Curtiss-Wright Corporation

Thank you for standing by. Welcome to the Curtis Wright Third Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. And if you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Jim Ryan, Senior Director, Investor Relations. Please go ahead.

Thank you, Lori, and good morning, everyone. Welcome to Curtis Wright's third quarter 2021 earnings conference call. Joining me on the call today are President and Chief Executive Officer Lynn Bamford and Vice President and Chief Financial Officer Chris Barker. Our call today is being webcast, and the press release, as well as a copy of today's financial presentation, is available for download through the investor relations section of our company website at www.curtiswright.com. A replay of this webcast also can be found on the website. Please note today's discussion will include certain projections and statements that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. We detail those risks and uncertainties associated with our forward-looking statements in our public filings with the SEC. As a reminder, the company's results include an adjusted, non-gap view that excludes certain costs in order to provide greater transparency and to certify ongoing operating and financial performance. Also note that both our adjusted results and full year guidance include our build-to-print actuation product line that supported the 737 MAX program, as well as our German valve business, which was classified as held for sale in the fourth quarter of 2020. Gap to non-gap reconciliations for current and prior year periods are available in the earnings release at the end of this presentation and on our website. Any references to organic growth exclude the effects of restructuring, impairment of assets held for sale, foreign currency translation, acquisitions, and divestitures, unless otherwise known. Now I would like to turn the call over to Lynn to get things started. Lynn?

Thank you, Jim, and good morning, everyone. I'll begin with the key highlights of our third quarter performance and an overview of our full year 2021 outlook. Then I'll turn the call over to Chris to provide a more detailed review of our financial results and updates to our full year guidance. Finally, I'll wrap up our prepared remarks before we move to Q&A. Starting with the third quarter highlights, we experienced a strong 12% increase in overall sales, of which 4% was organic. Our A&D markets improved 15%, reflecting solid growth in commercial aerospace, naval defense, and yet another quarter of strong performance from our PACSAR acquisition. Having just completed its first year under Curtis Wright's ownership, I'm pleased to report that PACSTAR is executing very well and its integration remains on track. The business is well positioned for continued strong top-line growth and is closely aligned with the Army's top modernization priorities. Turning to our commercial markets, we experienced strong year-over-year growth, which was led by both our industrial vehicle and process markets, as these industries continue to sharply rebound. Looking at our profitability, adjusted operating income improved 12% with adjusted operating margin strong at 17.5%, reflecting higher sales and operating income across all our segments, as well as the benefits of our operational excellence initiative. It's important to note that this strong performance was achieved while we continued to invest strategically with a $4 million incremental investment in research and development in as compared to the prior year. As a result, we are on track to invest $12 million in incremental RMD this year to support our future organic growth initiative. Adjusted diluted EPS was $1.88 in the third quarter, which was slightly above our expectations due to the strong operational performance and the benefits of our consistent share repurchase activity. Free cash flow was similarly strong, up 76% compared with the prior year, with strong free cash flow conversions that exceeded 125% and keeps us on track to achieve our long-term objectives. Turning to our third quarter orders, we achieved 13% growth and booked a bill exceeded one-time sales, driven by increases within each of our three segments. Digging a little deeper, we experienced solid growth of 7% in our A&D market orders, as well as a robust growth of 25% in our commercial market, providing continued support to our strong backlog. Next, I wanted to address the global supply chain disruption on our business. Overall, I am really proud of the team's strong execution in light of this challenging supply chain environment. As we expected and as we indicated last quarter, our operations continue to be faced with some supply chain disruptions caused by both delays in container shipments and shortages in electronic components, principally impacting sales within our ANI and defense electronic segments. Thus far, these disruptions have been immaterial to our full year 2021 results, essentially limited to timing rather than lost revenues, based upon the team's untiring efforts to mitigate these impacts to sales and to preserve our profitability. We continue to aggressively manage the timing of products within our supply chain and remain encouraged by our strong backlog. As we move forward, this remains a watch item for us, and should we encounter further revenue push-outs, we anticipate offsetting any delays through the strength of our combined portfolio. I'd also like to address our press release from mid-September, where we announced the Board's support for a substantial increase in our share repurchase authorization from $150 million up to $550 million. We immediately and opportunistically began to repurchase $200 million of our stock in mid-September. I'm pleased to report that we recently completed this program and bought back more than 1.5 million shares. We are on track to complete at least $250 million of share repurchases in 2021, and we remain well positioned for the continued return of capital to our shareholders going forward with $350 million of remaining authorization. Finally, turning to our full year 2021 adjusted guidance. While we maintained our outlook for sales, operating income, margin, and free cash flow, we tightened and raised the bottom end of our adjusted EPS guidance range. We now expect to achieve between $7.20 and $7.35, essentially double-digit growth compared with the prior year, based on our strong year-to-date performance and the benefit of our repurchase activity. We remain very much on track to deliver strong results in 2021. Now I'd like to turn the call over to Chris to provide a more thorough review of our third quarter performance and our outlook for 2021. Chris?