Curtiss-Wright Reports Second Quarter 2023 Financial Results and Raises Full-Year 2023 Guidance

Rhea-AI Summary

Curtiss-Wright Corporation (NYSE: CW) reported strong financial results for Q2 2023, with sales of $704 million, up 16% compared to the previous year. The company also raised its full-year 2023 adjusted financial guidance, with sales expected to grow by 7% to 9% and diluted EPS expected to increase by 10% to 13%. Backlog increased by 9% year-to-date, reaching $2.8 billion.

Positive

• Curtiss-Wright Corporation reported strong Q2 2023 financial results, with sales up 16% to $704 million.
• The company raised its full-year 2023 adjusted financial guidance, expecting sales to grow by 7% to 9%.
• Backlog increased by 9% year-to-date, reaching $2.8 billion.

Negative

• None.

DAVIDSON, N.C.--(BUSINESS WIRE)-- Curtiss-Wright Corporation (NYSE: CW) reports financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Highlights:

• Reported sales of $704 million, up 16%;
• Reported operating income of $113 million, operating margin of 16.0%, and diluted earnings per share (EPS) of $2.10;
• Adjusted operating income of $115 million, up 18%;
• Adjusted operating margin of 16.4%, up 30 basis points;
• Adjusted diluted EPS of $2.15, up 18%;
• New orders of $842 million, up 8%, reflecting strong Aerospace & Defense (A&D) market demand, and book-to-bill of 1.2;
• Backlog of $2.8 billion, up 9% year-to-date; and
• Free cash flow (FCF) of $99 million, generating 119% Adjusted FCF conversion.

Raised Full-Year 2023 Adjusted Financial Guidance:

• Sales increased to new range of 7% to 9% growth (previously 4% to 6%), now reflecting growth in all A&D and Commercial end markets;
• Operating income increased to new range of 8% to 11% growth (previously 5% to 8%);
• Maintained operating margin range of 17.4% to 17.6%, up 10 to 30 basis points compared with the prior year;
• Diluted EPS increased to new range of $8.90 to $9.15, up 10% to 13% (previously $8.65 to $8.90); and
• Free cash flow increased to new range of $370 to $400 million (previously $360 to $400 million) and continues to reflect greater than 110% FCF conversion.

"Curtiss-Wright delivered stronger-than-expected second quarter results, highlighted by top-line growth in all of our A&D and Commercial end markets and continued operating margin expansion, as we successfully execute on our Pivot to Growth strategy," said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. "We also experienced solid order activity, yielding a book-to-bill of 1.2, and continued to grow our backlog driven by strong demand across all three segments."

"Based on the strong first half results and our expectations for continued easing in the defense electronics supply chain, we have increased our full-year sales, operating income, diluted EPS and free cash flow guidance. We now expect growth in all of our A&D and Commercial markets, as we maintain strong alignment with the favorable secular growth trends influencing our business. We remain committed to delivering on our investor day targets through a strong focus on operational excellence and continued investment in Curtiss-Wright's future growth to drive long-term shareholder value.”

Second Quarter 2023 Operating Results

(In millions)	Q2-2023			Q2-2022			Change
Reported
Sales	$	704		$	609		16%
Operating income	$	113		$	98		15%
Operating margin		16.0	%		16.1	%	(10 bps)
Adjusted (1)
Sales	$	704		$	609		16%
Operating income	$	115		$	98		18%
Operating margin		16.4	%		16.1	%	30 bps
(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.

• Sales of $704 million increased 16% compared with the prior year;
• Total A&D market sales increased 23%, while total Commercial market sales increased 4%;
• In our A&D markets, our results reflected strong organic sales growth driven by the continued easing of defense electronics supply chain headwinds in our defense markets and higher sales in the commercial aerospace market, as well as the contribution from the acquisition of our engineered arresting systems business;
• In our Commercial markets, we experienced solid growth in the power & process markets, despite the wind down on the China Direct AP1000 program, and higher sales in the general industrial market; and
• Adjusted operating income of $115 million increased 18%, while Adjusted operating margin increased 30 basis points to 16.4%, principally driven by favorable overhead absorption on higher revenues in all three segments; Those increases were partially offset by unfavorable mix in the Aerospace & Industrial and Naval & Power segments.

Second Quarter 2023 Segment Performance

Aerospace & Industrial

(In millions)	Q2-2023			Q2-2022			Change
Reported
Sales	$	226		$	209		8%
Operating income	$	36		$	32		10%
Operating margin		15.8	%		15.6	%	20 bps
Adjusted (1)
Sales	$	226		$	209		8%
Operating income	$	36		$	32		10%
Operating margin		15.8	%		15.6	%	20 bps
(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.

• Sales of $226 million, up $18 million, or 8%;
• Commercial aerospace market revenue increases reflected strong demand and higher OEM sales of sensors products and surface treatment services on narrowbody and widebody platforms;
• Higher general industrial market revenue was principally driven by increased sales of industrial automation products and surface treatment services;
• Higher revenue in the aerospace and naval defense markets reflected the timing of sales for our actuation equipment supporting various programs; and
• Adjusted operating income was $36 million, up 10% from the prior year, while Adjusted operating margin increased 20 basis points to 15.8%, mainly due to solid absorption on higher sales, partially offset by unfavorable mix in actuation and sensors products.

Defense Electronics

(In millions)	Q2-2023			Q2-2022			Change
Reported
Sales	$	198		$	150		32%
Operating income	$	43		$	24		77%
Operating margin		21.8	%		16.4	%	540 bps
Adjusted (1)
Sales	$	198		$	150		32%
Operating income	$	43		$	24		77%
Operating margin		21.8	%		16.4	%	540 bps
(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.

• Sales of $198 million, up $48 million, or 32%;
• Higher revenue in the aerospace defense market was primarily driven by increased sales of our embedded computing and 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;
• Higher commercial aerospace market revenue reflected increased sales of avionics and flight test equipment on various domestic and international platforms; and
• Adjusted operating income was $43 million, up 77% from the prior year, while adjusted operating margin increased 540 basis points to 21.8%, primarily due to favorable absorption on higher A&D revenues.

Naval & Power

(In millions)	Q2-2023			Q2-2022			Change
Reported
Sales	$	280		$	251		12%
Operating income	$	47		$	50		(6%)
Operating margin		16.7	%		19.9	%	(320 bps)
Adjusted (1)
Sales	$	280		$	251		12%
Operating income	$	49		$	50		(1%)
Operating margin		17.6	%		19.9	%	(230 bps)
(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.

• Sales of $280 million, up $29 million, or 12%;
• Higher aerospace defense market revenues reflected a solid contribution from the arresting systems acquisition and strong demand from international customers;
• Naval defense market revenue increases principally reflected higher revenues on Columbia-class and Virginia-class submarines, partially offset by the timing of revenues on aircraft carrier programs;
• Higher power & process market revenues reflected strong growth in industrial valve sales in the process market as well as solid growth in commercial nuclear aftermarket revenues supporting the maintenance of existing operating reactors; Those increases were partially offset by lower China Direct AP1000 program revenues; and
• Adjusted operating income was $49 million, down 1% from the prior year, while adjusted operating margin decreased 230 basis points to 17.6%, as favorable absorption on higher organic revenues and the contribution from the arresting systems acquisition were offset by an unfavorable mix of products.

Free Cash Flow

(In millions)	Q2-2023			Q2-2022			Change
Net cash provided by operating activities	$	111		$	31		257	%
Capital expenditures		(12	)		(9	)	40	%
Reported free cash flow	$	99		$	22		341	%
Adjusted free cash flow (1)	$	99		$	22		341	%
(1) A reconciliation of Reported to Adjusted free cash flow is available in the Appendix.

• Reported free cash flow of $99 million increased $77 million year over year, primarily due to improvements in working capital;
• Adjusted free cash flow of $99 million; and
• Capital expenditures increased $3 million compared with the prior year.

New Orders and Backlog

• New orders of $842 million increased 8% compared with the prior year and generated an overall book-to-bill of approximately 1.2x, principally driven by strong demand for defense electronics and naval defense products within our A&D markets, and for nuclear aftermarket products within our Commercial markets; and
• Backlog of $2.8 billion, up 9% from December 31, 2022, reflects higher demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

• During the second quarter, the Company repurchased 72,703 shares of its common stock for approximately $12 million; and
• The Company also declared a quarterly dividend of $0.20 a share, an increase of 5% from the previous quarter.

Full-Year 2023 Guidance

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

($ in millions, except EPS)	2023 Adjusted Non-GAAP Guidance (Prior)	2023 Adjusted Non-GAAP Guidance (Current)	Change vs 2022 Adjusted (Current)
Total Sales	$2,655 - $2,710	$2,730 - $2,790	Up 7% - 9%
Operating Income	$463 - $477	$476 - $490	Up 8% - 11%
Operating Margin	17.4% - 17.6%	17.4% - 17.6%	Up 10 - 30 bps
Diluted EPS	$8.65 - $8.90	$8.90 - $9.15	Up 10% - 13%
Free Cash Flow	$360 - $400	$370 - $400	Up 25% - 36%

(1)

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

A more detailed breakdown of the Company’s 2023 financial guidance by segment and by market, as well as all reconciliations of Reported GAAP amounts to Adjusted Non-GAAP amounts, can be found in the accompanying schedules. Historical financial results are available in the Investor Relations section of Curtiss-Wright’s website.

Conference Call & Webcast Information

The Company will host a conference call to discuss its second quarter 2023 financial results and updates to 2023 guidance at 10:00 a.m. ET on Thursday, August 3, 2023. A live webcast of the call and the accompanying financial presentation, as well as a webcast replay of the call, will be made available on the internet by visiting the Investor Relations section of the Company’s website at www.curtisswright.com.

(Tables to Follow)

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
($'s in thousands, except per share data)
	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2023				2022				2023				2022
Product sales	$	583,036			$	505,416			$	1,107,917			$	958,837
Service sales		121,360				103,941				227,339				209,981
Total net sales		704,396				609,357				1,335,256				1,168,818
Cost of product sales		369,549				316,389				713,306				610,916
Cost of service sales		75,274				64,454				140,969				127,986
Total cost of sales		444,823				380,843				854,275				738,902
Gross profit		259,573				228,514				480,981				429,916
Research and development expenses		20,210				23,868				42,234				44,417
Selling expenses		34,273				30,407				66,698				58,499
General and administrative expenses		92,315				76,134				180,659				163,734
Loss on divestiture		—				—				—				4,651
Operating income		112,775				98,105				191,390				158,615
Interest expense		14,992				9,788				27,936				19,318
Other income, net		7,954				4,555				15,721				7,552
Earnings before income taxes		105,737				92,872				179,175				146,849
Provision for income taxes		(24,738	)			(22,000	)			(41,330	)			(35,292	)
Net earnings	$	80,999			$	70,872			$	137,845			$	111,557
Net earnings per share:
Basic earnings per share	$	2.11			$	1.84			$	3.60			$	2.90
Diluted earnings per share	$	2.10			$	1.83			$	3.58			$	2.89
Dividends per share	$	0.20			$	0.19			$	0.39			$	0.37
Weighted-average shares outstanding:
Basic		38,329				38,429				38,309				38,438
Diluted		38,555				38,654				38,528				38,657

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
($'s in thousands, except par value)
	June 30,				December 31,
	2023				2022
Assets
Current assets:
Cash and cash equivalents	$	158,737			$	256,974
Receivables, net		751,532				724,603
Inventories, net		545,596				483,113
Other current assets		67,693				52,623
Total current assets		1,523,558				1,517,313
Property, plant, and equipment, net		340,857				342,708
Goodwill		1,555,908				1,544,635
Other intangible assets, net		589,932				620,897
Operating lease right-of-use assets, net		143,814				153,855
Prepaid pension asset		232,557				222,627
Other assets		54,472				47,567
Total assets	$	4,441,098			$	4,449,602
Liabilities
Current liabilities:
Current portion of long-term debt	$	—			$	202,500
Accounts payable		233,602				266,525
Accrued expenses		144,073				177,536
Deferred revenue		264,766				242,483
Other current liabilities		78,486				82,395
Total current liabilities		720,927				971,439
Long-term debt		1,176,066				1,051,900
Deferred tax liabilities, net		117,882				123,001
Accrued pension and other postretirement benefit costs		58,267				58,348
Long-term operating lease liability		122,939				132,275
Long-term portion of environmental reserves		13,497				12,547
Other liabilities		93,256				107,973
Total liabilities	$	2,302,834		0	$	2,457,483
Stockholders' equity
Common stock, $1 par value	$	49,187			$	49,187
Additional paid in capital		130,846				134,553
Retained earnings		3,297,281				3,174,396
Accumulated other comprehensive loss		(225,375	)			(258,916	)
Less: cost of treasury stock		(1,113,675	)			(1,107,101	)
Total stockholders' equity	$	2,138,264			$	1,992,119
Total liabilities and stockholders' equity	$	4,441,098			$	4,449,602

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
	June 30, 2023											June 30, 2022											% Change
	As Reported				Adjustments			Adjusted				As Reported				Adjustments			Adjusted				As Reported			Adjusted
Sales:
Aerospace & Industrial	$	226,260			$	—		$	226,260			$	208,572			$	—		$	208,572			8	%		8	%
Defense Electronics		197,722				—			197,722				149,549				—			149,549			32	%		32	%
Naval & Power		280,414				—			280,414				251,236				—			251,236			12	%		12	%
Total sales	$	704,396			$	—		$	704,396			$	609,357			$	—		$	609,357			16	%		16	%
Operating income (expense):
Aerospace & Industrial	$	35,665			$	—		$	35,665			$	32,464			$	—		$	32,464			10	%		10	%
Defense Electronics		43,180				—			43,180				24,460				—			24,460			77	%		77	%
Naval & Power(1)		46,782				2,659			49,441				50,001				—			50,001			(6	)%		(1	)%
Total segments	$	125,627			$	2,659		$	128,286			$	106,925			$	—		$	106,925			17	%		20	%
Corporate and other		(12,852	)			—			(12,852	)			(8,820	)			—			(8,820	)		(46	)%		(46	)%
Total operating income	$	112,775			$	2,659		$	115,434			$	98,105			$	—		$	98,105			15	%		18	%
Operating margins:	As Reported							Adjusted				As Reported							Adjusted				As Reported			Adjusted
Aerospace & Industrial		15.8	%						15.8	%			15.6	%						15.6	%		20 bps			20 bps
Defense Electronics		21.8	%						21.8	%			16.4	%						16.4	%		540 bps			540 bps
Naval & Power		16.7	%						17.6	%			19.9	%						19.9	%		(320 bps)			(230 bps)
Total Curtiss-Wright		16.0	%						16.4	%			16.1	%						16.1	%		(10 bps)			30 bps
Segment margins		17.8	%						18.2	%			17.5	%						17.5	%		30 bps			70 bps
(1) Excludes first year purchase accounting adjustments in the current period.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
RECONCILIATION OF AS REPORTED TO ADJUSTED (UNAUDITED)
($'s in thousands)
	Six Months Ended											Six Months Ended
	June 30, 2023											June 30, 2022											% Change
	As Reported				Adjustments			Adjusted				As Reported				Adjustments			Adjusted				As Reported			Adjusted
Sales:
Aerospace & Industrial	$	428,707			$	—		$	428,707			$	399,684			$	—		$	399,684			7	%		7	%
Defense Electronics		359,876				—			359,876				292,618				—			292,618			23	%		23	%
Naval & Power		546,673				—			546,673				476,516				—			476,516			15	%		15	%
Total sales	$	1,335,256			$	—		$	1,335,256			$	1,168,818			$	—		$	1,168,818			14	%		14	%
Operating income (expense):
Aerospace & Industrial	$	62,210			$	—		$	62,210			$	57,317			$	—		$	57,317			9	%		9	%
Defense Electronics		66,548				—			66,548				47,750				—			47,750			39	%		39	%
Naval & Power (1)(2)		84,719				5,335			90,054				77,289				5,427			82,716			10	%		9	%
Total segments	$	213,477			$	5,335		$	218,812			$	182,356			$	5,427		$	187,783			17	%		17	%
Corporate and other (3)		(22,087	)			—			(22,087	)			(23,741	)			4,876			(18,865	)		7	%		(17	)%
Total operating income	$	191,390			$	5,335		$	196,725			$	158,615			$	10,303		$	168,918			21	%		16	%
Operating margins:	As Reported							Adjusted				As Reported							Adjusted				As Reported			Adjusted
Aerospace & Industrial		14.5	%						14.5	%			14.3	%						14.3	%		20 bps			20 bps
Defense Electronics		18.5	%						18.5	%			16.3	%						16.3	%		220 bps			220 bps
Naval & Power		15.5	%						16.5	%			16.2	%						17.4	%		(70 bps)			(90 bps)
Total Curtiss-Wright		14.3	%						14.7	%			13.6	%						14.5	%		70 bps			20 bps
Segment margins		16.0	%						16.4	%			15.6	%						16.1	%		40 bps			30 bps
(1) Excludes first year purchase accounting adjustments in the current period.
(2) Excludes the results of operations from our German valves business, which was sold in January 2022, and the loss on divestiture in the prior year period.
(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
		June 30, 2023									June 30, 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		$	132,192		$	—		$	132,192		$	94,545		$	—		$	94,545		40	%	40	%
Ground Defense			70,875			—			70,875			44,393			—			44,393		60	%	60	%
Naval Defense			180,956			—			180,956			172,786			—			172,786		5	%	5	%
Commercial Aerospace			82,033			—			82,033			68,192			—			68,192		20	%	20	%
Total Aerospace & Defense		$	466,056		$	—		$	466,056		$	379,916		$	—		$	379,916		23	%	23	%
Commercial markets:
Power & Process		$	131,000		$	—		$	131,000		$	125,355		$	—		$	125,355		5	%	5	%
General Industrial			107,340			—			107,340			104,086			—			104,086		3	%	3	%
Total Commercial		$	238,340		$	—		$	238,340		$	229,441		$	—		$	229,441		4	%	4	%
Total Curtiss-Wright		$	704,396		$	—		$	704,396		$	609,357		$	—		$	609,357		16	%	16	%
		Six Months Ended									Six Months Ended
		June 30, 2023									June 30, 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		$	232,071		$	—		$	232,071		$	192,549		$	—		$	192,549		21	%	21	%
Ground Defense			137,132			—			137,132			83,501			—			83,501		64	%	64	%
Naval Defense			352,912			—			352,912			335,753			—			335,753		5	%	5	%
Commercial Aerospace			152,523			—			152,523			129,084			—			129,084		18	%	18	%
Total Aerospace & Defense		$	874,638		$	—		$	874,638		$	740,887		$	—		$	740,887		18	%	18	%
Commercial markets:
Power & Process		$	251,338		$	—		$	251,338		$	230,143		$	—		$	230,143		9	%	9	%
General Industrial			209,280			—			209,280			197,788			—			197,788		6	%	6	%
Total Commercial		$	460,618		$	—		$	460,618		$	427,931		$	—		$	427,931		8	%	8	%
Total Curtiss-Wright		$	1,335,256		$	—		$	1,335,256		$	1,168,818		$	—		$	1,168,818		14	%	14	%

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
RECONCILIATION OF AS REPORTED TO ADJUSTED DILUTED EARNINGS PER SHARE (UNAUDITED)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Diluted earnings per share - As Reported	$	2.10		$	1.83		$	3.58		$	2.89
First year purchase accounting adjustments		0.05			—			0.10			—
Divested German valves business		—			—			—			0.11
Costs associated with shareholder activism		—			—			—			0.10
Former executive pension settlement expense		—			—			—			0.04
Diluted earnings per share - Adjusted (1)	$	2.15		$	1.83		$	3.68		$	3.14
(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, loss from sale of our industrial valves business in Germany, and foreign currency fluctuations.

	Three Months Ended
	June 30,
	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	8%		10%		32%		77%		12%		(6%)		16%		15%
Less: Acquisitions	0%		0%		0%		0%		(9%)		0%		(4%)		0%
Foreign Currency	1%		1%		0%		(8%)		0%		(1%)		0%		(2%)
Organic	9%		11%		32%		69%		3%		(7%)		12%		13%
	Six Months Ended
	June 30,
	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%		23%		39%		15%		10%		14%		21%
Less: Acquisitions	0%		0%		0%		0%		(8%)		0%		(3%)		0%
Loss on divestiture	0%		0%		0%		0%		0%		(7%)		0%		(3%)
Foreign Currency	1%		(1%)		0%		(7%)		0%		(1%)		0%		(4%)
Organic	8%		8%		23%		32%		7%		2%		11%		14%

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 in both the current and prior year periods and (ii) executive pension payments in the prior year period. 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								Six Months Ended
	June 30,								June 30,
	2023				2022				2023				2022
Net cash provided by (used for) operating activities	$	110,952			$	31,044			$	19,353			$	(93,271	)
Capital expenditures		(12,003	)			(8,596	)			(22,664	)			(19,492	)
Free cash flow	$	98,949			$	22,448			$	(3,311	)		$	(112,763	)
Westinghouse legal settlement		—				—				10,000				15,000
Pension payment to former executive		—				—				—				8,214
Adjusted free cash flow	$	98,949			$	22,448			$	6,689			$	(89,549	)
Adjusted free cash flow conversion		119	%			32	%			5	%			(74	%)

CURTISS-WRIGHT CORPORATION
2023 Guidance
As of August 2, 2023
($'s in millions, except per share data)
	2022 Reported (GAAP)				2022 Adjustments (Non-GAAP)(1,3)				2022 Adjusted (Non-GAAP)(1,3)				2023 Reported Guidance (GAAP)							2023 Adjustments (Non-GAAP)(2,3)				2023 Adjusted Guidance (Non-GAAP)(2,3)
													Low			High								Low			High				2023 Chg vs 2022 Adjusted
Sales:
Aerospace & Industrial	$	836			$	—			$	836			$	865		$	885			$	—			$	865		$	885			4 - 6%
Defense Electronics	$	690			$	—			$	690			$	755		$	775			$	—			$	755		$	775			9 - 12%
Naval & Power	$	1,031			$	—			$	1,031			$	1,110		$	1,130			$	—			$	1,110		$	1,130			8 - 10%
Total sales	$	2,557			$	—			$	2,557			$	2,730		$	2,790			$	—			$	2,730		$	2,790			7 - 9%
Operating income:
Aerospace & Industrial	$	137			$	1			$	138			$	145		$	150			$	—			$	145		$	150			5 - 9%
Defense Electronics	$	155			$	—			$	155			$	174		$	180			$	—			$	174		$	180			13 - 17%
Naval & Power	$	178			$	14			$	192			$	187		$	192			$	8			$	195		$	200			2 - 4%
Total segments	$	469			$	15			$	484			$	506		$	521			$	8			$	514		$	529
Corporate and other		(46	)			5				(41	)			(37	)		(40	)			—				(37	)		(40	)
Total operating income		423				20				443				468			482				8				476			490			8 - 11%
Interest expense		(47	)			—				(47	)			(52	)		(54	)			—				(52	)		(54	)
Other income, net		13				4				17				27			28				—				27			28
Earnings before income taxes		389				24				413				443			455				8				451			463
Provision for income taxes		(95	)			(4	)			(99	)			(106	)		(109	)			(2	)			(108	)		(111	)
Net earnings		294				20				314				337			346				6				343			352
Diluted earnings per share	$	7.62			$	0.51			$	8.13			$	8.75		$	8.99			$	0.16			$	8.90		$	9.15			10 - 13%
Diluted shares outstanding		38.6								38.6				38.5			38.5								38.5			38.5
Effective tax rate		24.4	%							24.0	%			24.0	%		24.0	%							24.0	%		24.0	%
Operating margins:
Aerospace & Industrial		16.4	%							16.5	%			16.7	%		16.9	%							16.7	%		16.9	%		20 - 40 bps
Defense Electronics		22.4	%							22.4	%			23.0	%		23.2	%							23.0	%		23.2	%		60 - 80 bps
Naval & Power		17.2	%							18.6	%			16.8	%		16.9	%							17.5	%		17.7	%		(110) - (90) bps
Total operating margin		16.6	%							17.3	%			17.2	%		17.3	%							17.4	%		17.6	%		10 - 30 bps
Free cash flow	$	257			$	39			$	296			$	360		$	390			$	10			$	370		$	400			25 - 36%
Notes: Full year amounts may not add due to rounding.
(1) 2022 Adjusted financials exclude the impact of first year purchase accounting adjustments, the loss on sale of our German valves business, costs associated with shareholder activism and pension settlement charges related to the retirement of two former executives.
(2) 2023 Adjusted financials exclude the impact of first year purchase accounting adjustments.
(3) Free Cash Flow is defined as cash flow from operations less capital expenditures. 2022 Adjusted Free Cash Flow excluded one-time pension settlement payments of $24 million and a legal settlement payment of $15 million. 2023 Adjusted Free Cash Flow guidance excludes a legal settlement payment of $10 million.

CURTISS-WRIGHT CORPORATION
2023 Sales Growth Guidance by End Market
As of August 2, 2023
	2023 % Change vs. 2022 Adjusted(1)
	Prior		Current		% Total Sales
Aerospace & Defense Markets
Aerospace Defense	9 - 11%		9 - 11%		20%
Ground Defense	4 - 6%		16 - 18%		9%
Naval Defense	4 - 6%		6 - 8%		27%
Commercial Aerospace	5 - 7%		9 - 11%		11%
Total Aerospace & Defense	6 - 8%		9 - 11%		67%
Commercial Markets
Power & Process	Flat		3 - 5%		18%
General Industrial	2 - 4%		3 - 5%		16%
Total Commercial	0 - 2%		3 - 5%		33%
Total Curtiss-Wright Sales	4 - 6%		7 - 9%		100%
Note: Sales percentages may not add due to rounding.
(1) 2023 and 2022 Sales include the contribution from the engineered arresting systems business, acquired on June 30, 2022, to the Aerospace Defense market.

About Curtiss-Wright Corporation

Curtiss-Wright Corporation (NYSE:CW) is a global integrated business that provides highly engineered products, solutions and services mainly to Aerospace & Defense markets, as well as critical technologies in demanding Commercial Power, Process and Industrial markets. We leverage a workforce of approximately 8,400 highly skilled employees who develop, design and build what we believe are the best engineered solutions to the markets we serve. Building on the heritage of Glenn Curtiss and the Wright brothers, Curtiss-Wright has a long tradition of providing innovative solutions through trusted customer relationships. For more information, visit www.curtisswright.com.

Certain statements made in this press release, including statements about future revenue, financial performance guidance, quarterly and annual revenue, net income, operating income growth, future business opportunities, cost saving initiatives, the successful integration of the Company’s acquisitions, and future cash flow from operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements present management's expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to: a reduction in anticipated orders; an economic downturn; changes in the competitive marketplace and/or customer requirements; a change in government spending; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, defense contracting, electronics, marine, and industrial companies. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and subsequent reports filed with the Securities and Exchange Commission.

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20230802239462/en/

Jim Ryan

(704) 869-4621

Jim.Ryan@curtisswright.com

Source: Curtiss-Wright Corporation

FAQ

What were Curtiss-Wright Corporation's sales in Q2 2023?

Curtiss-Wright Corporation reported sales of $704 million in Q2 2023, an increase of 16% compared to the previous year.

What is Curtiss-Wright Corporation's full-year 2023 adjusted financial guidance?

Curtiss-Wright Corporation raised its full-year 2023 adjusted financial guidance, with sales expected to grow by 7% to 9% and diluted EPS expected to increase by 10% to 13%.

What is the backlog of Curtiss-Wright Corporation?

Curtiss-Wright Corporation's backlog reached $2.8 billion, up 9% year-to-date.