10-QPeriod: Q3 FY2022

CURTISS WRIGHT CORP Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 3, 2022For Securities:CW

Summary

Curtiss-Wright Corporation (CW) reported its financial results for the third quarter and the first nine months of 2022. For the three months ended September 30, 2022, the company saw a slight increase in total net sales to $630.5 million, up 2% year-over-year, driven by growth in the Aerospace & Industrial and Naval & Power segments. Operating income also rose by 10% to $107.6 million, with an improved operating margin of 17.1%. This performance reflects favorable absorption and operational excellence initiatives, though partially offset by a decrease in the Defense Electronics segment due to lower sales and unfavorable overhead absorption. For the nine months ended September 30, 2022, total net sales decreased by 2% to $1.8 billion. Operating income declined by 4% to $266.2 million, and the operating margin contracted slightly. The company experienced headwinds in the Defense Electronics segment due to supply chain issues and delayed defense budgets. However, strong new order growth of 17% for the nine-month period, reaching $2.2 billion, signals positive future demand, particularly in naval defense and aerospace. The company also completed a significant acquisition in June 2022, contributing to increased goodwill and intangible assets.

Financial Highlights

54 data points
Beta

Revenue

$630.54M

36.8% Gross Margin

Net Income

$73.77M

11.7% Net Margin

EPS (Diluted)

$1.91

Total Assets

$4.34B

Cash & Equivalents

$113.55M

Free Cash Flow

$86.36M

Financial Statements
Beta
Revenue$630.54M
Cost of Revenue$398.33M
Gross Profit$232.21M
R&D Expenses$17.39M
Operating Income$107.58M
Interest Expense$14.00M
Net Income$73.77M
EPS (Basic)$1.92
EPS (Diluted)$1.91
Shares Outstanding (Basic)38.37M
Shares Outstanding (Diluted)38.65M

Key Highlights

  • 1Total net sales for Q3 2022 increased 2% to $630.5 million, with Aerospace & Industrial and Naval & Power segments showing growth.
  • 2Operating income for Q3 2022 increased 10% to $107.6 million, and operating margin improved to 17.1%.
  • 3Nine-month net sales decreased 2% to $1.8 billion, impacted by declines in Defense Electronics and Naval & Power segments.
  • 4Nine-month operating income decreased 4% to $266.2 million, with a slight decrease in operating margin.
  • 5The company completed a significant acquisition (arresting systems) for $247 million in June 2022, adding $88.8 million in goodwill.
  • 6New orders for the nine months ended September 30, 2022, increased 17% to $2.2 billion, indicating strong future demand.
  • 7The company refinanced its credit facility, increasing its revolving credit capacity to $750 million, maturing in May 2027.

Frequently Asked Questions

In the third quarter of 2022, Curtiss-Wright's total net sales increased by 2% to $630.5 million compared to the same period in 2021. This growth was primarily driven by the Aerospace & Industrial segment, which saw a 9% increase in sales, and the Naval & Power segment, which experienced a 6% increase. The Defense Electronics segment saw a 11% decrease in sales.

In June 2022, Curtiss-Wright completed the acquisition of Safran Aerosystems Arresting Company for $247 million. This acquisition contributed $14 million in net sales and a net loss of $6 million to the consolidated statement of earnings for the nine months ended September 30, 2022. It also resulted in the recognition of $88.8 million in goodwill and $130.5 million in intangible assets.

The company highlighted challenges including ongoing supply chain difficulties, increased lead times, and heightened inflation in material and transportation costs. These factors have affected the ability to obtain raw materials and components, leading to delays in converting backlog into net sales. The company expects these trends to continue through at least the remainder of 2022.

Cash flow from operating activities decreased significantly by $153 million in the first nine months of 2022, amounting to $2.4 million compared to $155.8 million in the same period of 2021. This decrease was primarily attributed to lower defense revenues, higher inventory purchases, reduced advance cash receipts, and a legal settlement payment made to Westinghouse Electric Company.