10-QPeriod: Q3 FY2021

CURTISS WRIGHT CORP Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 4, 2021For Securities:CW

Summary

Curtiss-Wright Corporation (CW) reported solid third-quarter and nine-month results for 2021, demonstrating significant year-over-year growth in both sales and operating income. Total net sales increased by 9% for the quarter and 7% for the nine months, driven primarily by strong performance in the Defense Electronics and Naval & Power segments. The company also saw a substantial increase in operating income, up 15% for the quarter and 31% for the nine months, reflecting improved operational efficiency, benefits from prior restructuring initiatives, and the impact of acquisitions. The company's strategic focus on defense markets, which are expected to generate approximately 55% of 2021 revenues, appears to be paying off, with the Defense Electronics and Naval & Power segments showing robust growth. While the Aerospace & Industrial segment experienced a slight decline in nine-month sales due to softness in commercial aerospace, overall segment performance and profitability improved. Curtiss-Wright's financial position remains strong, with ample liquidity and a solid balance sheet, enabling continued investment in growth and shareholder returns.

Financial Highlights

54 data points
Beta

Revenue

$620.62M

38.2% Gross Margin

Net Income

$69.70M

11.2% Net Margin

EPS (Diluted)

$1.70

Total Assets

$4.08B

Cash & Equivalents

$234.42M

Free Cash Flow

$97.20M

Financial Statements
Beta
Revenue$620.62M
Cost of Revenue$383.61M
Gross Profit$237.01M
R&D Expenses$21.62M
Operating Income$97.67M
Interest Expense$9.96M
Net Income$69.70M
EPS (Basic)$1.71
EPS (Diluted)$1.70
Shares Outstanding (Basic)40.77M
Shares Outstanding (Diluted)40.95M

Key Highlights

  • 1Total net sales increased by 9% to $620.6 million for the third quarter and 7% to $1.84 billion for the first nine months of 2021.
  • 2Operating income rose significantly, up 15% to $97.7 million for the third quarter and 31% to $277.3 million for the nine months, with improved operating margins across most segments.
  • 3Defense Electronics segment sales grew by 22% in Q3 and 23% year-to-date, driven by the PacStar acquisition and strong demand.
  • 4Naval & Power segment sales increased by 4% in Q3 and 5% year-to-date, supported by increased production on key naval programs.
  • 5Aerospace & Industrial segment showed resilience with a 4% sales increase in Q3, though year-to-date sales were down 3% due to commercial aerospace weakness.
  • 6The company generated $155.8 million in cash from operating activities for the first nine months of 2021, a significant increase from the prior year, primarily due to a prior year pension contribution.
  • 7Curtiss-Wright continues to focus on its defense markets, expecting them to contribute approximately 55% of 2021 revenues.

Frequently Asked Questions

Sales increased by 9% to $620.6 million, driven by growth in the Defense Electronics segment (up 22%), largely due to the incremental impact of the PacStar acquisition, and the Naval & Power segment (up 4%), supported by higher production on key naval programs. The Aerospace & Industrial segment also saw a 4% increase in the quarter.

Operating income increased by 15% to $97.7 million in the third quarter and 31% to $277.3 million for the nine months ended September 30, 2021. This was driven by higher sales, improved operational efficiencies, benefits from prior restructuring initiatives, and acquisitions, leading to expanded operating margins in most segments.

The company expects approximately 55% of its 2021 revenues to come from defense markets, which are performing strongly. The Defense Electronics and Naval & Power segments are key growth drivers. While the commercial aerospace market has faced headwinds impacting the Aerospace & Industrial segment, the general industrial market and other commercial sectors show continued demand.

Curtiss-Wright generated $155.8 million in cash from operating activities for the first nine months of 2021, a significant increase compared to the prior year. This improvement was mainly due to a substantial voluntary pension contribution in the prior year, higher net earnings, and improved working capital management. The company has sufficient liquidity and borrowing capacity to meet its financial obligations.