10-QPeriod: Q1 FY2023

CURTISS WRIGHT CORP Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 4, 2023For Securities:CW

Summary

Curtiss-Wright Corporation (CW) reported a strong first quarter for 2023, with total net sales increasing by 13% year-over-year to $630.9 million. This growth was driven by solid performance across all segments, particularly in Aerospace & Industrial and Naval & Power. Net earnings saw a significant increase of 40% to $56.8 million, or $1.48 per diluted share, up from $1.05 in the prior year's first quarter. The company's operating income also rose substantially by 30% to $78.6 million, reflecting improved operating margins. The company's balance sheet remains robust, with a healthy liquidity position and ample capacity under its credit facility. Key operational drivers included strong demand in both defense and commercial aerospace markets, as well as continued strength in power & process and general industrial sectors. The company also benefited from the absence of certain prior-year charges, contributing to the significant net earnings improvement. Curtiss-Wright continues to manage its capital effectively, repurchasing shares and maintaining compliance with debt covenants, positioning it for continued growth and shareholder value creation.

Financial Highlights

52 data points
Beta

Revenue

$630.86M

35.1% Gross Margin

Net Income

$56.85M

9.0% Net Margin

EPS (Diluted)

$1.48

Total Assets

$4.36B

Cash & Equivalents

$130.66M

Free Cash Flow

-$102.26M

Financial Statements
Beta
Revenue$630.86M
Cost of Revenue$409.45M
Gross Profit$221.41M
R&D Expenses$22.02M
Operating Income$78.61M
Interest Expense$12.94M
Net Income$56.85M
EPS (Basic)$1.48
EPS (Diluted)$1.48
Shares Outstanding (Basic)38.30M
Shares Outstanding (Diluted)38.52M

Key Highlights

  • 1Total net sales increased 13% to $630.9 million in Q1 2023, up from $559.5 million in Q1 2022.
  • 2Net earnings grew by 40% to $56.8 million in Q1 2023, compared to $40.7 million in Q1 2022.
  • 3Diluted earnings per share rose to $1.48 in Q1 2023, a significant increase from $1.05 in the prior year period.
  • 4Operating income increased by 30% to $78.6 million, with operating margin improving to 12.5%.
  • 5Aerospace & Defense markets sales grew 13% to $408.6 million, while Commercial markets sales increased 12% to $222.3 million.
  • 6The company generated $717.8 million in new orders, a 13% increase year-over-year, indicating strong future demand.
  • 7Cash used in operating activities decreased by $33 million to ($91.6 million) in Q1 2023 from ($124.3 million) in Q1 2022, indicating improved working capital management.

Frequently Asked Questions

The 13% increase in total net sales to $630.9 million was driven by strong organic growth across all three segments: Aerospace & Industrial (+6%), Defense Electronics (+13%), and Naval & Power (+18%). The Aerospace & Defense markets, particularly ground defense and naval defense, showed significant strength. Commercial markets, including Power & Process and General Industrial, also contributed positively to the sales growth.

Profitability saw a substantial improvement. Net earnings increased by 40% to $56.8 million, and diluted EPS rose to $1.48 from $1.05. This was supported by a 30% increase in operating income to $78.6 million and an expansion in operating margin to 12.5%. The improvement was partly due to the absence of prior year charges, such as the loss on sale of the industrial valves business and pension settlement charges.

Curtiss-Wright maintains a strong liquidity position. As of March 31, 2023, the company had $130.7 million in cash and cash equivalents and $553 million in unused credit availability under its credit facility. The company repaid $203 million of maturing debt in the quarter and remains in compliance with all debt covenants, with significant capacity to borrow additional debt without violating its most restrictive covenant.

The company continues to evaluate cash utilization alternatives, including share repurchases and dividends. During the first quarter of 2023, Curtiss-Wright repurchased approximately 0.1 million shares for $12 million. The company also paid dividends of $0.19 per share. Management believes its capital resources are sufficient to meet short-term and long-term needs, including returning capital to shareholders and funding growth through acquisitions.