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Curtiss-Wright Reports First Quarter 2024 Financial Results and Increases Full-Year 2024 Guidance for Sales, Operating Income and EPS

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CURTISS-WRIGHT REPORTS FIRST QUARTER 2024 FINANCIAL RESULTS AND INCREASES FULL-YEAR 2024 GUIDANCE FOR SALES, OPERATING INCOME AND EPS

May 01, 2024

 

Curtiss-Wright Corporation (NYSE: CW) reports financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights:

  • Reported sales of $713 million, up 13%, operating income of $100 million, up 27%, operating margin of 14.0%, and diluted earnings per share (EPS) of $1.99;
  • Adjusted operating income of $100 million, up 23%;
  • Adjusted operating margin of 14.0%, up 110 basis points;
  • Adjusted diluted EPS of $1.99, up 30%; and
  • New orders of $901 million, up 26%, reflected a book-to-bill that exceeded 1.25x driven by strong demand within our Aerospace & Defense (A&D) markets.

Raised Full-Year 2024 Financial Guidance:

  • Sales increased to new range of 5% to 7% growth (previously 4% to 6%) and continues to reflect growth in all A&D and Commercial end markets;
  • Operating income increased to new range of 5% to 8% growth (previously 4% to 7%);
  • Maintained operating margin range of 17.4% to 17.6%, up 0 to 20 basis points compared with the prior year;
  • Diluted EPS increased to new range of $10.10 to $10.40, up 8% to 11% (previously $10.00 to $10.30, up 7% to 10%); and
  • Maintained free cash flow range of $415 to $435 million, which continues to reflect nearly 110% FCF conversion.

“Curtiss-Wright delivered strong first quarter 2024 results, exceeding our overall expectations, highlighted by significant growth in sales and operating income, continued operating margin expansion, and diluted EPS of $1.99, which increased 30% year-over-year,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “Our results included a very strong performance in the Defense Electronics segment, which was partially offset by reduced profitability in the Naval & Power segment, principally related to a naval contract adjustment that impacted both the first quarter and full-year outlook for this segment.”

“Based upon our strong overall start to the year and the continued strength in our order book, we have increased our full-year 2024 sales, operating income and diluted EPS guidance as we continue to successfully execute on our Pivot to Growth strategy. We now expect to deliver total sales growth of 5% to 7%, including the contribution from our recent commercial nuclear acquisition of WSC, Inc., continued operating margin expansion while increasing R&D investments, and diluted EPS growth of 8% to 11%, while we maintain our outlook for strong free cash flow conversion well in excess of 100%. We look forward to discussing our alignment with the favorable secular growth trends driving our end markets and our new long-term financial targets at our upcoming investor day on May 21st.”

First Quarter 2024 Operating Results

(In millions)

Q1-2024

Q1-2023

Change

Reported

 

 

 

Sales

$

713

 

$

631

 

13

%

Operating income

$

100

 

$

79

 

27

%

Operating margin

 

14.0

%

 

12.5

%

150 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

713

 

$

631

 

13

%

Operating income

$

100

 

$

81

 

23

%

Operating margin

 

14.0

%

 

12.9

%

110 bps

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

  • Sales of $713 million, up $82 million, or 13% compared with the prior year;
  • Total A&D market sales increased 20%, while total Commercial market sales were essentially flat;
  • In our A&D markets, we experienced higher sales in the defense markets principally driven by continued strong demand for our defense electronics products, as well as strong growth in OEM sales in the commercial aerospace market;
  • In our Commercial markets, we experienced solid growth in the power & process markets, while sales in the general industrial market declined modestly; and
  • Adjusted operating income of $100 million increased 23%, while Adjusted operating margin increased 110 basis points to 14.0%, principally driven by favorable overhead absorption and mix on higher revenues in the Defense Electronics segment, partially offset by an unfavorable naval contract adjustment in the Naval & Power segment.

First Quarter 2024 Segment Performance

Aerospace & Industrial

(In millions)

Q1-2024

Q1-2023

Change

Reported

 

 

 

Sales

$

219

 

$

202

 

8

%

Operating income

$

27

 

$

27

 

3

%

Operating margin

 

12.5

%

 

13.1

%

(60 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

219

 

$

202

 

8

%

Operating income

$

27

 

$

27

 

3

%

Operating margin

 

12.5

%

 

13.1

%

(60 bps)

(1) Note: There were no adjustments to segment operating results.

  • Sales of $219 million, up $17 million, or 8%;
  • Strong revenue growth in the commercial aerospace market reflected higher OEM sales of actuation and sensors products, as well as surface treatment services, on narrowbody and widebody platforms;
  • Higher sales in the aerospace defense market reflected increased actuation development on various fighter jet programs;
  • General industrial market revenues declined modestly, as the benefit of new product introductions supporting the electrification of vehicles was more than offset by reduced sales of industrial vehicle products on off-highway vehicle platforms, and lower sales of industrial automation and services; and
  • Operating income was $27 million, up 3% from the prior year, while operating margin decreased 60 basis points to 12.5%, as favorable absorption on higher sales was offset by unfavorable mix and the timing of development programs.

Defense Electronics

(In millions)

Q1-2024

Q1-2023

Change

Reported

 

 

 

Sales

$

212

 

$

162

 

31

%

Operating income

$

48

 

$

23

 

106

%

Operating margin

 

22.7

%

 

14.4

%

830 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

212

 

$

162

 

31

%

Operating income

$

48

 

$

23

 

106

%

Operating margin

 

22.7

%

 

14.4

%

830 bps

(1) Note: There were no adjustments to segment operating results.

  • Sales of $212 million, up $50 million, or 31%;
  • Higher revenue in the aerospace defense market was principally driven by increased sales of our embedded computing equipment on various fighter jet, unmanned aerial vehicle and helicopter programs;
  • Strong revenue growth in the ground defense market reflected the robust demand and higher sales of tactical battlefield communications equipment;
  • Higher commercial aerospace market revenue reflected increased OEM sales of avionics and electronics on various platforms; and
  • Operating income was $48 million, up 106% from the prior year, while operating margin increased 830 basis points to 22.7%, mainly reflecting improved absorption and mix on higher revenues.

Naval & Power

(In millions)

Q1-2024

Q1-2023

Change

Reported

 

 

 

Sales

$

282

 

$

266

 

6

%

Operating income

$

35

 

$

38

 

(7

%)

Operating margin

 

12.5

%

 

14.3

%

(180 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

282

 

$

266

 

6

%

Operating income

$

35

 

$

41

 

(13

%)

Operating margin

 

12.5

%

 

15.3

%

(280 bps)

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

  • Sales of $282 million, up $16 million, or 6%;
  • Higher revenue in the aerospace defense market was primarily driven by increased sales of our arresting systems equipment supporting various domestic and international customers;
  • Naval defense market revenue increases principally reflected higher revenues on the Columbia-class submarine, partially offset by timing of revenues on the Virginia-class submarine and CVN-80 aircraft carrier programs;
  • Higher power & process market revenues mainly reflected increased commercial nuclear aftermarket sales supporting the maintenance of operating reactors in the U.S. and Canada; and
  • Adjusted operating income was $35 million, down 13% from the prior year, while adjusted operating margin decreased 280 basis points to 12.5%, as favorable absorption on higher revenues was more than offset by an unfavorable naval contract adjustment. 

Free Cash Flow

(In millions)

Q1-2024

Q1-2023

Change

Net cash used for operating activities

$

(46

)

$

(92

)

50

%

Capital expenditures

 

(12

)

 

(11

)

(13

%)

Reported free cash flow

$

(58

)

$

(102

)

44

%

Adjusted free cash flow (1)

$

(58

)

$

(92

)

37

%

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

  • Reported free cash flow of ($58) million increased $45 million, primarily due to higher cash earnings and the timing of tax payments, as well as a $10 million legal settlement payment made in the prior year;
  • Adjusted free cash flow of ($58) million increased $35 million;
  • Capital expenditures increased $1 million compared with the prior year period, primarily due to higher growth investments in the Defense Electronics segment.

New Orders and Backlog

  • New orders of $901 million increased 26% compared with the prior year and generated an overall book-to-bill that exceeded 1.25x, principally driven by strong demand for defense electronics and naval defense products within our A&D markets; and
  • Backlog of $3.1 billion, up 7% from December 31, 2023, reflects higher demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

  • During the first quarter, the Company repurchased 52,612 shares of its common stock for approximately $12 million; and
  • The Company declared a quarterly dividend of $0.20 a share.

Full-Year 2024 Guidance

The Company is increasing 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

$2,960 - $3,010

$2,985 - $3,035

Up 5% - 7%

Operating Income

$514 - $528

$518 - $533

Up 5% - 8%

Operating Margin

17.4% - 17.6%

17.4% - 17.6%

Up 0 - 20 bps

Diluted EPS

$10.00 - $10.30

$10.10 - $10.40

Up 8% - 11%

Free Cash Flow

$415 - $435

$415 - $435

Up 0% - 5%

(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 first quarter 2024 financial results and business outlook at 10:00 a.m. ET on Thursday, May 2, 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

 

March 31,

 

 

2024

 

 

 

2023

 

Product sales

$

595,704

 

 

$

524,881

 

Service sales

 

117,463

 

 

 

105,979

 

Total net sales

 

713,167

 

 

 

630,860

 

 

 

 

 

Cost of product sales

 

389,477

 

 

 

343,757

 

Cost of service sales

 

69,935

 

 

 

65,695

 

Total cost of sales

 

459,412

 

 

 

409,452

 

 

 

 

 

Gross profit

 

253,755

 

 

 

221,408

 

 

 

 

 

Research and development expenses

 

22,980

 

 

 

22,024

 

Selling expenses

 

36,765

 

 

 

32,425

 

General and administrative expenses

 

94,049

 

 

 

88,344

 

 

 

 

 

Operating income

 

99,961

 

 

 

78,615

 

 

 

 

 

Interest expense

 

10,570

 

 

 

12,944

 

Other income, net

 

9,608

 

 

 

7,767

 

 

 

 

 

Earnings before income taxes

 

98,999

 

 

 

73,438

 

Provision for income taxes

 

(22,504

)

 

 

(16,592

)

Net earnings

$

76,495

 

 

$

56,846

 

 

 

 

 

Net earnings per share:

 

 

 

Basic earnings per share

$

2.00

 

 

$

1.48

 

Diluted earnings per share

$

1.99

 

 

$

1.48

 

 

 

 

 

Dividends per share

$

0.20

 

 

$

0.19

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic

 

38,254

 

 

 

38,303

 

Diluted

 

38,431

 

 

 

38,516

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($'s in thousands, except par value)

 

 

 

 

 

March 31,

 

December 31,

 

 

2024

 

 

 

2023

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

338,034

 

 

$

406,867

 

Receivables, net

 

776,662

 

 

 

732,678

 

Inventories, net

 

553,037

 

 

 

510,033

 

Other current assets

 

69,483

 

 

 

67,502

 

Total current assets

 

1,737,216

 

 

 

1,717,080

 

Property, plant, and equipment, net

 

329,347

 

 

 

332,796

 

Goodwill

 

1,552,343

 

 

 

1,558,826

 

Other intangible assets, net

 

542,335

 

 

 

557,612

 

Operating lease right-of-use assets, net

 

133,846

 

 

 

141,435

 

Prepaid pension asset

 

267,334

 

 

 

261,869

 

Other assets

 

49,661

 

 

 

51,351

 

Total assets

$

4,612,082

 

 

$

4,620,969

 

 

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

90,000

 

 

$

 

Accounts payable

 

233,818

 

 

 

243,833

 

Accrued expenses

 

158,089

 

 

 

188,039

 

Deferred revenue

 

297,545

 

 

 

303,872

 

Other current liabilities

 

78,823

 

 

 

70,800

 

Total current liabilities

 

858,275

 

 

 

806,544

 

Long-term debt, net

 

960,009

 

 

 

1,050,362

 

Deferred tax liabilities

 

128,000

 

 

 

132,319

 

Accrued pension and other postretirement benefit costs

 

67,446

 

 

 

66,875

 

Long-term operating lease liability

 

111,981

 

 

 

118,611

 

Long-term portion of environmental reserves

 

13,439

 

 

 

12,784

 

Other liabilities

 

92,753

 

 

 

105,061

 

Total liabilities

$

2,231,903

 

 

$

2,292,556

 

 

 

 

 

Stockholders' equity

 

 

 

Common stock, $1 par value

$

49,187

 

 

$

49,187

 

Additional paid in capital

 

133,166

 

 

 

140,182

 

Retained earnings

 

3,556,572

 

 

 

3,487,751

 

Accumulated other comprehensive loss

 

(228,255

)

 

 

(213,223

)

Less: cost of treasury stock

 

(1,130,491

)

 

 

(1,135,484

)

Total stockholders' equity

 

2,380,179

 

 

 

2,328,413

 

 

 

 

 

Total liabilities and stockholders' equity

$

4,612,082

 

 

$

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 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; and (ii) 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

 

 

 

 

 

March 31, 2024

 

March 31, 2023

 

% Change

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

 

Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

219,325

 

 

$

 

$

219,325

 

 

$

202,447

 

 

$

 

$

202,447

 

 

8

%

 

8

%

Defense Electronics

 

211,741

 

 

 

 

 

211,741

 

 

 

162,154

 

 

 

 

 

162,154

 

 

31

%

 

31

%

Naval & Power

 

282,101

 

 

 

 

 

282,101

 

 

 

266,259

 

 

 

 

 

266,259

 

 

6

%

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

713,167

 

 

$

 

$

713,167

 

 

$

630,860

 

 

$

 

$

630,860

 

 

13

%

 

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

27,466

 

 

$

 

$

27,466

 

 

$

26,545

 

 

$

 

$

26,545

 

 

3

%

 

3

%

Defense Electronics

 

48,081

 

 

 

 

 

48,081

 

 

 

23,368

 

 

 

 

 

23,368

 

 

106

%

 

106

%

Naval & Power (1)

 

35,191

 

 

 

 

 

35,191

 

 

 

37,937

 

 

 

2,676

 

 

40,613

 

 

(7

)%

 

(13

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

110,738

 

 

$

 

$

110,738

 

 

$

87,850

 

 

$

2,676

 

$

90,526

 

 

26

%

 

22

%

Corporate and other

 

(10,777

)

 

 

 

 

(10,777

)

 

 

(9,235

)

 

 

 

 

(9,235

)

 

(17

)%

 

(17

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

$

99,961

 

 

$

 

$

99,961

 

 

$

78,615

 

 

$

2,676

 

$

81,291

 

 

27

%

 

23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

As Reported

 

 

 

Adjusted

 

As Reported

 

 

 

Adjusted

 

Reported

 

Adjusted

Aerospace & Industrial

 

12.5

%

 

 

 

 

12.5

%

 

 

13.1

%

 

 

 

 

13.1

%

 

(60 bps)

 

(60 bps)

Defense Electronics

 

22.7

%

 

 

 

 

22.7

%

 

 

14.4

%

 

 

 

 

14.4

%

 

830 bps

 

830 bps

Naval & Power

 

12.5

%

 

 

 

 

12.5

%

 

 

14.3

%

 

 

 

 

15.3

%

 

(180 bps)

 

(280 bps)

Total Curtiss-Wright

 

14.0

%

 

 

 

 

14.0

%

 

 

12.5

%

 

 

 

 

12.9

%

 

150 bps

 

110 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

15.5

%

 

 

 

 

15.5

%

 

 

13.9

%

 

 

 

 

14.3

%

 

160 bps

 

120 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes first year purchase accounting adjustments.

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

 

 

 

 

 

March 31, 2024

 

March 31, 2023

 

2024 vs. 2023

 

 

Reported Sales

 

Adjustments

 

Adjusted Sales

 

Reported Sales

 

Adjustments

 

Adjusted Sales

 

Change in Reported Sales

Change in Adjusted Sales

Aerospace & Defense markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace Defense

 

$

132,074

 

$

 

$

132,074

 

$

99,879

 

$

 

$

99,879

 

32

%

32

%

Ground Defense

 

 

90,760

 

 

 

 

90,760

 

 

66,256

 

 

 

 

66,256

 

37

%

37

%

Naval Defense

 

 

177,647

 

 

 

 

177,647

 

 

171,956

 

 

 

 

171,956

 

3

%

3

%

Commercial Aerospace

 

 

89,775

 

 

 

 

89,775

 

 

70,490

 

 

 

 

70,490

 

27

%

27

%

Total Aerospace & Defense

 

$

490,256

 

$

 

$

490,256

 

$

408,581

 

$

 

$

408,581

 

20

%

20

%

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process

 

 

124,039

 

 

 

 

124,039

 

 

120,339

 

 

 

 

120,339

 

3

%

3

%

General Industrial

 

 

98,872

 

 

 

 

98,872

 

 

101,940

 

 

 

 

101,940

 

(3

%)

(3

%)

Total Commercial

 

$

222,911

 

$

 

$

222,911

 

$

222,279

 

$

 

$

222,279

 

0

%

0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

713,167

 

$

 

$

713,167

 

$

630,860

 

$

 

$

630,860

 

13

%

13

%

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

RECONCILIATION OF AS REPORTED TO ADJUSTED DILUTED EARNINGS PER SHARE (UNAUDITED)

 

 

 

 

 

Three Months Ended

 

March 31,

 

2024

 

2023

Diluted earnings per share - As Reported

$

1.99

 

 

$

1.48

 

First year purchase accounting adjustments

 

 

 

 

0.05

 

Diluted earnings per share - Adjusted (1)

$

1.99

 

 

$

1.53

 

 

 

 

 

(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 sale