Skip to main content

Curtiss-Wright Reports Second Quarter 2021 Financial Results; Raises Full-year 2021 Financial Guidance

Curtiss-Wright Corporation (NYSE: CW) reports financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights:

  • Reported sales of $621 million, operating income of $95 million, operating margin of 15.2%, diluted earnings per share (EPS) of $1.49, and free cash flow of $66 million;
  • Adjusted sales of $609 million, up 14%;
  • Adjusted operating income of $95 million, up 24%;
  • Adjusted operating margin of 15.6%, up 120 basis points;
  • Adjusted diluted EPS of $1.56, up 22%; and
  • New orders of $679 million, up 11%, led by strong demand in our Commercial markets.

Raised Full-Year 2021 Financial Guidance:

  • Adjusted sales increased by $15 million due to ongoing recovery in general industrial market demand; Maintaining overall range of 7% to 9% sales growth;
  • Adjusted operating income increased to new range of 9% to 12% growth (previously 9% to 11%);
  • Adjusted operating margin increased by 10 basis points to new range of 16.7% to 16.8%, up 40 to 50 basis points compared with the prior year; and
  • Adjusted diluted EPS increased by $0.05 to new range of $7.15 to $7.35, up 9% to 12%.

“We delivered strong second quarter results, as Adjusted diluted EPS grew by 22%, led by solid sales growth across the majority of our markets, and improved profitability in the Aerospace & Industrial and Naval & Power segments,” said Lynn M. Bamford, President and CEO of Curtiss-Wright Corporation. “We also benefitted from the continued execution of our operational excellence initiatives and savings generated by our prior year restructuring actions to drive continued operating margin expansion. In addition, we continued to direct incrementally higher investments in research and development projects that target the highest growth vectors in our end markets and support our long-term organic growth. Based on our solid year-to-date results and outlook for the remainder of 2021, we have increased our full-year Adjusted guidance for sales, operating income, operating margin and diluted EPS.”

“As we introduced at our recent Investor Day event in May, we are executing with confidence on our new Pivot to Growth strategy to unlock significant value for our shareholders. Through a renewed focus on disciplined, strategic investments and the deployment of our new operational growth platform, we are well-positioned to deliver on our new three-year targets through 2023, which includes a 5% to 10% revenue CAGR, continued operating margin expansion with operating income growth greater than revenue growth, adjusted diluted EPS CAGR at or above 10%, and sustained free cash flow conversion above 110% on average.”

Second Quarter 2021 Operating Results

(In millions)

Q2-2021

Q2-2020

Change

Reported sales

$

621.5

$

550.0

13%

Adjustments (1)

(12.1

)

(17.3

)

Adjusted sales (1)

$

609.4

$

532.7

14%

Reported operating income

$

94.6

$

55.3

71%

Adjustments (1)

0.5

21.2

Adjusted operating income (1)

$

95.0

$

76.6

24%

Adjusted operating margin (1)

15.6

%

14.4

%

120 bps

Amounts may not add due to rounding.

(1)

Adjusted results exclude (i) our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited and our German valves business, which was classified as held for sale, both in the fourth quarter of 2020 impacting both periods; (ii) first year purchase accounting costs associated with acquisitions in both periods; and (iii) a non-cash impairment of capitalized development costs related to a commercial aerospace program, one-time costs associated with the relocation of our DRG business in the Naval & Power segment, and restructuring costs, which impacted the prior year period.

  • Adjusted sales of $609 million, up $77 million, or 14%;
  • Aerospace & Defense market sales increased 11%, led by strong growth in naval defense and the contribution of the PacStar acquisition in ground defense, which more than offset lower aerospace defense revenues;
  • Commercial market sales increased 21%, principally due to strong demand in the general industrial market, as well as higher power & process market sales;
  • Adjusted operating income was $95 million, up 24%, while Adjusted operating margin increased 120 basis points to 15.6%. This improvement was driven by favorable overhead absorption on higher organic revenues in both our Aerospace & Industrial and Naval & Power segments, as well as the benefits of our prior year restructuring and ongoing company-wide operational excellence initiatives, which were partially offset by $5 million in higher research and development investments; and
  • Non-segment expenses of $10 million increased by $2 million compared with the prior year, due to higher environmental and other corporate expenses.

Free Cash Flow

(In millions)

Q2-2021

Q2-2020

Change

Net cash provided by operating activities

$

75.1

$

140.4

(47%)

Capital expenditures

(9.2

)

(10.7

)

14%

Free cash flow

$

65.8

$

129.7

(49%)

Adjustment to capital expenditures (DRG facility investment) (1)

-

2.0

-

Restructuring (1)

-

4.1

-

Adjusted free cash flow (1)

$

65.8

$

135.8

(51%)

Amounts may not add due to rounding.

(1)

Adjusted free cash flow excludes a capital investment related to the new state-of-the-art naval facility in the Naval & Power segment and the cash impact from restructuring in the prior year period.

  • Free cash flow of $66 million, defined as cash flow from operations less capital expenditures, decreased $64 million, or 49%, principally driven by the timing of collections and tax payments, partially offset by higher net earnings;
  • Capital expenditures decreased $1 million compared with the prior year, primarily due to lower capital investments as a result of the completion of our new DRG facility within the Naval & Power segment; and
  • Adjusted free cash flow of $66 million, down $70 million, or 51%.

New Orders and Backlog

  • New orders of $679 million increased 11% compared with the prior year period, generating overall book to bill of approximately 1.1x, driven by strong demand in our Commercial markets, most notably for industrial vehicle products; and
  • Backlog of $2.2 billion improved slightly from December 31, 2020, principally reflecting the rebound in commercial market demand.

Share Repurchase and Dividends

  • During the second quarter, the Company repurchased 100,719 shares of its common stock for approximately $13 million;
  • Year-to-date, the Company repurchased 206,208 shares for approximately $25 million; and
  • During the quarter, the Board of Directors declared a 6% increase in the quarterly dividend to $0.18 per share.

Other Items – Business Held for Sale

  • During the fourth quarter of 2020, the Company classified its German valves business (previously within its Commercial/Industrial segment) as held for sale and its results have been adjusted from comparisons between our current and prior year results, and full-year financial guidance.

Second Quarter 2021 Segment Performance

Aerospace & Industrial

(In millions)

Q2-2021

Q2-2020

Change

Reported sales

$

199.7

$

177.4

13%

Adjustments (1)

(5.8

)

(11.7

)

Adjusted sales (1)

$

193.9

$

165.7

17%

Reported operating income

$

32.0

$

9.6

233%

Adjustments (1)

(1.5

)

3.2

Adjusted operating income (1)

$

30.5

$

12.8

138%

Adjusted operating margin (1)

15.7

%

7.7

%

800 bps

Amounts may not add due to rounding.

(1)

Adjusted results exclude our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited in the fourth quarter of 2020 impacting both periods and restructuring costs in the prior year period.

  • Reported results reflected sales of $200 million, operating income of $32 million and operating margin of 16.0%;
  • Adjusted sales of $194 million, up $28 million, or 17%;
  • General industrial market revenue increased by nearly 40%, led by strong industrial vehicle demand for on- and off-highway platforms, and higher sales of surface treatment services due to improving economic conditions;
  • Commercial aerospace market revenues were essentially flat, as higher sales of sensors products on narrowbody platforms were mainly offset by lower actuation sales on widebody platforms; and
  • Adjusted operating income was $30 million, up 138% from the prior year, while Adjusted operating margin increased 800 basis points to 15.7%, reflecting strong absorption on higher general industrial market sales, and the benefits of our ongoing operational excellence and prior year restructuring initiatives.

Defense Electronics

(In millions)

Q2-2021

Q2-2020

Change

Reported sales

$

162.4

$

139.6

16%

Adjustments (1)

1.1

0.2

Adjusted sales (1)

$

163.4

$

139.8

17%

Reported operating income

$

29.3

$

24.7

18%

Adjustments (1)

1.6

8.8

Adjusted operating income (1)

$

30.8

$

33.5

(8%)

Adjusted operating margin (1)

18.9

%

24.0

%

(510 bps)

Amounts may not add due to rounding.

(1)

Adjusted results exclude first year purchase accounting costs associated with acquisitions in both periods, and a non-cash impairment of capitalized development costs related to a commercial aerospace program and restructuring costs in the prior year period.

  • Reported results reflected sales of $162 million, operating income of $29 million and operating margin of 18.0%;
  • Adjusted sales of $163 million, up $24 million, or 17%, principally driven by the contribution from the PacStar acquisition for tactical battlefield communications equipment within our ground defense market;
  • Aerospace defense market revenue declined due to the timing of sales of our embedded computing equipment on various programs;
  • Higher commercial aerospace market revenues reflect increased sales of avionics and flight test equipment on various domestic and international platforms; and
  • Adjusted operating income was $31 million, down 8% from the prior year, while Adjusted operating margin decreased 510 basis points to 18.9%, reflecting unfavorable mix in defense electronics and $4 million in higher research and development investments.

Naval & Power

(In millions)

Q2-2021

Q2-2020

Change

Reported sales

$

259.4

$

233.0

11%

Adjustments (1)

(7.4

)

(5.8

)

Adjusted sales (1)

$

252.0

$

227.2

11%

Reported operating income

$

43.1

$

29.1

48%

Adjustments (1)

0.4

9.2

Adjusted operating income (1)

$

43.5

$

38.3

13%

Adjusted operating margin (1)

17.2

%

16.9

%

30 bps

Amounts may not add due to rounding.

(1)

Adjusted results exclude our German valves business which was classified as held for sale in the fourth quarter of 2020 impacting both periods; and first year purchase accounting costs associated with acquisitions, one-time costs associated with the relocation of our DRG business and restructuring costs, all impacting the prior year period.

  • Reported results reflected sales of $259 million, operating income of $43 million and operating margin of 16.6%;
  • Adjusted sales of $252 million, up $25 million, or 11%;
  • Strong naval defense market revenue growth primarily reflected higher production revenues on the CVN-80 and CVN-81 aircraft carrier programs;
  • Higher power & process market revenues reflected increased nuclear aftermarket maintenance supporting existing operating reactors, as well as higher industrial valve revenues to the oil and gas market; and
  • Adjusted operating income was $43 million, up 13% from the prior year, while Adjusted operating margin increased 30 basis points to 17.2%, driven by solid absorption on higher revenues, as well as the benefits of our prior year restructuring initiatives.

Full-Year 2021 Guidance

The Company is updating its full-year 2021 Adjusted financial guidance as follows:

(In millions, except EPS)

2021 Adjusted

Non-GAAP

Guidance

(Prior)

Changes to Adjusted Guidance

2021 Adjusted

Non-GAAP

Guidance

(Current)

2021 Adjusted Chg vs 2020 Restated

Total Sales

$2,450 - $2,500

$15

$2,465 - $2,515

Up 7% - 9%

Operating Income

$408 - $418

$3

$411 - $421

Up 9% - 12%

Operating Margin

16.6% - 16.7%

10 bps

16.7% - 16.8%

Up 40 - 50 bps

Effective Tax Rate

23.5%

50 bps

24.0%

Diluted EPS

$7.10 - $7.30

$0.05

$7.15 - $7.35

Up 9% - 12%

Diluted Shares Outstanding

41.3

(0.2)

41.1

Free Cash Flow (FCF)

$330 - $360

-

$330 - $360

Avg. FCF Conversion

~116%

-

~116%

(1)

2021 Adjusted financial guidance used in comparisons to 2020 financial results excludes first year purchase accounting costs associated with acquisitions, as well as our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited and our German valves business which was classified as held for sale, both in the fourth quarter of 2020.

A more detailed breakdown of the Company’s 2021 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 in the new segment structure for 2020 and 2019 periods 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 second quarter 2021 financial results and updates to 2021 guidance at 10:00 a.m. ET on Wednesday, August 4, 2021. A live webcast of the call and the accompanying financial presentation, as well as a 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,

2021

2020

2021

2020

Product sales

$

515,392

$

466,445

$

1,024,367

$

964,374

Service sales

106,103

83,602

194,187

186,904

Total net sales

621,495

550,047

1,218,554

1,151,278

Cost of product sales

331,881

309,152

661,335

639,965

Cost of service sales

64,895

54,869

122,743

124,708

Total cost of sales

396,776

364,021

784,078

764,673

Gross profit

224,719

186,026

434,476

386,605

Research and development expenses

23,194

18,269

45,057

36,576

Selling expenses

29,564

25,193

59,160

56,781

General and administrative expenses

77,378

76,606

150,610

153,264

Restructuring expenses

10,609

12,189

Operating income

94,583

55,349

179,649

127,795

Interest expense

10,180

8,515

20,139

16,004

Other income, net

440

(4,105

)

5,283

1,427

Earnings before income taxes

84,843

42,729

164,793

113,218

Provision for income taxes

(23,435

)

(11,711

)

(43,916

)

(30,439

)

Net earnings

$

61,408

$

31,018

$

120,877

$

82,779

Net earnings per share:

Basic earnings per share

$

1.50

$

0.75

$

2.95

$

1.97

Diluted earnings per share

$

1.49

$

0.74

$

2.94

$

1.95

Dividends per share

$

0.18

$

0.17

$

0.35

$

0.34

Weighted average shares outstanding:

Basic

40,915

41,629

40,921

42,092

Diluted

41,088

41,855

41,092

42,362

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($'s in thousands, except par value)

June 30,

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

$

197,508

$

198,248

Receivables, net

644,089

588,718

Inventories, net

446,689

428,879

Assets held for sale

29,687

27,584

Other current assets

83,417

57,395

Total current assets

1,401,390

1,300,824

Property, plant, and equipment, net

366,789

378,200

Goodwill

1,466,735

1,455,137

Other intangible assets, net

568,604

609,630

Operating lease right-of-use assets, net

144,274

150,898

Prepaid pension asset

105,963

92,531

Other assets

31,230

34,114

Total assets

$

4,084,985

$

4,021,334

Liabilities

Current liabilities:

Current portion of long-term and short-term debt

100,000

100,000

Accounts payable

166,253

201,237

Accrued expenses

133,264

146,833

Deferred revenue

260,358

253,411

Liabilities held for sale

10,573

10,141

Other current liabilities

104,024

98,755

Total current liabilities

774,472

810,377

Long-term debt

957,504

958,292

Deferred tax liabilities, net

121,895

115,007

Accrued pension and other postretirement benefit costs

97,143

98,345

Long-term operating lease liability

127,136

133,069

Long-term portion of environmental reserves

14,655

15,422

Other liabilities

97,476

103,248

Total liabilities

2,190,281

2,233,760

Stockholders' equity

Common stock, $1 par value

49,187

49,187

Additional paid in capital

119,946

122,535

Retained earnings

2,776,884

2,670,328

Accumulated other comprehensive loss

(297,531

)

(310,856

)

Less: cost of treasury stock

(753,782

)

(743,620

)

Total stockholders' equity

1,894,704

1,787,574

Total liabilities and stockholders' equity

$

4,084,985

$

4,021,334

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

SEGMENT INFORMATION (UNAUDITED)(1)

($'s in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

Change

Change

2021

2020

%

2021

2020

%

Sales:

Aerospace & Industrial

$

199,713

$

177,411

13

%

$

380,044

$

404,139

(6

%)

Defense Electronics

162,351

139,613

16

%

343,563

279,194

23

%

Naval & Power

259,431

233,023

11

%

494,947

467,945

6

%

Total sales

$

621,495

$

550,047

13

%

$

1,218,554

$

1,151,278

6

%

Operating income (expense):

Aerospace & Industrial

$

31,977

$

9,615

233

%

$

51,002

$

41,755

22

%

Defense Electronics

29,271

24,736

18

%

65,894

48,799

35

%

Naval & Power

43,095

29,146

48

%

81,152

57,256

42

%

Total segments

$

104,343

$

63,497

64

%

$

198,048

$

147,810

34

%

Corporate and other

(9,760

)

(8,148

)

(20

%)

(18,399

)

(20,015

)

8

%

Total operating income

$

94,583

$

55,349

71

%

$

179,649

$

127,795

41

%

Operating margins:

Aerospace & Industrial

16.0

%

5.4

%

1,060 bps

13.4

%

10.3

%

310 bps

Defense Electronics

18.0

%

17.7

%

30 bps

19.2

%

17.5

%

170 bps

Naval & Power

16.6

%

12.5

%

410 bps

16.4

%

12.2

%

420 bps

Total Curtiss-Wright

15.2

%

10.1

%

510 bps

14.7

%

11.1

%

360 bps

Segment margins

16.8

%

11.5

%

530 bps

16.3

%

12.8

%

350 bps

(1) Amounts reported under realigned segment reporting structure.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

RECONCILIATION OF REPORTED SALES TO ADJUSTED SALES BY END MARKET (UNAUDITED)

($'s in thousands)

Three Months Ended

Three Months Ended

June 30, 2021

June 30, 2020

2021 vs. 2020

Reported Sales

Adjustments

Adjusted Sales

Reported Sales

Adjustments

Adjusted Sales

Change in

Adjusted Sales

Aerospace & Defense markets:

Aerospace Defense (1)

$

99,977

$

$

99,977

$

109,305

$

201

$

109,506

(9%)

Ground Defense (1)

48,221

1,080

49,301

20,029

20,029

146%

Naval Defense

177,724

177,724

164,941

164,941

8%

Commercial Aerospace (2)

71,555

(5,784)

65,771

71,084

(11,710)

59,374

11%

Total Aerospace & Defense

$

397,477

$

(4,704)

$

392,773

$

365,359

$

(11,509)

$

353,850

11%

Commercial markets:

Power & Process (3)

125,333

(7,413)

117,920

112,787

(5,835)

106,952

10%

General Industrial

98,685

98,685

71,901

71,901

37%

Total Commercial

224,018

(7,413)

216,605

184,688

(5,835)

178,853

21%

Total Curtiss-Wright

$

621,495

$

(12,117)

$

609,378

$

550,047

$

(17,344)

$

532,703

14%

Six Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

2021 vs. 2020

Reported Sales

Adjustments

Adjusted Sales

Reported Sales

Adjustments

Adjusted Sales

Change in

Adjusted Sales

Aerospace & Defense markets:

Aerospace Defense (1)

$

210,993

$

$

210,993

$

211,133

$

201

$

211,334

0%

Ground Defense (1)

103,967

2,160

106,127

42,686

42,686

149%

Naval Defense

355,629

355,629

330,633

330,633

8%

Commercial Aerospace (2)

128,824

(8,383)

120,441

171,765

(30,405)

141,360

(15%)

Total Aerospace & Defense

$

799,413

$

(6,223)

$

793,190

$

756,217

$

(30,204)

$

726,013

9%

Commercial markets:

Power & Process (3)

230,837

(12,996)

217,841

236,713

(12,708)

224,005

(3%)

General Industrial

188,304

188,304

158,348

158,348

19%

Total Commercial

$

419,141

$

(12,996)

$

406,145

$

395,061

$

(12,708)

$

382,353

6%

Total Curtiss-Wright

$

1,218,554

$

(19,219)

$

1,199,335

$

1,151,278

$

(42,912)

$

1,108,366

8%

(1) Adjustments exclude first year purchase accounting adjustments associated with acquisitions.

(2) Adjustments exclude our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited in the fourth quarter of 2020.

(3) Adjustments exclude our German valves business which was classified as held for sale in the fourth quarter of 2020.

 

Use 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 non-GAAP measures provide investors with additional insight into the Company’s ongoing business performance. 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.

The Company’s presentation of its financials and guidance includes an Adjusted (non-GAAP) view that excludes (i) the results of a build-to-print actuation product line supporting the Boeing 737 MAX program which we exited and a German valves business classified as held for sale, both in the fourth quarter of 2020; (ii) significant restructuring costs in 2020 associated with its operations, including one-time actions taken in response to COVID-19; (iii) a non-cash impairment of capitalized development costs related to a commercial aerospace program in the prior period; (iv) first year purchase accounting costs associated with its acquisitions in both periods, including one-time inventory step-up, backlog amortization, deferred revenue adjustments and transaction costs; and (v) one-time transition and IT security costs, and capital investments, specifically associated with the relocation of the DRG business in the Naval & Power segment in the prior period. Transition costs include relocation of employees and equipment as well as overlapping facility and labor costs associated with the relocation. We believe this Adjusted view will provide 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. 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 (EPS) under GAAP excluding: (i) the impact of first year purchase accounting costs associated with acquisitions for current and prior year periods, specifically one-time inventory step-up, backlog amortization, deferred revenue adjustments and transaction costs; (ii) one-time transition and IT security costs associated with the relocation of a business in the prior year period; (iii) the non-cash impairment of capitalized development costs related to a commercial aerospace program in the prior year period; (iv) significant restructuring costs in 2020 associated with its operations, (v) a build-to-print actuation product line supporting the Boeing 737 MAX program which we exited, and (vi) the results of a German valves business classified as held for sale in the fourth quarter of 2020.

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 the impact of restructuring costs, foreign currency fluctuations and contributions from acquisitions made during the last twelve months.

Three Months Ended

June 30,

2021 vs. 2020

Aerospace & Industrial

Defense Electronics

Naval & Power

Total Curtiss-Wright

Sales

Operating

income

Sales

Operating

income

Sales

Operating

income

Sales

Operating

income

Organic

10%

174%

(6%)

12%

10%

24%

6%

46%

Acquisitions

0%

0%

22%

9%

0%

0%

6%

4%

Restructuring

0%

59%

0%

7%

0%

26%

0%

26%

Foreign Currency

3%

0%

0%

(10%)

1%

(2%)

1%

(5%)

Total

13%

233%

16%

18%

11%

48%

13%

71%

Six Months Ended

June 30,

2021 vs. 2020

Aerospace & Industrial

Defense Electronics

Naval & Power

Total Curtiss-Wright

Sales

Operating

income

Sales

Operating

income

Sales

Operating

income

Sales

Operating

income

Organic

(8%)

8%

(1%)

26%

4%

28%

(1%)

26%

Acquisitions

0%

0%

23%

12%

0%

0%

6%

4%

Restructuring

0%

14%

0%

5%

0%

16%

0%

14%

Foreign Currency

2%

0%

1%

(8%)

2%

(2%)

1%

(3%)

Total

(6%)

22%

23%

35%

6%

42%

6%

41%

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 cash flow provided by operating activities less capital expenditures. Adjusted free cash flow for 2020 excludes: (i) a capital investment in the Naval & Power segment related to the new, state-of-the-art naval facility principally for DRG; (ii) a voluntary contribution to the Company’s corporate defined benefit pension plan made in the first quarter of 2020; and (iii) the cash impact from restructuring in 2020. 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,

2021

2020

2021

2020

Net cash provided by operating activities

$

75,079

$

140,367

$

48,476

$

(52,209)

Capital expenditures

(9,234)

(10,687)

(17,771)

(29,324)

Free cash flow

$

65,845

$

129,680

$

30,705

$

(81,533)

Voluntary pension contribution

150,000

Adjustment to capital expenditures (DRG facility investment)

1,998

9,675

Restructuring

4,076

4,741

Adjusted free cash flow

$

65,845

$

135,754

$

30,705

$

82,883

Adjusted free cash flow conversion

101

%

247

%

24

%

74

%

CURTISS-WRIGHT CORPORATION
2021 Guidance (New Segment Structure)
As of August 3, 2021
($'s in millions, except per share data)
 

2020

Adjusted

Non-GAAP) (1)

Exiting

Non-Core

Operations

2020

Adjusted (2,4)

(Non-GAAP)

2021

Reported

Guidance

(GAAP)

Exiting

Non-Core

Operations

2021

Adjustments (3)

(Non-GAAP)

2021

Adjusted Guidance (3)

(Non-GAAP)

Low HighLowHigh2021 Chg vs
2020 Adjusted
Sales:
Aerospace & Industrial

$

805

$

(67

)

$

738

$

774

$

789

$

(14

)

$

-

$

760

$

775

3 - 5

%

Defense Electronics

611

-

611

745

760

-

-

745

760

22 - 24

%

Naval & Power

977

(26

)

951

991

1,011

(31

)

-

960

980

1 - 3

%

Total sales

$

2,393

$

(93

)

$

2,300

$

2,510

$

2,560

$

(45

)

$

-

$

2,465

$

2,515

7 to 9%
 
Operating income:
Aerospace & Industrial

$

114

$

(16

)

$

98

$

117

$

120

$

(2

)

$

-

$

115

$

118

17 - 21

%

Defense Electronics

144

-

144

153

158

-

6

159

164

10 - 13

%

Naval & Power

171

-

171

176

181

(2

)

-

174

179

2 - 5

%

Total segments

429

(16

)

413

446

459

(4

)

6

448

461

Corporate and other

(38

)

-

(38

)

(37

)

(39

)

-

-

(37

)

(39

)

Total operating income

$

391

$

(16

)

$

375

$

409

$

419

$

(4

)

$

6

$

411

$

421

9 to 12%
 
Interest expense

$

(36

)

$

-

$

(36

)

$

(41

)

$

(41

)

$

-

$

-

$

(41

)

$

(41

)

Other income, net

21

-

21

13

13

-

3

16

17

Earnings before income taxes

377

(16

)

361

381

392

(4

)

9

386

397

Provision for income taxes

(88

)

4

(85

)

(91

)

(94

)

1

(2

)

(93

)

(95

)

Net earnings

$

289

$

(12

)

$

277

$

290

$

298

$

(3

)

$

7

$

294

$

302

 
Diluted earnings per share

$

6.87

$

(0.29

)

$

6.59

$

7.05

$

7.25

$

(0.07

)

$

0.17

$

7.15

$

7.35

9 to 12%
Diluted shares outstanding

42.0

42.0

41.1

41.1

41.1

41.1

Effective tax rate

23.4

%

23.4

%

24.0

%

24.0

%

24.0

%

24.0

%

 
Operating margins:
Aerospace & Industrial

14.2

%

NM

13.3

%

15.1

%

15.2

%

+10 bps

-

15.1

%

15.3

%

180 to 200 bps
Defense Electronics

23.6

%

NM

23.6

%

20.5

%

20.7

%

-

+80 bps

21.3

%

21.5

%

(210 to 230 bps)
Naval & Power

17.5

%

NM

18.0

%

17.8

%

17.9

%

+40 bps

-

18.2

%

18.3

%

20 to 30 bps
Total operating margin

16.3

%

NM

16.3

%

16.3

%

16.4

%

+20 bps+20 bps

16.7

%

16.8

%

40 to 50 bps
 
Free cash flow

$

394

$

-

$

394

$

330

$

360

-

-

$

330

$

360

 
Notes: Full year amounts may not add due to rounding. All financial information by reportable segment for the 2020 and 2021 reporting periods reflects the Corporation’s first quarter 2021 segment reorganization.
(1) A reconciliation of our 2020 GAAP to our 2020 Non-GAAP Adjusted figures are provided in our February 24, 2021 press release.
(2) 2020 Adjusted financials are defined as Reported Operating Income, Operating Margin, Net Income and Diluted EPS under GAAP excluding restructuring costs, first year purchase accounting costs, specifically one-time backlog amortization and transaction costs associated with acquisitions, a non-cash impairment of capitalized development costs related to a commercial aerospace program, and one-time transition and IT security costs related to the relocation of the DRG business, as well as a $10 million non-cash currency translation loss (within non-operating income) related to the liquidation of a foreign legal entity. 2020 financial results excludes our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited, as well as our German valves business which was classified as held for sale, both in the fourth quarter of 2020.
(3) 2021 Adjusted financials are defined as Reported Operating Income, Operating Margin, Net Income and Diluted EPS under GAAP excluding our build-to-print actuation product line supporting the Boeing 737 MAX program which we exited, as well as our German valves business which was classified as held for sale, both in the fourth quarter of 2020, first year purchase accounting costs, specifically one-time backlog amortization and transaction costs associated with acquisitions, and a one-time, $3 million pension settlement charge related to the retirement of two former executives (within non-operating income).
(4) Free Cash Flow is defined as cash flow from operations less capital expenditures. 2020 Adjusted Free Cash Flow guidance excludes a $150 million voluntary contribution made in January to the Company’s corporate defined benefit pension plan, a $20 million cash impact from restructuring, and a $10 million capital investment related to the new, state-of-the-art naval facility principally for DRG.
 
CURTISS-WRIGHT CORPORATION
2021 Sales Growth Guidance by End Market
As of August 3, 2021
 

2021 % Change vs 2020

Aerospace & Defense Markets

Prior

Current

% Total Sales

Aerospace Defense

2 - 4%

2 - 4%

19%

Ground Defense

100 - 105%

100 - 105%

9%

Naval Defense

Flat

0 - 2%

28%

Commercial Aerospace

Flat

Flat

10%

Total Aerospace & Defense

7 - 9%

7 - 9%

66%

Commercial Markets

Power & Process

3 - 5%

1 - 3%

18%

General Industrial

9 - 11%

15 - 17%

15%

Total Commercial

6 - 8%

6 - 8%

34%

Total Curtiss-Wright Sales

7 - 9%

7 - 9%

100%

 
Note: Amounts may not add due to rounding.
(1) This table reflects the Company's first quarter 2021 End Market Structure and Realignment, where all Commercial Aerospace market revenues shifted into a newly defined Total Aerospace & Defense market.
(2) The Power & Process end market is comprised of a) Nuclear and b) Process, while the General Industrial end market is comprised of a) Industrial Vehicles and b) Industrial Automation and Services.
(3) Based on these changes, all of our general industrial businesses operate within the Aerospace & Industrial segment, and the majority of the Company’s nuclear and process revenues operate within the Naval & Power segment.

About Curtiss-Wright Corporation

Curtiss-Wright Corporation (NYSE:CW) is a global innovative company that delivers highly engineered, critical function products and services to the Aerospace and Defense markets, and to the Commercial markets including Power, Process and General Industrial. Building on the heritage of Glenn Curtiss and the Wright brothers, Curtiss-Wright has a long tradition of providing reliable solutions through trusted customer relationships. The company employs approximately 8,200 people worldwide. 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, future cash flow from operations, and potential impacts of the COVID-19 pandemic are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act") and 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; the impact of a global pandemic or national epidemic, 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, 2020 and subsequent reports filed with the Securities and Exchange Commission.

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

Contacts:

Jim Ryan
(704) 869-4621
Jim.Ryan@curtisswright.com

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.