Curtiss-Wright Corporation

Welcome to the Curtis Wright fourth quarter and full year 2023 earnings conference call. At this time, all participants have been placed on a 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 that 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, Jamie, and good morning, everyone. Welcome to Curtis Wright's fourth quarter and full year 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 Barkis. Our call today's 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 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. To detail those risks and uncertainties associated with the forward-looking statements and our public filings to the SEC. As a reminder, the company's results include an adjusted non-GAAP view that excludes certain costs in order to provide better transparency into Curtis Wright's 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. The non-GAAP reconciliations for current and prior year periods are available in the earnings release and on our website. Now I'd like to turn the call over to Lynn to get things started.

Thank you, Jim, and good morning, everyone. Curtis Wright delivered a solid operational performance in the fourth quarter and a strong finish to 2023. For the second consecutive year, we achieved several new financial records as we continued to execute our pivot to growth strategy. We generated double-digit growth in sales and earnings per share in 2023 as we benefited from the underlying demand within our core portfolio. We achieved these results while maintaining our commitment to incremental investments in R&D, and we generated significant growth in orders, which are proof points that our strategy to build momentum in our organic growth is working. Overall, we delivered another outstanding year for our shareholders, and I look forward with confidence to Curtis Wright's future. Turning to today's presentation, I'll begin by covering the highlights of our fourth quarter of full year 2023 performance and a brief preview of our 2024 financial outlook. Then I'll turn the call over to Chris to provide a more in-depth review of our financials. Finally, I'll wrap up our prepared remarks with a recap of our performance and the notable achievements against our 2021 Investor Day commitments before we move to Q&A. Starting with our fourth quarter 2023 highlights, sales of $786 million increased 4% year over year and exceeded our expectations due to a stronger than expected performance in the defense electronics segment, which continues to benefit from a healthy backlog and easing in the supply chain. Our performance was once again led by growth in our aerospace and defense markets, as we benefited from 20% growth in commercial aerospace, along with higher tactical communications equipment revenues in ground defense. We also experienced solid growth in our commercial nuclear and process markets. Adjusted operating income grew 2% year over year to a quarterly record of $163 million and resulted in a strong operating margin of 20.8%. Diluted earnings per share increased 8% year-over-year to a quarterly record of $3.16, while free cash flow was $270 million, resulting in a 221% free cash flow conversion. Next, I'll turn your attention to the right-hand side of the slide and recap our full-year 2023 results, where key metrics including sales, operating income, earnings per share, free cash flow, and orders were all records for the company. Sales increased 11% overall to more than $2.8 billion, driven by 10% organic growth. as well as a better than expected contribution from the arresting systems business acquired in the mid-2022. We delivered continued operating margin expansion reaching 17.4% in 2023, which included more than $20 million in incremental strategic investments in research and development to further position us for future organic growth. Of note, for 2023, total R&D investments included both internal and customer-funded projects exceeded 6.5% of total sales. We also overcame the significant headwind associated with the wind-down of the profitable CAP 1000 program. Diluted earnings per share of $9.38 increased 15% year-over-year, while adjusted pre-cash flow was $413 million, a reflection of our strong growth in earnings and working capital management. Growth in our order book was exceptionally strong in 2023, up 5% year over year to a record $3.1 billion, reflecting 1.1 times book-to-bill overall, and solid demand across the majority of our A&D and commercial markets. Of note, we generated double-digit bookings in our defense electronic segment, driven by strong demand for embedded computing and tactical communications equipment, as well as higher growth in our naval and power segment for both commercial nuclear and process equipment. As a result, we concluded the year with a backlog of $2.9 billion, up 9% year over year. With this strong performance, we exceeded expectations for nearly all of our three-year targets set at our 2021 investor day, including sales, operating income, EPS growth, and delivering close to 110% average free cash flow conversion. I'll provide greater detail on our performance against our long-term targets later in the call. Overall, I'm exceptionally proud of the team's continued dedication to deliver consistent, profitable growth and a tremendous performance this past year. Finally, I would like to introduce our full year 2024 guidance, where our successful pivot to growth journey continues. Overall, we are projecting mid-single-digit sales organic growth as we continue to benefit from our steadily growing backlog and the strong alignment of our technologies to favorable end-market trends. We intend to continue our pursuit of investing for growth by making incremental investments in both internally and externally funded research and development. We expect to generate solid growth in diluted EPS and free cash flow this year with the potential to reach double-digit EPS growth and up to $435 million of free cash flow at the high end of our guidance ranges. In summary, Curtis Wright remains well-positioned to deliver another exceptional performance in 2024. Now, I'd like to turn the call over to Chris to continue with our prepared remarks.