
|
|
|
|
|
575
|
|
|
|
|
|
|
|
|
|
565
|
|
|
|
|
|
575
|
|
|
|
|
|
Power
|
|
|
|
|
553
|
|
|
|
|
|
587
|
|
|
|
|
|
597
|
|
|
|
|
|
|
|
|
|
657
|
|
|
|
|
|
667
|
|
|
|
|
|
Total sales
|
|
|
|
$
|
2,271
|
|
|
|
|
$
|
2,335
|
|
|
|
|
$
|
2,375
|
|
|
|
|
3 to 5%
|
|
|
|
$
|
2,415
|
|
|
|
|
$
|
2,455
|
|
|
|
|
6 to 8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial/Industrial
|
|
|
|
$
|
168
|
|
|
|
|
$
|
174
|
|
|
|
|
$
|
179
|
|
|
|
|
|
|
|
|
$
|
177
|
|
|
|
|
$
|
182
|
|
|
|
|
|
Defense
|
|
|
|
|
109
|
|
|
|
|
|
121
|
|
|
|
|
|
124
|
|
|
|
|
|
|
|
|
|
121
|
|
|
|
|
|
124
|
|
|
|
|
|
Power
|
|
|
|
|
81
|
|
|
|
|
|
94
|
|
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
80
|
|
|
|
|
|
83
|
|
|
|
|
|
Total segments
|
|
|
|
|
359
|
|
|
|
|
|
389
|
|
|
|
|
|
400
|
|
|
|
|
|
|
|
|
|
378
|
|
|
|
|
|
389
|
|
|
|
|
|
Corporate and other
|
|
|
|
|
(34
|
)
|
|
|
|
|
(34
|
)
|
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
(34
|
)
|
|
|
|
|
(35
|
)
|
|
|
|
|
Total operating income
|
|
|
|
$
|
325
|
|
|
|
|
$
|
355
|
|
|
|
|
$
|
365
|
|
|
|
|
9 to 12%
|
|
|
|
$
|
343
|
|
|
|
|
$
|
353
|
|
|
|
|
6 to 9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
$
|
(41
|
)
|
|
|
|
$
|
(37
|
)
|
|
|
|
$
|
(38
|
)
|
|
|
|
|
|
|
|
$
|
(36
|
)
|
|
|
|
$
|
(37
|
)
|
|
|
|
|
Other income, net
|
|
|
|
|
16
|
|
|
|
|
|
14
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
14
|
|
|
|
|
|
Earnings before income taxes
|
|
|
|
|
300
|
|
|
|
|
|
332
|
|
|
|
|
|
341
|
|
|
|
|
|
|
|
|
|
322
|
|
|
|
|
|
331
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
|
(85
|
)
|
|
|
|
|
(80
|
)
|
|
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
|
(77
|
)
|
|
|
|
|
(79
|
)
|
|
|
|
|
Net earnings
|
|
|
|
$
|
215
|
|
|
|
|
$
|
253
|
|
|
|
|
$
|
259
|
|
|
|
|
|
|
|
|
$
|
245
|
|
|
|
|
$
|
251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported diluted earnings per share
|
|
|
|
$
|
4.80
|
|
|
|
|
$
|
5.65
|
|
|
|
|
$
|
5.80
|
|
|
|
|
18 to 21%
|
|
|
|
$
|
5.47
|
|
|
|
|
$
|
5.62
|
|
|
|
|
14 to 17%
|
Diluted shares outstanding
|
|
|
|
|
44.8
|
|
|
|
|
|
44.7
|
|
|
|
|
|
44.7
|
|
|
|
|
|
|
|
|
|
44.7
|
|
|
|
|
|
44.7
|
|
|
|
|
|
Effective tax rate
|
|
|
|
|
28.3
|
%
|
|
|
|
|
24.0
|
%
|
|
|
|
|
24.0
|
%
|
|
|
|
|
|
|
|
|
24.0
|
%
|
|
|
|
|
24.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial/Industrial
|
|
|
|
|
14.5
|
%
|
|
|
|
|
14.7
|
%
|
|
|
|
|
14.9
|
%
|
|
|
|
20 to 40 bps
|
|
|
|
|
14.8
|
%
|
|
|
|
|
15.0
|
%
|
|
|
|
30 to 50 bps
|
Defense
|
|
|
|
|
19.7
|
%
|
|
|
|
|
21.3
|
%
|
|
|
|
|
21.5
|
%
|
|
|
|
160 to 180 bps
|
|
|
|
|
21.3
|
%
|
|
|
|
|
21.5
|
%
|
|
|
|
160 to 180 bps
|
Power
|
|
|
|
|
14.7
|
%
|
|
|
|
|
16.0
|
%
|
|
|
|
|
16.2
|
%
|
|
|
|
130 to 150 bps
|
|
|
|
|
12.2
|
%
|
|
|
|
|
12.4
|
%
|
|
|
|
(230 to 250 bps)
|
Total operating margin
|
|
|
|
|
14.3
|
%
|
|
|
|
|
15.2
|
%
|
|
|
|
|
15.4
|
%
|
|
|
|
90 to 110 bps
|
|
|
|
|
14.2
|
%
|
|
|
|
|
14.4
|
%
|
|
|
|
(10) to 10 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Full year amounts may not add due to rounding
|
|
(1) Full-year 2017 and 2018 effective tax rate guidance includes
the impacts of the Tax Cuts and Jobs Act.
|
|
(2) Full-year 2017 adjusted results and expectations for 2018
guidance include the impacts from the adoption of ASU 2017-07
Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Postretirement Benefit Cost resulting in the
reclassification of the non-service components of Pension expense
from Operating Income to Other Income/Expense. This accounting
change lowered operating income by $14.6 million and $14.0 million,
respectfully, and lowered operating margin by 70 and 60 basis
points, respectively, in full-year 2017 and projected full-year 2018
periods. This change is neutral to earnings per share in both
periods.
|
|
(3) Full-year 2018 guidance updated to include the acquisition of
the Dresser-Rand government business (Dresser-Rand) within the Power
segment, which adds $70 million in sales, but reduces operating
income and operating margin, due to first year purchase accounting
costs associated with the acquisition. Guidance update also reflects
an improved outlook in the Commercial/Industrial segment.
|
|
|
CURTISS-WRIGHT CORPORATION
|
2018 Sales Growth Guidance by End Market (1)
|
As of May 2, 2018
|
|
|
|
|
|
|
|
|
|
|
2018 % Change vs 2017
|
|
|
2018 % Change vs 2017
|
|
|
|
(Prior)
|
|
|
(Current)
|
|
|
|
|
|
|
|
Defense Markets
|
|
|
|
|
|
|
Aerospace
|
|
|
8 - 10%
|
|
|
8 - 10%
|
Ground
|
|
|
0 - 2%
|
|
|
0 - 2%
|
Navy
|
|
|
0 - 2%
|
|
|
16 - 18%
|
Total Defense
|
|
|
3 - 5%
|
|
|
9 - 11%
|
(Including Other Defense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Markets
|
|
|
|
|
|
|
Commercial Aerospace
|
|
|
0 - 2%
|
|
|
0 - 2%
|
Power Generation
|
|
|
6 - 8%
|
|
|
6 - 8%
|
General Industrial
|
|
|
3 - 5%
|
|
|
4 - 6%
|
Total Commercial
|
|
|
3 - 5%
|
|
|
3 - 5%
|
|
|
|
|
|
|
|
Total Curtiss-Wright Sales
|
|
|
3 - 5%
|
|
|
6 - 8%
|
|
|
|
|
|
|
|
Note: Full year amounts may not add due to rounding
|
|
|
|
|
(1) Full-year 2018 guidance updated to include
the acquisition of the Dresser-Rand government business, which
primarily adds sales to the naval defense market, as well as an
improved outlook in the Commercial/Industrial segment, which
primarily adds sales to the general industrial market.
|
|
About Curtiss-Wright Corporation
Curtiss-Wright Corporation (NYSE: CW) is a global innovative company
that delivers highly engineered, critical function products and services
to the commercial, industrial, defense and energy markets. Building on
the heritage of Glenn Curtiss and the Wright brothers, Curtiss-Wright
has a long tradition of providing reliable solutions through trusted
customer relationships. The company employs approximately 8,600 people
worldwide. 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, 2017, and
subsequent reports filed with the Securities and Exchange Commission.
This press release and additional information are available at www.curtisswright.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180502006810/en/
Source: Curtiss-Wright Corporation