Curtiss-Wright(US:CW)2021-11-06 20:56Financial Data and Key Metrics Changes - The company experienced a strong 12% increase in overall sales, with 4% being organic growth [7] - Adjusted operating income improved by 12%, with adjusted operating margins at 17.5% [9] - Adjusted diluted EPS was $1.88, slightly above expectations, and free cash flow increased by 76% compared to the prior year [10] Business Line Data and Key Metrics Changes - Aerospace & Industrial segment sales increased by 14%, driven by strong demand in commercial aerospace and general industrial markets [16] - Defense Electronics segment revenues rose by 22%, primarily due to the PacStar acquisition, although organic sales were impacted by timing issues [18] - Naval & Power segment revenues increased by 3%, with higher sales in naval nuclear propulsion equipment [20] Market Data and Key Metrics Changes - A&D market orders grew by 7%, while commercial market orders saw robust growth of 25% [11] - The company reported a book-to-bill ratio exceeding one, indicating strong order activity [33] Company Strategy and Development Direction - The company is focused on strategic investments, including a $12 million increase in R&D spending to support future growth initiatives [9][30] - Share repurchase authorization was increased from $150 million to $550 million, with plans to repurchase at least $250 million in 2021 [14] - The company remains committed to acquisitions as a priority for growth, with a full pipeline of opportunities [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain disruptions but noted that these have not materially impacted full-year results [12] - The company expects to achieve strong results in 2021, with adjusted EPS guidance raised to a range of $7.20 to $7.35 [15][29] - Management expressed confidence in the defense budget's bipartisan support and its alignment with the company's priorities [45] Other Important Information - The company is on track to achieve its ninth consecutive year of over 100% free cash flow conversion [31] - The company is managing supply chain challenges through dual sourcing and strategic relationships [39] Q&A Session Summary Question: Supply chain risk management - Management discussed efforts to mitigate supply chain risks, including dual sourcing and addressing electronic component shortages [36][39] Question: Impact of continuing resolution on defense portfolio - Management noted that while continuing resolutions are disappointing, they are somewhat insulated due to selling primarily to primes [42][43] Question: Performance of acquisitions in the defense sector - Management reported positive performance from acquisitions, with no significant challenges noted beyond general supply chain delays [50] Question: Outlook for the CAP1000 program - Management indicated they are managing capacity effectively as the CAP1000 program winds down, with potential future opportunities in nuclear projects [52][53] Question: Share repurchase strategy - Management confirmed that share repurchases are part of a broader capital allocation strategy, with acquisitions remaining a top priority [55][60] Question: Budget markups and their implications - Management highlighted positive budget markups for naval programs, which are expected to benefit the company [61]