Curtiss-Wright Reports Third Quarter 2020 Financial Results

Q3 Results Reflect Strong Defense Market Sales Growth and Benefits of Cost Containment Actions

Board of Directors Grants New $200 Million Share Repurchase Authorization

DAVIDSON, N.C.–(BUSINESS WIRE)–Curtiss-Wright Corporation (NYSE: CW) reports financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Highlights:

  • Reported diluted earnings per share (EPS) of $1.55, with Adjusted diluted EPS of $1.85;
  • Net sales of $572 million, down 7%, with defense market sales up 11%;
  • Reported operating income of $85 million, with Reported operating margin of 14.8%;
  • Adjusted operating income of $100 million, down 7%;
  • Adjusted operating margin of 17.4%, flat compared to the prior year, as benefits of our cost containment and restructuring initiatives partially offset reduced commercial markets sales;
  • Reported free cash flow (FCF) of $49 million, with Adjusted FCF of $55 million; Year-to-date Adjusted FCF of $138 million, up 12%; and
  • Share repurchases of approximately $13 million.

“We generated solid third quarter Adjusted diluted EPS of $1.85 led by stronger than expected sales growth in our defense markets of 11%,” said David C. Adams, Chairman and CEO of Curtiss-Wright Corporation. “In addition, all three segments demonstrated sequential quarterly improvement in sales, operating income and operating margin, and also benefitted from the savings generated by our ongoing cost containment and restructuring initiatives. We remain on track to achieve our full-year 2020 guidance.”

Updated Full-Year 2020 Adjusted Guidance (compared to Full-Year 2019 Adjusted Actuals):

  • Narrowed overall sales guidance by raising bottom end of range to down 4% to 5% (previously down 4% to 6%); Increased defense markets sales growth range to up 11% to 13% (previously up 8% to 10%);
  • Increased Adjusted operating margin by 10 basis points to new range of 16.1% to 16.3% (previously 16.0% to 16.2%);
  • Narrowed Adjusted diluted EPS guidance to new range of $6.70 to $6.85 (previously $6.60 to $6.85);
  • Maintained Adjusted FCF guidance range of $350 to $380 million, with Adjusted FCF conversion of approximately 130%; and
  • Updated guidance does not include the recently announced acquisition of Pacific Star Communications, Inc. (PacStar), a leading provider of advanced tactical communications solutions for battlefield network management, which is anticipated to close in the fourth quarter.

Mr. Adams continued, “Looking ahead to the remainder of 2020, we expect continued overall sales growth in our defense markets, which remain strong, and savings generated by our restructuring actions to drive sequential improvement in operating margin, diluted EPS and free cash flow.”

“We continue to leverage our strong and healthy balance sheet to implement our balanced capital allocation strategy. Last month, we announced our decision to acquire PacStar and today we are pleased to announce the authorization of an additional $200 million in share repurchases. In addition, as part of our previously announced 2020 restructuring actions, we have elected to discontinue our build-to-print actuation contract supporting the Boeing 737 MAX program at the conclusion of this year. Phasing out this historically low-margin and commodity-type business will lessen the Company’s overall exposure to the commercial aerospace market. Collectively, these actions are expected to aid our efforts to drive long-term profitable growth and deliver significant value for our shareholders.”

Company Announces New $200 Million Share Repurchase Authorization:

  • Curtiss-Wright’s Board of Directors has authorized an additional $200 million for future share repurchases, increasing total available authorization to $250 million, which is immediately available for opportunistic share repurchases;
  • Of this authorization, the Company intends to repurchase a minimum of $50 million in opportunistic share repurchases in the fourth quarter of 2020;
  • The Company remains on track to complete its existing $50 million 10b5-1 share repurchase program authorized for 2020 by the end of the year, and had previously completed a $100 million opportunistic share repurchase program executed in March 2020; and
  • Beginning in January 2021, the Company expects to repurchase $50 million additional shares via a 10b5-1 program throughout 2021, which is expected to more than offset potential dilution from compensation plans.

Third Quarter 2020 Operating Results

(In millions)

Q3-2020

Q3-2019

Change

Sales

$

571.6

 

$

614.9

 

(7%)

Reported operating income

$

84.6

 

$

105.6

 

(20%)

Adjustments (1)

 

15.3

 

 

1.6

 

 

Adjusted operating income (1)

$

99.9

 

$

107.2

 

(7%)

Adjusted operating margin (1)

 

17.4

%

 

17.4

%

0 bps

(1)

 

Adjusted results exclude $11 million in restructuring costs, and one-time inventory step-up, backlog amortization and transaction costs for acquisitions.

  • Sales of $572 million, down $43 million, or 7%;
  • Sales to the defense markets increased 11%, 6% of which was organic, led by strong growth in aerospace and naval defense, while sales to the commercial markets decreased 22%, due to reduced demand in the commercial aerospace, general industrial and power generation markets. Please refer to the accompanying tables for an overall breakdown of sales by end market;
  • Adjusted operating income was $100 million, down 7%, reflecting unfavorable overhead absorption on lower revenues in the Commercial/Industrial segment, partially offset by increased profitability in the Power segment;
  • Adjusted operating margin was flat at 17.4%, reflecting the benefits of our company-wide restructuring and cost containment actions; and
  • Non-segment expenses of $8 million increased by $1 million, or 10%, compared to the prior year, primarily due to higher corporate costs.

Net Earnings and Diluted EPS

(In millions, except EPS)

Q3-2020

Q3-2019

Change

Reported net earnings

$

64.6

$

82.5

(22%)

Adjustments, net of tax (1)

 

12.8

 

1.3

 

Adjusted net earnings (1)

$

77.4

$

83.8

(8%)

Reported diluted EPS

$

1.55

$

1.92

(19%)

Adjustments, net of tax (1)

 

0.30

 

0.03

 

Adjusted diluted EPS (1)

$

1.85

$

1.95

(5%)

(1)

Adjusted results exclude restructuring costs and one-time inventory step-up, backlog amortization and transaction costs for acquisitions.

  • Reported net earnings of $65 million, down 22% from the prior year, reflecting lower segment operating income and higher interest expense;
  • Reported diluted EPS of $1.55, down 19% from the prior year, reflecting lower net earnings, partially offset by a lower share count;
  • Adjusted net earnings of $77 million, down 8%;
  • Adjusted diluted EPS of $1.85, down 5%; and
  • Effective tax rate of 20.2% decreased slightly compared to the prior year quarter.

Free Cash Flow

(In millions)

Q3-2020

Q3-2019

Change

Net cash provided by operating activities

$

56.0

 

$

118.6

 

(53

%)

Capital expenditures

 

(7.0

)

 

(16.4

)

57

%

Reported free cash flow

$

49.0

 

$

102.2

 

(52

%)

Adjustment to capital expenditures (DRG facility investment) (1)

 

0.4

 

 

4.8

 

(92

%)

Restructuring (1)

 

5.9

 

 

 

 

Adjusted free cash flow (1)

$

55.3

 

$

107.0

 

(48

%)

(1)

Adjusted free cash flow excludes a capital investment related to the new, state-of-the-art naval facility principally for DRG which impacted both periods, and the cash impact from restructuring in the current period.

  • Reported free cash flow was $49 million, a decrease of $53 million compared to the prior year, principally driven by lower cash earnings and lower collections, partially offset by a reduction in capital expenditures;
  • Capital expenditures decreased $9 million to $7 million compared to the prior year, primarily due to lower capital investments within the Power segment; and
  • Adjusted free cash flow was $55 million in the third quarter.

New Orders and Backlog

  • New orders of $559 million decreased 14% compared with the prior year period, as strong growth in embedded computing and valves products serving the defense markets was more than offset by reduced demand across the commercial markets; Order activity within our commercial and industrial markets continued to demonstrate solid monthly improvement compared with the lows experienced in May; and
  • Backlog of $2.2 billion increased 1% from December 31, 2019.

Share Repurchase and Dividends

  • During the third quarter, the Company repurchased 133,673 shares of its common stock for approximately $13 million;
  • Year-to-date, the Company repurchased 1.37 million shares for approximately $138 million, which included a $100 million opportunistic share repurchase program executed in March; and
  • The Company also declared a quarterly dividend of $0.17 a share, unchanged from the previous quarter.

Third Quarter 2020 Segment Performance

Commercial/Industrial

(In millions)

Q3-2020

Q3-2019

Change

Sales

$

222.5

 

$

279.0

 

(20%)

Reported operating income

$

24.8

 

$

43.6

 

(43%)

Adjustments (1)

 

7.7

 

 

 

 

Adjusted operating income (1)

$

32.5

 

$

43.6

 

(25%)

Adjusted operating margin (1)

 

14.6

%

 

15.6

%

(100 bps)

(1)

Adjusted results exclude restructuring costs and one-time backlog amortization and transaction costs for acquisitions.

  • Sales of $223 million, down $56 million, or 20%;
  • Higher aerospace defense revenues reflect increased sales of actuation and sensors equipment on various fighter jet programs;
  • Lower commercial aerospace market revenues reflect reduced OEM sales of actuation and sensors equipment, as well as surface treatment services;
  • General industrial market revenue declines reflect reduced year-over-year sales for industrial vehicle, valve and controls products, as well as surface treatment services;
  • Reported operating income was $25 million, with Reported operating margin of 11.2%; and
  • Adjusted operating income was $33 million, while Adjusted operating margin decreased 100 basis points to 14.6%, principally reflecting unfavorable absorption on lower commercial sales partially offset by the benefits of our cost containment and restructuring initiatives.

Defense

(In millions)

Q3-2020

Q3-2019

Change

Sales

$

180.3

 

$

160.4

 

12%

Reported operating income

$

41.6

 

$

40.2

 

3%

Adjustments (1)

 

3.6

 

 

0.7

 

 

Adjusted operating income (1)

$

45.2

 

$

40.9

 

11%

Adjusted operating margin (1)

 

25.0

%

 

25.4

%

(40 bps)

(1)

Adjusted results exclude restructuring costs and one-time backlog amortization and transaction costs for acquisitions.

  • Sales of $180 million, up $20 million, or 12%;
  • Higher aerospace defense market revenues were principally driven by increased sales of embedded computing equipment on various programs, most notably on Unmanned Aerial Vehicle (UAV) platforms;
  • Strong naval defense market revenue growth reflected timing of production of valves on submarine and aircraft carrier programs, as well as the contribution from the 901D acquisition;
  • Reduced ground defense market revenues reflect lower sales on international tank platforms;
  • Reported operating income was $42 million, with Reported operating margin of 23.0%; and
  • Adjusted operating income was $45 million, up 11% from the prior year, while Adjusted operating margin decreased 40 basis points to 25.0%, reflecting unfavorable mix on strong sales of our defense electronics products, mainly offset by the contribution from acquisitions and the benefits of our cost containment actions.

Power

(In millions)

Q3-2020

Q3-2019

Change

Sales

$

168.8

 

$

175.5

 

(4

%)

Reported operating income

$

26.0

 

$

28.8

 

(10

%)

Adjustments (1)

 

3.9

 

 

1.0

 

 

Adjusted operating income (1)

$

29.9

 

$

29.8

 

0

%

Adjusted operating margin (1)

 

17.7

%

 

17.0

%

70 bps

(1)

Adjusted results exclude restructuring costs and one-time transition and IT security costs associated with the relocation of our DRG business.

  • Sales of $169 million, down $7 million, or 4%;
  • Naval defense market revenues increased slightly, as higher Columbia class submarine production revenues were mainly offset by lower service center sales;
  • Reduced power generation market sales principally reflect lower domestic and international aftermarket revenues, partially offset by increased revenues on the CAP1000 program;
  • Reported operating income was $26 million, with Reported operating margin of 15.4%; and
  • Adjusted operating income was $30 million, flat compared to the prior year, while Adjusted operating margin increased 70 basis points to 17.7%, principally driven by the benefits of our cost containment and restructuring initiatives.

**********

A more detailed breakdown of the Company’s 2020 financial guidance by segment and by market, as well as all reconciliations of Reported GAAP amounts to Adjusted non-GAAP amounts can be found in the accompanying schedules.

Conference Call & Webcast Information

The Company will host a conference call to discuss its third quarter financial results and business outlook at 10:00 a.m. ET on Thursday, October 29, 2020. A live webcast of the call and the accompanying financial presentation, as well as a replay of the call, will be made available on the internet by visiting the Investor Relations section of the Company’s website at www.curtisswright.com.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

($’s in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

Change

 

September 30,

 

Change

 

 

2020

 

2019

 

$

 

%

 

2020

 

2019

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

493,398

 

 

$

516,760

 

 

$

(23,362)

 

 

(5

%)

 

$

1,457,772

 

 

$

1,520,612

 

 

$

(62,840)

 

 

(4

%)

Service sales

 

78,216

 

 

98,120

 

 

(19,904)

 

 

(20

%)

 

265,120

 

 

311,578

 

 

(46,458)

 

 

(15

%)

Total net sales

 

571,614

 

 

614,880

 

 

(43,266)

 

 

(7

%)

 

1,722,892

 

 

1,832,190

 

 

(109,298)

 

 

(6

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

305,921

 

 

331,793

 

 

(25,872)

 

 

(8

%)

 

945,886

 

 

986,475

 

 

(40,589)

 

 

(4

%)

Cost of service sales

 

52,872

 

 

57,011

 

 

(4,139)

 

 

(7

%)

 

177,580

 

 

192,722

 

 

(15,142)

 

 

(8

%)

Total cost of sales

 

358,793

 

 

388,804

 

 

(30,011)

 

 

(8

%)

 

1,123,466

 

 

1,179,197

 

 

(55,731)

 

 

(5

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

212,821

 

 

226,076

 

 

(13,255)

 

 

(6

%)

 

599,426

 

 

652,993

 

 

(53,567)

 

 

(8

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

17,587

 

 

18,362

 

 

(775)

 

 

(4

%)

 

54,163

 

 

54,503

 

 

(340)

 

 

(1

%)

Selling expenses

 

24,869

 

 

28,133

 

 

(3,264)

 

 

(12

%)

 

81,650

 

 

90,303

 

 

(8,653)

 

 

(10

%)

General and administrative expenses

 

77,251

 

 

74,012

 

 

3,239

 

 

4

%

 

230,515

 

 

224,888

 

 

5,627

 

 

3

%

Restructuring expenses

 

8,541

 

 

 

 

8,541

 

 

NM

 

20,730

 

 

 

 

20,730

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

84,573

 

 

105,569

 

 

(20,996)

 

 

(20

%)

 

212,368

 

 

283,299

 

 

(70,931)

 

 

(25

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

9,055

 

 

7,951

 

 

1,104

 

 

14

%

 

25,059

 

 

23,183

 

 

1,876

 

 

8

%

Other income, net

 

5,417

 

 

6,355

 

 

(938)

 

 

(15

%)

 

6,844

 

 

17,704

 

 

(10,860)

 

 

(61

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

80,935

 

 

103,973

 

 

(23,038)

 

 

(22

%)

 

194,153

 

 

277,820

 

 

(83,667)

 

 

(30

%)

Provision for income taxes

 

(16,315)

 

 

(21,463)

 

 

5,148

 

 

(24

%)

 

(46,754)

 

 

(59,645)

 

 

12,891

 

 

(22

%)

Net earnings

 

$

64,620

 

 

$

82,510

 

 

$

(17,890)

 

 

(22

%)

 

$

147,399

 

 

$

218,175

 

 

$

(70,776)

 

 

(32

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

1.56

 

 

$

1.93

 

 

 

 

 

 

$

3.52

 

 

$

5.10

 

 

 

 

 

Diluted earnings per share

 

$

1.55

 

 

$

1.92

 

 

 

 

 

 

$

3.49

 

 

$

5.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.17

 

 

$

0.17

 

 

 

 

 

 

$

0.51

 

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,545

 

 

42,709

 

 

 

 

 

 

41,926

 

 

42,755

 

 

 

 

 

Diluted

 

41,797

 

 

42,995

 

 

 

 

 

 

42,190

 

 

43,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM – not meaningful

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($’s in thousands, except par value)

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

Change

 

 

 

2020

 

2019

 

%

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

426,821

 

 

$

391,033

 

 

9

%

 

Receivables, net

 

634,944

 

 

632,194

 

 

%

 

Inventories, net

 

460,585

 

 

424,835

 

 

8

%

 

Other current assets

 

58,403

 

 

81,729

 

 

(29)

%

 

Total current assets

 

1,580,753

 

 

1,529,791

 

 

3

%

Property, plant, and equipment, net

 

379,859

 

 

385,593

 

 

(1)

%

Goodwill

 

1,207,881

 

 

1,166,680

 

 

4

%

Other intangible assets, net

 

476,864

 

 

479,907

 

 

(1)

%

Operating lease right-of-use assets, net

 

152,987

 

 

165,490

 

 

(8)

%

Prepaid pension asset

 

131,631

 

 

 

 

NM

Other assets

 

29,805

 

 

36,800

 

 

(19)

%

 

Total assets

 

$

3,959,780

 

 

$

3,764,261

 

 

5

%

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

158,020

 

 

222,000

 

 

(29)

%

 

Accrued expenses

 

136,965

 

 

164,744

 

 

(17)

%

 

Income taxes payable

 

5,711

 

 

7,670

 

 

(26)

%

 

Deferred revenue

 

267,504

 

 

276,115

 

 

(3)

%

 

Other current liabilities

 

97,634

 

 

74,202

 

 

32

%

 

Total current liabilities

 

665,834

 

 

744,731

 

 

(11)

%

Long-term debt

 

1,058,707

 

 

760,639

 

 

39

%

Deferred tax liabilities, net

 

94,720

 

 

80,159

 

 

18

%

Accrued pension and other postretirement benefit costs

 

91,745

 

 

138,635

 

 

(34)

%

Long-term operating lease liability

 

133,476

 

 

145,124

 

 

(8)

%

Long-term portion of environmental reserves

 

15,269

 

 

15,026

 

 

2

%

Other liabilities

 

100,566

 

 

105,575

 

 

(5)

%

 

Total liabilities

 

2,160,317

 

 

1,989,889

 

 

9

%

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock, $1 par value

 

49,187

 

 

49,187

 

 

%

Additional paid in capital

 

121,797

 

 

116,070

 

 

5

%

Retained earnings

 

2,623,289

 

 

2,497,111

 

 

5

%

Accumulated other comprehensive loss

 

(310,891)

 

 

(325,274)

 

 

4

%

Less: cost of treasury stock

 

(683,919)

 

 

(562,722)

 

 

(22)

%

 

Total stockholders’ equity

 

1,799,463

 

 

1,774,372

 

 

1

%

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

3,959,780

 

 

$

3,764,261

 

 

5

%

 

 

 

 

 

 

 

 

NM – not meaningful

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

SEGMENT INFORMATION (UNAUDITED)

($’s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

 

2020

 

2019

 

%

 

2020

 

2019

 

%

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial/Industrial

 

$

222,527

 

 

$

278,967

 

 

(20

%)

 

$

700,543

 

 

$

841,725

 

 

(17

%)

Defense

 

 

180,321

 

 

 

160,413

 

 

12

%

 

 

516,387

 

 

 

452,688

 

 

14

%

Power

 

 

168,766

 

 

 

175,500

 

 

(4

%)

 

 

505,962

 

 

 

537,777

 

 

(6

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

 

$

571,614

 

 

$

614,880

 

 

(7

%)

 

$

1,722,892

 

 

$

1,832,190

 

 

(6

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Commercial/Industrial

 

$

24,838

 

 

$

43,641

 

 

(43

%)

 

$

74,191

 

 

$

130,222

 

 

(43

%)

Defense

 

 

41,550

 

 

 

40,241

 

 

3

%

 

 

98,126

 

 

 

93,580

 

 

5

%

Power

 

 

25,962

 

 

 

28,776

 

 

(10

%)

 

 

67,843

 

 

 

86,140

 

 

(21

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segments

 

$

92,350

 

 

$

112,658

 

 

(18

%)

 

$

240,160

 

 

$

309,942

 

 

(23

%)

Corporate and other

 

 

(7,777

)

 

 

(7,089

)

 

(10

%)

 

 

(27,792

)

 

 

(26,643

)

 

(4

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

$

84,573

 

 

$

105,569

 

 

(20

%)

 

$

212,368

 

 

$

283,299

 

 

(25

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial/Industrial

 

 

11.2

%

 

 

15.6

%

 

(440 bps)

 

 

10.6

%

 

 

15.5

%

 

(490 bps)

Defense

 

 

23.0

%

 

 

25.1

%

 

(210 bps)

 

 

19.0

%

 

 

20.7

%

 

(170 bps)

Power

 

 

15.4

%

 

 

16.4

%

 

(100 bps)

 

 

13.4

%

 

 

16.0

%

 

(260 bps)

Total Curtiss-Wright

 

 

14.8

%

 

 

17.2

%

 

(240 bps)

 

 

12.3

%

 

 

15.5

%

 

(320 bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment margins

 

 

16.2

%

 

 

18.3

%

 

(210 bps)

 

 

13.9

%

 

 

16.9

%

 

(300 bps)

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

SALES BY END MARKET (UNAUDITED)

($’s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

 

2020

 

2019

 

%

 

2020

 

2019

 

%

Defense markets:

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace

 

$

121,987

 

 

$

110,742

 

 

10

%

 

$

333,120

 

 

$

293,955

 

 

13

%

Ground

 

20,519

 

 

22,231

 

 

(8

%)

 

63,205

 

 

69,383

 

 

(9

%)

Naval

 

165,524

 

 

143,430

 

 

15

%

 

496,157

 

 

424,371

 

 

17

%

Total Defense

 

$

308,030

 

 

$

276,403

 

 

11

%

 

$

892,482

 

 

$

787,709

 

 

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial markets:

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace

 

$

70,943

 

 

$

109,015

 

 

(35

%)

 

$

242,708

 

 

$

320,237

 

 

(24

%)

Power Generation

 

80,509

 

 

88,543

 

 

(9

%)

 

241,059

 

 

278,194

 

 

(13

%)

General Industrial

 

112,132

 

 

140,919

 

 

(20

%)

 

346,643

 

 

446,050

 

 

(22

%)

Total Commercial

 

$

263,584

 

 

$

338,477

 

 

(22

%)

 

$

830,410

 

 

$

1,044,481

 

 

(20

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Curtiss-Wright

 

$

571,614

 

 

$

614,880

 

 

(7

%)

 

$

1,722,892

 

 

$

1,832,190

 

 

(6

%)

Use of Non-GAAP Financial Information (Unaudited)

The Corporation supplements its financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial information. Curtiss-Wright believes that these non-GAAP measures provide investors with additional insight into the Company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. Curtiss-Wright encourages investors to review its financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The Company’s presentation of its financials and guidance includes an Adjusted (non-GAAP) view that excludes significant restructuring costs in 2020 associated with its operations, including one-time actions taken in response to COVID-19, a non-cash impairment of capitalized development costs related to a commercial aerospace program, first year purchase accounting costs associated with its acquisitions, as well as one-time transition and IT security costs, and capital investments, specifically associated with the relocation of the DRG business in the Power segment. Transition costs include relocation of employees and equipment as well as overlapping facility and labor costs associated with the relocation. We believe this Adjusted view will provide improved transparency to the investment community in order to better measure Curtiss-Wright’s ongoing operating and financial performance and better comparisons of our key financial metrics to our peers. Reconciliations of “Reported” GAAP amounts to “Adjusted” non-GAAP amounts are furnished within this release.

The following definitions are provided:

Adjusted Operating Income, Operating Margin, Net Earnings and Diluted EPS

These Adjusted financials are defined as Reported Operating Income, Operating Margin, Net Earnings and Diluted Earnings per Share (EPS) under GAAP excluding: (i) the impact of first year purchase accounting costs associated with acquisitions for current and prior year periods, specifically one-time inventory step-up, backlog amortization and transaction costs; (ii) one-time transition and IT security costs associated with the relocation of a business in the current year period; (iii) the non-cash impairment of capitalized development costs related to a commercial aerospace program; and (iv) significant restructuring costs in 2020 associated with its operations.

Organic Sales and Organic Operating Income

The Corporation discloses organic sales and organic operating income because the Corporation believes it provides investors with insight as to the Company’s ongoing business performance. Organic sales and organic operating income are defined as sales and operating income excluding the impact of restructuring costs, foreign currency fluctuations and contributions from acquisitions made during the last twelve months.

 

Three Months Ended

 

September 30,

 

2020 vs. 2019

 

Commercial/Industrial

 

Defense

 

Power

 

Total Curtiss-Wright

 

Sales

 

Operating

income

 

Sales

 

Operating

income

 

Sales

 

Operating

income

 

Sales

 

Operating

income

Organic

(22

%)

 

(28

%)

 

3

%

 

2

%

 

(4

%)

 

3

%

 

(10

%)

 

(11

%)

Acquisitions

1

%

 

0

%

 

8

%

 

2

%

 

0

%

 

0

%

 

3

%

 

1

%

Restructuring

0

%

 

(15

%)

 

0

%

 

(1

%)

 

0

%

 

(13

%)

 

0

%

 

(10

%)

Foreign Currency

1

%

 

0

%

 

1

%

 

0

%

 

0

%

 

0

%

 

0

%

 

0

%

Total

(20

%)

 

(43

%)

 

12

%

 

3

%

 

(4

%)

 

(10

%)

(7

%)

 

(20

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

September 30,

 

2020 vs. 2019

 

Commercial/Industrial

 

Defense

 

Power

 

Total Curtiss-Wright

 

Sales

 

Operating

income

 

Sales

 

Operating

income

 

Sales

 

Operating

income

 

Sales

 

Operating

income

Organic

(18

%)

 

(33

%)

 

5

%

 

6

%

 

(6

%)

 

(8

%)

 

(9

%)

 

(16

%)

Acquisitions

1

%

 

0

%

 

9

%

 

0

%

 

0

%

 

0

%

 

3

%

 

0

%

Restructuring

0

%

 

(11

%)

 

0

%

 

(2

%)

 

0

%

 

(13

%)

 

0

%

 

(10

%)

Foreign Currency

0

%

 

1

%

 

0

%

 

1

%

 

0

%

 

0

%

 

0

%

 

1

%

Total

(17

%)

 

(43

%)

 

14

%

 

5

%

 

(6

%)

 

(21

%)

(6

%)

 

(25

%)

Contacts

Jim Ryan

(704) 869-4621

Jim.Ryan@curtisswright.com

Read full story here

Spread the word

Discuss

This site uses Akismet to reduce spam. Learn how your comment data is processed.