What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-04 compared with 2022-11-03 · 194 added, 369 removed, 511 unchanged (52% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands, except per share data) 2023 2022

11 unchanged sentences

Loss on divestiture — 4,651

Impairment of assets held for sale — 8,656 — 8,656

Operating income 78,615 60,510

15 unchanged sentences

(In thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

Three Months Ended

Net earnings $ 56,846 $ 40,685

6 unchanged sentences

Comprehensive income $ 71,320 $ 39,626

(1) The tax expense included in foreign currency translation adjustments for the three months ended September 30, 2022 was immaterial.

The tax expense included in foreign currency translation adjustments for the nine months ended September 30, 2022 was $ 1.7 million.

The tax benefit included in foreign currency translation adjustments for the three and nine months ended September 30, 2021 was immaterial.

(2) The tax expense included in pension and postretirement adjustments for the three and nine months ended September 30, 2022 was $ 1.2 million and $ 3.1 million, respectively.

The tax expense included in pension and postretirement adjustments for the three and nine months ended September 30, 2021 was $ 2.0 million and $ 5.1 million, respectively.

(1) The tax benefit included in foreign currency translation adjustments for the three months ended March 31, 2023 was $ 2.4 million.

The tax benefit included in foreign currency translation adjustments for the three months ended March 31, 2022 was immaterial.

(2) The tax benefit included in pension and postretirement adjustments for the three months ended March 31, 2023 was immaterial.

The tax expense included in pension and postretirement adjustments for the three months ended March 31, 2022 was $ 1.4 million.

See notes to condensed consolidated financial statements

2 unchanged sentences

(In thousands, except per share data)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current assets:

2 unchanged sentences

Inventories, net 527,937 483,113

Assets held for sale — 10,988

Other current assets 67,415 52,623

12 unchanged sentences

Deferred revenue 234,487 242,483

Liabilities held for sale — 12,655

Other current liabilities 76,452 82,395

9 unchanged sentences

Stockholders’ equity

Common stock, $ 1 par value, 100,000,000 shares authorized as of September 30, 2022 and December 31, 2021;

49,187,378 shares issued as of September 30, 2022 and December 31, 2021;

outstanding shares were 38,334,223 as of September 30, 2022 and 38,469,778 as of December 31, 2021

Common stock, $ 1 par value, 100,000,000 shares authorized as of March 31, 2023 and December 31, 2022;

49,187,378 shares issued as of March 31, 2023 and December 31, 2022;

outstanding shares were 38,364,387 as of March 31, 2023 and 38,259,722 as of December 31, 2022

49,187 49,187

2 unchanged sentences

Accumulated other comprehensive loss ( 244,442 ) ( 258,916 )

Common treasury stock, at cost ( 10,853,155 shares as of September 30, 2022 and 10,717,600 shares as of December 31, 2021)

Common treasury stock, at cost ( 10,822,991 shares as of March 31, 2023 and 10,927,656 shares as of December 31, 2022)

( 1,101,439 ) ( 1,107,101 )

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(In thousands) 2023 2022

1 unchanged sentence

Net earnings $ 56,846 $ 40,685

Adjustments to reconcile net earnings to net cash provided by operating activities

Adjustments to reconcile net earnings to net cash used for operating activities:

Depreciation and amortization 28,927 27,363

Loss on divestiture — 4,651

Impairment of assets held for sale — 8,656

Gain on sale/disposal of long-lived assets ( 4,241 ) ( 604 )

(Gain) loss on sale/disposal of long-lived assets 93 ( 3,070 )

Deferred income taxes ( 2,619 ) 803

Share-based compensation 5,179 3,809

Change in operating assets and liabilities, net of business acquired:

Change in operating assets and liabilities, net of businesses acquired:

Receivables, net 6,153 ( 13,414 )

5 unchanged sentences

Other current and long-term assets and liabilities ( 44,602 ) ( 32,845 )

Net cash provided by operating activities 2,387 155,761

Net cash used for operating activities ( 91,599 ) ( 124,315 )

Cash flows from investing activities:

Proceeds from sale/disposal of long-lived assets 224 5,567

Purchases of investments ( 10,000 ) —

Additions to property, plant, and equipment ( 10,661 ) ( 10,896 )

Acquisition of business, net of cash acquired ( 247,215 ) —

Additional consideration paid on prior year acquisitions — ( 5,062 )

1 unchanged sentence

Cash flows from financing activities:

Borrowings under revolving credit facilities 1,332,219 166,771

Payments of revolving credit facilities ( 1,038,019 ) ( 166,771 )

Borrowings under revolving credit facility 465,025 241,198

Payment of revolving credit facility ( 286,825 ) ( 121,198 )

Principal payments on debt ( 202,500 ) —

Repurchases of common stock ( 12,386 ) ( 18,857 )

Proceeds from share-based compensation 5,225 5,284

Dividends paid ( 14,220 ) ( 14,320 )

Other ( 268 ) ( 248 )

Net cash (used for)/provided by financing activities 244,788 ( 84,406 )

Net cash provided by (used for) financing activities ( 31,729 ) 106,179

Effect of exchange-rate changes on cash 7,450 ( 5,795 )

Net increase (decrease) in cash and cash equivalents ( 57,452 ) 36,168

Net decrease in cash and cash equivalents ( 126,315 ) ( 34,322 )

Cash and cash equivalents at beginning of period 256,974 171,004

4 unchanged sentences

(In thousands)

For the nine months ended September 30, 2022

For the three months ended March 31, 2022

Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock

9 unchanged sentences

Other — ( 506 ) — — 506

September 30, 2022 $ 49,187 $ 131,230 $ 3,072,639 $ ( 274,114 ) $ ( 1,094,699 )

For the three months ended September 30, 2022

Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock

June 30, 2022 $ 49,187 $ 126,316 $ 3,006,164 $ ( 227,872 ) $ ( 1,086,156 )

Net earnings — — 73,768 — —

Other comprehensive loss, net of tax — — — ( 46,242 ) —

Dividends declared — — ( 7,293 ) — —

Employee stock purchase plan — 459 — — 4,254

Share-based compensation — 4,455 — — ( 8 )

Repurchase of common stock (1)

— — — — ( 12,789 )

September 30, 2022 $ 49,187 $ 131,230 $ 3,072,639 $ ( 274,114 ) $ ( 1,094,699 )

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

For the nine months ended September 30, 2021

March 31, 2022 $ 49,187 $ 122,603 $ 2,942,580 $ ( 191,524 ) $ ( 1,073,426 )

For the three months ended March 31, 2023

Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock

9 unchanged sentences

Other — ( 261 ) — — 261

September 30, 2021 $ 49,187 $ 124,532 $ 2,839,294 $ ( 308,810 ) $ ( 804,143 )

For the three months ended September 30, 2021

Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock

June 30, 2021 $ 49,187 $ 119,946 $ 2,776,884 $ ( 297,531 ) $ ( 753,782 )

Net earnings — — 69,703 — —

Other comprehensive loss, net of tax — — — ( 11,279 ) —

Dividends declared — — ( 7,293 ) — —

Employee stock purchase plan — 466 — — 4,320

Share-based compensation — 4,120 — — 16

Repurchase of common stock (1)

— — — — ( 54,697 )

September 30, 2021 $ 49,187 $ 124,532 $ 2,839,294 $ ( 308,810 ) $ ( 804,143 )

March 31, 2023 $ 49,187 $ 126,909 $ 3,223,944 $ ( 244,442 ) $ ( 1,101,439 )

(1) For both the three months ended March 31, 2023 and 2022, the Corporation repurchased approximately 0.1 million shares of its common stock.

See notes to condensed consolidated financial statements

(1) For the three and nine months ended September 30, 2022, the Corporation repurchased approximately 0.1 million and 0.3 million shares of its common stock, respectively.

For the three and nine months ended September 30, 2021, the Corporation repurchased approximately 0.4 million and 0.6 million shares of its common stock, respectively.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

14 unchanged sentences

Accordingly, the effect of the changes on future periods of contract performance is recognized as if the revised estimate had been the original estimate.

During the three and nine months ended September 30, 2022 and 2021, there were no significant changes in estimated contract costs.

During the three months ended March 31, 2023 and 2022, there were no significant changes in estimated contract costs.

In the opinion of management, all adjustments considered necessary for a fair presentation have been reflected in these financial statements.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s 2021 Annual Report on Form 10-K.

The results of operations for interim periods are not necessarily indicative of trends or of the operating results for a full year.

8 unchanged sentences

If a performance obligation does not qualify for over-time revenue recognition, revenue is then recognized at the point-in-time in which control of the distinct good or service is transferred to the customer, typically based upon the terms of delivery.

The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over-time versus at a point-in-time for the three and nine months ended September 30, 2022 and 2021:

The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over-time versus at a point-in-time for the three months ended March 31, 2023 and 2022:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

Three Months Ended

Over-time 49 % 53 %

2 unchanged sentences

Backlog includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods.

Total backlog was approximately $ 2.6 billion as of September 30, 2022, of which the Corporation expects to recognize approximately 90 % as net sales over the next 36 months .

Total backlog was approximately $ 2.7 billion as of March 31, 2023, of which the Corporation expects to recognize approximatel y 90 % as net sales over the next 36 months .

The remainder will be recognized thereafter.

1 unchanged sentence

The following table presents the Corporation’s total net sales disaggregated by end market and customer type:

Total Net Sales by End Market and Customer Type Three Months Ended Nine Months Ended

September 30, September 30,

Total Net Sales by End Market and Customer Type Three Months Ended

(In thousands) 2023 2022

4 unchanged sentences

Commercial Aerospace 70,490 60,892

Total Aerospace & Defense $ 414,422 $ 415,238 $ 1,155,309 $ 1,214,651

Total Aerospace & Defense customers $ 408,581 $ 360,971

Power & Process $ 120,339 $ 104,788

General Industrial 101,940 93,702

Total Commercial $ 216,120 $ 205,381 $ 644,051 $ 624,522

Total Commercial customers $ 222,279 $ 198,490

Total $ 630,860 $ 559,461

5 unchanged sentences

The Corporation’s contract liabilities primarily consist of customer advances received prior to revenue being earned.

Revenue recognized during the three and nine months ended September 30, 2022 included in the contract liabilities balance as of January 1, 2022 was approximately $ 54 million and $ 189 million, respectively.

Revenue recognized during the three and nine months ended September 30, 2021 included in the contract liabilities balance as of January 1, 2021 was approximately $ 46 million and $ 188 million, respectively.

Revenue recognized during the three months ended March 31, 2023 and 2022 included in contract liabilities at the beginning of the respective years was approximately $ 89 million and $ 79 million, respectively.

Contract assets and contract liabilities are reported in the "Receivables, net" and "Deferred revenue" lines, respectively, within the Condensed Consolidated Balance Sheet.

The Corporation continually evaluates potential acquisitions that either strategically fit within the Corporation’s existing portfolio or expand the Corporation’s portfolio into new product lines or adjacent markets.

The Corporation has completed numerous acquisitions that have been accounted for as business combinations and have resulted in the recognition of goodwill in the Corporation's financial statements.

This goodwill arises because the acquisition purchase price reflects the future

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

earnings and cash flow potential in excess of the earnings and cash flows attributable to the current product and customer set at the time of acquisition.

Thus, goodwill inherently includes the know-how of the assembled workforce, the ability of the workforce to further improve the technology and product offerings, and the expected cash flows resulting from these efforts.

Goodwill may also include expected synergies resulting from the complementary strategic fit these businesses bring to existing operations.

The Corporation allocates the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities.

In the months after closing, as the Corporation obtains additional information about these assets and liabilities, including through tangible and intangible asset appraisals, and as the Corporation learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price.

Only items identified as of the acquisition date are considered for subsequent adjustment.

The Corporation will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

During the nine months ended September 30, 2022, the Corporation acquired one business for an aggregate purchase price of $ 247 million, which is described in more detail below.

The Condensed Consolidated Statement of Earnings for the nine months ended September 30, 2022 includes $ 14 million of total net sales and $ 6 million of net losses from the Corporation's 2022 acquisition.

During the nine months ended September 30, 2021, the Corporation did not complete any acquisitions.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the acquisition consummated during the nine months ended September 30, 2022.

(In thousands) 2022

Accounts receivable $ 9,970

Inventory 22,790

Property, plant, and equipment 1,683

Other current and non-current assets 1,872

Intangible assets 130,500

Operating lease right-of-use assets, net 1,197

Current and non-current liabilities ( 9,607 )

Net tangible and intangible assets 158,405

Goodwill 88,810

Total purchase price $ 247,215

Goodwill deductible for tax purposes $ 88,810

2022 Acquisition

Safran Aerosystems Arresting Company ("arresting systems acquisition")

On June 30, 2022 , the Corporation completed its arresting systems acquisition for $ 247 million.

The Purchase Agreement contains a purchase price adjustment mechanism and representations and warranties customary for a transaction of this type.

The acquired business is a designer and manufacturer of mission-critical, fixed-wing aircraft emergency arresting system, and operates within the Naval & Power segment .

The acquisition is subject to post-closing adjustments with the purchase price allocation not yet complete.

ASSETS HELD FOR SALE

In January 2022, the Corporation completed the sale of its industrial valve business in Germany, which was presented as held for sale in the Corporation's Consolidated Balance Sheet as of December 31, 2021, for gross cash proceeds of $ 3 million.

In January 2022, the Corporation completed the sale of its industrial valve business in Germany for gross cash proceeds of $ 3 million.

The Corporation recorded a loss of $ 5 million upon sale closing during the first quarter of 2022.

Receivables primarily include amounts billed to customers, unbilled charges on long-term contracts consisting of amounts recognized as sales but not billed, and other receivables.

Substantially all amounts of unbilled receivables are expected to be

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

billed and collected within one year.

Receivables primarily include amounts billed to customers, unbilled charges on long-term contracts consisting of amounts recognized as sales but not billed, and other receivables.

Substantially all amounts of unbilled receivables are expected to be billed and collected within one year.

An immaterial amount of unbilled receivables are subject to retainage provisions.

1 unchanged sentence

The composition of receivables is as follows:

(In thousands) September 30, 2022 December 31, 2021

(In thousands) March 31, 2023 December 31, 2022

Billed receivables:

Trade and other receivables $ 397,301 $ 412,682

Unbilled receivables (contract assets):

Unbilled receivables:

Recoverable costs and estimated earnings not billed 328,199 316,682

9 unchanged sentences

The composition of inventories is as follows:

(In thousands) September 30, 2022 December 31, 2021

(In thousands) March 31, 2023 December 31, 2022

Raw materials $ 259,191 $ 242,116

7 unchanged sentences

Inventories, net $ 527,937 $ 483,113

(1) This caption includes capitalized development costs of $ 18.4 million as of September 30, 2022 related to certain aerospace and defense programs.

(1) As of March 31, 2023, this caption includes capitalized development costs of $ 16.3 million related to certain aerospace and defense programs.

These capitalized costs will be liquidated as units are produced under contract.

As of September 30, 2022, capitalized development costs of $ 11.7 million are not currently supported by existing firm orders.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2022 are as follows:

As of March 31, 2023, capitalized development costs of $ 10.6 million are not currently supported by existing firm orders.

The changes in the carrying amount of goodwill for the three months ended March 31, 2023 are as follows:

(In thousands) Aerospace & Industrial Defense Electronics Naval & Power Consolidated

December 31, 2022 $ 321,550 $ 702,786 $ 520,299 $ 1,544,635

Acquisitions — — 88,810 88,810

Foreign currency translation adjustment 1,473 2,224 816 4,513

September 30, 2022 $ 305,163 $ 694,934 $ 512,134 $ 1,512,231

March 31, 2023 $ 323,023 $ 705,010 $ 521,115 $ 1,549,148

OTHER INTANGIBLE ASSETS, NET

2 unchanged sentences

The following tables present the cumulative composition of the Corporation’s intangible assets:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(In thousands) Gross Accumulated Amortization Net Gross Accumulated Amortization Net

5 unchanged sentences

(1) Programs include values assigned to major programs of acquired businesses and represent the aggregate value associated with the customer relationships, contracts, technology, and trademarks underlying the associated program.

During the nine months ended September 30, 2022, the Corporation acquired intangible assets of $ 130.5 million, which included Customer-related intangibles of $ 94.6 million, Technology of $ 31.5 million, and Other intangible assets of $ 4.4 million.

The weighted average amortization periods for these aforementioned intangible assets are 15.9 years, 15.0 years, and 10.0 years, respectively.

Total intangible amortization expense for the nine months ended September 30, 2022 was $ 46 million, as compared to $ 45 million in the comparable prior year period.

Total intangible amortization expense for the three months ended March 31, 2023 was $ 16 million, as compared to $ 14 million in the comparable prior year period.

The estimated future amortization expense of intangible assets over the next five years is as follows:

2 unchanged sentences

Forward Foreign Exchange and Currency Option Contracts

The Corporation has foreign currency exposure primarily in the United Kingdom, Europe, and Canada.

The Corporation has foreign currency exposure, primarily against the British Pound, Euro, and Canadian dollar.

The Corporation uses financial instruments, such as forward and option contracts, to hedge a portion of existing and anticipated foreign currency denominated transactions.

6 unchanged sentences

Effects on Condensed Consolidated Balance Sheets

As of September 30, 2022 and December 31, 2021, the fair values of the asset and liability derivative instruments were immaterial.

As of March 31, 2023 and December 31, 2022, the fair values of the asset and liability derivative instruments were immaterial.

Effects on Condensed Consolidated Statements of Earnings

Undesignated hedges

The losses and gains and on forward exchange derivative contracts not designated for hedge accounting are recognized to general and administrative expenses within the Condensed Consolidated Statements of Earnings.

The gain for the three months ended March 31, 2023 was $4 million.

The loss for the three months ended March 31, 2022 was immaterial.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Undesignated hedges

The gains and losses on forward exchange derivative contracts not designated for hedge accounting are recognized to general and administrative expenses within the Condensed Consolidated Statements of Earnings.

The losses for the three and nine months ended September 30, 2022 were $ 6 million and $ 12 million, respectively.

The losses for both the three and nine months ended September 30, 2021 were $ 2 million, respectively.

The estimated fair value amounts were determined by the Corporation using available market information that is primarily based on quoted market prices for the same or similar issuances as of September 30, 2022.

Accordingly, all of the Corporation’s debt is valued as a Level 2 financial instrument.

1 unchanged sentence

Furthermore, the use of different methodologies to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(In thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

14 unchanged sentences

150,000 128,166 150,000 123,656

4.49 % Senior notes due 2032

200,000 189,022 200,000 183,007

4.64 % Senior notes due 2034

100,000 93,730 100,000 90,341

Total debt 1,225,700 1,156,200 1,250,000 1,152,828

2 unchanged sentences

Total debt, net $ 1,229,619 $ 1,160,119 1,254,400 1,157,228

Revolving Credit Agreement

In May 2022, the Corporation terminated its existing credit agreement, which was set to expire in October 2023, and entered into a new credit agreement (“Credit Agreement”) with a syndicate of financial institutions.

The Credit Agreement, which is set to expire in May 2027, increases the size of the Corporation’s revolving credit facility to $ 750 million, and expands the accordion feature to $ 250 million.

The Corporation plans to use the Credit Agreement for general corporate purposes, which may include the funding of possible future acquisitions or supporting internal growth initiatives.

On October 27, 2022, the Corporation announced that it formally closed its private placement debt offering of $ 300 million for senior notes, consisting of $ 200 million 4.49 % notes due 2032 and $ 100 million 4.64 % notes due 2034.

PENSION PLANS

Defined Benefit Pension Plans

The following table is a consolidated disclosure of all domestic and foreign defined benefit pension plans as described in the Corporation’s 2021 Annual Report on Form 10-K.

The components of net periodic pension cost for the three and nine months ended September 30, 2022 and 2021 were as follows:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Nine Months Ended

September 30, September 30,

The following table is a consolidated disclosure of all domestic and foreign defined pension plans as described in the Corporation’s 2022 Annual Report on Form 10-K filed with the SEC.

The components of net periodic pension cost/(benefit) were as follows:

Three Months Ended

(In thousands) 2023 2022

5 unchanged sentences

Cost of settlements — 1,842

Net periodic pension cost $ 2,627 $ 3,346 $ 7,171 $ 13,142

The Corporation did not make any contributions to the Curtiss-Wright Pension Plan during 2021, and does not expect to do so in 2022.

Net periodic pension cost/(benefit) $ ( 2,859 ) $ 3,256

The Corporation did not make any contributions to the Curtiss-Wright Pension Plan during the three months ended March 31, 2023, and does not expect to do so throughout the remainder of the year.

Contributions to the foreign benefit plans are not expected to be material in 2023.

During the nine months ended September 30, 2022, as well as during the three and nine months ended September 30, 2021, the Company recognized settlement charges related to the retirement of former executives.

The settlement charges represent events that are accounted for under guidance on employers’ accounting for settlements and curtailments of defined benefit pension plans.

During the three months ended March 31, 2022, the Company recognized a settlement charge related to the retirement of a former executive.

The settlement charge represents an event that is accounted for under guidance on employers’ accounting for settlements and curtailments of defined benefit pension plans.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Defined Contribution Retirement Plan

1 unchanged sentence

subsidiaries.

The employer contributions include both employer match and non-elective contribution components up to a maximum employer contribution of 7 % of eligible compensation.

During the three and nine months ended September 30, 2022, the expense relating to the plan was $ 5.5 million and $ 15.8 million, respectively.

During the three and nine months ended September 30, 2021, the expense relating to the plan was $ 4.6 million and $ 14.2 million, respectively.

The employer contributions include both employer match and non-elective contribution components up to a maximum employer contribution o f 7 % of eligible compensation.

During the three months ended March 31, 2023 and 2022, the expense relating to the plan was $ 6.1 million and $ 5.7 million, respectively.

EARNINGS PER SHARE

1 unchanged sentence

A reconciliation of basic to diluted shares used in the earnings per share calculation is as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands) 2023 2022

2 unchanged sentences

Diluted weighted-average shares outstanding 38,516 38,668

For the three and nine months ended September 30, 2022, approximately 49,000 and 37,000 shares, respectively, issuable under equity-based awards were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period.

There were no anti-dilutive equity-based awards for the three months ended September 30, 2021.

For the nine months ended September 30, 2021, approximately 41,000 shares issuable under equity-based awards were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period.

For the three months ended March 31, 2023 and 2022, approximately 24,000 and 26,000 shares, respectively, issuable under equity-based awards were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period.

SEGMENT INFORMATION

1 unchanged sentence

Interest expense and income taxes are not reported on an operating segment basis as they are not considered in the segments’ performance evaluation by the Corporation’s chief operating decision-maker, its Chief Executive Officer.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net sales and operating income by reportable segment were as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands) 2023 2022

13 unchanged sentences

Adjustments to reconcile operating income to earnings before income taxes are as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

(In thousands) 2023 2022

3 unchanged sentences

Earnings before income taxes $ 73,438 $ 53,977

(In thousands) September 30, 2022 December 31, 2021

(In thousands) March 31, 2023 December 31, 2022

Identifiable assets

3 unchanged sentences

Corporate and Other 277,072 372,842

Assets held for sale — 10,988

Total consolidated $ 4,362,125 $ 4,449,602

1 unchanged sentence

The cumulative balance of each component of accumulated other comprehensive income (AOCI), net of tax, is as follows:

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) Foreign currency translation adjustments, net Total pension and postretirement adjustments, net Accumulated other comprehensive income (loss)

2 unchanged sentences

( 61,241 ) ( 23,447 ) ( 84,688 )

Amounts reclassified from accumulated other comprehensive income (1)

Amounts reclassified from accumulated other comprehensive loss (1)

— 16,237 16,237

3 unchanged sentences

14,666 ( 223 ) 14,443

Amounts reclassified from accumulated other comprehensive income (1)

— 11,407 11,407

Amounts reclassified from accumulated other comprehensive income (loss) (1)

Net current period other comprehensive income (loss) 14,666 ( 192 ) 14,474

September 30, 2022 $ ( 196,825 ) $ ( 77,289 ) $ ( 274,114 )

March 31, 2023 $ ( 146,141 ) $ ( 98,301 ) $ ( 244,442 )

(1) All amounts are after tax.

4 unchanged sentences

Amortization of actuarial losses ( 77 ) Other income, net

Settlements ( 1,842 ) Other income, net

( 44 ) Earnings before income taxes

2 unchanged sentences

CONTINGENCIES AND COMMITMENTS

From time to time, the Corporation and its subsidiaries are involved in legal proceedings that are incidental to the operation of our business.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

From time to time, the Corporation is involved in legal proceedings that are incidental to the operation of its business.

Some of these proceedings allege damages relating to asbestos and environmental exposures, intellectual property matters, copyright infringement, personal injury claims, employment and employee benefit matters, government contract issues, commercial or contractual disputes, and acquisitions or divestitures.

The Corporation continues to defend vigorously against all claims.

Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including assessment of the merits of the particular claim, as well as current accruals and insurance coverage, the Corporation does not expect that such legal proceedings will have a material adverse impact on its condensed consolidated financial statements.

Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including assessment of the merits of the particular claim, as well as current accruals and insurance coverage, the Corporation does not believe that the disposition of any of these matters, individually or in the aggregate, will have a material adverse effect on its condensed consolidated financial condition, results of operations, and cash flows.

Legal Proceedings

4 unchanged sentences

Letters of Credit and Other Financial Arrangements

The Corporation enters into standby letters of credit agreements and guarantees with financial institutions and customers primarily relating to guarantees of repayment, future performance on certain contracts to provide products and services, and to

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

secure advance payments from certain international customers.

As of September 30, 2022 and December 31, 2021, there were $ 14.7 million and $ 21.1 million of stand-by letters of credit outstanding, respectively, and $ 2.4 million and $ 4.5 million of bank guarantees outstanding, respectively.

As of March 31, 2023 and December 31, 2022, there were $ 19 million and $ 17 million of stand-by letters of credit outstanding, respectively.

As of March 31, 2023 and December 31, 2022, there were $ 14 million and $ 3 million of bank guarantees outstanding, respectively.

In addition, the Corporation is required to provide the Nuclear Regulatory Commission financial assurance demonstrating its ability to cover the cost of decommissioning its Cheswick, Pennsylvania facility upon closure, though the Corporation does not intend to close this facility.

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and China contracts.

Under the terms of the settlement agreement, the Corporation paid WEC $ 15 million in March 2022 and is required to pay WEC a final amount of $ 10 million in the first quarter of 2023 in exchange for the Corporation’s full release from all open claims under such contracts, whether known or unknown.

Under the settlement, the parties also negotiated and executed a right of first refusal for all future AP1000 projects.

As of December 31, 2021, the Corporation was adequately accrued regarding this matter.

SUBSEQUENT EVENTS

Under the terms of the settlement agreement, the Corporation paid WEC $ 15 million in the first quarter of 2022 and a final amount of $ 10 million in the first quarter of 2023 in exchange for the Corporation’s full release from all open claims under such contracts, whether known or unknown, as well as negotiating and executing a right of first refusal for all future AP1000 projects.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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Examples of forward-looking statements include, but are not limited to:

(a) projections of or statements regarding return on investment, future earnings, interest income, sales, volume, other income, earnings or loss per share, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management, (c) statements of future economic performance and potential impacts from COVID-19, including the impacts to supply and demand, the impact of significant inflation, higher interest rates or deflation, and measures taken by governments and private industry in response, (d) statements of future economic performance and potential impacts due to the conflict between Russia and Ukraine, and (e) statements of assumptions, such as economic conditions underlying other statements.

(a) projections of or statements regarding return on investment, future earnings, interest income, sales, volume, other income, earnings or loss per share, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management, (c) statements of future economic performance, (d) impacts on our business relating to ongoing supply chain delivery disruptions, significant inflation, higher interest rates or deflation, and measures taken by governments and private industry in response, (e) statements of future economic performance and potential impacts due to the conflict between Russia and Ukraine, (f) the effect of laws, rules, regulations, new accounting pronouncements, and outstanding litigation on our business and future performance, and (g) statements of assumptions, such as economic conditions underlying other statements.

Such forward-looking statements can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continue,” “could,” “estimate,” “expects,” “intend,” “may,” “might,” “outlook,” “potential,” “predict,” “should,” “will,” as well as the negative of any of the foregoing or variations of such terms or comparable terminology, or by discussion of strategy.

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These risks and uncertainties include, but are not limited to, those described in “Item 1A.

Risk Factors” of our 2021 Annual Report on Form 10-K, and elsewhere in that report, those described in this Quarterly Report on Form 10-Q, and those described from time to time in our future reports filed with the Securities and Exchange Commission.

Risk Factors” of our 2022 Annual Report on Form 10-K filed with the SEC, and elsewhere in that report, those described in this Quarterly Report on Form 10-Q, and those described from time to time in our future reports filed with the Securities and Exchange Commission.

Such forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, those contained in Item 1.

Financial Statements and Item 2.

Financial Statements (including the Notes to Condensed Consolidated Financial Statements) and Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

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Approximately 66% of our 2023 revenues are expected to be generated from A&D-related markets.

In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a pandemic.

The pandemic has adversely affected certain elements of our business, including our supply chain, transportation networks, and production levels.

The extent to which COVID-19 continues to adversely impact our operations depends on future developments, including the impact of the global rollout of COVID-19 vaccines, the emergence and impact of any new COVID-19 variants, as well as the issuance of vaccine mandates by the Biden administration.

However, given the diversified breadth of our company, we believe that we are well-positioned to mitigate any material risks arising as a result of COVID-19 or any of its variants.

From an operational perspective, our current cash balance, coupled with expected cash flows from operating activities for the remainder of the year as well as our current borrowing capacity under the Credit Agreement, are expected to be more than sufficient to meet operating cash requirements, planned capital expenditures, principal payments on the current portion of long-term debt obligations, interest payments on long-term debt obligations, payments on lease obligations, pension and postretirement funding requirements, and dividend payments through the current year and beyond.

Business Environment

During the current period, we have experienced supply chain challenges, including increased lead times, as well as heightened levels of inflation in material and transportation costs due to availability constraints and high demand.

Certain parts of our business have been adversely affected by disruptions that have hindered our ability to timely obtain raw materials and components from our suppliers in the required quantities, or on favorable terms.

In certain instances, these disruptions have delayed our ability to convert backlog into net sales in line with historical performance.

We expect inflationary and supply chain constraint trends to continue throughout at least the remainder of 2022.

While the long-term impact of these factors remains uncertain, we will continue to closely monitor the extent to which these factors will impact our business, financial condition, and results of operations.

Inflation Reduction Act of 2022 (IRA)

On August 16, 2022, the IRA was enacted into law.

The statute includes a 15% corporate alternative minimum tax on adjusted financial statement income which is effective for the fiscal year ended February 2, 2024.

The new law also imposes a 1% excise tax on share repurchases, effective for repurchases made after December 31, 2022.

We are currently assessing the potential impact of this law as it pertains to excise taxes, which will be dependent on the extent of share repurchases made in future periods.

RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand the results of operations and financial condition of the Corporation for the three and nine month periods ended September 30, 2022.

The financial information as of September 30, 2022 should be read in conjunction with the financial statements for the year ended December 31, 2021 contained in our Form 10-K.

The financial information as of March 31, 2023 should be read in conjunction with the financial statements for the year ended December 31, 2022 contained in our Form 10-K filed with the SEC.

The MD&A is organized into the following sections:

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The sales for the relevant markets will be discussed throughout the MD&A.

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Analytical Definitions

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The results of operations for acquisitions are incremental for the first twelve months from the date of acquisition.

Additionally, the results of operations of divested businesses are removed from the comparable prior year period for purposes of calculating “organic” and “incremental” results.

The definition of “organic” excludes the impairment of assets held for sale and corresponding loss from sale of our industrial valves business in Germany as well as the effects of foreign currency translation.

The definition of “organic” excludes the loss from sale of our industrial valves business in Germany as well as the effects of foreign currency translation.

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Condensed Consolidated Statements of Earnings

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2022 2021 % change 2022 2021 % change

Three Months Ended

(In thousands) 2023 2022 % change

Aerospace & Industrial $ 202,447 $ 191,112 6 %

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New orders $ 717,817 $ 634,265 13 %

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Components of sales and operating income increase (decrease):

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2022 vs.

Sales Operating Income Sales Operating Income

Three Months Ended

Sales Operating Income

Organic 11 % 16 %

Acquisitions 3 % — %

Loss on divestiture/impairment of assets held for sale — % 9 % — % 2 %

Loss on divestiture — % 9 %

Foreign currency (1 %) 5 %

Total 13 % 30 %

Sales in the third quarter increased $10 million, or 2%, to $631 million, compared with the prior year period.

On a segment basis, sales from the Aerospace & Industrial and Naval & Power segments increased $17 million and $13 million, respectively, with sales from the Defense Electronics segment decreasing $20 million.

Sales during the nine months ended September 30, 2022 decreased $40 million, or 2%, to $1,799 million, compared with the prior year period.

On a segment basis, sales from the Defense Electronics and Naval & Power segments decreased $71 million and $5 million, respectively, with sales from the Aerospace & Industrial segment increasing $36 million.

Sales during the three months ended March 31, 2023 increased $71 million, or 13%, to $631 million, compared with the prior year period.

On a segment basis, sales from the Aerospace & Industrial, Defense Electronics, and Naval & Power segments increased $11 million, $19 million, and $41 million, respectively.

Changes in sales by segment are discussed in further detail in the results by business segment section below.

Operating income in the third quarter increased $10 million, or 10%, to $108 million, and operating margin increased 140 basis points to 17.1% compared with the same period in 2021.

In the Aerospace & Industrial segment, operating income and operating margin benefited from favorable absorption on higher sales in the general industrial and commercial aerospace markets, as well as our ongoing operational excellence initiatives.

Operating income and operating margin in the Naval & Power segment increased primarily due to a prior year impairment loss on assets held for sale in our industrial valves business in Germany, favorable absorption on higher organic sales, as well as the benefits of our ongoing operational excellence initiatives.

These increases were partially offset by a decrease in operating income in the Defense Electronics segment, primarily due to unfavorable overhead absorption on lower sales.

Operating income during the nine months ended September 30, 2022 decreased $11 million, or 4%, to $266 million and operating margin decreased 30 basis points to 14.8%, compared with the same period in 2021.

In the Defense Electronics segment, decreases in operating income and operating margin were primarily due to unfavorable overhead absorption on lower sales.

These decreases were partially offset by increases in operating income and operating margin in the Aerospace & Industrial segment, primarily due to favorable absorption on higher sales in the general industrial and commercial aerospace markets, as well as the benefits of our ongoing operational excellence initiatives.

In the Naval & Power segment, operating income was essentially flat while operating margin improved slightly, as favorable absorption on higher organic sales as well as lower current period losses associated with our industrial valves business in Germany were partially offset by first year purchase accounting costs from our arresting systems acquisition.

Non-segment operating expense in the third quarter of $10 million was essentially flat against the comparable prior year period.

Non-segment operating expense during the nine months ended September 30, 2022 increased $6 million, or 20%, to $33 million, primarily due to costs associated with shareholder activism in the current period.

Interest expense in the third quarter and nine months ended September 30, 2022 increased $4 million, or 41% , to $14 million, and $3 million, or 11% , to $33 million, primarily due to higher current period borrowings under our Credit Agreement.

Other income, net in the third quarter of $4 million was essentially flat against the comparable prior year period.

O ther income, net during the nine months ended September 30, 2022 increased $2 million, or 27%, to $11 million, primarily due to lower overall pension costs against the comparable prior year period.

The effective tax rate of 24.2% in the third quarter increased compared to an effective tax rate of 23.7% in the prior year period, primarily due to provisional tax expense in the current period to record a valuation allowance on unused foreign tax credits.

The effective tax rate of 24.1% for the nine months ended September 30, 2022 decreased as compared to an effective

Operating income during the three months ended March 31, 2023 increased $18 million, or 30%, to $79 million, compared with the prior year period, while operating margin increased 170 basis points to 12.5%, compared with the same period in 2022.

In the Naval & Power segment, increases in operating income and operating margin were primarily due t o the absence of a prior year loss on sale of our industrial valves business in Germany, as well as favorable overhead absorption on higher organic sales.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

tax rate of 25.6%, primarily due to a favorable state rate change on deferred tax liabilities in the current year versus an unfavorable foreign rate change on deferred tax liabilities in the prior year.

Comprehensive income in the third quarter was $28 million, compared to comprehensive income of $58 million in the prior year period.

The change was primarily due to the following:

• Foreign currency translation adjustments in the third quarter resulted in a $50 million comprehensive loss, compared to a $16 million comprehensive loss in the prior year period.

The comprehensive loss during the current period was primarily attributed to decreases in the British Pound and Canadian dollar.

• Net earnings increas ed $4 million , primarily due to higher operating income.

Comprehensive income during the nine months ended September 30, 2022 was $102 million, compared to comprehensive income of $193 million in the prior year period.

Operating income and operating margin in the Aerospace & Industrial segment increased primarily due to favorable overhead absorption on higher sales .

In the Defense Electronics segment, operating income was essentially flat while operating margin decreased, as favorable absorption on higher sales was offset by unfavorable mix on defense electronics products.

Non-segment operating expense during the three months ended March 31, 2023 decreased $6 million , or 38%, to $9 million , primarily due to the absence of costs associated with shareholder activism in the prior year period.

Interest expense increased $3 million, or 36%, to $13 million, primarily due to the issuance of $300 million Senior Notes in October 2022 as well as higher interest rates in the current period under our revolving Credit Agreement (the “Credit Agreement” or “credit facility”).

Other income, net during the three months ended March 31, 2023 increased $5 million , or 159%, to $8 million, primarily due to the absence of pension settlement charges recognized in the prior year period related to the retirement of a former executive.

The effective tax rate for the three months ended March 31, 2023 of 22.6% decreased as compared to an effective tax rate of 24.6% in the prior year period , primarily due to higher stock compensation benefits in the current period.

Comprehensive income for the three months ended March 31, 2023 was $71 million, compared to comprehensive income of $40 million in the prior year period.

The change was primarily due to the following:

• Foreign currency translation adjustments for the nine months ended September 30, 2022 resulted in a $97 million comprehensive loss, compared to a $13 million comprehensive loss in the prior period.

The comprehensive loss during the current period was primarily attributed to decreases in the British Pound and Canadian dollar.

• Net earnings decreas ed $5 million, pr imarily due to lower operating income and higher interest expense.

New orders in the third quarter and nine months ended September 30, 2022 increased $189 million and $328 million, respectively, from the comparable prior year periods, primarily due to the timing of naval defense orders and the incremental impact from our arresting systems acquisition in the Naval & Power segment, as well as an increase in new orders for ground defense and aerospace defense equipment in the Defense Electronics segment.

New orders in both periods also benefited from an increase in new orders for commercial aerospace equipment in the Aerospace & Industrial segment.

• Net earnings increased $16 million, primarily due to higher operating income.

• Foreign currency translation adjustments for the three months ended March 31, 2023 resulted in a $15 million comprehensive gain, compared to a $7 million comprehensive loss in the prior period.

The comprehensive gain during the current period was primarily attributed to increases in the British Pound.

New orders increased $84 million during the three months ended March 31, 2023 from the comparable prior year period, primarily due to an increase in orders for defense electronics equipment in the Defense Electronics segment, as well as an increase in orders for actuation products within our A&D markets in the Aerospace & Industrial segment.

These increases were partially offset by the timing of naval defense orders in the Naval & Power segment.

Changes in new orders by segment are discussed in further detail in the "Results by Business Segment" section below.

RESULTS BY BUSINESS SEGMENT

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The following tables summarize sales, operating income and margin, and new orders within the Aerospace & Industrial segment.

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2022 2021 % change 2022 2021 % change

Three Months Ended

(In thousands) 2023 2022 % change

Sales $ 202,447 $ 191,112 6 %

Operating income 26,545 24,853 7 %

Operating margin 18.3 % 15.7 % 260 bps 15.7 % 14.2 % 150 bps

Operating margin 13.1 % 13.0 % 10 bps

New orders $ 258,644 $ 228,314 13 %

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Components of sales and operating income increase (decrease):

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2022 vs.

Sales Operating Income Sales Operating Income

Three Months Ended

Sales Operating Income

Organic 8 % 4 %

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Sales in the Aerospace & Industrial segment are primarily generated from the commercial aerospace and general industrial markets, and to a lesser extent the defense and power & process markets.

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Sales in the third quarter increased $17 million, or 9%, to $213 million from the prior year period, primarily due to higher sales in the general industrial and commercial aerospace markets.

Sales in the general industrial market increased $11 million primarily due to higher demand for industrial vehicle products.

In the commercial aerospace market, sales increased $5 million due to higher demand for sensors products as well as surface treatment services on various narrowbody and widebody platforms.

Sales during the nine months ended September 30, 2022 increased $36 million, or 6%, to $613 million from the prior year period, primarily due to higher sales in the general industrial and commercial aerospace markets.

Sales in the general industrial market increased $20 million primarily due to higher demand for industrial vehicle products.

In the commercial aerospace market, sales increased $15 million primarily due to higher demand for actuation and sensors products as well as surface treatment services.

Operating income in the third quarter increased $8 million, or 27%, to $39 million from the prior year period, and operating margin increased 260 basis points to 18.3%.

Operating income during the nine months ended September 30, 2022 increased $15 million, o r 18% , to $96 million from the prior year period, and operating margin increased 150 basis points to 15.7%.

Increases in operating income and operating margin for each of the respective periods were primarily due to favorable absorption on higher sales in the general industrial and commercial aerospace markets, as well as the benefits of our ongoing operational excellence initiatives.

New orders in the third quarter and nine months ended September 30, 2022 increased $11 million and $33 million, respectively, from the comparable prior year periods, as an increase in new orders for commercial aerospace equipment was partially offset by the timing of new orders for industrial vehicles.

Sales during the three months ended March 31, 2023 increased $11 million, or 6%, to $202 million from the prior year period, primarily due to higher demand for sensors products as well as surface treatment services on narrow-body and wide-body platforms in the commercial aerospace market.

The general industrial market benefited from higher sales of surface treatment services and industrial vehicle products.

Operating income during the three months ended March 31, 2023 increased $2 million, or 7%, to $27 million from the prior year period, and operating margin increased 10 basis points to 13.1%.

The increase in operating income and operating margin was primarily due to favorable overhead absorption on higher sales, partially offset by unfavorable mix on sensors products.

New orders during the three months ended March 31, 2023 increased $30 million from the comparable prior year period, primarily due to an increase in orders for actuation products within our A&D markets.

Defense Electronics

The following tables summarize sales, operating income and margin, and new orders within the Defense Electronics segment.

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2022 2021 % change 2022 2021 % change

Three Months Ended

(In thousands) 2023 2022 % change

Sales $ 162,154 $ 143,069 13 %

Operating income 23,368 23,290 — %

Operating margin 22.7 % 22.5 % 20 bps 18.6 % 20.3 % (170 bps)

Operating margin 14.4 % 16.3 % (190 bps)

New orders $ 234,115 $ 159,688 47 %

Components of sales and operating income increase (decrease):

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2022 vs.

Sales Operating Income Sales Operating Income

Three Months Ended

Sales Operating Income

Organic 14 % (7 %)

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Sales in the Defense Electronics segment are primarily to the defense markets and, to a lesser extent, the commercial aerospace market.

Sales in the third quarter decreased $20 million, or 11%, to $161 million from the prior year period.

In the aerospace defense market, sales decreased $14 million primarily due to ongoing supply chain headwinds, which contributed to lower sales of

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

embedded computing and flight test equipment.

In the ground defense market, we experienced lower sales of tactical communications equipment, primarily due to the aforementioned supply chain headwinds.

Sales during the nine months ended September 30, 2022 decreased $71 million, or 14%, to $454 million from the prior year period.

In the aerospace defense market, sales decreased $30 million primarily due to ongoing supply chain headwinds as well as the delayed signing of the FY22 defense budget, which contributed to lower sales of embedded computing equipment on various programs.

The ground defense market was also negatively impacted by ongoing supply chain headwinds, which resulted in lower sales of $27 million, primarily on embedded computing and tactical communications equipment on various programs.

In the commercial aerospace market, sales decreased $12 million primarily due to lower sales of electronic systems and flight test equipment on various domestic and international platforms.

Operating income in the third quarter decreased $4 million, or 10%, to $37 million compared to the prior year period, and operating margin increased 20 basis points from the prior year period to 22.7%.

Operating income was negatively impacted by unfavorable overhead absorption on lower sales, while operating margin benefited from our ongoing operational excellence initiatives.

Operating income during the nine months ended September 30, 2022 decreased $22 million, or 21%, to $84 million, and operating margin decreased 170 basis points from the prior year period to 18.6%, primarily due to unfavorable overhead absorption on lower sa les.

New orders in the third quarter and nine months ended September 30, 2022 increased $76 million and $72 million, respectively, against the comparable prior year periods, primarily due to an increase in new orders for ground defense and aerospace defense equipment.

Sales during the three months ended March 31, 2023 increased $19 million, or 13%, to $162 million from the prior year period.

In the ground defense market, sales increased $27 million primarily due to higher demand for tactical battlefield communications equipment.

This increase was partially offset by lower sales of $9 million in the aerospace defense market primarily due to timing of sales of embedded computing equipment on various helicopter and unmanned aerial vehicle programs.

Operating income during the three months ended March 31, 2023 of $23 million was essentially flat against the prior year period, and operating margin decreased 190 basis points from the prior year period to 14.4%, as favorable absorption on higher sales was offset by unfavorable mix on defense electronics products.

New orders during the three months ended March 31, 2023 increased $74 million from the comparable prior year period, primarily due to an increase in orders for defense electronics equipment, including embedded computing and tactical communications products.

Naval & Power

The following tables summarize sales, operating income and margin, and new orders within the Naval & Power segment.

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2022 2021 % change 2022 2021 % change

Three Months Ended

(In thousands) 2023 2022 % change

Sales $ 266,259 $ 225,280 18 %

Operating income 37,937 27,288 39 %

Operating margin 16.2 % 14.6 % 160 bps 16.2 % 15.8 % 40 bps

Operating margin 14.2 % 12.1 % 210 bps

New orders $ 225,058 $ 246,263 (9 %)

Components of sales and operating income increase (decrease):

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2022 vs.

Sales Operating Income Sales Operating Income

Three Months Ended

Sales Operating Income

Organic 11 % 18 %

Acquisitions 7 % — %

Loss on divestiture/impairment of assets held for sale — % 24 % — % 3 %

Loss on divestiture — % 20 %

Foreign currency — % 1 %

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Sales in the Naval & Power segment are primarily to the naval defense and power & process markets, and, to a lesser extent, the aerospace defense market.

Sales during the three months ended March 31, 2023 increased $41 million, or 18%, to $266 million from the prior year period, primarily due to higher sales across our aerospace defense, naval defense, and power & process markets.

In the aerospace defense market, sales increased $16 million due to the incremental impact from our arresting systems acquisition.

Sales in the naval defense market benefited $9 million primarily due to higher sales on the Columbia-class submarine and CVN-81 aircraft carrier programs, partially offset by the timing of sales on the CVN-80 aircraft carrier program .

In the power & process market, sales increased $15 million primarily due to higher nuclear aftermarket sales supporting the maintenance of existing operating reactors as well as higher industrial valve sales in the process market.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Sales in the third quarter increased $13 million, or 6%, to $256 million from the prior year period, primarily due to the impact of our arresting systems acquisition in the aerospace defense market, which contributed incremental sales of $14 million.

In the power & process market, higher nuclear aftermarket sales were more than offset by the wind-down on the China Direct AP1000 program.

Sales during the nine months ended September 30, 2022 decreased $5 million, or 1%, to $733 million from the prior year period.

Sales decreased $13 million in the naval defense market, as higher demand on the Columbia-class submarine and CVN-81 aircraft carrier programs was more than offset by lower sales on the CVN-80 aircraft carrier and Virginia-class submarine programs.

In the power & process market, higher nuclear aftermarket sales were more than offset by the wind-down on the China Direct AP1000 program.

These decreases were partially offset by the impact of our arresting systems acquisition in the aerospace defense market, which contributed incremental sales of $14 million.

Operating income in the third quarter increased $6 million, or 17%, to $42 million, and operating margin increased 160 basis points from the prior year period to 16.2%, primarily due to a prior year impairment loss on assets held for sale related to our industrial valves business in Germany, favorable absorption on higher organic sales, as well as the benefits of our ongoing operational excellence initiatives.

These increases were partially offset by unfavorable mix in the power & process market, as well as first year purchase accounting costs from our arresting systems acquisition.

Operating income during the nine months ended September 30, 2022 increased $2 million, or 2% , to $119 million, and operating margin increased 40 basis points from the prior year period to 16.2%, primarily due to favorable absorption on higher organic sales, as well as lower current period losses associated with our industrial valves business in Germany, which was sold in the current period.

These increases were partially offset by first year purchase accounting costs from our arresting systems acquisition.

New orders in the third quarter and nine months ended September 30, 2022 increased $102 million and $223 million, respectively, from the comparable prior year periods, primarily due to the timing of naval defense orders, the incremental impact from our arresting systems acquisition, as well as an increase in new orders for nuclear aftermarket and process products.

Operating income during the three months ended March 31, 2023 increased $11 million, or 39%, to $38 million, and operating margin increased 210 basis points from the prior year period to 14.2%, primarily due to the absence of a prior year loss on sale of our industrial valves business in Germany as well as favorable overhead absorption on higher organic sales.

New orders decreased $21 million during the three months ended March 31, 2023 from the comparable prior year period, primarily due to the timing of naval defense orders.

SUPPLEMENTARY INFORMATION

The table below depicts sales by end market and customer type, as it helps provide an enhanced understanding of our businesses and the markets in which we operate.

The table has been included to supplement the discussion of our consolidated operating results.

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Total Net Sales by End Market and Customer Type Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2022 2021 % change 2022 2021 % change

The table has been included to supplement the discussion of our operating results.

Net Sales by End Market and Customer Type Three Months Ended

(In thousands) 2023 2022 % change

Aerospace & Defense markets:

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Aerospace & Defense markets

Sales in the third quarter decreased $1 million, or less than 1%, to $414 million against the comparable prior year period.

In the aerospace defense market, the incremental impact from our arresting systems acquisition was more than offset by lower sales of embedded computing and flight test equipment, primarily due to ongoing supply chain headwinds.

Sales in the commercial aerospace market benefited from higher demand for sensors products as well as surface treatment services on various narrowbody and widebody platforms.

Sales in the ground defense and naval defense markets were essentially flat.

Sales during the nine months ended September 30, 2022 decreased $59 million, or 5%, to $1,155 million, primarily due to lower sales in the aerospace defense, ground defense, and naval defense markets.

Sales in the aerospace defense and ground defense markets decreased primarily due to ongoing supply chain headwinds and the delayed signing of the FY22 defense budget .

Sales decreases in the naval defense market were primarily due to lower sales on the CVN-80 aircraft carrier and Virginia-class submarine programs, partially offset by higher demand on the Columbia-class submarine and CVN-81 aircraft carrier programs.

Sales during the three months ended March 31, 2023 increased $48 million, or 13%, to $409 million, primarily due to higher sales in the ground defense, naval defense, and commercial aerospace markets.

Sales in the ground defense market increased primarily due to higher demand for tactical battlefield communications equipment.

Sales increases in the naval defense market were primarily due to higher sales on the Columbia-class submarine and CVN-81 aircraft carrier programs, partially offset by timing of sales on the CVN-80 aircraft carrier program .

Sales in the commercial aerospace market benefited from higher demand for sensors products as well as surface treatment services on narrow-body and wide-body platforms.

In the aerospace defense market, the incremental impact from our arresting systems acquisition was partially offset by the timing of sales of embedded computing equipment on various helicopter and unmanned aerial vehicle programs.

Commercial markets

Sales in the third quarter increased $11 million, or 5%, to $216 million primarily due to higher demand for our industrial vehicle products in the general industrial market.

Sales during the nine months ended September 30, 2022 increased $20 million, or 3%, to $644 million primarily due to higher demand for our industrial vehicle products in the general industrial market.

In the power & process market, higher nuclear aftermarket sales were offset by the wind-down on the China Direct AP1000 program.

Sales during the three months ended March 31, 2023 increased $24 million, or 12%, to $222 million.

In the power & process market, sales increased primarily due to higher nuclear aftermarket sales supporting the maintenance of existing operating reactors, as well as higher industrial valve sales in the process market.

The general industrial market benefited from higher sales of both surface treatment services and industrial vehicle products.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Use of Cash

We derive the majority of our operating cash inflow from receipts on the sale of goods and services and cash outflow for the procurement of materials and labor;

cash flow is therefore subject to market fluctuations and conditions.

Most of our long-term contracts allow for several billing points (progress or milestone) that provide us with cash receipts as costs are incurred throughout the project rather than upon contract completion, thereby reducing working capital requirements.

In some cases, these payments can exceed the costs incurred on a project.

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, increased dividends, capital expenditures, and paying down debt, to determine the most beneficial use of available capital resources.

We believe that our cash and cash equivalents, cash flow from operations,

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

available borrowings under the credit facility, and ability to raise additional capital through the credit markets, are sufficient to meet both the short-term and long-term capital needs of the organization.

Condensed Consolidated Statements of Cash Flows Nine Months Ended

(In thousands) September 30, 2022 September 30, 2021

Cash provided by (used for):

We derive the majority of our operating cash inflow from receipts on the sale of goods and services and cash outflow for the procurement of materials and labor;

cash flow is therefore subject to market fluctuations and conditions.

In some cases, these payments can exceed the costs incurred on a project.

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, increased dividends, and paying down debt, to determine the most beneficial use of available capital resources.

We believe that our cash and cash equivalents, cash flow from operations, available borrowings under the credit facility, and ability to raise additional capital through the credit markets, are sufficient to meet both the short-term and long-term capital needs of the organization, including the return of capital to shareholders through dividends and share repurchases and growing our business through acquisitions.

Condensed Consolidated Statements of Cash Flows Three Months Ended

(In thousands) March 31, 2023 March 31, 2022

Cash provided by (used in):

Operating activities

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Effect of exchange-rate changes on cash 7,450 (5,795)

Net increase (decrease) in cash and cash equivalents (57,452) 36,168

Net cash provided by operating activities decreased $153 million from the prior year period, primarily due to lower defense revenues, higher inventory purchases, lower advanced cash receipts, and a legal settlement payment made to WEC during the current period.

Net cash used for investing activities increased $252 million from the prior year period, primarily due to our arresting systems acquisition for $247 million.

Net cash provided by financing activities increased $329 million from the prior year period, primarily due to higher current period net borrowings under our Credit Agreement.

Net decrease in cash and cash equivalents (126,315) (34,322)

Net cash used in operating activities decreased $33 million from the prior year period, primarily due to higher cash earnings and improved working capital.

These increases were partially offset by higher tax payments in the current period.

Net cash used in investing activities of $10 million was essentially flat compared to the prior year period.

Net cash provided by financing activities decreased $138 million from the prior year period, primarily due to the repayment of our 2013 Notes.

This decrease was partially offset by higher current period net borrowings under our credit facility.

Refer to the "Financing Activities" section below for further details.

Financing Activities

The Corporation’s debt outstanding had an average interest rate of 3.6% and 3.3% for the three and nine months ended September 30, 2022, respectively and 3.6% for both the three and nine months ended September 30, 2021, respectively.

The Corporation’s average debt outstanding was $1.4 billion and $1.2 billion for the three and nine months ended September 30, 2022, and $1.1 billion for both the three and nine months ended September 30, 2021, respectively.

On October 27, 2022, the Corporation announced that it formally closed its private placement debt offering of $300 million for senior notes, consisting of $200 million 4.49% notes due 2032 and $100 million 4.64% notes due 2034 .

Revolving Credit Agreement

In May 2022, the Corporation terminated its existing credit agreement, which was set to expire in October 2023, and entered into a new Credit Agreement with a syndicate of financial institutions.

The Credit Agreement, which is set to expire in May 2027, increases the size of the Corporation’s revolving credit facility to $750 million, and expands the accordion feature to $250 million.

As of September 30, 2022, the Corporation had $388 million of outstanding borrowings under the Credit Agreement, and $15 million in letters of credit supported by the Credit Agreement.

The unused credit available under the Credit Agreement as of September 30, 2022 was $347 million, which could be borrowed without violating any of our debt covenants.

During the three months ended March 31, 2023, we repaid $203 million of the 2013 Notes that matured on February 26, 2023.

The Corporation’s debt outstanding had an average interest rate o f 4.4% and 3.2% for the three months ended March 31, 2023 and 2022, respectively.

The Corporation’s average debt outstanding was $1,129 million an d $1,112 million for the three months ended March 31, 2023 and 2022, respectively.

Credit Agreement

As of March 31, 2023, the Corporation had $178 million of outstanding borrowings under its credit facility and approximately $19 million in letters of credit supported by the credit facility.

The unused credit available under the credit facility as of March 31, 2023 was $553 million which could be borrowed without violating any of our debt covenants.

Repurchase of common stock

During the nine months ended September 30, 2022, the Corporation used $44 million of cash to repurchase approximately 0.3 million outstanding shares under its share repurchase program.

During the nine months ended September 30, 2021, the Corporation used $79 million of cash to repurchase approximately 0.6 million outstanding shares under its share repurchase program.

During the three months ended March 31, 2023, the Corporation used $12 million of cash to repurchase approximately 0.1 million outstanding shares under its share repurchase program.

During the three months ended March 31, 2022, the Corporation used $19 million of cash to repurchase approximately 0.1 million outstanding shares under its share repurchase program.

Cash Utilization

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FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Cash Utilization

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, increased dividends, capital expenditures, and repaying debt to determine the most beneficial use of available capital resources.

The Corporation made dividend payments of $14 million during both the nine months ended September 30, 2022 and September 30, 2021, respectively.

Additionally, beginning in the second quarter, the Corporation increased its quarterly dividend 6% to $0.19 per share.

In the third quarter, the Corporation declared dividends of $7 million, which was paid to shareholders of record in October 2022.

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, and increased dividends to determine the most beneficial use of available capital resources.

We believe that our cash and cash equivalents, cash flow from operations, available borrowings under the credit facility, and ability to raise additional capital through the credit markets are sufficient to meet both the short-term and long-term capital needs of the organization, including the return of capital to shareholders through dividends and share repurchases and growing our business through acquisitions.

Debt Compliance

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The debt to capitalization limit is a measure of our indebtedness (as defined per the notes purchase agreement and credit facility) to capitalization, where capitalization equals debt plus equity, and is the same for and applies to all of our debt agreements and credit facility.

As of September 30, 2022, we had the ability to borrow additional debt of $1.4 billion without violating our debt to capitalization covenant.

As of March 31, 2023, we had the ability to borrow additional debt of approximately $1.8 billion without violating our debt to capitalization covenant.

CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

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Securities and Exchange Commission on February 22, 2023, in the Notes to the Consolidated Financial Statements, Note 1, and the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk during the nine months ended September 30, 2022.

Information regarding market risk and market risk management policies is more fully described in "Item 7A.

Quantitative and Qualitative Disclosures about Market Risk" of our 2021 Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements