News Details

Curtiss-Wright Reports Second Quarter 2022 Financial Results and Raises Full-year 2022 Guidance

August 03, 2022

Curtiss-Wright Corporation (NYSE: CW) reports financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Highlights:

  • Reported sales of $609 million, operating income of $98 million, operating margin of 16.1%, and diluted earnings per share (EPS) of $1.83;
  • Adjusted operating margin of 16.1%, up 50 basis points;
  • Adjusted diluted EPS of $1.83, up 18%;
  • New orders of $776 million, up 13%, reflecting strong Aerospace & Defense (A&D) market demand, and book-to-bill of 1.27;
  • Backlog of $2.4 billion, up 9% year-to-date;
  • Reported free cash flow (FCF) of $22 million; and
  • Share repurchases of approximately $12 million.

Full-Year 2022 Adjusted Guidance:

  • Full-year 2022 guidance updated to include the acquisition of the Safran aerospace arresting systems business (SAA) that was completed on June 30, 2022; the business is expected to generate partial year sales of approximately $40 million within the Naval & Power segment and also be accretive to full-year Adjusted diluted EPS;
  • Sales increased to new range of 4% to 6% growth (previously 3% to 5%);
  • Adjusted operating income increased to new range of 5% to 7% growth (previously 3% to 6%) to reflect organic improvements and the contribution from SAA;
  • Maintained Adjusted operating margin range of 17.1% to 17.3%, up 10 to 30 basis points compared with the prior year;
  • Adjusted diluted EPS increased by $0.05 to new range of $8.10 to $8.30, up 10% to 13%; and
  • Maintained free cash flow range of $345 to $365 million, reflecting greater than 110% FCF conversion.

"Curtiss-Wright delivered solid second quarter results, as overall sales were in-line with our expectations and our ongoing focus on operational execution enabled us to generate 50 basis points in operating margin expansion. As a result, Adjusted diluted EPS of $1.83 exceeded our expectations in the second quarter," said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. "We also experienced strong order activity, as bookings increased 13% year over year, yielding a book-to-bill of 1.27, driven by increased demand in our defense and commercial aerospace markets."

"Looking ahead to the remainder of 2022, although near-term headwinds from ongoing supply chain disruption continue to impact the timing of revenue within our defense markets, we are encouraged by the improving trends in our commercial markets which provides confidence in achieving our full-year outlook. We raised our full-year 2022 guidance for total sales growth to a new range of 4% to 6% to reflect the contribution of the recently completed SAA acquisition, and we continue to anticipate solid organic growth of 3% to 5% in our A&D and Commercial markets. We also expect continued operating margin expansion and double-digit Adjusted diluted EPS growth of 10% to 13%, as we successfully execute on our Pivot to Growth strategy to drive long-term shareholder value.”

Financing of $300 Million in Senior Notes:

  • On July 29, 2022, the Company priced a private placement debt offering of $300 million for senior notes, consisting of $200 million 4.49% notes due 2032 and $100 million 4.64% notes due 2034; The offering is expected to close in the fourth quarter; and
  • Curtiss-Wright maintains a flexible and conservative capital structure, and has significant capacity for acquisitions, returns to shareholders and other corporate needs.

Second Quarter 2022 Operating Results

(In millions)

Q2-2022

Q2-2021

Change

Reported

 

 

 

Sales

$

609

 

$

621

 

(2

%)

Operating income

$

98

 

$

95

 

4

%

Operating margin

 

16.1

%

 

15.2

%

90 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

609

 

$

609

 

0

%

Operating income

$

98

 

$

95

 

3

%

Operating margin

 

16.1

%

 

15.6

%

50 bps

(1)

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

  • Adjusted sales of $609 million were flat compared with the prior year;
  • Total A&D market sales decreased 3%, while total Commercial market sales increased 6%;
  • In our A&D markets, we experienced reduced sales in our defense markets due to ongoing supply chain headwinds principally for defense electronics components and the timing of naval defense revenues, which were partially offset by modest growth in the commercial aerospace market;
  • In our Commercial markets, we experienced solid sales growth within the power & process market, despite the wind down on the China Direct AP1000 program, as well as solid mid-single-digit growth in the general industrial market; and
  • Adjusted operating income of $98 million increased 3%, while Adjusted operating margin increased 50 basis points to 16.1%, principally driven by increased profitability in the Naval & Power segment, as well as the benefits of our ongoing company-wide operational excellence initiatives; These increases were partially offset by unfavorable overhead absorption on lower revenues in our Defense Electronics segment.

Second Quarter 2022 Segment Performance

Aerospace & Industrial

(In millions)

Q2-2022

Q2-2021

Change

Reported

 

 

 

Sales

$

209

 

$

200

 

4

%

Operating income

$

32

 

$

32

 

2

%

Operating margin

 

15.6

%

 

16.0

%

(40 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

209

 

$

194

 

8

%

Operating income

$

32

 

$

30

 

7

%

Operating margin

 

15.6

%

 

15.7

%

(10 bps)

(1)

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

  • Adjusted sales of $209 million, up $15 million, or 8%;
  • Higher commercial aerospace market revenue reflected strong demand for actuation and sensors products, as well as surface treatment services, on numerous narrowbody and widebody platforms;
  • Higher general industrial market revenue was driven by increased sales of industrial vehicle products, principally serving off-highway and specialty platforms;
  • Lower aerospace defense market revenue principally reflected reduced sales of actuation and sensors products on various fighter jet programs; and
  • Adjusted operating income was $32 million, up 7% from the prior year, while Adjusted operating margin decreased 10 basis points to 15.6%, as favorable absorption on strong Commercial market sales and the benefits of our ongoing operational excellence initiatives were offset by higher research and development investments.

Defense Electronics

(In millions)

Q2-2022

Q2-2021

Change

Reported

 

 

 

Sales

$

150

 

$

162

 

(8

%)

Operating income

$

24

 

$

29

 

(16

%)

Operating margin

 

16.4

%

 

18.0

%

(160 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

150

 

$

163

 

(8

%)

Operating income

$

24

 

$

31

 

(21

%)

Operating margin

 

16.4

%

 

18.9

%

(250 bps)

(1)

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

  • Adjusted sales of $150 million, down $14 million, or 8%, principally reflected the timing of sales within our aerospace and ground defense markets due to ongoing supply chain headwinds and the delayed signing of the FY22 defense budget;
  • Higher naval defense market revenue primarily reflected increased revenues on the Virginia-class submarine program;
  • Lower commercial aerospace market revenue reflected decreased sales of avionics and flight test equipment on various domestic and international platforms; and
  • Adjusted operating income was $24 million, down 21% from the prior year, while adjusted operating margin decreased 250 basis points to 16.4%, primarily reflecting unfavorable absorption on lower A&D revenues.

Naval & Power

(In millions)

Q2-2022

Q2-2021

Change

Reported

 

 

 

Sales

$

251

 

$

259

 

(3

%)

Operating income

$

50

 

$

43

 

16

%

Operating margin

 

19.9

%

 

16.6

%

330 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

251

 

$

252

 

0

%

Operating income

$

50

 

$

43

 

15

%

Operating margin

 

19.9

%

 

17.2

%

270 bps

(1)

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

  • Adjusted sales of $251 million were essentially flat compared with the prior year period;
  • Naval defense market revenue declines primarily reflected lower revenues on the CVN-80 aircraft carrier and Virginia-class submarine programs, partially offset by higher revenues on the CVN-81 aircraft carrier and Columbia-class submarine programs;
  • Higher power & process market revenues reflected strong growth in industrial valve sales in the process market as well as higher nuclear aftermarket revenues supporting the maintenance of existing operating reactors; Those increases were partially offset by the timing of production on the China Direct AP1000 program; and
  • Adjusted operating income was $50 million, up 15% from the prior year, while adjusted operating margin increased 270 basis points to 19.9%, primarily driven by favorable mix in the naval defense and process markets, as well as the benefits of our ongoing operational excellence initiatives.

Free Cash Flow

(In millions)

Q2-2022

Q2-2021

Change

Net cash provided by operating activities

$

31

 

$

75

 

(59

%)

Capital expenditures

 

(9

)

 

(9

)

(7

%)

Reported free cash flow

$

22

 

$

66

 

(66

%)

Adjusted free cash flow (1)

$

22

 

$

66

 

(66

%)

(1)

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

  • Reported free cash flow of $22 million decreased $43 million, primarily due to the timing of defense revenues and higher working capital;
  • Adjusted free cash flow of $22 million; and
  • Capital expenditures were essentially flat compared with the prior year.

New Orders and Backlog

  • New orders of $776 million increased 13% and generated a strong book-to-bill of 1.27, principally driven by strong demand for naval defense and commercial aerospace products within our A&D markets, and for nuclear aftermarket and process products within our Commercial markets; and
  • Backlog of $2.4 billion, up 9% from December 31, 2021, reflects higher demand in both our A&D and commercial markets.

Share Repurchase and Dividends

  • During the second quarter, the Company repurchased 87,412 shares of its common stock for approximately $12 million; and
  • The Company also declared and paid a quarterly dividend of $0.19 a share, an increase of 6% from the previous quarter.

Full-Year 2022 Guidance

The Company is updating its full-year 2022 Adjusted financial guidance(1) as follows:

($ in millions, except EPS)

2022 Adjusted
Non-GAAP Guidance
(Prior)

2022 Adjusted
Non-GAAP Guidance
(Current)

% Chg vs 2021

Total Sales

$2,530 - $2,580

$2,570 - $2,620

Up 4% - 6%

Operating Income

$432 - $446

$439 - $452

Up 5% - 7%

Operating Margin

17.1% - 17.3%

17.1% - 17.3%

Up 10 - 30 bps

Diluted EPS

$8.05 - $8.25

$8.10 - $8.30

Up 10% - 13%

Free Cash Flow

$345 - $365

$345 - $365

Up 0% - 5%

(1)

Reconciliations of Reported to Adjusted 2021 operating results and 2022 financial guidance are available in the Appendix. Adjusted guidance includes the contribution from the SAA acquisition to the Company's second half 2022 performance.

**********

A more detailed breakdown of the Company’s 2022 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 second quarter 2022 financial results and updates to 2022 guidance at 10:00 a.m. ET on Thursday, August 4, 2022. 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)

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,

 

2022

 

2021

 

2022

 

2021

Product sales

$

505,416

 

 

$

515,392

 

 

$

958,837

 

 

$

1,024,367

 

Service sales

 

103,941

 

 

 

106,103

 

 

 

209,981

 

 

 

194,187

 

Total net sales

 

609,357

 

 

 

621,495

 

 

 

1,168,818

 

 

 

1,218,554

 

 

 

 

 

 

 

 

 

Cost of product sales

 

316,389

 

 

 

331,881

 

 

 

610,916

 

 

 

661,335

 

Cost of service sales

 

64,454

 

 

 

64,895

 

 

 

127,986

 

 

 

122,743

 

Total cost of sales

 

380,843

 

 

 

396,776

 

 

 

738,902

 

 

 

784,078

 

 

 

 

 

 

 

 

 

Gross profit

 

228,514

 

 

 

224,719

 

 

 

429,916

 

 

 

434,476

 

 

 

 

 

 

 

 

 

Research and development expenses

 

23,868

 

 

 

23,194

 

 

 

44,417

 

 

 

45,057

 

Selling expenses

 

30,407

 

 

 

29,564

 

 

 

58,499

 

 

 

59,160

 

General and administrative expenses

 

76,134

 

 

 

77,378

 

 

 

163,734

 

 

 

150,610

 

Loss on divestiture

 

 

 

 

 

 

 

4,651

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

98,105

 

 

 

94,583

 

 

 

158,615

 

 

 

179,649

 

 

 

 

 

 

 

 

 

Interest expense

 

9,788

 

 

 

10,180

 

 

 

19,318

 

 

 

20,139

 

Other income, net

 

4,555

 

 

 

440

 

 

 

7,552

 

 

 

5,283

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

92,872

 

 

 

84,843

 

 

 

146,849

 

 

 

164,793

 

Provision for income taxes

 

(22,000

)

 

 

(23,435

)

 

 

(35,292

)

 

 

(43,916

)

Net earnings

$

70,872

 

 

$

61,408

 

 

$

111,557

 

 

$

120,877

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

Basic earnings per share

$

1.84

 

 

$

1.50

 

 

$

2.90

 

 

$

2.95

 

Diluted earnings per share

$

1.83

 

 

$

1.49

 

 

$

2.89

 

 

$

2.94

 

 

 

 

 

 

 

 

 

Dividends per share

$

0.19

 

 

$

0.18

 

 

$

0.37

 

 

$

0.35

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

38,429

 

 

 

40,915

 

 

 

38,438

 

 

 

40,921

 

Diluted

38,654

41,088

38,657

41,092

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($'s in thousands, except par value)

 

 

 

 

 

June 30,

 

December 31,

 

2022

 

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

171,414

 

 

$

171,004

 

Receivables, net

 

699,632

 

 

 

647,148

 

Inventories, net

 

482,790

 

 

 

411,567

 

Assets held for sale

 

 

 

 

10,988

 

Other current assets

 

84,584

 

 

 

67,101

 

Total current assets

 

1,438,420

 

 

 

1,307,808

 

Property, plant, and equipment, net

 

348,062

 

 

 

360,031

 

Goodwill

 

1,531,999

 

 

 

1,463,026

 

Other intangible assets, net

 

638,873

 

 

 

538,077

 

Operating lease right-of-use assets, net

 

145,325

 

 

 

143,613

 

Prepaid pension asset

 

263,719

 

 

 

256,422

 

Other assets

 

36,130

 

 

 

34,568

 

Total assets

$

4,402,528

 

 

$

4,103,545

 

 

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

202,500

 

 

$

 

Accounts payable

 

171,589

 

 

 

211,640

 

Accrued expenses

 

133,706

 

 

 

147,701

 

Deferred revenue

 

215,188

 

 

 

260,157

 

Liabilities held for sale

 

 

 

 

12,655

 

Due to seller

 

247,215

 

 

 

 

Other current liabilities

 

89,009

 

 

 

102,714

 

Total current liabilities

 

1,059,207

 

 

 

734,867

 

Long-term debt

 

1,006,577

 

 

 

1,050,610

 

Deferred tax liabilities, net

 

149,213

 

 

 

147,349

 

Accrued pension and other postretirement benefit costs

 

84,404

 

 

 

91,329

 

Long-term operating lease liability

 

126,006

 

 

 

127,152

 

Long-term portion of environmental reserves

 

13,100

 

 

 

13,656

 

Other liabilities

 

96,382

 

 

 

112,092

 

Total liabilities

 

2,534,889

 

 

2,277,055

 

 

 

 

 

Stockholders' equity

 

 

 

Common stock, $1 par value

$

49,187

 

 

$

49,187

 

Additional paid in capital

 

126,316

 

 

 

127,104

 

Retained earnings

 

3,006,164

 

 

 

2,908,827

 

Accumulated other comprehensive loss

 

(227,872

)

 

 

(190,465

)

Less: cost of treasury stock

 

(1,086,156

)

 

 

(1,068,163

)

Total stockholders' equity

 

1,867,639

 

 

 

1,826,490

 

 

 

 

 

Total liabilities and stockholders' equity

$

4,402,528

 

 

$

4,103,545

 

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, 2022

 

June 30, 2021

 

% Change

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

208,572

 

 

$

 

$

208,572

 

 

$

199,713

 

 

$

(5,784

)

 

$

193,929

 

 

4

%

 

8

%

Defense Electronics (2)

 

149,549

 

 

 

 

 

149,549

 

 

 

162,351

 

 

 

1,080

 

 

 

163,431

 

 

(8

)%

 

(8

)%

Naval & Power (3)

 

251,236

 

 

 

 

 

251,236

 

 

 

259,431

 

 

 

(7,413

)

 

 

252,018

 

 

(3

)%

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

609,357

 

 

$

 

$

609,357

 

 

$

621,495

 

 

$

(12,117

)

 

$

609,378

 

 

(2

)%

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

32,464

 

 

$

 

$

32,464

 

 

$

31,977

 

 

$

(1,506

)

 

$

30,471

 

 

2

%

 

7

%

Defense Electronics (2)

 

24,460

 

 

 

 

 

24,460

 

 

 

29,271

 

 

 

1,592

 

 

 

30,863

 

 

(16

)%

 

(21

)%

Naval & Power (3)

 

50,001

 

 

 

 

 

50,001

 

 

 

43,095

 

 

 

366

 

 

 

43,461

 

 

16

%

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

106,925

 

 

$

 

$

106,925

 

 

$

104,343

 

 

$

452

 

 

$

104,795

 

 

2

%

 

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

(8,820

)

 

 

 

 

(8,820

)

 

 

(9,760

)

 

 

 

 

 

(9,760

)

 

10

%

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

$

98,105

 

 

$

 

$

98,105

 

 

$

94,583

 

 

$

452

 

 

$

95,035

 

 

4

%

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

As Reported

 

 

 

Adjusted

 

As Reported

 

 

 

Adjusted

 

As Reported

 

Adjusted

Aerospace & Industrial

 

15.6

%

 

 

 

 

15.6

%

 

 

16.0

%

 

 

 

 

15.7

%

 

(40 bps)

 

(10 bps)

Defense Electronics

 

16.4

%

 

 

 

 

16.4

%

 

 

18.0

%

 

 

 

 

18.9

%

 

(160 bps)

 

(250 bps)

Naval & Power

 

19.9

%

 

 

 

 

19.9

%

 

 

16.6

%

 

 

 

 

17.2

%

 

330 bps

 

270 bps

Total Curtiss-Wright

 

16.1

%

 

 

 

 

16.1

%

 

 

15.2

%

 

 

 

 

15.6

%

 

90 bps

 

50 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

17.5

%

 

 

 

 

17.5

%

 

 

16.8

%

 

 

 

 

17.2

%

 

70 bps

 

30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes our build-to-print actuation product line supporting the Boeing 737 Max program, which we substantially exited in the fourth quarter of 2020.

(2) Excludes first year purchase accounting adjustments in the prior period.

(3) Excludes the results of operations from our German valves business, which was sold in January 2022.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

RECONCILIATION OF AS REPORTED TO ADJUSTED (UNAUDITED)

($'s in thousands)

 

Six Months Ended

 

Six Months Ended

 

 

 

 

 

June 30, 2022

 

June 30, 2021

 

% Change

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

399,684

 

 

$

 

$

399,684

 

 

$

380,044

 

 

$

(8,383

)

 

$

371,661

 

 

5

%

 

8

%

Defense Electronics (2)

 

292,618

 

 

 

 

 

292,618

 

 

 

343,563

 

 

 

2,160

 

 

 

345,723

 

 

(15

)%

 

(15

)%

Naval & Power (3)

 

476,516

 

 

 

 

 

476,516

 

 

 

494,947

 

 

 

(12,996

)

 

 

481,951

 

 

(4

)%

 

(1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

1,168,818

 

 

$

 

$

1,168,818

 

 

$

1,218,554

 

 

$

(19,219

)

 

$

1,199,335

 

 

(4

)%

 

(3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

57,317

 

 

$

 

$

57,317

 

 

$

51,002

 

 

$

(1,982

)

 

$

49,020

 

 

12

%

 

17

%

Defense Electronics (2)

 

47,750

 

 

 

 

 

47,750

 

 

 

65,894

 

 

 

3,197

 

 

 

69,091

 

 

(28

)%

 

(31

)%

Naval & Power (3)

 

77,289

 

 

 

5,427

 

 

82,716

 

 

 

81,152

 

 

 

2,955

 

 

 

84,107

 

 

(5

)%

 

(2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

182,356

 

 

$

5,427

 

$

187,783

 

 

$

198,048

 

 

$

4,170

 

 

$

202,218

 

 

(8

)%

 

(7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other (4)

 

(23,741

)

 

 

4,876

 

 

(18,865

)

 

 

(18,399

)

 

 

 

 

 

(18,399

)

 

(29

)%

 

(3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

$

158,615

 

 

$

10,303

 

$

168,918

 

 

$

179,649

 

 

$

4,170

 

 

$

183,819

 

 

(12

)%

 

(8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

As Reported

 

 

 

Adjusted

 

As Reported

 

 

 

Adjusted

 

As Reported

 

Adjusted

Aerospace & Industrial

 

14.3

%

 

 

 

 

14.3

%

 

 

13.4

%

 

 

 

 

13.2

%

 

90 bps

 

110 bps

Defense Electronics

 

16.3

%

 

 

 

 

16.3

%

 

 

19.2

%

 

 

 

 

20.0

%

 

(290 bps)

 

(370 bps)

Naval & Power

 

16.2

%

 

 

 

 

17.4

%

 

 

16.4

%

 

 

 

 

17.5

%

 

(20 bps)

 

(10 bps)

Total Curtiss-Wright

 

13.6

%

 

 

 

 

14.5

%

 

 

14.7

%

 

 

 

 

15.3

%

 

(110 bps)

 

(80 bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

15.6

%

 

 

 

 

16.1

%

 

 

16.3

%

 

 

 

 

16.9

%

 

(70 bps)

 

(80 bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes our build-to-print actuation product line supporting the Boeing 737 Max program, which we substantially exited in the fourth quarter of 2020.

(2) Excludes first year purchase accounting adjustments in the prior period.

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

(4) Excludes costs associated with shareholder activism in the current 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, 2022

 

June 30, 2021

 

% 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

 

$

94,545

 

$

 

$

94,545

 

$

99,977

 

$

 

 

$

99,977

 

(5

%)

(5

%)

Ground Defense (1)

 

 

44,393

 

 

 

 

44,393

 

 

48,221

 

 

1,080

 

 

 

49,301

 

(8

%)

(10

%)

Naval Defense

 

 

172,786

 

 

 

 

172,786

 

 

177,724

 

 

 

 

 

177,724

 

(3

%)

(3

%)

Commercial Aerospace (2)

 

 

68,192

 

 

 

 

68,192

 

 

71,555

 

 

(5,784

)

 

 

65,771

 

(5

%)

4

%

Total Aerospace & Defense

 

$

379,916

 

$

 

$

379,916

 

$

397,477

 

$

(4,704

)

 

$

392,773

 

(4

%)

(3

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process (3)

 

 

125,355

 

 

 

 

125,355

 

 

125,333

 

 

(7,414

)

 

 

117,919

 

0

%

6

%

General Industrial

 

 

104,086

 

 

 

 

104,086

 

 

98,685

 

 

 

 

 

98,685

 

5

%

5

%

Total Commercial

 

$

229,441

 

$

 

$

229,441

 

$

224,018

 

$

(7,414

)

 

$

216,604

 

2

%

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

609,357

 

$

 

$

609,357

 

$

621,495

 

$

(12,118

)

 

$

609,377

 

(2

%)

0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

 

 

 

 

June 30, 2022

 

June 30, 2021

 

% 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

 

$

192,549

 

$

 

$

192,549

 

$

210,993

 

$

 

 

$

210,993

 

(9

%)

(9

%)

Ground Defense (1)

 

 

83,501

 

 

 

 

83,501

 

 

103,967

 

 

2,160

 

 

 

106,127

 

(20

%)

(21

%)

Naval Defense

 

 

335,753

 

 

 

 

335,753

 

 

355,629

 

 

 

 

 

355,629

 

(6

%)

(6

%)

Commercial Aerospace (2)

 

 

129,084

 

 

 

 

129,084

 

 

128,824

 

 

(8,383

)

 

 

120,441

 

0

%

7

%

Total Aerospace & Defense

 

$

740,887

 

$

 

$

740,887

 

$

799,413

 

$

(6,223

)

 

$

793,190

 

(7

%)

(7

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process (3)

 

 

230,143

 

 

 

 

230,143

 

 

230,837

 

 

(12,996

)

 

 

217,841

 

0

%

6

%

General Industrial

 

 

197,788

 

 

 

 

197,788

 

 

188,304

 

 

 

 

 

188,304

 

5

%

5

%

Total Commercial

 

$

427,931

 

$

 

$

427,931

 

$

419,141

 

$

(12,996

)

 

$

406,145

 

2

%

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

1,168,818

 

$

 

$

1,168,818

 

$

1,218,554

 

$

(19,219

)

 

$

1,199,335

 

(4

%)

(3

%)

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

(2) Excludes our build-to-print actuation product line supporting the Boeing 737 MAX program, which we substantially exited in the fourth quarter of 2020.

(3) Excludes the prior period results of our German valves business, which was sold in January 2022.

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,

 

2022

 

2021

 

2022

 

2021

Diluted earnings per share - As Reported

$

1.83

 

$

1.49

 

 

$

2.89

 

$

2.94

 

Divested German valves business

 

 

 

 

 

 

0.11

 

 

0.04

 

Costs associated with shareholder activism

 

 

 

 

 

 

0.10

 

 

 

Former executive pension settlement expense

 

 

 

0.06

 

 

 

0.04

 

 

0.06

 

First year purchase accounting adjustments

 

 

 

0.03

 

 

 

 

 

0.06

 

Exit of build-to-print actuation product line

 

 

 

(0.02

)

 

 

 

 

(0.03

)

Diluted earnings per share - Adjusted (1)

$

1.83

 

$

1.56

 

 

$

3.14

 

$

3.07

 

 

 

 

 

 

 

 

 

(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 made during the last twelve months, loss on divestiture of the German valves business, and foreign currency fluctuations.

 

Three Months Ended

 

June 30,

 

2022 vs. 2021

 

 

Aerospace & Industrial

 

Defense Electronics

 

Naval & Power

 

Total Curtiss-Wright

 

 

Sales

 

Operating
income

 

Sales

 

Operating
income

 

Sales

 

Operating
income

 

Sales

 

Operating
income

As Reported

 

4%

 

2%

 

(8%)

 

(16%)

 

(3%)

 

16%

 

(2%)

 

4%

Less: Acquisitions

 

0%

 

0%

 

0%

 

0%

 

0%

 

0%

 

0%

 

0%

Foreign Currency

 

3%

 

0%

 

1%

 

(5%)

 

0%

 

(1%)

 

1%

 

(2%)

Organic

 

7%

 

2%

 

(7%)

 

(21%)

 

(3%)

 

15%

 

(1%)

 

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30,

 

 

2022 vs. 2021

 

 

Aerospace & Industrial

 

Defense Electronics

 

Naval & Power

 

Total Curtiss-Wright

 

 

Sales

 

Operating
income

 

Sales

 

Operating
income

 

Sales

 

Operating
income

 

Sales

 

Operating
income

As Reported

 

5%

 

12%

 

(15%)

 

(28%)

 

(4%)

 

(5%)

 

(4%)

 

(12%)

Less: Acquisitions

 

0%

 

0%

 

0%

 

0%

 

0%

 

0%

 

0%

 

0%

Loss on divestiture

 

0%

 

0%

 

0%

 

0%

 

0%

 

7%

 

0%

 

4%

Foreign Currency

 

2%

 

2%

 

1%

 

(1%)

 

0%

 

0%

 

1%

 

(1%)

Organic

 

7%

 

14%

 

(14%)

 

(29%)

 

(4%)

 

2%

 

(3%)

 

(9%)

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 for 2022 excludes: (i) payments associated with the Westinghouse legal settlement and (ii) executive pension payments. 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,

 

2022

 

2021

 

2022

 

2021

Net cash provided by (used for) operating activities

$

31,044

 

 

$

75,079

 

 

$

(93,271

)

 

$

48,476

 

Capital expenditures

 

(8,596

)

 

 

(9,234

)

 

 

(19,492

)

 

 

(17,771

)

Free cash flow

$

22,448

 

 

$

65,845

 

 

$

(112,763

)

 

$

30,705

 

Westinghouse legal settlement

 

 

 

 

 

 

 

15,000

 

 

 

 

Pension payment to former executive

 

 

 

 

 

 

 

8,214

 

 

 

 

Adjusted free cash flow

$

22,448

 

 

$

65,845

 

 

$

(89,549

)

 

$

30,705

 

Adjusted free cash flow conversion

 

32

%

 

 

101

%

 

 

(74

%)

 

 

24

%

CURTISS-WRIGHT CORPORATION

2022 Guidance

As of August 3, 2022

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021
Reported
(GAAP)

 

2021
Adjustments
(Non-
GAAP)(1)

 

2021
Adjusted
(Non-
GAAP)(1)

 

2022
Reported
Guidance
(GAAP)

 

2022
Adjustments
(Non-GAAP)(2,3)

 

2022
Adjusted Guidance
(Non-GAAP)(1,2,3)

 

 

 

 

 

 

 

Low

High

 

 

 

Low

High

 

2022 Chg
vs 2021
Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

786

 

 

$

(11

)

 

$

775

 

 

$

820

 

$

840

 

 

$

 

 

$

820

 

$

840

 

 

6 - 8%

Defense Electronics

 

724

 

 

 

4

 

 

 

728

 

 

 

720

 

 

735

 

 

 

 

 

 

720

 

 

735

 

 

(1) - 1%

Naval & Power

 

995

 

 

 

(30

)

 

 

965

 

 

 

1,030

 

 

1,045

 

 

 

 

 

 

1,030

 

 

1,045

 

 

7 - 8%

Total sales

$

2,506

 

 

$

(37

)

 

$

2,468

 

 

$

2,570

 

$

2,620

 

 

$

 

 

$

2,570

 

$

2,620

 

 

4 to 6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

122

 

 

$

(2

)

 

$

120

 

 

$

133

 

$

137

 

 

$

 

 

$

133

 

$

137

 

 

11 - 14%

Defense Electronics

 

159

 

 

 

5

 

 

 

164

 

 

 

160

 

 

165

 

 

 

 

 

 

160

 

 

165

 

 

(3) - 0%

Naval & Power

 

142

 

 

 

34

 

 

 

176

 

 

 

171

 

 

175

 

 

 

15

 

 

 

186

 

 

190

 

 

6 - 8%

Total segments

 

423

 

 

 

38

 

 

 

460

 

 

 

464

 

 

477

 

 

 

15

 

 

 

479

 

 

492

 

 

 

Corporate and other

 

(40

)

 

 

 

 

 

(40

)

 

 

(44

)

 

(45

)

 

 

5

 

 

 

(39

)

 

(40

)

 

 

Total operating income

$

383

 

 

$

38

 

 

$

420

 

 

$

420

 

$

432

 

 

$

20

 

 

$

439

 

$

452

 

 

5 to 7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

$

(40

)

 

$

 

 

$

(40

)

 

$

(44

)

$

(45

)

 

$

 

 

$

(44

)

$

(45

)

 

 

Other income, net

 

12

 

 

 

3

 

 

 

15

 

 

 

8

 

 

9

 

 

 

9

 

 

 

17

 

 

18

 

 

 

Earnings before income taxes

 

355

 

 

 

41

 

 

 

395

 

 

 

384

 

 

396

 

 

 

29

 

 

 

412

 

 

424

 

 

 

Provision for income taxes

 

(87

)

 

 

(10

)

 

 

(97

)

 

 

(92

)

 

(95

)

 

 

(7

)

 

 

(99

)

 

(102

)

 

 

Net earnings

$

267

 

 

$

31

 

 

$

298

 

 

$

291

 

$

301

 

 

$

22

 

 

$

313

 

$

323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

6.58

 

 

$

0.76

 

 

$

7.34

 

 

$

7.54

 

$

7.74

 

 

$

0.56

 

 

$

8.10

 

$

8.30

 

 

10 to 13%

Diluted shares outstanding

 

40.6

 

 

 

 

 

40.6

 

 

 

38.6

 

 

38.8

 

 

 

 

 

38.6

 

 

38.8

 

 

 

Effective tax rate

 

24.6

%

 

 

 

 

24.6

%

 

 

24.0

%

 

24.0

%

 

 

 

 

24.0

%

 

24.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

 

15.5

%

 

 

 

 

15.5

%

 

 

16.2

%

 

16.4

%

 

 

 

 

16.2

%

 

16.4

%

 

70 to 90 bps

Defense Electronics

 

22.0

%

 

 

 

 

22.6

%

 

 

22.2

%

 

22.4

%

 

 

 

 

22.2

%

 

22.4

%

 

(20 to 40 bps)

Naval & Power

 

14.2

%

 

 

 

 

18.2

%

 

 

16.6

%

 

16.7

%

 

 

 

 

18.0

%

 

18.2

%

 

(20) to 0 bps

Total operating margin

 

15.3

%

 

 

 

 

17.0

%

 

 

16.3

%

 

16.5

%

 

 

 

 

17.1

%

 

17.3

%

 

10 to 30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

$

347

 

 

 

 

$

347

 

 

$

306

 

$

326

 

 

$

39

 

 

$

345

 

$

365

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(1) 2021 Adjusted financials excludes the impact of first year purchase accounting adjustments; our build-to-print actuation product line supporting the Boeing 737 Max program; the results of operations and related impairments from our German valves business; pension settlement charges related to the retirement of two former executives (within non-operating income); and one-time legal settlement costs.

(2) 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.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURTISS-WRIGHT CORPORATION

2022 Sales Growth Guidance by End Market

As of August 3, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022 % Change vs. 2021 Adjusted(1)(2)

 

 

 

 

 

 

 

 

 

Prior

 

Current

 

% Total Sales

Aerospace & Defense Markets

 

 

 

 

 

Aerospace Defense

0 - 2%

 

9 - 11%

 

19%

Ground Defense

2 - 4%

 

(1 - 3%)

 

8%

Naval Defense

1 - 3%

 

1 - 3%

 

28%

Commercial Aerospace

9 - 11%

 

9 - 11%

 

11%

Total Aerospace & Defense

2 - 4%

 

4 - 6%

 

66%

 

 

 

 

 

 

Commercial Markets

 

 

 

 

 

Power & Process

1 - 3%

 

4 - 6%

 

18%

General Industrial

6 - 8%

 

6 - 8%

 

16%

Total Commercial

4 - 6%

 

5 - 7%

 

34%

 

 

 

 

 

 

Total Curtiss-Wright Sales

3 - 5%

 

4 - 6%

 

100%

 

 

 

 

 

 

(1) 2021 Adjusted Sales exclude the impact of first year purchase accounting adjustments; our build-to-print actuation product line supporting the Boeing 737 Max programs; and the results of operations from our German valves business.

(2) 2022 Sales include the contribution from the SAA acquisition to the Company's second half 2022 performance.

 

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 8,000 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, 2021, and subsequent reports filed with the Securities and Exchange Commission.

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

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

Source: Curtiss-Wright Corporation