10-KPeriod: FY2023

CURTISS WRIGHT CORP Annual Report, Year Ended Dec 31, 2023

Filed February 20, 2024For Securities:CW

Summary

Curtiss-Wright Corporation's 2023 Form 10-K highlights a strong performance driven by its core Aerospace & Defense (A&D) and critical commercial markets. The company demonstrated robust sales growth across all three segments: Aerospace & Industrial, Defense Electronics, and Naval & Power. This growth was fueled by increased demand in defense programs, a rebound in commercial aerospace, and continued strength in the power and process sectors, particularly nuclear. The company's strategy focuses on "Pivot to Growth," emphasizing organic and inorganic sales acceleration, operational excellence, and disciplined capital allocation, including share repurchases and dividends. Financial results show a significant increase in net earnings and operating income, supported by favorable pricing and operational efficiencies, despite inflationary pressures. Curtiss-Wright's diversified business model, with a substantial portion of revenue (56% in 2023) tied to U.S. government defense spending, provides a degree of stability. The company is well-positioned to capitalize on long-term trends such as increased global defense spending and the growing demand for advanced nuclear technologies. While managing risks related to supply chain, geopolitical events, and economic volatility, Curtiss-Wright continues to invest in innovation and leverage its engineering expertise to drive shareholder value. The company maintained effective internal controls over financial reporting and reported no material cybersecurity incidents in 2023.

Financial Highlights

54 data points
Beta

Revenue

$2.85B

37.5% Gross Margin

Net Income

$354.51M

12.5% Net Margin

EPS (Diluted)

$9.20

Total Assets

$4.62B

Cash & Equivalents

$406.87M

Free Cash Flow

$403.42M

Financial Statements
Beta
Revenue$2.85B
Cost of Revenue$1.78B
Gross Profit$1.07B
R&D Expenses$85.76M
Operating Income$484.60M
Interest Expense$51.39M
Net Income$354.51M
EPS (Basic)$9.26
EPS (Diluted)$9.20
Shares Outstanding (Basic)38.28M
Shares Outstanding (Diluted)38.53M

Key Highlights

  • 1Total sales increased by 11% to $2.85 billion in 2023, driven by growth in all three segments.
  • 2Defense Electronics segment saw an 18% sales increase, fueled by demand in tactical communications and embedded computing.
  • 3Naval & Power segment sales grew 11%, benefiting from U.S. Navy shipbuilding programs and commercial nuclear aftermarket demand.
  • 4Operating income increased by 14% to $484.6 million, with operating margins expanding by 40 basis points.
  • 5The company repurchased $50 million of its common stock in 2023 and paid $30 million in dividends, demonstrating a commitment to returning capital to shareholders.
  • 6Backlog increased by 10% to $2.87 billion, indicating strong future revenue visibility.
  • 7Approximately 56% of total net sales were derived from contracts with agencies of, and prime contractors to, the U.S. Government, providing a stable revenue base.

Frequently Asked Questions

Curtiss-Wright's revenue is primarily driven by its highly engineered products, solutions, and services offered to the Aerospace & Defense (A&D) markets, as well as critical technologies for demanding commercial power, process, and industrial markets. Key segments include Defense Electronics, Naval & Power, and Aerospace & Industrial. A significant portion of revenue is derived from U.S. government defense spending.

In 2023, Curtiss-Wright reported an 11% increase in total sales to $2.85 billion, with net earnings growing by 20% to $354.5 million. Operating income also rose by 14% to $484.6 million, with an improved operating margin. This strong performance was supported by growth across all business segments.

Key risks include cybersecurity threats, potential product liability and warranty claims, reliance on subcontractor performance and raw material availability, complexities in manufacturing processes, risks associated with the acquisition strategy, dependence on government defense spending and market fluctuations, regulatory compliance for aerospace and other industries, and general economic and geopolitical uncertainties. The company also faces risks related to climate change regulations and ESG expectations.

Curtiss-Wright's strategy, termed "Pivot to Growth," focuses on maximizing revenue, operating income, and free cash flow. This involves driving top-line acceleration through both organic and inorganic sales growth, deepening customer relationships via its "One Curtiss-Wright" approach, improving margins through its Operational Growth Platform, and executing a disciplined capital allocation strategy that includes acquisitions, share repurchases, and dividends.

Curtiss-Wright generates significant operating cash flow and has access to a $750 million revolving credit facility. In 2023, operating cash flow was $448 million. The company manages its capital through debt repayment, share repurchases ($50 million in 2023), and dividend payments ($30 million in 2023). Management believes its cash position, cash flow from operations, and credit facility are sufficient to meet its capital needs.