Curtiss-Wright Corporation (NYSE: CW) reports financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights:

• Reported sales of $713 million, up 13%, operating income of $100 million, up 27%, operating margin of 14.0%, and diluted earnings per share (EPS) of $1.99;
• Adjusted operating income of $100 million, up 23%;
• Adjusted operating margin of 14.0%, up 110 basis points;
• Adjusted diluted EPS of $1.99, up 30%; and
• New orders of $901 million, up 26%, reflected a book-to-bill that exceeded 1.25x driven by strong demand within our Aerospace & Defense (A&D) markets.

Raised Full-Year 2024 Financial Guidance:

• Sales increased to new range of 5% to 7% growth (previously 4% to 6%) and continues to reflect growth in all A&D and Commercial end markets;
• Operating income increased to new range of 5% to 8% growth (previously 4% to 7%);
• Maintained operating margin range of 17.4% to 17.6%, up 0 to 20 basis points compared with the prior year;
• Diluted EPS increased to new range of $10.10 to $10.40, up 8% to 11% (previously $10.00 to $10.30, up 7% to 10%); and
• Maintained free cash flow range of $415 to $435 million, which continues to reflect nearly 110% FCF conversion.

“Curtiss-Wright delivered strong first quarter 2024 results, exceeding our overall expectations, highlighted by significant growth in sales and operating income, continued operating margin expansion, and diluted EPS of $1.99, which increased 30% year-over-year,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “Our results included a very strong performance in the Defense Electronics segment, which was partially offset by reduced profitability in the Naval & Power segment, principally related to a naval contract adjustment that impacted both the first quarter and full-year outlook for this segment.”

“Based upon our strong overall start to the year and the continued strength in our order book, we have increased our full-year 2024 sales, operating income and diluted EPS guidance as we continue to successfully execute on our Pivot to Growth strategy. We now expect to deliver total sales growth of 5% to 7%, including the contribution from our recent commercial nuclear acquisition of WSC, Inc., continued operating margin expansion while increasing R&D investments, and diluted EPS growth of 8% to 11%, while we maintain our outlook for strong free cash flow conversion well in excess of 100%. We look forward to discussing our alignment with the favorable secular growth trends driving our end markets and our new long-term financial targets at our upcoming investor day on May 21st.”

First Quarter 2024 Operating Results

• Sales of $713 million, up $82 million, or 13% compared with the prior year;
• Total A&D market sales increased 20%, while total Commercial market sales were essentially flat;
• In our A&D markets, we experienced higher sales in the defense markets principally driven by continued strong demand for our defense electronics products, as well as strong growth in OEM sales in the commercial aerospace market;
• In our Commercial markets, we experienced solid growth in the power & process markets, while sales in the general industrial market declined modestly; and
• Adjusted operating income of $100 million increased 23%, while Adjusted operating margin increased 110 basis points to 14.0%, principally driven by favorable overhead absorption and mix on higher revenues in the Defense Electronics segment, partially offset by an unfavorable naval contract adjustment in the Naval & Power segment.

First Quarter 2024 Segment Performance

Aerospace & Industrial

• Sales of $219 million, up $17 million, or 8%;
• Strong revenue growth in the commercial aerospace market reflected higher OEM sales of actuation and sensors products, as well as surface treatment services, on narrowbody and widebody platforms;
• Higher sales in the aerospace defense market reflected increased actuation development on various fighter jet programs;
• General industrial market revenues declined modestly, as the benefit of new product introductions supporting the electrification of vehicles was more than offset by reduced sales of industrial vehicle products on off-highway vehicle platforms, and lower sales of industrial automation and services; and
• Operating income was $27 million, up 3% from the prior year, while operating margin decreased 60 basis points to 12.5%, as favorable absorption on higher sales was offset by unfavorable mix and the timing of development programs.

Defense Electronics

• Sales of $212 million, up $50 million, or 31%;
• Higher revenue in the aerospace defense market was principally driven by increased sales of our embedded computing equipment on various fighter jet, unmanned aerial vehicle and helicopter programs;
• Strong revenue growth in the ground defense market reflected the robust demand and higher sales of tactical battlefield communications equipment;
• Higher commercial aerospace market revenue reflected increased OEM sales of avionics and electronics on various platforms; and
• Operating income was $48 million, up 106% from the prior year, while operating margin increased 830 basis points to 22.7%, mainly reflecting improved absorption and mix on higher revenues.

Naval & Power

• Sales of $282 million, up $16 million, or 6%;
• 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 increases principally reflected higher revenues on the Columbia-class submarine, partially offset by timing of revenues on the Virginia-class submarine and CVN-80 aircraft carrier programs;
• Higher power & process market revenues mainly reflected increased commercial nuclear aftermarket sales supporting the maintenance of operating reactors in the U.S. and Canada; and
• Adjusted operating income was $35 million, down 13% from the prior year, while adjusted operating margin decreased 280 basis points to 12.5%, as favorable absorption on higher revenues was more than offset by an unfavorable naval contract adjustment. 

Free Cash Flow

• Reported free cash flow of ($58) million increased $45 million, primarily due to higher cash earnings and the timing of tax payments, as well as a $10 million legal settlement payment made in the prior year;
• Adjusted free cash flow of ($58) million increased $35 million;
• Capital expenditures increased $1 million compared with the prior year period, primarily due to higher growth investments in the Defense Electronics segment.

New Orders and Backlog

• New orders of $901 million increased 26% compared with the prior year and generated an overall book-to-bill that exceeded 1.25x, principally driven by strong demand for defense electronics and naval defense products within our A&D markets; and
• Backlog of $3.1 billion, up 7% from December 31, 2023, reflects higher demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

• During the first quarter, the Company repurchased 52,612 shares of its common stock for approximately $12 million; and
• The Company declared a quarterly dividend of $0.20 a share.

Full-Year 2024 Guidance

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

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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 first quarter 2024 financial results and business outlook at 10:00 a.m. ET on Thursday, May 2, 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)

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; and (ii) the sale or divestiture of a business or product line, as applicable.

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 foreign currency fluctuations.

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 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.

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.

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