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Curtiss-Wright Reports First Quarter 2022 Financial Results and Reaffirms Full-Year 2022 Guidance

Curtiss-Wright Corporation (NYSE: CW) reports financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights:

  • Reported sales of $559 million, reflecting timing of defense revenues;
  • Reported diluted earnings per share (EPS) of $1.05;
  • Adjusted diluted EPS of $1.31;
  • New orders of $634 million, up 12%, reflecting strong demand within our Aerospace & Defense (A&D) and Commercial markets; and
  • Share repurchases of approximately $12 million.

"Curtiss-Wright delivered solid Adjusted diluted EPS of $1.31 in the first quarter, exceeding our expectations, as the benefits of our combined portfolio of businesses enabled us to partially mitigate the headwinds of continued global supply chain disruption and the delayed signing of the FY22 Defense budget," said Lynn M. Bamford, President and CEO of Curtiss-Wright Corporation. "We are greatly encouraged by the double-digit order growth in the first quarter, which builds upon our already strong backlog and provides further confidence in our full-year outlook."

“Looking ahead to the remainder of the year, we anticipate steady, sequential improvement in sales, operating margin, diluted EPS and free cash flow, with a greater percentage of our full-year sales weighted to the second half of the year due to the timing of revenue within our defense markets. Overall, we are maintaining our full-year 2022 guidance for total sales growth of 3% to 5% driven by growth in all of our A&D and Commercial markets, continued operating margin expansion, and double-digit Adjusted diluted EPS growth of 10% to 12%, as we continue to successfully execute on our Pivot to Growth strategy to drive long-term shareholder value.”

First Quarter 2022 Operating Results

(In millions)

 

Q1-2022

 

Q1-2021

 

Change

Reported

 

 

 

 

 

 

Sales

 

$

559

 

 

$

597

 

 

(6

%)

Operating income

 

$

61

 

 

$

85

 

 

(29

%)

Operating margin

 

 

10.8

%

 

 

14.2

%

 

(340 bps)

 

 

 

 

 

 

 

Adjusted (1)

 

 

 

 

 

 

Sales

 

$

559

 

 

$

590

 

 

(5

%)

Operating income

 

$

71

 

 

$

89

 

 

(20

%)

Operating margin

 

 

12.7

%

 

 

15.0

%

 

(230 bps)

(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.
  • Adjusted sales of $559 million, down $30 million, or 5%;
  • Total Aerospace & Defense (A&D) market sales decreased 10%, while total Commercial market sales increased 5%;
  • In our A&D markets, strong double-digit growth in the commercial aerospace market was more than offset by reductions in our defense markets due to the timing of sales, ongoing supply chain headwinds and the delayed signing of the FY22 defense budget;
  • In our Commercial markets, we experienced solid demand in the general industrial market, as well as higher sales within the power & process markets, despite the wind down on the China Direct AP1000 program; and
  • Adjusted operating income of $71 million decreased 20%, while Adjusted operating margin decreased 230 basis points to 12.7%, principally driven by unfavorable overhead absorption on lower revenues and mix in our Defense Electronics and Naval & Power segments. These decreases were partially offset by higher revenues and increased profitability in the Aerospace & Industrial segment, as well as the benefits of our ongoing company-wide operational excellence initiatives.

First Quarter 2022 Segment Performance

Aerospace & Industrial

(In millions)

 

Q1-2022

 

Q1-2021

 

Change

Reported

 

 

 

 

 

 

Sales

 

$

191

 

 

$

180

 

 

6

%

Operating income

 

$

25

 

 

$

19

 

 

31

%

Operating margin

 

 

13.0

%

 

 

10.6

%

 

240 bps

 

 

 

 

 

 

 

Adjusted (1)

 

 

 

 

 

 

Sales

 

$

191

 

 

$

178

 

 

8

%

Operating income

 

$

25

 

 

$

19

 

 

34

%

Operating margin

 

 

13.0

%

 

 

10.4

%

 

260 bps

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

  • Adjusted sales of $191 million, up $13 million, or 8%;
  • Higher commercial aerospace market revenue reflected strong demand for actuation and sensors products, as well as surface treatment services, primarily on narrowbody platforms;
  • Higher general industrial market revenue was principally driven by increased sales of industrial vehicle products, most notably serving off-highway platforms;
  • Aerospace defense market revenue growth reflected higher sales of actuation products and surface treatment services on the F-35 program, mainly offset by lower sales of sensors equipment on various programs; and
  • Adjusted operating income was $25 million, up 34% from the prior year, while Adjusted operating margin increased 260 basis points to 13.0%, reflecting strong absorption on higher sales and the benefits of our ongoing operational excellence and prior year restructuring initiatives.

Defense Electronics

(In millions)

 

Q1-2022

 

Q1-2021

 

Change

Reported

 

 

 

 

 

 

Sales

 

$

143

 

 

$

181

 

 

(21

%)

Operating income

 

$

23

 

 

$

37

 

 

(36

%)

Operating margin

 

 

16.3

%

 

 

20.2

%

 

(390 bps)

 

 

 

 

 

 

 

Adjusted (1)

 

 

 

 

 

 

Sales

 

$

143

 

 

$

182

 

 

(22

%)

Operating income

 

$

23

 

 

$

38

 

 

(39

%)

Operating margin

 

 

16.3

%

 

 

20.9

%

 

(460 bps)

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

  • Adjusted sales of $143 million, down $39 million, or 22%, principally reflected the timing of sales within our aerospace and ground defense markets as certain revenues shifted out of the first quarter of 2022 due to ongoing supply chain headwinds and the delayed signing of the FY22 defense budget;
  • Naval defense market revenue declines primarily reflected the timing of revenues on the Virginia-class submarine program and various surface ships; and
  • Adjusted operating income was $23 million, down 39% from the prior year, while adjusted operating margin decreased 460 basis points to 16.3%, primarily reflecting reduced absorption and unfavorable mix on lower defense sales, which more than offset the benefits of our ongoing operational excellence initiatives.

Naval & Power

(In millions)

Q1-2022

 

Q1-2021

 

Change

Reported

 

 

 

 

 

Sales

$

225

 

 

$

236

 

 

(4

%)

Operating income

$

27

 

 

$

38

 

 

(28

%)

Operating margin

 

12.1

%

 

 

16.2

%

 

(410 bps)

 

 

 

 

 

 

Adjusted (1)

 

 

 

 

 

Sales

$

225

 

 

$

230

 

 

(2

%)

Operating income

$

33

 

 

$

41

 

 

(20

%)

Operating margin

 

14.5

%

 

 

17.7

%

 

(320 bps)

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

  • Adjusted sales of $225 million, down $5 million, or 2%;
  • Naval defense market revenue declines primarily reflected lower revenues on the CVN-80 aircraft carrier and Virginia-class submarine programs, partially offset by higher revenues on the CVN-81 aircraft carrier and Columbia-class submarine programs;
  • Higher power & process market sales reflected strong growth in nuclear aftermarket revenues supporting the maintenance of existing operating reactors and strong industrial valve demand in the process market; Those increases were mainly offset by the timing of production on the China Direct AP1000 program; and
  • Adjusted operating income was $33 million, down 20% from the prior year, while adjusted operating margin decreased 320 basis points to 14.5%, driven by unfavorable absorption on lower naval defense market revenues and unfavorable mix in the power & process market.

Free Cash Flow

(In millions)

 

Q1-2022

 

Q1-2021

 

Change

Net cash used for operating activities

 

$

(124

)

 

$

(27

)

 

(367

%)

Capital expenditures

 

(11

)

 

(9

)

 

(28

%)

Reported free cash flow

 

$

(135

)

 

$

(35

)

 

(285

%)

Adjusted free cash flow (1)

 

$

(112

)

 

$

(35

)

 

(219

%)

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

  • Reported free cash flow of ($135) million decreased approximately $100 million, primarily due to higher working capital and the Westinghouse legal settlement payment;
  • Adjusted free cash flow of ($112) million decreased $77 million; and
  • Capital expenditures increased $2 million compared with the prior year, primarily due to higher capital investments within the Aerospace & Industrial segment.

New Orders and Backlog

  • New orders of $634 million increased 12% and generated an overall book-to-bill that exceeded 1.1x, principally driven by solid demand for naval defense and commercial aerospace products within our A&D markets, and for industrial vehicle products within our Commercial markets; and
  • Backlog of $2.3 billion, up 3% from December 31, 2021, reflects higher demand in both our A&D and commercial markets.

Share Repurchase and Dividends

  • During the first quarter, the Company repurchased 87,303 shares of its common stock for approximately $12 million; and
  • The Company also declared a quarterly dividend of $0.18 a share, unchanged from the previous quarter.

Other Items – Westinghouse Legal Settlement

  • In February 2022, the Company and Westinghouse reached an agreement to settle all open claims and counterclaims under the AP1000 U.S. and China contracts;
  • The Company’s 2021 and 2022 non-GAAP results have been adjusted for this legal matter;
  • The Company recorded full-year charges of approximately $13 million in 2021 related to this matter; and
  • The terms of the settlement require a $25 million cash payment, with $15 million paid in the first quarter of 2022 and $10 million to be paid in the first quarter of 2023.

Full-Year 2022 Guidance

The Company maintains its full-year 2022 Adjusted financial guidance (1) as follows:

(In millions, except EPS)

 

2022 Adjusted

Non-GAAP Guidance

 

% Chg vs 2021

Total Sales

 

$2,530 - $2,580

 

Up 3% - 5%

Operating Income

 

$432 - $446

 

Up 3% - 6%

Operating Margin

 

17.1% - 17.3%

 

Up 10 - 30 bps

Diluted EPS

 

$8.05 - $8.25

 

Up 10% - 12%

Free Cash Flow (2)

 

$345 - $365

 

Up 0% - 5%

(1) Reconciliations of Reported to Adjusted 2021 operating results and 2022 financial guidance are available in the Appendix.

(2) 2022 Adjusted Free Cash Flow includes $50 - $60 million in capital expenditures, compared with $41 million in 2021.

A more detailed breakdown of the Company’s 2022 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 first quarter 2022 financial results and updates to 2022 guidance at 10:00 a.m. ET on Thursday, May 5, 2022. A live webcast of the call and the accompanying financial presentation, as well as a replay of the call, will be made available on the internet by visiting the Investor Relations section of the Company’s website at www.curtisswright.com.

(Tables to Follow)

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

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

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

 

2022

 

2021

Product sales

 

$

453,421

 

 

$

508,975

 

Service sales

 

 

106,040

 

 

 

88,084

 

Total net sales

 

 

559,461

 

 

 

597,059

 

 

 

 

 

 

Cost of product sales

 

 

294,527

 

 

 

329,454

 

Cost of service sales

 

 

63,532

 

 

 

57,848

 

Total cost of sales

 

 

358,059

 

 

 

387,302

 

 

 

 

 

 

Gross profit

 

 

201,402

 

 

 

209,757

 

 

 

 

 

 

Research and development expenses

 

 

20,549

 

 

 

21,863

 

Selling expenses

 

 

28,092

 

 

 

29,596

 

General and administrative expenses

 

 

87,600

 

 

 

73,232

 

Loss on divestiture

 

 

4,651

 

 

 

 

 

 

 

 

 

Operating income

 

 

60,510

 

 

 

85,066

 

 

 

 

 

 

Interest expense

 

 

9,530

 

 

 

9,959

 

Other income, net

 

 

2,997

 

 

 

4,843

 

 

 

 

 

 

Earnings before income taxes

 

 

53,977

 

 

 

79,950

 

Provision for income taxes

 

 

(13,292

)

 

 

(20,481

)

Net earnings

 

$

40,685

 

 

$

59,469

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

Basic earnings per share

 

$

1.06

 

 

$

1.45

 

Diluted earnings per share

 

$

1.05

 

 

$

1.45

 

 

 

 

 

 

Dividends per share

 

$

0.18

 

 

$

0.17

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

 

38,456

 

 

 

40,933

 

Diluted

 

 

38,668

 

 

 

41,103

 

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($'s in thousands, except par value)

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2022

 

2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

136,682

 

 

$

171,004

 

Receivables, net

 

 

661,129

 

 

 

647,148

 

Inventories, net

 

 

448,122

 

 

 

411,567

 

Assets held for sale

 

 

 

 

 

10,988

 

Other current assets

 

 

63,942

 

 

 

67,101

 

Total current assets

 

 

1,309,875

 

 

 

1,307,808

 

Property, plant, and equipment, net

 

 

355,363

 

 

 

360,031

 

Goodwill

 

 

1,458,899

 

 

 

1,463,026

 

Other intangible assets, net

 

 

523,913

 

 

 

538,077

 

Operating lease right-of-use assets, net

 

 

147,224

 

 

 

143,613

 

Prepaid pension asset

 

 

260,238

 

 

 

256,422

 

Other assets

 

 

33,855

 

 

 

34,568

 

Total assets

 

$

4,089,367

 

 

$

4,103,545

 

 

 

 

 

 

Liabilities

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term and short term debt

 

$

202,500

 

 

$

 

Accounts payable

 

 

168,772

 

 

 

211,640

 

Accrued expenses

 

 

109,077

 

 

 

144,466

 

Income taxes payable

 

 

1,478

 

 

 

3,235

 

Deferred revenue

 

 

224,679

 

 

 

260,157

 

Liabilities held for sale

 

 

 

 

 

12,655

 

Other current liabilities

 

 

93,745

 

 

 

102,714

 

Total current liabilities

 

 

800,251

 

 

 

734,867

 

Long-term debt, net

 

 

967,744

 

 

 

1,050,610

 

Deferred tax liabilities

 

 

150,085

 

 

 

147,349

 

Accrued pension and other postretirement benefit costs

 

 

84,610

 

 

 

91,329

 

Long-term operating lease liability

 

 

128,897

 

 

 

127,152

 

Long-term portion of environmental reserves

 

 

13,924

 

 

 

13,656

 

Other liabilities

 

 

94,436

 

 

 

112,092

 

Total liabilities

 

 

2,239,947

 

 

 

2,277,055

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

Common stock, $1 par value

 

$

49,187

 

 

$

49,187

 

Additional paid in capital

 

 

122,603

 

 

 

127,104

 

Retained earnings

 

 

2,942,580

 

 

 

2,908,827

 

Accumulated other comprehensive loss

 

 

(191,524

)

 

 

(190,465

)

Less: cost of treasury stock

 

 

(1,073,426

)

 

 

(1,068,163

)

Total stockholders' equity

 

 

1,849,420

 

 

 

1,826,490

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

4,089,367

 

 

$

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 in the prior year, 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

 

 

 

 

 

 

March 31, 2022

 

March 31, 2021

 

% Change

 

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

 

Reported

 

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

 

$

191,112

 

 

$

 

$

191,112

 

 

$

180,331

 

 

$

(2,599

)

 

$

177,732

 

 

6

%

 

8

%

Defense Electronics (2)

 

 

143,069

 

 

 

 

 

143,069

 

 

 

181,212

 

 

 

1,080

 

 

 

182,292

 

 

(21

)%

 

(22

)%

Naval & Power (3)

 

 

225,280

 

 

 

 

 

225,280

 

 

 

235,516

 

 

 

(5,583

)

 

 

229,933

 

 

(4

)%

 

(2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

 

$

559,461

 

 

$

 

$

559,461

 

 

$

597,059

 

 

$

(7,102

)

 

$

589,957

 

 

(6

)%

 

(5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial (1)

 

$

24,853

 

 

$

 

$

24,853

 

 

$

19,025

 

 

$

(476

)

 

$

18,549

 

 

31

%

 

34

%

Defense Electronics (2)

 

 

23,290

 

 

 

 

 

23,290

 

 

 

36,623

 

 

 

1,560

 

 

 

38,183

 

 

(36

)%

 

(39

)%

Naval & Power (3)

 

 

27,288

 

 

 

5,427

 

 

32,715

 

 

 

38,057

 

 

 

2,589

 

 

 

40,646

 

 

(28

)%

 

(20

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other (4)

 

 

(14,921

)

 

 

4,876

 

 

(10,045

)

 

 

(8,639

)

 

 

45

 

 

 

(8,594

)

 

(73

)%

 

(17

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

$

60,510

 

 

$

10,303

 

$

70,813

 

 

$

85,066

 

 

$

3,718

 

 

$

88,784

 

 

(29

)%

 

(20

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

 

As Reported

 

 

 

Adjusted

 

As Reported

 

 

 

Adjusted

 

Reported

 

Adjusted

Aerospace & Industrial

 

 

13.0

%

 

 

 

 

13.0

%

 

 

10.6

%

 

 

 

 

10.4

%

 

240 bps

 

260 bps

Defense Electronics

 

 

16.3

%

 

 

 

 

16.3

%

 

 

20.2

%

 

 

 

 

20.9

%

 

(390 bps)

 

(460 bps)

Naval & Power

 

 

12.1

%

 

 

 

 

14.5

%

 

 

16.2

%

 

 

 

 

17.7

%

 

(410 bps)

 

(320 bps)

Total Curtiss-Wright

 

 

10.8

%

 

 

 

 

12.7

%

 

 

14.2

%

 

 

 

 

15.0

%

 

(340 bps)

 

(230 bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

 

13.5

%

 

 

 

 

14.5

%

 

 

15.7

%

 

 

 

 

16.5

%

 

(220 bps)

 

(200 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 the results of operations from our German valves business, which was sold in January 2022, and the loss on divestiture in the current period.

(4) Excludes costs associated with shareholder activism in the current 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

 

 

 

 

 

 

March 31, 2022

 

March 31, 2021

 

2022 vs. 2021

Reported

Reported

Change in

Change in

 

 

Sales

 

Adjustments

 

Adjusted Sales

 

Sales

 

Adjustments

 

Adjusted Sales

 

Reported Sales

 

Adjusted Sales

Aerospace & Defense markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace Defense

 

$

98,004

 

$

 

$

98,004

 

$

111,016

 

$

 

 

$

111,016

 

(12

%)

 

(12

%)

Ground Defense (1)

 

 

39,108

 

 

 

 

39,108

 

 

55,746

 

 

1,080

 

 

 

56,826

 

(30

%)

 

(31

%)

Naval Defense

 

 

162,967

 

 

 

 

162,967

 

 

177,905

 

 

 

 

 

177,905

 

(8

%)

 

(8

%)

Commercial Aerospace (2)

 

 

60,892

 

 

 

 

60,892

 

 

57,269

 

 

(2,599

)

 

 

54,670

 

6

%

 

11

%

Total Aerospace & Defense

 

$

360,971

 

$

 

$

360,971

 

$

401,936

 

$

(1,519

)

 

$

400,417

 

(10

%)

 

(10

%)

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power & Process (3)

 

 

104,788

 

 

 

 

104,788

 

 

105,504

 

 

(5,583

)

 

 

99,921

 

(1

%)

 

5

%

General Industrial

 

 

93,702

 

 

 

 

93,702

 

 

89,619

 

 

 

 

 

89,619

 

5

%

 

5

%

Total Commercial

 

$

198,490

 

$

 

$

198,490

 

$

195,123

 

$

(5,583

)

 

$

189,540

 

2

%

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

559,461

 

$

 

$

559,461

 

$

597,059

 

$

(7,102

)

 

$

589,957

 

(6

%)

 

(5

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

March 31,

 

 

2022

 

2021

Diluted earnings per share - As Reported

 

$

1.05

 

$

1.45

 

Divested German valves business

 

 

0.11

 

 

0.04

 

Costs associated with shareholder activism

 

 

0.10

 

 

 

Former executive pension settlement expense

 

 

0.05

 

 

 

First year purchase accounting adjustments

 

 

 

 

0.03

 

Exit of build-to-print actuation product line

 

 

 

 

(0.01

)

Diluted earnings per share - Adjusted (1)

 

$

1.31

 

$

1.51

 

 

 

 

 

 

(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 made during the last twelve months, loss on divestiture of the German valves business, and foreign currency fluctuations.

 

 

Three Months Ended

 

 

March 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%

 

31%

 

(21%)

 

(36%)

 

(4%)

 

(28%)

 

(6%)

 

(29%)

Less: Acquisitions

 

0%

 

0%

 

0%

 

0%

 

0%

 

0%

 

0%

 

0%

Loss on divestiture

 

0%

 

0%

 

0%

 

0%

 

0%

 

14%

 

0%

 

6%

Foreign Currency

 

1%

 

2%

 

0%

 

(1%)

 

0%

 

0%

 

0%

 

1%

Organic

 

7%

 

33%

 

(21%)

 

(37%)

 

(4%)

 

(14%)

 

(6%)

 

(22%)

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

 

 

March 31,

 

 

2022

 

2021

Net cash used for operating activities

 

$

(124,315

)

 

$

(26,603

)

Capital expenditures

 

 

(10,896

)

 

 

(8,537

)

Free cash flow

 

$

(135,211

)

 

$

(35,140

)

Westinghouse legal settlement

 

 

15,000

 

 

 

 

Pension payment to former executive

 

 

8,214

 

 

 

 

Adjusted free cash flow

 

$

(111,997

)

 

$

(35,140

)

Adjusted free cash flow conversion

 

 

(221

%)

 

 

(56

%)

CURTISS-WRIGHT CORPORATION

2022 Guidance

As of May 4, 2022

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

2021

 

2021

 

2022

 

2022

 

2022

Reported

Adjustments(1)

Adjusted(1)

Reported Guidance

Adjustments(2,3)

Adjusted Guidance(1,2,3)

(GAAP)

(Non-GAAP)

(Non-GAAP)

(GAAP)

(Non-GAAP)

(Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022 Chg

vs 2021

Low

High

Low

High

Adjusted

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

 

$

786

 

 

$

(11

)

 

$

775

 

 

$

805

 

$

825

 

 

$

 

 

$

805

 

$

825

 

 

4 - 6

%

Defense Electronics

 

 

724

 

 

 

4

 

 

 

728

 

 

 

745

 

 

760

 

 

 

 

 

 

745

 

 

760

 

 

2 - 4

%

Naval & Power

 

 

995

 

 

 

(30

)

 

 

965

 

 

 

980

 

 

995

 

 

 

 

 

 

980

 

 

995

 

 

2 - 3

%

Total sales

 

$

2,506

 

 

$

(37

)

 

$

2,468

 

 

$

2,530

 

$

2,580

 

 

$

 

 

$

2,530

 

$

2,580

 

 

3 to 5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

 

$

122

 

 

$

(2

)

 

$

120

 

 

$

131

 

$

135

 

 

$

 

 

$

131

 

$

135

 

 

9 - 12

%

Defense Electronics

 

 

159

 

 

 

5

 

 

 

164

 

 

 

164

 

 

169

 

 

 

 

 

 

164

 

 

169

 

 

0 - 3

%

Naval & Power

 

 

142

 

 

 

34

 

 

 

176

 

 

 

172

 

 

176

 

 

 

6

 

 

 

177

 

 

182

 

 

1 - 4

%

Total segments

 

 

423

 

 

 

38

 

 

 

460

 

 

 

466

 

 

480

 

 

 

6

 

 

 

472

 

 

486

 

 

 

Corporate and other

 

 

(40

)

 

 

 

 

 

(40

)

 

 

(44

)

 

(45

)

 

 

5

 

 

 

(39

)

 

(40

)

 

 

Total operating income

 

$

383

 

 

$

38

 

 

$

420

 

 

$

422

 

$

435

 

 

$

11

 

 

$

432

 

$

446

 

 

3 to 6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$

(40

)

 

$

 

 

$

(40

)

 

$

(40

)

$

(41

)

 

$

 

 

$

(40

)

$

(41

)

 

 

Other income, net

 

 

12

 

 

 

3

 

 

 

15

 

 

 

8

 

 

9

 

 

 

9

 

 

 

17

 

 

18

 

 

 

Earnings before income taxes

 

 

355

 

 

 

41

 

 

 

395

 

 

 

390

 

 

403

 

 

 

20

 

 

 

409

 

 

422

 

 

 

Provision for income taxes

 

 

(87

)

 

 

(10

)

 

 

(97

)

 

 

(95

)

 

(97

)

 

 

(5

)

 

 

(98

)

 

(101

)

 

 

Net earnings

 

$

267

 

 

$

31

 

 

$

298

 

 

$

296

 

$

306

 

 

$

15

 

 

$

311

 

$

321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

6.58

 

 

$

0.76

 

 

$

7.34

 

 

$

7.67

 

$

7.87

 

 

$

0.38

 

 

$

8.05

 

$

8.25

 

 

10 to 12%

Diluted shares outstanding

 

 

40.6

 

 

 

 

 

40.6

 

 

 

38.6

 

 

38.8

 

 

 

 

 

38.6

 

 

38.8

 

 

 

Effective tax rate

 

 

24.6

%

 

 

 

 

24.6

%

 

 

24.0

%

 

24.0

%

 

 

 

 

24.0

%

 

24.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Industrial

 

 

15.5

%

 

 

 

 

15.5

%

 

 

16.2

%

 

16.4

%

 

 

 

 

16.2

%

 

16.4

%

 

70 to 90 bps

Defense Electronics

 

 

22.0

%

 

 

 

 

22.6

%

 

 

22.0

%

 

22.2

%

 

 

 

 

22.0

%

 

22.2

%

 

(40 to 60 bps)

Naval & Power

 

 

14.2

%

 

 

 

 

18.2

%

 

 

17.5

%

 

17.7

%

 

 

 

 

18.1

%

 

18.3

%

 

(10) to 10 bps

Total operating margin

 

 

15.3

%

 

 

 

 

17.0

%

 

 

16.7

%

 

16.9

%

 

 

 

 

17.1

%

 

17.3

%

 

10 to 30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

 

$

347

 

 

 

 

$

347

 

 

$

306

 

$

326

 

 

$

39

 

 

$

345

 

$

365

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(1) 2021 Adjusted financials excludes the impact of first year purchase accounting adjustments; our build-to-print actuation product line supporting the Boeing 737 Max program; the results of operations and related impairments from our German valves business; pension settlement charges related to the retirement of two former executives (within non-operating income); and one-time legal settlement costs.

(2) 2022 Adjusted financials exclude 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.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURTISS-WRIGHT CORPORATION

2022 Sales Growth Guidance by End Market

As of May 4, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022 % Change

 

 

 

 

vs 2021 Adjusted(1)

 

% Total Sales

Aerospace & Defense Markets

 

 

 

 

Aerospace Defense

 

0 - 2%

 

18%

Ground Defense

 

2 - 4%

 

9%

Naval Defense

 

1 - 3%

 

28%

Commercial Aerospace

 

9 - 11%

 

11%

Total Aerospace & Defense

 

2 - 4%

 

66%

 

 

 

 

 

Commercial Markets

 

 

 

 

Power & Process

 

1 - 3%

 

18%

General Industrial

 

6 - 8%

 

16%

Total Commercial

 

4 - 6%

 

34%

 

 

 

 

 

Total Curtiss-Wright Sales

 

3 - 5%

 

100%

 

 

 

 

 

(1) 2021 Adjusted Sales exclude the impact of first year purchase accounting adjustments; our build-to-print actuation product line supporting the Boeing 737 Max programs; and the results of operations from our German valves business.

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 7,800 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, 2021, 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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