Curtiss-Wright Corporation

Welcome to the Curtiss-Wright Third Quarter 2024 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 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, Todd, and good morning, everyone. Welcome to Curtis Wright's third 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 Parkes. 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 curtisgrace.com. Replay of this webcast also can be found on the website. Please note today's discussion will include certain projections and statements that are overlooking as defined in the Private Securities Litigation and Reform Act of 1995. These statements are based on management's current expectations and are not guaranteed at future performance. GTL has risks and uncertainties associated with our forward-looking statements and our public filings with the SEC. As a reminder, the company's results included an adjusted non-debt view that excludes certain costs in order to provide greater transparency into Curtis Wright's ongoing operating and financial performance. Also note that our updated full-year guidance does not include the acquisition of Ulster Energy, which we anticipate closing in the fourth quarter. Any references to organic growth are on an adjusted basis and exclude foreign currency translation, acquisitions, divestitures, and restructuring unless otherwise noted. Gap and non-gap reconciliations for current and prior year periods are available in the earnings release and on our website. Now I'd like to turn it over to Lynn to get things started.

Thank you, Jim, and good morning, everyone. As you saw in our results released last night, we delivered a strong third quarter performance and continue to build momentum across our businesses. We continue to invest in the future of Curtis Wright, including our technology, systems and infrastructure, and of course, our talent. As a result of these investments, Curtis Wright remains deeply aligned with the major growth vectors within our end markets and well-positioned to generate meaningful and long-term returns for our shareholders. In addition, there have been a number of exciting industry developments and announcements over the past few months, particularly in commercial nuclear, which have the potential to create tremendous value for Curtis Wright over the course of this decade and beyond. I'll speak to some of those opportunities in more detail later in our remarks. Overall, we remain confident in our ability to accelerate the pace of long-term profitable growth and have demonstrated considerable progress towards our 2026 Investor Day objectives. With that, I'll turn to today's presentation. I'll begin by covering the highlights of our third quarter performance, and we'll 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 with some closing remarks before we move to Q&A. Starting with the highlights of our third quarter 2024 performance, sales increased 10% year over year to nearly $800 million, driven by a better than expected performance in both our defense electronics and naval and power segments. Underscoring these results, we achieved a strong 15% growth in our aerospace and defense markets, as well as low double-digit growth in our commercial nuclear markets. Operating income increased 11% year-over-year, once again exceeding our sales growth, and resulted in the 20 basis points of overall operating margin expansion to 18.7%. This performance reflected the strong growth in sales, our team's commitment to operational excellence, and the initial benefits of our corporate-wide restructuring actions. Diluted earnings per share increased 17% year-over-year, which also exceeded our expectations and was primarily driven by our higher A&D sales. Pre-cash flow was $163 million, up 19% year-over-year, reflecting more than 140% conversion due to the improved operational performance and lower working capital. turning to our order book and starting in our A&D markets. We continue to experience strong demand for our defense electronics products within our ground and aero defense markets, with the third quarter results reflecting higher orders for tactical communications and flight test equipment. As a result, our defense electronics segment achieved its highest booking quarter on record. Elsewhere, orders within our naval defense and commercial aerospace markets were relatively flat compared with the prior year, but both have demonstrated very strong growth through the first nine months of 2024. Within our commercial markets, we benefited from improved demand in our commercial nuclear aftermarket businesses, primarily driven by the fall outage season, which, as expected, was more pronounced than 2023. Elsewhere, we continue to see stabilization in order trends for our industrial businesses, most notably in industrial vehicles, despite some of the challenging dynamics impacting the global off-highway market. Overall, total new orders increased 2% year over year in the third quarter, reflecting a solid 1.1 times book-to-bill. Furthermore, new orders for the year continue to outpace our very strong overall sales growth. As a result, our year-to-date backlog is up 16% and reached a new record of $3.3 billion. This strong demand provides us with continued confidence to support Curtis Wright's long-term growth outlook. Turning to the topic of capital allocation, I would like to highlight the ramp-up in our share repurchase activity during the third quarter. Curtis Wright typically plans for at least $50 million of annual repurchases to cover share dilution. In May, the board approved an increase in the total available authorization to $400 million, reflecting their confidence in the company's ability to deliver profitable growth and in our strong free cash flow position. Subsequently, in September, the board approved our request for a $100 million expansion of our 2024 share buyback program. I'm pleased to report that we immediately began to repurchase our stock and completed the $100 million program on September 30th. We are now on track to complete at least $150 million of share repurchases in 2024, and we've remained well-positioned to deliver a constant return to capital in our shareholders going forward. Next, I'll provide some highlights of our updated full-year 2024 outlook, as shown on the right-hand side of the slide. Our growing backlog and strong operational performance have provided confidence to once again raise our overall guidance for the majority of our key metrics. We now expect sales to increase 7% to 9%, principally reflecting the improved outlook in our A&D and commercial nuclear markets, driving a 7% to 10% increase in operating income. We continue to target our operating margin expansion while making significant investments across the business to improve our competitive positioning and strengthen Curtis Wright for the future. Diluted EPS is now expected to grow 12% to 15%. In addition, for the second consecutive quarter, we raised our free cash flow guide to reflect the strong year-to-date performance and higher confidence in the full-year outlook. In summary, Curtis Wright demonstrated strong operational performance in the third quarter, and the business remains primed to deliver exceptional results for the full year. Now I would like to turn the call over to Chris to continue with our prepared remarks.