DAVIDSON, N.C.--(BUSINESS WIRE)-- Curtiss-Wright Corporation (NYSE: CW) reports financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights:

• Reported sales of $559 million, reflecting timing of defense revenues;
• Reported diluted earnings per share (EPS) of $1.05;
• Adjusted diluted EPS of $1.31;
• New orders of $634 million, up 12%, reflecting strong demand within our Aerospace & Defense (A&D) and Commercial markets; and
• Share repurchases of approximately $12 million.

"Curtiss-Wright delivered solid Adjusted diluted EPS of $1.31 in the first quarter, exceeding our expectations, as the benefits of our combined portfolio of businesses enabled us to partially mitigate the headwinds of continued global supply chain disruption and the delayed signing of the FY22 Defense budget," said Lynn M. Bamford, President and CEO of Curtiss-Wright Corporation. "We are greatly encouraged by the double-digit order growth in the first quarter, which builds upon our already strong backlog and provides further confidence in our full-year outlook."

“Looking ahead to the remainder of the year, we anticipate steady, sequential improvement in sales, operating margin, diluted EPS and free cash flow, with a greater percentage of our full-year sales weighted to the second half of the year due to the timing of revenue within our defense markets. Overall, we are maintaining our full-year 2022 guidance for total sales growth of 3% to 5% driven by growth in all of our A&D and Commercial markets, continued operating margin expansion, and double-digit Adjusted diluted EPS growth of 10% to 12%, as we continue to successfully execute on our Pivot to Growth strategy to drive long-term shareholder value.”

First Quarter 2022 Operating Results

• Adjusted sales of $559 million, down $30 million, or 5%;
• Total Aerospace & Defense (A&D) market sales decreased 10%, while total Commercial market sales increased 5%;
• In our A&D markets, strong double-digit growth in the commercial aerospace market was more than offset by reductions in our defense markets due to the timing of sales, ongoing supply chain headwinds and the delayed signing of the FY22 defense budget;
• In our Commercial markets, we experienced solid demand in the general industrial market, as well as higher sales within the power & process markets, despite the wind down on the China Direct AP1000 program; and
• Adjusted operating income of $71 million decreased 20%, while Adjusted operating margin decreased 230 basis points to 12.7%, principally driven by unfavorable overhead absorption on lower revenues and mix in our Defense Electronics and Naval & Power segments. These decreases were partially offset by higher revenues and increased profitability in the Aerospace & Industrial segment, as well as the benefits of our ongoing company-wide operational excellence initiatives.

First Quarter 2022 Segment Performance

Aerospace & Industrial

• Adjusted sales of $191 million, up $13 million, or 8%;
• Higher commercial aerospace market revenue reflected strong demand for actuation and sensors products, as well as surface treatment services, primarily on narrowbody platforms;
• Higher general industrial market revenue was principally driven by increased sales of industrial vehicle products, most notably serving off-highway platforms;
• Aerospace defense market revenue growth reflected higher sales of actuation products and surface treatment services on the F-35 program, mainly offset by lower sales of sensors equipment on various programs; and
• Adjusted operating income was $25 million, up 34% from the prior year, while Adjusted operating margin increased 260 basis points to 13.0%, reflecting strong absorption on higher sales and the benefits of our ongoing operational excellence and prior year restructuring initiatives.

Defense Electronics

• Adjusted sales of $143 million, down $39 million, or 22%, principally reflected the timing of sales within our aerospace and ground defense markets as certain revenues shifted out of the first quarter of 2022 due to ongoing supply chain headwinds and the delayed signing of the FY22 defense budget;
• Naval defense market revenue declines primarily reflected the timing of revenues on the Virginia-class submarine program and various surface ships; and
• Adjusted operating income was $23 million, down 39% from the prior year, while adjusted operating margin decreased 460 basis points to 16.3%, primarily reflecting reduced absorption and unfavorable mix on lower defense sales, which more than offset the benefits of our ongoing operational excellence initiatives.

Naval & Power

• Adjusted sales of $225 million, down $5 million, or 2%;
• Naval defense market revenue declines primarily reflected lower revenues on the CVN-80 aircraft carrier and Virginia-class submarine programs, partially offset by higher revenues on the CVN-81 aircraft carrier and Columbia-class submarine programs;
• Higher power & process market sales reflected strong growth in nuclear aftermarket revenues supporting the maintenance of existing operating reactors and strong industrial valve demand in the process market; Those increases were mainly offset by the timing of production on the China Direct AP1000 program; and
• Adjusted operating income was $33 million, down 20% from the prior year, while adjusted operating margin decreased 320 basis points to 14.5%, driven by unfavorable absorption on lower naval defense market revenues and unfavorable mix in the power & process market.

Free Cash Flow

• Reported free cash flow of ($135) million decreased approximately $100 million, primarily due to higher working capital and the Westinghouse legal settlement payment;
• Adjusted free cash flow of ($112) million decreased $77 million; and
• Capital expenditures increased $2 million compared with the prior year, primarily due to higher capital investments within the Aerospace & Industrial segment.

New Orders and Backlog

• New orders of $634 million increased 12% and generated an overall book-to-bill that exceeded 1.1x, principally driven by solid demand for naval defense and commercial aerospace products within our A&D markets, and for industrial vehicle products within our Commercial markets; and
• Backlog of $2.3 billion, up 3% from December 31, 2021, reflects higher demand in both our A&D and commercial markets.

Share Repurchase and Dividends

• During the first quarter, the Company repurchased 87,303 shares of its common stock for approximately $12 million; and
• The Company also declared a quarterly dividend of $0.18 a share, unchanged from the previous quarter.

Other Items – Westinghouse Legal Settlement

• In February 2022, the Company and Westinghouse reached an agreement to settle all open claims and counterclaims under the AP1000 U.S. and China contracts;
• The Company’s 2021 and 2022 non-GAAP results have been adjusted for this legal matter;
• The Company recorded full-year charges of approximately $13 million in 2021 related to this matter; and
• The terms of the settlement require a $25 million cash payment, with $15 million paid in the first quarter of 2022 and $10 million to be paid in the first quarter of 2023.

Full-Year 2022 Guidance

The Company maintains its full-year 2022 Adjusted financial guidance (1) as follows:

A more detailed breakdown of the Company’s 2022 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 first quarter 2022 financial results and updates to 2022 guidance at 10:00 a.m. ET on Thursday, May 5, 2022. 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)

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 in the prior year, 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.

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 made during the last twelve months, loss on divestiture of the German valves business, 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 for 2022 excludes: (i) payments associated with the Westinghouse legal settlement and (ii) executive pension payments. 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 7,800 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, 2021, 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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Jim Ryan

(704) 869-4621

[email protected]

Source: Curtiss-Wright Corporation