Curtiss-Wright Reports Fourth Quarter and Full-Year 2023 Financial Results; Issues Full-Year 2024 Guidance Reflecting Strong Growth in Sales, EPS and Free Cash Flow

Rhea-AI Summary

Curtiss-Wright Corporation (CW) reports record FY23 sales, profitability, and strong financial performance with a focus on aerospace & defense and commercial markets. The company achieved significant growth in sales, operating income, EPS, and free cash flow, ending the year on a high note.

Positive

• Record sales of $2.8 billion, up 11% in FY23.
• Operating income of $485 million, operating margin of 17.0%.
• Diluted EPS of $9.20, up 15%.
• Adjusted FCF of $413 million, generating 114% conversion.
• New orders of $3.1 billion, up 5% with a book-to-bill of 1.1x.
• Backlog of $2.9 billion, up 9%.
• Strong demand in A&D and Commercial markets.
• Guidance for 2024 includes total sales growth of 4-6% and diluted EPS growth of 7-10%.
• Expectations to deliver continued operating margin expansion and strong free cash flow generation in 2024.

Negative

• None.

Insights

Financial Analyst

The reported financial results by Curtiss-Wright Corporation indicate a positive trajectory with an 11% increase in sales and a 15% increase in adjusted diluted EPS for the full year. This performance suggests a robust demand in the Aerospace & Defense and Commercial markets, which is a strong indicator of the company's current market position and operational efficiency. The reported book-to-bill ratio of 1.1x demonstrates that the company is receiving orders at a rate that exceeds their current billing, which can be a predictor of continued revenue growth.

From a cash flow perspective, the 114% adjusted free cash flow conversion rate is noteworthy as it reflects the company's ability to convert its income into free cash flow efficiently. Investors often look at free cash flow as a measure of financial health because it represents the cash a company is able to generate after laying out the money required to maintain or expand its asset base. The company's guidance for 2024, projecting organic sales growth and continued margin expansion, can be viewed positively by the market as it suggests confidence in the company's future performance.

Market Research Analyst

The Aerospace & Defense and Commercial sectors are key drivers of Curtiss-Wright's growth, with solid demand reflected in new orders and backlog increases. The company's alignment with favorable secular growth trends in these markets could position it well for sustained growth. The emphasis on ramping up research and development investments across the company's portfolio indicates a strategic focus on innovation and long-term competitiveness, which is essential in these high-tech industries.

It's important to note that the company's operational performance has resulted in record sales and operating income, driven by 10% organic growth. This level of organic growth is particularly impressive and suggests that the company is increasing its market share and improving its core business without solely relying on acquisitions or external factors.

Economist

The company's performance and outlook must be contextualized within the broader economic environment. The reported results indicate resilience in the face of potential macroeconomic headwinds such as inflation and supply chain disruptions. The increase in capital expenditures within the Naval & Power segment suggests an investment in future capabilities, which is a positive sign for sustained growth even as it may impact short-term cash flow. Furthermore, the company's ability to maintain a strong backlog amidst global economic uncertainties speaks to the strength of its market position and the essential nature of its products and services.

Looking ahead, the company's guidance for 2024 indicates an expectation of stable economic conditions and continued demand in its key markets. However, investors should consider potential risks such as changes in defense spending, geopolitical tensions and shifts in commercial aerospace demand, which could impact the company's performance.

Company Delivers Record FY23 Sales, Profitability, EPS, Free Cash Flow and Orders

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 vs 2023 Adjusted		% 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240214356278/en/

Jim Ryan

(704) 869-4621

Jim.Ryan@curtisswright.com

Source: Curtiss-Wright Corporation

FAQ

What were Curtiss-Wright's reported sales for FY23?

Curtiss-Wright reported sales of $2.8 billion, up 11% in FY23.

What was the operating income for FY23?

The operating income for FY23 was $485 million with an operating margin of 17.0%.

What was the diluted EPS for FY23?

The diluted EPS for FY23 was $9.20, up 15%.

What were the new orders in FY23?

New orders in FY23 were $3.1 billion, up 5% with a book-to-bill of 1.1x.

What is the guidance for 2024 in terms of total sales growth?

The guidance for 2024 includes total sales growth of 4-6%.