Core Viewpoint - Curtiss-Wright Corporation reported strong first-quarter 2025 earnings, with adjusted EPS of $2.82, exceeding estimates and reflecting significant year-over-year growth in both sales and earnings [1][2][3]. Financial Performance - The company achieved net sales of $805.6 million, a 13% increase year over year, surpassing the Zacks Consensus Estimate of $767 million by 5% [3]. - Adjusted operating income was reported at $134 million, with an adjusted operating margin of 17.9% [3]. Backlog and Orders - Total backlog at the end of Q1 was $3.7 billion, an 8.8% increase from the end of 2024, driven by demand in aerospace, defense, and commercial markets [4]. - New orders reached $1 billion, up 13% year over year, supported by strong demand in naval defense, commercial aerospace, and commercial nuclear sectors [4]. Segment Performance - **Aerospace & Industrial**: Sales increased 4% to $227 million, driven by higher commercial aerospace sales and defense market revenues [5]. Adjusted operating income improved 15% to $50 million, with a margin expansion of 140 bps to 13.9% [6]. - **Defense Electronics**: Sales rose 16% to $245 million, fueled by ground and naval defense market revenues [7]. Operating income increased 40% to $67 million, with a margin expansion of 480 bps to 27.5% [8]. - **Naval & Power**: Sales grew 18% to $333 million, driven by demand for submarine programs and commercial nuclear products [9][10]. Adjusted operating income increased 28% to $45 million, with a margin expansion of 100 bps to 12.6% [11]. Financial Position - As of March 31, 2025, cash and cash equivalents were $226.5 million, down from $385 million at the end of 2024 [12]. Long-term debt remained flat at $0.96 billion [12]. - Net cash outflow from operating activities was $38.8 million, an improvement from $45.6 million in the prior year [12]. Adjusted free cash outflow was $54.5 million, compared to $57.7 million a year ago [12]. 2025 Guidance - The company raised its 2025 guidance for adjusted earnings to a range of $12.45-$12.80 per share, up from $12.10-$12.40 [13]. - Sales guidance was also increased to $3.37-$3.42 billion, compared to the previous range of $3.34-$3.39 billion [14]. - Free cash flow guidance was raised to $495-$515 million, up from $485-$505 million [14].

Financial Data and Key Metrics Changes - Sales for Q1 2025 reached $806 million, representing a 13% year-over-year increase or 11% on an organic basis, driven by growth in aerospace and defense markets [7][10] - Operating income increased by 34% year-over-year, resulting in a 260 basis points expansion in overall operating margin [8] - Diluted earnings per share (EPS) rose by 42% year-over-year, primarily due to higher aerospace and defense sales [8] - Free cash flow increased by 5% year-over-year, despite typically being a first-quarter outflow [8] - New orders increased by 13% year-over-year to a record of over $1 billion, resulting in a book-to-bill ratio of 1.26 times [8][10] Business Line Data and Key Metrics Changes - Aerospace and Industrial segment sales increased by 4%, with solid growth in defense markets, particularly in actuation equipment for F-35 and F-18 programs [12] - Defense Electronics segment saw a 16% sales growth, driven by embedded computing equipment sales supporting various C5ISR programs [13] - Naval and Power segment experienced an 18% sales growth, primarily due to higher revenue from naval defense platforms and contributions from acquisitions [15] Market Data and Key Metrics Changes - The overall backlog reached a record of over $3.6 billion, providing visibility and confidence in long-term growth [10] - The company expects total sales to grow by 8% to 9% in 2025, with strong growth anticipated in defense electronics and aerospace markets [10][24] - Commercial aerospace sales are projected to increase by 13% to 15%, driven by new cockpit voice recorder solutions [18] Company Strategy and Development Direction - The company is focused on operational growth and efficiency to expand margins and fund investments for profitable growth [6][29] - The strategy includes enhancing customer engagement and leveraging domain expertise in mission-critical technologies [5] - The company is well-positioned to capture growth trends in defense and commercial markets, with a strong emphasis on R&D and technological leadership [31][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong results despite macroeconomic uncertainties [6][29] - The company raised its full-year guidance for sales, operating margins, and EPS, reflecting improved outlooks in key markets [10][11] - Management highlighted the importance of adapting to challenges such as tariffs and supply chain issues while maintaining operational excellence [21][29] Other Important Information - Approximately 20% of the company's business is subject to tariffs, with an estimated $30 million impact for 2025, but mitigation strategies are in place [21][45] - The company anticipates a total annualized savings of approximately $12 million from its restructuring program [22] Q&A Session Summary Question: Can you provide more detail on the tariff impact? - Management discussed the dynamic situation regarding tariffs and the proactive measures taken to mitigate impacts, including operational adjustments and pricing strategies [41][43] Question: What drove the increase in commercial aerospace guidance? - The increase was attributed solely to new cockpit voice recorder business, with expectations for long-term revenue growth due to FAA mandates [49][51] Question: How supportive has the current administration been towards nuclear energy? - Management expressed cautious optimism regarding ongoing support for nuclear energy, citing positive developments in Poland and Bulgaria [62][63] Question: What is the outlook for shipbuilding and how does it affect the company? - Management noted that while shipbuilding programs take time, there are immediate opportunities for growth due to increased funding and support for the industrial base [66] Question: Can you comment on Defense Electronics margin performance? - Management acknowledged conservatism in guidance due to various factors but emphasized ongoing operational excellence initiatives that are expected to drive future growth [70][72]

Q1 2025 EARNINGS CONFERENCE CALL Conference Call Dial-in numbers: (800) 343-5172 (domestic) (203) 518-9856 (international) Conference code: CWQ125 May 8, 2025 1 Investor Day 2024 SAFE HARBOR STATEMENT Please note that the information provided in this presentation is accurate as of the date of the original presentation. The presentation will remain posted on this website from one to twelve months following the initial presentation, but content will not be updated to reflect new information that may become av ...