UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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FORM
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CURRENT
REPORT
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(State or Other
Jurisdiction of
Incorporation)
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(Commission File
Number)
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(IRS Employer
Identification No.)
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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CURTISS-WRIGHT CORPORATION | |||
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By:
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/s/ Glenn E. Tynan | |
Glenn E. Tynan | |||
Vice-President and | |||
Chief Financial Officer |
Exhibit
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Description
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Number
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99.1 | Press Release dated February 26, 2020 | |
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Exhibit 99.1 |
DAVIDSON, N.C.--(BUSINESS WIRE)--February 26, 2020--Curtiss-Wright Corporation (NYSE: CW) reports financial results for the fourth quarter and full-year ended December 31, 2019.
Fourth Quarter 2019 Highlights:
Full-Year 2019 Highlights:
“We delivered record Adjusted diluted EPS in the fourth quarter, driven by continued strong sales growth in our defense markets and the benefits of our ongoing margin improvement initiatives,” said David C. Adams, Chairman and CEO of Curtiss-Wright Corporation. “In addition, we generated nearly $250 million in Adjusted free cash flow, along with robust free cash flow conversion of 277% in the quarter.”
“Our full-year 2019 results were highlighted by a strong operational performance, as we delivered higher sales and operating income in all three segments, improved profitability that produced a 16.5% Adjusted operating margin, and double-digit growth in Adjusted diluted EPS. Adjusted free cash flow of $371 million was also strong, driven by solid growth in earnings as well as our continued efforts to reduce working capital.”
Full-Year 2020 Guidance
The Company is issuing full-year 2020 financial guidance as follows:
(In millions, except EPS) |
2020 Reported Guidance |
2020 Adjustments |
2020 Adjusted Guidance(1)(2) |
Total Sales |
$2,590 - $2,630 |
- |
$2,590 - $2,630 |
Operating Income |
$390 - $399 |
$38 |
$428 - $437 |
Operating Margin |
15.1% - 15.2% |
150 bps |
16.5% - 16.6% |
Diluted EPS |
$6.82 - $7.02 |
$0.68 |
$7.50 - $7.70 |
Diluted Shares Outstanding |
43.0 |
- |
43.0 |
Free Cash Flow |
$193 - $213 |
$177 |
$370 - $390 |
(1) 2020 Adjusted guidance excludes $28 million in restructuring costs (impacting all three segments), $7 million in one-time backlog amortization and transaction costs associated with the acquisition of 901D, and $3 million in one-time transition and IT security costs associated with the relocation of our DRG business. |
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(2) 2020 Adjusted free cash flow guidance excludes a $150 million voluntary contribution made in January to the Company’s corporate defined benefit pension plan, a $14 million cash impact from restructuring, and a $13 million capital investment related to the new, state-of-the-art naval facility principally for DRG. |
Full-year 2020 Adjusted guidance notes (compared to Adjusted full-year 2019):
In addition, the Company has reorganized two business units to better align to its management structure and to shift most of the naval defense revenue into the Defense and Power segments. Historical financials will be available on the Company’s website.
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.
Mr. Adams continued, “For 2020, we anticipate increased sales driven by growth in all defense markets, improved profitability despite significantly increasing our year-over-year R&D investments, and strong free cash flow generation. We will continue to execute on our ongoing margin improvement initiatives, including various restructuring actions. These initiatives are expected to generate approximately $20 million in annualized savings beginning in 2021, and support Curtiss-Wright’s long-term profitable growth. Overall, we expect to maintain top-quartile performance for all of our key financial metrics and deliver significant long-term value for our shareholders.”
Fourth Quarter 2019 Operating Results
(In millions) |
4Q-2019 |
4Q-2018 |
Change |
||
Sales |
$ |
655.8 |
$ |
648.6 |
1% |
Reported operating income |
$ |
120.7 |
$ |
110.0 |
10% |
Adjustments (1) |
|
2.5 |
|
0.4 |
|
Adjusted operating income (1) |
$ |
123.2 |
$ |
110.4 |
12% |
Adjusted operating margin (1) |
|
18.8% |
|
17.0% |
180 bps |
(1) Adjusted results exclude one-time inventory step-up, backlog amortization and transaction costs for current and prior year acquisitions, and one-time transition and IT security costs associated with the relocation of our DRG business in the current year. |
Net Earnings and Diluted EPS
(In millions, except EPS) |
4Q-2019 |
4Q-2018 |
Change |
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Reported net earnings |
$ |
89.4 |
$ |
82.8 |
8% |
Adjustments, net of tax (1) |
|
1.9 |
|
0.4 |
|
Adjusted net earnings (1) |
$ |
91.3 |
$ |
83.2 |
10% |
Reported diluted EPS |
$ |
2.08 |
$ |
1.89 |
10% |
Adjustments, net of tax (1) |
|
0.04 |
|
0.01 |
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Adjusted diluted EPS (1) |
$ |
2.12 |
$ |
1.90 |
12% |
(1) Adjusted results exclude one-time inventory step-up, backlog amortization and transaction costs for current and prior year acquisitions, and one-time transition and IT security costs associated with the relocation of our DRG business in the current year. |
Free Cash Flow
(In millions) |
4Q-2019 |
4Q-2018 |
Change |
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Net cash provided by operating activities |
$ |
262.4 |
$ |
237.3 |
11% |
Capital expenditures |
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(19.8) |
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(23.1) |
14% |
Reported free cash flow |
$ |
242.6 |
$ |
214.2 |
13% |
Adjustment to capital expenditures (DRG facility investment) (1) |
|
5.3 |
|
- |
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Adjusted free cash flow (1) |
$ |
247.9 |
$ |
214.2 |
16% |
(1) Adjusted free cash flow excludes fourth quarter 2019 capital investment related to the new, state-of-the-art naval facility principally for DRG (Power segment). |
New Orders and Backlog
Other Items – Share Repurchase
Fourth Quarter 2019 Segment Performance
Commercial/Industrial
(In millions) |
4Q-2019 |
4Q-2018 |
Change |
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Sales |
$ |
323.2 |
$ |
304.8 |
6% |
Reported operating income |
$ |
52.7 |
$ |
46.9 |
12% |
Reported operating margin |
|
16.3% |
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15.4% |
90 bps |
Defense
(In millions) |
4Q-2019 |
4Q-2018 |
Change |
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Sales |
$ |
163.5 |
$ |
150.9 |
8% |
Reported operating income |
$ |
44.1 |
$ |
36.5 |
21% |
Adjustments (1) |
|
0.5 |
|
- |
|
Adjusted operating income (1) |
$ |
44.6 |
$ |
36.5 |
22% |
Adjusted operating margin (1) |
|
27.2% |
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24.2% |
300 bps |
(1) Adjusted results exclude one-time backlog amortization and transaction costs for current year acquisition. |
Power
(In millions) |
4Q-2019 |
4Q-2018 |
Change |
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Sales |
$ |
169.1 |
$ |
192.9 |
(12%) |
Reported operating income |
$ |
32.3 |
$ |
36.1 |
(10%) |
Adjustments (1) |
|
2.0 |
|
0.4 |
|
Adjusted operating income (1) |
$ |
34.3 |
$ |
36.5 |
(6%) |
Adjusted operating margin (1) |
|
20.3% |
|
18.9% |
140 bps |
(1) Adjusted results exclude one-time Inventory Step-up, Backlog Amortization and Transaction costs for prior year acquisition, and one-time transition and IT security costs associated with the relocation of our DRG business in the current year. |
**********
Conference Call & Webcast Information
The Company will host a conference call to discuss fourth quarter and full-year 2019 financial results and expectations for 2020 guidance at 9:00 a.m. ET on Thursday, February 27, 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.
(Tables to Follow)
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) |
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($'s in thousands, except per share data) |
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Three Months Ended |
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Year Ended |
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December 31, |
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Change |
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December 31, |
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Change |
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2019 |
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2018 |
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$ |
% |
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2019 |
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2018 |
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$ |
% |
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Product sales |
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$ |
552,918 |
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$ |
541,689 |
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$ |
11,229 |
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2% |
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$ |
2,073,530 |
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$ |
1,993,249 |
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$ |
80,281 |
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4% |
Service sales |
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102,853 |
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106,933 |
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(4,080) |
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(4)% |
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414,431 |
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418,586 |
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(4,155) |
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(1)% |
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Total net sales |
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655,771 |
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648,622 |
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7,149 |
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1% |
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2,487,961 |
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2,411,835 |
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76,126 |
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3% |
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Cost of product sales |
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343,286 |
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336,402 |
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6,884 |
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2% |
|
1,329,761 |
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1,272,599 |
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57,162 |
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4% |
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Cost of service sales |
|
66,733 |
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|
71,168 |
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(4,435) |
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(6)% |
|
259,455 |
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|
267,975 |
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(8,520) |
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(3)% |
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Total cost of sales |
|
410,019 |
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|
407,570 |
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|
2,449 |
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1% |
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1,589,216 |
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|
1,540,574 |
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|
48,642 |
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3% |
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Gross profit |
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245,752 |
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|
241,052 |
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|
4,700 |
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2% |
|
898,745 |
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|
871,261 |
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|
27,484 |
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3% |
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Research and development expenses |
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18,017 |
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19,291 |
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(1,274) |
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(7)% |
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72,520 |
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|
64,525 |
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|
7,995 |
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12% |
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Selling expenses |
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30,558 |
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|
32,095 |
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(1,537) |
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(5)% |
|
120,861 |
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|
126,641 |
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(5,780) |
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(5)% |
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General and administrative expenses |
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76,523 |
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|
79,661 |
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(3,138) |
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(4)% |
|
301,411 |
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|
306,469 |
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(5,058) |
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(2)% |
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Operating income |
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120,654 |
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|
110,005 |
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|
10,649 |
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10% |
|
403,953 |
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|
373,626 |
|
|
30,327 |
|
8% |
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Interest expense |
|
8,164 |
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|
8,264 |
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(100) |
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(1)% |
|
31,347 |
|
|
33,983 |
|
|
(2,636) |
|
(8)% |
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Other income, net |
|
6,152 |
|
|
4,099 |
|
|
2,053 |
|
50% |
|
23,856 |
|
|
16,596 |
|
|
7,260 |
|
44% |
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Earnings before income taxes |
|
118,642 |
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|
105,840 |
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|
12,802 |
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12% |
|
396,462 |
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|
356,239 |
|
|
40,223 |
|
11% |
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Provision for income taxes |
|
(29,234) |
|
|
(23,005) |
|
|
(6,229) |
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(27)% |
|
(88,879) |
|
|
(80,490) |
|
|
(8,389) |
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(10)% |
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Net earnings |
|
$ |
89,408 |
|
|
$ |
82,835 |
|
|
$ |
6,573 |
|
8% |
|
$ |
307,583 |
|
|
$ |
275,749 |
|
|
$ |
31,834 |
|
12% |
|
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|
|
|
|
|
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|
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Net earnings per share: |
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Basic earnings per share |
|
$ |
2.09 |
|
|
$ |
1.91 |
|
|
|
|
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$ |
7.20 |
|
|
$ |
6.28 |
|
|
|
|
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Diluted earnings per share |
|
$ |
2.08 |
|
|
$ |
1.89 |
|
|
|
|
|
$ |
7.15 |
|
|
$ |
6.22 |
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Dividends per share |
|
$ |
0.17 |
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|
$ |
0.15 |
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$ |
0.66 |
|
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$ |
0.60 |
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Weighted average shares outstanding: |
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Basic |
|
42,687 |
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|
43,447 |
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|
42,739 |
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|
43,892 |
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Diluted |
|
42,986 |
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|
43,782 |
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|
|
|
|
43,016 |
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|
44,316 |
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CURTISS-WRIGHT CORPORATION and SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
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($'s in thousands, except par value) |
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December 31, |
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December 31, |
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Change |
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2019 |
|
2018 |
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% |
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Assets |
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Current assets: |
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Cash and cash equivalents |
|
$ |
391,033 |
|
|
$ |
276,066 |
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|
42% |
|
Receivables, net |
|
632,194 |
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|
593,755 |
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|
6% |
||
|
Inventories, net |
|
424,835 |
|
|
423,426 |
|
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0% |
||
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Other current assets |
|
81,729 |
|
|
50,719 |
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|
61% |
||
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Total current assets |
|
1,529,791 |
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|
1,343,966 |
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|
14% |
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Property, plant, and equipment, net |
|
385,593 |
|
|
374,660 |
|
|
3% |
|||
Goodwill |
|
1,166,680 |
|
|
1,088,032 |
|
|
7% |
|||
Other intangible assets, net |
|
479,907 |
|
|
429,567 |
|
|
12% |
|||
Operating lease right-of-use assets, net |
|
165,490 |
|
|
— |
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NM |
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Other assets |
|
36,800 |
|
|
19,160 |
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|
92% |
|||
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Total assets |
|
$ |
3,764,261 |
|
|
$ |
3,255,385 |
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|
16% |
|
|
|
|
|
|
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|
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Liabilities |
|
|
|
|
|
|
|||||
Current liabilities: |
|
|
|
|
|
|
|||||
|
Current portion of long-term and short term debt |
|
$ |
— |
|
|
$ |
243 |
|
|
NM |
|
Accounts payable |
|
222,000 |
|
|
232,983 |
|
|
(5)% |
||
|
Accrued expenses |
|
164,744 |
|
|
166,954 |
|
|
(1)% |
||
|
Income taxes payable |
|
7,670 |
|
|
5,811 |
|
|
32% |
||
|
Deferred revenue |
|
276,115 |
|
|
236,508 |
|
|
17% |
||
|
Other current liabilities |
|
74,202 |
|
|
44,829 |
|
|
66% |
||
|
Total current liabilities |
|
744,731 |
|
|
687,328 |
|
|
8% |
||
Long-term debt, net |
|
760,639 |
|
|
762,313 |
|
|
0% |
|||
Deferred tax liabilities |
|
80,159 |
|
|
47,121 |
|
|
70% |
|||
Accrued pension and other postretirement benefit costs |
|
138,635 |
|
|
101,227 |
|
|
37% |
|||
Long-term operating lease liability |
|
145,124 |
|
|
— |
|
|
NM |
|||
Long-term portion of environmental reserves |
|
15,026 |
|
|
15,777 |
|
|
(5)% |
|||
Other liabilities |
|
105,575 |
|
|
110,838 |
|
|
(5)% |
|||
|
Total liabilities |
|
1,989,889 |
|
|
1,724,604 |
|
|
15% |
||
|
|
|
|
|
|
|
|
||||
Stockholders' equity |
|
|
|
|
|
|
|||||
Common stock, $1 par value |
|
$ |
49,187 |
|
|
$ |
49,187 |
|
|
0% |
|
Additional paid in capital |
|
116,070 |
|
|
118,234 |
|
|
(2)% |
|||
Retained earnings |
|
2,497,111 |
|
|
2,191,471 |
|
|
14% |
|||
Accumulated other comprehensive loss |
|
(325,274) |
|
|
(288,447) |
|
|
13% |
|||
Less: cost of treasury stock |
|
(562,722) |
|
|
(539,664) |
|
|
4% |
|||
|
Total stockholders' equity |
|
1,774,372 |
|
|
1,530,781 |
|
|
16% |
||
|
|
|
|
|
|
|
|
||||
|
Total liabilities and stockholders' equity |
|
$ |
3,764,261 |
|
|
$ |
3,255,385 |
|
|
16% |
|
|
|
|
|
|
|
|
||||
NM = Not Meaningful |
|
|
|
|
|
|
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES |
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SEGMENT INFORMATION (UNAUDITED) |
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($'s in thousands) |
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|
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||||||||
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||||||||
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Three Months Ended |
|
Year Ended |
||||||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||||||
|
|
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|
|
|
Change |
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|
|
|
|
Change |
||||||||
|
|
2019 |
|
2018 |
|
% |
|
2019 |
|
2018 |
|
% |
||||||||
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial/Industrial |
|
$ |
323,219 |
|
|
$ |
304,835 |
|
|
6% |
|
$ |
1,239,881 |
|
|
$ |
1,209,178 |
|
|
3% |
Defense |
|
163,491 |
|
|
150,924 |
|
|
8% |
|
579,329 |
|
|
554,374 |
|
|
5% |
||||
Power |
|
169,061 |
|
|
192,863 |
|
|
(12)% |
|
668,751 |
|
|
648,283 |
|
|
3% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total sales |
|
$ |
655,771 |
|
|
$ |
648,622 |
|
|
1% |
|
$ |
2,487,961 |
|
|
$ |
2,411,835 |
|
|
3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (expense): |
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial/Industrial |
|
$ |
52,687 |
|
|
$ |
46,922 |
|
|
12% |
|
$ |
196,455 |
|
|
$ |
182,669 |
|
|
8% |
Defense |
|
44,129 |
|
|
36,462 |
|
|
21% |
|
129,653 |
|
|
128,446 |
|
|
1% |
||||
Power |
|
32,304 |
|
|
36,066 |
|
|
(10)% |
|
112,954 |
|
|
98,858 |
|
|
14% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total segments |
|
$ |
129,120 |
|
|
$ |
119,450 |
|
|
8% |
|
$ |
439,062 |
|
|
$ |
409,973 |
|
|
7% |
Corporate and other |
|
(8,466) |
|
|
(9,445) |
|
|
10% |
|
(35,109) |
|
|
(36,347) |
|
|
3% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total operating income |
|
$ |
120,654 |
|
|
$ |
110,005 |
|
|
10% |
|
$ |
403,953 |
|
|
$ |
373,626 |
|
|
8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating margins: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial/Industrial |
|
16.3% |
|
15.4% |
|
90 bps |
|
15.8% |
|
15.1% |
|
70 bps |
||||||||
Defense |
|
27.0% |
|
24.2% |
|
280 bps |
|
22.4% |
|
23.2% |
|
(80 bps) |
||||||||
Power |
|
19.1% |
|
18.7% |
|
40 bps |
|
16.9% |
|
15.2% |
|
170 bps |
||||||||
Total Curtiss-Wright |
|
18.4% |
|
17.0% |
|
140 bps |
|
16.2% |
|
15.5% |
|
70 bps |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Segment margins |
|
19.7% |
|
18.4% |
|
130 bps |
|
17.6% |
|
17.0% |
|
60 bps |
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES |
||||||||||||||||||||
SALES BY END MARKET (UNAUDITED) |
||||||||||||||||||||
($'s in thousands) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Year Ended |
||||||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||||||
|
|
|
|
|
|
Change |
|
|
|
|
|
Change |
||||||||
|
|
2019 |
|
2018 |
|
% |
|
2019 |
|
2018 |
|
% |
||||||||
Defense markets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Aerospace |
|
$ |
122,886 |
|
|
$ |
104,142 |
|
|
18% |
|
$ |
416,841 |
|
|
$ |
376,951 |
|
|
11% |
Ground |
|
24,049 |
|
|
28,667 |
|
|
(16)% |
|
93,432 |
|
|
97,131 |
|
|
(4)% |
||||
Naval |
|
144,405 |
|
|
134,020 |
|
|
8% |
|
568,776 |
|
|
486,476 |
|
|
17% |
||||
Total Defense |
|
$ |
291,340 |
|
|
$ |
266,829 |
|
|
9% |
|
$ |
1,079,049 |
|
|
$ |
960,558 |
|
|
12% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial markets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Aerospace |
|
$ |
112,801 |
|
|
$ |
108,529 |
|
|
4% |
|
$ |
433,038 |
|
|
$ |
414,422 |
|
|
4% |
Power Generation |
|
113,979 |
|
|
124,317 |
|
|
(8)% |
|
392,173 |
|
|
431,793 |
|
|
(9)% |
||||
General Industrial |
|
137,651 |
|
|
148,947 |
|
|
(8)% |
|
583,701 |
|
|
605,062 |
|
|
(4)% |
||||
Total Commercial |
|
$ |
364,431 |
|
|
$ |
381,793 |
|
|
(5)% |
|
$ |
1,408,912 |
|
|
$ |
1,451,277 |
|
|
(3)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Curtiss-Wright |
|
$ |
655,771 |
|
|
$ |
648,622 |
|
|
1% |
|
$ |
2,487,961 |
|
|
$ |
2,411,835 |
|
|
3% |
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 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. The Company is also excluding significant restructuring costs in 2020 associated with its operations. 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 Income and Diluted EPS
These Adjusted financials are defined as Reported Operating Income, Operating Margin, Net Income and Diluted EPS under GAAP excluding 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; one-time transition and IT security costs associated with the relocation of a business in the current year period; and 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 foreign currency fluctuations and contributions from acquisitions made during the last twelve months.
|
Three Months Ended |
||||||||||||||
|
December 31, |
||||||||||||||
|
2019 vs. 2018 |
||||||||||||||
|
Commercial/Industrial |
|
Defense |
|
Power |
|
Total Curtiss-Wright |
||||||||
|
Sales |
|
Operating income |
|
Sales |
|
Operating income |
|
Sales |
|
Operating income |
|
Sales |
|
Operating income |
Organic |
6% |
|
13% |
|
6% |
|
21% |
|
(12)% |
|
(10)% |
|
1% |
|
10% |
Acquisitions |
0% |
|
0% |
|
2% |
|
0% |
|
0% |
|
0% |
|
1% |
|
0% |
Foreign Currency |
0% |
|
(1)% |
|
0% |
|
0% |
|
0% |
|
0% |
|
(1)% |
|
0% |
Total |
6% |
|
12% |
|
8% |
|
21% |
|
(12)% |
|
(10)% |
1% |
|
10% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
||||||||||||||
|
December 31, |
||||||||||||||
|
2019 vs. 2018 |
||||||||||||||
|
Commercial/Industrial |
|
Defense |
|
Power |
|
Total Curtiss-Wright |
||||||||
|
Sales |
|
Operating income |
|
Sales |
|
Operating income |
|
Sales |
|
Operating income |
|
Sales |
|
Operating income |
Organic |
4% |
|
8% |
|
3% |
|
0% |
|
(1)% |
|
11% |
|
2% |
|
6% |
Acquisitions |
0% |
|
0% |
|
2% |
|
0% |
|
4% |
|
3% |
|
2% |
|
1% |
Foreign Currency |
(1)% |
|
0% |
|
0% |
|
1% |
|
0% |
|
0% |
|
(1)% |
|
1% |
Total |
3% |
|
8% |
|
5% |
|
1% |
|
3% |
|
14% |
3% |
|
8% |
Free Cash Flow and Free Cash Flow Conversion
The Corporation discloses free cash flow because it measures cash flow available for investing and financing activities. Free cash flow represents cash available to repay outstanding debt, invest in the business, acquire businesses, return capital to shareholders and make other strategic investments. Free cash flow is defined as cash flow provided by operating activities less capital expenditures. Adjusted free cash flow excludes a capital investment in the Power segment related to the new, state-of-the-art naval facility principally for DRG, voluntary contributions to the Company’s corporate defined benefit pension plan made in the first quarters of 2018 and 2020, and the cash impact from restructuring in 2020. The Corporation discloses free cash flow conversion because it measures the proportion of net earnings converted into free cash flow and is defined as free cash flow divided by net earnings from continuing operations.
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES |
||||||||||||||||
NON-GAAP FINANCIAL DATA (UNAUDITED) |
||||||||||||||||
($'s in thousands) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities |
$ |
262,389 |
|
|
$ |
237,298 |
|
|
$ |
421,404 |
|
|
$ |
336,273 |
|
|
Capital expenditures |
(19,833) |
|
|
(23,130) |
|
|
(69,752) |
|
|
(53,417) |
|
|||||
Free cash flow |
$ |
242,556 |
|
|
$ |
214,168 |
|
|
$ |
351,652 |
|
|
$ |
282,856 |
|
|
Adjustment to capital expenditures (DRG facility investment) |
|
5,298 |
|
|
— |
|
|
19,284 |
|
|
— |
|
||||
Voluntary pension payment |
— |
|
|
— |
|
|
— |
|
|
50,000 |
|
|||||
Adjusted free cash flow |
$ |
247,854 |
|
|
$ |
214,168 |
|
|
$ |
370,936 |
|
|
$ |
332,856 |
|
|
Free Cash Flow Conversion |
277% |
|
259% |
|
121% |
|
121% |
CURTISS-WRIGHT CORPORATION | |||||||||||||||||||||||||||||||||||
2019 Reconciliation Reported (GAAP) to Adjusted (Non-GAAP) | |||||||||||||||||||||||||||||||||||
($'s in millions, except per share data) | |||||||||||||||||||||||||||||||||||
2018 Reported (GAAP) |
2018 Adjustments (1) (Non-GAAP) |
2018 Adjusted (1) (Non-GAAP) |
2019 Reported (GAAP) |
2019 Adjustments (1) (Non-GAAP) |
2019 Adjusted (1) (Non-GAAP) |
||||||||||||||||||||||||||||||
2019 Chg vs 2018 Adjusted |
|||||||||||||||||||||||||||||||||||
Sales: | |||||||||||||||||||||||||||||||||||
Commercial/Industrial |
$ |
|
1,209 |
|
$ |
|
- |
|
$ |
|
1,209 |
|
$ |
|
1,240 |
|
$ |
|
- |
|
$ |
|
1,240 |
|
|||||||||||
Defense |
|
554 |
|
|
- |
|
|
554 |
|
|
579 |
|
|
2 |
|
|
581 |
|
|||||||||||||||||
Power |
|
648 |
|
|
- |
|
|
648 |
|
|
669 |
|
|
- |
|
|
669 |
|
|||||||||||||||||
Total sales |
$ |
|
2,412 |
|
$ |
|
- |
|
$ |
|
2,412 |
|
$ |
|
2,488 |
|
$ |
|
2 |
|
$ |
|
2,490 |
|
3 |
% |
|||||||||
Operating income: | |||||||||||||||||||||||||||||||||||
Commercial/Industrial |
$ |
|
183 |
|
$ |
|
- |
|
$ |
|
183 |
|
$ |
|
196 |
|
$ |
|
- |
|
$ |
|
196 |
|
|||||||||||
Defense |
|
128 |
|
|
- |
|
|
128 |
|
|
130 |
|
|
2 |
|
|
132 |
|
|||||||||||||||||
Power |
|
99 |
|
|
9 |
|
|
108 |
|
|
113 |
|
|
4 |
|
|
117 |
|
|||||||||||||||||
Total segments |
|
410 |
|
|
9 |
|
|
419 |
|
|
439 |
|
|
7 |
|
|
446 |
|
|||||||||||||||||
Corporate and other |
|
(36 |
) |
|
- |
|
|
(36 |
) |
|
(35 |
) |
|
- |
|
|
(35 |
) |
|||||||||||||||||
Total operating income |
$ |
|
374 |
|
$ |
|
9 |
|
$ |
|
382 |
|
$ |
|
404 |
|
$ |
|
7 |
|
$ |
|
411 |
|
7 |
% |
|||||||||
Interest expense |
$ |
|
(34 |
) |
$ |
|
- |
|
$ |
|
(34 |
) |
$ |
|
(31 |
) |
|
- |
|
$ |
|
(31 |
) |
||||||||||||
Other income, net |
|
17 |
|
|
- |
|
|
17 |
|
|
24 |
|
|
- |
|
|
24 |
|
|||||||||||||||||
Earnings before income taxes |
356 |
|
|
|
9 |
|
|
365 |
|
|
396 |
|
|
7 |
|
|
403 |
|
|
|
|||||||||||||||
Provision for income taxes |
|
(81 |
) |
|
(2 |
) |
|
(83 |
) |
|
(89 |
) |
|
(2 |
) |
|
(90 |
) |
|||||||||||||||||
Net earnings |
$ |
|
276 |
|
$ |
|
7 |
|
$ |
|
282 |
|
$ |
|
308 |
|
$ |
|
5 |
|
$ |
|
313 |
|
|||||||||||
Diluted earnings per share |
$ |
|
6.22 |
|
$ |
|
0.15 |
|
$ |
|
6.37 |
|
$ |
|
7.15 |
|
$ |
|
0.12 |
|
$ |
|
7.27 |
|
14 |
% |
|||||||||
Diluted shares outstanding |
|
44.3 |
|
|
44.3 |
|
|
43.0 |
|
|
43.0 |
|
|||||||||||||||||||||||
Effective tax rate |
|
22.6 |
% |
|
22.6 |
% |
|
22.4 |
% |
|
22.4 |
% |
|||||||||||||||||||||||
Operating margins: | |||||||||||||||||||||||||||||||||||
Commercial/Industrial |
|
15.1 |
% |
|
- |
|
|
15.1 |
% |
|
15.8 |
% |
|
- |
|
|
15.8 |
% |
70 bps | ||||||||||||||||
Defense |
|
23.2 |
% |
|
- |
|
|
23.2 |
% |
|
22.4 |
% |
+30 bps |
|
22.7 |
% |
(50 bps) | ||||||||||||||||||
Power |
|
15.2 |
% |
+140 bps |
|
16.6 |
% |
|
16.9 |
% |
+60 bps |
|
17.5 |
% |
90 bps | ||||||||||||||||||||
Total operating margin |
|
15.5 |
% |
+30 bps |
|
15.8 |
% |
|
16.2 |
% |
+30 bps |
|
16.5 |
% |
70 bps | ||||||||||||||||||||
Free cash flow (2) |
$ |
|
283 |
|
$ |
|
50 |
|
$ |
|
333 |
|
$ |
|
352 |
|
$ |
|
19 |
|
$ |
|
371 |
|
11 |
% |
|||||||||
Note: Full year amounts may not add due to rounding | |||||||||||||||||||||||||||||||||||
(1) Adjusted financials are defined as Reported Operating Income, Operating Margin, Net Income and Diluted EPS under GAAP excluding 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, as well as one-time transition and IT security costs related to the relocation of the DRG business. | |||||||||||||||||||||||||||||||||||
(2) Free Cash Flow is defined as cash flow from operations less capital expenditures. 2018 Adjusted Free Cash Flow excludes a voluntary contribution to the Company’s corporate defined benefit pension plan of $50 million. 2019 Adjusted Free Cash Flow excludes a $19 million capital investment in the Power segment related to construction of a new, state-of-the-art naval facility for the DRG business. |
CURTISS-WRIGHT CORPORATION | ||||||||||||||||||||
2020 Segment Reorganization | ||||||||||||||||||||
As of February 26, 2020 | ||||||||||||||||||||
($'s in millions, except per share data) | ||||||||||||||||||||
2019 Adjusted (Non-GAAP) |
|
Business Unit Realignment |
|
2019 Adjusted (Non-GAAP) |
|
2020 Adjusted Guidance (Non-GAAP) |
||||||||||||||
(Prior Structure) | (New Structure) | (New Structure) | ||||||||||||||||||
Low | High | |||||||||||||||||||
Sales: | ||||||||||||||||||||
Commercial/Industrial |
$ |
1,240 |
|
$ |
(102 |
) |
$ |
1,138 |
|
$ |
1,140 |
|
$ |
1,160 |
|
|||||
Defense |
|
581 |
|
|
47 |
|
|
628 |
|
|
690 |
|
|
700 |
|
|||||
Power |
|
669 |
|
|
55 |
|
|
724 |
|
|
760 |
|
|
770 |
|
|||||
Total sales |
$ |
2,490 |
|
$ |
- |
|
$ |
2,490 |
|
$ |
2,590 |
|
$ |
2,630 |
|
|||||
Operating income: | ||||||||||||||||||||
Commercial/Industrial |
$ |
196 |
|
$ |
(17 |
) |
$ |
180 |
|
$ |
180 |
|
$ |
184 |
|
|||||
Defense |
|
132 |
|
|
8 |
|
|
140 |
|
|
152 |
|
|
155 |
|
|||||
Power |
|
117 |
|
|
9 |
|
|
126 |
|
|
130 |
|
|
132 |
|
|||||
Total segments |
|
446 |
|
|
- |
|
|
446 |
|
|
462 |
|
|
472 |
|
|||||
Corporate and other |
|
(35 |
) |
|
- |
|
|
(35 |
) |
|
(34 |
) |
|
(35 |
) |
|||||
Total operating income |
$ |
411 |
|
$ |
- |
|
$ |
411 |
|
$ |
428 |
|
$ |
437 |
|
|||||
Interest expense |
$ |
(31 |
) |
$ |
- |
|
$ |
(31 |
) |
$ |
(32 |
) |
$ |
(33 |
) |
|||||
Other income, net |
|
24 |
|
|
- |
|
|
24 |
|
|
24 |
|
|
25 |
|
|||||
Earnings before income taxes |
|
403 |
|
|
- |
|
|
403 |
|
|
419 |
|
|
429 |
|
|||||
Provision for income taxes |
|
(90 |
) |
|
- |
|
|
(90 |
) |
|
(96 |
) |
|
(99 |
) |
|||||
Net earnings |
$ |
313 |
|
$ |
- |
|
$ |
313 |
|
$ |
323 |
|
$ |
331 |
|
|||||
Diluted earnings per share |
$ |
7.27 |
|
$ |
- |
|
$ |
7.27 |
|
$ |
7.50 |
|
$ |
7.70 |
|
|||||
Diluted shares outstanding |
|
43.0 |
|
|
43.0 |
|
|
43.0 |
|
|
43.0 |
|
||||||||
Effective tax rate |
|
22.4 |
% |
|
22.4 |
% |
|
23.0 |
% |
|
23.0 |
% |
||||||||
Operating margins: | ||||||||||||||||||||
Commercial/Industrial |
|
15.8 |
% |
|
- |
|
|
15.8 |
% |
|
15.8 |
% |
|
15.9 |
% |
|||||
Defense |
|
22.7 |
% |
(40 bps) |
|
22.3 |
% |
|
22.0 |
% |
|
22.1 |
% |
|||||||
Power |
|
17.5 |
% |
(10 bps) |
|
17.4 |
% |
|
17.1 |
% |
|
17.2 |
% |
|||||||
Total operating margin |
|
16.5 |
% |
|
- |
|
|
16.5 |
% |
|
16.5 |
% |
|
16.6 |
% |
|||||
Notes: | ||||||||||||||||||||
(1) Full year amounts may not add due to rounding | ||||||||||||||||||||
(2) The above supplemental financial information by reportable segment for the 2019 and 2020 reporting periods reflects the Corporation’s first quarter 2020 segment reorganization. |
CURTISS-WRIGHT CORPORATION | ||||||||||||||||||||||||||||||||
2020 Guidance (New Segment Structure) | ||||||||||||||||||||||||||||||||
As of February 26, 2020 | ||||||||||||||||||||||||||||||||
($'s in millions, except per share data) | ||||||||||||||||||||||||||||||||
2019 Reported (GAAP) |
|
2019 Adjustments (1) (Non-GAAP) |
2019 Adjusted (Non-GAAP) |
2020 Reported Guidance (GAAP) |
2020 Adjustments (2) (Non-GAAP) |
2020 Adjusted Guidance (3)(4)(5) (Non-GAAP) |
||||||||||||||||||||||||||
Low | High | Low | High | 2020 Chg vs 2019 Adjusted | ||||||||||||||||||||||||||||
Sales: | ||||||||||||||||||||||||||||||||
Commercial/Industrial |
$ |
1,138 |
|
$ |
- |
|
$ |
1,138 |
|
$ |
1,140 |
|
$ |
1,160 |
|
$ |
- |
|
$ |
1,140 |
|
$ |
1,160 |
|
||||||||
Defense |
|
626 |
|
|
2 |
|
|
628 |
|
|
690 |
|
|
700 |
|
|
- |
|
|
690 |
|
|
700 |
|
||||||||
Power |
|
724 |
|
|
- |
|
|
724 |
|
|
760 |
|
|
770 |
|
|
- |
|
|
760 |
|
|
770 |
|
||||||||
Total sales |
$ |
2,488 |
|
$ |
2 |
|
$ |
2,490 |
|
$ |
2,590 |
|
$ |
2,630 |
|
$ |
- |
|
$ |
2,590 |
|
$ |
2,630 |
|
4 to 6% | |||||||
Operating income: | ||||||||||||||||||||||||||||||||
Commercial/Industrial |
$ |
180 |
|
$ |
- |
|
$ |
180 |
|
$ |
167 |
|
$ |
171 |
|
$ |
13 |
|
$ |
180 |
|
$ |
184 |
|
||||||||
Defense |
|
137 |
|
|
2 |
|
|
140 |
|
|
141 |
|
|
144 |
|
|
11 |
|
|
152 |
|
|
155 |
|
||||||||
Power |
|
122 |
|
|
4 |
|
|
126 |
|
|
116 |
|
|
119 |
|
|
14 |
|
|
130 |
|
|
132 |
|
||||||||
Total segments |
|
439 |
|
|
7 |
|
|
446 |
|
|
424 |
|
|
434 |
|
|
38 |
|
|
462 |
|
|
472 |
|
||||||||
Corporate and other |
|
(35 |
) |
|
- |
|
|
(35 |
) |
|
(34 |
) |
|
(35 |
) |
|
- |
|
|
(34 |
) |
|
(35 |
) |
||||||||
Total operating income |
$ |
404 |
|
$ |
7 |
|
$ |
411 |
|
$ |
390 |
|
$ |
399 |
|
$ |
38 |
|
$ |
428 |
|
$ |
437 |
|
4 to 6% | |||||||
Interest expense |
$ |
(31 |
) |
$ |
- |
|
$ |
(31 |
) |
$ |
(32 |
) |
$ |
(33 |
) |
$ |
- |
|
$ |
(32 |
) |
$ |
(33 |
) |
||||||||
Other income, net |
|
24 |
|
|
- |
|
|
24 |
|
|
24 |
|
|
25 |
|
|
- |
|
|
24 |
|
|
25 |
|
||||||||
Earnings before income taxes |
|
397 |
|
|
7 |
|
|
403 |
|
|
381 |
|
|
392 |
|
|
38 |
|
|
419 |
|
|
429 |
|
||||||||
Provision for income taxes |
|
(89 |
) |
|
(2 |
) |
|
(90 |
) |
|
(88 |
) |
|
(90 |
) |
|
(9 |
) |
|
(96 |
) |
|
(99 |
) |
||||||||
Net earnings |
$ |
308 |
|
$ |
5 |
|
$ |
313 |
|
$ |
294 |
|
$ |
302 |
|
$ |
29 |
|
$ |
323 |
|
$ |
331 |
|
||||||||
Diluted earnings per share |
$ |
7.15 |
|
$ |
0.12 |
|
$ |
7.27 |
|
$ |
6.82 |
|
$ |
7.02 |
|
$ |
0.68 |
|
$ |
7.50 |
|
$ |
7.70 |
|
3 to 6% | |||||||
Diluted shares outstanding |
|
43.0 |
|
|
43.0 |
|
|
43.0 |
|
|
43.0 |
|
|
43.0 |
|
|
43.0 |
|
||||||||||||||
Effective tax rate |
|
22.4 |
% |
|
22.4 |
% |
|
23.0 |
% |
|
23.0 |
% |
|
23.0 |
% |
|
23.0 |
% |
||||||||||||||
Operating margins: | ||||||||||||||||||||||||||||||||
Commercial/Industrial |
|
15.8 |
% |
|
- |
|
|
15.8 |
% |
|
14.6 |
% |
|
14.8 |
% |
+110 bps |
|
15.8 |
% |
|
15.9 |
% |
0 to 10 bps | |||||||||
Defense |
|
21.9 |
% |
+40 bps |
|
22.3 |
% |
|
20.4 |
% |
|
20.6 |
% |
+160 bps |
|
22.0 |
% |
|
22.1 |
% |
(20 to 30 bps) | |||||||||||
Power |
|
16.9 |
% |
+50 bps |
|
17.4 |
% |
|
15.3 |
% |
|
15.4 |
% |
+180 bps |
|
17.1 |
% |
|
17.2 |
% |
(20 to 30 bps) | |||||||||||
Total operating margin |
|
16.2 |
% |
+30 bps |
|
16.5 |
% |
|
15.1 |
% |
|
15.2 |
% |
+150 bps |
|
16.5 |
% |
|
16.6 |
% |
0 to 10 bps | |||||||||||
Free cash flow (6) |
$ |
352 |
|
$ |
19 |
|
$ |
371 |
|
$ |
193 |
|
$ |
213 |
|
$ |
177 |
|
$ |
370 |
|
$ |
390 |
|
||||||||
Notes: Full year amounts may not add due to rounding. All financial information by reportable segment for the 2019 and 2020 reporting periods reflects the Corporation’s first quarter 2020 segment reorganization. | ||||||||||||||||||||||||||||||||
(1) 2019 Adjusted financials are defined as Reported Operating Income, Operating Margin, Net Income and Diluted EPS under GAAP excluding the impact of first year purchase accounting costs associated with acquisitions (Defense segment), specifically one-time backlog amortization and transaction costs, as well as one-time transition and IT security costs related to the relocation of the DRG business (Power Segment). | ||||||||||||||||||||||||||||||||
(2) 2020 Adjusted financials are defined as Reported Operating Income, Operating Margin, Net Income and Diluted EPS under GAAP excluding restructuring costs (impacting all three segments), the impact of first year purchase accounting costs, specifically one-time backlog amortization and transaction costs associated with the acquisition of 901D (Defense Segment), and one-time transition and IT security costs related to the relocation of the DRG business (Power Segment). | ||||||||||||||||||||||||||||||||
(3) Commercial/Industrial segment 2020 guidance reflects improved profitability due to higher sales and benefits of our ongoing margin improvement initiatives. Adjusted guidance excludes $13 million in restructuring costs. | ||||||||||||||||||||||||||||||||
(4) Defense segment 2020 guidance reflects reduced profitability, despite higher sales, due to a $5 million increase in R&D investments. Adjusted guidance excludes $4 million in restructuring costs and $7 million in one-time backlog amortization and transaction costs associated with the acquisition of 901D. | ||||||||||||||||||||||||||||||||
(5) Power segment 2020 guidance reflects reduced profitability, despite higher sales, due to a $5 million increase in R&D investments. Adjusted guidance excludes $11 million in restructuring costs and $3 million in one-time transition and IT security costs related to the relocation of the DRG business. | ||||||||||||||||||||||||||||||||
(6) Free Cash Flow is defined as cash flow from operations less capital expenditures. 2019 Adjusted Free Cash Flow excludes a $19 million capital investment in the Power segment related to construction of a new, state-of-the-art naval facility for the DRG business. 2020 Adjusted Free Cash Flow guidance excludes a voluntary contribution to the Company’s corporate defined benefit pension plan of $150 million, a $14 million cash impact from restructuring, and a $13 million capital investment in the Power segment related to construction of a new, state-of-the-art naval facility for the DRG business. |
CURTISS-WRIGHT CORPORATION | ||
2020 Sales Growth Guidance by End Market | ||
As of February 26, 2020 | ||
2020 % Change vs 2019 | ||
(Prior) | ||
Defense Markets | ||
Aerospace | 4 - 6% | |
Ground | 5 - 7% | |
Navy | 12 - 14% | |
Total Defense | 8 - 10% | |
Commercial Markets | ||
Commercial Aerospace | 0 - 2% | |
Power Generation | 3 - 5% | |
General Industrial | Flat | |
Total Commercial | 0 - 2% | |
Total Curtiss-Wright Sales | 4 - 6% |
About Curtiss-Wright Corporation
Curtiss-Wright Corporation (NYSE: CW) is a global innovative company that delivers highly engineered, critical function products and services to the commercial, industrial, defense and energy markets. Building on the heritage of Glenn Curtiss and the Wright brothers, Curtiss-Wright has a long tradition of providing reliable solutions through trusted customer relationships. The company employs approximately 9,100 people worldwide. For more information, visit www.curtisswright.com.
Certain statements made in this press release, including statements about future revenue, financial performance guidance, quarterly and annual revenue, net income, operating income growth, future business opportunities, cost saving initiatives, the successful integration of the Company’s acquisitions, and future cash flow from operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements present management's expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to: a reduction in anticipated orders; an economic downturn; changes in the competitive marketplace and/or customer requirements; a change in government spending; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, defense contracting, electronics, marine, and industrial companies. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and subsequent reports filed with the Securities and Exchange Commission.
This press release and additional information are available at www.curtisswright.com.
Jim Ryan
(704) 869-4621
Jim.Ryan@curtisswright.com
|
Exhibit 99.2
|
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