Curtiss-Wright Reports Second Quarter 2024 Financial Results and Raises Full-Year 2024 Guidance

August 8, 2024

DAVIDSON, N.C.–(BUSINESS WIRE)–Curtiss-Wright Corporation (NYSE: CW) reports financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Highlights:

Reported sales of $785 million, up 11%;
Reported operating income of $129 million, operating margin of 16.4%, and diluted earnings per share (EPS) of $2.58;
Adjusted operating income of $133 million, up 16%;
Adjusted operating margin of 17.0%, up 60 basis points;
Adjusted diluted EPS of $2.67, up 24%;
New orders of $995 million, up 18%, reflected a book-to-bill of approximately 1.3x driven by strong demand within our Aerospace & Defense (A&D) markets;
Backlog of $3.2 billion, up 13% year-to-date; and
Free cash flow (FCF) of $100 million, generating 97% Adjusted FCF conversion.

Raised Full-Year 2024 Adjusted Financial Guidance:

Sales increased to new range of 6% to 8% growth (previously 5% to 7%), driven by strong growth in our A&D markets;
Operating income increased to new range of 6% to 9% growth (previously 5% to 8%);
Maintained operating margin range of 17.4% to 17.6%, flat to up 20 basis points compared with the prior year;
Diluted EPS increased to new range of $10.40 to $10.65, up 11% to 14% (previously $10.10 to $10.40, up 8% to 11%);
Reduced effective tax rate by 100 bps to 22.5% following consolidation of U.K. legal entity structure, and
Free cash flow increased to new range of $425 to $445 million, up 3% to 8% (previously $415 to $435 million, up 0% to 5%), and continues to reflect greater than 105% FCF conversion.

“Curtiss-Wright delivered strong second quarter results, highlighted by mid-teens revenue growth in our A&D end markets, continued operating margin expansion, and 24% growth in Adjusted diluted EPS,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “We once again demonstrated robust order activity, as bookings increased 18% year over year, yielding a book-to-bill of 1.3x. Based on the strong first half results and our outlook for the remainder of 2024, we have increased our full-year Adjusted guidance for sales, operating income, diluted EPS and free cash flow.”

“As we discussed at our Investor Day event in May, we continue to build momentum through the execution of our Pivot to Growth strategy. We remain focused on accelerating operational excellence to drive margin expansion and generate funding to reinvest into the business. As part of this strategy, we recently launched restructuring actions to support volume increases, improve efficiencies and further optimize our operations. These actions are expected to produce both recurring operational savings and increased free cash flow.”

2024 Restructuring Program and Other Cost Savings Initiatives

During the second quarter of 2024, the Company initiated restructuring actions across all three segments, principally within the Aerospace & Industrial segment. These initiatives are expected to result in approximately $15 million in restructuring costs in 2024, and are expected to yield initial savings in 2024, as well as approximately $10 million in annualized savings in 2025; and
Curtiss-Wright launched a U.K. legal entity consolidation program anticipated to facilitate more efficient cash repatriation. This initiative is expected to generate approximately $5 million in annualized savings, based on a 100 basis point reduction in the effective tax rate, and approximately $5 million in annual recurring free cash flow.

Acquisition of Ultra Energy

On June 3, 2024, the Company announced the acquisition of Ultra Nuclear Limited and Weed Instrument Co., Inc. (“Ultra Energy”) for $200 million in cash.
Ultra Energy is a leading global provider of safety-critical monitoring systems, temperature and pressure sensors, and reactor protection and control systems principally to the commercial nuclear and A&D markets;
The business 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 free cash flow conversion rate in excess of 100%; and
The acquisition is expected to close in the third quarter of 2024, subject to U.K. regulatory approval, and the acquired business will operate within Curtiss-Wright’s Naval & Power segment.

Second Quarter 2024 Operating Results

(In millions)	Q2-2024			Q2-2023			Change
*Reported*
Sales	$	785		$	704		11	%
Operating income	$	129		$	113		14	%
Operating margin		16.4	%		16.0	%	40 bps

*Adjusted ⁽¹⁾*
Sales	$	785		$	704		11	%
Operating income	$	133		$	115		16	%
Operating margin		17.0	%		16.4	%	60 bps
(1) Reconciliations of Reported to Adjusted operating results are available in the Appendix.

Sales of $785 million increased 11% compared with the prior year period;
Total A&D market sales increased 16%, while total Commercial market sales increased 2%;
In our A&D markets, we experienced strong growth in the defense markets principally driven by strong demand for our defense electronics products and the timing of production ramps in naval defense, as well as higher OEM sales in the commercial aerospace market;
In our Commercial markets, we experienced solid growth in the power & process markets, principally driven by higher sales of our commercial nuclear products, while sales in the general industrial market declined modestly; and
Adjusted operating income of $133 million increased 16%, while Adjusted operating margin increased 60 basis points to 17.0%, principally driven by favorable overhead absorption on higher revenues in all three segments and favorable mix in the Defense Electronics segment, partially offset by unfavorable mix and timing of development programs in the Naval & Power segment.

Second Quarter 2024 Segment Performance

Aerospace & Industrial

(In millions)	Q2-2024			Q2-2023			Change
*Reported*
Sales	$	233		$	226		3	%
Operating income	$	35		$	36		(1	%)
Operating margin		15.1	%		15.8	%	(70 bps)

*Adjusted ⁽¹⁾*
Sales	$	233		$	226		3	%
Operating income	$	38		$	36		6	%
Operating margin		16.2	%		15.8	%	40 bps
⁽¹⁾ Reconciliations of Reported to Adjusted operating results are available in the Appendix.

Sales of $233 million, up $7 million, or 3%;
Commercial aerospace market revenue increases reflected strong demand and higher OEM sales of sensors and actuation products, as well as surface treatment services, on narrowbody and widebody platforms;
General industrial market revenues declined modestly, as the benefit of higher sales of surface treatment services was more than offset by reduced sales of industrial vehicle products to off-highway vehicle platforms; and
Adjusted operating income was $38 million, up 6% from the prior year, while adjusted operating margin increased 40 basis points to 16.2%, mainly due to solid absorption on higher sales and the initial benefits of our restructuring initiatives.

Defense Electronics

(In millions)	Q2-2024			Q2-2023			Change
*Reported*
Sales	$	228		$	198		16	%
Operating income	$	58		$	43		35	%
Operating margin		25.5	%		21.8	%	370 bps

*Adjusted ⁽¹⁾*
Sales	$	228		$	198		16	%
Operating income	$	59		$	43		36	%
Operating margin		25.7	%		21.8	%	390 bps
⁽¹⁾ Reconciliations of Reported to Adjusted operating results are available in the Appendix.

Sales of $228 million, up $31 million, or 16%;
Higher revenue in the aerospace defense market was principally driven by increased sales of our embedded computing equipment on various domestic and international helicopter programs;
Strong revenue growth in the ground defense market primarily reflected higher sales of tactical battlefield communications equipment; and
Adjusted operating income was $59 million, up 36% from the prior year, while adjusted operating margin increased 390 basis points to 25.7%, reflecting favorable absorption and mix on higher revenues, and the benefits of our cost containment initiatives.

Naval & Power

(In millions)	Q2-2024			Q2-2023			Change
*Reported*
Sales	$	323		$	280		15	%
Operating income	$	46		$	47		(1	%)
Operating margin		14.3	%		16.7	%	(240 bps)

*Adjusted ⁽¹⁾*
Sales	$	323		$	280		15	%
Operating income	$	47		$	49		(6	%)
Operating margin		14.4	%		17.6	%	(320 bps)
⁽¹⁾ Reconciliations of Reported to Adjusted operating results are available in the Appendix.

Sales of $323 million, up $43 million, or 15%;
Strong revenue growth in the naval defense market principally reflected higher demand on various submarine programs and the CVN-81 aircraft carrier program;
Higher revenue in the aerospace defense market was primarily driven by increased sales of our arresting systems equipment supporting various domestic and international customers;
Higher power & process market revenues mainly reflected increased commercial nuclear aftermarket sales supporting the maintenance of U.S. operating reactors; and
Adjusted operating income was $47 million, down 6% from the prior year, while adjusted operating margin decreased 320 basis points to 14.4%, as favorable absorption on higher revenues was more than offset by unfavorable mix of products and timing of development programs.

Free Cash Flow

(In millions)	Q2-2024			Q2-2023			Change
Net cash provided by operating activities	$	111		$	111		—	%
Capital expenditures		(11	)		(12	)	(8	%)
Reported free cash flow	$	100		$	99		1	%
Adjusted free cash flow ⁽¹⁾	$	100		$	99		1	%
⁽¹⁾ A reconciliation of Reported to Adjusted free cash flow is available in the Appendix.

Reported free cash flow of $100 million increased slightly as higher cash earnings were essentially offset by the timing of tax payments and working capital;
Adjusted free cash flow of $100 million; and
Capital expenditures decreased $1 million compared with the prior year.

New Orders and Backlog

New orders of $995 million increased 18% compared with the prior year and generated an overall book-to-bill of approximately 1.3x, principally driven by strong demand for naval defense and commercial aerospace products within our A&D markets; and
Backlog of $3.2 billion, up 13% from December 31, 2023, reflects strong demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

During the second quarter, the Company repurchased 47,174 shares of its common stock for approximately $13 million; and
The Company also declared a quarterly dividend of $0.21 a share, an increase of 5% from the previous quarter.

Full-Year 2024 Guidance

The Company is updating its full-year 2024 Adjusted financial guidance⁽¹⁾ as follows:

($ in millions, except EPS)	2024 Adjusted Non-GAAP Guidance (Prior)	2024 Adjusted Non-GAAP Guidance (Current)	Change vs 2023 Adjusted (Current)
Total Sales	$2,985 – $3,035	$3,010 – $3,060	Up 6% – 8%
Operating Income	$518 – $533	$525 – $539	Up 6% – 9%
Operating Margin	17.4% – 17.6%	17.4% – 17.6%	Up 0 – 20 bps
Diluted EPS	$10.10 – $10.40	$10.40 – $10.65	Up 11% – 14%
Free Cash Flow	$415 – $435	$425 – $445	Up 3% – 8%
⁽¹⁾ Reconciliations of Reported to Adjusted 2023 operating results and 2024 financial guidance are available in the Appendix.

**********

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 its second quarter 2024 financial results and updates to 2024 guidance at 10:00 a.m. ET on Thursday, August 8, 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
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
($’s in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2024			2023			2024			2023
Product sales	$	661,407		$	583,036		$	1,257,111		$	1,107,917
Service sales		123,384			121,360			240,847			227,339
Total net sales		784,791			704,396			1,497,958			1,335,256

Cost of product sales		428,926			369,549			818,403			713,306
Cost of service sales		71,764			75,274			141,699			140,969
Total cost of sales		500,690			444,823			960,102			854,275

Gross profit		284,101			259,573			537,856			480,981

Research and development expenses		22,152			20,210			45,132			42,234
Selling expenses		35,126			34,273			71,891			66,698
General and administrative expenses		95,008			92,315			189,057			180,659
Restructuring expenses		2,918			—			2,918			—

Operating income		128,897			112,775			228,858			191,390

Interest expense		11,216			14,992			21,786			27,936
Other income, net		8,560			7,954			18,168			15,721

Earnings before income taxes		126,241			105,737			225,240			179,175
Provision for income taxes		(26,770	)		(24,738	)		(49,274	)		(41,330	)
Net earnings	$	99,471		$	80,999		$	175,966		$	137,845

Net earnings per share:
Basic earnings per share	$	2.60		$	2.11		$	4.60		$	3.60
Diluted earnings per share	$	2.58		$	2.10		$	4.58		$	3.58

Dividends per share	$	0.21		$	0.20		$	0.41		$	0.39

Weighted-average shares outstanding:
Basic		38,302			38,329			38,273			38,309
Diluted		38,501			38,555			38,460			38,528

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
($’s in thousands, except par value)

	June 30,			December 31,
		2024			2023
Assets
Current assets:
Cash and cash equivalents	$	382,564		$	406,867
Receivables, net		817,135			732,678
Inventories, net		559,142			510,033
Other current assets		77,039			67,502
Total current assets		1,835,880			1,717,080
Property, plant, and equipment, net		326,969			332,796
Goodwill		1,571,004			1,558,826
Other intangible assets, net		545,448			557,612
Operating lease right-of-use assets, net		146,956			141,435
Prepaid pension asset		272,857			261,869
Other assets		49,080			51,351
Total assets	$	4,748,194		$	4,620,969

Liabilities
Current liabilities:
Current portion of long-term debt	$	90,000		$	—
Accounts payable		224,778			243,833
Accrued expenses		158,505			188,039
Deferred revenue		341,601			303,872
Other current liabilities		81,632			70,800
Total current liabilities		896,516			806,544
Long-term debt		959,655			1,050,362
Deferred tax liabilities, net		128,277			132,319
Accrued pension and other postretirement benefit costs		67,650			66,875
Long-term operating lease liability		123,586			118,611
Long-term portion of environmental reserves		14,157			12,784
Other liabilities		99,933			105,061
Total liabilities	$	2,289,774		$	2,292,556

Stockholders’ equity
Common stock, $1 par value	$	49,187		$	49,187
Additional paid in capital		135,574			140,182
Retained earnings		3,648,005			3,487,751
Accumulated other comprehensive loss		(233,488	)		(213,223	)
Less: cost of treasury stock		(1,140,858	)		(1,135,484	)
Total stockholders’ equity	$	2,458,420		$	2,328,413

Total liabilities and stockholders’ equity	$	4,748,194		$	4,620,969

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) costs associated with the Company’s 2024 Restructuring Program; and (iii) the sale or divestiture of a business or product line, 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, 2024								June 30, 2023								% Change
	As Reported			Adjustments		Adjusted			As Reported			Adjustments		Adjusted			As Reported		Adjusted
Sales:
Aerospace & Industrial	$	233,232		$	—	$	233,232		$	226,260		$	—	$	226,260		3	%	3	%
Defense Electronics		228,461			—		228,461			197,722			—		197,722		16	%	16	%
Naval & Power		323,098			—		323,098			280,414			—		280,414		15	%	15	%

Total sales	$	784,791		$	—	$	784,791		$	704,396		$	—	$	704,396		11	%	11	%

Operating income (expense):
Aerospace & Industrial⁽²⁾	$	35,246		$	2,619	$	37,865		$	35,665		$	—	$	35,665		(1	)%	6	%
Defense Electronics⁽²⁾		58,244			523		58,767			43,180			—		43,180		35	%	36	%
Naval & Power⁽¹⁾⁽²⁾		46,283			342		46,625			46,782			2,659		49,441		(1	)%	(6	)%

Total segments	$	139,773		$	3,484	$	143,257		$	125,627		$	2,659	$	128,286		11	%	12	%
Corporate and other⁽²⁾		(10,876	)		964		(9,912	)		(12,852	)		—		(12,852	)	15	%	23	%

Total operating income	$	128,897		$	4,448	$	133,345		$	112,775		$	2,659	$	115,434		14	%	16	%

Operating margins:	As Reported					Adjusted			As Reported					Adjusted			As Reported		Adjusted
Aerospace & Industrial		15.1	%				16.2	%		15.8	%				15.8	%	(70 bps)		40 bps
Defense Electronics		25.5	%				25.7	%		21.8	%				21.8	%	370 bps		390 bps
Naval & Power		14.3	%				14.4	%		16.7	%				17.6	%	(240 bps)		(320 bps)
Total Curtiss-Wright		16.4	%				17.0	%		16.0	%				16.4	%	40 bps		60 bps

Segment margins		17.8	%				18.3	%		17.8	%				18.2	%	— bps		10 bps

⁽¹⁾ Excludes first year purchase accounting adjustments in both the current and prior year periods.
⁽²⁾ Excludes costs associated with the Company’s 2024 Restructuring Program 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, 2024								June 30, 2023								% Change
	As Reported			Adjustments		Adjusted			As Reported			Adjustments		Adjusted			As Reported		Adjusted
Sales:
Aerospace & Industrial	$	452,557		$	—	$	452,557		$	428,707		$	—	$	428,707		6	%	6	%
Defense Electronics		440,202			—		440,202			359,876			—		359,876		22	%	22	%
Naval & Power		605,199			—		605,199			546,673			—		546,673		11	%	11	%

Total sales	$	1,497,958		$	—	$	1,497,958		$	1,335,256		$	—	$	1,335,256		12	%	12	%

Operating income (expense):
Aerospace & Industrial⁽²⁾	$	62,712		$	2,619	$	65,331		$	62,210		$	—	$	62,210		1	%	5	%
Defense Electronics⁽²⁾		106,325			523		106,848			66,548			—		66,548		60	%	61	%
Naval & Power ⁽¹⁾⁽²⁾		81,474			342		81,816			84,719			5,335		90,054		(4	)%	(9	)%

Total segments	$	250,511		$	3,484	$	253,995		$	213,477		$	5,335	$	218,812		17	%	16	%
Corporate and other⁽²⁾		(21,653	)		964		(20,689	)		(22,087	)		—		(22,087	)	2	%	6	%

Total operating income	$	228,858		$	4,448	$	233,306		$	191,390		$	5,335	$	196,725		20	%	19	%

Operating margins:	As Reported					Adjusted			As Reported					Adjusted			As Reported		Adjusted
Aerospace & Industrial		13.9	%				14.4	%		14.5	%				14.5	%	(60 bps)		(10 bps)
Defense Electronics		24.2	%				24.3	%		18.5	%				18.5	%	570 bps		580 bps
Naval & Power		13.5	%				13.5	%		15.5	%				16.5	%	(200 bps)		(300 bps)
Total Curtiss-Wright		15.3	%				15.6	%		14.3	%				14.7	%	100 bps		90 bps

Segment margins		16.7	%				17.0	%		16.0	%				16.4	%	70 bps		60 bps

⁽¹⁾ Excludes first year purchase accounting adjustments in both the current and prior year periods.
⁽²⁾ Excludes costs associated with the Company’s 2024 Restructuring Program in the current period.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
RECONCILIATION OF AS REPORTED SALES TO ADJUSTED SALES BY END MARKET (UNAUDITED)
($’s in thousands)

	Three Months Ended						Three Months Ended
	June 30, 2024						June 30, 2023						% 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	$	154,104	$	—	$	154,104	$	132,192	$	—	$	132,192	17	%	17	%
Ground Defense		84,939		—		84,939		70,875		—		70,875	20	%	20	%
Naval Defense		209,847		—		209,847		180,956		—		180,956	16	%	16	%
Commercial Aerospace		93,316		—		93,316		82,033		—		82,033	14	%	14	%
Total Aerospace & Defense	$	542,206	$	—	$	542,206	$	466,056	$	—	$	466,056	16	%	16	%

Commercial markets:
Power & Process	$	138,601	$	—	$	138,601	$	131,000	$	—	$	131,000	6	%	6	%
General Industrial		103,984		—		103,984		107,340		—		107,340	(3	%)	(3	%)
Total Commercial	$	242,585	$	—	$	242,585	$	238,340	$	—	$	238,340	2	%	2	%

Total Curtiss-Wright	$	784,791	$	—	$	784,791	$	704,396	$	—	$	704,396	11	%	11	%

	Six Months Ended						Six Months Ended
	June 30, 2024						June 30, 2023						% 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	$	286,178	$	—	$	286,178	$	232,071	$	—	$	232,071	23	%	23	%
Ground Defense		175,700		—		175,700		137,132		—		137,132	28	%	28	%
Naval Defense		387,494		—		387,494		352,912		—		352,912	10	%	10	%
Commercial Aerospace		183,091		—		183,091		152,523		—		152,523	20	%	20	%
Total Aerospace & Defense	$	1,032,463	$	—	$	1,032,463	$	874,638	$	—	$	874,638	18	%	18	%

Commercial markets:
Power & Process	$	262,639	$	—	$	262,639	$	251,338	$	—	$	251,338	4	%	4	%
General Industrial		202,856		—		202,856		209,280		—		209,280	(3	%)	(3	%)
Total Commercial	$	465,495	$	—	$	465,495	$	460,618	$	—	$	460,618	1	%	1	%

Total Curtiss-Wright	$	1,497,958	$	—	$	1,497,958	$	1,335,256	$	—	$	1,335,256	12	%	12	%

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,
		2024		2023		2024		2023
Diluted earnings per share – As Reported	$	2.58	$	2.10	$	4.58	$	3.58
First year purchase accounting adjustments		—		0.05		—		0.10
Restructuring costs		0.09		—		0.09		—
Diluted earnings per share – Adjusted ⁽¹⁾	$	2.67	$	2.15	$	4.67	$	3.68

⁽¹⁾ All adjustments are presented net of income taxes.