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Curtiss-Wright Reports Fourth Quarter and Full-Year 2022 Financial Results; Issues Full-Year 2023 Guidance Reflecting Higher Sales, Operating Margin, EPS and Free Cash Flow

Strong Q4 Results Drive Record FY22 Sales, Profitability and Orders

Curtiss-Wright Corporation (NYSE: CW) reports financial results for the fourth quarter and full-year ended December 31, 2022.

Fourth Quarter 2022 Highlights:

  • Reported sales of $758 million, operating income of $157 million, operating margin of 20.8%, diluted earnings per share (EPS) of $2.82, and free cash flow (FCF) of $283 million;
  • Adjusted sales of $758 million, up 16% year-over-year;
  • Adjusted operating income of $160 million, up 24%;
  • Adjusted operating margin of 21.1%, up 140 basis points;
  • Adjusted diluted EPS of $2.92, up 21%;
  • Adjusted FCF of $299 million, with 265% FCF conversion; and
  • New orders of $714 million, up 5%, reflecting solid demand in Aerospace & Defense (A&D) and Commercial markets.

Full-Year 2022 Highlights:

  • Reported sales of $2.6 billion, operating income of $423 million, operating margin of 16.6%, diluted EPS of $7.62, and FCF of $257 million;
  • Adjusted sales of $2.6 billion, up 4% year-over-year;
  • Adjusted operating income of $443 million, up 5%;
  • Adjusted operating margin of 17.3%, up 30 basis points;
  • Adjusted diluted EPS of $8.13, up 11%;
  • Adjusted FCF of $296 million, with 94% FCF conversion;
  • Total share repurchases of $50 million; and
  • New orders of $2.9 billion, up 15%; Backlog up 19%.

"Curtiss-Wright delivered record financial performance in the fourth quarter, driven by double-digit organic sales growth in our Aerospace & Defense and Commercial markets, and a strong performance from the recent acquisition of our engineered arresting systems business," said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. "In addition, we achieved record quarterly Adjusted free cash flow of nearly $300 million, which generated robust free cash flow conversion of 265%."

"Our full-year 2022 results were highlighted by a strong operational performance, as we produced higher sales and operating income in our Aerospace & Industrial and Naval & Power segments. Further, the strength and resilience of our combined portfolio enabled us to minimize the impact of the challenging supply chain environment, as we generated 30 basis points in full-year operating margin expansion to 17.3%, and delivered double-digit EPS growth. Our results also reflected record orders of $2.9 billion and a book-to-bill of 1.15x, driven by strong demand across the portfolio."

“Looking to 2023, we anticipate total sales growth of 4% to 6% principally driven by strong growth in our A&D markets, continued operating margin expansion while maintaining steady investments in our technology, and strong Adjusted free cash flow generation ranging from $360 to $400 million. As a result, we remain well-positioned with line of sight to the 3-year financial targets that we communicated at our 2021 Investor Day.”

Fourth Quarter 2022 Operating Results

(In millions)

Q4-2022

Q4-2021

Change

Reported

 

 

 

Sales

$

758

 

$

667

 

14

%

Operating income

$

157

 

$

105

 

49

%

Operating margin

 

20.8

%

 

15.8

%

500 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

758

 

$

655

 

16

%

Operating income

$

160

 

$

129

 

24

%

Operating margin

 

21.1

%

 

19.7

%

140 bps

(1)

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

  • Adjusted sales of $758 million increased 16% compared with the prior year, and included a $9 million or 1% headwind from unfavorable foreign currency translation, mainly within our Aerospace & Industrial segment;
  • Total A&D market sales increased 18%, while total Commercial market sales increased 10%;
  • In our A&D markets, our results reflected strong growth of 20% in our defense markets, driven by higher defense electronics revenues, the contribution from the acquisition of our engineered arresting systems business and double-digit sales growth in commercial aerospace;
  • In our Commercial markets, we experienced double-digit sales growth in the general industrial market, as well as high-single digit sales growth within the power & process market, despite the wind down on the China Direct AP1000 program; and
  • Adjusted operating income of $160 million increased 24%, while Adjusted operating margin increased 140 basis points to 21.1%, principally driven by favorable overhead absorption on higher revenues in all three segments, as well as the benefits of our prior year restructuring and ongoing company-wide operational excellence initiatives.

Fourth Quarter 2022 Segment Performance

Aerospace & Industrial

(In millions)

Q4-2022

Q4-2021

Change

Reported

 

 

 

Sales

$

223

 

$

210

 

6

%

Operating income

$

41

 

$

40

 

2

%

Operating margin

 

18.2

%

 

19.0

%

(80 bps)

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

223

 

$

208

 

8

%

Operating income

$

41

 

$

40

 

2

%

Operating margin

 

18.5

%

 

19.5

%

(100 bps)

(1)

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

  • Adjusted sales of $223 million, up $16 million, or 8% overall, and included a $6 million or 4% headwind from unfavorable foreign currency translation;
  • Higher commercial aerospace market revenue was driven by higher sales of actuation and sensors products on numerous narrowbody and widebody platforms;
  • Lower aerospace defense market revenue reflected the timing of defense market sales of our actuation and sensors products;
  • Strong double-digit revenue growth in the general industrial market reflected continued strong demand for industrial vehicle products serving on-highway, off-highway and specialty platforms, and increased sales of surface treatment services; and
  • Adjusted operating income was $41 million, up 2% from the prior year, while Adjusted operating margin decreased 100 basis points to 18.5%, as favorable absorption on higher sales and the benefits of our ongoing operational excellence initiatives were partially offset by unfavorable mix on actuation products.

Defense Electronics

(In millions)

Q4-2022

Q4-2021

Change

Reported

 

 

 

Sales

$

236

 

$

199

 

19

%

Operating income

$

70

 

$

52

 

34

%

Operating margin

 

29.7

%

 

26.3

%

340 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

236

 

$

200

 

18

%

Operating income

$

70

 

$

53

 

33

%

Operating margin

 

29.7

%

 

26.5

%

320 bps

(1)

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

  • Adjusted sales of $236 million, up $37 million, or 18%, principally reflected strong growth in defense market sales, despite ongoing supply chain headwinds related to the availability of electronic components;
  • Higher aerospace defense market revenues reflected increased sales of our embedded computing equipment on various fighter jet and helicopter programs;
  • Ground defense market revenue increases reflected higher sales of our tactical communications equipment; and
  • Adjusted operating income was $70 million, up 33% from the prior year, while adjusted operating margin increased 320 basis points to 29.7%, primarily driven by strong absorption on higher defense revenues.

Naval & Power

(In millions)

Q4-2022

Q4-2021

Change

Reported

 

 

 

Sales

$

298

 

$

258

 

16

%

Operating income

$

59

 

$

25

 

135

%

Operating margin

 

19.7

%

 

9.7

%

1,000 bps

 

 

 

 

Adjusted (1)

 

 

 

Sales

$

298

 

$

248

 

20

%

Operating income

$

60

 

$

48

 

26

%

Operating margin

 

20.3

%

 

19.3

%

100 bps

(1)

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

  • Adjusted sales of $298 million, up $50 million, or 20%;
  • Higher aerospace defense market revenues reflected the contribution from the arresting systems acquisition for arresting systems equipment, principally to international customers;
  • Naval defense market revenue increases reflected the strong ramp up on the Columbia-class submarine program partially offset by timing of revenues on the CVN-80 aircraft carrier program;
  • Higher power & process market revenues reflected strong growth in nuclear aftermarket sales supporting existing operating reactors as well as increased industrial valve sales in the process market. Those increases were partially offset by the wind down of production on the China Direct AP1000 program; and
  • Adjusted operating income was $60 million, up 26% from the prior year, while adjusted operating margin increased 100 basis points to 20.3%, driven by favorable absorption on higher organic revenues, a solid contribution from the arresting systems acquisition and the benefits of our restructuring initiatives.

Free Cash Flow

(In millions)

Q4-2022

Q4-2021

Change

Net cash provided by operating activities

$

292

 

$

232

 

26

%

Capital expenditures

 

(9

)

 

(13

)

(29

%)

Reported free cash flow

$

283

 

$

219

 

29

%

Adjusted free cash flow (1)

$

299

 

$

219

 

37

%

(1)

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

  • Reported free cash flow of $283 million increased $64 million, primarily due to higher cash earnings and lower taxes;
  • Adjusted free cash flow of $299 million increased $80 million; and
  • Capital expenditures decreased $4 million compared with the prior year.

New Orders and Backlog

  • New orders of $714 million increased 5% in the fourth quarter driven by strong demand for defense electronics products and the contribution from our arresting systems acquisition within our A&D markets, and for nuclear aftermarket products within our Commercial markets;
  • Full-year 2022 new orders of $2.9 billion increased 15% and generated an overall book-to-bill of 1.15x, reflecting growth in our A&D and Commercial markets; and
  • Backlog of $2.6 billion, up 19% from December 31, 2021, reflects strong demand in our Defense and Commercial Aerospace markets.

Share Repurchase and Dividends

  • During the fourth quarter, the Company repurchased 74,816 shares of its common stock for approximately $12 million;
  • During full-year 2022, the Company repurchased 0.3 million shares for $50 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, consisting of $200 million 4.49% notes due 2032 and $100 million 4.64% notes due 2034.

Full-Year 2023 Guidance

The Company's full-year 2023 Adjusted financial guidance(1) is as follows:

($ in millions, except EPS)

2023 Adjusted

Non-GAAP Guidance

% Chg vs 2022

Total Sales

$2,655 - $2,710

Up 4% - 6%

Operating Income

$463 - $477

Up 5% - 8%

Operating Margin

17.4% - 17.6%

Up 10 - 30 bps

Diluted EPS

$8.65 - $8.90

Up 6% - 10%

Free Cash Flow

$360 - $400

Up 22% - 36%

(1)

Reconciliations of Reported to Adjusted 2022 operating results and 2023 financial guidance are available in the Appendix, and exclude first year purchase accounting costs in both periods associated with acquisitions.

**********

A more detailed breakdown of the Company’s 2023 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 fourth quarter and full-year 2022 financial results and expectations for 2023 guidance at 9:00 a.m. ET on Wednesday, February 22, 2023. 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

CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

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

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Product sales

$

646,263

 

 

$

556,911

 

 

$

2,135,882

 

 

$

2,109,617

 

Service sales

 

111,402

 

 

 

109,847

 

 

 

421,143

 

 

 

396,314

 

Total net sales

 

757,665

 

 

 

666,758

 

 

 

2,557,025

 

 

 

2,505,931

 

 

 

 

 

 

 

 

 

Cost of product sales

 

399,389

 

 

 

340,432

 

 

 

1,348,569

 

 

 

1,330,191

 

Cost of service sales

 

65,792

 

 

 

64,454

 

 

 

253,847

 

 

 

242,384

 

Total cost of sales

 

465,181

 

 

 

404,886

 

 

 

1,602,416

 

 

 

1,572,575

 

 

 

 

 

 

 

 

 

Gross profit

 

292,484

 

 

 

261,872

 

 

 

954,609

 

 

 

933,356

 

 

 

 

 

 

 

 

 

Research and development expenses

 

19,032

 

 

 

21,814

 

 

 

80,836

 

 

 

88,489

 

Selling expenses

 

31,199

 

 

 

27,729

 

 

 

121,586

 

 

 

116,956

 

General and administrative expenses

 

85,008

 

 

 

96,532

 

 

 

324,093

 

 

 

326,140

 

Loss on divestiture

 

 

 

 

 

 

 

4,651

 

 

 

 

Impairment of assets held for sale

 

 

 

 

10,432

 

 

 

 

 

 

19,088

 

 

 

 

 

 

 

 

 

Operating income

 

157,245

 

 

 

105,365

 

 

 

423,443

 

 

 

382,683

 

 

 

 

 

 

 

 

 

Interest expense

 

13,665

 

 

 

10,146

 

 

 

46,980

 

 

 

40,240

 

Other income, net

 

1,434

 

 

 

3,157

 

 

 

12,732

 

 

 

12,067

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

145,014

 

 

 

98,376

 

 

 

389,195

 

 

 

354,510

 

Provision for income taxes

 

(35,991

)

 

 

(21,797

)

 

 

(94,847

)

 

 

(87,351

)

Net earnings

$

109,023

 

 

$

76,579

 

 

$

294,348

 

 

$

267,159

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

Basic earnings per share

$

2.85

 

 

$

1.95

 

 

$

7.67

 

 

$

6.61

 

Diluted earnings per share

$

2.82

 

 

$

1.94

 

 

$

7.62

 

 

$

6.58

 

 

 

 

 

 

 

 

 

Dividends per share

$

0.19

 

 

$

0.18

 

 

$

0.75

 

 

$

0.71

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

38,296

 

 

 

39,309

 

 

 

38,386

 

 

 

40,417

 

Diluted

 

38,633

 

 

 

39,524

 

 

 

38,649

 

 

 

40,602

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($'s in thousands, except par value)

 

 

 

 

 

December 31,

 

December 31,

 

 

2022

 

 

 

2021

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

256,974

 

 

$

171,004

 

Receivables, net

 

724,603

 

 

 

647,148

 

Inventories, net

 

483,113

 

 

 

411,567

 

Assets held for sale

 

 

 

 

10,988

 

Other current assets

 

52,623

 

 

 

67,101

 

Total current assets

 

1,517,313

 

 

 

1,307,808

 

Property, plant, and equipment, net

 

342,708

 

 

 

360,031

 

Goodwill

 

1,544,635

 

 

 

1,463,026

 

Other intangible assets, net

 

620,897

 

 

 

538,077

 

Operating lease right-of-use assets, net

 

153,855

 

 

 

143,613

 

Prepaid pension asset

 

222,627

 

 

 

256,422

 

Other assets

 

47,567

 

 

 

34,568

 

Total assets

$

4,449,602

 

 

$

4,103,545

 

 

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Current portion of long-term and short-term debt

$

202,500

 

 

$

 

Accounts payable

 

266,525

 

 

 

211,640

 

Accrued expenses

 

177,536

 

 

 

147,701

 

Deferred revenue

 

242,483

 

 

 

260,157

 

Liabilities held for sale

 

 

 

 

12,655

 

Other current liabilities

 

82,395

 

 

 

102,714

 

Total current liabilities

 

971,439

 

 

 

734,867

 

Long-term debt

 

1,051,900

 

 

 

1,050,610

 

Deferred tax liabilities

 

123,001

 

 

 

147,349

 

Accrued pension and other postretirement benefit costs

 

58,348

 

 

 

91,329

 

Long-term operating lease liability

 

132,275

 

 

 

127,152

 

Long-term portion of environmental reserves

 

12,547

 

 

 

13,656

 

Other liabilities

 

107,973

 

 

 

112,092

 

Total liabilities

 

2,457,483

 

 

 

2,277,055

 

 

 

 

 

Stockholders' equity

 

 

 

Common stock, $1 par value

$

49,187

 

 

$

49,187

 

Additional paid in capital

 

134,553

 

 

 

127,104

 

Retained earnings

 

3,174,396

 

 

 

2,908,827

 

Accumulated other comprehensive loss

 

(258,916

)

 

 

(190,465

)

Less: cost of treasury stock

 

(1,107,101

)

 

 

(1,068,163

)

Total stockholders' equity

 

1,992,119

 

 

 

1,826,490

 

 

 

 

 

Total liabilities and stockholders' equity

$

4,449,602

 

 

$

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

 

 

 

 

 

December 31, 2022

 

December 31, 2021

 

% Change

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

223,258

 

 

$

 

$

223,258

 

 

$

209,994

 

 

$

(2,418

)

 

$

207,576

 

 

6

%

 

8

%

Defense Electronics (2)

 

236,456

 

 

 

 

 

236,456

 

 

 

199,259

 

 

 

360

 

 

 

199,619

 

 

19

%

 

18

%

Naval & Power (4)

 

297,951

 

 

 

 

 

297,951

 

 

 

257,505

 

 

 

(9,401

)

 

 

248,104

 

 

16

%

 

20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

757,665

 

 

$

 

$

757,665

 

 

$

666,758

 

 

$

(11,459

)

 

$

655,299

 

 

14

%

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)(3)

$

40,599

 

 

$

703

 

$

41,302

 

 

$

39,943

 

 

$

493

 

 

$

40,436

 

 

2

%

 

2

%

Defense Electronics (2)

 

70,230

 

 

 

 

 

70,230

 

 

 

52,433

 

 

 

442

 

 

 

52,875

 

 

34

%

 

33

%

Naval & Power (3)(4)(5)

 

58,717

 

 

 

1,724

 

 

60,441

 

 

 

25,025

 

 

 

22,802

 

 

 

47,827

 

 

135

%

 

26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

169,546

 

 

$

2,427

 

$

171,973

 

 

$

117,401

 

 

$

23,737

 

 

$

141,138

 

 

44

%

 

22

%

Corporate and other

 

(12,301

)

 

 

 

 

(12,301

)

 

 

(12,036

)

 

 

(22

)

 

 

(12,058

)

 

2

%

 

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

$

157,245

 

 

$

2,427

 

$

159,672

 

 

$

105,365

 

 

$

23,715

 

 

$

129,080

 

 

49

%

 

24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

As Reported

 

 

 

Adjusted

 

As Reported

 

 

 

Adjusted

 

As Reported

 

Adjusted

Aerospace & Industrial

 

18.2

%

 

 

 

 

18.5

%

 

 

19.0

%

 

 

 

 

19.5

%

 

(80 bps)

 

(100 bps)

Defense Electronics

 

29.7

%

 

 

 

 

29.7

%

 

 

26.3

%

 

 

 

 

26.5

%

 

340 bps

 

320 bps

Naval & Power

 

19.7

%

 

 

 

 

20.3

%

 

 

9.7

%

 

 

 

 

19.3

%

 

1,000 bps

 

100 bps

Total Curtiss-Wright

 

20.8

%

 

 

 

 

21.1

%

 

 

15.8

%

 

 

 

 

19.7

%

 

500 bps

 

140 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

22.4

%

 

 

 

 

22.7

%

 

 

17.6

%

 

 

 

 

21.5

%

 

480 bps

 

120 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.

(5) Excludes one-time legal settlement costs in the prior period.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

RECONCILIATION OF AS REPORTED TO ADJUSTED (UNAUDITED)

($'s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

Year Ended

 

 

 

 

 

December 31, 2022

 

December 31, 2021

 

% Change

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

$

836,035

 

 

$

 

$

836,035

 

 

$

786,334

 

 

$

(11,182

)

 

$

775,152

 

 

6

%

 

8

%

Defense Electronics (2)

 

690,262

 

 

 

 

 

690,262

 

 

 

724,326

 

 

 

3,600

 

 

 

727,926

 

 

(5

)%

 

(5

)%

Naval & Power (4)

 

1,030,728

 

 

 

 

 

1,030,728

 

 

 

995,271

 

 

 

(29,869

)

 

 

965,402

 

 

4

%

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

2,557,025

 

 

$

 

$

2,557,025

 

 

$

2,505,931

 

 

$

(37,451

)

 

$

2,468,480

 

 

2

%

 

4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)(3)

$

136,996

 

 

$

703

 

$

137,699

 

 

$

121,817

 

 

$

(1,586

)

 

$

120,231

 

 

12

%

 

15

%

Defense Electronics (2)

 

154,568

 

 

 

 

 

154,568

 

 

 

159,089

 

 

 

5,134

 

 

 

164,223

 

 

(3

)%

 

(6

)%

Naval & Power (3)(4)(6)

 

177,582

 

 

 

14,056

 

 

191,638

 

 

 

141,660

 

 

 

34,139

 

 

 

175,799

 

 

25

%

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

$

469,146

 

 

$

14,759

 

$

483,905

 

 

$

422,566

 

 

$

37,687

 

 

$

460,253

 

 

11

%

 

5

%

Corporate and other (5)

 

(45,703

)

 

 

4,876

 

 

(40,827

)

 

 

(39,883

)

 

 

53

 

 

 

(39,830

)

 

15

%

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

$

423,443

 

 

$

19,635

 

$

443,078

 

 

$

382,683

 

 

$

37,739

 

 

$

420,422

 

 

11

%

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

As Reported

 

 

 

Adjusted

 

As Reported

 

 

 

Adjusted

 

As Reported

 

Adjusted

Aerospace & Industrial

 

16.4

%

 

 

 

 

16.5

%

 

 

15.5

%

 

 

 

 

15.5

%

 

90 bps

 

100 bps

Defense Electronics

 

22.4

%

 

 

 

 

22.4

%

 

 

22.0

%

 

 

 

 

22.6

%

 

40 bps

 

(10 bps)

Naval & Power

 

17.2

%

 

 

 

 

18.6

%

 

 

14.2

%

 

 

 

 

18.2

%

 

300 bps

 

40 bps

Total Curtiss-Wright

 

16.6

%

 

 

 

 

17.3

%

 

 

15.3

%

 

 

 

 

17.0

%

 

130 bps

 

30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

18.3

%

 

 

 

 

18.9

%

 

 

16.9

%

 

 

 

 

18.6

%

 

140 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.

(6) Excludes one-time legal settlement costs in the prior 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

 

 

 

 

 

December 31, 2022

 

December 31, 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

 

$

172,763

 

$

 

$

172,763

 

$

124,815

 

$

 

 

$

124,815

 

38

%

38

%

Ground Defense (1)

 

 

81,348

 

 

 

 

81,348

 

 

61,199

 

 

360

 

 

 

61,559

 

33

%

32

%

Naval Defense

 

 

183,418

 

 

 

 

183,418

 

 

179,259

 

 

 

 

 

179,259

 

2

%

2

%

Commercial Aerospace (2)

 

 

77,178

 

 

 

 

77,178

 

 

71,437

 

 

(2,418

)

 

 

69,019

 

8

%

12

%

Total Aerospace & Defense

 

$

514,707

 

$

 

$

514,707

 

$

436,710

 

$

(2,058

)

 

$

434,652

 

18

%

18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process (3)

 

 

131,598

 

 

 

 

131,598

 

 

129,916

 

 

(9,401

)

 

 

120,515

 

1

%

9

%

General Industrial

 

 

111,360

 

 

 

 

111,360

 

 

100,132

 

 

 

 

 

100,132

 

11

%

11

%

Total Commercial

 

$

242,958

 

$

 

$

242,958

 

$

230,048

 

$

(9,401

)

 

$

220,647

 

6

%

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

757,665

 

$

 

$

757,665

 

$

666,758

 

$

(11,459

)

 

$

655,299

 

14

%

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

Year Ended

 

 

 

 

 

December 31, 2022

 

December 31, 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

 

$

479,743

 

$

 

$

479,743

 

$

452,661

 

$

 

 

$

452,661

 

6

%

6

%

Ground Defense (1)

 

 

219,739

 

 

 

 

219,739

 

 

220,290

 

 

3,600

 

 

 

223,890

 

0

%

(2

%)

Naval Defense

 

 

694,015

 

 

 

 

694,015

 

 

710,688

 

 

 

 

 

710,688

 

(2

%)

(2

%)

Commercial Aerospace (2)

 

 

276,519

 

 

 

 

276,519

 

 

267,722

 

 

(11,182

)

 

 

256,540

 

3

%

8

%

Total Aerospace & Defense

 

$

1,670,016

 

$

 

$

1,670,016

 

$

1,651,361

 

$

(7,582

)

 

$

1,643,779

 

1

%

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process (3)

 

 

472,300

 

 

 

 

472,300

 

 

473,489

 

 

(29,869

)

 

 

443,620

 

0

%

6

%

General Industrial

 

 

414,709

 

 

 

 

414,709

 

 

381,081

 

 

 

 

 

381,081

 

9

%

9

%

Total Commercial

 

$

887,009

 

$

 

$

887,009

 

$

854,570

 

$

(29,869

)

 

$

824,701

 

4

%

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

2,557,025

 

$

 

$

2,557,025

 

$

2,505,931

 

$

(37,451

)

 

$

2,468,480

 

2

%

4

%

(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

 

Year Ended

 

December 31,

 

December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Diluted earnings per share - As Reported

$

2.82

 

$

1.94

 

$

7.62

 

$

6.58

 

First year purchase accounting adjustments

 

0.05

 

 

0.02

 

 

0.18

 

 

0.11

 

Divested German valves business

 

 

 

0.11

 

 

0.14

 

 

0.30

 

Costs associated with shareholder activism

 

 

 

 

 

0.10

 

 

 

Pension settlement charges

 

0.05

 

 

 

 

0.09

 

 

0.06

 

Charges related to legal settlement

 

 

 

0.32

 

 

 

 

0.31

 

Exit of build-to-print actuation product line

 

 

 

0.01

 

 

 

 

(0.02

)

Diluted earnings per share - Adjusted (1)

$

2.92

 

$

2.40

 

$

8.13

 

$

7.34

 

(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 and results of operations from divested businesses or product lines during the last twelve months, impairment of assets held for sale and corresponding loss from sale of our industrial valves business in Germany, and foreign currency fluctuations.

 

Three Months Ended

 

December 31,

 

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

%

 

2

%

 

19

%

 

34

%

 

16

%

 

135

%

 

14

%

 

49

%

Less: Acquisitions/divestiture

1

%

 

0

%

 

0

%

 

0

%

 

(9

%)

 

(17

%)

 

(3

%)

 

(4

%)

Impairment of assets held for sale

0

%

 

0

%

 

0

%

 

0

%

 

0

%

 

(42

%)

 

0

%

 

(10

%)

Foreign currency

4

%

 

(1

%)

 

0

%

 

(5

%)

 

1

%

 

(2

%)

 

1

%

 

(4

%)

Organic

11

%

 

(1

%)

 

19

%

 

29

%

 

8

%

 

74

%

 

12

%

 

31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

December 31,

 

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

%

 

12

%

 

(5

%)

 

(3

%)

 

4

%

 

25

%

 

2

%

 

11

%

Less: Acquisitions/divestiture

1

%

 

1

%

 

0

%

 

0

%

 

(1

%)

 

0

%

 

0

%

 

0

%

Loss on divestiture/impairment of assets held for sale

0

%

 

0

%

 

0

%

 

0

%

 

0

%

 

(10

%)

 

0

%

 

(4

%)

Foreign currency

3

%

 

1

%

 

1

%

 

(3

%)

 

0

%

 

0

%

 

1

%

 

(1

%)

Organic

10

%

 

14

%

 

(4

%)

 

(6

%)

 

3

%

 

15

%

 

3

%

 

6

%

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

 

Year Ended

 

December 31,

 

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net cash provided by operating activities

$

292,389

 

 

$

231,907

 

 

$

294,776

 

 

$

387,668

 

Capital expenditures

 

(9,428

)

 

 

(13,250

)

 

 

(38,217

)

 

 

(41,108

)

Free cash flow

$

282,961

 

 

$

218,657

 

 

$

256,559

 

 

$

346,560

 

Westinghouse legal settlement

 

 

 

 

 

 

 

15,000

 

 

 

 

Pension payment to former executives

 

15,753

 

 

 

 

 

 

23,967

 

 

 

 

Adjusted free cash flow

$

298,714

 

 

$

218,657

 

 

$

295,526

 

 

$

346,560

 

Adjusted free cash flow conversion

 

265

%

 

 

230

%

 

 

94

%

 

 

116

%

CURTISS-WRIGHT CORPORATION

2023 Guidance

As of February 21, 2023

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

Reported

(GAAP)

 

2022

Adjustments

(Non-

GAAP)(1,3)

 

2022

Adjusted

(Non-

GAAP)(1,3)

 

2023

Reported Guidance

(GAAP)

 

2023

Adjustments

(Non-

GAAP)(2,3)

 

2023

Adjusted Guidance

(Non-GAAP)(2,3)

 

 

 

 

 

 

 

Low

High

 

 

 

Low

High

 

2023 Chg

vs 2022

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

836

 

 

$

 

 

$

836

 

 

$

845

 

$

860

 

 

$

 

 

$

845

 

$

860

 

 

1 - 3%

Defense Electronics

 

690

 

 

 

 

 

 

690

 

 

 

725

 

 

750

 

 

 

 

 

 

725

 

 

750

 

 

5 - 9%

Naval & Power

 

1,031

 

 

 

 

 

 

1,031

 

 

 

1,085

 

 

1,100

 

 

 

 

 

 

1,085

 

 

1,100

 

 

5 - 7%

Total sales

$

2,557

 

 

$

 

 

$

2,557

 

 

$

2,655

 

$

2,710

 

 

$

 

 

$

2,655

 

$

2,710

 

 

4 to 6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

$

137

 

 

$

1

 

 

$

138

 

 

$

143

 

$

148

 

 

$

 

 

$

143

 

$

148

 

 

4 - 7%

Defense Electronics

 

155

 

 

 

 

 

 

155

 

 

 

165

 

 

172

 

 

 

 

 

 

165

 

 

172

 

 

7 - 11%

Naval & Power

 

178

 

 

 

14

 

 

 

192

 

 

 

182

 

 

186

 

 

 

8

 

 

 

190

 

 

194

 

 

(1) - 1%

Total segments

 

469

 

 

 

15

 

 

 

484

 

 

 

490

 

 

506

 

 

 

8

 

 

 

498

 

 

514

 

 

 

Corporate and other

 

(46

)

 

 

5

 

 

 

(41

)

 

 

(35

)

 

(38

)

 

 

 

 

 

(35

)

 

(38

)

 

 

Total operating income

$

423

 

 

$

20

 

 

$

443

 

 

$

455

 

$

469

 

 

$

8

 

 

$

463

 

$

477

 

 

5 to 8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

$

(47

)

 

$

 

 

$

(47

)

 

$

(52

)

$

(54

)

 

$

 

 

$

(52

)

$

(54

)

 

 

Other income, net

 

13

 

 

 

4

 

 

 

17

 

 

 

27

 

��

28

 

 

 

 

 

 

27

 

 

28

 

 

 

Earnings before income taxes

 

389

 

 

 

24

 

 

 

413

 

 

 

430

 

 

443

 

 

 

8

 

 

 

438

 

 

451

 

 

 

Provision for income taxes

 

(95

)

 

 

(4

)

 

 

(99

)

 

 

(103

)

 

(106

)

 

 

(2

)

 

 

(105

)

 

(108

)

 

 

Net earnings

$

294

 

 

$

20

 

 

$

314

 

 

$

327

 

$

336

 

 

$

6

 

 

$

333

 

$

343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

7.62

 

 

$

0.51

 

 

$

8.13

 

 

$

8.49

 

$

8.74

 

 

$

0.16

 

 

$

8.65

 

$

8.90

 

 

6 to 10%

Diluted shares outstanding

 

38.6

 

 

 

 

 

38.6

 

 

 

38.5

 

 

38.5

 

 

 

 

 

38.5

 

 

38.5

 

 

 

Effective tax rate

 

24.4

%

 

 

 

 

24.0

%

 

 

24.0

%

 

24.0

%

 

 

 

 

24.0

%

 

24.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

 

16.4

%

 

 

 

 

16.5

%

 

 

17.0

%

 

17.2

%

 

 

 

 

17.0

%

 

17.2

%

 

50 to 70 bps

Defense Electronics

 

22.4

%

 

 

 

 

22.4

%

 

 

22.7

%

 

22.9

%

 

 

 

 

22.7

%

 

22.9

%

 

30 to 50 bps

Naval & Power

 

17.2

%

 

 

 

 

18.6

%

 

 

16.7

%

 

16.9

%

 

 

 

 

17.5

%

 

17.7

%

 

(110) to (90) bps

Total operating margin

 

16.6

%

 

 

 

 

17.3

%

 

 

17.1

%

 

17.3

%

 

 

 

 

17.4

%

 

17.6

%

 

10 to 30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

$

257

 

 

$

39

 

 

$

296

 

 

$

350

 

$

390

 

 

$

10

 

 

$

360

 

$

400

 

 

 

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

 

(1) 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.

(2) 2023 Adjusted financials exclude the impact of first year purchase accounting adjustments.

(3) Free Cash Flow is defined as cash flow from operations less capital expenditures. 2022 Adjusted Free Cash Flow excluded one-time pension settlement payments of $24 million and a legal settlement payment of $15 million. 2023 Adjusted Free Cash Flow guidance excludes a legal settlement payment of $10 million.

CURTISS-WRIGHT CORPORATION

2023 Sales Growth Guidance by End Market

As of February 21, 2023

 

 

 

 

 

 

 

 

 

 

 

2023 % Change

vs 2022 Adjusted(1)

 

% Total Sales

 

 

 

 

Aerospace & Defense Markets

 

 

 

Aerospace Defense

9 - 11%

 

20%

Ground Defense

4 - 6%

 

9%

Naval Defense

4 - 6%

 

27%

Commercial Aerospace

5 - 7%

 

11%

Total Aerospace & Defense

6 - 8%

 

67%

 

 

 

 

Commercial Markets

 

 

 

Power & Process

Flat

 

18%

General Industrial

2 - 4%

 

16%

Total Commercial

0 - 2%

 

33%

 

 

 

 

Total Curtiss-Wright Sales

4 - 6%

 

100%

Note: Sales percentages may not add due to rounding.

 

 

 

(1) 2023 and 2022 Sales include the contribution from the engineered arresting systems business, acquired on June 30, 2022, to the Aerospace Defense market.

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 8,100 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, 2022, and subsequent reports filed with the Securities and Exchange Commission.

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

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