01—Abstract
Summary
Summary of the 10-K filed February 20, 2024. Cited figures are marked; the original filing is the authoritative source.
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%a 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.
02—Key points
Key Highlights
- Total sales increased by 11% to $2.85 billion in 2023, driven by growth in all three segments.
- Defense Electronics segment saw an 18% sales increase, fueled by demand in tactical communications and embedded computing.
- Naval & Power segment sales grew 11%, benefiting from U.S. Navy shipbuilding programs and commercial nuclear aftermarket demand.
- Operating income increased by 14% to $484.6 million, with operating margins expanding by 40 basis points.
- The company repurchased $50 million of its common stock in 2023 and paid $30 million in dividends, demonstrating a commitment to returning capital to shareholders.
- Backlog increased by 10% to $2.87 billion, indicating strong future revenue visibility.
- Approximately 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Curtiss Wright Corp kept $0.12.
- Revenue$2.85B100.0%
- Cost of revenue−$1.78B62.5%
- Gross profit$1.07B37.5%
- Operating costs−$582.6M20.5%
- Operating income$484.6M17.0%
- Interest, other & tax−$130.1M4.6%
- Net income$354.5M12.5%
Where FY2023 revenue went
$2.85B- Cost of revenue: $1.78B, 62% of revenue
- Other operating costs: $496.8M, 17% of revenue
- Net income: $354.5M, 12% of revenue
- R&D: $85.8M, 3.0% of revenue
- Interest, other & tax: $130.1M, 4.6% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 20, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $2.85B$2.56B | +11.3% |
| Cost of Revenue | $1.78B$1.60B | +11.0% |
| Gross Profit | $1.07B$954.61M | +11.8% |
| R&D Expenses | $85.76M$80.84M | +6.1% |
| Operating Income | $484.60M$423.44M | +14.4% |
| Interest Expense | $51.39M$46.98M | +9.4% |
| Net Income | $354.51M$294.35M | +20.4% |
| EPS (Basic) | $9.26$7.67 | +20.7% |
| EPS (Diluted) | $9.20$7.62 | +20.7% |
| Shares Outstanding (Basic) | 38.28M38.39M | −0.3% |
| Shares Outstanding (Diluted) | 38.53M38.65M | −0.3% |
05—Questions
Frequently Asked Questions
What are Curtiss-Wright's primary revenue drivers?
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.
How did the company perform financially in 2023?
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.
What are the key risks identified in the 10-K filing?
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.
What is the company's strategy for growth?
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.
How does the company manage its capital and liquidity?
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.
06—Continue