Curtiss-Wright Corporation

Welcome to the Curtis Wright Third Quarter 2023 Earnings Conference Call. At this time, all participants have been placed on the listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Jim Ryan, Vice President of Investor Relations.

Thank you, Raisa, and good morning, everyone. Welcome to Curtis Wright's third quarter 2023 earnings conference call. Joining me on the call today are Chair and Chief Executive Officer Lynn Bamford and Vice President and Chief Financial Officer Chris Farkas. Our call today is being webcast and the press release as well as a copy of today's financial presentation 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 the forward-looking statements in our public filings with the SEC. As a reminder, the company's results include an adjusted non-GAAP view that excludes certain costs in order to provide greater transparency and occurs for its ongoing operating and financial performance. Any references to organic growth are on an adjusted basis and exclude foreign currency translation, acquisitions, and divestitures unless otherwise noted. GAAP to non-GAAP reconciliations for current and prior year periods are available in the earnings release and on our website. And I'd like to turn the call over to Lynn to get things started.

Thank you, Jim, and good morning, everyone. I will begin by covering the highlights of our third quarter 2023 performance and a brief update on our full year financial outlook, which we are updating to reflect stronger expectations for revenue, earnings, and free cash flow generation. Then I'll turn the call over to Chris to provide a more in-depth review of our financial results and updates to our 2023 guidance. Finally, I'll wrap up our prepared remarks before we move to Q&A. Starting with our third quarter 2023 highlights, sales increased 15% overall to $724 million and improved 14% organically as we demonstrated higher year-over-year sales growth in all our end markets. Our A&D markets grew 18% year-over-year as we benefited from the continued easing of the supply chain in defense electronics. which drove strong increases in both aerospace and ground defense, as well as mid-teens growth in commercial aerospace. We also experienced widespread growth in our commercial nuclear, process, and industrial markets, which Chris will cover in more detail shortly. Operating income grew 17% year over year and exceeded our strong sales growth, while operating margin expanded 30 basis points, Underscored within this performance was strong profitability in defense electronics segment. As we continue to overcome the dramatic impact of last year's supply chain challenges, we continue to benefit from steady improvements in lead times and component availability within defense electronics, providing further confidence in achieving our full-year outlook. Diluted earnings per share of $2.54 increased 23% year-over-year, while adjusted free cash flow was up 59%, resulting in 140% in free cash flow conversion. We were also pleased with the continued growth in our order book, up 3% in the quarter and now up 8% year-to-date. Leading the way was our defense electronic segment, which achieved a record bookings quarter exceeding the previous record set in the last year's third quarter. This activity was driven by continued strong demand for embedded computing and tactical communications equipment. In addition, in our naval and power segment, we continue to experience strong demand for commercial nuclear products to support maintenance, modernization, and plant life extensions, as well as advanced small modular reactor designs. Overall, book to bill was 1.2 times in the third quarter, building upon our already strong backlog, which is now up 12% year to date, and in excess of $2.9 billion. Next is some highlights of our full-year 2023 guidance. Our growing backlog and strong performance to date, along with favorable trends across all our end markets, provides us with confidence to raise our sales outlook again. This positions us to deliver 8% to 10% top-line growth with increased sales projected in all three segments. Overall, strong profitability remains unchanged, with expectations for 10 to 30 basis points in year-over-year margin improvement, reflecting the balance of the combined portfolio, whereby a reduction in the naval and power segments profitability was offset by a stronger outlook in defense electronics. As a result, diluted EPS is now expected to grow 11% to 13%, which, as a reminder, keeps us on track to exceed our long-term targets. In addition, for the second consecutive quarter, we increased the bottom end of our already strong free cash flow guide to reflect the year-to-date performance and higher confidence in the full year outlook. In summary, Curtis Wright remains well-positioned to deliver another strong performance in 2023. Now, I would like to turn the call over to Chris to continue with our prepared remarks.