Curtiss-Wright(US:CW)2025-08-07 19:04PART I – FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion and analysis, market risk disclosures, and internal controls for the interim period Item 1. Financial Statements The company achieved significant growth in Q2 and H1 2025, with net sales up 12% and net earnings rising to $222.4 million, alongside improved cash flow and increased total assets Condensed Consolidated Statements of Earnings Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net sales | $876.6 | $784.8 | $1,682.2 | $1,498.0 | | Gross profit | $326.2 | $284.1 | $618.6 | $537.9 | | Operating income | $156.3 | $128.9 | $285.5 | $228.9 | | Net earnings | $121.1 | $99.5 | $222.4 | $176.0 | | Diluted earnings per share | $3.19 | $2.58 | $5.87 | $4.58 | Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $331.7 | $385.0 | | Total current assets | $2,000.0 | $1,850.0 | | Goodwill | $1,698.6 | $1,675.7 | | Total assets | $5,194.5 | $4,985.7 | | Total current liabilities | $1,026.5 | $1,095.9 | | Long-term debt | $958.4 | $958.9 | | Total liabilities | $2,482.8 | $2,535.9 | | Total stockholders' equity | $2,711.7 | $2,449.8 | Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $97.8 | $65.7 | | Net cash used for investing activities | ($36.6) | ($56.7) | | Net cash used for financing activities | ($127.6) | ($27.6) | | Net decrease in cash and cash equivalents | ($53.4) | ($24.3) | Note 1: Basis of Presentation Financial statements adhere to SEC interim reporting rules, reflecting the company's global A&D and commercial markets business, with ASU 2023-07 adopted for segment reporting - The company provides highly engineered products, solutions, and services primarily to aerospace & defense (A&D) markets, as well as commercial power, process, and industrial markets27 - The company adopted ASU 2023-07, which enhances disclosures for reportable segments, as of December 31, 2024, requiring disclosure of significant segment expenses provided to the chief operating decision-maker32 Note 2: Revenue Revenue recognition is based on control transfer, with H1 2025 sales split between over-time and point-in-time, and a $3.9 billion backlog primarily from A&D markets - Total contract backlog was approximately $3.9 billion as of June 30, 2025, with the company expecting to recognize about 90% of this backlog as net sales within the next 36 months40 Revenue Recognition Timing (% of Revenue) | Period | Over-time | Point-in-time | | :--- | :--- | :--- | | Q2 2025 | 51% | 49% | | Q2 2024 | 50% | 50% | | H1 2025 | 52% | 48% | | H1 2024 | 50% | 50% | Total Net Sales by End Market (in millions) | End Market | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Aerospace & Defense | $1,171.5 | $1,032.5 | | Aerospace Defense | $319.3 | $286.2 | | Ground Defense | $194.8 | $175.7 | | Naval Defense | $461.2 | $387.5 | | Commercial Aerospace | $196.2 | $183.1 | | Total Commercial | $510.8 | $465.5 | | Power & Process | $306.4 | $262.6 | | General Industrial | $204.4 | $202.9 | Note 3: Acquisitions No new acquisitions occurred in H1 2025, but 2024 acquisitions contributed $44 million in sales and a $3 million net loss, primarily in the Naval & Power segment - The company did not complete any acquisitions during the six months ended June 30, 202546 - The two businesses acquired in 2024 contributed $44 million in net sales and a $3 million net loss for the six months ended June 30, 202546 - In 2024, the company acquired WSC Inc. for $34 million and Ultra Energy for $201 million, with both acquisitions operating in the Naval & Power segment5152 Note 11: Segment Information The company's three segments—Aerospace & Industrial, Defense Electronics, and Naval & Power—all reported sales and operating income growth in H1 2025 Net Sales by Segment (in millions) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Aerospace & Industrial | $466.8 | $453.1 | | Defense Electronics | $499.9 | $441.7 | | Naval & Power | $717.9 | $605.4 | | Total Net Sales | $1,682.2 | $1,498.0 | Operating Income by Segment (in millions) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Aerospace & Industrial | $68.9 | $62.7 | | Defense Electronics | $135.3 | $106.3 | | Naval & Power | $102.3 | $81.5 | | Total Segment Operating Income | $306.5 | $250.5 | Note 14: Restructuring Costs The 2024 Restructuring Program is largely complete, with H1 2025 pre-tax charges decreasing to $2.0 million and a remaining liability of $1.1 million - The 2024 Restructuring Program, involving workforce reductions and facility consolidation, is substantially complete as of June 30, 202583 Restructuring Charges and Liability (in millions) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Pre-tax Charges | $2.0 | $4.3 | | Liability Balance (as of June 30) | $1.1 | N/A | Note 15: Subsequent Events The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is expected to reduce 2025 estimated tax payments by $15 million due to R&D expensing - The newly enacted One Big Beautiful Bill Act (OBBBA) is expected to reduce the company's 2025 estimated tax payments by approximately $15 million due to immediate expensing of R&D84 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported strong Q2 and H1 2025 financial performance, with total sales up 12%, operating income growing 25% to $286 million, and robust liquidity Results of Operations H1 2025 total sales increased 12% to $1.68 billion, with operating income up 25% to $286 million and net earnings rising 26% to $222.4 million Components of Sales and Operating Income Change (H1 2025 vs. H1 2024) | Component | Sales Change | Operating Income Change | | :--- | :--- | :--- | | Organic | 10% | 23% | | Acquisitions | 2% | (1%) | | Restructuring | —% | 1% | | Foreign currency | —% | 2% | | Total | 12% | 25% | - For the six months ended June 30, 2025, operating income increased 25% to $286 million, and operating margin expanded by 170 basis points to 17.0%, driven by increases across all segments100 - New orders for the first six months of 2025 increased 6% year-over-year to $2.02 billion96 Results by Business Segment All three business segments—Aerospace & Industrial, Defense Electronics, and Naval & Power—achieved sales and operating income growth in H1 2025 - Aerospace & Industrial: H1 2025 sales increased 3% to $466 million, and operating income rose 10% to $69 million, driven by higher demand for OEM sensors and surface treatment services in commercial aerospace110112114 - Defense Electronics: H1 2025 sales grew 13% to $498 million, with operating income up 27% to $135 million, fueled by strong demand for embedded computing equipment and tactical communications for defense programs117119121 - Naval & Power: H1 2025 sales increased 19% to $718 million, and operating income grew 26% to $102 million, driven by higher demand on submarine programs and the incremental impact of the Ultra Energy and WSC acquisitions124126130 Liquidity and Capital Resources The company maintains strong liquidity, with operating cash flow increasing to $97.8 million in H1 2025, supported by substantial available credit and debt covenant compliance - Net cash provided by operating activities increased by $32 million to $97.8 million for the first six months of 2025, mainly due to higher cash earnings140 - During H1 2025, the company repurchased approximately 102,000 shares of its common stock for $35 million146 - As of June 30, 2025, the company had $723 million available under its credit facility and could borrow an additional $3.0 billion without violating its debt to capitalization covenant145149 Item 3. Quantitative and Qualitative Disclosures about Market Risk No material changes in the company's market risk occurred during the first six months of 2025 - There have been no material changes in the company's market risk during the first six months of 2025154 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures are effective155 - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected or are likely to materially affect internal controls156 PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, safety disclosures, other information, and exhibits Item 1. Legal Proceedings The company is involved in various legal proceedings, including asbestos claims, but does not anticipate a material adverse financial impact - The company does not expect any ongoing legal proceedings, including asbestos claims, to have a material adverse effect on its financial condition, citing minimal historical use of asbestos and adequate insurance coverage159160 Item 1A. Risk Factors No material changes to the company's risk factors occurred during the first six months of 2025 - There have been no material changes in the company's Risk Factors during the first six months of 2025161 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 59,501 shares of common stock in Q2 2025 for an average of $346.01 per share, with $125.3 million remaining for future repurchases Share Repurchases for the Quarter Ended June 30, 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 36,792 | $295.10 | | May 2025 | 12,520 | $398.15 | | June 2025 | 10,189 | $465.80 | | Total Q2 2025 | 59,501 | $346.01 | - As of June 30, 2025, $125.3 million remained available for share repurchases under the company's announced program163 Item 3. Defaults upon Senior Securities The company reported no defaults on its senior securities - None164 Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable165 Item 5. Other Information No material changes occurred in director nomination procedures or Rule 10b5-1 trading arrangements for directors and officers in H1 2025 - There have been no material changes in the procedures for security holders to recommend director nominees166 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the first six months of 2025167 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data