Curtiss-Wright to Acquire Ultra Energy

Rhea-AI Summary

Curtiss-Wright (NYSE: CW) announced an agreement to acquire Ultra Nuclear and Weed Instrument Co., Inc. ('Ultra Energy') for $200 million in cash. Ultra Energy specializes in safety-critical systems for nuclear power generation and aerospace applications. The acquisition, expected to close in Q3 2024, aims to enhance Curtiss-Wright's global portfolio and is projected to be accretive to adjusted diluted EPS in its first full year. Ultra Energy, generating $65 million in sales in 2023, will operate within Curtiss-Wright's Naval & Power segment, potentially driving long-term profitable growth and strong free cash flow. Regulatory approval from the UK is pending.

Positive

• Curtiss-Wright expands its portfolio with high-complementary solutions, enhancing its global footprint.
• The acquisition is projected to be accretive to adjusted diluted EPS in its first full year of ownership.
• Ultra Energy reported $65 million in sales in 2023, contributing to revenue growth.
• The business is expected to generate strong free cash flow conversion rates exceeding 100%.
• The acquisition aligns with Curtiss-Wright's strategic priorities and long-term financial objectives.
• Ultra Energy's UK-based manufacturing footprint offers expanded reach in advanced nuclear reactor design.

Negative

• The acquisition cost of $200 million in cash could impact Curtiss-Wright's short-term liquidity.
• The deal is subject to UK regulatory approval, introducing potential delays or uncertainties.
• First-year purchase accounting costs might offset initial earnings benefits.

Insights

Financial Analyst

The acquisition of Ultra Energy for $200 million by Curtiss-Wright is expected to be accretive to Curtiss-Wright's adjusted diluted earnings per share in the first full year of ownership. This is significant because earnings accretion typically indicates that the acquisition will add positive value to the acquiring company. Considering Ultra Energy's sales of $65 million in 2023, the purchase price represents a revenue multiple of approximately 3.1x. This multiple can be considered reasonable within the industry, especially given Ultra Energy's specialized product lines in critical safety systems.

Furthermore, with a strong free cash flow conversion rate in excess of 100%, the acquisition appears strategically sound, as it will improve Curtiss-Wright's cash flow profile. Investors should also note the emphasis on Ultra Energy's alignment with Curtiss-Wright's long-term financial objectives, which include profitable growth and strong cash flow generation. The acquisition is set to enhance Curtiss-Wright's operational scope, particularly within the naval and power sectors.

Key Takeaway: The financial metrics and strategic alignment suggest that this acquisition is a positive move for Curtiss-Wright, likely to benefit shareholders through enhanced earnings and cash flow.

Market Research Analyst

The acquisition of Ultra Energy marks a significant expansion in Curtiss-Wright's portfolio, particularly in sectors with strong, long-term growth potential: commercial nuclear power, nuclear defense and advanced reactor technologies. The move signals Curtiss-Wright's strategic intent to leverage Ultra Energy's established relationships and manufacturing footprint in the UK to enhance its position in the global market.

Notably, the acquisition aligns well with current industry trends emphasizing the modernization of nuclear infrastructure and the development of new, advanced power plants like small modular reactors (SMRs). SMRs represent the next generation of nuclear technology, offering safer and more efficient energy production compared to traditional reactors. This positions Curtis-Wright to capitalize on the industry's shift towards innovative power solutions, both in commercial and defense applications.

Key Takeaway: From a market perspective, this acquisition reinforces Curtiss-Wright’s strategic positioning in high-growth sectors, potentially offering expanded market opportunities and increased relevance in the evolving nuclear and defense landscapes.

Tech Expert

From a technological standpoint, the acquisition of Ultra Energy brings Curtiss-Wright a suite of advanced safety-critical systems, including neutron monitoring, radiation monitoring and reactor protection systems. These technologies are vital for the safe and reliable operation of nuclear power plants. The integration of Ultra Energy's cutting-edge solutions should enhance Curtiss-Wright's existing capabilities and provide a competitive edge in the nuclear sector.

Moreover, as the energy industry continues to prioritize safety and reliability, these advanced monitoring and protection systems will be important in both existing and new nuclear facilities. Ultra Energy's expertise in temperature and pressure sensors is another valuable addition, as these components are integral to maintaining the optimal operation of nuclear reactors.

Key Takeaway: The acquisition significantly bolsters Curtiss-Wright's technological offerings, positioning the company as a more formidable player in the nuclear safety and measurement/control systems market.

A Leading Global Provider of Safety-Critical Measurement and Control Systems to the Commercial Nuclear and Aerospace & Defense Markets

DAVIDSON, N.C.--(BUSINESS WIRE)-- Curtiss-Wright Corporation (NYSE: CW) today announced that it entered into an agreement to acquire the stock of Ultra Nuclear Limited and Weed Instrument Co., Inc. (“Ultra Energy”), a subsidiary of Ultra Electronics, for $200 million in cash. Ultra Energy is a leading designer and manufacturer of reactor protection systems, neutron monitoring systems, radiation monitoring systems, and temperature and pressure sensors that facilitate the safe and reliable operation of commercial nuclear power generation plants, and support UK nuclear defense, as well as aerospace and industrial applications.

Ultra Energy generated sales of approximately $65 million in 2023 and is expected to be accretive to Curtiss-Wright's adjusted diluted earnings per share in its first full year of ownership, excluding first year purchase accounting costs, and produce a strong free cash flow conversion rate in excess of 100%. The acquisition is expected to close in the third quarter of 2024, subject to UK regulatory approval, and the acquired business will operate within Curtiss-Wright's Naval & Power segment.

“The acquisition of Ultra Energy significantly increases the breadth of Curtiss-Wright’s global portfolio with highly complementary, critical measurement and control solutions supporting the modernization of existing commercial nuclear power plants, as well as the design of new and advanced power plants including small modular reactors, in both the U.S. and Europe,” said Lynn M. Bamford, Chair and Chief Executive Officer. “The transaction provides an opportunity to leverage Ultra Energy’s relationships and UK-based nuclear manufacturing footprint to further expand Curtiss-Wright's presence with the leading global designers of advanced nuclear reactors as well as our robust naval defense portfolio to support UK submarines.”

“Building on our successful acquisition track record, Ultra Energy’s critical solutions have a strong alignment to our strategic priorities as highlighted at our 2024 Investor Day. Further, the business is expected to support Curtiss-Wright's financial objectives including long-term profitable growth and strong free cash flow generation.”

Through its predecessor companies, Ultra Energy’s roots date back to the mid-1950s as a specialist in neutron monitoring and the late-1960s as a manufacturer of temperature and pressure sensors. Today, its diverse portfolio includes neutron monitoring for measuring reactor power and safety management, radiation monitoring for plant safety, reactor protection systems to constantly monitor plant conditions, and highly accurate temperature and pressure sensors.

Ultra Energy employs approximately 300 people and maintains primary operations in Wimborne, UK, and Round Rock, TX. Ultra Energy is a subsidiary of Ultra Electronics, formerly a UK-traded public company.

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, headquartered in Davidson, North Carolina, has a long tradition of providing innovative solutions through trusted customer relationships. For more information, visit www.curtisswright.com.

This press release contains forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 that are based on management's beliefs and assumptions. Such statements, including statements relating to Curtiss-Wright Corporation's expectations for the future opportunities associated with the acquisition, the success of transferring Ultra Energy’s technology throughout our existing world-wide network, and the success of the Company integrating Ultra Energy into its Naval & Power segment are not considered historical facts and are considered forward-looking statements under the federal securities laws. 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 competitive marketplace and/or customer requirements; a change in US government spending; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, defense contracting, marine, electronics and industrial companies. Please refer to the Company's current SEC filings under the Securities Exchange Act of 1934, as amended, for further information.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240603867484/en/

Jim Ryan

(704) 869-4621

jim.ryan@curtisswright.com

Source: Curtiss-Wright Corporation

FAQ

What is the value of the acquisition deal between Curtiss-Wright and Ultra Energy?

The acquisition deal is valued at $200 million in cash.

When is the Curtiss-Wright and Ultra Energy acquisition expected to close?

The acquisition is expected to close in the third quarter of 2024.

How will the Ultra Energy acquisition affect Curtiss-Wright's earnings?

The acquisition is expected to be accretive to Curtiss-Wright's adjusted diluted earnings per share in its first full year of ownership.

What segment will Ultra Energy operate within Curtiss-Wright post-acquisition?

Ultra Energy will operate within Curtiss-Wright's Naval & Power segment.

How much revenue did Ultra Energy generate in 2023?

Ultra Energy generated approximately $65 million in sales in 2023.

What are the expected financial benefits of the Ultra Energy acquisition for Curtiss-Wright?

The acquisition is expected to support long-term profitable growth and strong free cash flow generation.

What regulatory approvals are required for the Curtiss-Wright and Ultra Energy acquisition?

The acquisition is subject to UK regulatory approval.