DAVIDSON, N.C.--(BUSINESS WIRE)--Curtiss-Wright Corporation (NYSE: CW) reports financial results for the fourth quarter and full-year ended December 31, 2023.
Fourth Quarter 2023 Highlights:
- Reported sales of $786 million, up 4%, operating income of $161 million, operating margin of 20.4%, and diluted earnings per share (EPS) of $3.11;
- Adjusted operating income of $163 million, up 2%;
- Adjusted operating margin of 20.8%;
- Adjusted diluted EPS of $3.16, up 8%; and
- Free cash flow (FCF) of $270 million, generating 221% Adjusted FCF conversion.
Full-Year 2023 Highlights:
- Reported sales of $2.8 billion, up 11%, operating income of $485 million, operating margin of 17.0%, diluted EPS of $9.20 and Reported FCF of $403 million;
- Adjusted operating income of $494 million, up 11%;
- Adjusted operating margin of 17.4%;
- Adjusted diluted EPS of $9.38, up 15%;
- Adjusted FCF of $413 million, generating 114% Adjusted FCF conversion;
- Total share repurchases of $50 million;
- New orders of $3.1 billion, up 5%, reflecting solid demand in Aerospace & Defense (A&D) and Commercial markets, and book-to-bill of 1.1x; and
- Backlog of $2.9 billion, up 9%;
"Curtiss-Wright ended the year with a strong fourth quarter financial performance that reflected better-than-expected sales growth, record quarterly Adjusted diluted EPS of $3.16 and strong free cash flow," said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation.
"Our full-year 2023 results were highlighted by another year of strong operational performance, as we delivered record high sales and operating income driven by 10% organic growth, and improved profitability while continuing to ramp up our investments in research and development across the portfolio. We achieved record Adjusted free cash flow of $413 million, driven by 15% growth in Adjusted diluted EPS as well as our continued efforts to reduce working capital. Our results also reflected strong demand across our A&D and Commercial markets, which drove record new orders exceeding $3 billion and a book-to-bill of 1.1x. Overall, these results mark the final, successful year for the three year goals we established at our May 2021 Investor Day. I'm incredibly proud of the team's efforts to successfully execute our pivot to growth strategy and the momentum we now carry forward into 2024."
"Looking ahead, our strong backlog entering the year supports our expectations to deliver total organic sales growth of 4% to 6% in 2024, including growth in all of our A&D and Commercial end markets. We expect to deliver continued operating margin expansion while increasing R&D investments, diluted EPS growth of 7% to 10%, and strong free cash flow generation ranging from $415 to $435 million. We remain well-positioned with strong alignment of our technologies to the favorable secular growth trends in each of our end markets, and confident in our ability to deliver profitable growth and drive long-term shareholder value."
Fourth Quarter 2023 Operating Results
(In millions) | Q4-2023 | Q4-2022 | Change | |||||
Reported | ||||||||
Sales | $ | 786 | $ | 758 | 4 | % | ||
Operating income | $ | 161 | $ | 157 | 2 | % | ||
Operating margin | 20.4 | % | 20.8 | % | (40 bps) | |||
Adjusted (1) | ||||||||
Sales | $ | 786 | $ | 758 | 4 | % | ||
Operating income | $ | 163 | $ | 160 | 2 | % | ||
Operating margin | 20.8 | % | 21.1 | % | (30 bps) | |||
(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix. | ||||||||
- Sales of $786 million increased 4% compared with the prior year period;
- Total A&D market sales increased 5%, while total Commercial market sales increased 2%;
- In our A&D markets, we experienced solid growth in the defense markets principally driven by higher defense electronics revenues and higher sales of arresting systems equipment, as well as strong sales growth in the commercial aerospace market;
- In our Commercial markets, we experienced solid growth in the power & process markets, despite the wind down on the China Direct AP1000 program, while sales in the general industrial market were in-line with the prior year period; and
- Adjusted operating income was $163 million, up 2% compared with the prior year period, while Adjusted operating margin decreased 30 basis points to 20.8%, as favorable overhead absorption on higher revenues in all three segments was offset by unfavorable mix on products and higher investment in research and development.
Fourth Quarter 2023 Segment Performance
Aerospace & Industrial
(In millions) | Q4-2023 | Q4-2022 | Change | |||||
Reported | ||||||||
Sales | $ | 238 | $ | 223 | 7 | % | ||
Operating income | $ | 44 | $ | 41 | 9 | % | ||
Operating margin | 18.5 | % | 18.2 | % | 30 bps | |||
Adjusted (1) | ||||||||
Sales | $ | 238 | $ | 223 | 7 | % | ||
Operating income | $ | 44 | $ | 41 | 7 | % | ||
Operating margin | 18.5 | % | 18.5 | % | 0 bps | |||
(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix. | ||||||||
- Sales of $238 million, up $15 million, or 7%;
- Higher commercial aerospace market revenues reflected increased OEM sales of actuation and sensors products, as well as surface treatment services, on narrowbody and widebody platforms;
- In the defense markets, higher revenue in the aerospace defense market supporting various fighter jet programs was mainly offset by lower sales on ground missile launchers in the ground defense market;
- General industrial market revenue was essentially flat, as the benefit of new product introductions addressing the electrification of vehicles was mainly offset by lower sales on off-highway vehicle platforms; and
- Adjusted operating income was $44 million, up 7%, with a strong Adjusted operating margin of 18.5%, as favorable absorption on higher revenues was partially offset by the timing of development contracts.
Defense Electronics
(In millions) | Q4-2023 | Q4-2022 | Change | |||||
Reported | ||||||||
Sales | $ | 240 | $ | 236 | 1 | % | ||
Operating income | $ | 69 | $ | 70 | (2 | %) | ||
Operating margin | 28.8 | % | 29.7 | % | (90 bps) | |||
Adjusted (1) | ||||||||
Sales | $ | 240 | $ | 236 | 1 | % | ||
Operating income | $ | 69 | $ | 70 | (2 | %) | ||
Operating margin | 28.8 | % | 29.7 | % | (90 bps) | |||
(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix. | ||||||||
- Sales of $240 million, up $3 million, or 1%;
- Aerospace defense market revenue declines principally reflected the timing of sales of our embedded computing equipment on various helicopter programs partially offset by higher sales of flight test instrumentation equipment on various fighter jet programs;
- Strong revenue growth in the ground defense market reflected higher sales of tactical battlefield communications equipment as well as higher sales of embedded computing equipment on the Stryker ground combat vehicle;
- Higher revenue in the naval defense market reflected increased sales of our embedded computing equipment supporting various domestic and international programs; and
- Adjusted operating income was $69 million, down 2% from the prior year period, while adjusted operating margin decreased 90 basis points to 28.8%, as favorable absorption on higher revenues was offset by unfavorable mix and higher investments in research and development.
Naval & Power
(In millions) | Q4-2023 | Q4-2022 | Change | |||||
Reported | ||||||||
Sales | $ | 308 | $ | 298 | 3 | % | ||
Operating income | $ | 57 | $ | 59 | (3 | %) | ||
Operating margin | 18.5 | % | 19.7 | % | (120 bps) | |||
Adjusted (1) | ||||||||
Sales | $ | 308 | $ | 298 | 3 | % | ||
Operating income | $ | 59 | $ | 60 | (2 | %) | ||
Operating margin | 19.3 | % | 20.3 | % | (100 bps) | |||
(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix. | ||||||||
- Sales of $308 million, up $10 million, or 3%;
- 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 was essentially flat, as higher revenues on Columbia-class and Virginia-class submarines were mainly offset by the timing of revenues on the CVN-80 and CVN-81 aircraft carrier programs;
- Higher power & process market revenues reflected strong growth in industrial valve sales in the process market, and solid growth in the commercial nuclear market supporting increased development on Advanced Small Modular Reactors (ASMRs); Those increases were partially offset by lower China Direct AP1000 program revenues; and
- Adjusted operating income was $59 million, down 2% from the prior year period, while adjusted operating margin decreased 100 basis points to 19.3%, as favorable absorption on higher revenues was offset by unfavorable mix of products and timing of development contracts.
Free Cash Flow
(In millions) | Q4-2023 | Q4-2022 | Change | |||||
Net cash provided by operating activities | $ | 282 | $ | 292 | (3 | %) | ||
Capital expenditures | (13 | ) | (9 | ) | 34 | % | ||
Reported free cash flow | $ | 270 | $ | 283 | (5 | %) | ||
Adjusted free cash flow (1) | $ | 270 | $ | 299 | (10 | %) | ||
(1) A reconciliation of Reported to Adjusted free cash flow is available in the Appendix. | ||||||||
- Reported free cash flow of $270 million decreased $13 million, as higher cash earnings were more than offset by higher taxes;
- Adjusted free cash flow of $270 million decreased $29 million; and
- Capital expenditures increased approximately $3 million compared with the prior year period, primarily due to higher growth investments within the Naval & Power segment.
New Orders and Backlog
- New orders of $685 million decreased 4% in the fourth quarter, reflecting timing in our Defense markets, partially offset by strong demand within our Commercial markets for nuclear aftermarket products as well as subsea pumps to the process market;
- Full-year 2023 new orders of $3.1 billion increased 5% and generated an overall book-to-bill of 1.1x, reflecting growth in our A&D and Commercial markets; and
- Backlog of $2.9 billion, up 9% from December 31, 2022, reflects strong demand in both our A&D and Commercial markets.
Share Repurchase and Dividends
- During the fourth quarter, the Company repurchased 60,442 shares of its common stock for approximately $13 million;
- During full-year 2023, the Company repurchased 0.3 million shares for $50 million; and
- The Company also declared a quarterly dividend of $0.20 a share.
Full-Year 2024 Guidance
The Company's full-year 2024 financial guidance(1) is as follows:
($ in millions, except EPS) | 2024 Guidance | % Chg vs 2023 Adjusted |
Total Sales | $2,960 - $3,010 | Up 4% - 6% |
Operating Income | $514 - $528 | Up 4% - 7% |
Operating Margin | 17.4% - 17.6% | Up 0 - 20 bps |
Diluted EPS | $10.00 - $10.30 | Up 7% - 10% |
Free Cash Flow | $415 - $435 | Up 0% - 5% |
| (1) Reconciliations of Reported to Adjusted 2023 operating results and 2024 financial guidance are available in the Appendix, and exclude first year purchase accounting costs associated with prior year acquisitions. | ||
**********
A more detailed breakdown of the Company's 2024 financial guidance by segment and by market, as well as all reconciliations of Reported GAAP amounts to Adjusted non-GAAP amounts, can be found in the accompanying schedules. Historical financial results are available in the Investor Relations section of Curtiss-Wright's website.
Conference Call & Webcast Information
The Company will host a conference call to discuss fourth quarter and full-year 2023 financial results and expectations for 2024 guidance at 10:00 a.m. ET on Thursday, February 15, 2024. A live webcast of the call and the accompanying financial presentation, as well as a webcast replay of the call, will be made available on the internet by visiting the Investor Relations section of the Company's website at www.curtisswright.com.
(Tables to Follow)
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) | |||||||||||||||
($'s in thousands, except per share data) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Product sales | $ | 667,879 | $ | 646,263 | $ | 2,389,711 | $ | 2,135,882 | |||||||
Service sales | 117,912 | 111,402 | 455,662 | 421,143 | |||||||||||
Total net sales | 785,791 | 757,665 | 2,845,373 | 2,557,025 | |||||||||||
Cost of product sales | 414,010 | 399,389 | 1,507,480 | 1,348,569 | |||||||||||
Cost of service sales | 67,051 | 65,792 | 270,715 | 253,847 | |||||||||||
Total cost of sales | 481,061 | 465,181 | 1,778,195 | 1,602,416 | |||||||||||
Gross profit | 304,730 | 292,484 | 1,067,178 | 954,609 | |||||||||||
Research and development expenses | 20,066 | 19,032 | 85,764 | 80,836 | |||||||||||
Selling expenses | 36,306 | 31,199 | 137,088 | 121,586 | |||||||||||
General and administrative expenses | 87,664 | 85,008 | 359,724 | 324,093 | |||||||||||
Loss on divestiture | - | - | - | 4,651 | |||||||||||
Operating income | 160,694 | 157,245 | 484,602 | 423,443 | |||||||||||
Interest expense | 10,961 | 13,665 | 51,393 | 46,980 | |||||||||||
Other income, net | 7,117 | 1,434 | 29,861 | 12,732 | |||||||||||
Earnings before income taxes | 156,850 | 145,014 | 463,070 | 389,195 | |||||||||||
Provision for income taxes | (36,963 | ) | (35,991 | ) | (108,561 | ) | (94,847 | ) | |||||||
Net earnings | $ | 119,887 | $ | 109,023 | $ | 354,509 | $ | 294,348 | |||||||
Net earnings per share: | |||||||||||||||
Basic earnings per share | $ | 3.14 | $ | 2.85 | $ | 9.26 | $ | 7.67 | |||||||
Diluted earnings per share | $ | 3.11 | $ | 2.82 | $ | 9.20 | $ | 7.62 | |||||||
Dividends per share | $ | 0.20 | $ | 0.19 | $ | 0.79 | $ | 0.75 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 38,232 | 38,296 | 38,283 | 38,386 | |||||||||||
Diluted | 38,505 | 38,633 | 38,529 | 38,649 | |||||||||||
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
($'s in thousands, except par value) | |||||||
December 31, | December 31, | ||||||
2023 | 2022 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 406,867 | $ | 256,974 | |||
Receivables, net | 732,678 | 723,304 | |||||
Inventories, net | 510,033 | 483,113 | |||||
Other current assets | 67,502 | 52,623 | |||||
Total current assets | 1,717,080 | 1,516,014 | |||||
Property, plant, and equipment, net | 332,796 | 342,708 | |||||
Goodwill | 1,558,826 | 1,544,635 | |||||
Other intangible assets, net | 557,612 | 620,897 | |||||
Operating lease right-of-use assets, net | 141,435 | 153,855 | |||||
Prepaid pension asset | 261,869 | 222,627 | |||||
Other assets | 51,351 | 47,567 | |||||
Total assets | $ | 4,620,969 | $ | 4,448,303 | |||
Liabilities | |||||||
Current liabilities: | |||||||
Current portion of long-term and short-term debt | $ | - | $ | 202,500 | |||
Accounts payable | 243,833 | 266,525 | |||||
Accrued expenses | 188,039 | 174,440 | |||||
Deferred revenue | 303,872 | 254,801 | |||||
Other current liabilities | 70,800 | 82,779 | |||||
Total current liabilities | 806,544 | 981,045 | |||||
Long-term debt | 1,050,362 | 1,051,900 | |||||
Deferred tax liabilities | 132,319 | 123,001 | |||||
Accrued pension and other postretirement benefit costs | 66,875 | 58,348 | |||||
Long-term operating lease liability | 118,611 | 132,275 | |||||
Long-term portion of environmental reserves | 12,784 | 12,547 | |||||
Other liabilities | 105,061 | 107,973 | |||||
Total liabilities | $ | 2,292,556 | $ | 2,467,089 | |||
Stockholders' equity | |||||||
Common stock, $1 par value | $ | 49,187 | $ | 49,187 | |||
Additional paid in capital | 140,182 | 134,553 | |||||
Retained earnings | 3,487,751 | 3,163,491 | |||||
Accumulated other comprehensive loss | (213,223 | ) | (258,916 | ) | |||
Less: cost of treasury stock | (1,135,484 | ) | (1,107,101 | ) | |||
Total stockholders' equity | 2,328,413 | 1,981,214 | |||||
Total liabilities and stockholders' equity | $ | 4,620,969 | $ | 4,448,303 | |||
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, 2023 | December 31, 2022 | % Change | |||||||||||||||||||||||||
As Reported | Adjustments | Adjusted | As Reported | Adjustments | Adjusted | As Reported | Adjusted | ||||||||||||||||||||
Sales: | |||||||||||||||||||||||||||
Aerospace & Industrial | $ | 238,224 | $ | - | $ | 238,224 | $ | 223,258 | $ | - | $ | 223,258 | 7 | % | 7 | % | |||||||||||
Defense Electronics | 239,751 | - | 239,751 | 236,456 | - | 236,456 | 1 | % | 1 | % | |||||||||||||||||
Naval & Power | 307,816 | - | 307,816 | 297,951 | - | 297,951 | 3 | % | 3 | % | |||||||||||||||||
Total sales | $ | 785,791 | $ | - | $ | 785,791 | $ | 757,665 | $ | - | $ | 757,665 | 4 | % | 4 | % | |||||||||||
Operating income (expense): | |||||||||||||||||||||||||||
Aerospace & Industrial (1) | $ | 44,054 | $ | - | $ | 44,054 | $ | 40,599 | $ | 703 | $ | 41,302 | 9 | % | 7 | % | |||||||||||
Defense Electronics | 69,015 | - | 69,015 | 70,230 | - | 70,230 | (2 | )% | (2 | )% | |||||||||||||||||
Naval & Power (2) | 56,845 | 2,529 | 59,374 | 58,717 | 1,724 | 60,441 | (3 | )% | (2 | )% | |||||||||||||||||
Total segments | $ | 169,914 | $ | 2,529 | $ | 172,443 | $ | 169,546 | $ | 2,427 | $ | 171,973 | - | % | - | % | |||||||||||
Corporate and other | (9,221 | ) | - | (9,221 | ) | (12,301 | ) | - | (12,301 | ) | 25 | % | 25 | % | |||||||||||||
Total operating income | $ | 160,693 | $ | 2,529 | $ | 163,222 | $ | 157,245 | $ | 2,427 | $ | 159,672 | 2 | % | 2 | % | |||||||||||
Operating margins: | As Reported | Adjusted | As Reported | Adjusted | As Reported | Adjusted | |||||||||||||||||||||
Aerospace & Industrial | 18.5 | % | 18.5 | % | 18.2 | % | 18.5 | % | 30 bps | - bps | |||||||||||||||||
Defense Electronics | 28.8 | % | 28.8 | % | 29.7 | % | 29.7 | % | (90 bps) | (90 bps) | |||||||||||||||||
Naval & Power | 18.5 | % | 19.3 | % | 19.7 | % | 20.3 | % | (120 bps) | (100 bps) | |||||||||||||||||
Total Curtiss-Wright | 20.4 | % | 20.8 | % | 20.8 | % | 21.1 | % | (40 bps) | (30 bps) | |||||||||||||||||
Segment margins | 21.6 | % | 21.9 | % | 22.4 | % | 22.7 | % | (80 bps) | (80 bps) | |||||||||||||||||
(1) Excludes purchase accounting adjustments in the prior period. | |||||||||||||||||||||||||||
(2) Excludes purchase accounting adjustments in the current and prior period and trailing costs associated with the divestiture of our German valves business. | |||||||||||||||||||||||||||
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES | |||||||||||||||||||||||||||
RECONCILIATION OF AS REPORTED TO ADJUSTED (UNAUDITED) | |||||||||||||||||||||||||||
($'s in thousands) | |||||||||||||||||||||||||||
Year Ended | Year Ended | ||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | % Change | |||||||||||||||||||||||||
As Reported | Adjustments | Adjusted | As Reported | Adjustments | Adjusted | As Reported | Adjusted | ||||||||||||||||||||
Sales: | |||||||||||||||||||||||||||
Aerospace & Industrial | $ | 887,228 | $ | - | $ | 887,228 | $ | 836,035 | $ | - | $ | 836,035 | 6 | % | 6 | % | |||||||||||
Defense Electronics | 815,912 | - | 815,912 | 690,262 | - | 690,262 | 18 | % | 18 | % | |||||||||||||||||
Naval & Power | 1,142,233 | - | 1,142,233 | 1,030,728 | - | 1,030,728 | 11 | % | 11 | % | |||||||||||||||||
Total sales | $ | 2,845,373 | $ | - | $ | 2,845,373 | $ | 2,557,025 | $ | - | $ | 2,557,025 | 11 | % | 11 | % | |||||||||||
Operating income (expense): | |||||||||||||||||||||||||||
Aerospace & Industrial (1) | $ | 145,278 | $ | - | $ | 145,278 | $ | 136,996 | $ | 703 | $ | 137,699 | 6 | % | 6 | % | |||||||||||
Defense Electronics | 191,775 | - | 191,775 | 154,568 | - | 154,568 | 24 | % | 24 | % | |||||||||||||||||
Naval & Power (2) | 189,227 | 9,198 | 198,425 | 177,582 | 14,056 | 191,638 | 7 | % | 4 | % | |||||||||||||||||
Total segments | $ | 526,280 | $ | 9,198 | $ | 535,478 | $ | 469,146 | $ | 14,759 | $ | 483,905 | 12 | % | 11 | % | |||||||||||
Corporate and other (3) | (41,678 | ) | - | (41,678 | ) | (45,703 | ) | 4,876 | (40,827 | ) | 9 | % | (2 | )% | |||||||||||||
Total operating income | $ | 484,602 | $ | 9,198 | $ | 493,800 | $ | 423,443 | $ | 19,635 | $ | 443,078 | 14 | % | 11 | % | |||||||||||
Operating margins: | As Reported | Adjusted | As Reported | Adjusted | As Reported | Adjusted | |||||||||||||||||||||
Aerospace & Industrial | 16.4 | % | 16.4 | % | 16.4 | % | 16.5 | % | - bps | (10 bps) | |||||||||||||||||
Defense Electronics | 23.5 | % | 23.5 | % | 22.4 | % | 22.4 | % | 110 bps | 110 bps | |||||||||||||||||
Naval & Power | 16.6 | % | 17.4 | % | 17.2 | % | 18.6 | % | (60 bps) | (120 bps) | |||||||||||||||||
Total Curtiss-Wright | 17.0 | % | 17.4 | % | 16.6 | % | 17.3 | % | 40 bps | 10 bps | |||||||||||||||||
Segment margins | 18.5 | % | 18.8 | % | 18.3 | % | 18.9 | % | 20 bps | (10 bps) | |||||||||||||||||
(1) Excludes purchase accounting adjustments in the prior period. | |||||||||||||||||||||||||||
(2) Excludes purchase accounting adjustments in both periods and trailing costs associated with the divestiture of our German valves business. | |||||||||||||||||||||||||||
(3) Excludes costs associated with shareholder activism in the prior year 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, 2023 | December 31, 2022 | % 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 | $ | 171,527 | $ | - | $ | 171,527 | $ | 172,763 | $ | - | $ | 172,763 | (1 | %) | (1 | %) | |||||||
Ground Defense | 87,691 | - | 87,691 | 81,348 | - | 81,348 | 8 | % | 8 | % | |||||||||||||
Naval Defense | 187,240 | - | 187,240 | 183,418 | - | 183,418 | 2 | % | 2 | % | |||||||||||||
Commercial Aerospace | 92,723 | - | 92,723 | 77,178 | - | 77,178 | 20 | % | 20 | % | |||||||||||||
Total Aerospace & Defense | $ | 539,181 | $ | - | $ | 539,181 | $ | 514,707 | $ | - | $ | 514,707 | 5 | % | 5 | % | |||||||
Commercial markets: | |||||||||||||||||||||||
Power & Process | 136,541 | - | 136,541 | 131,598 | - | 131,598 | 4 | % | 4 | % | |||||||||||||
General Industrial | 110,069 | - | 110,069 | 111,360 | - | 111,360 | (1 | %) | (1 | %) | |||||||||||||
Total Commercial | $ | 246,610 | $ | - | $ | 246,610 | $ | 242,958 | $ | - | $ | 242,958 | 2 | % | 2 | % | |||||||
Total Curtiss-Wright | $ | 785,791 | $ | - | $ | 785,791 | $ | 757,665 | $ | - | $ | 757,665 | 4 | % | 4 | % | |||||||
Year Ended | Year Ended | ||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | % 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 | $ | 551,622 | $ | - | $ | 551,622 | $ | 479,743 | $ | - | $ | 479,743 | 15 | % | 15 | % | |||||||
Ground Defense | 308,008 | - | 308,008 | 219,739 | - | 219,739 | 40 | % | 40 | % | |||||||||||||
Naval Defense | 720,013 | - | 720,013 | 694,015 | - | 694,015 | 4 | % | 4 | % | |||||||||||||
Commercial Aerospace | 324,949 | - | 324,949 | 276,519 | - | 276,519 | 18 | % | 18 | % | |||||||||||||
Total Aerospace & Defense | $ | 1,904,592 | $ | - | $ | 1,904,592 | $ | 1,670,016 | $ | - | $ | 1,670,016 | 14 | % | 14 | % | |||||||
Commercial markets: | |||||||||||||||||||||||
Power & Process | 509,998 | - | 509,998 | 472,300 | - | 472,300 | 8 | % | 8 | % | |||||||||||||
General Industrial | 430,783 | - | 430,783 | 414,709 | - | 414,709 | 4 | % | 4 | % | |||||||||||||
Total Commercial | $ | 940,781 | $ | - | $ | 940,781 | $ | 887,009 | $ | - | $ | 887,009 | 6 | % | 6 | % | |||||||
Total Curtiss-Wright | $ | 2,845,373 | $ | - | $ | 2,845,373 | $ | 2,557,025 | $ | - | $ | 2,557,025 | 11 | % | 11 | % | |||||||
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, | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Diluted earnings per share - As Reported | $ | 3.11 | $ | 2.82 | $ | 9.20 | $ | 7.62 | |||
First year purchase accounting adjustments | 0.02 | 0.05 | 0.15 | 0.18 | |||||||
Divested German valves business | 0.03 | - | 0.03 | 0.14 | |||||||
Costs associated with shareholder activism | - | - | - | 0.10 | |||||||
Pension settlement charges | - | 0.05 | - | 0.09 | |||||||
Diluted earnings per share - Adjusted (1) | $ | 3.16 | $ | 2.92 | $ | 9.38 | $ | 8.13 | |||
(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, and impacts from foreign currency fluctuations.
Three Months Ended | |||||||||||||||
December 31, | |||||||||||||||
2023 vs. 2022 | |||||||||||||||
Aerospace & Industrial | Defense Electronics | Naval & Power | Total Curtiss-Wright | ||||||||||||
Sales | Operating income | Sales | Operating income | Sales | Operating income | Sales | Operating income | ||||||||
As Reported | 7% | 9% | 1% | (2%) | 3% | (3%) | 4% | 2% | |||||||
Less: Acquisitions | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | |||||||
Divestiture-related costs | 0% | 0% | 0% | 0% | 0% | 1% | 0% | 1% | |||||||
Foreign currency | (1%) | 0% | 0% | 0% | 0% | 1% | (1%) | 0% | |||||||
Organic | 6% | 9% | 1% | (2%) | 3% | (1%) | 3% | 3% | |||||||
Year Ended | |||||||||||||||
December 31, | |||||||||||||||
2023 vs. 2022 | |||||||||||||||
Aerospace & Industrial | Defense Electronics | Naval & Power | Total Curtiss-Wright | ||||||||||||
Sales | Operating income | Sales | Operating income | Sales | Operating income | Sales | Operating income | ||||||||
As Reported | 6% | 6% | 18% | 24% | 11% | 7% | 11% | 14% | |||||||
Less: Acquisitions | 0% | 0% | 0% | 0% | (4%) | 0% | (2%) | 0% | |||||||
Divestiture-related costs | 0% | 0% | 0% | 0% | 0% | (2%) | 0% | (1%) | |||||||
Foreign currency | 0% | 0% | 0% | (3%) | 0% | 0% | 1% | (1%) | |||||||
Organic | 6% | 6% | 18% | 21% | 7% | 5% | 10% | 12% | |||||||
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 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, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net cash provided by operating activities | $ | 282,372 | $ | 292,389 | $ | 448,089 | $ | 294,776 | |||||||
Capital expenditures | (12,629 | ) | (9,428 | ) | (44,666 | ) | (38,217 | ) | |||||||
Free cash flow | $ | 269,743 | $ | 282,961 | $ | 403,423 | $ | 256,559 | |||||||
Westinghouse legal settlement | - | - | 10,000 | 15,000 | |||||||||||
Pension payment to former executives | - | 15,753 | - | 23,967 | |||||||||||
Adjusted free cash flow | $ | 269,743 | $ | 298,714 | $ | 413,423 | $ | 295,526 | |||||||
Adjusted free cash flow conversion | 221 | % | 265 | % | 114 | % | 94 | % | |||||||
CURTISS-WRIGHT CORPORATION | ||||||||||||||||||||
2024 Guidance | ||||||||||||||||||||
As of February 14, 2024 | ||||||||||||||||||||
($'s in millions, except per share data) | ||||||||||||||||||||
2023 Reported (GAAP) | 2023 Adjustments (Non-GAAP)(1,2) | 2023 Adjusted (Non-GAAP)(1,2) | 2024 Reported Guidance (GAAP) | |||||||||||||||||
Low | High | 2024 Chg vs 2023 Adjusted | ||||||||||||||||||
Sales: | ||||||||||||||||||||
Aerospace & Industrial | $ | 887 | $ | - | $ | 887 | $ | 915 | $ | 930 | 3 - 5 | % | ||||||||
Defense Electronics | 816 | - | 816 | 857 | 872 | 5 - 7 | % | |||||||||||||
Naval & Power | 1,142 | - | 1,142 | 1,188 | 1,208 | 4 - 6 | % | |||||||||||||
Total sales | $ | 2,845 | $ | - | $ | 2,845 | $ | 2,960 | $ | 3,010 | 4 to 6% | |||||||||
Operating income: | ||||||||||||||||||||
Aerospace & Industrial | $ | 145 | $ | - | $ | 145 | $ | 152 | $ | 156 | 5 - 8 | % | ||||||||
Defense Electronics | 192 | - | 192 | 198 | 203 | 3 - 6 | % | |||||||||||||
Naval & Power | 189 | 9 | 198 | 202 | 207 | 2 - 5 | % | |||||||||||||
Total segments | 526 | 9 | 535 | 552 | 567 | |||||||||||||||
Corporate and other | (42 | ) | - | (42 | ) | (38 | ) | (39 | ) | |||||||||||
Total operating income | $ | 485 | $ | 9 | $ | 494 | $ | 514 | $ | 528 | 4 to 7% | |||||||||
Interest expense | $ | (51 | ) | $ | - | $ | (51 | ) | $ | (45 | ) | $ | (46 | ) | ||||||
Other income, net | 30 | - | 30 | 33 | 35 | |||||||||||||||
Earnings before income taxes | 463 | 9 | 472 | 503 | 518 | |||||||||||||||
Provision for income taxes | (109 | ) | (2 | ) | (111 | ) | (118 | ) | (122 | ) | ||||||||||
Net earnings | $ | 355 | $ | 6 | $ | 361 | $ | 385 | $ | 396 | ||||||||||
Diluted earnings per share | $ | 9.20 | $ | 0.18 | $ | 9.38 | $ | 10.00 | $ | 10.30 | 7 to 10% | |||||||||
Diluted shares outstanding | 38.5 | 38.5 | 38.5 | 38.5 | ||||||||||||||||
Effective tax rate | 23.4 | % | 23.4 | % | 23.5 | % | 23.5 | % | ||||||||||||
Operating margins: | ||||||||||||||||||||
Aerospace & Industrial | 16.4 | % | 16.4 | % | 16.6 | % | 16.8 | % | 20 to 40 bps | |||||||||||
Defense Electronics | 23.5 | % | 23.5 | % | 23.1 | % | 23.3 | % | (40) to (20) bps | |||||||||||
Naval & Power | 16.6 | % | 17.4 | % | 17.0 | % | 17.2 | % | (40) to (20) bps | |||||||||||
Total operating margin | 17.0 | % | 17.4 | % | 17.4 | % | 17.6 | % | 0 to 20 bps | |||||||||||
Free cash flow | $ | 403 | $ | 10 | $ | 413 | $ | 415 | $ | 435 | ||||||||||
Notes: Full year amounts may not add due to rounding. | ||||||||||||||||||||
(1) 2023 Adjusted financials exclude the impact of first year purchase accounting adjustments. | ||||||||||||||||||||
(2) Free Cash Flow is defined as cash flow from operations less capital expenditures. 2023 Adjusted Free Cash Flow excluded a legal settlement payment of $10 million. | ||||||||||||||||||||
CURTISS-WRIGHT CORPORATION | |||
2024 Sales Growth Guidance by End Market | |||
As of February 14, 2024 | |||
2024 % Change
| % Total Sales | ||
Aerospace & Defense Markets | |||
Aerospace Defense | 5 - 7% | 20% | |
Ground Defense | 4 - 6% | 11% | |
Naval Defense | 3 - 5% | 25% | |
Commercial Aerospace | 10 - 12% | 12% | |
Total Aerospace & Defense | 5 - 7% | 67% | |
Commercial Markets | |||
Power & Process | 3 - 5% | 18% | |
General Industrial | 1 - 3% | 15% | |
Total Commercial | 2 - 4% | 33% | |
Total Curtiss-Wright Sales | 4 - 6% | 100% | |
Note: Sales percentages may not add due to rounding. | |||
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 8,600 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, 2023, and subsequent reports filed with the Securities and Exchange Commission.
This press release and additional information are available at www.curtisswright.com.
Contacts
Jim Ryan
(704) 869-4621
Jim.Ryan@curtisswright.com
