Curtiss-Wright Corporation

Welcome to the Curtis Wright Second Quarter 2024 Earnings Conference Call. At this time, all participants have been placed in 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 the star and 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star and 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 and zero. I would now like to turn the call over to Jim Ryan, Vice President of Investor Relations.

Thank you, David, and good morning, everyone. Welcome to Curtis Wright's second quarter 2024 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's theme 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. We detail those risks and uncertainties associated with our forward-looking statements and 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 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, divestitures, and restructuring once otherwise noted. GAAP and 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. Today marks our first earnings call following our May 2024 Investor Day. During the event, we provided investors with an overview of our pivot to growth strategy, a recap of our prior three years journey, and our new three-year financial target. We appreciated the opportunity to showcase some of our critical technologies and several of our key business leaders across Curtis Wright. The event had a great turnout, and I value everyone's support and feedback. As you will see in our results today, we are off to a great start. Our performance emphasizes our focus on accelerating the pace of long-term organic growth across all of our end markets, along with the team's dedication to operational excellence, future margin expansion, and free cash flow generation. I am confident we are building strong momentum to compound sustained profitable growth in the years ahead. With that, I'll turn to today's presentation. I'll begin by covering the highlights of our second quarter performance and will provide a few comments regarding our updated 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 by discussing the recently announced acquisition of Ultra Energy and some closing remarks before we move to Q&A. Starting with the highlights of our second quarter 2024 performance, sales of $785 million increased 11% year-over-year, driven by better-than-expected performance in the defense electronics segment and the timing of revenues in the naval and power segment. Underscoring this performance, we achieved strong mid-to-high teams growth across all our aerospace and defense markets, Operating income increased 16% year-over-year, exceeding our sales growth, and resulted in 60 basis points of overall operating margin expansion. Diluted earnings per share of $2.67 increased 24% year-over-year and also exceeded our expectations, primarily due to the higher sales. Free cash flow was strong at $100 million and in line with the prior year, professing nearly 100% conversion. Regarding our order book, we continue to experience strong growth, particularly within our A&D markets, driving overall new orders up 18% year-over-year to nearly $1 billion or 1.3 times book-to-bill in the second quarter. This strong demand enabled us to once again reach a record level of backlog, now in excess of $3.2 billion, which provides us with great visibility for the second half of 2024 and supports our long-term outlook. Within our A&D order book, we experienced robust demand in our naval defense businesses supporting aircraft carrier and submarine programs, as well as increased aircraft handling equipment orders from both the U.S., and direct foreign military customers. We are also seeing positive order trends within our commercial markets. The most notable increases in demand were in our industrial businesses, and more specifically, industrial vehicles, where orders improved and have now essentially stabilized year over year. Next is some highlights of our full 2024 guidance. Our strong first half performance along with our growing order book provided confidence to increase our overall guidance for the majority of our key metrics. We now expect overall sales to increase six to eight percent and we continue to target operating margin expansion while making significant incremental investments in both internally and externally funded research and development. This puts us on track to firmly deliver double-digit growth in diluted EPS this year. In addition, we increased our already strong free cash flow guide to reflect higher confidence in the full-year outlook. Overall, we are well-positioned to deliver exceptional results in 2024. Finally, we launched a corporate-wide restructuring program and several cost-saving initiatives in the second quarter to support our future growth and improve our overall operational efficiency. We expect these actions to affect all three segments, but mainly impact the A&I segment. We anticipate approximately $15 million in restructuring costs in 2024 and approximately $10 million in annualized savings through operating income in 2025. In addition, we expect to recognize a portion of these savings this year in the A&I segment, which is embedded within our updated guidance. Additionally, we completed the consolidation of our UK legal entity structure, which Chris had initially discussed at Investor Day. He'll provide some more additional color on the specific benefits of this program later in our prepared remarks. Overall, the savings generated by these two initiatives support our ongoing pursuit of operating margin expansion and EPS growth and will generate additional funding to reinvest back into the business. We also expect them to contribute to our already strong fee-free cash flow position. In summary, Curtis Wright continues to build momentum through the execution of our pivot to growth strategy, and we remain confident in our ability to deliver long-term shareholder value. Now I'd like to turn the call over to Chris to continue with our prepared remarks.