News Details

Curtiss-Wright Reports Third Quarter 2022 Financial Results and Updates Full-Year 2022 Guidance

November 02, 2022

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

Third Quarter 2022 Highlights:

  • Reported sales of $631 million, operating income of $108 million, operating margin of 17.1%, and diluted earnings per share (EPS) of $1.91;
  • Adjusted operating income of $114 million, up 6%;
  • Adjusted operating margin of 18.2%, up 70 basis points;
  • Adjusted diluted EPS of $2.07, up 10%;
  • Reported free cash flow (FCF) of $86 million;
  • New orders of $818 million, up 32%, reflecting strong Aerospace & Defense (A&D) and Commercial market demand, and book-to-bill of 1.30; and
  • Backlog of $2.6 billion, up 19% year-to-date.

"Curtiss-Wright delivered solid third quarter results, despite continued supply chain challenges, as the strength of our combined portfolio, coupled with the benefits of our company-wide operational excellence initiatives, enabled us to generate stronger than expected profitability with 70 basis points in operating margin expansion and double-digit EPS growth," said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. "Sales in our Commercial markets increased 9% during the quarter, led by double-digit growth in our general industrial and process markets, while sales for Aerospace & Defense markets were relatively flat. We once again experienced robust order activity, as bookings increased 32% year over year, and both bookings and backlog grew 19% on a year-to-date basis. This was driven by strong demand across the majority of our defense and commercial markets, including record level quarterly orders within our Defense Electronics segment."

Full-Year 2022 Financial Outlook:

  • Sales revised to new range of 2% to 4% growth (previously 4% to 6%), including 1% to 3% growth in our A&D markets and 6% to 8% growth in our Commercial markets;
  • Adjusted operating income revised to new range of 3% to 6% growth (previously 5% to 7%), reflecting the timing of revenues within our Defense Electronics segment, partially offset by stronger profitability within our Aerospace & Industrial segment;
  • 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 revised to new range of $8.05 to $8.20 (previously $8.10 to $8.30), which continues to reflect double-digit growth; and
  • Adjusted free cash flow revised to a new range of $275 to $315 million (previously $345 to $365 million), reflecting the timing of defense revenues, as well as the expected delay in receipt of a significant cash payment upon the final delivery of our CAP1000 reactor coolant pumps to China, which has likely pushed to 2023, to align with our customer’s project schedule.

"Although underlying demand across the portfolio remains strong, we are revising our full-year 2022 guidance to reflect the ongoing global supply chain disruption which continues to impact the timing of production, deliveries and free cash flow within our Defense Electronics segment. We have taken numerous actions, including consistent engagement with our supply base that supported our prior expectations of a strong second half, however, conditions are not easing as quickly as anticipated. While we are confident these dynamics will get resolved over time, the challenges are delaying the recognition of our strong order book."

"Looking forward, the business fundamentals in the Defense Electronics segment remain quite strong, driven by record bookings, strong profitability and favorable long-term secular tailwinds. In addition, we remain focused on mitigating the impact of other macro-level headwinds through our ongoing operational excellence initiatives. As a result, we are able to maintain our previous operating margin guidance despite the topline reset."

"Overall, Curtiss-Wright remains in a strong position to deliver significant long-term value for our shareholders and on track to achieve the financial targets that we set out at our 2021 Investor Day."

Curtiss-Wright and X-energy Sign Preferred Strategic Supplier Agreement:

  • On September 15, 2022, the Company signed a preferred strategic supplier agreement to advance the design and deployment of X-energy’s Xe-100 advanced Small Modular Reactor (SMR);
  • Under the agreement, Curtiss-Wright has been selected as a preferred supplier to develop and provide three of the most critical systems for the Nuclear Steam Supply System; and
  • Curtiss-Wright estimates that its content for these three systems will be in excess of $100 million in revenue per four-unit (320 MW) plant.

Poland Selects Westinghouse AP1000 Technology for its First Nuclear Power Plant:

  • Earlier in 2022, Curtiss-Wright secured Westinghouse’s commitment to our reactor coolant pump (RCP) technology in future AP1000 power plants, including Eastern Europe;
  • Westinghouse's initial partnership with Poland covers the first three of potentially six AP1000 reactors, which are expected to begin producing electricity in 2033; and
  • The agreement provides an opportunity for Curtiss-Wright to receive new RCP orders within the next three to five years.

Third Quarter 2022 Operating Results

(In millions)

Q3-2022

Q3-2021

Change

Reported

 

 

 

Sales

$

631

 

$

621

 

2

%

Operating income

$

108

 

$

98

 

10

%

Operating margin

 

17.1

%

 

15.7

%

140 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

631

 

$

614

 

3

%

Operating income

$

114

 

$

108

 

6

%

Operating margin

 

18.2

%

 

17.5

%

70 bps

(1)

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

  • Adjusted sales of $631 million increased 3% compared with the prior year, and included a 1% headwind from unfavorable foreign currency translation;
  • Total A&D market sales were flat, while total Commercial market sales increased 9%;
  • In our A&D markets, our results reflected the contribution from the acquisition of our new engineered arresting systems business in the aerospace defense market and mid-single digit sales growth in commercial aerospace; Those increases were principally offset by the timing of defense electronics revenues due to ongoing supply chain headwinds;
  • In our Commercial markets, we experienced double-digit sales growth in the general industrial market and mid-single digit sales growth within the power & process market, despite the wind down on the China Direct AP1000 program as it nears completion; and
  • Adjusted operating income of $114 million increased 6%, while Adjusted operating margin increased 70 basis points to 18.2%, principally driven by the benefits of our ongoing company-wide operational excellence initiatives and favorable overhead absorption on higher revenues in the Aerospace & Industrial and Naval & Power segments, partially offset by unfavorable overhead absorption on lower revenues in our Defense Electronics segment.

Third Quarter 2022 Segment Performance

Aerospace & Industrial

(In millions)

Q3-2022

Q3-2021

Change

Reported

 

 

 

Sales

$

213

 

$

196

 

9

%

Operating income

$

39

 

$

31

 

27

%

Operating margin

 

18.3

%

 

15.7

%

260 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

213

 

$

196

 

9

%

Operating income

$

39

 

$

31

 

27

%

Operating margin

 

18.3

%

 

15.7

%

260 bps

(1)

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

  • Adjusted sales of $213 million, up $17 million, or 9% overall, and included a 3% headwind from unfavorable foreign currency translation;
  • Higher commercial aerospace market revenue reflected continued strong demand for sensors products and surface treatment services on numerous narrowbody and widebody platforms;
  • Strong double-digit revenue growth in the general industrial market was driven by increased sales of industrial vehicle products, principally serving on-highway and specialty platforms, and higher sales of surface treatment services; and
  • Adjusted operating income was $39 million, up 27% from the prior year, while Adjusted operating margin increased 260 basis points to 18.3%, reflecting favorable absorption on strong sales and the benefits of our ongoing operational excellence and pricing initiatives.

Defense Electronics

(In millions)

Q3-2022

Q3-2021

Change

Reported

 

 

 

Sales

$

161

 

$

182

 

(11

%)

Operating income

$

37

 

$

41

 

(10

%)

Operating margin

 

22.7

%

 

22.5

%

20 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

161

 

$

183

 

(12

%)

Operating income

$

37

 

$

42

 

(14

%)

Operating margin

 

22.7

%

 

23.2

%

(50 bps)

(1)

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

  • Adjusted sales of $161 million, down $21 million, or 12%, principally reflected the timing of defense market sales due to ongoing supply chain headwinds related to the availability of electronic components;
  • Lower aerospace defense market revenue reflected decreased sales of our embedded computing and flight test equipment;
  • Ground defense market revenue declines reflected reduced sales of our tactical communications equipment; and
  • Adjusted operating income was $37 million, down 14% from the prior year, while adjusted operating margin decreased 50 basis points to 22.7%, primarily reflecting unfavorable absorption and mix on lower A&D revenues, partially offset by the benefits of our ongoing operational excellence initiatives.

Naval & Power

(In millions)

Q3-2022

Q3-2021

Change

Reported

 

 

 

Sales

$

256

 

$

243

 

6

%

Operating income

$

42

 

$

35

 

17

%

Operating margin

 

16.2

%

 

14.6

%

160 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

256

 

$

235

 

9

%

Operating income

$

48

 

$

44

 

11

%

Operating margin

 

18.9

%

 

18.6

%

30 bps

(1)

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

  • Adjusted sales of $256 million, up $21 million, or 9%, principally driven by the contribution from the arresting systems acquisition for arresting systems equipment within the aerospace defense market;
  • Naval defense market revenues increased slightly as higher revenues on the Columbia-class submarine and CVN-81 aircraft carrier programs were mainly offset by timing of revenues on the Virginia-class submarine and CVN-80 aircraft carrier programs;
  • Higher power & process market revenues reflected continued strong growth in industrial valve sales in the process market, as well as higher nuclear aftermarket revenues supporting existing operating reactors; Those increases were partially offset by the wind down of production on the China Direct AP1000 program; and
  • Adjusted operating income was $48 million, up 11% from the prior year, while adjusted operating margin increased 30 basis points to 18.9%, as favorable absorption on higher organic revenues, as well as the benefits of our restructuring and ongoing operational excellence initiatives, were partially offset by unfavorable mix in the power & process market.

Free Cash Flow

(In millions)

Q3-2022

Q3-2021

Change

Net cash provided by operating activities

$

96

 

$

107

 

(11

%)

Capital expenditures

 

(9

)

 

(10

)

(8

%)

Reported free cash flow

$

86

 

$

97

 

(11

%)

Adjusted free cash flow (1)

$

86

 

$

97

 

(11

%)

(1)

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

  • Reported free cash flow of $86 million decreased $11 million, primarily due to the timing of defense revenues and higher inventory levels as we continue to work through the challenging supply chain environment;
  • Adjusted free cash flow of $86 million; and
  • Capital expenditures decreased $1 million compared with the prior year.

New Orders and Backlog

  • New orders of $818 million increased 32% in the third quarter and generated a book-to-bill of 1.30, principally driven by strong demand for defense and commercial aerospace products within our A&D markets, and for nuclear aftermarket and process products within our Commercial markets; and
  • Backlog of $2.6 billion, up 19% from December 31, 2021, reflects strong demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

  • During the third quarter, the Company repurchased 90,307 shares of its common stock for approximately $13 million; and
  • The Company also declared a quarterly dividend of $0.19 a share.

Other Items – Completion of Financing of $300 Million in Senior Notes

  • On October 27, 2022, the Company announced the successful completion of a private placement debt offering of $300 million for senior notes (the "Notes"), consisting of $200 million 4.49% notes due 2032 and $100 million 4.64% notes due 2034.

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

$2,570 - $2,620

$2,525 - $2,575

Up 2% - 4%

Operating Income

$439 - $452

$433 - $444

Up 3% - 6%

Operating Margin

17.1% - 17.3%

17.1% - 17.3%

Up 10 - 30 bps

Diluted EPS

$8.10 - $8.30

$8.05 - $8.20

Up 10% - 12%

Free Cash Flow

$345 - $365

$275 - $315

Down 9% - 21%

(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 arresting systems acquisition to the Company's second half 2022 performance. 

  • Revised Adjusted free cash flow reflects the timing of defense revenues, as well as the expected delay in receipt of a significant cash payment upon the final delivery of our CAP1000 reactor coolant pumps to China, which has likely pushed to 2023, to align with our customer’s project schedule.

**********

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 third quarter 2022 financial results and updates to 2022 guidance at 10:00 a.m. ET on Thursday, November 3, 2022. 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

 

Nine Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

Product sales

$

530,782

 

 

$

528,339

 

 

$

1,489,619

 

 

$

1,552,706

 

Service sales

 

99,760

 

 

 

92,280

 

 

 

309,741

 

 

 

286,467

 

Total net sales

 

630,542

 

 

 

620,619

 

 

 

1,799,360

 

 

 

1,839,173

 

 

 

 

 

 

 

 

 

Cost of product sales

 

338,264

 

 

 

328,424

 

 

 

949,180

 

 

 

989,759

 

Cost of service sales

 

60,069

 

 

 

55,187

 

 

 

188,055

 

 

 

177,930

 

Total cost of sales

 

398,333

 

 

 

383,611

 

 

 

1,137,235

 

 

 

1,167,689

 

 

 

 

 

 

 

 

 

Gross profit

 

232,209

 

 

 

237,008

 

 

 

662,125

 

 

 

671,484

 

 

 

 

 

 

 

 

 

Research and development expenses

 

17,387

 

 

 

21,618

 

 

 

61,804

 

 

 

66,675

 

Selling expenses

 

31,888

 

 

 

30,067

 

 

 

90,387

 

 

 

89,227

 

General and administrative expenses

 

75,351

 

 

 

78,998

 

 

 

239,085

 

 

 

229,608

 

Loss on divestiture

 

 

 

 

 

 

 

4,651

 

 

 

 

Impairment of assets held for sale

 

 

 

 

8,656

 

 

 

 

 

 

8,656

 

 

 

 

 

 

 

 

 

Operating income

 

107,583

 

 

 

97,669

 

 

 

266,198

 

 

 

277,318

 

 

 

 

 

 

 

 

 

Interest expense

 

13,997

 

 

 

9,955

 

 

 

33,315

 

 

 

30,094

 

Other income, net

 

3,746

 

 

 

3,627

 

 

 

11,298

 

 

 

8,910

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

97,332

 

 

 

91,341

 

 

 

244,181

 

 

 

256,134

 

Provision for income taxes

 

(23,564

)

 

 

(21,638

)

 

 

(58,856

)

 

 

(65,554

)

Net earnings

$

73,768

 

 

$

69,703

 

 

$

185,325

 

 

$

190,580

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

Basic earnings per share

$

1.92

 

 

$

1.71

 

 

$

4.82

 

 

$

4.66

 

Diluted earnings per share

$

1.91

 

 

$

1.70

 

 

$

4.79

 

 

$

4.64

 

 

 

 

 

 

 

 

 

Dividends per share

$

0.19

 

 

$

0.18

 

 

$

0.56

 

 

$

0.53

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

38,368

 

 

 

40,769

 

 

 

38,416

 

 

 

40,865

 

Diluted

 

38,647

 

 

 

40,950

 

 

 

38,655

 

 

 

41,040

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($'s in thousands, except par value)

 

 

 

 

 

September 30,

 

December 31,

 

2022

 

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

113,552

 

 

$

171,004

 

Receivables, net

 

713,592

 

 

 

647,148

 

Inventories, net

 

503,064

 

 

 

411,567

 

Assets held for sale

 

 

 

 

10,988

 

Other current assets

 

84,468

 

 

 

67,101

 

Total current assets

 

1,414,676

 

 

 

1,307,808

 

Property, plant, and equipment, net

 

338,549

 

 

 

360,031

 

Goodwill

 

1,512,231

 

 

 

1,463,026

 

Other intangible assets, net

 

618,563

 

 

 

538,077

 

Operating lease right-of-use assets, net

 

145,252

 

 

 

143,613

 

Prepaid pension asset

 

267,262

 

 

 

256,422

 

Other assets

 

45,629

 

 

 

34,568

 

Total assets

$

4,342,162

 

 

$

4,103,545

 

 

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

202,500

 

 

$

 

Accounts payable

 

182,621

 

 

 

211,640

 

Accrued expenses

 

139,982

 

 

 

147,701

 

Deferred revenue

 

220,259

 

 

 

260,157

 

Liabilities held for sale

 

 

 

 

12,655

 

Other current liabilities

 

95,002

 

 

 

102,714

 

Total current liabilities

 

840,364

 

 

 

734,867

 

Long-term debt

 

1,141,211

 

 

 

1,050,610

 

Deferred tax liabilities, net

 

150,721

 

 

 

147,349

 

Accrued pension and other postretirement benefit costs

 

85,865

 

 

 

91,329

 

Long-term operating lease liability

 

125,493

 

 

 

127,152

 

Long-term portion of environmental reserves

 

13,186

 

 

 

13,656

 

Other liabilities

 

101,079

 

 

 

112,092

 

Total liabilities

 

2,457,919

 

 

 

2,277,055

 

 

 

 

 

Stockholders' equity

 

 

 

Common stock, $1 par value

$

49,187

 

 

$

49,187

 

Additional paid in capital

 

131,230

 

 

 

127,104

 

Retained earnings

 

3,072,639

 

 

 

2,908,827

 

Accumulated other comprehensive loss

 

(274,114

)

 

 

(190,465

)

Less: cost of treasury stock

 

(1,094,699

)

 

 

(1,068,163

)

Total stockholders' equity

 

1,884,243

 

 

 

1,826,490

 

 

 

 

 

Total liabilities and stockholders' equity

$

4,342,162

 

 

$

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

 

 

 

 

 

September 30, 2022

 

September 30, 2021

 

% Change

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

213,093

 

 

$

 

$

213,093

 

 

$

196,296

 

 

$

(381

)

 

$

195,915

 

 

9

%

 

9

%

Defense Electronics (2)

 

161,188

 

 

 

 

 

161,188

 

 

 

181,504

 

 

 

1,080

 

 

 

182,584

 

 

(11

)%

 

(12

)%

Naval & Power (4)

 

256,261

 

 

 

 

 

256,261

 

 

 

242,819

 

 

 

(7,471

)

 

 

235,348

 

 

6

%

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

630,542

 

 

$

 

$

630,542

 

 

$

620,619

 

 

$

(6,772

)

 

$

613,847

 

 

2

%

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

39,080

 

 

$

 

$

39,080

 

 

$

30,872

 

 

$

(97

)

 

$

30,775

 

 

27

%

 

27

%

Defense Electronics (2)

 

36,588

 

 

 

 

 

36,588

 

 

 

40,762

 

 

 

1,561

 

 

 

42,323

 

 

(10

)%

 

(14

)%

Naval & Power (3)(4)

 

41,576

 

 

 

6,905

 

 

48,481

 

 

 

35,483

 

 

 

8,381

 

 

 

43,864

 

 

17

%

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

117,244

 

 

$

6,905

 

$

124,149

 

 

$

107,117

 

 

$

9,845

 

 

$

116,962

 

 

9

%

 

6

%

Corporate and other

 

(9,661

)

 

 

 

 

(9,661

)

 

 

(9,448

)

 

 

9

 

 

 

(9,439

)

 

(2

)%

 

(2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

$

107,583

 

 

$

6,905

 

$

114,488

 

 

$

97,669

 

 

$

9,854

 

 

$

107,523

 

 

10

%

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

As Reported

 

 

 

Adjusted

 

As Reported

 

 

 

Adjusted

 

As Reported

 

Adjusted

Aerospace & Industrial

 

18.3

%

 

 

 

 

18.3

%

 

 

15.7

%

 

 

 

 

15.7

%

 

260 bps

 

260 bps

Defense Electronics

 

22.7

%

 

 

 

 

22.7

%

 

 

22.5

%

 

 

 

 

23.2

%

 

20 bps

 

(50 bps)

Naval & Power

 

16.2

%

 

 

 

 

18.9

%

 

 

14.6

%

 

 

 

 

18.6

%

 

160 bps

 

30 bps

Total Curtiss-Wright

 

17.1

%

 

 

 

 

18.2

%

 

 

15.7

%

 

 

 

 

17.5

%

 

140 bps

 

70 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

18.6

%

 

 

 

 

19.7

%

 

 

17.3

%

 

 

 

 

19.1

%

 

130 bps

 

60 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 first year purchase accounting adjustments in the current period.

(4) Excludes the results of operations from our German valves business, which was sold in January 2022, including an impairment loss in the prior period.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

RECONCILIATION OF AS REPORTED TO ADJUSTED (UNAUDITED)

($'s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

Nine Months Ended

 

 

 

 

 

September 30, 2022

 

September 30, 2021

 

% Change

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

612,777

 

 

$

 

$

612,777

 

 

$

576,340

 

 

$

(8,764

)

 

$

567,576

 

 

6

%

 

8

%

Defense Electronics (2)

 

453,806

 

 

 

 

 

453,806

 

 

 

525,067

 

 

 

3,240

 

 

 

528,307

 

 

(14

)%

 

(14

)%

Naval & Power (4)

 

732,777

 

 

 

 

 

732,777

 

 

 

737,766

 

 

 

(20,468

)

 

 

717,298

 

 

(1

)%

 

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

1,799,360

 

 

$

 

$

1,799,360

 

 

$

1,839,173

 

 

$

(25,992

)

 

$

1,813,181

 

 

(2

)%

 

(1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

96,397

 

 

$

 

$

96,397

 

 

$

81,874

 

 

$

(2,079

)

 

$

79,795

 

 

18

%

 

21

%

Defense Electronics (2)

 

84,338

 

 

 

 

 

84,338

 

 

 

106,656

 

 

 

4,692

 

 

 

111,348

 

 

(21

)%

 

(24

)%

Naval & Power (3)(4)

 

118,865

 

 

 

12,332

 

 

131,197

 

 

 

116,635

 

 

 

11,337

 

 

 

127,972

 

 

2

%

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

299,600

 

 

$

12,332

 

$

311,932

 

 

$

305,165

 

 

$

13,950

 

 

$

319,115

 

 

(2

)%

 

(2

)%

Corporate and other (5)

 

(33,402

)

 

 

4,876

 

 

(28,526

)

 

 

(27,847

)

 

 

75

 

 

 

(27,772

)

 

(20

)%

 

(3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

$

266,198

 

 

$

17,208

 

$

283,406

 

 

$

277,318

 

 

$

14,025

 

 

$

291,343

 

 

(4

)%

 

(3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

As Reported

 

 

 

Adjusted

 

As Reported

 

 

 

Adjusted

 

As Reported

 

Adjusted

Aerospace & Industrial

 

15.7

%

 

 

 

 

15.7

%

 

 

14.2

%

 

 

 

 

14.1

%

 

150 bps

 

160 bps

Defense Electronics

 

18.6

%

 

 

 

 

18.6

%

 

 

20.3

%

 

 

 

 

21.1

%

 

(170 bps)

 

(250 bps)

Naval & Power

 

16.2

%

 

 

 

 

17.9

%

 

 

15.8

%

 

 

 

 

17.8

%

 

40 bps

 

10 bps

Total Curtiss-Wright

 

14.8

%

 

 

 

 

15.8

%

 

 

15.1

%

 

 

 

 

16.1

%

 

(30 bps)

 

(30 bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

16.7

%

 

 

 

 

17.3

%

 

 

16.6

%

 

 

 

 

17.6

%

 

10 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 first year purchase accounting adjustments in the current period.

(4) Excludes the results of operations from our German valves business, which was sold in January 2022, including a loss on divestiture in the current period and an impairment loss in the prior period.

(5) 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

 

 

 

 

 

September 30, 2022

 

September 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

 

$

114,431

 

$

 

$

114,431

 

$

116,853

 

$

 

 

$

116,853

 

(2

%)

(2

%)

Ground Defense (1)

 

 

54,890

 

 

 

 

54,890

 

 

55,124

 

 

1,080

 

 

 

56,204

 

0

%

(2

%)

Naval Defense

 

 

174,844

 

 

 

 

174,844

 

 

175,800

 

 

 

 

 

175,800

 

(1

%)

(1

%)

Commercial Aerospace (2)

 

 

70,257

 

 

 

 

70,257

 

 

67,461

 

 

(381

)

 

 

67,080

 

4

%

5

%

Total Aerospace & Defense

 

$

414,422

 

$

 

$

414,422

 

$

415,238

 

$

699

 

 

$

415,937

 

0

%

0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process (3)

 

 

110,559

 

 

 

 

110,559

 

 

112,736

 

 

(7,472

)

 

 

105,264

 

(2

%)

5

%

General Industrial

 

 

105,561

 

 

 

 

105,561

 

 

92,645

 

 

 

 

 

92,645

 

14

%

14

%

Total Commercial

 

$

216,120

 

$

 

$

216,120

 

$

205,381

 

$

(7,472

)

 

$

197,909

 

5

%

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

630,542

 

$

 

$

630,542

 

$

620,619

 

$

(6,773

)

 

$

613,846

 

2

%

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

Nine Months Ended

 

 

 

 

 

September 30, 2022

 

September 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

 

$

306,980

 

$

 

$

306,980

 

$

327,847

 

$

 

 

$

327,847

 

(6

%)

(6

%)

Ground Defense (1)

 

 

138,391

 

 

 

 

138,391

 

 

159,090

 

 

3,240

 

 

 

162,330

 

(13

%)

(15

%)

Naval Defense

 

 

510,597

 

 

 

 

510,597

 

 

531,429

 

 

 

 

 

531,429

 

(4

%)

(4

%)

Commercial Aerospace (2)

 

 

199,341

 

 

 

 

199,341

 

 

196,285

 

 

(8,764

)

 

 

187,521

 

2

%

6

%

Total Aerospace & Defense

 

$

1,155,309

 

$

 

$

1,155,309

 

$

1,214,651

 

$

(5,524

)

 

$

1,209,127

 

(5

%)

(4

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process (3)

 

 

340,702

 

 

 

 

340,702

 

 

343,573

 

 

(20,468

)

 

 

323,105

 

(1

%)

5

%

General Industrial

 

 

303,349

 

 

 

 

303,349

 

 

280,949

 

 

 

 

 

280,949

 

8

%

8

%

Total Commercial

 

$

644,051

 

$

 

$

644,051

 

$

624,522

 

$

(20,468

)

 

$

604,054

 

3

%

7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

1,799,360

 

$

 

$

1,799,360

 

$

1,839,173

 

$

(25,992

)

 

$

1,813,181

 

(2

%)

(1

%)

(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

 

Nine Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

Diluted earnings per share - As Reported

$

1.91

 

$

1.70

 

$

4.79

 

$

4.64

 

Divested German valves business

 

 

 

0.15

 

 

0.11

 

 

0.19

 

Costs associated with shareholder activism

 

 

 

 

 

0.10

 

 

 

Former executive pension settlement expense

 

 

 

 

 

0.04

 

 

0.06

 

First year purchase accounting adjustments

 

0.16

 

 

0.03

 

 

0.17

 

 

0.09

 

Exit of build-to-print actuation product line

 

 

 

 

 

 

 

(0.03

)

Diluted earnings per share - Adjusted (1)

$

2.07

 

$

1.88

 

$

5.21

 

$

4.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

September 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

9%

 

27%

 

(11%)

 

(10%)

 

6%

 

17%

 

2%

 

10%

Less: Acquisitions

0%

 

0%

 

0%

 

0%

 

(6%)

 

20%

 

(2%)

 

7%

Impairment of assets held for sale

0%

 

0%

 

0%

 

0%

 

0%

 

(24%)

 

0%

 

(9%)

Foreign currency

3%

 

1%

 

1%

 

(1%)

 

0%

 

(1%)

 

1%

 

0%

Organic

12%

 

28%

 

(10%)

 

(11%)

 

0%

 

12%

 

1%

 

8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

September 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

6%

 

18%

 

(14%)

 

(21%)

 

(1%)

 

2%

 

(2%)

 

(4%)

Less: Acquisitions

0%

 

0%

 

0%

 

0%

 

(1%)

 

6%

 

(1%)

 

3%

Loss on divestiture/impairment of assets held for sale

0%

 

0%

 

0%

 

0%

 

0%

 

(3%)

 

0%

 

(2%)

Foreign currency

3%

 

1%

 

1%

 

(1%)

 

0%

 

0%

 

1%

 

0%

Organic

9%

 

19%

 

(13%)

 

(22%)

 

(2%)

 

5%

 

(2%)

 

(3%)

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

 

Nine Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

Net cash provided by operating activities

$

95,658

 

 

$

107,285

 

 

$

2,387

 

 

$

155,761

 

Capital expenditures

 

(9,297

)

 

 

(10,087

)

 

 

(28,789

)

 

 

(27,858

)

Free cash flow

$

86,361

 

 

$

97,198

 

 

$

(26,402

)

 

$

127,903

 

Westinghouse legal settlement

 

 

 

 

 

 

 

15,000

 

 

 

 

Pension payment to former executive

 

 

 

 

 

 

 

8,214

 

 

 

 

Adjusted free cash flow

$

86,361

 

 

$

97,198

 

 

$

(3,188

)

 

$

127,903

 

Adjusted free cash flow conversion

 

108

%

 

 

127

%

 

 

(2

%)

 

 

63

%

CURTISS-WRIGHT CORPORATION

2022 Guidance

As of November 2, 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

 

 

 

675

 

 

690

 

 

 

 

 

 

675

 

 

690

 

 

(7) - (5)%

Naval & Power

 

995

 

 

 

(30

)

 

 

965

 

 

 

1,030

 

 

1,045

 

 

 

 

 

 

1,030

 

 

1,045

 

 

7 - 8%

Total sales

$

2,506

 

 

$

(37

)

 

$

2,468

 

 

$

2,525

 

$

2,575

 

 

$

 

 

$

2,525

 

$

2,575

 

 

2 to 4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

122

 

 

$

(2

)

 

$

120

 

 

$

135

 

$

139

 

 

$

 

 

$

135

 

$

139

 

 

12 - 16%

Defense Electronics

 

159

 

 

 

5

 

 

 

164

 

 

 

150

 

 

155

 

 

 

 

 

 

150

 

 

155

 

 

(9) - (6)%

Naval & Power

 

142

 

 

 

34

 

 

 

176

 

 

 

171

 

 

175

 

 

 

15

 

 

 

186

 

 

190

 

 

6 - 8%

Total segments

 

423

 

 

 

38

 

 

 

460

 

 

 

456

 

 

469

 

 

 

15

 

 

 

471

 

 

484

 

 

 

Corporate and other

 

(40

)

 

 

 

 

 

(40

)

 

 

(43

)

 

(44

)

 

 

5

 

 

 

(38

)

 

(39

)

 

 

Total operating income

$

383

 

 

$

38

 

 

$

420

 

 

$

413

 

$

425

 

 

$

20

 

 

$

433

 

$

444

 

 

3 to 6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

$

(40

)

 

$

 

 

$

(40

)

 

$

(46

)

$

(47

)

 

$

 

 

$

(46

)

$

(47

)

 

 

Other income, net

 

12

 

 

 

3

 

 

 

15

 

 

 

10

 

 

11

 

 

 

7

 

 

 

17

 

 

18

 

 

 

Earnings before income taxes

 

355

 

 

 

41

 

 

 

395

 

 

 

378

 

 

389

 

 

 

27

 

 

 

405

 

 

416

 

 

 

Provision for income taxes

 

(87

)

 

 

(10

)

 

 

(97

)

 

 

(89

)

 

(93

)

 

 

(6

)

 

 

(96

)

 

(100

)

 

 

Net earnings

$

267

 

 

$

31

 

 

$

298

 

 

$

290

 

$

296

 

 

$

20

 

 

$

310

 

$

316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

6.58

 

 

$

0.76

 

 

$

7.34

 

 

$

7.52

 

$

7.67

 

 

$

0.53

 

 

$

8.05

 

$

8.20

 

 

10 to 12%

Diluted shares outstanding

 

40.6

 

 

 

 

 

40.6

 

 

 

38.6

 

 

38.6

 

 

 

 

 

38.6

 

 

38.6

 

 

 

Effective tax rate

 

24.6

%

 

 

 

 

24.6

%

 

 

24.0

%

 

24.0

%

 

 

 

 

24.0

%

 

24.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

 

15.5

%

 

 

 

 

15.5

%

 

 

16.4

%

 

16.6

%

 

 

 

 

16.4

%

 

16.6

%

 

90 to 110 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

%

 

 

16.4

%

 

16.5

%

 

 

 

 

17.1

%

 

17.3

%

 

10 to 30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

$

347

 

 

 

 

$

347

 

 

$

236

 

$

276

 

 

$

39

 

 

$

275

 

$

315

 

 

 

 

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 November 2, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Prior

 

Current

 

% Total Sales

Aerospace & Defense Markets

 

 

 

 

 

Aerospace Defense

9 - 11%

 

3 - 5%

 

19%

Ground Defense

(1 - 3%)

 

(7 - 9%)

 

8%

Naval Defense

1 - 3%

 

Flat

 

28%

Commercial Aerospace

9 - 11%

 

9 - 11%

 

11%

Total Aerospace & Defense

4 - 6%

 

1 - 3%

 

66%

 

 

 

 

 

 

Commercial Markets

 

 

 

 

 

Power & Process

4 - 6%

 

5 - 7%

 

18%

General Industrial

6 - 8%

 

6 - 8%

 

16%

Total Commercial

5 - 7%

 

6 - 8%

 

34%

 

 

 

 

 

 

Total Curtiss-Wright Sales

4 - 6%

 

2 - 4%

 

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 arresting systems 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