Skip to main content

Curtiss-Wright Reports Third Quarter 2024 Financial Results and Raises Full-Year 2024 Guidance

News Details

Curtiss-Wright Reports Third Quarter 2024 Financial Results and Raises Full-Year 2024 Guidance

October 30, 2024

 

DAVIDSON, N.C.--(BUSINESS WIRE)-- Curtiss-Wright Corporation (NYSE: CW) reports financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Highlights:

  • Reported sales of $799 million, up 10%;
  • Reported operating income of $145 million, operating margin of 18.1%, and diluted earnings per share (EPS) of $2.89;
  • Adjusted operating income of $149 million, up 11%;
  • Adjusted operating margin of 18.7%, up 20 basis points;
  • Adjusted diluted EPS of $2.97, up 17%;
  • New orders of $860 million, up 2%, reflected a book-to-bill of 1.1x driven by solid demand within our Aerospace & Defense (A&D) markets;
  • Backlog of $3.3 billion, up 16% year-to-date; and
  • Free cash flow (FCF) of $163 million, generating 142% Adjusted FCF conversion.

Raised Full-Year 2024 Adjusted Financial Guidance:

  • Sales increased to new range of 7% to 9% growth (previously 6% to 8%), principally driven by strong growth in our A&D markets;
  • Operating income increased to new range of 7% to 10% growth (previously 6% to 9%);
  • Maintained operating margin range of 17.4% to 17.6%, flat to up 20 basis points compared with the prior year;
  • Diluted EPS increased to new range of $10.55 to $10.75, up 12% to 15% (previously $10.40 to $10.65, up 11% to 14%); and
  • Free cash flow increased to new range of $430 to $450 million, up 4% to 9% (previously $425 to $445 million, up 3% to 8%), and continues to reflect greater than 105% FCF conversion.

"Curtiss-Wright achieved strong third quarter results, highlighted by mid-teens revenue growth in our A&D end markets, a better-than-expected operational performance in our Defense Electronics segment and a 17% year-over-year increase in Adjusted diluted EPS," said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. "We continue to demonstrate solid order activity, yielding an overall book-to-bill of 1.1x in the quarter, highlighted by record quarterly orders within our Defense Electronics segment. We also delivered solid cash generation, resulting in an exceptional free cash flow conversion of 142%. Based on the strong year-to-date performance and our continued momentum in executing on our Pivot to Growth strategy, we once again raised our full-year 2024 outlook for sales, diluted EPS and free cash flow."

“We continue to leverage our strong balance sheet in support of our disciplined capital allocation strategy. This includes delivering on our commitment to drive solid returns to our shareholders as we completed the recently announced $100 million expansion of our 2024 share repurchase program during the quarter. Additionally, we remain focused on supplementing our organic growth with high quality, strategic acquisitions that meet our stringent financial criteria to drive long-term shareholder value.”

Third Quarter 2024 Operating Results

(In millions)

Q3-2024

Q3-2023

Change

Reported

 

 

 

Sales

$

799

 

$

724

 

10

%

Operating income

$

145

 

$

133

 

9

%

Operating margin

 

18.1

%

 

18.3

%

(20 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

799

 

$

724

 

10

%

Operating income

$

149

 

$

134

 

11

%

Operating margin

 

18.7

%

 

18.5

%

20 bps

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

  • Sales of $799 million increased 10% compared with the prior year;
  • Total A&D market sales increased 15%, as we experienced strong growth in the defense markets principally driven by increased demand for our defense electronics products and higher submarine and aircraft carrier revenues in naval defense, as well as higher OEM sales in the commercial aerospace market;
  • Total Commercial market sales were flat, reflecting solid growth in the power & process market, principally driven by higher sales of our commercial nuclear products, which was offset by lower sales in the general industrial market; and
  • Adjusted operating income of $149 million increased 11%, while Adjusted operating margin increased 20 basis points to 18.7%, principally driven by favorable overhead absorption on higher revenues in all three segments and partially offset by an unfavorable mix of products.

Third Quarter 2024 Segment Performance

Aerospace & Industrial

(In millions)

Q3-2024

Q3-2023

Change

Reported

 

 

 

Sales

$

229

 

$

220

 

4

%

Operating income

$

37

 

$

39

 

(4

%)

Operating margin

 

16.4

%

 

17.7

%

(130 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

229

 

$

220

 

4

%

Operating income

$

39

 

$

39

 

1

%

Operating margin

 

17.2

%

 

17.7

%

(50 bps)

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

  • Sales of $229 million, up $8 million, or 4%;
  • Commercial aerospace market revenue increases reflected strong demand and higher OEM sales of sensors products and surface treatment services on narrowbody and widebody platforms;
  • Higher revenue in the aerospace defense market reflected the timing of sales for our actuation equipment on various fighter jet programs;
  • Lower general industrial market revenue was principally driven by reduced sales of industrial vehicle products to off-highway vehicle platforms and lower sales of industrial automation and services; and
  • Adjusted operating income was $39 million, up 1% from the prior year, while Adjusted operating margin decreased 50 basis points to 17.2%, as favorable absorption on higher sales as well as the benefits of our restructuring initiatives were offset by unfavorable mix of products.

Defense Electronics

(In millions)

Q3-2024

Q3-2023

Change

Reported

 

 

 

Sales

$

243

 

$

216

 

12

%

Operating income

$

64

 

$

56

 

13

%

Operating margin

 

26.2

%

 

26.0

%

20 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

243

 

$

216

 

12

%

Operating income

$

64

 

$

56

 

15

%

Operating margin

 

26.5

%

 

26.0

%

50 bps

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

  • Sales of $243 million, up $27 million, or 12%;
  • Higher revenue in the aerospace defense market was principally driven by increased sales of our embedded computing equipment on various domestic and international helicopter programs, partially offset by the timing of flight test equipment sales;
  • Strong revenue growth in the ground defense market primarily reflected higher sales of tactical battlefield communications equipment;
  • Higher commercial aerospace market revenue principally reflected increased OEM sales of avionics and electronics on various platforms; and
  • Adjusted operating income was $64 million, up 15% from the prior year, while Adjusted operating margin increased 50 basis points to 26.5%, primarily due to favorable absorption on higher A&D revenues.

Naval & Power

(In millions)

Q3-2024

Q3-2023

Change

Reported

 

 

 

Sales

$

327

 

$

288

 

14

%

Operating income

$

53

 

$

48

 

11

%

Operating margin

 

16.2

%

 

16.6

%

(40 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

327

 

$

288

 

14

%

Operating income

$

54

 

$

49

 

10

%

Operating margin

 

16.4

%

 

17.0

%

(60 bps)

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

  • Sales of $327 million, up $39 million, or 14%;
  • Strong revenue growth in the naval defense market principally reflected higher demand on the Virginia-class submarine, Columbia-class submarine and CVN-81 aircraft carrier programs, as well as higher growth on various next-generation submarine development programs;
  • Higher power & process market revenues mainly reflected increased commercial nuclear aftermarket sales supporting the maintenance of U.S. operating reactors; and
  • Adjusted operating income was $54 million, up 10% from the prior year, while Adjusted operating margin decreased 60 basis points to 16.4%, as favorable absorption on higher revenues was partially offset by an unfavorable mix of products and the timing of development programs.

Free Cash Flow

(In millions)

Q3-2024

Q3-2023

Change

Net cash provided by operating activities

$

177

 

$

146

 

21

%

Capital expenditures

 

(15

)

 

(9

)

56

%

Reported free cash flow

$

163

 

$

137

 

19

%

Adjusted free cash flow (1)

$

163

 

$

137

 

19

%

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

  • Reported free cash flow of $163 million increased $26 million year over year, primarily driven by higher cash earnings and lower working capital;
  • Adjusted free cash flow of $163 million; and
  • Capital expenditures increased $5 million compared with the prior year period, due to growth investments within the Aerospace & Industrial and Defense Electronics segments.

New Orders and Backlog

  • New orders of $860 million increased 2% compared with the prior year and generated an overall book-to-bill of approximately 1.1x, principally driven by continued strong demand for defense electronics products within our A&D markets; and
  • Backlog of $3.3 billion, up 16% from December 31, 2023, reflecting higher demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

  • During the third quarter, the Company repurchased 355,578 shares of its common stock for approximately $113 million and remains on track to repurchase a total of $150 million in shares in 2024; and
  • The Company declared a quarterly dividend of $0.21 a share.

Full-Year 2024 Guidance

The Company is updating its full-year 2024 Adjusted financial guidance(1) as follows:

($ in millions, except EPS)

2024 Adjusted
Non-GAAP Guidance
(Prior)

2024 Adjusted
Non-GAAP Guidance
(Current)

Change vs 2023 Adjusted
(Current)

Total Sales

$3,010 - $3,060

$3,050 - $3,095

Up 7% - 9%

Operating Income

$525 - $539

$531 - $545

Up 7% - 10%

Operating Margin

17.4% - 17.6%

17.4% - 17.6%

Up 0 - 20 bps

Diluted EPS

$10.40 - $10.65

$10.55 - $10.75

Up 12% - 15%

Free Cash Flow

$425 - $445

$430 - $450

Up 4% - 9%

(1) Reconciliations of Reported to Adjusted 2023 operating results and 2024 financial guidance are available in the Appendix.

**********

A more detailed breakdown of the Company’s 2024 financial guidance by segment and by market, as well as all reconciliations of Reported GAAP amounts to Adjusted Non-GAAP amounts, can be found in the accompanying schedules. Historical financial results are available in the Investor Relations section of Curtiss-Wright’s website.

Conference Call & Webcast Information

The Company will host a conference call to discuss its third quarter 2024 financial results and updates to 2024 guidance at 10:00 a.m. ET on Thursday, October 31, 2024. 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,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Product sales

$

684,216

 

 

$

613,915

 

 

$

1,941,327

 

 

$

1,721,832

 

Service sales

 

114,702

 

 

 

110,411

 

 

 

355,549

 

 

 

337,750

 

Total net sales

 

798,918

 

 

 

724,326

 

 

 

2,296,876

 

 

 

2,059,582

 

 

 

 

 

 

 

 

 

Cost of product sales

 

434,370

 

 

 

380,163

 

 

 

1,252,773

 

 

 

1,093,469

 

Cost of service sales

 

66,285

 

 

 

62,695

 

 

 

207,984

 

 

 

203,664

 

Total cost of sales

 

500,655

 

 

 

442,858

 

 

 

1,460,757

 

 

 

1,297,133

 

 

 

 

 

 

 

 

 

Gross profit

 

298,263

 

 

 

281,468

 

 

 

836,119

 

 

 

762,449

 

 

 

 

 

 

 

 

 

Research and development expenses

 

20,734

 

 

 

23,464

 

 

 

65,866

 

 

 

65,698

 

Selling expenses

 

37,311

 

 

 

34,084

 

 

 

109,202

 

 

 

100,782

 

General and administrative expenses

 

92,035

 

 

 

91,401

 

 

 

281,092

 

 

 

272,060

 

Restructuring expenses

 

3,280

 

 

 

 

 

 

6,198

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

144,903

 

 

 

132,519

 

 

 

373,761

 

 

 

323,909

 

 

 

 

 

 

 

 

 

Interest expense

 

11,408

 

 

 

12,496

 

 

 

33,194

 

 

 

40,432

 

Other income, net

 

10,126

 

 

 

7,023

 

 

 

28,294

 

 

 

22,744

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

143,621

 

 

 

127,046

 

 

 

368,861

 

 

 

306,221

 

Provision for income taxes

 

(32,461

)

 

 

(30,268

)

 

 

(81,735

)

 

 

(71,598

)

Net earnings

$

111,160

 

 

$

96,778

 

 

$

287,126

 

 

$

234,623

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

Basic earnings per share

$

2.91

 

 

$

2.53

 

 

$

7.51

 

 

$

6.13

 

Diluted earnings per share

$

2.89

 

 

$

2.51

 

 

$

7.47

 

 

$

6.09

 

 

 

 

 

 

 

 

 

Dividends per share

$

0.21

 

 

$

0.20

 

 

$

0.62

 

 

$

0.59

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

38,208

 

 

 

38,285

 

 

 

38,245

 

 

 

38,301

 

Diluted

 

38,451

 

 

 

38,558

 

 

 

38,451

 

 

 

38,538

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($'s in thousands, except par value)

 

 

 

 

 

September 30,

 

December 31,

 

 

2024

 

 

 

2023

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

443,850

 

 

$

406,867

 

Receivables, net

 

857,614

 

 

 

732,678

 

Inventories, net

 

582,584

 

 

 

510,033

 

Other current assets

 

68,035

 

 

 

67,502

 

Total current assets

 

1,952,083

 

 

 

1,717,080

 

Property, plant, and equipment, net

 

330,292

 

 

 

332,796

 

Goodwill

 

1,583,448

 

 

 

1,558,826

 

Other intangible assets, net

 

532,397

 

 

 

557,612

 

Operating lease right-of-use assets, net

 

156,613

 

 

 

141,435

 

Prepaid pension asset

 

279,212

 

 

 

261,869

 

Other assets

 

51,693

 

 

 

51,351

 

Total assets

$

4,885,738

 

 

$

4,620,969

 

 

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

90,000

 

 

$

 

Accounts payable

 

222,542

 

 

 

243,833

 

Accrued expenses

 

194,414

 

 

 

188,039

 

Deferred revenue

 

392,330

 

 

 

303,872

 

Other current liabilities

 

87,369

 

 

 

70,800

 

Total current liabilities

 

986,655

 

 

 

806,544

 

Long-term debt

 

959,302

 

 

 

1,050,362

 

Deferred tax liabilities, net

 

124,186

 

 

 

132,319

 

Accrued pension and other postretirement benefit costs

 

68,159

 

 

 

66,875

 

Long-term operating lease liability

 

134,866

 

 

 

118,611

 

Long-term portion of environmental reserves

 

14,661

 

 

 

12,784

 

Other liabilities

 

107,490

 

 

 

105,061

 

Total liabilities

$

2,395,319

 

 

$

2,292,556

 

 

 

 

 

Stockholders' equity

 

 

 

Common stock, $1 par value

$

49,187

 

 

$

49,187

 

Additional paid in capital

 

144,394

 

 

 

140,182

 

Retained earnings

 

3,751,183

 

 

 

3,487,751

 

Accumulated other comprehensive loss

 

(203,428

)

 

 

(213,223

)

Less: cost of treasury stock

 

(1,250,917

)

 

 

(1,135,484

)

Total stockholders' equity

$

2,490,419

 

 

$

2,328,413

 

 

 

 

 

Total liabilities and stockholders' equity

$

4,885,738

 

 

$

4,620,969

 

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 Operating Income, Operating Margin, Net Earnings and Diluted EPS

These Adjusted financials are defined as Reported 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) costs associated with the Company's 2024 Restructuring Program; and (iii) the sale or divestiture of a business or product line, 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, 2024

 

September 30, 2023

 

% Change

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

228,659

 

 

$

 

$

228,659

 

 

$

220,297

 

 

$

 

$

220,297

 

 

4

%

 

4

%

Defense Electronics

 

243,029

 

 

 

 

 

243,029

 

 

 

216,285

 

 

 

 

 

216,285

 

 

12

%

 

12

%

Naval & Power

 

327,230

 

 

 

 

 

327,230

 

 

 

287,744

 

 

 

 

 

287,744

 

 

14

%

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

798,918

 

 

$

 

$

798,918

 

 

$

724,326

 

 

$

 

$

724,326

 

 

10

%

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial(2)

$

37,435

 

 

$

1,926

 

$

39,361

 

 

$

39,014

 

 

$

 

$

39,014

 

 

(4

)%

 

1

%

Defense Electronics(2)

 

63,639

 

 

 

819

 

 

64,458

 

 

 

56,212

 

 

 

 

 

56,212

 

 

13

%

 

15

%

Naval & Power(1)(2)

 

53,039

 

 

 

759

 

 

53,798

 

 

 

47,663

 

 

 

1,333

 

 

48,996

 

 

11

%

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

154,113

 

 

$

3,504

 

$

157,617

 

 

$

142,889

 

 

$

1,333

 

$

144,222

 

 

8

%

 

9

%

Corporate and other(2)

 

(9,210

)

 

 

660

 

 

(8,550

)