CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands)
For the nine months ended September 30, 2024
Common Stock
Additional Paid in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Treasury Stock
December 31, 2023
$
49,187
$
140,182
$
3,487,751
$
(213,223)
$
(1,135,484)
Net earnings
—
—
287,126
—
—
Other comprehensive income, net of tax
—
—
—
9,795
—
Dividends declared
—
—
(23,694)
—
—
Restricted stock
—
(13,944)
—
—
13,944
Employee stock purchase plan
—
5,714
—
—
5,631
Share-based compensation
—
14,934
—
—
230
Repurchase of common stock (1)
—
—
—
—
(137,580)
Other
—
(2,492)
—
—
2,342
September 30, 2024
$
49,187
$
144,394
$
3,751,183
$
(203,428)
$
(1,250,917)
For the three months ended September 30, 2024
Common Stock
Additional Paid in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Treasury Stock
June 30, 2024
$
49,187
$
135,574
$
3,648,005
$
(233,488)
$
(1,140,858)
Net earnings
—
—
111,160
—
—
Other comprehensive income, net of tax
—
—
—
30,060
—
Dividends declared
—
—
(7,982)
—
—
Restricted stock
—
(65)
—
—
65
Employee stock purchase plan
—
3,230
—
—
2,643
Share-based compensation
—
5,683
—
—
15
Repurchase of common stock (1)
—
—
—
—
(112,784)
Other
—
(28)
—
—
2
September 30, 2024
$
49,187
$
144,394
$
3,751,183
$
(203,428)
$
(1,250,917)
Page 8
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands)
For the nine months ended September 30, 2023
Common Stock
Additional Paid in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Treasury Stock
December 31, 2022
$
49,187
$
134,553
$
3,163,491
$
(258,916)
$
(1,107,101)
Net earnings
—
—
234,623
—
—
Other comprehensive income, net of tax
—
—
—
5,500
—
Dividends declared
—
—
(22,612)
—
—
Restricted stock
—
(13,878)
—
—
13,878
Employee stock purchase plan
—
3,312
—
—
7,271
Share-based compensation
—
12,884
—
—
329
Repurchase of common stock (1)
—
—
—
—
(37,366)
Other
—
(261)
—
—
261
September 30, 2023
$
49,187
$
136,610
$
3,375,502
$
(253,416)
$
(1,122,728)
For the three months ended September 30, 2023
Common Stock
Additional Paid in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Treasury Stock
June 30, 2023
$
49,187
$
130,846
$
3,286,376
$
(225,375)
$
(1,113,675)
Net earnings
—
—
96,778
—
—
Other comprehensive loss, net of tax
—
—
—
(28,041)
—
Dividends declared
—
—
(7,652)
—
—
Employee stock purchase plan
—
1,829
—
—
3,529
Share-based compensation
—
3,935
—
—
419
Repurchase of common stock (1)
—
—
—
—
(13,001)
September 30, 2023
$
49,187
$
136,610
$
3,375,502
$
(253,416)
$
(1,122,728)
See notes to condensed consolidated financial statements
(1)For the three and nine months ended September 30, 2024, the Corporation repurchased approximately 356,000 and 455,000 shares of its common stock, respectively. For the three and nine months ended September 30, 2023, the Corporation repurchased approximately 64,000 and 209,000 shares of its common stock, respectively.
Page 9
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Curtiss-Wright Corporation along with its subsidiaries (we, the Corporation, or the Company) is a global integrated business that provides highly engineered products, solutions, and services mainly to aerospace & defense (A&D) markets, as well as critical technologies in demanding commercial power, process, and industrial markets.
The unaudited condensed consolidated financial statements include the accounts of Curtiss-Wright and its majority-owned subsidiaries. All intercompany transactions and accounts have been eliminated.
The unaudited condensed consolidated financial statements of the Corporation have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted as permitted by such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of these financial statements.
Management is required to make estimates and judgments that affect the reported amount of assets, liabilities, revenue, and expenses and disclosure of contingent assets and liabilities in the accompanying financial statements. Actual results may differ from these estimates. The most significant of these estimates includes the estimate of costs to complete using the over-time revenue recognition accounting method, pension plan and postretirement obligation assumptions, estimates for inventory obsolescence, fair value estimates around assets and assumed liabilities from acquisitions, estimates for the valuation and useful lives of intangible assets, legal reserves, and the estimate of future environmental costs. Changes in estimates of contract sales, costs, and profits are recognized using the cumulative catch-up method of accounting. This method recognizes in the current period the cumulative effect of the changes on current and prior periods. 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, 2024 and 2023, there were no material 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 2023 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.
New Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires disclosure of significant reportable segment expenses that are regularly provided to the chief operating decision-maker ("CODM") and included within the Corporation's measure of segment profit or loss. ASU 2023-07 also requires that all disclosures around segment profit or loss and assets be provided on both an annual and interim basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 is required to be applied on a retrospective basis for all periods presented. The Corporation is currently evaluating the impact of adopting this standard on its financial statements, but does not expect it to have a material impact on its consolidated financial position, results of operations, or cash flows.
2. REVENUE
The Corporation recognizes revenue when control of a promised good and/or service is transferred to a customer in an amount that reflects the consideration that the Corporation expects to be entitled to in exchange for that good and/or service.
Performance Obligations
The Corporation identifies a performance obligation for each promise in a contract to transfer a distinct good or service to the customer. As part of its assessment, the Corporation considers all goods and/or services promised in the contract, regardless of whether they are explicitly stated or implied by customary business practices. The Corporation’s contracts may contain either a single performance obligation, including the promise to transfer individual goods or services that are not separately distinct within the context of the respective contracts, or multiple performance obligations. For contracts with multiple performance obligations, the Corporation allocates the overall transaction price to each performance obligation using standalone selling
Page 10
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
prices, where available, or utilizes estimates for each distinct good or service in the contract where standalone prices are not available.
The Corporation’s performance obligations are satisfied either at a point-in-time or on an over-time basis. Typically, over-time revenue recognition is based on the utilization of an input measure used to measure progress, such as costs incurred to date relative to total estimated costs. 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, 2024 and 2023:
The components of net periodic pension cost for the three and nine months ended September 30, 2024 and 2023 were as follows:
三个月之内结束
九个月结束
2020年9月30日
2020年9月30日
（以千为单位）
2024
2023
2024
2023
服务成本
$
4,063
$
4,167
$
12,615
$
12,431
利息费用
8,513
8,665
25,691
26,266
计划资产预期回报
(16,356)
(15,582)
(49,447)
(47,260)
以前服务成本的摊销
(8)
(34)
(23)
(100)
未确认的精算亏损摊销
104
(89)
636
64
净周期性养老金成本
$
(3,684)
$
(2,873)
$
(10,528)
$
(8,599)
The Corporation did not make any contributions to the Curtiss-Wright Pension Plan during the nine months ended September 30, 2024, 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 2024.
Defined Contribution Retirement Plan
The Company also maintains a defined contribution plan for all non-union employees who are not currently receiving final or career average pay benefits for its U.S. 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, 2024, the expense relating to the plan was $5.7 million and $20.0 million, respectively. During the three and nine months ended September 30, 2023, the expense relating to the plan was $5.2 million and $17.4 million, respectively.
The Corporation’s measure of segment profit or loss is operating income. 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.
friable condition of asbestos in its historical products makes it unlikely that it will face material liability in any asbestos litigation, whether individually or in the aggregate. The Corporation maintains insurance coverage and indemnification agreements for these potential liabilities and believes adequate coverage exists to cover any unanticipated asbestos liability.
Operating income during the nine months ended September 30, 2024 decreased $1 million, or 1%, to $100 million from the prior year period, and operating margin decreased 90 basis points to 14.7%, as favorable overhead absorption on higher sales was partially offset by current period restructuring costs and unfavorable product mix.
Components of sales and operating income increase (decrease):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024 vs. 2023
2024 vs. 2023
Sales
Operating Income
Sales
Operating Income
Organic
12
%
14
%
18
%
39
%
Restructuring
—
%
(1
%)
—
%
(1
%)
Foreign currency
—
%
—
%
1
%
—
%
Total
12
%
13
%
19
%
38
%
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 increased $27 million, or 12%, to $243 million from the prior year period. In the ground defense market, sales increased $11 million primarily due to higher demand for tactical battlefield communications equipment. Sales in the aerospace defense market benefited $8 million primarily due to higher demand for embedded computing equipment on various domestic and international helicopter programs. In the commercial aerospace market, sales increased primarily due to higher OEM sales of avionics and electronics on various platforms.
Sales during the nine months ended September 30, 2024 increased $107 million, or 19%, to $683 million from the prior year period. In the ground defense market, sales increased $51 million primarily due to higher demand for tactical battlefield communications equipment. Sales in the aerospace defense market increased $40 million primarily due to higher demand for embedded computing equipment on various helicopter and fighter jet programs. In the commercial aerospace market, sales benefited $12 million primarily from higher OEM demand for avionics and electronics on various platforms.
Operating income in the third quarter increased $7 million, or 13%, to $64 million compared to the prior year period, and operating margin increased 20 basis points from the prior year period to 26.2%, primarily due to favorable overhead absorption on higher A&D sales.
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CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
PART I - ITEM 2
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued
Operating income during the nine months ended September 30, 2024 increased $47 million, or 38%, to $170 million, and operating margin increased 360 basis points from the prior year period to 24.9%, primarily due to favorable overhead absorption on higher A&D sales, favorable product mix, as well as the benefit of our cost containment initiatives.
New orders in the third quarter increased $14 million primarily due to an increase in orders for defense electronics products.
New orders during the nine months ended September 30, 2024 increased $60 million 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)
2024
2023
% change
2024
2023
% change
Sales
$
327,230
$
287,744
14%
$
932,429
$
834,417
12%
Operating income
53,039
47,663
11%
134,513
132,382
2%
Operating margin
16.2
%
16.6
%
(40 bps)
14.4
%
15.9
%
(150 bps)
New orders
$
329,717
$
335,741
(2%)
$
1,241,239
$
980,176
27%
Components of sales and operating income increase (decrease):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024 vs. 2023
2024 vs. 2023
Sales
Operating Income
Sales
Operating Income
Organic
13
%
11
%
11
%
2
%
Acquisitions
1
%
—
%
1
%
—
%
Foreign currency
—
%
—
%
—
%
—
%
Total
14
%
11
%
12
%
2
%
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 in the third quarter increased $40 million, or 14%, to $327 million from the prior year period. In the naval defense market, sales increased $31 million primarily due to increased production on Virginia-class and Columbia-class submarine programs and the CVN-81 aircraft carrier program, as well as higher growth on various next-generation submarine development programs. Sales in the power & process market benefited $8 million primarily due to higher commercial nuclear aftermarket sales supporting the maintenance of operating reactors in the United States.
Sales during the nine months ended September 30, 2024 increased $98 million, or 12%, to $932 million from the prior year period. In the naval defense market, sales increased $59 million primarily due to higher demand on various submarine programs as well as higher foreign military sales. Sales in the power & process market increased $21 million primarily due to higher commercial nuclear aftermarket sales supporting the maintenance of operating reactors in North America, partially offset by the wind-down on the China Direct AP1000 program. In the aerospace defense market, sales increased $17 million primarily due to higher demand for arresting systems equipment supporting various domestic and international customers.
Operating income in the third quarter increased $5 million, or 11%, to $53 million against the comparable prior year period, while operating margin decreased 40 basis points from the prior year period to 16.2%, as favorable overhead absorption on
Page 26
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
PART I - ITEM 2
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued
higher sales as well as the absence of first year purchase accounting costs from our arresting systems acquisition were partially offset by unfavorable product mix and the timing of development programs.
Operating income during the nine months ended September 30, 2024 increased $2 million, or 2%, to $135 million while operating margin decreased 150 basis points from the prior year period to 14.4%, as favorable overhead absorption on higher sales as well as the absence of first year purchase accounting costs from our arresting systems acquisition were essentially offset by an unfavorable naval contract adjustment, unfavorable product mix, and the timing of development programs.
New orders in the third quarter decreased $6 million primarily due to the timing of naval defense orders.
New orders during the nine months ended September 30, 2024 increased $261 million primarily due to an increase in 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.
Total Net Sales by End Market and Customer Type
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In thousands)
2024
2023
% change
2024
2023
% change
Aerospace & Defense markets:
Aerospace Defense
$
158,980
$
148,023
7
%
$
445,158
$
380,095
17
%
Ground Defense
92,973
83,185
12
%
268,672
220,317
22
%
Naval Defense
217,510
179,862
21
%
605,004
532,773
14
%
Commercial Aerospace
96,677
79,703
21
%
279,768
232,226
20
%
Total Aerospace & Defense
$
566,140
$
490,773
15
%
$
1,598,602
$
1,365,411
17
%
Commercial markets:
Power & Process
$
131,376
$
122,118
8
%
$
394,016
$
373,457
6
%
General Industrial
101,402
111,435
(9
%)
304,258
320,714
(5
%)
Total Commercial
$
232,778
$
233,553
—
%
$
698,274
$
694,171
1
%
Total Curtiss-Wright
$
798,918
$
724,326
10
%
$
2,296,876
$
2,059,582
12
%
Aerospace & Defense markets
Sales in the third quarter increased $75 million, or 15%, to $566 million against the comparable prior year period, due to higher sales across all markets. Sales in the aerospace defense market increased primarily due to higher demand for embedded computing equipment on various domestic and international helicopter programs. In the ground defense market, sales increased primarily due to higher demand for tactical battlefield communications equipment. Sales increases in the naval defense market were primarily due to higher demand on various submarine programs as well as the CVN-81 aircraft carrier program. In the commercial aerospace market, sales increased primarily due to higher demand for actuation and sensors products, as well as surface treatment services, on various narrow-body and wide-body platforms, and higher demand for avionics equipment on various domestic helicopter programs.
Sales during the nine months ended September 30, 2024 increased $233 million, or 17%, to $1,599 million, primarily due to higher sales across all markets. Sales in the aerospace defense market increased primarily due to higher demand for both arresting systems equipment supporting various domestic and international customers as well as embedded computing equipment on various helicopter and fighter jet programs. 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
Page 27
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
PART I - ITEM 2
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued
higher demand on various submarine programs as well as higher foreign military sales. Sales in the commercial aerospace market primarily benefited from higher demand for OEM sensors and actuation products, surface treatment services on narrowbody and widebody platforms, as well as avionics equipment on various platforms.
Commercial markets
Sales in the third quarter of $233 million were essentially flat against the comparable prior year period. Sales in the power & process market benefited from higher commercial nuclear aftermarket sales supporting the maintenance of operating reactors in the United States. This increase was essentially offset by lower sales of industrial vehicle products to off-highway vehicle platforms in the general industrial market.
Sales during the nine months ended September 30, 2024 increased $4 million, or 1%, to $698 million. Sales in the power & process market primarily benefited from higher commercial nuclear aftermarket sales supporting the maintenance of operating reactors in North America, partially offset by the wind-down on the China Direct AP1000 program. The general industrial market was negatively impacted by lower sales of industrial vehicle products to off-highway vehicle platforms.
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.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended
(In thousands)
September 30, 2024
September 30, 2023
Cash provided by (used for):
Operating activities
$
242,976
$
165,717
Investing activities
(70,253)
(31,573)
Financing activities
(142,818)
(245,046)
Effect of exchange-rate changes on cash
7,078
2,737
Net increase (decrease) in cash and cash equivalents
36,983
(108,165)
Net cash provided by operating activities increased $77 million from the prior year period, primarily due to higher cash earnings and improved working capital.
Net cash used for investing activities increased$39 million from the prior year period, primarily due to our acquisition of WSC.
Net cash used for financing activities decreased $102 million from the prior year period, primarily due to the repayment of our 2013 Notes in February 2023. This decrease was partially offset by higher share repurchases during the current period. Refer to the "Financing Activities" section below for further details.
Financing Activities
Debt
The Corporation’s debt outstanding had an average interest rate of 3.8% for both the three and nine months ended September 30, 2024, respectively, and 4.0% for both the three and nine months ended September 30, 2023, respectively. The Corporation’s average debt outstanding was $1.0 billion for both the three and nine months ended September 30, 2024, respectively, and $1.1 billion and $1.2 billion for the three and nine months ended September 30, 2023, respectively.
Page 28
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
PART I - ITEM 2
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued
Credit Agreement
As of September 30, 2024, the Corporation had $20 million in letters of credit supported by the Credit Agreement. The unused credit available under the Credit Agreement as of September 30, 2024 was $730 million, which could be borrowed without violating any of our debt covenants.
Repurchase of common stock
During the nine months ended September 30, 2024, the Corporation used $138 million of cash to repurchase approximately 0.5 million outstanding shares under its share repurchase program. During the nine months ended September 30, 2023, the Corporation used $37 million of cash to repurchase approximately 0.2 million outstanding shares under its share repurchase program.
Cash Utilization
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.
Dividends
The Corporation made dividend payments of $16 million and $15 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. Additionally, beginning in the second quarter of 2024, the Corporation increased its quarterly dividend to $0.21 per share.
Debt Compliance
As of the date of this report, we were in compliance with all debt agreements and credit facility covenants, including our most restrictive covenant, which is our debt to capitalization limit of 60%. 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, 2024, we had the ability to borrow additional debt of $2.6 billion without violating our debt to capitalization covenant.
Page 29
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
PART I - ITEM 2
MANAGEMENT’S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued
CRITICAL ACCOUNTING POLICIES
Our condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by the application of our accounting policies. Critical accounting policies are those that require application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our 2023 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on February 20, 2024, 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.
Page 30
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our market risk during the nine months ended September 30, 2024. 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 2023 Annual Report on Form 10-K.
Item 4. CONTROLS AND PROCEDURES
As of September 30, 2024, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of September 30, 2024 insofar as they are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and they include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
During the quarter ended September 30, 2024, there have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Page 31
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
From time to time, we are involved in legal proceedings that are incidental to the operation of our 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. We continue 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, we do not believe that the disposition of any of these matters, individually or in the aggregate, will have a material adverse effect on our condensed consolidated financial condition, results of operations, and cash flows.
We have been named in pending lawsuits that allege injury from exposure to asbestos. To date, we have not been found liable or paid any material sum of money in settlement in any asbestos-related case. We believe that the minimal use of asbestos in our past operations and the relatively non-friable condition of asbestos in our products make it unlikely that we will face material liability in any asbestos litigation, whether individually or in the aggregate. We maintain insurance coverage for these potential liabilities and we believe adequate coverage exists to cover any unanticipated asbestos liability.
Item 1A. RISK FACTORS
There have been no material changes in our Risk Factors during the nine months ended September 30, 2024. Information regarding our Risk Factors is more fully described in "Item 1A. Risk Factors" of our 2023 Annual Report on Form 10-K.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information about our repurchase of equity securities that are registered by us pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, during the quarter ended September 30, 2024.
Total Number of shares purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of a Publicly Announced Program
Maximum Dollar amount of shares that may yet be Purchased Under the Program
July 1 - July 31
15,736
$279.41
115,522
$
120,946,336
August 1 - August 31
14,856
$295.95
130,378
$
116,549,750
September 1 - September 30
324,986
$319.98
455,364
$
12,559,951
For the quarter ended September 30, 2024
355,578
$317.18
455,364
$
12,559,951
In November 2023, the Corporation adopted two written trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The first trading plan includes share repurchases of $50 million, to be executed equally throughout the 2024 calendar year. The second trading plan includes opportunistic share repurchases up to $100 million during 2024 to be executed through a 10b5-1 program. The Corporation implemented these written trading plans in connection with its previously authorized $550 million share repurchase program on September 16, 2021 (the “2021 Share Repurchase Authorization”). The terms of these trading plans can be found in the Corporation’s Form 8-K filed with U.S. Securities and Exchange Commission on November 28, 2023.
On May 9, 2024, our Board of Directors authorized the Corporation to repurchase up to an additional $300 million of its common stock (the “2024 Share Repurchase Authorization”). As of September 30, 2024, the Corporation has not executed against the 2024 Share Repurchase Authorization.
On September 11, 2024, the Corporation adopted a written trading plan under Rule 10b5-1 of the Exchange Act. The trading plan includes purchases in the total amount of $100 million. The number of shares of Company common stock to be purchased on any purchase day will be up to the maximum daily target volume allowable under Rule 10b-18 of the Exchange Act. The
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Corporation completed the entire $100 million of repurchases under this trading plan during the third quarter. As of September 30, 2024, the total available authorization under the 2021 Share Repurchase Authorization and 2024 Share Repurchase Authorization (together, the “Share Repurchase Programs”) is $300 million.
The repurchase of the Corporation’s common stock under the Share Repurchase Programs may be made through a variety of methods, which could include open market purchases, accelerated share repurchase transactions, negotiated block transactions, 10b5-1 plans, other transactions that may be structured through investment banking institutions or privately negotiated, or a combination of the foregoing. The Share Repurchase Programs do not have an expiration date and may be amended, discontinued, or terminated by the Corporation’s Board of Directors at any time without prior notice. The timing, price, and volume of share repurchases will depend on market conditions, relevant securities laws, and corporate, tax, regulatory and other relevant considerations.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
Director Nomination Process
There have been no material changes in our procedures by which our security holders may recommend nominees to our board of directors during the nine months ended September 30, 2024. Information regarding security holder recommendations and nominations for directors is more fully described in the section entitled “Stockholder Nominations for Directors” of our 2024 Proxy Statement on Schedule 14A, which is incorporated by reference to our 2023 Annual Report on Form 10-K.
Insider Adoption or Termination of Trading Arrangements
During the quarter ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K, except as described in the table below:
Name
Title
Action
Character of Trading Arrangement(1)
Adoption Date
Earliest Sale Date
Expiration Date(2)
Aggregate # of securities to be purchased or sold(3)
Lynn M. Bamford
Chair and Chief Executive Officer
Adoption
Rule 10b5-1 Trading Arrangement
September 9, 2024
December 11, 2024
March 31, 2025
Up to 7,129 shares to be sold
1.Except as indicated by footnote, the trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended.
2.The Rule 10b5-1 trading arrangement permits transactions through and including the earlier to occur of (a) the completion of all purchases or sales, (b) the date listed in the table, or (c) such date the trading arrangement is otherwise terminated according to its terms. The trading arrangements also provide for automatic expiration in the event of death, dissolution, bankruptcy, or insolvency of the adopting person.
3.The volume of sales is based on pricing triggers outlined in the Rule 10b5-1 trading Arrangement.
The 10b5-1 Trading Arrangement in the above table included a representation from the officer to the broker administering the plan that such individual (i) was not in possession of any material nonpublic information regarding the Company or the securities subject to the plan and (ii) the plan was entered into good faith and not as part of a plan or scheme to evade securities law. A similar representation was made to the Company in connection with the adoption of the plan. Those representations were made as of the date of adoption of the 10b5-1 plan and speak only as of that date. In making those representations, there is
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no assurance with respect to any material nonpublic information of which the officer was unaware, or with respect to any material nonpublic information acquired by the officer or the Company after the date of the representation. Actual sale transactions will be disclosed publicly through Form 144 and Form 4 filings with the SEC, as required.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.