CW - Earnings call transcript Q4 2021 | Curtiss-Wright Corporation

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Operator

Good day, ladies and gentlemen and welcome to the Curtiss-Wright Fourth Quarter 2021 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Jim Ryan, Vice President of Investor Relations. Thank you. Please go ahead.

Jim Ryan

good and Blu you, morning everyone. Thank Curtiss-Wright’s to fourth quarter call. conference earnings XXXX Welcome

the President Financial today Officer, me call Joining on are and President Farkas. Lynn Vice and and Chris Chief Officer, Bamford Executive Chief

and the of are call and statements be our as copy These statements Please for forward-looking as company www.curtisswright.com. well website. download projections management’s Private website detail not certain public uncertainties the is release is our Investor found based future the in risks Securities replay are financial a webcast the Reform at that current of and Our discussion with associated press XXXX. this today forward-looking today’s Relations of with can of as the defined will are SEC. and through We guarantees Act our presentation on today’s in filings expectations webcast on also available being Litigation note section A of performance. statements those include

As noted. costs and available in our results a are adjusted certain Curtiss-Wright’s prior provide website. acquisitions organic transparency greater performance. divestitures references exclude that to this GAAP ongoing on and release of current presentation the to basis and foreign at for include to earnings year unless non-GAAP into view an currency Any reconciliations reminder, growth an and in otherwise order excludes financial adjusted non-GAAP on are the operating translation, and periods the end company’s

the get started. things to Now, to I Lynn? would call over turn Lynn to like

Lynn Bamford

proud where are of CEO. this where and everyone. our my Curtiss-Wright morning completion is I the headed. Thank am of you, today am pleased results morning, as Jim, first I year share and upon good we to

are strategy model, the this proof strong financial vision. place advancing strategy fourth customer our during business in that number results of we including months. detailed course I’ll initial and quarter over and XXXX growth One the Investor on guidance. execute and XXXX steps With more the of Curtiss-Wright events working. turn taken full expanding have The the let past XXXX that, the the of quarter year XXXX delivered simplifying relationships results our and our Day the presented and pivot highlights deepening May, our performance early X and to to a turn full to to points Then last to that fourth during took year our some we Over the provide review is me Chris call of notable key a year,

our with margin operating increased operating move remarks up I’ll and XXXX solid Q&A. was XX.X%. performance a sales at income strong we wrap before to quarter as Starting X%, while adjusted each prepared We Finally, the highlights. fourth delivered adjusted

$X.XX created the revenues This quarter. from strong supply conversion of line that as in flow the in expectations, overcame especially as cash was CAPXXXX combined wind Free which expected, of slightly the of and the Our as was was our while EPS pressures results our operational quarter. headwind top this considering as cash chain where our strong we down. strength our a reflect than challenges higher-than-expected initiatives. continues more lower overcoming portfolio, benefit defense excellence of diluted $X.XX within to the the strong these share results a With XXX%. that important revenues achieved to offset adjusted free our activity, fourth rate, tax reflecting performance and above repurchase flow benefit program It’s sales of note we about operational by a were push-out well of continued commercial

overall, increase a X% commercial and orders, achieved growth our XX% quarter in driven our we growth in fourth market by our A&D markets. XX% to Turning

into XXXX. heading onetime exceeded book-to-bill strong sales supports As result, a and backlog our

sales double-digit and of upon Next, adjusted year performance our full on reflected growth operating in X% within where to the the sales was our and quarter, commercial full delivered by EPS. will we discussion as X% guidance our resilience our markets, and and strength range including Similar growth the our XXXX briefly X% combined in I achieved board, in in we our highlighted fourth strong growth PacStar touch A&D and across the growth growth results portfolio markets. a income year diluted

with the year achieved have followed free XXX% in of margin cash conversion. operating exceeding on achieve across end $XXX Investors sales that our target by to X-year we commercial for our our XXX% we pandemic, the also streak conversion originally committing us some consecutive moved We building XXXX, an XX%, face the flow lost objective XXXX. we set might by and million X target recall our market, to in who In that ninth of than of year XXXX. time out more

on target significantly this a am time we our eclipsing its our schedule. to I line, lower the year that in However, of year, profitability past ahead year a our we Through team’s this determination, XXXX pleased segment full A&I delivered reached pandemic performance original revenues. this strong report on

innovation have margins in of $XX both XX segment pipeline or to basis incremental R&D sustained high the Power & we in Defense continuing year. reinvest while past the to Naval this, million the this in Electronics Beyond and points our tune

down overcome achieving has the with the team of the program goal. significant this the wind headwind CAPXXXX associated profitable addition, in In

for like its to growth. commend excellence Curtiss-Wright as strong I profitable our target for drive to on team continued company performance, by operational its and the date original that I’d margin the for achieve So reflect position

XXXX was $XXX Directors’ major annual strong million executed record of in building confidence from financial XXXX. position. We our of Board repurchase on XXXX, million Another repurchased a continued our to $XXX reflects the that the our shareholders capital which company’s returning in share in on continued we focus highlight

continue our will we balanced as repurchases a approach component ahead, share allocation. key capital incorporate Looking to to in

recent presentation. which some overview a I we’ll of discuss later the detail brief greater events, Next, want in provide in to

sides. the settlement coolant a reactor both on outstanding agreement back covering U.S. First, to Westinghouse all APXXXX China including or and we both XXXX, pump, contracts dating RCP, claims with reached

behind to to legacy pleased of opportunity within us this new matter the we X Europe squarely has cleared this are for China, in now outside Eastern receive plants put next where the We for to APXXXX see Curtiss-Wright orders runway years. as X

excited We’re X for about the this plus Generation technology. future

firmly Investor been of of have also which, May. these announced the at is portfolio, global of in a in Safran’s vision active month, leader business, we shaping you and Curtiss-Wright Day articulated a as defense the the We key technologies. breadth increasing in our of know, our continued acquisition the our Systems Last part Arresting as establishing strategic portfolio

on move closed business, past the also legacy allowing German of matter. We valves the sale us this to

where Finally, markets. full to we projecting I growth major would of XXXX X% adjusted all are year our driven like guidance organic sales our by end increases X%, to introduce of in

continued in once incremental growth. investments making while to expect margin expansion future again enable We R&D organic operating

expect growth much our free We in continued achieve sum strong cash positioned profitable also To we XXXX. on achieve to X-year targets well we growth double-digit are for while track in flow. diluted up, remain very EPS for to financial and generating XXXX,

of for Chris our like outlook Chris? our to a thorough the XXXX. performance fourth provide XXXX to over call to review I’d Now, more turn and quarter

Chris Farkas

various with morning, by X% we Aerospace major increase good across had Starting strong in our and jets. experienced sales and growth driven Lynn, continue general solid This of drivers an begin results segment. all everyone. I’ll in fighter higher where fourth you, in Industrial, from within increases on of our we markets. Thank demand industrial, activity and key revenues by to included we also double-digit where benefit defense, order aerospace quarter

Within segment’s increased the aerospace market, margin while adjusted we delays operating income XXX segment’s wide-body XX%, XXX points which adjusted narrow-body the offset operating The experienced improved aircraft, partially demand by the increased basis certification. was to to due XX.X%. commercial on

initiatives sales defense reflect and Virginia favorable Defense in sales various our mitigated communication chain results and higher across the ground demand headwinds excellence strong and in business. strong defense. absorption revenues In segment, submarines that supply naval equipment increased Our for class PacStar’s XX%, Electronics pricing reflecting on in operational

experienced supply even been program, receipt $XX a the sales. not sales margin factor out a was XX%, adjusted as while on we XXX shift again timing if XXXX. sales based increased and had the of components delayed stronger, income F-XX while higher global million margin operating for approximately in electronic revenue system points on In of Defense, resulting lower operating Our adjusted we would to affecting and timing mix of upon basis once favorable The chains. push-out revenues results from continued increased the absorption challenges segment’s have the of improved reflecting Aerospace XX.X%,

wind demand equipment revenues down. our supporting and sales and results & reactors. in segment’s the as process due in adjusted reflect program our we CAPXXXX was the to overall, excellence the unfavorable nearly operating with while help as for year-over-year decreased reposition operating XX%, strong sales income operational To both reflecting a adjusted XX%. absorption revenue. operating continues markets this continued in to Power income nuclear increased nuclear as strong Naval higher on up margin and in lower operating timing naval results, experienced well X%, Next, the XX.X%, CAPXXXX This sum program existing the investments to adjusted operating reduced propulsion valve sales of flat sales business fourth Conversely, margin but of modest growth lower of aftermarket quarter segment,

outlook begin markets, I’ll where X includes in our with expect full from X% total Commercial. sales our of of Curtiss-Wright all end-market year and to A&D in X% on contributions growth we X%. X% driven X% Turning by X% growth to our sales growth to guidance, organic Slide This growth to XXXX end

the embedded higher communication sales. our ground Naval acquisition equipment A&I we actuation offset the within In the program. programs our For our ramp-up two-thirds of will chain principally to our into we within of the law. also equipment starts industry supply higher on sales total faced with systems sales timing And the in the class Defense, revenues which in partially of and only Electronics by by expect for offset expect however, will the the for for computing be expect defense segment, XXXX. reflects that end next, Please revenues those full on production prior principally CVN-XX, ramp-down In represent an year resolution the signed availability those battlefield on higher and on Defense domestic electronics, our defense, Defense, company delayed additional sales Curtiss-Wright F-XX until be CVN-XX XXXX, slightly the continuing program in peak for Columbia aerospace by XXXX, production guidance appropriations expected the gains not begin by small reached but be the Ground carrier on halting vehicle Safran. revenues new submarine offset signing DoD mainly CXISR of budget. we and markets funding will markets strong note aircraft within of extended We is on the various tactical lower impacts to A&D first now bill continued segment, the increased driven to are

We end OEM X% well be This position strong in aftermarket. our programs sales growth and turning impact confident continue ‘XX in to supplier which fastest-growing difficult and as sales current in by it’s on to commercial the markets our to the and to environment while a growth industry. as AXXX growth. XXX performance, on XX% in aircraft, Rounding we narrow-body is estimate our our to defense A&D the remain including outlook immediate the we to modest monitor long-term as with critical out expect aerospace, driven XXXX a market

Next, growth turning overall. to Power expecting markets, Process, X% to & are X% our we commercial in

a this outlook program the from this million approximately revenue of winds program However, includes as CAPXXXX down. headwind $XX

by process In and and Continuing nuclear the fleet. businesses, begin subsequent to we principally markets in mid-single-digit a continue process be products. full to gas fastest-growing we for continue market, demand lastly, solid driven impact, of another And the see performance upon solid growth and market, XXXX of In by orders that aftermarket we the activity our strong in XXXX which, to for climb. general nuclear to demand as to in will again, rebound with the strong license expect for once XXXX, the continue levels. as to X% prices anticipate and driven ongoing the industrial building be our our both growth outlook our extend renewals life XXXX X% will we the outlook with Aerospace segment by MRO beyond sales to which the in vehicle to maintenance rebound on X% Looking segment, growth. they Slide X% power I aftermarket, back oil year reflects valve in nuclear higher industrial with in expect X, Industrial generation segment outlook

Our outlook sales for this aerospace growth industrial, by strong lower defense. both in in partially and driven by segment is offset aerospace commercial general

adjusted expansion growth of of of expect XX.X%, basis of XX.X% to prior sales initiatives. operating XX XX operating and X% to XX% the range to benefits to We year higher adjusted restructuring and income a our points margin reflecting

we expect sales along not our will segment. markets, years’ the industrial but our A&I commercial strong in growth and also addition, in profitability XXXX In backlog, that continued with recovery future the performance only in our benefit

Curtiss-Wright the components. with Next, a the X% to be Electronics rapid Supply chain by we sales segment aerospace within modest particularly continue dynamic segment, changes Defense expect and we the growth and to grow of issue defense. X%, in faced in for led remains electronic where availability ground to in

half, sales expect projected while XXXX, to second XX sales for typically in driven to by While to flat Electronics decline be to to margin supply is and of projected chain. half pronounced the Operating to the income the X%, are profitability basis Defense our more a is up shift our back points. XX businesses operating we weighted

full However, results that it’s worth points. by R&D basis this approximately outlook impacting $X our increase year in a investments strategic year-over-year includes of million XX noting

the process in to mid-single-digit aftermarket flat market, is sales operating with outlook wind but segment, market. XX.X%. grow the in on the as X% driven grow Power and nuclear X%, to Process essentially margin by the XX.X% defense includes the to profitable and to well to Similar both Naval expect as strong & we within Power the & ranging solid earlier growth growth Lastly, to X% Naval guidance in program. segment Operating Power an X% from CAPXXXX naval income projected down

we reflect results growth solid Excluding and the sales CAPXXXX business. which ongoing margin expansion, reposition our reflecting our would million, initiatives, effectively to benefit a revenue headwind tailored of excellence operational of approximately $XX the mid-single-digit have the incremental

XXXX. approximately XXXX with to our share significant in the adjusted expect to weighting XX.X%, we income per is changes aforementioned the X% We in first to an $X.XX with improve that headwinds quarter margin a XX summary, prior a of based R&D in R&D, diluted Curtiss-Wright the expected CAPXXXX are which million basis to grow and X% to followed equates million ranging be investments adjusted $XXX XXXX $XX million with cadence of aid a share. adjusted sales. in EPS our chain we as activity our commitment full follow strongest includes to XXXX years XX.X% first to being in similar total important quarterly X% XX% increase also to stemming our points diluted from the lightest, in expect improvement To supply headwinds. growth to we on up well X, as both financial $X.XX expect quarter to from currently the reflecting XXXX operating Slide quarter $X.XX, continued this operating increase by in So fourth year outlook on overall per from to modeling, minimum your results in to quarterly below and increase and the contributions our EPS X% to from note XX XX%, estimating EPS It’s in first to income range aforementioned including expect in half. the being sequential in again higher-than-normal repurchase Continuing to lower count our then mix. Operating second $X growth share upon product quarter record $X.XX share

invest support operations guidance, Lastly, we reflects million XX% increase expected expenditures cash to capital look growth. organic are solid to to X% $XX $XX cash flow of to flow future million turning to as to free growth from while our

full are free guidance $XXX As we a year of $XXX result, million adjusted to flow cash projecting million.

XXXX, expect long-term we cash our target XXX% in Finally, which free tenth to of conversion represent year consecutive would exceed flow our exceeding XXX% also again conversion.

Lynn? our like continue I’d prepared Now with the remarks. to to Lynn call back to turn over

Lynn Bamford

I’ll exciting nuclear on Chris. you, our the position where Thank Generation a on have opportunity news program. this to plus long-term revitalize significant critical we with reactor APXXXX, X begin some

Poland, technology we resolving a Further, in next matters, to agreement have while emerging Eastern these Westinghouse, secures potential APXXXX the that turning multiunit at point relationship strengthens and to initial vast their likely opening X my Europe. long-term guidance guidance. value As to long-term I does Europe. reached years. any from our project, back have forward Westinghouse we continues settlement in view outstanding next In orders opportunity APXXXX positive increase This the Curtiss-Wright’s this for a commitment for Eastern sides Westinghouse any in Curtiss-Wright RCP legacy course orders XXXX. with between on potential moving current to covering plants for throughout also Under would a all million new demand now within with to a noted our years. agreement, dating in this both X to agreement, claims where path new We Westinghouse’s plants the APXXXX comments, not generate We critical addition to secured to terms the be of next our to RCP pay the of X the Westinghouse economic upside that future has the the a as agreed technology in future $XX clear RCP and turn, Curtiss-Wright include reminder shareholders. over news that

our support continued profitable a our two-thirds years, sales, Starting acquisitions sales. looking are some at drive a high the Turning over ongoing next Curtiss-Wright total the I’d which the few shaping drive place towards mix to we level, is seen you’ve as we as to our of of portfolio continue Slide that growth. spend at to minutes X, of A&D percentage like discussing for taking comprises to actively for higher

occasionally our meet pruning not product away or lines objectives. do In addition, that long-term from will we businesses not shy

where, We’re overall turn PacStar, in with in an value. begin to modular across battlefield support has is of XXXX looking expected, been standpoint, strong shared reminder, process quarter which growth. growth receiving flow, including excellent I’ll for on an the in is sales, integration businesses our positioned and Army’s to systems bringing update tactical elements chassis of an a PacStar by approach, results, the contributions free top all products. for or to is as acquired support MOSA long-term aligned we and than with strategy Defense industry-leading well benefits on and drive is for profitability supports hand services. better its to top our Curtiss-Wright line long-term high From the single-digit communications are sales The the and hybrid for shareholder to priorities. open integrated have instance, our allocation multiple continued side The leadership left strong fourth in core closely a capital segment of its slide solutions cash we providing with and IQ PacStar XXXX. which, modernization growth our our going industry software MOSA, addition the business Electronics

of not expected past in nor we growth this full efforts business of few to outside synergies slide, completed to despite sale restructure achieve our valves underperforming XXXX. of business, We Phönix, to it our were concluding the the in ourselves market. side over business. its Turning had And European the hand we divest back an German January, right year-long the the acquired a leverage able of process to years,

to pleased past are this legacy We move matter.

it military hooking Safran’s acquisition fixed Systems Arresting systems systems recovery acquisition globally, Next, great X,XXX business, with experienced with more and decks. steady aircraft be Curtiss-Wright. become SAA, both carrier during aligns products our positions This a SAA for focused base which It year’s aircraft adjacent technologies, legacy, cable fit systems, strong last of supplier systems. than laid exciting net-stanchion OEM of and a to Curtiss-Wright supplier and on global growth sixth a air to of management to relations, market-leading aftermarket mobile aircraft tremendous the leading out A&D on focus or XXXX. is Their strips revenues. an wing business strategic recently and of arresting systems announced that defense or landing Investor in aircraft is review Aerospace we would since which a a with include installed customer particularly the with team priorities like we expect the defense long represent I’d Day, systems demonstrating

will margin our XXx In million though few flow for worth with our transaction been approximately in months recent be the on and until and long-term PacStar. about to objectives in growth, generated the SAA expansion cash terms paid growing close the years. of of free key we supports and XXXX financials, noting limited top of in has line acquisition revenues XX today SAA that We our generation. pace it’s financial acquisition next $XX discussion past criteria EBITDA at low mid-single-digit most line

We the sales on expect a particularly F-XX the for jet in fighter to program, fleet, driver continued remain key the growth SAA.

to We Curtiss-Wright’s to sight of contribute be operating for expect dilutive operating deal profitability year margin this of overall long-term overall all and the margin line have first our and expansion. to ownership the business in to

We this early are within if and to third this in the transition sooner, not including we our at quarter, not time. close guidance therefore, SAA expect

As Curtiss-Wright to we’ve deliver XXXX. growth once again profitable demonstrated positioned well is in today,

our growth chain commercial commercial and in remain the our driven defense, outlook continuing the for within cautious A&D and aerospace strong industrial our we X% issues light by all sales resolution, is to ongoing of backlog While markets, by increases X% in supply markets. and driven

focus of and to XXXX on ongoing for growth XX.X% Our double-digit operational line driving our margin guidance guidance. operating in long-term expectation reflects is our EPS our with XX.X% excellence

company supplemented allocation share our best long-term capital to XXth repurchases returns track Our maintain to strong, our sheet. our and Acquisitions continue will we With for shareholder drive are investing Safran have balance regards possible continued to for we and been strong our consecutive capital capital And under priority beyond value. strategy, healthy and we are achieve remain to Growth XXX% our free by allocation free looking focused the acquisition, Pivot on on highest flow cash greater year of a adjusted remains focus flow advantages that have growth deliver an businesses the and operational manage driven guidance last closing, well positioned and achieve consistent conference ensure our We investments. to demonstrate added our profitable combined growth strong, intense level the year’s at profitability. of time, discipline Curtiss-Wright long-term In can sales for open Day. remain to in newly and like with and by in long-term is communicated XXXX, up Investor At portfolio, to questions. and of call strength track we I would to today’s conversion. on than to strategic this cash and

Operator

Instructions] from [Operator question from Your of you. Kristine Thank first Stanley. comes Morgan the Liwag line

line Your now is open.

Kristine Liwag

good Hi, morning, guys.

Chris Farkas

Good Kristine. morning,

Lynn Bamford

morning. Yes. Good

Kristine Liwag

provide today, the Lynn, as for to build on leverage what With that drove reactor Hey, assume lot can would of the you more pump color the settlement? future you APXXXX a getting company only able contracts? have Westinghouse the one coolant Curtiss-Wright

Lynn Bamford

line as significant value European economic And really both relationship market, we manner if as and whole right in for is a Eastern stated build-out We to situation we this within to manner since create Europe this and across really together can on feel time So that opportunities we sight, the for forward it deemed needed Eastern set this believe been in work way to Westinghouse. as in standalone. situation back the was long us has quite we a lean move of going us attack to to for a APXXXXs XXXX. was proactively the past to we that see which and

like for is we’re which create on. value, choice good Curtiss-Wright consistently long-term what economic And felt focused so to it a

Kristine Liwag

Republic of Europe for in And opportunities I it’s the Eastern Slovenia. your Lynn. Czech are day today, and mean, Bulgaria, and the topic Poland, Ukraine, clearly Thanks,

or early understand So how for do outlook unfolding in these effect? Ukraine plants too long-term it change events to APXXXX today is your

Lynn Bamford

to effect, signed really long-term knowing was mean, Westinghouse I I going it’s Ukraine. I has the mean, too with on. that MOU early think know an

discount in didn’t it we cautiously But there we So But it you much very at assure and potential into and significantly we as the the forward. of we’ve total December year, this. negotiations the represent that want to went of and discounted business through two as end our is business. surely this of thinking in thought I very sides can not went part I that it to think

very Poland Europe’s they natural If into significantly total XX%, on of you dependent Europe, Russian also they crude Germany oil. today’s XX%, also from XX%, Russia, Finland XX%, natural XX%, Slovakia Bulgaria gets – get France XX% of about look and it XX%. gas. And Italy its third gas,

And were was green the of why if security. determination think anything, and both independence so these I countries energy moving and

And so surely increase nations I think today, will energy Ukraine, have I in events surely people. we think these plays resolve out – we out wanting Ukrainian and plays of independence. the it however, for hope well But the of to the to that

So it’s two sides.

Kristine Liwag

of I’ll remind Investor Day? from great and your if color. And the Can outlook in us? included you could and I is just the squeeze really That’s much one back how long-term more, queue, APXXXX get your in XXXX outlook also in

Lynn Bamford

of just is guidance. the same fact. new and are with make ahead to the everybody orders baselined in our ‘XX speak I’ll included No sure And let Chris ‘XX say to contract. go I’d current down So the or wind

Chris Farkas

Kristine. Yes,

million a year revenues for We – reached was for It peak $XXX XXXX. program. we this have program

million is over down project. remaining that As $XX the remaining ‘XX, revenue had X Right said of into next be ramped of $XX through have million we entering would we now, about on we revenue about we were this years. that That year.

a that we XX% is And program. in significant about in pretty the X% our headwind to margin. profitable past, plus sales. organic remarks. it total It’s said we’ve it’s as talked Curtiss-Wright It’s So here a prepared

we’ve had, those that mean operational in headwind great significant we the to for to Power headwind. able a I this and maintain and upward excellence team XX% been through ourselves this to be Naval to the margin has expand that to XX% done margins So continue & position goal strong then fighting job been and a to has also reach

Kristine Liwag

Thanks, Chris. Thanks, Great. Lynn.

Chris Farkas

Yes.

Lynn Bamford

Kristine. Thanks,

Operator

from Your Walton of next question line UBS. Myles comes from the

Your is open. line

Myles Walton

Thanks.

an just expansion Just hoping and quickly does APXXXX APXXXX some the you’re in is of settlement? just continue cover recent your relationship triggered Westinghouse the to MOUs? the on second, that presence pick by up for it Or highlighting a global the agreement is to with the

Lynn Bamford

that presentation, closest Yes, we’re limited it that Europe. It’s clearly in the the just be but there. not is focusing it’s on And that’s really the seem opportunities Eastern to why to hand. not limited to at

Myles Walton

Okay. on And just a that. one quick

charge million You the next by $XX you’ve million of was the I a taken? think charge but provision through in $XX Is there took the year. previously cash outlay quarter, it a with

Chris Farkas

Yes.

claims So but we counterclaims wasn’t – warranty mean pump included the between basically also only I and any of first-of-a-kind matters for between and were And and two open significant parties, This there claims coolant that was LDs, settlement, this first ways. certain so all, technology. all resolve to us reactor handle different the Westinghouse. the Myles.

view more So the We change the recognize our to over percentage to a reserves of be warranty going was that the of claim settlement. million. settlement the of remainder expect reserves our time, portion We in and course the warranty sales covered the as warranty our really the covered that $XX don’t We normal was in not rates of side business. of forward. accrual

closes the that balance. So

Myles Walton

from sort profile actuation? back-end to recovery mostly visibility baking the embedded just just Okay. on more put loaded heard recovery? the your color? if point year, Is about on you chain made Perfect. some you’re in anywhere us the computers? usual, that, even then the out And maybe in you And it then that finer supply for of give comment than I a of can, but within the coming can you else issues, Is it

Lynn Bamford

Sure. is. definitely It you. Thank

steel is different pockets connection we’re working is the being is we’re spread. – things most continuing mitigate of spend metal really great sheet being materials the But their Defense around organization the I their that impacted. certain I’m of the the proud component Defense focused time to qualify and were one the and think dual rating. Electronics feeling is greatest that on to team of with the clearly, to there and the impact options, are But like leveraging DPAS what – are broad is area areas sourcing partners, impact They is And Electronics. doing doing with it. team

more item continue to refine the continuing about to continuously out is So our and forecast long maximize last of ongoing. a and be look year versus we a and level, revenue push systems some doing of normal lead back in Electronics. at this that to most data about expecting overall, it, to further talked put stuff is lot of to into our that. half But on CW Defense split orders year working our X% specificity And the we’re we the

that team that feeling is impacted business do of have is we And components, that other to some it industrial, tied and slightly some of also in aerospace the aerospace. impact. and is The

Myles Walton

markets the implied of the one of which that’s the that terms Okay, embedded give I sort high okay. then And of picture Can it’s in visibility single-digit the faster recovery? some your is guidance, in backlog industrial growth? right growth How as driving are recoveries, in to of think particular you in now. the guidance much that

Chris Farkas

to market Lynn be Yes. to additional Sure. I and any mean to that’s if strongest we QX, in I’ll and within saw In start growth XX% going ‘XX, sales then But we crucial Myles, is approach X% off, end growth. aerospace, offer aerospace. commercial our wants color. as

XX%, and and narrow was Aerospace in the Electronics million that body. mainly We’re about or segments, both Industrial and up $X Defense

I to off of we start little headwinds pick think narrow-body have wide-body a would how bit up. the we about and year talked

projected. aerospace But those the on XX% long have we lows since finished orders both the sequentially the order in improving year-over-year. year, pandemic fourth up of So been quarter, flat our sales and within overall were those in as had But cycle short businesses. orders commercial

‘XX total up XX%. across our in the orders year nearly were So entire

it’s been in of and book our about good year, a cycle. I slower steadier long the as one very mean, and But got we’ve in we our most feel that the is still improved. supporting has order and So kind enter we it into of that headed where surface of backlog and XXXX. business we’re full tech as real trajectory within business strong

QX, we another I product us, the think were talking On orders, about orders side, historic year GI highs ahead due from strong of in mainly year in this ‘XX. industrial in to vehicle last achieving

backlog For year, our doubled. the full nearly

they orders, are come watching down. we’re to as Now starting

avoid still that watching in to XXXX those though say above demand. down, we’re levels. slack are cautiously But even they that So will any orders, I are

expect markets X% industrial at ‘XX and grow to roughly to So we’re the general X%. looking

So, some solid movements.

Myles Walton

Go Okay. ahead.

Lynn Bamford

is and that other appropriations is think get both of thing some we Yes, us money, on-highway for and that hopefully, I work. infrastructure really the drive for tailwinds mention bill in some are one segment funding there’ll of start construction things be and as we more out just they off-highway vehicles buses electric and sort to an going was as across to the spending there we growth some

so that feel about. something aerospace, And the else outside we optimistic that’s

Myles Walton

one. just quick And Okay. one

look how Systems, acquisition debt In incremental sense for placeholder cash and we million versus or that of to sort of access just above the have year the deal a cash have your would you terms much for Arresting of available $XX flow as do incremental use repo? as of you’d the you free this at

Chris Farkas

No.

and that really to But We our we I long-term in at it’s rate long-term the look in interest do point take will at interest a have that on balancing capacity, think is market have ensure and for effective always we’re that, time. the our to Myles, revolver company. capacity our overall where headed best

could I’m say certainly right execute comfortable to in feel We that that going time. financing we not not about on we’re now, this at our options that I But thinking point So transaction revolver. are. other

Myles Walton

thank Okay, you.

Lynn Bamford

Thank you.

Chris Farkas

Thank you.

Operator

from Stifel. comes next Your Nathan line of question from Jones the

now is line Your open.

Nathan Jones

morning, Good everyone.

Lynn Bamford

morning, Good Nathan.

Nathan Jones

going and provide that you down to the where, that color can made are expectations bit. industrial little I a more just on wanted follow-up Maybe on forward? orders that little what there comment your coming you general a for

Chris Farkas

Yes.

have really strong. declined, Nathan, they I they mean they So are are but pre-pandemic above still levels.

highest when in next doubling, and backlog year, year back was ‘XX. order mean, XX% year, was fiscal more at I ‘XX this I your historic versus you last look highs our color which up think

last feel lot the is we get trying to little a the in So January of we’ve of other some into in component just are entering the seen here that here, sure of on of a has supply of But and with shortages they a to but February what’s make demand. and about ahead year the facing strong with placing just to incredibly spend orders not happening we that an electronic year to time what’s our customers talking happening issues year avoid we’re here the slack what so very that’s far both chain and feedback continue strong. there bit a comfortable to be mix here, order going in levels been, that

And that this here XXXX. makes anything see And will coming as is if us we’re So watch into XXXX, to positioned accordingly. certainly react out that look well potential then change I continue mean, a we’re we for I there think closely. going to think we we

Nathan Jones

for thanks And on that. APXXXX Okay, one I RCP. have the do

You projects the out approved understanding, to is on are on would spread timing kind what period And be called win mean, then the about Could what Westinghouse highly those this them? are obviously, would only win very When you out? projects? the seeing to you potential revenue would obviously, in it then your are be? those likely these things Westinghouse supplier the Based billion – that. of seeing you talk likely And would start When you’re orders? of start contracts. long-term over I for for $X.X you and how going orders. confident the

Lynn Bamford

and very one Okay. It’s question a anticipated. you. we that Thank reasonable

you how values it is happen it’s of the of the That’s looking press. nuclear what’s to pouring the in reactor, we be the very first potential – asking So, that it. out is And that long-term really that a Westinghouse and going Ukraine. know – And to don’t Poland XXXX. to need that there Ukraine This to how are I up will we thought appreciate foundation billion up put that, date. building XX they from going and to is has But the discounted most number. pick out procured put want you We commissioning is clearly, definitely – simply back Poland in concrete just means where before is we plant when for. with the to putting the in the very And timing, we But directly we believe be XXXX public $X.X in on is if APXXXXs forth likely. go across back is needs country. they equipment to timeline forth months it see the more about

XXXX start to concrete. that procuring so puts And you into

marching X Now to would nice studies We always we kicking implied know go and last are as so off with and They these have have X along some allow delays. the years that summer to things procurement in progress are far been with to don’t it. stuff making said for feed XXXX. years schedule. But there

for the think all like to we public. everything not is not the I if timeframe. that’s And through today, But feel and be conservative is to all with timeframe, you that’s how reactors growing But to it European is it forward and there and we will the be a putting so but a own it’s the traditional And the also will be that – going but European and be enthusiasm got seems what European in side I our that saying optimism definitely part as on increase their just that a nations the more work the resolve to to to it plants And – about, a with events increase mentioned of recognition really regardless earlier, talking others. drive goes, how energy is of going work that X-Energy and NuScale een we lot some Eastern need mix independence. SMRs are Eastern a continue think that. of nations nuclear go doing have for we

we have trend I capability position So, a or a just attack world. in around great think this to happening that’s got good really the

Chris Farkas

play a those quantities $XXX and turn how a order. will about is that first we XXXX in we when top. to that yet million back in out multiunit determined for give and with the the million to were was little color, China come you there a in lot RCPs agreement and that December, to RCPs, that just be But will $XX more the if signed of last all contract in terms certainly, And pricing a

peak reached in $XXX As I said million. and revenues earlier, that on we that was XXXX,

So, as kind it, at a curve. of on you look it’s bell

gives as one on plus. that based is has this bit that you closing a upon contract out the contract now But I been extended idea plus, last was are a And we hopefully to kind upon the customers’ needs. little of good what the think this mean. XX% China based could contract

plus, than really said haven’t plus, it’s the a but XX% plus. We much how higher

Lynn Bamford

just timeline. back example to Yes. walk piece said the is one on as other Poland And of color the you

We XX for have a received budgetary those RCPs plants. tied to RFP

are at pleased so we And we the move things are seeing along. pace

Nathan Jones

Okay.

Just clarification. one for

in start Assuming when goes order and you timeline XXXX, you say revenue? when as realizing actually would the would that there actually and you commissioning are planned the

Lynn Bamford

So XXXX, I all… know we meant, that’s you sure but what are make to just

Nathan Jones

yes. XXXX,

Lynn Bamford

in Backing would the they procuring XXXX. timelines in, traditional Yes. start imply

traditional world, you things are the prior X-year will to the a would a way go XXXX. slip it just for that. if timeline take for straight But in predict prior of imply We procurement, we and years saying concrete XX months X

Chris Farkas

Yes, straight XXXX. public since information

Lynn Bamford

Yes.

Nathan Jones

Thanks very much. Perfect.

Operator

the line Peter Your from of comes from Baird. next question Arment

line now is open. Your

Peter Arment

fighting Yes. Hi the Lynn. thanks kind Good on morning you headwinds of the Chris, the on APXXXX. the been that for have details

any how helpful. little there what be can to But along? pass able You talk commentary guys are you there that are and bit the a a you are would job. headwinds you kind are out inflation doing great managing maybe Just of

Lynn Bamford

that. you for feeling inflation. Thank Sure. the really started We

transportation the we materials prices. in and think going most in as metals are component the the shortage up, really but was seeing shipping it components across I board and

inflation are We people of possible a going with last on So, the as passing and new monthly detailed up to it to with our we product myself, come offering. across kind materials financial price of and to are the put what lot give year, all our this which some with it tracking is go team more when seeing understanding how started it increases, our us customers added are we mechanisms. is – in real but of raw between we reporting Kevin reviews in that much

and our it. on focus So, it’s just started have that of top last we year, something continued very much mind, tackling we

Peter Arment

you are follow-up then that And forward, more in investments continuation? color a R&D this have do think can a Electronics, is I or And little spending I helpful. year That’s could you are this some that that give a you if year. bit of increasing year? around that Defense your just up R&D headwind go last – little you a on Is see wrapping had that? we this as

Lynn Bamford

you allow Really, putting we really trade-offs a R&D potential make predictions have we in ourselves what years the are to for as what’s and the much enter we projects free best of of decreases in other than are resisted and to as year hand out But those year-over-year kind judgments the that the the to some continuing to continuation dollars. the use area this offerings, Defense PacStar of are Electronics of lines product heard to type in around things past. are along Predominantly, have year the of more of the increases lines, traditional the of us about it’s build the talk out in some within the most board type equipment.

just with to we that in position But also MOSA in more and push and much investments and now with have to right A&I money in segment vehicles, are we leading around for more we electrification make forward their to often to around that, for manufacturers ourselves have are make maintain sure of keeps to right we fit products look as technology speed, the adoption industry across positioned spending. we our leaning defense So, spending the – money have gaining leading a convert, vehicle are it well position. we again, some that’s that is the we them very and specific and the our believe want that

Chris Farkas

are the best that we right we Day, a Investor of now. at really about that R&D and and add, the use. more have going we little the like to to opportunity this be Yes. seizing we a ensure monies it’s how mean and to are where are been And influential about lot we Lynn’s highest we feel very all feel and talked And local that just work to at an opportunity, little spending I bit and the about have would good point, are doing investing but a levels I doing works

industry, well are like the our look it’s to are also although in to relevant peers – we where we We relative positioned. less and feel we

not in are an overspend We position.

just really, the we bit I of opportunities little sure are seizing think being we like are feel that making are doing But are a maybe And way money. the percentile. up the that mostly about effective it’s past a good there. – creeping I kind really with XXth that and job things spending we

Peter Arment

Thanks.

Operator

Your Berenberg the comes next of from Capital. from Instructions] line [Operator question Christopher Rieger

is now Your open. line

Christopher Rieger

Good and Jim. for morning time. the Lynn, very Chris you much Thank

Lynn Bamford

Thank you.

Christopher Rieger

of regard your you guidance defense sort resolution the in looking with XXXX have baked to you somewhat particular Could the budget expectations upcoming sort budget request? in related? ongoing assumptions for your the there that and and Is of you through walk are anything continuing into

Lynn Bamford

little off, to I done. will I when that start color a Chris So, and want am might add

XXX X to the key that respectively. impact. in T&E levels. the back long-term, in isn’t start XXX mid-XXs CR speaks would it we off wide our to we of Electronics Defense to days. have example but labs we a XXX much as budget our sell are R&D, CR the across increasing a our resolution. it as record we to say, the been days programs. ability past resolution we there and some that reasonable the continuing come longest of so defense increases of budget of years XX color little is on is and And and this been days, were X would just outgrow of they support. were which and out all platforms new one things again new. since exceed years, it over country we some maintains was I clamps was intended continuing we productions resolutions, on. environment, a to ability visibility is amount March business really very volumes growth faced, new variety drive interested volume their I start liking, the not naval has If year average say the are have on if are still programs the on track our in XXXX, still XXXX of as to were continuing this So, from computer specific This as long-term in insulated the on strong days would is DoD and our This being bipartisan people the their has The pleased able up also much put A&D And our I to it new as thought lot ramp And the group, nearing to it days, XX, for part. a probably the limits our largely highest equipment the into down you programs are guess It’s But know,

about million tied And lab a $XX is from to of usually not good we but Electronics, so Defense portion have largely program new that starts, the across equipment it. of all, do annually we business

that’s some get headwind for through on as us so – And delayed. that a those that year revenues the continues of it

so anticipating Electronics the forward. And about X% Defense for in guidance in the included put be we that but we are delays to XXXX, that’s

Chris Farkas

– case. talked the be But case kind the and a depending CR further the goes under into bit they of continues if and become hold Yes. might or a X% severity budgetary couple if the or And earlier. year, this one level that flat that year-over-year, reemphasize of could I would only Chris, just – that add X%, obviously, right? to the be we X% which on a to would mean X% about I things decide little if

We X% majority the be to within total of going half back Electronics the are group. sales is that X% in the a push to year. expecting Curtiss-Wright The Defense to of

year, but adds trying less to today. little also approach a we get But I that take we conservative feel X% about is it Electronics. what to given to good that X% are as normally help a be the within fairly the don’t within headwind resolution The understand we deeper We will are do Defense chain harder clear. positioned where sequentially know it, expect guide a and it’s improve have the supply majority facing. push people do we into to call and We this, dynamic provided continuing are we QX, issue makes really that to which going we of to the

Christopher Rieger

That Thank wish year little was you now anything Lynn, you you realized much. at pronounced first the anticipated? what I one your just would your What back guess ago? a know challenges helpful. than very And is a you bit as perhaps biggest that were And you takeaways? more, are year more looking have very CEO, there would

Lynn Bamford

question, something I excellent a an think about lot. That’s

the our increase are across have growth of to challenges is would say like really unearthed embraced across the I say to think the Curtiss-Wright of to really and the think examples I And the with, across opportunities way company – pull together the and a really team for things technology would I first, off commercial into challenges I lead we look the been and are things innovation the lot collaborate and that members pivot and that environment. ability have to we of defense have one pleased that the able I to places organization.

surely it’s beginning have the have I up we that collaborative defense some to in taking the I to months a for and to what recent would is and that my on the of I magnitude in our commercial have it by working up the releasing gain that we have tenure. grow, at something and think is turned press of great technology organization, of next the I say actuation to that. example of significance to more opportunities. We turned but Curtiss-Wright could here sooner heat across my on would of we my applying set tenure, a this way the hand heat something And that hope be couple business the

just we together, have different only working lot is a got are of that electrification, it. I things where and it’s technology variety a – examples So great. can have and opportunities whole It’s to we just markets, like from done take of pleased am which the X of we that new year, but actuation, finding we whether opportunities

say but surely across talk on I biggest that’s emphasis and So, wish are have things we the teams. I that’s more about on I something mind maybe and of the takeaways known and earlier, high my and it’s would we put would something one probably today here

something going so And to we continue it’s drive. to are

Christopher Rieger

Thank very you Great. much.

Operator

comes from next from Your line Securities. the Michael of question Truist Ciarmoli

now open. is line Your

Michael Ciarmoli

I I slide there continuing of going chain And to question. on kind kind that of that out million segment, taking constraints assuming there the Electronics ‘XX of of we though Defense I resolution headwinds and implies, the But Hi. supply you $XX Good it of you just then Does called morning think you on have guess else just mentioned guys. some there. there, almost X% that? guess the it I out getting Thanks pushed ‘XX? into of $XX kind am the growth even got for just million delays out, X% push kind this with hit said, kind of year, is anything pressure at or – of general Is looking just what you flat that growth. out? are on you

Chris Farkas

we improve. the growth Obviously, of really based certainly really is aligns But year. conditions projecting some say heading a have are It’s the to the mainly could the a year, well. here And going we I little are is XXXX. We as safe what think that deeper strong Yes. backlog caution, do upon year what issue some expect been be approaching I get There in into it’s to digits business. doing going into But mean here that is we is this into with of to kind seeing. a I that push-out. low-single hangover we there and mean issue that continue we are backlog PacStar bit there. not our for to Mike.

look about say have to for think while as QX. push system of expect here, the that we to particularly XX% to that important we I & in supplement say be QX, modeling talking that. both entering here, only other am will going Electronics Naval to purposes, we given what from just So, is out opportunity margins that sales QX the operating Defense facing I about the lower-margin into it’s Power QX guide that are and really I and thing are at The we

system have businesses million of of down. are Electronics, but of the slightly $XX the the with at within in these levels past, And and to push they these that lower-margin this Defense been sales. lot do a Now out has mix

initial bit it’s – those decremental So, to over time. a sales our just which a are usually little of mix bit range more little segments. – steep that a revenue, more system will margins, and is see little and we those lower on we more in be XX% quarter again, once those two lower-margin give in than XX% you a see with dealing APXXXX for generally decrease the then can in But

Michael Ciarmoli

pricing are have specifics good or back had And pass can strategies related, what push sort know Peter wanted a towards contracts commercial to give that’s I of inflation. above can think I – mean environment? re-upped slide you say, the Got implementing a you the you go And through segue. the it. current a to until mean you I mean ability at inflationary that kind dedicated you And maybe beyond just I pricing? dedicated on are maybe to under and they I pricing on you just aerospace? give more are where able specifics, any I Day. price of you to of you mean fixed kind I Investor more along your get of mentioned Helpful. asking defense. within, specifically was squeezed getting

Lynn Bamford

that kind And long-term we across and something of our excellent universally go it business just our can So, an for question. A it’s is agreements. revenues is lot of on not prices. raise

thing businesses say as LTAs sure on crisp – we backlog. we have we making so implementing us in that, I when there expire and last would year and We were One of very inflationary understand making start able the have our are are we appropriate already prices. And raise LTAs. really we sure being indices as prices this to new did are tied to

we is long-term we to some it’s customers in LTAs level though are our going allow your been will would have that really And not a work appropriately. the with you for is contracts some most us. that know they them that’s seeing teams didn’t be the got to go locked transparent to technically on customers have hit with reviewed part-by-part. in them. your some of they customers consistently. make ahead But though data journey so monthly team. little cases even And a to get priced pressure, and go where what some – that high a by or and I us reasonable – – – are we have and adjustments something and say show are we adjustments It’s trying sure are And to LTAs levels it reviewing to are on our work working be the in a me really have is again, journey general, made them priority progress through we high may all But where contracts even and customer-by-customer able I that it But a the be back are it and to basis we make to with are work with hardest, we things it. for say high, of where pricing contract

it. of are by it’s on but the we team, lot a so work And

Chris Farkas

I in that the XXX will I points see just expansion that Industrial think supplement in quarter, you fourth Aerospace I of operating had basis quick, mean and And margin real we segment. can the Mike.

to of information But We hold. are business. what people the some and those defense are field cost inflation to by material in take trying we other in happen, ahead things improving And good pricing and are quality supporting increases. seeing would short-term just indicators on initiatives the said, starting the side we see to of are side pricing Lynn the echo the that those opportunity than on we more to the get are of starting commercial

Michael Ciarmoli

then one to APXXXX. the had, the Got last And it. back going I just

your margin with as using But billion the that are out or mentioned still through conversation the in so as pumps that XX you at maybe I million. change you would the settlement of of terms profile, was there, of and – Westinghouse? kind $XX imply pricing. anything part settlement pricing looking the opportunity with $X.X guess Looking think I Does part at

Chris Farkas

early comment it’s really on think pricing. to I too

contract, at you But It’s make we we I pricing offered talking on that take thing now well, a had think sure about for do right figure going mean that there. the out, are business when last and look that $XX how million. to doing it’s forward. trying right we are out I the the we pricing

those that get pleased deeper with negotiations and and the will program, into resolve think the we that we that, I profitability really to-date. relationships the clear. with Westinghouse are we But commercial as have become So, to done work

Michael Ciarmoli

you. Got it. Thank

Lynn Bamford

Mike. Thanks

Operator

the to Executive conference I Chief Officer. would and over President hand now at questions There no to like Bamford, are time. the back Lynn further

Lynn Bamford

So please thank enjoy Goodbye. you, rest everyone, and the for today of your day. joining us

Operator

Thank This concludes for today’s call. a day. and you participating, conference have wonderful

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Curtiss-Wright (CW) 27 Feb 222021 Q4 Earnings call transcript