Curtiss‑Wright delivered a strong operational performance in 2022 as we achieved several new financial records, including full-year sales, profitability and new orders, and our share price reached new highs. I am exceptionally proud of the team’s continued resilience and agility to overcome numerous macro market challenges impacting our global operations. Our results this past year truly underscored the talent and collaboration of our team, along with the strength of our combined portfolio, as we successfully execute our Pivot to Growth strategy.
By leveraging our strong backlog, stable balance sheet and disciplined approach to capital allocation, we remain extremely well-positioned to drive long-term profitable growth and deliver continued long-term value for all stakeholders.
We have extensive manufacturing proficiency with state-of-the-art facilities supporting high-performance platforms and mission-critical applications that need precision engineering of complex, ruggedized products.
Enhancing Synergies Across the Portfolio
Curtiss-Wright has an outstanding reputation for its highly engineered products and services, long-standing customer relationships and technological leadership. We have extensive manufacturing proficiency with state-of-the-art facilities supporting high-performance platforms and mission-critical applications that need precision engineering of complex, ruggedized products, such as the photo on the cover of the Vertical Turning Lathe used in the production of our AP1000 reactor coolant pumps.
We are deeply embedded in our customers’ workflows, which allows us to drive growth in new products and markets. In addition, by enhancing our collaboration of ideas and best practices, and driving a One Curtiss-Wright approach to the customer, we are well-positioned to take advantage of exciting industry growth dynamics and secular trends within our end markets. In turn, this drives inherent synergies to build upon crossover applications for our Aerospace & Defense (A&D) and Commercial technologies and further unlock value across the portfolio.
Delivering Strong 2022 Financial Results
Curtiss-Wright’s strong operational performance in 2022, including our achievement of record sales and orders levels, continued operating margin expansion and double-digit growth in earnings per share, provides confidence that our strategy is working.
Adjusted sales increased 4% to a record $2.6 billion, as we overcame several macro-level headwinds, including the ongoing supply chain, rising inflation and interest rates, and a tighter labor market, as well as the headwind associated with the wind down of our AP1000 contract in China. Overall, we demonstrated solid growth in our A&D markets (66% of total sales), including the contribution from the arresting systems business acquired in mid-2022, and benefited from strong demand within our Commercial markets (34% of total sales), including Nuclear, Process and General Industrial.
Business fundamentals and underlying demand across our portfolio remained strong, as full-year orders grew 15% driven by increases in all three segments.
Adjusted operating income increased 5% to $443 million, while adjusted operating margin increased 30 basis points to a record 17.3%, reflecting our continued strong execution and the benefits of our ongoing company-wide operational excellence and newly deployed commercial excellence initiatives. The Curtiss-Wright team has efficiently managed through this inflationary environment by demonstrating solid financial discipline while making incremental investments in Research and Development (R&D) to deliver future organic growth.
Adjusted diluted earnings per share increased 11% to $8.13, reflecting our overall strong operational performance, as well as our commitment to returning capital to our shareholders through our ongoing share repurchase programs. We also generated $296 million in adjusted free cash flow, driving an adjusted free cash flow conversion of 94%. Of note, we have achieved more than 100% adjusted free cash flow conversion in nine of the past ten years.
Business fundamentals and underlying demand across our portfolio remained strong, as full-year orders grew 15% driven by increases in all three segments. Our robust and growing order book, particularly within our A&D markets, resulted in a record backlog of $2.6 billion, and provides confidence in our future growth outlook.
Disciplined Capital Allocation Strategy
We continue to generate strong cash flow and maintain a healthy balance sheet to support our disciplined approach to capital allocation which dedicates resources to the highest and best use to improve shareholder value. As we stated at our 2021 investor day, high-quality acquisitions that strategically enhance our portfolio have been and will continue to remain our highest priority for capital allocation under our Pivot to Growth strategy. In 2022, we grew our portfolio by welcoming two new businesses into Curtiss-Wright. We also maintained steady distributions to our shareholders in 2022, which followed record annual share repurchase of $350 million in 2021. In addition, we increased our dividend for the 6th straight year, as we maintain steady increases in alignment with our long-term sales growth. With our continued focus on working capital and resulting strong free cash flow generation, we concluded 2022 with approximately $1.7 billion of borrowing capacity, providing the financial flexibility that will enable us to pursue our long-term growth strategies.
Looking Ahead with Confidence
As always, I would like to thank our approximately 8,100 employees for their steadfast commitment to driving yet another strong and successful year for Curtiss-Wright. We remain actively engaged with our workforce to strengthen the overall employee experience, including enhanced training programs, the roll-out of a new Human Capital Management System and a redesign of our safety portal, while continuing to encourage a collegial and inclusive workplace. In addition, we have maintained a strong commitment to positive environmental, social and governance (ESG) related business practices, and continue to take the necessary steps to compile our utility data across our global operations to share our energy baseline.
While it will take another strong team effort in 2023, we have line of sight to achieve the three-year financial targets established at our 2021 Investor Day, which includes a minimum of a 5% compound annual growth rate (CAGR) in revenue, operating income growth in excess of revenue growth, while not losing sight of our focus on maintaining top quartile performance; an EPS CAGR above 10%; and our strong focus on free cash flow with an average conversion rate north of 110%.
We look forward to continuing to execute on our Pivot to Growth strategy and delivering tremendous, long-term value to all of our stakeholders.
