Curtiss-Wright(CW) - 2023 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2023, total net sales increased to $704.4 million, up 15.6% from $609.4 million in the same period of 2022[23] - Gross profit for the same period was $259.6 million, representing a gross margin of 36.8%, compared to $228.5 million and a gross margin of 37.5% in 2022[23] - Net earnings for the three months ended June 30, 2023, were $81.0 million, an increase of 15.8% from $70.9 million in 2022[23] - Basic earnings per share rose to $2.11, up from $1.84 in the prior year, reflecting a 14.7% increase[23] - The company reported a comprehensive income of $100.1 million for the three months ended June 30, 2023, compared to $34.5 million in the same period of 2022[25] - Operating income for the three months ended June 30, 2023 was $112.8 million, an increase from $98.1 million in the same period of 2022[181] - Comprehensive income for the second quarter of 2023 was $100 million, compared to $35 million in the prior year, driven by a $19 million foreign currency translation gain[205] - The Corporation's comprehensive income for the six months ended June 30, 2023, was $171 million, compared to $74 million in the prior year, reflecting a significant increase[206] Expenses and Costs - Research and development expenses decreased to $20.2 million, down 15.3% from $23.9 million in the same quarter of 2022[23] - Depreciation and amortization expenses for the three months ended June 30, 2023, were $57,975 thousand, up from $53,645 thousand in the same period of 2022[35] - The Corporation's share-based compensation expense for the three months ended June 30, 2023, was $8,859 thousand, compared to $7,580 thousand for the same period in 2022[35] - Total intangible amortization expense for the six months ended June 30, 2023 was $33 million, compared to $28 million in the prior year period[168] - The defined contribution plan expense for the six months ended June 30, 2023, was $12.2 million, compared to $10.3 million in the same period of 2022, reflecting a 18.4% increase[188] Assets and Liabilities - Total current assets as of June 30, 2023, were $1.52 billion, slightly up from $1.52 billion in 2022[18] - Total liabilities decreased to $2.30 billion from $2.46 billion year-over-year, indicating a reduction of 6.4%[18] - Cash and cash equivalents decreased to $158.7 million from $257.0 million in the previous year, a decline of 38.4%[18] - Receivables, net as of June 30, 2023, totaled $751,532 thousand, an increase from $724,603 thousand as of December 31, 2022[53] - Inventories, net as of June 30, 2023, amounted to $545,596 thousand, compared to $483,113 thousand as of December 31, 2022, reflecting an increase of 13%[55] - Total debt as of June 30, 2023 was $1,172.5 million, with an estimated fair value of $1,079.8 million[175] Cash Flow - Cash flows from operating activities provided $19,353 thousand for the three months ended June 30, 2023, compared to a cash outflow of $93,271 thousand for the same period in 2022[35] - Operating cash inflow for the six months ended June 30, 2023, was $19,353,000, a significant improvement from a cash outflow of $93,271,000 in the same period of 2022[124] - Net cash provided by operating activities increased by $113 million from the prior year period, primarily due to higher cash earnings and improved working capital[120] - The net increase in cash and cash equivalents for the six months ended June 30, 2023, was a decrease of $98,237,000, compared to a net increase of $410,000 in the same period of 2022[124] Dividends and Share Repurchase - The company declared dividends of $0.20 per share, up from $0.19 per share in the same quarter of 2022[23] - The Corporation repurchased approximately 0.1 million shares of its common stock for the three months ended June 30, 2023[39] - The Corporation repurchased approximately 72,703 shares at an average price of $170.26 per share during the quarter ended June 30, 2023, with $200 million remaining available for repurchase under its program[146] - The Corporation made dividend payments of $7 million during the six months ended June 30, 2023, compared to $14 million in the same period of 2022, with an increase in quarterly dividend to $0.20 per share starting in Q2 2023[130] Market Segments and Sales - The Aerospace & Defense segment reported total sales of $466,056 thousand for the second quarter of 2023, up from $379,916 thousand in the same quarter of 2022, representing a 23% increase[51] - The Defense Electronics segment's sales increased by $48 million, or 27%, to $226 million in the second quarter of 2023 compared to the prior year[84] - Sales in the Naval & Power segment for the six months ended June 30, 2023 increased by $70 million, or 15%, to $547 million, mainly due to higher sales in the aerospace defense and power & process markets[106] - Sales in the power & process market increased by $33 million, or 8%, to $461 million, driven by higher industrial valve sales and nuclear aftermarket sales[122] - Total sales for Curtiss-Wright increased by $134 million, or 18%, to $875 million for the six months ended June 30, 2023, with contributions from all markets[119] Orders and Backlog - Total backlog as of June 30, 2023, was approximately $2.8 billion, with an expectation to recognize about 90% as net sales over the next 36 months[50] - New orders in the second quarter increased by $65 million compared to the prior year, attributed to the acquisition of arresting systems and increased orders for nuclear aftermarket products[207] - New orders during the six months ended June 30, 2023 increased by $33 million, primarily due to the impact from the arresting systems acquisition and increased orders for nuclear aftermarket products[110] Interest and Debt Management - The Corporation's interest expense for the second quarter of 2023 increased by $5 million, or 53%, to $15 million, primarily due to the issuance of $300 million Senior Notes in October 2022[80] - The average interest rate on the Corporation's debt was 4.1% for the three months ended June 30, 2023, compared to 3.2% for the same period in 2022[164] - As of June 30, 2023, the Corporation had $125 million of outstanding borrowings under the Credit Agreement and $604 million of unused credit available without violating debt covenants[135] - The Corporation's management is in compliance with all debt agreements and credit facility covenants, maintaining a debt to capitalization limit of 60%[137]