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Business Wire 8-May-2019 4:15 PM
Curtiss-Wright Corporation (NYSE:CW) reports financial results for the first quarter ended March 31, 2019.
On March 18, 2019, Curtiss-Wright announced the acquisition of Tactical Communications Group, LLC (TCG), a leading supplier of tactical data link software solutions for critical military communication systems. In addition to our Reported results, we have included an Adjusted view (defined below) that excludes first year purchase accounting costs associated with this acquisition, as well as one-time transition and IT security costs associated with the relocation of the DRG business.
First Quarter 2019 Highlights:
Full-Year 2019 Business Outlook (compared with Adjusted full-year 2018):
"We delivered a strong start to the year, allowing us to increase our full-year guidance for sales, operating income, operating margin, diluted EPS and free cash flow," said David C. Adams, Chairman and CEO of Curtiss-Wright Corporation. "First quarter Adjusted diluted EPS was $1.30, as we delivered solid 6% top-line growth driven by strong defense market sales, as well as improved profitability led by a strong performance in the Power segment. Our results also reflected solid new order growth of 23%, primarily based on the timing of naval defense orders, which provides increased confidence in achieving our overall sales expectations."
"Looking ahead to the remainder of 2019, we anticipate steady, sequential improvement in operating margin, diluted EPS and free cash flow. Further, the recently completed acquisition of TCG supports our objectives for long-term profitable growth and strong free cash flow generation. Overall, we continue to execute on our long-term strategy to deliver top-quartile financial performance, which will enable us to deliver significant value for our shareholders."
First Quarter 2019 Operating Results
(In millions) | 1Q-2019 | 1Q-2018 | Change | ||||||||
Sales | $ | 578.3 | $ | 547.5 | 6% | ||||||
Reported operating income | $ | 72.0 | $ | 64.5 | 12% | ||||||
Adjustments (1) | 0.5 | - | - | ||||||||
Adjusted operating income (1) | $ | 72.5 | $ | 64.5 | 12% | ||||||
Adjusted operating margin (1) | 12.5% | 11.8% | 70 bps |
(1) |
Adjusted results exclude one-time backlog amortization and transaction costs for current year acquisition. |
Net Earnings and Diluted EPS
(In millions, except EPS) | 1Q-2019 | 1Q-2018 | Change | ||||||||||
Reported net earnings | $ | 55.6 | $ | 43.6 | 27 | % | |||||||
Adjustments (1) | 0.5 | - | - | ||||||||||
Tax impact on Adjustments (1) |
(0.1 |
) |
- | - | |||||||||
Adjusted net earnings (1) | $ | 56.0 | $ | 43.6 | 28 | % | |||||||
Reported diluted EPS | $ | 1.29 | $ | 0.98 | 32 | % | |||||||
Adjustments (1) | 0.01 | - | - | ||||||||||
Tax impact on Adjustments (1) |
(0.00 |
) |
- | - | |||||||||
Adjusted diluted EPS (1) | $ | 1.30 | $ | 0.98 | 33 | % |
(1) | Adjusted results exclude one-time backlog amortization and transaction costs for current year acquisition. |
Free Cash Flow
(In millions) | 1Q-2019 | 1Q-2018 | Change | |||||||||||
Net cash used for operating activities | $ | (51.9 | ) | $ | (71.3 | ) | 27 | % | ||||||
Capital expenditures |
(17.0 |
) |
(9.0 |
) |
(90 | %) | ||||||||
Reported free cash flow | $ | (68.9 | ) | $ | (80.2 | ) | 14 | % | ||||||
Pension payment (1) | - | 50.0 | - | |||||||||||
Adjustment to capital expenditures (DRG facility investment) (2) |
5.1 |
- | - | |||||||||||
Adjusted free cash flow | $ | (63.8 | ) | $ | (30.2 | ) | (111 | %) |
(1) | Reflects a $50 million voluntary contribution to the Company's corporate defined benefit pension plan made in the first quarter of 2018. |
(2) |
Reflects first quarter 2019 spending in accordance with the Company's planned $20 million capital investment in the Power segment. |
New Orders and Backlog
Other Items – Share Repurchase
First Quarter 2019 Segment Performance
Commercial/Industrial
(In millions) | 1Q-2019 | 1Q-2018 | Change | ||||||||
Sales | $ | 293.5 | $ | 296.6 | (1%) | ||||||
Reported operating income | $ | 39.4 | $ | 39.2 | 1% | ||||||
Reported operating margin | 13.4% | 13.2% | 20 bps | ||||||||
Defense
(In millions) | 1Q-2019 | 1Q-2018 | Change | ||||||||
Sales | $ | 121.0 | $ | 118.9 | 2% | ||||||
Reported operating income | $ | 17.7 | $ | 19.7 | (11%) | ||||||
Adjustments (1) |
0.5 |
- | - | ||||||||
Adjusted operating income (1) | $ | 18.1 | $ | 19.7 | (8%) | ||||||
Adjusted operating margin (1) | 14.9% | 16.6% | (170 bps) |
(1) |
Adjusted results exclude one-time backlog amortization and transaction costs for current year acquisition. |
Power
(In millions) | 1Q-2019 | 1Q-2018 | Change | ||||||||
Sales | $ | 163.8 | $ | 132.0 | 24% | ||||||
Reported operating income | $ | 24.2 | $ | 15.3 | 58% | ||||||
Reported operating margin | 14.8% | 11.6% | 320 bps | ||||||||
Full-Year 2019 Guidance
The Company is updating its full-year 2019 financial guidance as follows:
(In millions, except EPS) |
2019EAdjustedGuidance(Prior) |
Changes toAdjustedGuidance |
2019EAdjustedGuidance(Current) (1) |
||||||
Total Sales | $2,490 - $2,535 | $15-20 | $2,510 - $2,550 | ||||||
Operating Income | $396 - $405 | $10 | $406 - $415 | ||||||
Operating Margin | 15.9% - 16.0% | 30 bps | 16.2% - 16.3% | ||||||
Effective Tax Rate | 23.0% | - | 23.0% | ||||||
Diluted EPS | $6.80 - $6.95 | $0.20 | $7.00 - $7.15 | ||||||
Diluted Shares Outstanding | 43.4 | (0.1) | 43.3 | ||||||
Free Cash Flow (2) | $320 - $330 | $10 | $330 - $340 | ||||||
(1) |
2019 Adjusted guidance excludes one-time backlog amortization and transaction costs associated with the acquisition of TCG in the Defense segment, and one-time transition and IT security costs associated with the relocation of our DRG business in the Power segment. |
(2) |
2019 Adjusted free cash flow guidance excludes a $20 million capital investment in the Power segment related to the construction of a new, state-of-the-art naval facility principally for DRG. |
Full-year 2019 guidance notes (compared with Adjusted full-year 2018):
Conference Call & Webcast Information
The Company will host a conference call to discuss its first quarter financial results and business outlook at 9:00 a.m. EDT on Thursday, May 9, 2019. A live webcast of the call and the accompanying financial presentation, as well as a replay of the call, will be made available on the internet by visiting the Investor Relations section of the Company's website at www.curtisswright.com.
(Tables to Follow)
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES |
||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) |
||||||||||||||
($'s in thousands, except per share data) | ||||||||||||||
Three Months Ended | ||||||||||||||
March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
Product sales | $ | 471,599 | $ | 444,687 | $ | 26,912 | 6 | % | ||||||
Service sales | 106,715 | 102,835 | 3,880 | 4 | % | |||||||||
Total net sales | 578,314 | 547,522 | 30,792 | 6 | % | |||||||||
Cost of product sales | 311,956 | 299,311 | 12,645 | 4 | % | |||||||||
Cost of service sales | 69,485 | 67,020 | 2,465 | 4 | % | |||||||||
Total cost of sales | 381,441 | 366,331 | 15,110 | 4 | % | |||||||||
Gross profit | 196,873 | 181,191 | 15,682 | 9 | % | |||||||||
Research and development expenses | 17,241 | 15,941 | 1,300 | 8 | % | |||||||||
Selling expenses | 31,477 | 31,520 | (43 | ) | 0 | % | ||||||||
General and administrative expenses | 76,110 | 69,232 | 6,878 | 10 | % | |||||||||
Operating income | 72,045 | 64,498 | 7,547 | 12 | % | |||||||||
Interest expense | 7,272 | 8,204 | (932 | ) | (11 | %) | ||||||||
Other income, net | 5,478 | 4,683 | 795 | 17 | % | |||||||||
Earnings before income taxes | 70,251 | 60,977 | 9,274 | 15 | % | |||||||||
Provision for income taxes | (14,658 | ) | (17,334 | ) | 2,676 | 15 | % | |||||||
Net earnings | $ | 55,593 | $ | 43,643 | $ | 11,950 | 27 | % | ||||||
Net earnings per share | ||||||||||||||
Basic earnings per share | $ | 1.30 | $ | 0.99 | ||||||||||
Diluted earnings per share | $ | 1.29 | $ | 0.98 | ||||||||||
Dividends per share | $ | 0.15 | $ | 0.15 | ||||||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | 42,799 | 44,188 | ||||||||||||
Diluted | 43,058 | 44,678 | ||||||||||||
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||||||
($'s in thousands, except par value) | |||||||||||
March 31, | December 31, | Change | |||||||||
2019 | 2018 | % | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 154,428 | $ | 276,066 | (44 | %) | |||||
Receivables, net | 591,562 | 593,755 | 0 | % | |||||||
Inventories, net | 447,022 | 423,426 | 6 | % | |||||||
Other current assets | 45,727 | 50,719 | (10 | %) | |||||||
Total current assets | 1,238,739 | 1,343,966 | (8 | %) | |||||||
Property, plant, and equipment, net | 375,296 | 374,660 | 0 | % | |||||||
Goodwill | 1,111,342 | 1,088,032 | 2 | % | |||||||
Other intangible assets, net | 444,741 | 429,567 | 4 | % | |||||||
Operating lease right-of-use assets, net | 138,525 | — |
NM |
||||||||
Other assets | 20,159 | 19,160 | 5 | % | |||||||
Total assets | $ | 3,328,802 | $ | 3,255,385 | 2 | % | |||||
Liabilities | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term and short term debt | $ | 161 | $ | 243 | (34 | %) | |||||
Accounts payable | 176,439 | 232,983 | (24 | %) | |||||||
Accrued expenses | 114,062 | 166,954 | (32 | %) | |||||||
Income taxes payable | 13,708 | 5,811 | 136 | % | |||||||
Deferred revenue | 225,925 | 236,508 | (4 | %) | |||||||
Other current liabilities | 72,973 | 44,829 | 63 | % | |||||||
Total current liabilities | 603,268 | 687,328 | (12 | %) | |||||||
Long-term debt, net | 761,894 | 762,313 | 0 | % | |||||||
Deferred tax liabilities, net | 49,305 | 47,121 | 5 | % | |||||||
Accrued pension and other postretirement benefit costs | 99,389 | 101,227 | (2 | %) | |||||||
Long-term operating lease liability | 124,014 | — |
NM |
||||||||
Long-term portion of environmental reserves | 15,847 | 15,777 | 0 | % | |||||||
Other liabilities | 89,505 | 110,838 | (19 | %) | |||||||
Total liabilities | 1,743,222 | 1,724,604 | 1 | % | |||||||
Stockholders' equity | |||||||||||
Common stock, $1 par value | $ | 49,187 | $ | 49,187 | 0 | % | |||||
Additional paid in capital | 114,696 | 118,234 | (3 | %) | |||||||
Retained earnings | 2,266,902 | 2,191,471 | 3 | % | |||||||
Accumulated other comprehensive loss | (304,779 | ) | (288,447 | ) | (6 | %) | |||||
Less: cost of treasury stock | (540,426 | ) | (539,664 | ) | 0 | % | |||||
Total stockholders' equity | 1,585,580 | 1,530,781 | 4 | % | |||||||
Total liabilities and stockholders' equity | $ | 3,328,802 | $ | 3,255,385 | 2 | % | |||||
NM- not meaningful | |||||||||||
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES | |||||||||||
SEGMENT INFORMATION (UNAUDITED) | |||||||||||
($'s in thousands) | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
Change | |||||||||||
2019 | 2018 | % | |||||||||
Sales: |
|||||||||||
Commercial/Industrial | $ | 293,507 | $ | 296,641 | (1 | %) | |||||
Defense | 121,022 | 118,901 | 2 | % | |||||||
Power | 163,785 | 131,980 | 24 | % | |||||||
Total sales | $ | 578,314 | $ | 547,522 | 6 | % | |||||
Operating income (expense): |
|||||||||||
Commercial/Industrial | $ | 39,446 | $ | 39,225 | 1 | % | |||||
Defense | 17,653 | 19,728 | (11 | %) | |||||||
Power | 24,219 | 15,342 | 58 | % | |||||||
Total segments | $ | 81,318 | $ | 74,295 | 9 | % | |||||
Corporate and other | (9,273 | ) | (9,797 | ) | 5 | % | |||||
Total operating income | $ | 72,045 | $ | 64,498 | 12 | % | |||||
Operating margins: |
|||||||||||
Commercial/Industrial | 13.4 | % | 13.2 | % | |||||||
Defense | 14.6 | % | 16.6 | % | |||||||
Power | 14.8 | % | 11.6 | % | |||||||
Total Curtiss-Wright | 12.5 | % | 11.8 | % | |||||||
Segment margins | 14.1 | % | 13.6 | % | |||||||
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES | |||||||||||
SALES BY END MARKET (UNAUDITED) | |||||||||||
($'s in thousands) | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
Change | |||||||||||
2019 | 2018 | % | |||||||||
Defense markets: | |||||||||||
Aerospace | $ | 78,787 | $ | 79,153 | 0 | % | |||||
Ground | 20,758 | 22,519 | (8 | %) | |||||||
Naval | 131,088 | 103,489 | 27 | % | |||||||
Total Defense | $ | 230,633 | $ | 205,161 | 12 | % | |||||
Commercial markets: | |||||||||||
Aerospace | $ | 103,221 | $ | 99,404 | 4 | % | |||||
Power Generation | 96,480 | 98,319 | (2 | %) | |||||||
General Industrial | 147,980 | 144,638 | 2 | % | |||||||
Total Commercial | $ | 347,681 | $ | 342,361 | 2 | % | |||||
Total Curtiss-Wright | $ | 578,314 | $ | 547,522 | 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 has elected to change the presentation of its financials and guidance to include 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 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 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, as well as one-time transition and IT security costs associated with the relocation of a business in the current year period.
Organic Revenue and Organic Operating Income
The Corporation discloses organic revenue and organic operating income because the Corporation believes it provides investors with insight as to the Company's ongoing business performance. Organic revenue and organic operating income are defined as revenue and operating income excluding the impact of foreign currency fluctuations and contributions from acquisitions made during the last twelve months.
Three Months Ended | ||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||
2019 vs. 2018 | ||||||||||||||||||||||||
Commercial/Industrial | Defense | Power | Total Curtiss-Wright | |||||||||||||||||||||
Sales |
Operatingincome |
Sales |
Operatingincome |
Sales |
Operatingincome |
Sales |
Operatingincome |
|||||||||||||||||
Organic | 1 | % | 0 | % | 3 | % | (12 | %) | 6 | % | 35 | % | 2 | % | 5 | % | ||||||||
Acquisitions | 0 | % | 0 | % | 0 | % | (3 | %) | 18 | % | 23 | % | 5 | % | 5 | % | ||||||||
Foreign Currency | (2 | %) | 1 | % | (1 | %) | 4 | % | 0 | % | 0 | % | (1 | %) | 2 | % | ||||||||
Total | (1 | %) | 1 | % | 2 | % | (11 | %) | 24 | % | 58 | % | 6 | % | 12 | % | ||||||||
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. 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 | ||||||
March 31, | ||||||
2019 | 2018 | |||||
Net cash used for operating activities | $ | (51,858) | $ | (71,262) | ||
Capital expenditures | (17,034) | (8,971) | ||||
Free cash flow | $ | (68,892) | $ | (80,233) | ||
Voluntary pension payment | — | 50,000 | ||||
Adjustment to capital expenditures (DRG facility investment) | 5,123 | — | ||||
Adjusted free cash flow | $ | (63,769) | $ | (30,233) | ||
Free Cash Flow Conversion | (115%) | (69%) | ||||
CURTISS-WRIGHT CORPORATION | |||||||||||||||||||||||||||||||||||||
2019 Guidance | |||||||||||||||||||||||||||||||||||||
As of May 8, 2019 | |||||||||||||||||||||||||||||||||||||
($'s in millions, except per share data) | |||||||||||||||||||||||||||||||||||||
2018Reported(GAAP) |
2018Adjustments (1) (Non-GAAP) |
2018Adjusted(Non-GAAP) |
2019 Prior ReportedGuidance (2)(3)(4)(GAAP) |
2019 Change inOperationalPerformance(GAAP) |
2019Adjustments (1)(Non-GAAP) |
2019Adjusted Guidance (2)(3)(4)(Non-GAAP) |
|||||||||||||||||||||||||||||||
Low | High | Low | High |
2019 Chg vs2018 Adjusted |
|||||||||||||||||||||||||||||||||
Sales: |
|||||||||||||||||||||||||||||||||||||
Commercial/Industrial | $ | 1,209 | $ | - | $ | 1,209 | $ | 1,245 | $ | 1,270 | $ | 5 - 10 | $ | - | $ | 1,255 | $ | 1,275 | |||||||||||||||||||
Defense | 554 | - | 554 | 565 | 575 | 10 | - | 575 | 585 | ||||||||||||||||||||||||||||
Power | 648 | - | 648 | 680 | 690 | - | - | 680 | 690 | ||||||||||||||||||||||||||||
Total sales | $ | 2,412 | $ | - | $ | 2,412 | $ | 2,490 | $ | 2,535 | $ | 15 - 20 | $ | - | $ | 2,510 | $ | 2,550 | 4 to 6% | ||||||||||||||||||
Operating income: |
|||||||||||||||||||||||||||||||||||||
Commercial/Industrial | $ | 183 | $ | - | $ | 183 | $ | 193 | $ | 198 | $ | 2 | $ | - | $ | 195 | $ | 200 | |||||||||||||||||||
Defense | 128 | - | 128 | 128 | 131 | - | 2 | 130 | 133 | ||||||||||||||||||||||||||||
Power | 99 | 9 | 108 | 109 | 111 | - | 6 | 115 | 117 | ||||||||||||||||||||||||||||
Total segments | 410 | 9 | 419 | 430 | 440 | 2 | 8 | 440 | 450 | ||||||||||||||||||||||||||||
Corporate and other | (36 | ) | - | (36 | ) | (34 | ) | (36 | ) | - | - | (34 | ) | (36 | ) | ||||||||||||||||||||||
Total operating income | $ | 374 | $ | 9 | $ | 382 | $ | 396 | $ | 405 | $ | 2 | $ | 8 | $ | 406 | $ | 415 | 6 to 9% | ||||||||||||||||||
Interest expense | $ | (34 | ) | $ | - | $ | (34 | ) | $ | (33 | ) | $ | (33 | ) | $ | - | $ | - | $ | (33 | ) | $ | (33 | ) | |||||||||||||
Other income, net | 17 | - | 17 | 19 | 19 | - | - | 19 | 19 | ||||||||||||||||||||||||||||
Earnings before income taxes | 356 | 9 | 365 | 383 | 391 | 2 | 8 | 393 | 401 | ||||||||||||||||||||||||||||
Provision for income taxes | (81 | ) | (2 | ) | (83 | ) | (88 | ) | (90 | ) | (0 | ) | (2 | ) | (90 | ) | (92 | ) | |||||||||||||||||||
Net earnings | $ | 276 | $ | 7 | $ | 282 | $ | 295 | $ | 301 | $ | 2 | $ | 6 | $ | 303 | $ | 309 | |||||||||||||||||||
Diluted earnings per share | $ | 6.22 | $ | 0.15 | $ | 6.37 | $ | 6.80 | $ | 6.95 | $ | 0.06 | $ | 0.14 | $ | 7.00 | $ | 7.15 | 10 to 12% | ||||||||||||||||||
Diluted shares outstanding | 44.3 | 44.3 | 43.4 | 43.4 | (0.1 | ) | 43.3 | 43.3 | |||||||||||||||||||||||||||||
Effective tax rate | 22.6 | % | 22.6 | % | 23.0 | % | 23.0 | % | 23.0 | % | 23.0 | % | |||||||||||||||||||||||||
Operating margins: |
|||||||||||||||||||||||||||||||||||||
Commercial/Industrial | 15.1 | % |
- |
15.1 | % | 15.5 | % | 15.6 | % |
10 bps |
- | 15.6 | % | 15.7 | % | 50 to 60 bps | |||||||||||||||||||||
Defense | 23.2 | % |
- |
23.2 | % | 22.6 | % | 22.7 | % | (40 bps) |
40 bps |
22.6 | % | 22.7 | % | (50 to 60 bps) | |||||||||||||||||||||
Power | 15.2 | % |
140 bps |
16.6 | % | 16.0 | % | 16.1 | % | - |
90 bps |
16.9 | % | 17.0 | % | 30 to 40 bps | |||||||||||||||||||||
Total operating margin | 15.5 | % |
30 bps |
15.8 | % | 15.9 | % | 16.0 | % | (10 bps) |
40 bps |
16.2 | % | 16.3 | % | 40 to 50 bps | |||||||||||||||||||||
Free cash flow (5) | $ | 283 | $ | 50 | $ | 333 | $ | 300 | $ | 310 | $ | 10 | $ | 20 | $ | 330 | $ | 340 | |||||||||||||||||||
Note: Full year amounts may not add due to rounding |
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(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. |
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(2) Commercial/Industrial segment 2019 guidance reflects improved profitability due to higher sales and benefits of our ongoing margin improvement initiatives, partially offset by $4 million for tariffs and a $3 million increase in R&D investments. |
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(3) Defense segment 2019 Reported guidance reflects reduced profitability, despite higher sales, due to a $5 million increase in R&D investments. Adjusted guidance excludes $2 million in first year purchase accounting costs associated with the TCG acquisition. |
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(4) Power segment 2019 Reported guidance reflects improved profitability due to higher sales, partially offset by a $2 million increase in R&D investments. Adjusted guidance excludes $6 million in one-time transition and IT security costs related to the relocation of the DRG business. |
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(5) 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 guidance excludes a $20 million capital investment in the Power segment related to construction of a new, state-of-the-art naval facility for the DRG business. |
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CURTISS-WRIGHT CORPORATION | ||||
2019 Sales Growth Guidance by End Market | ||||
As of May 8, 2019 | ||||
2019 % Change vs 2018 | ||||
(Prior) | (Current) | |||
Defense Markets |
||||
Aerospace | 6 - 8% | 8 - 10% | ||
Ground | 5 - 7% | 5 - 7% | ||
Navy | 6 - 8% | 8 - 10% | ||
Total Defense | 6 - 8% | 8 - 10% | ||
Commercial Markets |
||||
Commercial Aerospace | 4 - 6% | 4 - 6% | ||
Power Generation | 1 - 3% | 1 - 3% | ||
General Industrial | 1 - 3% | 1 - 3% | ||
Total Commercial | 1 - 3% | 1 - 3% | ||
Total Curtiss-Wright Sales | 3 - 5% | 4 - 6% | ||
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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 9,000 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.
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