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 Curtiss-Wright Reports Second Quarter 2017 Financial Results; Raises Full-Year Sales and EPS Guidance; Declares 15% Increase in Quarterly Dividend
   Wednesday, July 26, 2017 4:15:03 PM ET

Curtiss-Wright Corporation (CW ) reports financial results for the second quarter and six months ended June 30, 2017.

Second Quarter 2017 Highlights

-- Diluted earnings per share (EPS) of $1.13, ahead of expectations, and up 28% compared with the prior year;

-- Net sales of $568 million, up 7%, including 5% organic growth;

-- Operating income of $83 million, up 22%;

-- Operating margin of 14.7%, up 190 basis points, despite 50 basis point dilution from acquisitions;

-- New orders of $548 million, up 5%;

-- Backlog of $2.1 billion increased 7% from December 31, 2016;

-- Free cash flow of $73 million, resulting in free cash flow conversion of 144%, as defined in table below; and

-- Share repurchases of approximately $14 million.

Full-Year 2017 Business Outlook

-- Increasing sales guidance by $20 million to new range of $2.19 to $2.23 billion, primarily due to improved outlook in industrial markets;

-- Increasing operating income guidance by $5 million, primarily due to improved industrial outlook and lower amortization estimates associated with the Teletronics Technology Corporation (TTC) acquisition;

-- Increasing operating margin guidance by 10 basis points to new range of 14.7% to 14.8%;

-- Increasing EPS guidance by $0.05 to new range of $4.45 to $4.55;

-- Increasing quarterly dividend by 15% to fifteen cents ($0.15) per share; and

-- Maintaining free cash flow guidance range of $260 million to $280 million.

"Our second quarter results were ahead of our expectations driven by robust 7% top-line growth and improved profitability that generated stronger than anticipated EPS of $1.13," said David C. Adams, Chairman and CEO of Curtiss-Wright Corporation. "We achieved higher sales and operating income growth in each of our segments, particularly in our Power segment. This drove overall operating margin up 190 basis points to 14.7%. In addition, the incremental benefits of our ongoing margin improvement initiatives enabled us to more than offset the first-year purchase accounting costs associated with the TTC acquisition."

"As a result of our strong start and improved performance in several of our industrial businesses, we are increasing our full-year 2017 guidance for sales, operating income, operating margin and EPS. We remain committed to increasing shareholder value by delivering solid profitability and free cash flow, maintaining a balanced capital allocation strategy and driving for top-quartile financial performance in our key financial metrics."

Second Quarter 2017 Operating Results
from Continuing Operations
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
   (In thousands)           2Q-2017           2Q-2016              Change
                                                              --------------                                          --------------                                          ---------------------
   Sales                                                       $ 567,653                                               $ 532,766                                                       7 %
   Operating income                                               83,271                                                  68,089                                                      22 %
   Operating margin                                                 14.7 %                                                  12.8 %                                                         190 bps
                                                                                                                                                                               

Sales

Sales of $568 million in the second quarter increased $35 million, or 7%, compared with the prior year, reflecting a $27 million, or 5%, increase in organic sales, and a $13 million, or 3%, contribution from acquisitions, partially offset by $5 million, or (1%), in unfavorable foreign currency translation.

Higher organic sales were principally driven by strong AP1000 revenues in the Power segment and improved industrial demand in the Commercial/Industrial segment. Higher Defense segment sales primarily reflect the contribution from our acquisition of TTC.

From an end market perspective, sales to the defense markets increased 4%, while sales to the commercial markets increased 8%, compared with the prior year. Please refer to the accompanying tables for a breakdown of sales by end market.

Operating Income

Operating income in the second quarter was $83 million, an increase of $15 million, or 22%, compared with the prior year, due to strong increases in each of our segments. In the Commercial/Industrial segment, higher operating income was primarily driven by the benefits of our margin improvement initiatives. In the Defense segment, our results reflect higher profitability on our embedded computing products, partially offset by first-year purchase accounting costs from the TTC acquisition. Finally, in the Power segment, our results reflect a strong improvement in operating income resulting from higher revenues on the AP1000 China Direct program and higher profitability in the aftermarket business.

Operating margin was 14.7%, an increase of 190 basis points over the prior year, reflecting higher revenues and the benefits of our ongoing margin improvement initiatives, partially offset by 50 basis points in margin dilution from acquisitions.

Non-segment Expense

Non-segment expenses increased by approximately $1 million compared with the prior year, due to higher foreign currency transactional losses.

Net Earnings

Second quarter net earnings increased 27% compared with the prior year, as higher operating income was partially offset by higher interest expense. In addition, the effective tax rate for the current quarter was 30.3%, a decrease from 31.0% in the prior year.

Free Cash Flow

   (In thousands)                                             2Q-2017                            2Q-2016
                                                                                       --------------------------------                                          ------------------------------
   Net cash provided by operating activities                                                              $  85,873                                                                 $ 86,371
   Capital expenditures                                                                  (12,914 )                                              (6,908 )
                                                                                       -------------------- ------- --                                           -------------------- ------ -
   Free cash flow                                                                                         $  72,959                                                                 $ 79,463
                                                                                                                                                                  

Free cash flow, defined as cash flow from operations less capital expenditures, was $73 million for the second quarter of 2017, a decrease of $6 million compared with the prior year. Net cash provided by operating activities of $86 million was essentially flat, primarily due to higher cash earnings, partially offset by higher trade receivables on increased sales. Capital expenditures increased by $6 million to $13 million, primarily due to capital investments being made in each of our segments.

New Orders and Backlog

New orders of $548 million in the second quarter increased 5% compared to the prior year, as higher orders within the Commercial/Industrial and Defense segments were partially offset by lower orders within the Power segment. Backlog of $2.1 billion increased 7% from December 31, 2016, due to increases in all three segments.

Other Items - Share Repurchase

During the second quarter, the Company repurchased 151,552 shares of its common stock for approximately $14 million.

Full-Year 2017 Guidance

The Company is updating its full-year 2017 financial guidance as
follows:
 
                                   Prior Guidance           Current Guidance
                                                                     -------------------                                             ---------------------
Total sales                                                          $2.17 - $2.21 billion                                           $2.19 - $2.23 billion
Operating income                                                       $316 - $325 million                                             $321 - $329 million
Operating margin                                                             14.6% - 14.7%                                                   14.7% - 14.8%
Interest expense                                                         $40 - $41 million                                               $41 - $42 million
Diluted earnings per share                                                   $4.40 - $4.50                                                   $4.45 - $4.55
Diluted shares outstanding                                                    44.9 million                                                       No change
Free cash flow                                                         $260 - $280 million                                                       No change
                                                                                                                                      

Notes:

-- Full-year 2017 guidance includes the acquisition of TTC, which adds $65 million in sales to the Defense segment, and is now expected to be slightly accretive to operating income and earnings per share, including purchase accounting costs.

-- Full-year 2017 guidance reflects the impact of a discrete tax benefit of $4.1 million from the adoption of ASU 2016-09 Improvements to Employee Share-Based Payment Accounting, which resulted in a $0.10 increase to our EPS guidance as disclosed in our press release dated May 3, 2017.

-- A more detailed breakdown of the Company’s 2017 guidance by segment and by market can be found in the accompanying schedules.

Second Quarter 2017 Segment Performance

Commercial/Industrial

   (In thousands)           2Q-2017           2Q-2016              Change
                                                              --------------                                          --------------                                          ---------------------
   Sales                                                       $ 291,599                                               $ 290,046                                                       1 %
   Operating income                                               43,693                                                  38,957                                                      12 %
   Operating margin                                                 15.0 %                                                  13.4 %                                                         160 bps
                                                                                                                                                                               

Sales for the second quarter were $292 million, an increase of $2 million, or 1%, over the prior year. Organic sales increased 2%, excluding $4 million, or (1%), in unfavorable foreign currency translation. In the general industrial market, we experienced solid sales growth for industrial vehicle products, while sales of severe-service valves to the energy markets were flat with the prior year but demonstrated sequential quarterly improvement. Elsewhere, our results reflect a decline in the commercial aerospace market, primarily due to reduced sales to Boeing on the 747 and 787 programs, despite higher sales on the 737 program. In the naval defense market, we experienced lower revenues on the Virginia-class submarine program, based on the timing of production.

Operating income in the second quarter was $44 million, up 12% from the prior year, while operating margin improved 160 basis points to 15.0%. This performance principally reflects increased profitability resulting from our ongoing margin improvement initiatives, most notably for facility consolidations, as well as higher profitability for industrial vehicle products, driven by higher sales volumes.

Defense

   (In thousands)           2Q-2017           2Q-2016              Change
                                                              --------------                                          --------------                                          ---------------------
   Sales                                                       $ 126,361                                               $ 113,961                                                      11 %
   Operating income                                               21,187                                                  18,609                                                      14 %
   Operating margin                                                 16.8 %                                                  16.3 %                                                          50 bps
                                                                                                                                                                               

Sales for the second quarter were $126 million, an increase of $12 million, or 11%, from the prior year. These results primarily reflect a $13 million contribution from the acquisition of TTC, partially offset by $1 million in unfavorable foreign currency translation, while organic sales were flat compared with the prior year. In the aerospace defense market, our results reflect higher sales of data acquisition and flight test equipment from TTC, increased sales to unmanned aerial vehicle (UAV) programs and higher foreign military sales. These increases were offset by lower domestic vehicle product sales, most notably on the G/ATOR program, in the ground defense market.

Operating income in the second quarter was $21 million, an increase of $3 million, or 14%, compared with the prior year, while operating margin increased 50 basis points to 16.8%, despite 300 basis point dilution from TTC. These improvements in operating income and margin were primarily driven by favorable mix for our defense electronics products, as well as the benefits of our margin improvement initiatives. Favorable foreign currency translation also added approximately $1 million to current quarter operating income.

Power

   (In thousands)           2Q-2017           2Q-2016              Change
                                                              --------------                                          --------------                                          ---------------------
   Sales                                                       $ 149,693                                               $ 128,759                                                      16 %
   Operating income                                               24,870                                                  16,114                                                      54 %
   Operating margin                                                 16.6 %                                                  12.5 %                                                         410 bps
                                                                                                                                                                               

Sales for the second quarter were $150 million, an increase of $21 million, or 16%, from the prior year. These results primarily reflect higher sales in the power generation market, driven by higher revenues on the AP1000 program, primarily on the 2015 China Direct contract, as well as improved aftermarket sales supporting currently operating nuclear reactors, driven by seasonally high spring outages. In the naval defense market, higher revenues on the CVN-80 aircraft carrier program were mainly offset by lower revenues on the Virginia-class submarine program, based on the timing of production.

Operating income in the second quarter was $25 million, an increase of $9 million, or 54%, compared with the prior year, while operating margin increased 410 basis points to 16.6%. This performance reflects higher production on the AP1000 China Direct program, as well as improved profitability in the aftermarket business driven by higher sales and the benefits of our ongoing margin improvement initiatives.

Conference Call & Webcast Information

The Company will host a conference call to discuss second quarter 2017 financial results at 9:00 a.m. EDT on Thursday, July 27, 2017. 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                                                                                                                                                                                                                                                                       Six Months Ended
                                                                                                                                 June 30,                                                                                                                                 Change                                                                                                                                  June 30,                                                                                                                                         Change
                                                                                             2017                                                                       2016                                                                         $                                                            %                                                           2017                                                                        2016                                                                         $                                                                   %
                                                                               ---------------------------------                                          ---------------------------------                                          --------------------------------                                          ------                                          ----------------------------------                                          ----------------------------------                                          --------------------------------                                          ---------------------
Product sales                                                                    $ 459,774                                                                  $ 427,324                                                                  $ 32,450                                                                 8 %                                               $ 883,003                                                                   $ 830,242                                                                  $ 52,761                                                                         6 %
Service sales                                                                      107,879                                                 105,442                                                  2,437                                              2 %                                                 208,241                                                  206,031                                                  2,210                                                      1 %
                                                                               --------------------------------                                           --------------------------------                                           -------------------------------                                                                                           ---------------------------------                                           ---------------------------------                                           -------------------------------
Total net sales                                                                    567,653                                                                    532,766                                                                    34,887                                                                 7 %                                               1,091,244                                                                   1,036,273                                                                    54,971                                                                         5 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Cost of product sales                                                              299,739                                                                    279,869                                                                    19,870                                                                 7 %                                                 586,231                                                                     544,604                                                                    41,627                                                                         8 %
Cost of service sales                                                               69,144                                                  67,518                                                  1,626                                              2 %                                                 135,468                                                  134,387                                                  1,081                                                      1 %
                                                                               --------------------------------                                           --------------------------------                                           -------------------------------                                                                                           ---------------------------------                                           ---------------------------------                                           -------------------------------
Total cost of sales                                                                368,883                                                                    347,387                                                                    21,496                                                                 6 %                                                 721,699                                                                     678,991                                                                    42,708                                                                         6 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
  Gross profit                                                                     198,770                                                                    185,379                                                                    13,391                                                                 7 %                                                 369,545                                                                     357,282                                                                    12,263                                                                         3 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Research and development expenses                                                   15,501                                                                     15,236                                                                       265                                                                 2 %                                                  30,799                                                                      30,396                                                                       403                                                                         1 %
Selling expenses                                                                    28,560                                                                     29,126                                                                      (566 )                                                              (2 %)                                                 57,513                                                                      58,752                                                                    (1,239 )                                                                      (2 %)
General and administrative expenses                                                 71,438                                                  72,928                                                 (1,490 )                                                              (2 %)                                                146,735                                                  142,782                                                  3,953                                                      3 %
                                                                               --------------------------------                                           --------------------------------                                           -------------------------------                                                                                           ---------------------------------                                           ---------------------------------                                           -------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
  Operating income                                                                  83,271                                                                     68,089                                                                    15,182                                                                22 %                                                 134,498                                                                     125,352                                                                     9,146                                                                         7 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Interest expense                                                                    10,750                                                                     10,273                                                                       477                                                                 5 %                                                  21,127                                                                      20,206                                                                       921                                                                         5 %
Other income, net                                                                      190                                                     101                                                     89                                                NM                                                    502                                                      335                                                    167                                                               NM
                                                                               --------------------------------                                           --------------------------------                                           -------------------------------                                                                                           ---------------------------------                                           ---------------------------------                                           -------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Earnings before income taxes                                                        72,711                                                                     57,917                                                                    14,794                                                                26 %                                                 113,873                                                                     105,481                                                                     8,392                                                                         8 %
Provision for income taxes                                                         (22,061 )                                                                  (17,954 )                                                                  (4,107 )                                                              23 %                                                 (30,676 )                                                                   (32,699 )                                                                   2,023                                                     (6 %)
                                                                               --------------------------------                                           --------------------------------                                           -------------------------------                                                                                           ---------------------------------                                           ---------------------------------                                           -------------------------------
Net earnings                                                                     $  50,650                                               $  39,963                                               $ 10,687                                             27 %                                               $  83,197                                                $  72,782                                               $ 10,415                                                     14 %
                                                                               === ======= ====================                                           === ======= ====================                                           === ====== ====================                                                                                           ==== ======= ====================                                           ==== ======= ====================                                           === ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Net earnings per share:
Basic earnings per share                                                         $    1.15                                                                  $    0.90                                                                                                                                                                                             $    1.88                                                                   $    1.63
Diluted earnings per share                                                       $    1.13                                                                  $    0.88                                                                                                                                                                                             $    1.86                                                                   $    1.61
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Dividends per share                                                              $    0.13                                                                  $    0.13                                                                                                                                                                                             $    0.26                                                                   $    0.26
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Weighted average shares outstanding:
   Basic                                                                            44,213                                                                     44,487                                                                                                                                                                                                44,221                                                                      44,526
   Diluted                                                                          44,807                                                                     45,164                                                                                                                                                                                                44,825                                                                      45,195
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
NM- not meaningful
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
 
                                                                                                                                      CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                                                                                                                                   CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                                                                                                            ($’s in thousands, except par value)
                                                                                                                                                                    
                                                                                                                                      June 30,                                                                      December 31,                                                                    Change
                                                                                                                                        2017                                                                            2016                                                                           %
                                                                                                                       --------------------------------------                                          --------------------------------------                                          --------------------------------
Assets
  Current assets:
     Cash and cash equivalents                                                                                              $   342,711                                                                     $   553,848                                                                       (38 %)
     Receivables, net                                                                                                           502,216                                                                         463,062                                                                         8 %
     Inventories, net                                                                                                           396,245                                                                         366,974                                                                         8 %
     Other current assets                                                                                                        45,932                                                       30,927                                                     49 %
                                                                                                                       -------------------------------------                                           -------------------------------------
       Total current assets                                                                                                   1,287,104                                                    1,414,811                                                     (9 %)
                                                                                                                       -------------------------------------                                           -------------------------------------
  Property, plant, and equipment, net                                                                                           390,520                                                                         388,903                                                                         0 %
  Goodwill                                                                                                                    1,082,944                                                                         951,057                                                                        14 %
  Other intangible assets, net                                                                                                  345,991                                                                         271,461                                                                        27 %
  Other assets                                                                                                                   14,715                                                       11,549                                                     27 %
                                                                                                                       -------------------------------------                                           -------------------------------------
       Total assets                                                                                                         $ 3,121,274                                                  $ 3,037,781                                                      3 %
                                                                                                                       ====== ========= ====================                                           ====== ========= ====================
                                                                                                                                                                                                                                                                                        
Liabilities
  Current liabilities:
                                                                                                                            $   150,820                                                                     $   150,668                                                                         0 %
     Current portion of long-term and short-term debt
     Accounts payable                                                                                                           157,088                                                                         177,911                                                                       (12 %)
     Accrued expenses                                                                                                           116,492                                                                         130,239                                                                       (11 %)
     Income taxes payable                                                                                                        10,578                                                                          18,274                                                                       (42 %)
     Deferred revenue                                                                                                           183,955                                                                         170,143                                                                         8 %
     Other current liabilities                                                                                                   34,858                                                       28,027                                                     24 %
                                                                                                                       -------------------------------------                                           -------------------------------------
       Total current liabilities                                                                                                653,791                                                      675,262                                                     (3 %)
                                                                                                                       -------------------------------------                                           -------------------------------------
  Long-term debt                                                                                                                814,810                                                                         815,630                                                                         0 %
  Deferred tax liabilities, net                                                                                                  55,675                                                                          49,722                                                                        12 %
  Accrued pension and other postretirement benefit costs                                                                        103,181                                                                         107,151                                                                        (4 %)
  Long-term portion of environmental reserves                                                                                    16,091                                                                          14,024                                                                        15 %
  Other liabilities                                                                                                              84,561                                                       84,801                                                      0 %
                                                                                                                       -------------------------------------                                           -------------------------------------
       Total liabilities                                                                                                      1,728,109                                                    1,746,590                                                     (1 %)
                                                                                                                       -------------------------------------                                           -------------------------------------
                                                                                                                                                                                                                                                                                        
Stockholders’ equity
  Common stock, $1 par value                                                                                                     49,187                                                                          49,187                                                                         0 %
  Additional paid in capital                                                                                                    122,584                                                                         129,483                                                                        (5 %)
  Retained earnings                                                                                                           1,825,697                                                                       1,754,907                                                                         4 %
  Accumulated other comprehensive loss                                                                                         (244,161 )                                                                      (291,756 )                                                                      16 %
  Less: cost of treasury stock                                                                                                 (360,142 )                                                                      (350,630 )                                                                      (3 %)
                                                                                                                       -------------------------------------                                           -------------------------------------
                                                                                                                              1,393,165                                                    1,291,191                                                      8 %
       Total stockholders’ equity
                                                                                                                       ---------------  --------------------                                           ---------------  --------------------
                                                                                                                                                                                     
                                                                                                                       --------------------------------------                                          --------------------------------------
                                                                                                                            $ 3,121,274                                                  $ 3,037,781                                                      3 %
       Total liabilities and stockholders’ equity
                                                                                                                       ====== ========= ====================                                           ====== ========= ====================
                                                                                                                                                                                                                                                                                                   
 
                                                                                                                                                                                                              CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                                                                                                                                                                                                                    SEGMENT INFORMATION (UNAUDITED)
                                                                                                                                                                                                             ($’s in thousands)
                                                                                                                                                                                                  
                                                                                                                                          Three Months Ended                                                                                                                                                                                                      Six Months Ended
                                                                                                                                               June 30,                                                                                                                                                                                                               June 30,
                                                                    ---------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                           Change                                                                                                                                                                                                                   Change
                                                                                  2017                                                                       2016                                                             %                                                             2017                                                                         2016                                                                          %
                                                                    ---------------------------------                                          ---------------------------------                                          ---------                                          -----------------------------------                                          -----------------------------------                                          --------------------------------
Sales:
-------------------------
Commercial/Industrial                                                 $ 291,599                                                                  $ 290,046                                                                  1 %                                                $   570,421                                                                  $   564,773                                                                         1 %
Defense                                                                 126,361                                                                    113,961                                                                 11 %                                                    241,023                                                                      219,352                                                                        10 %
Power                                                                   149,693                                                 128,759                                              16 %                                                    279,800                                252,148                                                     11 %
                                                                    --------------------------------                                           --------------------------------                                                                                              ----------------------------------                      -------------------- ----------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                        
Total sales                                                           $ 567,653                                                                  $ 532,766                                                                  7 %                                                $ 1,091,244                                                                  $ 1,036,273                                                                         5 %
                                                                                                                                                                                                                                                                                                                                                                                                                                        
Operating income expense:
-------------------------
Commercial/Industrial                                                 $  43,693                                                                  $  38,957                                                                 12 %                                                $    74,314                                                                  $    69,009                                                                         8 %
Defense                                                                  21,187                                                                     18,609                                                                 14 %                                                     32,342                                                                       35,454                                                                        (9 %)
Power                                                                    24,870                                                  16,114                                              54 %                                                     41,410                                                    30,742                                                     35 %
                                                                    --------------------------------                                           --------------------------------                                                                                              ----------------------------------                                           ----------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                        
Total segments                                                        $  89,750                                                                  $  73,680                                                                 22 %                                                $   148,066                                                                  $   135,205                                                                        10 %
Corporate and other                                                      (6,479 )                                                                   (5,591 )                                                              (16 %)                                                   (13,568 )                                                                     (9,853 )                                                                     (38 %)
                                                                    --------------------------------                                           --------------------------------                                                                                              ----------------------------------                                           ----------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                        
Total operating income                                                $  83,271                                               $  68,089                                              22 %                                                $   134,498                                               $   125,352                                                      7 %
                                                                    === ======= ====================                                           === ======= ====================                                                                                              === ========= ====================                                           === ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                                                                        
Operating margins:
-------------------------
Commercial/Industrial                                                      15.0                    %                                                  13.4                    %                                           160  bps                                                    13.0                    %                                                    12.2                    %                                                   80  bps
Defense                                                                    16.8                    %                                                  16.3                    %                                            50  bps                                                    13.4                    %                                                    16.2                    %                                                 (280  bps)
Power                                                                      16.6                    %                                                  12.5                    %                                           410  bps                                                    14.8                    %                                                    12.2                    %                                                  260  bps
Total Curtiss-Wright                                                       14.7                    %                                                  12.8                    %                                           190  bps                                                    12.3                    %                                                    12.1                    %                                                   20  bps
                                                                                                                                                                                                                                                                                                                                                                                                                                        
Segment margins                                                            15.8                    %                                                  13.8                    %                                           200  bps                                                    13.6                    %                                                    13.0                    %                                                   60  bps
                                                                                                                                                                                                                                                                                                                                                                                                                                                   
 
                                                                                                                                                                                                                 CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
                                                                                                                                                                                                                       SALES BY END MARKET (UNAUDITED)
                                                                                                                                                                                                                ($’s in thousands)
                                                                                                                                                                                                        
                                                                                                                                        Three Months Ended                                                                                                                                                                                                           Six Months Ended
                                                                                                                                             June 30,                                                                                                                                                                                                                    June 30,
                                                               --------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                            Change                                                                                                                                                                                                                        Change
                                                                               2017                                                                          2016                                                              %                                                              2017                                                                            2016                                                                           %
                                                               ------------------------------------                                          ------------------------------------                                          --------                                          --------------------------------------                                          --------------------------------------                                          --------------------------------
Defense markets:
Aerospace                                                           $  88,097                                                                     $  76,558                                                                 15 %                                                  $   153,880                                                                     $   138,107                                                                        11 %
Ground                                                                 17,515                                                                        19,880                                                                (12 %)                                                      37,251                                                                          39,055                                                                        (5 %)
Naval                                                                 100,048                                                                       103,998                                                                 (4 %)                                                     191,018                                                                         196,950                                                                        (3 %)
Other                                                                   5,964                                                      2,541                                             135 %                                                       13,007                                                        3,794                                                    243 %
                                                               -----------------------------------                                           -----------------------------------                                                                                             -------------------------------------                                           -------------------------------------
Total Defense                                                       $ 211,624                                                                     $ 202,977                                                                  4 %                                                  $   395,156                                                                     $   377,906                                                                         5 %
                                                                                                                                                                                                                                                                                                                                                                                                                                              
Commercial markets:
Aerospace                                                           $ 101,631                                                                     $ 102,595                                                                 (1 %)                                                 $   200,455                                                                     $   204,781                                                                        (2 %)
Power Generation                                                      114,773                                                                        95,628                                                                 20 %                                                      220,325                                                                         195,518                                                                        13 %
General Industrial                                                    139,625                                                    131,566                                               6 %                                                      275,308                                                      258,068                                                      7 %
                                                               -----------------------------------                                           -----------------------------------                                                                                             -------------------------------------                                           -------------------------------------
Total Commercial                                                    $ 356,029                                                                     $ 329,789                                                                  8 %                                                  $   696,088                                                                     $   658,367                                                                         6 %
                                                                                                                                                                                                                                                                                                     
                                                               ------------------------------------                                          ------------------------------------                                                                                            --------------------------------------                                          --------------------------------------
Total Curtiss-Wright                                                $ 567,653                                                  $ 532,766                                               7 %                                                  $ 1,091,244                                                  $ 1,036,273                                                      5 %
                                                               ====== ======= ====================                                           ====== ======= ====================                                                                                             ====== ========= ====================                                           ====== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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 following definitions are provided:

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
                                                                                                                                                                                                                                                 June 30,
                                                                                                                                                                                                                                               2017 vs. 2016
                                                           ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Commercial/Industrial                                                 Defense                                                        Power                                                                                             Total Curtiss-Wright
                                                           ------------------------------------------------------------                                          ----------------------------------------------------------                                          ----------------------------------------------------------                                          -----------------------------------------------------------------------
                                                             Sales      Operating                                           Sales     Operating                                           Sales     Operating                                            Sales           Operating
                                                                                                               income                                                                                              income                                                                                              income                                                                                                     income
                                                           ------                                            --------                                            ----                                            --------                                            ----                                            --------                                            ------                                            -------------------
Organic                                                      2 %                                               12 %                                               0 %                                              14 %                                              16 %                                              54 %                                                5 %                                                     22 %
Acquisitions                                                 0 %                                                0 %                                              12 %                                              (7 %)                                              0 %                                               0 %                                                3 %                                                     (2 %)
Foreign Currency                                            (1 %)                                               0 %                                              (1 %)                                              7 %                                               0 %                                               0 %                                               (1 %)                                                     2 %
                                                           --- ---                                           ---- ----                                           -- --                                           ---- ----                                           -- --                                           ---- ----                                           --- ---                                           ---------- ---------
Total                                                        1 %                                               12 %                                              11 %                                              14 %                                              16 %                                              54 %                                                7 %                                                     22 %
                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                             Six Months Ended
                                                                                                                                                                                                                                                 June 30,
                                                                                                                                                                                                                                               2017 vs. 2016
                                                           ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Commercial/Industrial                                                                                       Defense                                                                                              Power                                                                                             Total Curtiss-Wright
                                                           ------------------------------------------------------------                                          ----------------------------------------------------------                                          ----------------------------------------------------------                                          -----------------------------------------------------------------------
                                                             Sales                                            Operating                                           Sales                                           Operating                                           Sales                                           Operating                                            Sales                                                 Operating
                                                                                                               income                                                                                              income                                                                                              income                                                                                                     income
                                                           ------                                            --------                                            ----                                            --------                                            ----                                            --------                                            ------                                            -------------------
Organic                                                      2 %                                                7 %                                               0 %                                               8 %                                              11 %                                              35 %                                                4 %                                                     12 %
Acquisitions                                                 0 %                                                0 %                                              11 %                                             (20 %)                                              0 %                                               0 %                                                2 %                                                     (6 %)
Foreign Currency                                            (1 %)                                               1 %                                              (1 %)                                              3 %                                               0 %                                               0 %                                               (1 %)                                                     1 %
                                                           --- ---                                           ---- ----                                           -- --                                           ---- ----                                           -- --                                           ---- ----                                           --- ---                                           ---------- ---------
Total                                                        1 %                                                8 %                                              10 %                                              (9 %)                                             11 %                                              35 %                                                5 %                                                      7 %
                                                                                                                                                                                                                                                                                                                                                                                                                            

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                                                                                                                                     Six Months Ended
                                                                                                                                     June 30,                                                                                                                                              June 30,
                                                                                                  2017                                                                      2016                                                                      2017                                                                        2016
                                                                                    --------------------------------                                          --------------------------------                                          --------------------------------                                          ------------------------------------
                                                                                                                                                                                                                                                                                                                   
Net cash provided by operating activities                                             $ 85,873                                                                  $ 86,371                                                                  $ 60,932                                                                     $ 156,631
Capital expenditures                                                                   (12,914 )                                                                  (6,908 )                                                                 (23,288 )                                                                     (15,733 )
                                                                                    -------------------------------                                           -------------------------------                                           -------------------------------                                           -----------------------------------
Free cash flow                                                                        $ 72,959                                               $ 79,463                                               $ 37,644                                                  $ 140,898  
                                                                                    --- ------ --------------------                                           --- ------ --------------------                                           --- ------ --------------------                                           ------ ------- --------------------
                                                                                                                                                                                                                                                                                                                   
Free Cash Flow Conversion                                                                  144 %                                                                     199 %                                                                      45 %                                                                         194 %
                                                                                    -------------------------------                                           -------------------------------                                           -------------------------------                                           -----------------------------------
                                                                                                                                                                                                                                                                                                                                  
 
                                                                                                                 CURTISS-WRIGHT CORPORATION
                                                                                                         2017 Guidance (from Continuing Operations)
                                                                                                                     As of July 26, 2017
                                                                                             ($’s in millions, except per share data)
                                                                           
                                                                                            2016                                                                                                    2017 Guidance
                                                                                          Reported
                                                                                                                                                                     High
                                                                              -----------------------------                                                                                       -----------------------
Sales:
-----------------------------------
Commercial/Industrial                                                            $ 1,119                                                                                   $                1,120                             $  1,140
Defense                                                                              467                                                                                                      540                                  550
Power                                                                                524                                                                                   525               535  
                                                                              -------------------------------                                           --------------------------------------------------------------   ----------------------------------
Total sales                                                                      $ 2,109                                                                                   $                2,185                             $  2,225
                                                                                                                                                                                                                          
Operating income:
-----------------------------------
Commercial/Industrial                                                            $   157                                                                                   $                  161                             $    166
Defense                                                                               98                                                                                                      106                                  109
Power                                                                                 76                                                                                    77                79  
                                                                              -------------------------------                                           --------------------------------------------------------------   ----------------------------------
Total segments                                                                       331                                                                                                      343                                  353
Corporate and other                                                                  (23 )                                                                                                    (22 )                                (24 )
                                                                              -------------------------------                                           --------------------------------------------------------------   ----------------------------------
Total operating income                                                           $   308                                                                $                  321          $    329  
                                                                              ==== ===== ====================                                           ==================== ==================== ====================   ====== ====== ====================
                                                                                                                                                                                                                          
Interest expense                                                                 $    41                                                                                   $                   41                             $     42
Earnings before income taxes                                                         268                                                                                                      281                                  288
Provision for income taxes                                                           (79 )                                                                                                    (82 )                                (84 )
                                                                              -------------------------------                                           --------------------------------------------------------------   ----------------------------------
Net earnings                                                                     $   189                                                                $                  200          $    204  
                                                                              ==== ===== ====================                                           ==================== ==================== ====================   ====== ====== ====================
                                                                                                                                                                                                                          
Reported diluted earnings per share                                              $  4.20                                                                                   $                 4.45                             $   4.55
Diluted shares outstanding                                                          45.0                                                                                                     44.9                                 44.9
Effective tax rate                                                                  29.3                    %                                                                                29.1                    %            29.1                    %
                                                                                                                                                                                                                          
Operating margins:
-----------------------------------
Commercial/Industrial                                                               14.0                    %                                                                                14.3                    %            14.5                    %
Defense                                                                             21.1                    %                                                                                19.6                    %            19.7                    %
Power                                                                               14.6                    %                                                                                14.6                    %            14.7                    %
Total operating margin                                                              14.6                    %                                                                                14.7                    %            14.8                    %
                                                                                                                                                                                                                          
Note: Full year amounts may not add due to rounding
(1) Full-year 2017 guidance includes the acquisition of TTC,
which adds $65 million in sales to the Defense segment and is now
expected to be slightly accretive to operating income and earnings
per share, including purchase accounting costs.
(2) Full-year 2017 guidance reflects the impact of a discrete tax
benefit of $4.1 million from the adoption of Accounting Standards
Update (ASU) 2016-09 regarding the accounting for share-based
payments. This change resulted in a $0.10 increase to our EPS
guidance as disclosed in our press release dated May 3, 2017.
 
 
                                CURTISS-WRIGHT CORPORATION
                 2017 Sales Growth Guidance by End Market (from Continuing
                                        Operations)
                                    As of July 26, 2017
                              
                                                                      2017 % Change vs 2016
                                                                     ---------------------
                                                                      
Defense Markets
--------------------------
Aerospace                                                                   23 - 25%
Ground                                                                        Flat
Navy                                                                        (1 - 3%)
Total Defense                                                                7 to 9%
(Including Other Defense)
                                                                      
Commercial Markets
--------------------------
Commercial Aerospace                                                          Flat
Power Generation                                                             3 - 5%
General Industrial                                                           2 - 4%
Total Commercial                                                             1 to 3%
                                                                      
Total Curtiss-Wright Sales                                                   4 to 6%
                                                                      
Note: Full year amounts may not add due to rounding
Full-year 2017 guidance includes the acquisition of TTC, which
adds $65 million in sales, primarily to the aerospace defense market
and to a lesser extent to the commercial aerospace market.
 

About Curtiss-Wright Corporation Curtiss-Wright Corporation (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 8,000 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, 2016, and subsequent reports filed with the Securities and Exchange Commission.

This press release and additional information are available at www.curtisswright.com.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170726006189r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170726006189/en/

SOURCE: Curtiss-Wright Corporation

Curtiss-Wright Corporation 
Jim Ryan, 704-869-4621 
Jim.Ryan@curtisswright.com


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