News Details

Curtiss-Wright Reports Second Quarter 2021 Financial Results; Raises Full-year 2021 Financial Guidance

August 03, 2021

DAVIDSON, N.C.--(BUSINESS WIRE)-- Curtiss-Wright Corporation (NYSE: CW) reports financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights:

  • Reported sales of $621 million, operating income of $95 million, operating margin of 15.2%, diluted earnings per share (EPS) of $1.49, and free cash flow of $66 million;
  • Adjusted sales of $609 million, up 14%;
  • Adjusted operating income of $95 million, up 24%;
  • Adjusted operating margin of 15.6%, up 120 basis points;
  • Adjusted diluted EPS of $1.56, up 22%; and
  • New orders of $679 million, up 11%, led by strong demand in our Commercial markets.

Raised Full-Year 2021 Financial Guidance:

  • Adjusted sales increased by $15 million due to ongoing recovery in general industrial market demand; Maintaining overall range of 7% to 9% sales growth;
  • Adjusted operating income increased to new range of 9% to 12% growth (previously 9% to 11%);
  • Adjusted operating margin increased by 10 basis points to new range of 16.7% to 16.8%, up 40 to 50 basis points compared with the prior year; and
  • Adjusted diluted EPS increased by $0.05 to new range of $7.15 to $7.35, up 9% to 12%.

“We delivered strong second quarter results, as Adjusted diluted EPS grew by 22%, led by solid sales growth across the majority of our markets, and improved profitability in the Aerospace & Industrial and Naval & Power segments,” said Lynn M. Bamford, President and CEO of Curtiss-Wright Corporation. “We also benefitted from the continued execution of our operational excellence initiatives and savings generated by our prior year restructuring actions to drive continued operating margin expansion. In addition, we continued to direct incrementally higher investments in research and development projects that target the highest growth vectors in our end markets and support our long-term organic growth. Based on our solid year-to-date results and outlook for the remainder of 2021, we have increased our full-year Adjusted guidance for sales, operating income, operating margin and diluted EPS.”

“As we introduced at our recent Investor Day event in May, we are executing with confidence on our new Pivot to Growth strategy to unlock significant value for our shareholders. Through a renewed focus on disciplined, strategic investments and the deployment of our new operational growth platform, we are well-positioned to deliver on our new three-year targets through 2023, which includes a 5% to 10% revenue CAGR, continued operating margin expansion with operating income growth greater than revenue growth, adjusted diluted EPS CAGR at or above 10%, and sustained free cash flow conversion above 110% on average.”

Second Quarter 2021 Operating Results

(In millions)

Q2-2021

Q2-2020

Change

Reported sales

$

621.5

 

$

550.0

 

13%

Adjustments (1)

 

(12.1

)

 

(17.3

)

 

Adjusted sales (1)

$

609.4

 

$

532.7

 

14%

Reported operating income

$

94.6

 

$

55.3

 

71%

Adjustments (1)

 

0.5

 

 

21.2

 

 

Adjusted operating income (1)

$

95.0

 

$

76.6

 

24%

Adjusted operating margin (1)

 

15.6

%

 

14.4

%

120 bps

Amounts may not add due to rounding.

(1)

Adjusted results exclude (i) our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited and our German valves business, which was classified as held for sale, both in the fourth quarter of 2020 impacting both periods; (ii) first year purchase accounting costs associated with acquisitions in both periods; and (iii) a non-cash impairment of capitalized development costs related to a commercial aerospace program, one-time costs associated with the relocation of our DRG business in the Naval & Power segment, and restructuring costs, which impacted the prior year period.

  • Adjusted sales of $609 million, up $77 million, or 14%;
  • Aerospace & Defense market sales increased 11%, led by strong growth in naval defense and the contribution of the PacStar acquisition in ground defense, which more than offset lower aerospace defense revenues;
  • Commercial market sales increased 21%, principally due to strong demand in the general industrial market, as well as higher power & process market sales;
  • Adjusted operating income was $95 million, up 24%, while Adjusted operating margin increased 120 basis points to 15.6%. This improvement was driven by favorable overhead absorption on higher organic revenues in both our Aerospace & Industrial and Naval & Power segments, as well as the benefits of our prior year restructuring and ongoing company-wide operational excellence initiatives, which were partially offset by $5 million in higher research and development investments; and
  • Non-segment expenses of $10 million increased by $2 million compared with the prior year, due to higher environmental and other corporate expenses.

     

Free Cash Flow

(In millions)

Q2-2021

Q2-2020

Change

Net cash provided by operating activities

$

75.1

 

$

140.4

 

(47%)

Capital expenditures

 

(9.2

)

 

(10.7

)

14%

Free cash flow

$

65.8

 

$

129.7

 

(49%)

Adjustment to capital expenditures (DRG facility investment) (1)

 

-

 

 

2.0

 

-

Restructuring (1)

 

-

 

 

4.1

 

-

Adjusted free cash flow (1)

$

65.8

 

$

135.8

 

(51%)

Amounts may not add due to rounding.

(1)

Adjusted free cash flow excludes a capital investment related to the new state-of-the-art naval facility in the Naval & Power segment and the cash impact from restructuring in the prior year period.

  • Free cash flow of $66 million, defined as cash flow from operations less capital expenditures, decreased $64 million, or 49%, principally driven by the timing of collections and tax payments, partially offset by higher net earnings;
  • Capital expenditures decreased $1 million compared with the prior year, primarily due to lower capital investments as a result of the completion of our new DRG facility within the Naval & Power segment; and
  • Adjusted free cash flow of $66 million, down $70 million, or 51%.

New Orders and Backlog

  • New orders of $679 million increased 11% compared with the prior year period, generating overall book to bill of approximately 1.1x, driven by strong demand in our Commercial markets, most notably for industrial vehicle products; and
  • Backlog of $2.2 billion improved slightly from December 31, 2020, principally reflecting the rebound in commercial market demand.

Share Repurchase and Dividends

  • During the second quarter, the Company repurchased 100,719 shares of its common stock for approximately $13 million;
  • Year-to-date, the Company repurchased 206,208 shares for approximately $25 million; and
  • During the quarter, the Board of Directors declared a 6% increase in the quarterly dividend to $0.18 per share.

Other Items – Business Held for Sale

  • During the fourth quarter of 2020, the Company classified its German valves business (previously within its Commercial/Industrial segment) as held for sale and its results have been adjusted from comparisons between our current and prior year results, and full-year financial guidance.

Second Quarter 2021 Segment Performance

Aerospace & Industrial

(In millions)

Q2-2021

Q2-2020

Change

Reported sales

$

199.7

 

$

177.4

 

13%

Adjustments (1)

 

(5.8

)

 

(11.7

)

 

Adjusted sales (1)

$

193.9

 

$

165.7

 

17%

Reported operating income

$

32.0

 

$

9.6

 

233%

Adjustments (1)

 

(1.5

)

 

3.2

 

 

Adjusted operating income (1)

$

30.5

 

$

12.8

 

138%

Adjusted operating margin (1)

 

15.7

%

 

7.7

%

800 bps

Amounts may not add due to rounding.

(1)

Adjusted results exclude our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited in the fourth quarter of 2020 impacting both periods and restructuring costs in the prior year period.

  • Reported results reflected sales of $200 million, operating income of $32 million and operating margin of 16.0%;
  • Adjusted sales of $194 million, up $28 million, or 17%;
  • General industrial market revenue increased by nearly 40%, led by strong industrial vehicle demand for on- and off-highway platforms, and higher sales of surface treatment services due to improving economic conditions;
  • Commercial aerospace market revenues were essentially flat, as higher sales of sensors products on narrowbody platforms were mainly offset by lower actuation sales on widebody platforms; and
  • Adjusted operating income was $30 million, up 138% from the prior year, while Adjusted operating margin increased 800 basis points to 15.7%, reflecting strong absorption on higher general industrial market sales, and the benefits of our ongoing operational excellence and prior year restructuring initiatives.

Defense Electronics

(In millions)

Q2-2021

Q2-2020

Change

Reported sales

$

162.4

 

$

139.6

 

16%

Adjustments (1)

 

1.1

 

 

0.2

 

 

Adjusted sales (1)

$

163.4

 

$

139.8

 

17%

Reported operating income

$

29.3

 

$

24.7

 

18%

Adjustments (1)

 

1.6

 

 

8.8

 

 

Adjusted operating income (1)

$

30.8

 

$

33.5

 

(8%)

Adjusted operating margin (1)

 

18.9

%

 

24.0

%

(510 bps)

Amounts may not add due to rounding.

(1)

Adjusted results exclude first year purchase accounting costs associated with acquisitions in both periods, and a non-cash impairment of capitalized development costs related to a commercial aerospace program and restructuring costs in the prior year period.

  • Reported results reflected sales of $162 million, operating income of $29 million and operating margin of 18.0%;
  • Adjusted sales of $163 million, up $24 million, or 17%, principally driven by the contribution from the PacStar acquisition for tactical battlefield communications equipment within our ground defense market;
  • Aerospace defense market revenue declined due to the timing of sales of our embedded computing equipment on various programs;
  • Higher commercial aerospace market revenues reflect increased sales of avionics and flight test equipment on various domestic and international platforms; and
  • Adjusted operating income was $31 million, down 8% from the prior year, while Adjusted operating margin decreased 510 basis points to 18.9%, reflecting unfavorable mix in defense electronics and $4 million in higher research and development investments.

Naval & Power

(In millions)

Q2-2021

Q2-2020

Change

Reported sales

$

259.4

 

$

233.0

 

11%

Adjustments (1)

 

(7.4

)

 

(5.8

)

 

Adjusted sales (1)

$

252.0

 

$

227.2

 

11%

Reported operating income

$

43.1

 

$

29.1

 

48%

Adjustments (1)

 

0.4

 

 

9.2

 

 

Adjusted operating income (1)

$

43.5

 

$

38.3

 

13%

Adjusted operating margin (1)

 

17.2

%

 

16.9

%

30 bps

Amounts may not add due to rounding.

(1)

Adjusted results exclude our German valves business which was classified as held for sale in the fourth quarter of 2020 impacting both periods; and first year purchase accounting costs associated with acquisitions, one-time costs associated with the relocation of our DRG business and restructuring costs, all impacting the prior year period.

 

  • Reported results reflected sales of $259 million, operating income of $43 million and operating margin of 16.6%;
  • Adjusted sales of $252 million, up $25 million, or 11%;
  • Strong naval defense market revenue growth primarily reflected higher production revenues on the CVN-80 and CVN-81 aircraft carrier programs;
  • Higher power & process market revenues reflected increased nuclear aftermarket maintenance supporting existing operating reactors, as well as higher industrial valve revenues to the oil and gas market; and
  • Adjusted operating income was $43 million, up 13% from the prior year, while Adjusted operating margin increased 30 basis points to 17.2%, driven by solid absorption on higher revenues, as well as the benefits of our prior year restructuring initiatives.

Full-Year 2021 Guidance

The Company is updating its full-year 2021 Adjusted financial guidance as follows:

(In millions, except EPS)

2021 Adjusted

Non-GAAP

Guidance

(Prior)

Changes to Adjusted Guidance

2021 Adjusted

Non-GAAP

Guidance

(Current)

2021 Adjusted Chg vs 2020 Restated

Total Sales

$2,450 - $2,500

$15

$2,465 - $2,515

Up 7% - 9%

Operating Income

$408 - $418

$3

$411 - $421

Up 9% - 12%

Operating Margin

16.6% - 16.7%

10 bps

16.7% - 16.8%

Up 40 - 50 bps

Effective Tax Rate

23.5%

50 bps

24.0%

 

Diluted EPS

$7.10 - $7.30

$0.05

$7.15 - $7.35

Up 9% - 12%

Diluted Shares Outstanding

41.3

(0.2)

41.1

 

Free Cash Flow (FCF)

$330 - $360

-

$330 - $360

 

Avg. FCF Conversion

~116%

-

~116%

 

 

(1)

2021 Adjusted financial guidance used in comparisons to 2020 financial results excludes first year purchase accounting costs associated with acquisitions, as well as our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited and our German valves business which was classified as held for sale, both in the fourth quarter of 2020.

A more detailed breakdown of the Company’s 2021 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 in the new segment structure for 2020 and 2019 periods 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 2021 financial results and updates to 2021 guidance at 10:00 a.m. ET on Wednesday, August 4, 2021. 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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

515,392

 

 

 

$

466,445

 

 

 

$

1,024,367

 

 

 

$

964,374

 

 

 

Service sales

 

106,103

 

 

 

83,602

 

 

 

194,187

 

 

 

186,904

 

 

 

Total net sales

 

621,495

 

 

 

550,047

 

 

 

1,218,554

 

 

 

1,151,278

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

331,881

 

 

 

309,152

 

 

 

661,335

 

 

 

639,965

 

 

 

Cost of service sales

 

64,895

 

 

 

54,869

 

 

 

122,743

 

 

 

124,708

 

 

 

Total cost of sales

 

396,776

 

 

 

364,021

 

 

 

784,078

 

 

 

764,673

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

224,719

 

 

 

186,026

 

 

 

434,476

 

 

 

386,605

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

23,194

 

 

 

18,269

 

 

 

45,057

 

 

 

36,576

 

 

 

Selling expenses

 

29,564

 

 

 

25,193

 

 

 

59,160

 

 

 

56,781

 

 

 

General and administrative expenses

 

77,378

 

 

 

76,606

 

 

 

150,610

 

 

 

153,264

 

 

 

Restructuring expenses

 

 

 

 

10,609

 

 

 

 

 

 

12,189

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

94,583

 

 

 

55,349

 

 

 

179,649

 

 

 

127,795

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

10,180

 

 

 

8,515

 

 

 

20,139

 

 

 

16,004

 

 

 

Other income, net

 

440

 

 

 

(4,105

)

 

 

5,283

 

 

 

1,427

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

84,843

 

 

 

42,729

 

 

 

164,793

 

 

 

113,218

 

 

 

Provision for income taxes

 

(23,435

)

 

 

(11,711

)

 

 

(43,916

)

 

 

(30,439

)

 

 

Net earnings

 

$

61,408

 

 

 

$

31,018

 

 

 

$

120,877

 

 

 

$

82,779

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

1.50

 

 

 

$

0.75

 

 

 

$

2.95

 

 

 

$

1.97

 

 

 

Diluted earnings per share

 

$

1.49

 

 

 

$

0.74

 

 

 

$

2.94

 

 

 

$

1.95

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.18

 

 

 

$

0.17

 

 

 

$

0.35

 

 

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

40,915

 

 

 

41,629

 

 

 

40,921

 

 

 

42,092

 

 

 

Diluted

 

41,088

 

 

 

41,855

 

 

 

41,092

 

 

 

42,362

 

 

 

 

 

 

 

 

 

 

 

 

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($'s in thousands, except par value)

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2021

 

 

2020

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

197,508

 

 

 

$

198,248

 

 

 

 

Receivables, net

 

644,089

 

 

 

588,718

 

 

 

 

Inventories, net

 

446,689

 

 

 

428,879

 

 

 

 

Assets held for sale

 

29,687

 

 

 

27,584

 

 

 

 

Other current assets

 

83,417

 

 

 

57,395

 

 

 

 

Total current assets

 

1,401,390

 

 

 

1,300,824

 

 

 

Property, plant, and equipment, net

 

366,789

 

 

 

378,200

 

 

 

Goodwill

 

1,466,735

 

 

 

1,455,137

 

 

 

Other intangible assets, net

 

568,604

 

 

 

609,630

 

 

 

Operating lease right-of-use assets, net

 

144,274

 

 

 

150,898

 

 

 

Prepaid pension asset

 

105,963

 

 

 

92,531

 

 

 

Other assets

 

31,230

 

 

 

34,114

 

 

 

 

Total assets

 

$

4,084,985

 

 

 

$

4,021,334

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of long-term and short-term debt

 

100,000

 

 

 

100,000

 

 

 

 

Accounts payable

 

166,253

 

 

 

201,237

 

 

 

 

Accrued expenses

 

133,264

 

 

 

146,833

 

 

 

 

Deferred revenue

 

260,358

 

 

 

253,411

 

 

 

 

Liabilities held for sale

 

10,573

 

 

 

10,141

 

 

 

 

Other current liabilities

 

104,024

 

 

 

98,755

 

 

 

 

Total current liabilities

 

774,472

 

 

 

810,377

 

 

 

Long-term debt

 

957,504

 

 

 

958,292

 

 

 

Deferred tax liabilities, net

 

121,895

 

 

 

115,007

 

 

 

Accrued pension and other postretirement benefit costs

 

97,143

 

 

 

98,345

 

 

 

Long-term operating lease liability

 

127,136

 

 

 

133,069

 

 

 

Long-term portion of environmental reserves

 

14,655

 

 

 

15,422

 

 

 

Other liabilities

 

97,476

 

 

 

103,248

 

 

 

 

Total liabilities

 

2,190,281

 

 

 

2,233,760

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

Common stock, $1 par value

 

49,187

 

 

 

49,187

 

 

 

Additional paid in capital

 

119,946

 

 

 

122,535

 

 

 

Retained earnings

 

2,776,884

 

 

 

2,670,328

 

 

 

Accumulated other comprehensive loss

 

(297,531

)

 

 

(310,856

)

 

 

Less: cost of treasury stock

 

(753,782

)

 

 

(743,620

)

 

 

 

Total stockholders' equity

 

1,894,704

 

 

 

1,787,574

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

4,084,985

 

 

 

$

4,021,334

 

 

 

 

 

 

 

 

 

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

SEGMENT INFORMATION (UNAUDITED)(1)

($'s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

 

 

2021

 

 

 

2020

 

 

%

 

 

2021

 

 

 

2020

 

 

%

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

 

$

199,713

 

 

$

177,411

 

 

13

%

 

$

380,044

 

 

$

404,139

 

 

(6

%)

Defense Electronics

 

 

162,351

 

 

 

139,613

 

 

16

%

 

 

343,563

 

 

 

279,194

 

 

23

%

Naval & Power

 

 

259,431

 

 

 

233,023

 

 

11

%

 

 

494,947

 

 

 

467,945

 

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

 

$

621,495

 

 

$

550,047

 

 

13

%

 

$

1,218,554

 

 

$

1,151,278

 

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

Aerospace & Industrial

 

$

31,977

 

 

$

9,615

 

 

233

%

 

$

51,002

 

 

$

41,755

 

 

22

%

Defense Electronics

 

 

29,271

 

 

 

24,736

 

 

18

%

 

 

65,894

 

 

 

48,799

 

 

35

%

Naval & Power

 

 

43,095

 

 

 

29,146

 

 

48

%

 

 

81,152

 

 

 

57,256

 

 

42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

 

$

104,343

 

 

$

63,497

 

 

64

%

 

$

198,048

 

 

$

147,810

 

 

34

%

Corporate and other

 

 

(9,760

)

 

 

(8,148

)

 

(20

%)

 

 

(18,399

)

 

 

(20,015

)

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

$

94,583

 

 

$

55,349

 

 

71

%

 

$

179,649

 

 

$

127,795

 

 

41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

Aerospace & Industrial

 

 

16.0

%

 

 

5.4

%

 

1,060 bps

 

 

13.4

%

 

 

10.3

%

 

310 bps

Defense Electronics

 

 

18.0

%

 

 

17.7

%

 

30 bps

 

 

19.2

%

 

 

17.5

%

 

170 bps

Naval & Power

 

 

16.6

%

 

 

12.5

%

 

410 bps

 

 

16.4

%

 

 

12.2

%

 

420 bps

Total Curtiss-Wright

 

 

15.2

%

 

 

10.1

%

 

510 bps

 

 

14.7

%

 

 

11.1

%

 

360 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

 

16.8

%

 

 

11.5

%

 

530 bps

 

 

16.3

%

 

 

12.8

%

 

350 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts reported under realigned segment reporting structure.

 

 

 

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

 

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

 

($'s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

June 30, 2021

 

June 30, 2020

 

2021 vs. 2020

 

 

Reported Sales

 

Adjustments

 

Adjusted Sales

 

Reported Sales

 

Adjustments

 

Adjusted Sales

 

Change in

Adjusted Sales

Aerospace & Defense markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace Defense (1)

 

$

99,977

 

 

$

 

 

$

99,977

 

 

$

109,305

 

 

$

201

 

 

$

109,506

 

 

(9%)

Ground Defense (1)

 

48,221

 

 

1,080

 

 

49,301

 

 

20,029

 

 

 

 

20,029

 

 

146%

Naval Defense

 

177,724

 

 

 

 

177,724

 

 

164,941

 

 

 

 

164,941

 

 

8%

Commercial Aerospace (2)

 

71,555

 

 

(5,784)

 

 

65,771

 

 

71,084

 

 

(11,710)

 

 

59,374

 

 

11%

Total Aerospace & Defense

 

$

397,477

 

 

$

(4,704)

 

 

$

392,773

 

 

$

365,359

 

 

$

(11,509)

 

 

$

353,850

 

 

11%

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process (3)

 

125,333

 

 

(7,413)

 

 

117,920

 

 

112,787

 

 

(5,835)

 

 

106,952

 

 

10%

General Industrial

 

98,685

 

 

 

 

98,685

 

 

71,901

 

 

 

 

71,901

 

 

37%

Total Commercial

 

224,018

 

 

(7,413)

 

 

216,605

 

 

184,688

 

 

(5,835)

 

 

178,853

 

 

21%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

621,495

 

 

$

(12,117)

 

 

$

609,378

 

 

$

550,047

 

 

$

(17,344)

 

 

$

532,703

 

 

14%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

 

 

 

June 30, 2021

 

June 30, 2020

 

2021 vs. 2020

 

 

Reported Sales

 

Adjustments

 

Adjusted Sales

 

Reported Sales

 

Adjustments

 

Adjusted Sales

 

Change in

Adjusted Sales

Aerospace & Defense markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace Defense (1)

 

$

210,993

 

 

$

 

 

$

210,993

 

 

$

211,133

 

 

$

201

 

 

$

211,334

 

 

0%

Ground Defense (1)

 

103,967

 

 

2,160

 

 

106,127

 

 

42,686

 

 

 

 

42,686

 

 

149%

Naval Defense

 

355,629

 

 

 

 

355,629

 

 

330,633

 

 

 

 

330,633

 

 

8%

Commercial Aerospace (2)

 

128,824

 

 

(8,383)

 

 

120,441

 

 

171,765

 

 

(30,405)

 

 

141,360

 

 

(15%)

Total Aerospace & Defense

 

$

799,413

 

 

$

(6,223)

 

 

$

793,190

 

 

$

756,217

 

 

$

(30,204)

 

 

$

726,013

 

 

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process (3)

 

230,837

 

 

(12,996)

 

 

217,841

 

 

236,713

 

 

(12,708)

 

 

224,005

 

 

(3%)

General Industrial

 

188,304

 

 

 

 

188,304

 

 

158,348

 

 

 

 

158,348

 

 

19%

Total Commercial

 

$

419,141

 

 

$

(12,996)

 

 

$

406,145

 

 

$

395,061

 

 

$

(12,708)

 

 

$

382,353

 

 

6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

1,218,554

 

 

$

(19,219)

 

 

$

1,199,335

 

 

$

1,151,278

 

 

$

(42,912)

 

 

$

1,108,366

 

 

8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Adjustments exclude first year purchase accounting adjustments associated with acquisitions.

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

(3) Adjustments exclude our German valves business which was classified as held for sale in the fourth quarter of 2020.

 

Use of Non-GAAP Financial Information (Unaudited)

The Corporation supplements its financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial information. Curtiss-Wright believes that these non-GAAP measures provide investors with additional insight into the Company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. Curtiss-Wright encourages investors to review its financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The Company’s presentation of its financials and guidance includes an Adjusted (non-GAAP) view that excludes (i) the results of a build-to-print actuation product line supporting the Boeing 737 MAX program which we exited and a German valves business classified as held for sale, both in the fourth quarter of 2020; (ii) significant restructuring costs in 2020 associated with its operations, including one-time actions taken in response to COVID-19; (iii) a non-cash impairment of capitalized development costs related to a commercial aerospace program in the prior period; (iv) first year purchase accounting costs associated with its acquisitions in both periods, including one-time inventory step-up, backlog amortization, deferred revenue adjustments and transaction costs; and (v) one-time transition and IT security costs, and capital investments, specifically associated with the relocation of the DRG business in the Naval & Power segment in the prior period. Transition costs include relocation of employees and equipment as well as overlapping facility and labor costs associated with the relocation. We believe this Adjusted view will provide 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. 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 (EPS) under GAAP excluding: (i) the impact of first year purchase accounting costs associated with acquisitions for current and prior year periods, specifically one-time inventory step-up, backlog amortization, deferred revenue adjustments and transaction costs; (ii) one-time transition and IT security costs associated with the relocation of a business in the prior year period; (iii) the non-cash impairment of capitalized development costs related to a commercial aerospace program in the prior year period; (iv) significant restructuring costs in 2020 associated with its operations, (v) a build-to-print actuation product line supporting the Boeing 737 MAX program which we exited, and (vi) the results of a German valves business classified as held for sale in the fourth quarter of 2020.

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 the impact of restructuring costs, foreign currency fluctuations and contributions from acquisitions made during the last twelve months.

 

Three Months Ended

 

June 30,

 

2021 vs. 2020

 

Aerospace & Industrial

 

Defense Electronics

 

Naval & Power

 

Total Curtiss-Wright

 

Sales

 

Operating

income

 

Sales

 

Operating

income

 

Sales

 

Operating

income

 

Sales

 

Operating

income

Organic

10%

 

174%

 

(6%)

 

12%

 

10%

 

24%

 

6%

 

46%

Acquisitions

0%

 

0%

 

22%

 

9%

 

0%

 

0%

 

6%

 

4%

Restructuring

0%

 

59%

 

0%

 

7%

 

0%

 

26%

 

0%

 

26%

Foreign Currency

3%

 

0%

 

0%

 

(10%)

 

1%

 

(2%)

 

1%

 

(5%)

Total

13%

 

233%

 

16%

 

18%

 

11%

 

48%

13%

 

71%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

June 30,

 

2021 vs. 2020

 

Aerospace & Industrial

 

Defense Electronics

 

Naval & Power

 

Total Curtiss-Wright

 

Sales

 

Operating

income

 

Sales

 

Operating

income

 

Sales

 

Operating

income

 

Sales

 

Operating

income

Organic

(8%)

 

8%

 

(1%)

 

26%

 

4%

 

28%

 

(1%)

 

26%

Acquisitions

0%

 

0%

 

23%

 

12%

 

0%

 

0%

 

6%

 

4%

Restructuring

0%

 

14%

 

0%

 

5%

 

0%

 

16%

 

0%

 

14%

Foreign Currency

2%

 

0%

 

1%

 

(8%)

 

2%

 

(2%)

 

1%

 

(3%)

Total

(6%)

 

22%

 

23%

 

35%

 

6%

 

42%

6%

 

41%

Free Cash Flow and Free Cash Flow Conversion

The Corporation discloses free cash flow because it measures cash flow available for investing and financing activities. Free cash flow represents cash available to repay outstanding debt, invest in the business, acquire businesses, return capital to shareholders and make other strategic investments. Free cash flow is defined as cash flow provided by operating activities less capital expenditures. Adjusted free cash flow for 2020 excludes: (i) a capital investment in the Naval & Power segment related to the new, state-of-the-art naval facility principally for DRG; (ii) a voluntary contribution to the Company’s corporate defined benefit pension plan made in the first quarter of 2020; and (iii) the cash impact from restructuring in 2020. 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,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

$

75,079

 

 

$

140,367

 

 

$

48,476

 

 

$

(52,209)

 

Capital expenditures

(9,234)

 

 

(10,687)

 

 

(17,771)

 

 

(29,324)

 

Free cash flow

$

65,845

 

 

$

129,680

 

 

$

30,705

 

 

$

(81,533)

 

Voluntary pension contribution

 

 

 

 

 

 

 

150,000

 

Adjustment to capital expenditures (DRG facility investment)

 

 

 

1,998

 

 

 

 

9,675

 

Restructuring

 

 

 

4,076

 

 

 

 

4,741

 

Adjusted free cash flow

$

65,845

 

 

$

135,754

 

 

$

30,705

 

 

$

82,883

 

Adjusted free cash flow conversion

101

%

 

247

%

 

24

%

 

74

%

CURTISS-WRIGHT CORPORATION
2021 Guidance (New Segment Structure)
As of August 3, 2021
($'s in millions, except per share data)
 

2020

Adjusted

Non-GAAP) (1)

 

Exiting

Non-Core

Operations

 

2020

Adjusted (2,4)

(Non-GAAP)

 

2021

Reported

Guidance

(GAAP)

 

Exiting

Non-Core

Operations

2021

Adjustments (3)

(Non-GAAP)

 

2021

Adjusted Guidance (3)

(Non-GAAP)

Low High Low High 2021 Chg vs
2020 Adjusted
Sales:
Aerospace & Industrial

$

805

 

$

(67

)

$

738

 

$

774

 

$

789

 

$

(14

)

$

-

 

$

760

 

$

775

 

3 - 5

%

Defense Electronics

 

611

 

 

-

 

 

611

 

 

745

 

 

760

 

 

-

 

 

-

 

 

745

 

 

760

 

22 - 24

%

Naval & Power

 

977

 

 

(26

)

 

951

 

 

991

 

 

1,011

 

 

(31

)

 

-

 

 

960

 

 

980

 

1 - 3

%

Total sales

$

2,393

 

$

(93

)

$

2,300

 

$

2,510

 

$

2,560

 

$

(45

)

$

-

 

$

2,465

 

$

2,515

 

7 to 9%
 
Operating income:
Aerospace & Industrial

$

114

 

$

(16

)

$

98

 

$

117

 

$

120

 

$

(2

)

$

-

 

$

115

 

$

118

 

17 - 21

%

Defense Electronics

 

144

 

 

-

 

 

144

 

 

153

 

 

158

 

 

-

 

 

6

 

 

159

 

 

164

 

10 - 13

%

Naval & Power

 

171

 

 

-

 

 

171

 

 

176

 

 

181

 

 

(2

)

 

-

 

 

174

 

 

179

 

2 - 5

%

Total segments

 

429

 

 

(16

)

 

413

 

 

446

 

 

459

 

 

(4

)

 

6

 

 

448

 

 

461

 

Corporate and other

 

(38

)

 

-

 

 

(38

)

 

(37

)

 

(39

)

 

-

 

 

-

 

 

(37

)

 

(39

)

Total operating income

$

391

 

$

(16

)

$

375

 

$

409

 

$

419

 

$

(4

)

$

6

 

$

411

 

$

421

 

9 to 12%
 
Interest expense

$

(36

)

$

-

 

$

(36

)

$

(41

)

$

(41

)

$

-

 

$

-

 

$

(41

)

$

(41

)

Other income, net

 

21

 

 

-

 

 

21

 

 

13

 

 

13

 

 

-

 

 

3

 

 

16

 

 

17

 

Earnings before income taxes

 

377

 

 

(16

)

 

361

 

 

381

 

 

392

 

 

(4

)

 

9

 

 

386

 

 

397

 

Provision for income taxes

 

(88

)

 

4

 

 

(85

)

 

(91

)

 

(94

)

 

1

 

 

(2

)

 

(93

)

 

(95

)

Net earnings

$

289

 

$

(12

)

$

277

 

$

290

 

$

298

 

$

(3

)

$

7

 

$

294

 

$

302

 

 
Diluted earnings per share

$

6.87

 

$

(0.29

)

$

6.59

 

$

7.05

 

$

7.25

 

$

(0.07

)

$

0.17

 

$

7.15

 

$

7.35

 

9 to 12%
Diluted shares outstanding

 

42.0

 

 

42.0

 

 

41.1

 

 

41.1

 

 

41.1

 

 

41.1

 

Effective tax rate

 

23.4

%

 

23.4

%

 

24.0

%

 

24.0

%

 

24.0

%

 

24.0

%

 
Operating margins:
Aerospace & Industrial

 

14.2

%

 

NM

 

 

13.3

%

 

15.1

%

 

15.2

%

+10 bps

 

-

 

 

15.1

%

 

15.3

%

180 to 200 bps
Defense Electronics

 

23.6

%

 

NM

 

 

23.6

%

 

20.5

%

 

20.7

%

 

-

 

+80 bps

 

21.3

%

 

21.5

%

(210 to 230 bps)
Naval & Power

 

17.5

%

 

NM

 

 

18.0

%

 

17.8

%

 

17.9

%

+40 bps

 

-

 

 

18.2

%

 

18.3

%

20 to 30 bps
Total operating margin

 

16.3

%

 

NM

 

 

16.3

%

 

16.3

%

 

16.4

%

+20 bps +20 bps

 

16.7

%

 

16.8

%

40 to 50 bps
 
Free cash flow

$

394

 

$

-

 

$

394

 

$

330

 

$

360

 

 

-

 

 

-

 

$

330

 

$

360

 

 
Notes: Full year amounts may not add due to rounding. All financial information by reportable segment for the 2020 and 2021 reporting periods reflects the Corporation’s first quarter 2021 segment reorganization.
(1) A reconciliation of our 2020 GAAP to our 2020 Non-GAAP Adjusted figures are provided in our February 24, 2021 press release.
(2) 2020 Adjusted financials are defined as Reported Operating Income, Operating Margin, Net Income and Diluted EPS under GAAP excluding restructuring costs, first year purchase accounting costs, specifically one-time backlog amortization and transaction costs associated with acquisitions, a non-cash impairment of capitalized development costs related to a commercial aerospace program, and one-time transition and IT security costs related to the relocation of the DRG business, as well as a $10 million non-cash currency translation loss (within non-operating income) related to the liquidation of a foreign legal entity. 2020 financial results excludes our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited, as well as our German valves business which was classified as held for sale, both in the fourth quarter of 2020.
(3) 2021 Adjusted financials are defined as Reported Operating Income, Operating Margin, Net Income and Diluted EPS under GAAP excluding our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited, as well as our German valves business which was classified as held for sale, both in the fourth quarter of 2020, first year purchase accounting costs, specifically one-time backlog amortization and transaction costs associated with acquisitions, and a one-time, $3 million pension settlement charge related to the retirement of two former executives (within non-operating income).
(4) Free Cash Flow is defined as cash flow from operations less capital expenditures. 2020 Adjusted Free Cash Flow guidance excludes a $150 million voluntary contribution made in January to the Company’s corporate defined benefit pension plan, a $20 million cash impact from restructuring, and a $10 million capital investment related to the new, state-of-the-art naval facility principally for DRG.
 
CURTISS-WRIGHT CORPORATION
2021 Sales Growth Guidance by End Market
As of August 3, 2021
 

2021 % Change vs 2020

 

Aerospace & Defense Markets

Prior

Current

% Total Sales

Aerospace Defense

2 - 4%

2 - 4%

19%

Ground Defense

100 - 105%

100 - 105%

9%

Naval Defense

Flat

0 - 2%

28%

Commercial Aerospace

Flat

Flat

10%

Total Aerospace & Defense

7 - 9%

7 - 9%

66%

 

 

 

Commercial Markets

 

 

 

Power & Process

3 - 5%

1 - 3%

18%

General Industrial

9 - 11%

15 - 17%

15%

Total Commercial

6 - 8%

6 - 8%

34%

 

 

 

Total Curtiss-Wright Sales

7 - 9%

7 - 9%

100%

 
Note: Amounts may not add due to rounding.
(1) This table reflects the Company's first quarter 2021 End Market Structure and Realignment, where all Commercial Aerospace market revenues shifted into a newly defined Total Aerospace & Defense market.
(2) The Power & Process end market is comprised of a) Nuclear and b) Process, while the General Industrial end market is comprised of a) Industrial Vehicles and b) Industrial Automation and Services.
(3) Based on these changes, all of our general industrial businesses operate within the Aerospace & Industrial segment, and the majority of the Company’s nuclear and process revenues operate within the Naval & Power segment.

About Curtiss-Wright Corporation

Curtiss-Wright Corporation (NYSE:CW) is a global innovative company that delivers highly engineered, critical function products and services to the Aerospace and Defense markets, and to the Commercial markets including Power, Process and General Industrial. Building on the heritage of Glenn Curtiss and the Wright brothers, Curtiss-Wright has a long tradition of providing reliable solutions through trusted customer relationships. The company employs approximately 8,200 people worldwide. For more information, visitwww.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, future cash flow from operations, and potential impacts of the COVID-19 pandemic are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act") and 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; the impact of a global pandemic or national epidemic, 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, 2020 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