Curtiss-Wright (CW) FY Conference Transcript

Summary of Curtiss-Wright (CW) FY Conference Call - May 22, 2025 Company Overview - Company: Curtiss-Wright Corporation - Industry: Defense, Aerospace, and Nuclear sectors - Key Executives Present: Lynn Bemford (CFO), Chris Farkas (CEO) [3][6] Core Points and Arguments Growth Strategy - Pivot to Growth Strategy: The company is on track to achieve greater than 5% organic growth CAGR over the next three years, with a focus on defense, aerospace, and commercial nuclear sectors [10][12]. - Defense Business Growth: Projected mid to high single-digit growth, with double-digit growth achieved last year [10][11]. - Commercial Aerospace: Anticipated to exceed high single-digit growth rates as Boeing and Airbus ramp up production [11]. - Commercial Nuclear: Targeting low double-digit growth, with confidence in achieving this over the three-year horizon [12]. Financial Performance - Operating Income Growth: Expected to outpace sales growth, indicating continued operating margin expansion [14]. - EPS Growth: Targeting greater than 10% CAGR, supported by strong sales growth and capital allocation strategies [15]. - Free Cash Flow: On track to generate approximately $1 billion in free cash flow, with a long-term target of$1.3 billion [17]. Defense Sector Insights - Defense Budget: The company benefits from a $150 billion reconciliation bill on top of an$850 billion base budget, with a focus on shipbuilding and naval projects [18][19]. - Golden Dome Initiative: Expected to positively impact Curtiss-Wright, with partnerships enhancing capabilities in smart weaponry [20][21]. - Acquisition of Industrial Base Funding: Increased from $15 million to$21 million, indicating strong support from Navy customers [19]. International Exposure - NATO Spending: Increased military spending among NATO countries, with expectations for growth in international military sales, now approximately 10% of total portfolio [41][42]. - Rearm Europe Program: Seen as a positive development for future sales growth [43]. Commercial Nuclear Developments - Nuclear Power Plants: Anticipated doubling of the commercial nuclear segment from $300 million to$600 million by 2028, with significant growth expected from new builds in Poland and Bulgaria [51][52]. - Flight Recorders: Long-standing expertise in flight recorders is expected to drive growth, particularly with new FAA mandates [45][46]. Capital Allocation and M&A Strategy - M&A Pipeline: Strong pipeline with a focus on acquiring companies in Defense Electronics, Naval Safety, and Commercial Nuclear sectors [58]. - Share Repurchase: $700 million in stock repurchased over the past four years, with an expanded authorization of$534 million for future buybacks [60][61]. Research and Development - Investment in R&D: Over half of internal R&D spending is allocated to Defense Electronics, with ongoing partnerships (e.g., with NVIDIA) to enhance product development [38][39]. Additional Important Insights - Operational Excellence: The company has expanded its operating margin by 900 basis points over the last twelve years, demonstrating consistent performance [14][15]. - Additive Manufacturing: Growing capabilities in this area align with government contracting trends, which favor commercial pricing models [24][27]. - SMR Development: Engaged with major SMR providers, with potential content ranging from $20 million to$120 million per plant, indicating significant future revenue opportunities [63][64]. This summary encapsulates the key points discussed during the conference call, highlighting the company's growth strategies, financial performance, sector insights, and future opportunities.