10-QPeriod: Q2 FY2023

CURTISS WRIGHT CORP Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 3, 2023For Securities:CW

Summary

Curtiss-Wright Corporation reported solid financial results for the second quarter and first six months of 2023, demonstrating significant year-over-year growth in both sales and net earnings. Total net sales increased by 16% in Q2 and 14% for the year-to-date period, driven by strong performance across all three segments: Aerospace & Industrial, Defense Electronics, and Naval & Power. Net earnings saw a substantial increase of 14% in Q2 and 24% for the six months, reflecting improved operational efficiencies and favorable market conditions. The company's strategic focus on its core markets, particularly Aerospace & Defense, continues to yield positive results. The Defense Electronics segment exhibited exceptional growth with sales up 32% in Q2 and operating income soaring by 77%, while Naval & Power also showed robust sales growth of 12% in Q2. The Aerospace & Industrial segment also contributed positively with an 8% sales increase in Q2. Management highlighted that the company is well-positioned to meet its financial obligations and pursue growth opportunities, supported by healthy new order bookings and a strong balance sheet.

Financial Highlights

55 data points
Beta

Revenue

$704.40M

36.9% Gross Margin

Net Income

$81.00M

11.5% Net Margin

EPS (Diluted)

$2.10

Total Assets

$4.44B

Cash & Equivalents

$158.74M

Free Cash Flow

$98.95M

Financial Statements
Beta
Revenue$704.40M
Cost of Revenue$444.82M
Gross Profit$259.57M
R&D Expenses$20.21M
Operating Income$112.78M
Interest Expense$14.99M
Net Income$81.00M
EPS (Basic)$2.11
EPS (Diluted)$2.10
Shares Outstanding (Basic)38.33M
Shares Outstanding (Diluted)38.55M

Key Highlights

  • 1Total net sales increased by 16% to $704.4 million for the three months ended June 30, 2023, and by 14% to $1,335.3 million for the six months ended June 30, 2023, compared to the prior year periods.
  • 2Net earnings rose by 14% to $81.0 million for the three months ended June 30, 2023, and by 24% to $137.8 million for the six months ended June 30, 2023, compared to the prior year periods.
  • 3The Defense Electronics segment experienced significant growth, with sales up 32% in the second quarter and 77% in operating income.
  • 4Naval & Power segment sales grew 12% in the second quarter, driven by the arresting systems acquisition and increased demand for naval defense products and commercial nuclear aftermarket services.
  • 5The company generated $19.4 million in net cash from operating activities for the first six months of 2023, a significant improvement from the $93.3 million used in the prior year period.
  • 6New orders increased by 8% to $841.6 million for the three months ended June 30, 2023, and by 11% to $1,559.4 million for the six months ended June 30, 2023, indicating continued demand for the company's products and services.
  • 7Curtiss-Wright declared a quarterly dividend of $0.20 per share, an increase from the prior year's $0.19 per share.

Frequently Asked Questions

Sales growth in the second quarter of 2023 was primarily driven by strong performance across all three segments. The Defense Electronics segment saw a significant boost from higher demand for tactical battlefield communications equipment and embedded computing/flight test instrumentation. The Naval & Power segment benefited from the arresting systems acquisition and increased demand for naval defense and commercial nuclear aftermarket products. The Aerospace & Industrial segment's growth was supported by higher demand for sensors, surface treatment services, and industrial automation products.

Profitability has shown a strong upward trend. Net earnings increased by 14% for the second quarter and 24% for the six-month period ended June 30, 2023, compared to the same periods in 2022. This improvement is attributed to increased sales volumes, favorable overhead absorption, and the absence of certain prior-year charges, although partially offset by unfavorable product mix in some segments and acquisition-related purchase accounting costs.

Curtiss-Wright maintains a solid financial position with total assets of approximately $4.44 billion as of June 30, 2023. The company generated positive cash flow from operations of $19.4 million in the first six months of 2023, a marked improvement from the negative cash flow in the prior year. Management believes that its cash on hand, cash flow from operations, and available credit facilities are sufficient to meet its short-term and long-term capital needs, including dividends, share repurchases, and potential acquisitions.

The company repaid $203 million of its 2013 Notes that matured in February 2023. As of June 30, 2023, borrowings under the Credit Agreement were $125 million, with $604 million in unused credit available. The company was in compliance with its debt covenants, including a debt-to-capitalization limit of 60%, and has the capacity to borrow an additional $1.9 billion without violating this covenant. The average interest rate on its debt has increased compared to the prior year due to higher market rates and a revised debt mix.