Curtiss-Wright Corporation (NYSE: CW) reports financial results
for the third quarter ended September 30, 2021.
Third Quarter 2021 Highlights:
- Reported sales of $621 million, operating income of $98
million, operating margin of 15.7%, diluted earnings per share
(EPS) of $1.70, and free cash flow (FCF) of $97 million;
- Adjusted sales of $614 million, up 12%;
- Adjusted operating income of $108 million, up 12%;
- Adjusted operating margin of 17.5%, up 10 basis points;
- Adjusted diluted EPS of $1.88, up 6%;
- New orders of $617 million, up 13%; and
- Adjusted FCF of $97 million, up 76%, with 127% free cash flow
conversion.
Expansion of Company’s Share Repurchase
Authorization:
- In September, the Company’s Board of Directors authorized an
additional $400 million for future share repurchases, increasing
the total available authorization to $550 million;
- The Company immediately and opportunistically began the
repurchase of $200 million in additional shares via a 10b5-1
program, conducted in concurrence with its existing $50 million
share repurchase program being executed this calendar year;
and
- As of November 3, the Company has completed its $200 million
opportunistic share repurchase program, buying back approximately
1.5 million shares, and remains on track to repurchase a total of
$250 million in shares in 2021.
Full-Year 2021 Adjusted Guidance:
- Raised bottom end of Adjusted diluted EPS guidance to new range
of $7.20 to $7.35 (previously $7.15 to $7.35);
- Maintained sales growth of 7% to 9%, Adjusted operating income
growth of 9% to 12%, and Adjusted operating margin range of 16.7%
to 16.8%, up 40 to 50 basis points compared with the prior year;
and
- Maintained Adjusted FCF range of $330 to $360 million,
representing a free cash flow conversion rate of approximately
116%.
“We delivered strong third quarter results, with double-digit
growth in sales and operating income, despite supply chain
headwinds, which produced Adjusted diluted EPS of $1.88 and
generated strong free cash flow of approximately $100 million,”
said Lynn M. Bamford, President and CEO of Curtiss-Wright
Corporation. “Our results reflect the continued execution of our
operational excellence initiatives and savings generated by our
prior year restructuring actions, which drove operating margin
expansion that more than offset the $4 million in incremental
year-over-year research and development investments to support our
long-term organic growth.”
“In addition, we continued to leverage our strong and healthy
balance sheet to implement our balanced capital allocation
strategy. We firmly delivered on our commitment to drive solid
returns to our shareholders by completing the recently announced
$200 million opportunistic share repurchase program, and we remain
devoted to supporting our organic growth with high quality,
strategic acquisitions to drive long-term shareholder value.”
“Looking ahead to the remainder of 2021, while global supply
chain disruption continues to impact many businesses, we will
continue to work aggressively to mitigate any negative effects on
Curtiss-Wright, leveraging the strength and resilience of our
combined portfolio, which has provided us with confidence to raise
the midpoint of our Adjusted diluted EPS guidance range.”
Third Quarter 2021 Operating
Results
(In millions)
Q3-2021
Q3-2020
Change
Reported sales
$
620.6
$
571.6
9
%
Adjustments (1)
(6.8
)
(21.7
)
Adjusted sales (1)
$
613.8
$
549.9
12
%
Reported operating income
$
97.7
$
84.6
15
%
Adjustments (1)
9.9
11.2
Adjusted operating income (1)
$
107.5
$
95.8
12
%
Adjusted operating margin (1)
17.5
%
17.4
%
10 bps
Amounts may not add due to rounding.
(1)
Adjusted results exclude (i) our
build-to-print actuation product line supporting the Boeing 737 MAX
program which we exited and our German valves business, which was
classified as held for sale, both in the fourth quarter of 2020
impacting both periods; (ii) first year purchase accounting costs
in both periods associated with acquisitions; and (iii) one-time
costs associated with the relocation of our DRG business in the
Naval & Power segment, and restructuring costs in all segments,
which impacted the prior year period.
- Adjusted sales of $614 million, up $64 million, or 12%;
- Aerospace & Defense (A&D) market sales increased 15%,
led by strong growth in commercial aerospace and naval defense, and
the contribution from the PacStar acquisition in ground
defense;
- Commercial market sales increased 6%, principally due to
continued, strong demand in the general industrial market;
- Adjusted operating income of $108 million, up 12%, while
Adjusted operating margin increased 10 basis points to 17.5%,
principally reflecting favorable overhead absorption on higher
organic revenues in our Aerospace & Industrial segment, as well
as the benefits of our prior year restructuring and ongoing
company-wide operational excellence initiatives. Those gains were
partially offset by $4 million in higher research and development
investments, principally within the Defense Electronics segment;
and
- Non-segment expenses of $9 million increased by $2 million
compared with the prior year, primarily due to higher corporate
costs.
Free Cash Flow
(In millions)
Q3-2021
Q3-2020
Change
Net cash provided by operating
activities
$
107.3
$
56.0
92
%
Capital expenditures
(10.1
)
(7.0
)
(44
%)
Free cash flow (1)
$
97.2
$
49.0
98
%
Adjustment to capital expenditures (DRG
facility investment) (2)
-
0.4
-
Restructuring (2)
-
5.9
-
Adjusted free cash flow (2)
$
97.2
$
55.3
76
%
Amounts may not add due to rounding.
(1)
Free cash flow defined as net cash
provided by operating activities less capital expenditures
(2)
Adjusted free cash flow excludes a capital
investment related to the new state-of-the-art naval facility in
the Naval & Power segment and the cash impact from
restructuring in the prior year period.
- Free cash flow of $97 million increased $48 million, or 98%,
principally driven by the timing of tax payments and improvements
in working capital;
- Capital expenditures increased $3 million compared with the
prior year, primarily due to higher capital investments within the
Naval & Power segment; and
- Adjusted free cash flow of $97 million increased $42 million,
or 76%.
New Orders and Backlog
- New orders of $617 million increased 13% compared with the
prior year period, generating overall book to bill that exceeded
1.0x, principally driven by solid demand for our commercial
aerospace and defense electronics products within our A&D
markets, and for industrial vehicle products within our Commercial
markets; and
- Backlog of $2.2 billion, up 2% from December 31, 2020,
principally reflects the rebound in commercial market demand.
Share Repurchase and Dividends
- During the third quarter, the Company repurchased 540,643
shares of its common stock for approximately $67 million;
- Year-to-date through September 30, 2021, the Company
repurchased 746,851 shares for approximately $92 million; and
- The Company also declared a quarterly dividend of $0.18 a
share, unchanged from the previous quarter.
Other Items – Business Held for Sale
- During the fourth quarter of 2020, the Company classified its
German valves business (previously within its Commercial/Industrial
segment, currently within its Naval & Power segment) as held
for sale and its results have been adjusted from comparisons
between our current and prior year results, and full-year financial
guidance.
Third Quarter 2021 Segment
Performance
Aerospace & Industrial
(In millions)
Q3-2021
Q3-2020
Change
Reported sales
$
196.3
$
188.8
4
%
Adjustments (1)
(0.4
)
(16.5
)
Adjusted sales (1)
$
195.9
$
172.2
14
%
Reported operating income
$
30.9
$
23.9
29
%
Adjustments (1)
(0.1
)
(1.0
)
Adjusted operating income (1)
$
30.8
$
22.9
34
%
Adjusted operating margin (1)
15.7
%
13.3
%
240 bps
Amounts may not add due to rounding.
(1)
Adjusted results exclude our
build-to-print actuation product line supporting the Boeing 737 MAX
program which we exited in the fourth quarter of 2020 impacting
both periods and restructuring costs in the prior year period.
- Reported results reflected sales of $196 million, operating
income of $31 million and operating margin of 15.7%;
- Adjusted sales of $196 million, up $24 million, or 14%;
- Higher general industrial market revenue principally reflected
the continued strong rebound in industrial vehicle product demand
for on- and off-highway platforms in response to the economic
recovery;
- Strong commercial aerospace market revenue growth reflected
higher sales of sensors products and surface treatment services on
narrowbody platforms, partially offset by lower actuation sales on
widebody platforms; and
- Adjusted operating income of $31 million, up 34% from the prior
year, while Adjusted operating margin increased 240 basis points to
15.7%, reflecting strong absorption on higher sales, and the
benefits of our ongoing operational excellence and prior year
restructuring initiatives.
Defense Electronics
(In millions)
Q3-2021
Q3-2020
Change
Reported sales
$
181.5
$
148.3
22
%
Adjustments (1)
1.1
0.7
Adjusted sales (1)
$
182.6
$
149.1
22
%
Reported operating income
$
40.8
$
35.1
16
%
Adjustments (1)
1.6
3.5
Adjusted operating income (1)
$
42.3
$
38.7
9
%
Adjusted operating margin (1)
23.2
%
25.9
%
(270 bps)
Amounts may not add due to rounding.
(1)
Adjusted results exclude first year
purchase accounting costs in both periods associated with
acquisitions, and restructuring costs in the prior year period.
- Reported results reflected sales of $182 million, operating
income of $41 million and operating margin of 22.5%;
- Adjusted sales of $183 million, up $34 million, or 22%,
principally driven by the contribution from the PacStar acquisition
for tactical battlefield communications equipment within our ground
defense market;
- Lower aerospace defense market revenue reflected reduced sales
of our embedded computing equipment on various Unmanned Aerial
Vehicle (UAV) and fighter jet platforms, partially offset by solid
growth on various helicopter platforms;
- Higher commercial aerospace market revenue reflected increased
sales of electronic systems and flight test equipment on various
domestic and international platforms; and
- Adjusted operating income of $42 million, up 9% from the prior
year, while Adjusted operating margin decreased 270 basis points to
23.2%, as favorable mix in defense electronics was more than offset
by higher research and development investments and unfavorable
foreign currency translation.
Naval & Power
(In millions)
Q3-2021
Q3-2020
Change
Reported sales
$
242.8
$
234.5
4
%
Adjustments (1)
(7.5
)
(5.9
)
Adjusted sales (1)
$
235.3
$
228.6
3
%
Reported operating income
$
35.5
$
33.4
6
%
Adjustments (1)
8.4
8.6
Adjusted operating income (1)
$
43.9
$
42.0
4
%
Adjusted operating margin (1)
18.6
%
18.4
%
20 bps
Amounts may not add due to rounding.
(1)
Adjusted results exclude our German valves
business which was classified as held for sale in the fourth
quarter of 2020 impacting both periods; and first year purchase
accounting costs associated with acquisitions, one-time costs
associated with the relocation of our DRG business and
restructuring costs, all impacting the prior year period.
- Reported results reflected sales of $243 million, operating
income of $35 million and operating margin of 14.6%;
- Adjusted sales of $235 million, up $7 million, or 3%;
- Strong naval defense market revenue growth primarily reflected
higher revenues on the Virginia-class submarine and CVN-81 aircraft
carrier programs;
- Reduced power & process market sales reflected timing of
production on the China Direct AP1000 program in the nuclear
market, partially offset by solid industrial valve demand in the
oil and gas market; and
- Adjusted operating income of $44 million, up 4% from the prior
year, while Adjusted operating margin increased 20 basis points to
18.6%, driven by solid absorption on higher revenues and the
benefits of our prior year restructuring initiatives, partially
offset by unfavorable mix in the power & process market.
Full-Year 2021 Guidance
The Company is updating its full-year 2021 Adjusted financial
guidance as follows:
(In millions, except EPS)
2021 Adjusted Non-GAAP
Guidance (Prior)
2021 Adjusted Non-GAAP
Guidance (Current)
2021 Adjusted Chg vs 2020
Restated
Total Sales
$2,465 - $2,515
$2,465 - $2,515
Up 7% - 9%
Operating Income
$411 - $421
$411 - $421
Up 9% - 12%
Operating Margin
16.7% - 16.8%
16.7% - 16.8%
Up 40 - 50 bps
Interest Expense
$41
$40 - $41
Diluted EPS
$7.15 - $7.35
$7.20 - $7.35
Up 9% - 12%
Diluted Shares Outstanding
41.1
41.0
Free Cash Flow
$330 - $360
$330 - $360
Avg. FCF Conversion
~116%
~116%
(1)
2021 Adjusted financial guidance used in
comparisons to 2020 financial results excludes first year purchase
accounting costs associated with acquisitions, as well as our
build-to-print actuation product line supporting the Boeing 737 MAX
program which we exited and our German valves business which was
classified as held for sale, both in the fourth quarter of
2020.
A more detailed breakdown of the Company’s 2021 financial
guidance by segment and by market, as well as all reconciliations
of Reported GAAP amounts to Adjusted non-GAAP amounts can be found
in the accompanying schedules. Historical financial results in the
new segment structure for 2020 and 2019 periods are available in
the Investor Relations section of Curtiss-Wright’s website.
Conference Call & Webcast
Information
The Company will host a conference call to discuss third quarter
2021 financial results and updates to 2021 guidance at 10:00 a.m.
ET on Thursday, November 4, 2021. A live webcast of the call and
the accompanying financial presentation, as well as a replay of the
call, will be made available on the internet by visiting the
Investor Relations section of the Company’s website at
www.curtisswright.com.
(Tables to Follow)
CURTISS-WRIGHT CORPORATION and
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (UNAUDITED)
($'s in thousands, except per
share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Product sales
$
528,339
$
493,398
$
1,552,706
$
1,457,772
Service sales
92,280
78,216
286,467
265,120
Total net sales
620,619
571,614
1,839,173
1,722,892
Cost of product sales
328,424
305,921
989,759
945,886
Cost of service sales
55,187
52,872
177,930
177,580
Total cost of sales
383,611
358,793
1,167,689
1,123,466
Gross profit
237,008
212,821
671,484
599,426
Research and development expenses
21,618
17,587
66,675
54,163
Selling expenses
30,067
24,869
89,227
81,650
General and administrative expenses
78,998
77,251
229,608
230,515
Impairment of assets held for sale
8,656
—
8,656
—
Restructuring expenses
—
8,541
—
20,730
Operating income
97,669
84,573
277,318
212,368
Interest expense
9,955
9,055
30,094
25,059
Other income, net
3,627
5,417
8,910
6,844
Earnings before income taxes
91,341
80,935
256,134
194,153
Provision for income taxes
(21,638
)
(16,315
)
(65,554
)
(46,754
)
Net earnings
$
69,703
$
64,620
$
190,580
$
147,399
Net earnings per share:
Basic earnings per share
$
1.71
$
1.56
$
4.66
$
3.52
Diluted earnings per share
$
1.70
$
1.55
$
4.64
$
3.49
Dividends per share
$
0.18
$
0.17
$
0.53
$
0.51
Weighted average shares outstanding:
Basic
40,769
41,545
40,865
41,926
Diluted
40,950
41,797
41,040
42,190
CURTISS-WRIGHT CORPORATION and
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
($'s in thousands, except par
value)
September 30,
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
234,416
$
198,248
Receivables, net
670,867
588,718
Inventories, net
433,140
428,879
Assets held for sale
20,215
27,584
Other current assets
65,171
57,395
Total current assets
1,423,809
1,300,824
Property, plant, and equipment, net
360,314
378,200
Goodwill
1,461,313
1,455,137
Other intangible assets, net
552,514
609,630
Operating lease right-of-use assets,
net
140,524
150,898
Prepaid pension asset
111,906
92,531
Other assets
32,921
34,114
Total assets
$
4,083,301
$
4,021,334
Liabilities
Current liabilities:
Current portion of long-term and
short-term debt
100,000
100,000
Accounts payable
158,196
201,237
Accrued expenses
142,169
146,833
Deferred revenue
249,671
253,411
Liabilities held for sale
13,215
10,141
Other current liabilities
101,892
98,755
Total current liabilities
765,143
810,377
Long-term debt
957,101
958,292
Deferred tax liabilities, net
121,491
115,007
Accrued pension and other postretirement
benefit costs
98,122
98,345
Long-term operating lease liability
124,362
133,069
Long-term portion of environmental
reserves
15,096
15,422
Other liabilities
101,926
103,248
Total liabilities
2,183,241
2,233,760
Stockholders' equity
Common stock, $1 par value
49,187
49,187
Additional paid in capital
124,532
122,535
Retained earnings
2,839,294
2,670,328
Accumulated other comprehensive loss
(308,810
)
(310,856
)
Less: cost of treasury stock
(804,143
)
(743,620
)
Total stockholders' equity
1,900,060
1,787,574
Total liabilities and stockholders'
equity
$
4,083,301
$
4,021,334
CURTISS-WRIGHT CORPORATION and
SUBSIDIARIES
SEGMENT INFORMATION
(UNAUDITED)(1)
($'s in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
Change
Change
2021
2020
%
2021
2020
%
Sales:
Aerospace & Industrial
$
196,296
$
188,768
4
%
$
576,340
$
592,907
(3
%)
Defense Electronics
181,504
148,324
22
%
525,067
427,518
23
%
Naval & Power
242,819
234,522
4
%
737,766
702,467
5
%
Total sales
$
620,619
$
571,614
9
%
$
1,839,173
$
1,722,892
7
%
Operating income
(expense):
Aerospace & Industrial
$
30,872
$
23,880
29
%
$
81,874
$
65,635
25
%
Defense Electronics
40,762
35,103
16
%
106,656
83,902
27
%
Naval & Power
35,483
33,367
6
%
116,635
90,623
29
%
Total segments
$
107,117
$
92,350
16
%
$
305,165
$
240,160
27
%
Corporate and other
(9,448
)
(7,777
)
(21
%)
(27,847
)
(27,792
)
0
%
Total operating income
$
97,669
$
84,573
15
%
$
277,318
$
212,368
31
%
Operating
margins:
Aerospace & Industrial
15.7
%
12.7
%
300 bps
14.2
%
11.1
%
310 bps
Defense Electronics
22.5
%
23.7
%
(120 bps)
20.3
%
19.6
%
70 bps
Naval & Power
14.6
%
14.2
%
40 bps
15.8
%
12.9
%
290 bps
Total Curtiss-Wright
15.7
%
14.8
%
90 bps
15.1
%
12.3
%
280 bps
Segment margins
17.3
%
16.2
%
110 bps
16.6
%
13.9
%
270 bps
(1) Amounts reported under realigned
segment reporting structure.
CURTISS-WRIGHT CORPORATION and
SUBSIDIARIES
RECONCILIATION OF REPORTED
SALES TO ADJUSTED SALES BY END MARKET (UNAUDITED)
($'s in thousands)
Three Months Ended
Three Months Ended
September 30, 2021
September 30, 2020
2021 vs. 2020
Reported Sales
Adjustments
Adjusted Sales
Reported Sales
Adjustments
Adjusted Sales
Change in Adjusted Sales
Aerospace & Defense
markets:
Aerospace Defense (1)
$
116,853
$
—
$
116,853
$
121,987
$
748
$
122,735
(5
%)
Ground Defense (1)
55,124
1,080
56,204
20,519
—
20,519
174
%
Naval Defense
175,800
—
175,800
165,524
—
165,524
6
%
Commercial Aerospace (2)
67,461
(381
)
67,080
70,943
(16,524
)
54,419
23
%
Total Aerospace & Defense
$
415,238
$
699
$
415,937
$
378,973
$
(15,776
)
$
363,197
15
%
Commercial markets:
Power & Process (3)
112,736
(7,472
)
105,264
113,919
(5,896
)
108,023
(3
%)
General Industrial
92,645
—
92,645
78,722
—
78,722
18
%
Total Commercial
205,381
(7,472
)
197,909
192,641
(5,896
)
186,745
6
%
Total Curtiss-Wright
$
620,619
$
(6,773
)
$
613,846
$
571,614
$
(21,672
)
$
549,942
12
%
Nine Months Ended
Nine Months Ended
September 30, 2021
September 30, 2020
2021 vs. 2020
Reported Sales
Adjustments
Adjusted Sales
Reported Sales
Adjustments
Adjusted Sales
Change in Adjusted Sales
Aerospace & Defense
markets:
Aerospace Defense (1)
$
327,847
$
—
$
327,847
$
333,120
$
949
$
334,069
(2
%)
Ground Defense (1)
159,090
3,240
162,330
63,205
—
63,205
157
%
Naval Defense
531,429
—
531,429
496,157
—
496,157
7
%
Commercial Aerospace (2)
196,285
(8,764
)
187,521
242,708
(46,929
)
195,779
(4
%)
Total Aerospace & Defense
$
1,214,651
$
(5,524
)
$
1,209,127
$
1,135,190
$
(45,980
)
$
1,089,210
11
%
Commercial markets:
Power & Process (3)
343,573
(20,468
)
323,105
350,632
(18,604
)
332,028
(3
%)
General Industrial
280,949
—
280,949
237,070
—
237,070
19
%
Total Commercial
$
624,522
$
(20,468
)
$
604,054
$
587,702
$
(18,604
)
$
569,098
6
%
Total Curtiss-Wright
$
1,839,173
$
(25,992
)
$
1,813,181
$
1,722,892
$
(64,584
)
$
1,658,308
9
%
(1) Excludes first year purchase
accounting adjustments.
(2) Excludes our build-to-print actuation
product line supporting the Boeing 737 MAX program which we exited
in the fourth quarter of 2020.
(3) Excludes our German valves business
which was classified as held for sale in the fourth quarter of
2020.
Use of Non-GAAP Financial Information (Unaudited)
The Corporation supplements its financial information determined
under U.S. generally accepted accounting principles (GAAP) with
certain non-GAAP financial information. Curtiss-Wright believes
that these non-GAAP measures provide investors with additional
insight into the Company’s ongoing business performance. These
non-GAAP measures should not be considered in isolation or as a
substitute for the related GAAP measures, and other companies may
define such measures differently. Curtiss-Wright encourages
investors to review its financial statements and publicly filed
reports in their entirety and not to rely on any single financial
measure.
The Company’s presentation of its financials and guidance
includes an Adjusted (non-GAAP) view that excludes (i) the results
of a build-to-print actuation product line supporting the Boeing
737 MAX program which we exited and a German valves business
classified as held for sale, both in the fourth quarter of 2020;
(ii) significant restructuring costs in 2020 associated with its
operations; (iii) a non-cash impairment of capitalized development
costs related to a commercial aerospace program in the prior
period; (iv) first year purchase accounting costs in both periods
associated with its acquisitions, including one-time inventory
step-up, backlog amortization, deferred revenue adjustments and
transaction costs; and (v) one-time transition and IT security
costs, and capital investments, specifically associated with the
relocation of the DRG business in the Naval & Power segment in
the prior period. Transition costs include relocation of employees
and equipment as well as overlapping facility and labor costs
associated with the relocation. We believe this Adjusted view will
provide improved transparency in order to better measure
Curtiss-Wright’s ongoing operating and financial performance and
better comparisons of our key financial metrics to our peers.
Reconciliations of “Reported” GAAP amounts to “Adjusted” non-GAAP
amounts are furnished within this release.
The following definitions are provided:
Adjusted Sales, Operating Income,
Operating Margin, Net Earnings and Diluted EPS
These Adjusted financials are defined as Reported Sales,
Operating Income, Operating Margin, Net Earnings and Diluted
Earnings per Share (EPS) under GAAP excluding: (i) the impact of
first year purchase accounting costs in both periods associated
with acquisitions, specifically one-time inventory step-up, backlog
amortization, deferred revenue adjustments and transaction costs;
(ii) one-time transition and IT security costs associated with the
relocation of a business in the prior year period; (iii) the
non-cash impairment of capitalized development costs related to a
commercial aerospace program in the prior year period; (iv)
significant restructuring costs in 2020 associated with its
operations, (v) a build-to-print actuation product line supporting
the Boeing 737 MAX program which we exited, and (vi) the results of
a German valves business classified as held for sale in the fourth
quarter of 2020.
Organic Sales and Organic Operating
Income
The Corporation discloses organic sales and organic operating
income because the Corporation believes it provides investors with
insight as to the Company’s ongoing business performance. Organic
sales and organic operating income are defined as sales and
operating income excluding the impact of restructuring costs,
impairment of assets held for sale, foreign currency fluctuations
and contributions from acquisitions made during the last twelve
months.
Three Months Ended
September 30,
2021 vs. 2020
Aerospace &
Industrial
Defense Electronics
Naval & Power
Total Curtiss-Wright
Sales
Operating income
Sales
Operating income
Sales
Operating income
Sales
Operating income
Organic
3%
19%
(3%)
(2%)
3%
11%
1%
7%
Acquisitions
0%
0%
25%
21%
0%
0%
7%
9%
Impairment of assets held for sale
0%
0%
0%
0%
0%
(26%)
0%
(10%)
Restructuring
0%
13%
0%
1%
0%
22%
0%
13%
Foreign Currency
1%
(3%)
0%
(4%)
1%
(1%)
1%
(4%)
Total
4%
29%
22%
16%
4%
6%
9%
15%
Nine Months Ended
September 30,
2021 vs. 2020
Aerospace &
Industrial
Defense Electronics
Naval & Power
Total Curtiss-Wright
Sales
Operating income
Sales
Operating income
Sales
Operating income
Sales
Operating income
Organic
(5%)
12%
(2%)
14%
4%
22%
0%
19%
Acquisitions
0%
0%
25%
16%
0%
0%
6%
6%
Impairment of assets held for sale
0%
0%
0%
0%
0%
(10%)
0%
(4%)
Restructuring
0%
14%
0%
4%
0%
18%
0%
13%
Foreign Currency
2%
(1%)
0%
(7%)
1%
(1%)
1%
(3%)
Total
(3%)
25%
23%
27%
5%
29%
7%
31%
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 2020 excludes:
(i) a capital investment in the Naval & Power segment related
to the new, state-of-the-art naval facility principally for DRG;
(ii) a voluntary contribution to the Company’s corporate defined
benefit pension plan made in the first quarter of 2020; and (iii)
the cash impact from restructuring in 2020. The Corporation
discloses adjusted free cash flow conversion because it measures
the proportion of net earnings converted into free cash flow and is
defined as adjusted free cash flow divided by adjusted net
earnings.
CURTISS-WRIGHT CORPORATION and
SUBSIDIARIES
NON-GAAP FINANCIAL DATA
(UNAUDITED)
($'s in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Net cash provided by operating
activities
$
107,285
$
55,993
$
155,761
$
3,784
Capital expenditures
(10,087
)
(7,017
)
(27,858
)
(36,341
)
Free cash flow
$
97,198
$
48,976
$
127,903
$
(32,557
)
Voluntary pension contribution
—
—
—
150,000
Adjustment to capital expenditures (DRG
facility investment)
—
437
—
10,112
Restructuring
—
5,935
—
10,676
Adjusted free cash flow
$
97,198
$
55,348
$
127,903
$
138,231
Adjusted free cash flow conversion
127
%
75
%
63
%
76
%
CURTISS-WRIGHT CORPORATION 2021 Guidance (New
Segment Structure) As of November 3, 2021 ($'s in
millions, except per share data)
2020 Adjusted
(Non-GAAP)(1)
Exiting Non-Core
Operations
2020 Adjusted (2,4)
(Non-GAAP)
2021 Reported Guidance
(GAAP)
Exiting Non-Core
Operations
2021 Adjustments (3)
(Non-GAAP)
2021 Adjusted Guidance (3)
(Non-GAAP)
Low
High
Low
High
2021 Chg vs 2020
Adjusted
Sales: Aerospace &
Industrial
$
805
$
(67
)
$
738
$
774
$
789
$
(14
)
$
-
$
760
$
775
3 - 5%
Defense Electronics
611
-
611
742
756
-
4
745
760
22 - 24%
Naval & Power
977
(26
)
951
991
1,011
(31
)
-
960
980
1 - 3%
Total sales
$
2,393
$
(93
)
$
2,300
$
2,507
$
2,556
$
(45
)
$
4
$
2,465
$
2,515
7 to 9%
Operating income:
Aerospace & Industrial
$
114
$
(16
)
$
98
$
117
$
120
$
(2
)
$
-
$
115
$
118
17 - 21%
Defense Electronics
144
-
144
153
158
-
6
159
164
10 - 13%
Naval & Power
171
-
171
166
171
8
-
174
179
2 - 5%
Total segments
429
(16
)
413
436
449
6
6
448
461
Corporate and other
(38
)
-
(38
)
(37
)
(39
)
-
-
(37
)
(39
)
Total operating income
$
391
$
(16
)
$
375
$
398
$
409
$
6
$
6
$
411
$
421
9 to 12%
Interest expense
$
(36
)
$
-
$
(36
)
$
(40
)
$
(41
)
$
-
$
-
$
(40
)
$
(41
)
Other income, net
21
-
21
13
13
-
3
16
17
Earnings before income taxes
377
(16
)
361
372
381
6
9
387
397
Provision for income taxes
(88
)
4
(85
)
(89
)
(92
)
(1
)
(2
)
(93
)
(95
)
Net earnings
$
289
$
(12
)
$
277
$
283
$
290
$
5
$
7
$
295
$
302
Diluted earnings per share
$
6.87
$
(0.29
)
$
6.59
$
6.91
$
7.06
$
0.11
$
0.17
$
7.20
$
7.35
9 to 12%
Diluted shares outstanding
42.0
42.0
41.0
41.0
41.0
41.0
Effective tax rate
23.4
%
23.4
%
24.0
%
24.0
%
24.0
%
24.0
%
Operating margins:
Aerospace & Industrial
14.2
%
NM
13.3
%
15.1
%
15.2
%
+10 bps
-
15.1
%
15.3
%
180 to 200 bps
Defense Electronics
23.6
%
NM
23.6
%
20.6
%
20.8
%
-
+70 bps
21.3
%
21.5
%
(210 to 230 bps)
Naval & Power
17.5
%
NM
18.0
%
16.8
%
16.9
%
+140 bps
-
18.2
%
18.3
%
20 to 30 bps
Total operating margin
16.3
%
NM
16.3
%
15.9
%
16.0
%
+60 bps +20 bps
16.7
%
16.8
%
40 to 50 bps
Free cash flow
$
394
$
-
$
394
$
330
$
360
-
-
$
330
$
360
Notes: Full year amounts may not add due to rounding. All
financial information by reportable segment for the 2020 and 2021
reporting periods reflects the Corporation’s first quarter 2021
segment reorganization. (1) A reconciliation of our 2020
GAAP to our 2020 Non-GAAP Adjusted figures are provided in our
February 24, 2021 press release. (2) 2020 Adjusted
financials are defined as Reported Sales Operating Income,
Operating Margin, Net Income and Diluted EPS under GAAP excluding
restructuring costs; first year purchase accounting costs,
specifically one-time backlog amortization and transaction costs
associated with acquisitions; a non-cash impairment of capitalized
development costs related to a commercial aerospace program;
one-time transition and IT security costs related to the relocation
of the DRG business; and a $10 million non-cash currency
translation loss (within non-operating income) related to the
liquidation of a foreign legal entity. 2020 financial results
excludes our build-to-print actuation product line supporting the
Boeing 737 MAX program which we exited, and the results of our
German valves business which was classified as held for sale in the
fourth quarter of 2020 and resulted in an impairment loss of $33
million. (3) 2021 Adjusted financials are defined as
Reported Sales, Operating Income, Operating Margin, Net Income and
Diluted EPS under GAAP excluding our build-to-print actuation
product line supporting the Boeing 737 MAX program which we exited;
the results of our German valves business which was classified as
held for sale in the fourth quarter of 2020 and resulted in an
additional impairment loss of $9 million; the impact of first year
purchase accounting costs, specifically one-time backlog
amortization and transaction costs associated with acquisitions;
and a one-time, $3 million pension settlement charge related to the
retirement of two former executives (within non-operating
income). (4) Free Cash Flow is defined as cash flow from
operations less capital expenditures. 2020 Adjusted Free Cash Flow
guidance excludes a $150 million voluntary contribution made in
January to the Company’s corporate defined benefit pension plan, a
$20 million cash impact from restructuring, and a $10 million
capital investment related to the new, state-of-the-art naval
facility principally for DRG. CURTISS-WRIGHT
CORPORATION 2021 Sales Growth Guidance by End Market
As of November 3, 2021
2021 % Change vs 2020
Aerospace & Defense Markets
Current
% Total
Sales
Aerospace Defense
2 - 4%
19%
Ground Defense
100 - 105%
9%
Naval Defense
0 - 2%
28%
Commercial Aerospace
Flat
10%
Total Aerospace & Defense
7 - 9%
66%
Commercial Markets
Power & Process
1 - 3%
18%
General Industrial
15 - 17%
15%
Total Commercial
6 - 8%
34%
Total Curtiss-Wright Sales
7 - 9%
100%
Note: Amounts may not add due to rounding.
(1) This table reflects the Company's first quarter 2021 End
Market Structure and Realignment, where all Commercial Aerospace
market revenues shifted into a newly defined Total Aerospace &
Defense market. (2) The Power & Process end
market is comprised of a) Nuclear and b) Process, while the General
Industrial end market is comprised of a) Industrial Vehicles and b)
Industrial Automation and Services. (3) Based on
these changes, all of our general industrial businesses operate
within the Aerospace & Industrial segment, and the majority of
the Company’s nuclear and process revenues operate within the Naval
& Power segment.
About Curtiss-Wright Corporation
Curtiss-Wright Corporation (NYSE:CW) is a global innovative
company that delivers highly engineered, critical function products
and services to the Aerospace and Defense markets, and to the
Commercial markets including Power, Process and General Industrial.
Building on the heritage of Glenn Curtiss and the Wright brothers,
Curtiss-Wright has a long tradition of providing reliable solutions
through trusted customer relationships. The company employs
approximately 8,200 people worldwide. For more information, 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, future cash
flow from operations, and potential impacts of the COVID-19
pandemic are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended ("Securities
Act"), Section 21E of the Securities Exchange Act of 1934, as
amended ("Exchange Act") and the Private Securities Litigation
Reform Act of 1995. These statements present management's
expectations, beliefs, plans and objectives regarding future
financial performance, and assumptions or judgments concerning such
performance. Any discussions contained in this press release,
except to the extent that they contain historical facts, are
forward-looking and accordingly involve estimates, assumptions,
judgments and uncertainties. Such forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those expressed or implied.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Such risks and uncertainties include, but are not limited to: a
reduction in anticipated orders; an economic downturn; changes in
the competitive marketplace and/or customer requirements; a change
in government spending; an inability to perform customer contracts
at anticipated cost levels; the impact of a global pandemic or
national epidemic, and other factors that generally affect the
business of aerospace, defense contracting, electronics, marine,
and industrial companies. Such factors are detailed in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2020 and subsequent reports filed with the Securities
and Exchange Commission.
This press release and additional information are available at
www.curtisswright.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20211103006172/en/
Jim Ryan (704) 869-4621 Jim.Ryan@curtisswright.com
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