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CURTISS WRIGHT CORP (CW)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered broad beats and momentum: revenue $805.6M (+13% y/y), Adjusted EPS $2.82 (+42% y/y), and Adjusted operating margin 16.6% (+260 bps y/y), driven by stronger-than-expected naval timing and outperformance in Defense Electronics; record $1.0B orders (book-to-bill 1.26x) support visibility .
  • Against S&P Global consensus, CW beat on both revenue ($805.6M vs $767.7M*) and EPS ($2.82 vs $2.39*), with the beat powered by defense embedded computing strength and favorable naval revenue timing (company-reported actuals below; S&P consensus marked with asterisks) .
  • Management raised FY25 guidance across Sales (now +8–9%), Operating Income (+13–16%), Operating Margin (18.3–18.5%), EPS ($12.45–$12.80), and FCF ($495–$515M), citing strong A&D demand, operational excellence, and tariff mitigation plans .
  • Key catalysts: accelerated Defense Electronics margin expansion, cockpit voice/data recorder retrofit opportunity tied to the 25-hour mandate, robust naval and commercial nuclear demand, and record backlog; tariff risk remains but management expects a net ~$10M 2025 impact after mitigation .

What Went Well and What Went Wrong

  • What Went Well
    • Defense Electronics outperformed: sales +16% y/y to $245M and Adjusted op margin up 480 bps to 27.5% on volume absorption, operational excellence, and favorable mix .
    • Naval & Power strength: sales +18% y/y to $333M; Adjusted op income +28% y/y; submarine programs (Virginia/Columbia) and aircraft handling systems timing were key drivers; prior-year unfavorable adjustment did not recur .
    • Management conviction and guidance raise: “Raised our full-year outlook… expect total sales growth of 8% to 9%, operating margin expansion of 80 to 100 bps, and diluted EPS growth of 14% to 17%,” per CEO Lynn Bamford .
  • What Went Wrong
    • Seasonal FCF still negative (though improved): Q1 FCF of ($55)M vs ($58)M prior year on collection timing and higher growth capex; FCF conversion (non-GAAP) negative in Q1 (seasonal) .
    • Tariff headwind: about 20% of business exposed; gross 2025 impact estimated ~$30M with net ~$10M after pricing/operational mitigation; still a monitored risk .
    • Some end-market and mix headwinds: lower aerospace defense revenue within Naval & Power due to arresting systems timing; continued pressure in industrial vehicle products within General Industrial .

Financial Results

Multi-period summary (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$798.9 $824.3 $805.6
Adjusted Diluted EPS ($)$2.97 $3.27 $2.82
Adjusted Operating Margin (%)18.7% 19.8% 16.6%

Q1 2025 vs S&P Global consensus (company actuals vs consensus)

MetricConsensusActual
Revenue ($USD Millions)$767.7M*$805.6M
Adjusted Diluted EPS ($)$2.39*$2.82

Values marked with * are retrieved from S&P Global (Capital IQ) consensus estimates.

Segment performance – Q1 2025 vs Q1 2024

SegmentSales Q1’24 ($M)Sales Q1’25 ($M)YoY %Adj Op Inc Q1’24 ($M)Adj Op Inc Q1’25 ($M)Adj Op Margin Q1’24Adj Op Margin Q1’25
Aerospace & Industrial219 227 4% 27 32 12.5% 13.9%
Defense Electronics212 245 16% 48 67 22.7% 27.5%
Naval & Power282 333 18% 35 45 12.5% 13.5%

KPIs and cash

KPIQ1 2024Q1 2025
New Orders ($B)~$0.88B [implied from +13% to $1.0B] $1.0B (record)
Book-to-Bill (x)—1.26x
Backlog ($B)$3.4B at 12/31/23 $3.7B (+7% vs 12/31/24)
FCF ($M)($58) ($55)
FCF Conversion (non-GAAP)(75%) (51%)
Share Repurchase ($M)—~$14 (42,383 shares)
Dividend/Share ($)$0.20 $0.21

Notes: Orders and book-to-bill reflect the quarterly performance; backlog is stated vs 12/31/24 baseline .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total SalesFY 2025$3,335–$3,385M $3,365–$3,415M Raised
Operating IncomeFY 2025$598–$613M $614–$632M Raised
Operating MarginFY 202517.9%–18.1% 18.3%–18.5% Raised
Diluted EPSFY 2025$12.10–$12.40 $12.45–$12.80 Raised
Free Cash FlowFY 2025$485–$505M $495–$515M Raised
Defense Electronics SalesFY 2025$975–$990M $995–$1,010M Raised
Defense Electronics MarginFY 202525.0%–25.2% (prior) 26.3%–26.5% Raised
Naval & Power SalesFY 2025$1,400–$1,420M $1,410–$1,430M Raised
A&I MarginFY 202517.4%–17.6% (Feb guide) 17.0%–17.6% (range widened/low end lower due to tariffs) Maintained to Lower Low-End

Management explicitly noted FY25 guidance includes potential direct tariff impacts and mitigating actions .

Earnings Call Themes & Trends

TopicQ3 2024 (Prev-2)Q4 2024 (Prev-1)Q1 2025 (Current)Trend
Tariffs—Management preparing; agile approach; prior tariffs manageable ~20% of business exposed; gross ~$30M impact in 2025, net ~$10M after pricing/ops mitigation Intensifying but mitigated
Defense Electronics (MOSA/AI at edge)Strong demand; record bookings; margin 26.5% Restructuring to expand capacity; 2025 margin guide 25.0–25.2% (prior) Q1 margin 27.5%; FY25 margin raised to 26.3–26.5%; NVIDIA AI integration for edge compute Improving
Naval shipbuilding/aftermarketNaval defense +21% y/y; CVN-81, SSN(X) Strong orders/backlog; industrial base funding; aftermarket growth Q1 outperformance on submarine timing; stronger FY25 naval guide Improving
Commercial aerospace cockpit recorders—First noted opportunity build; mandate context Raised commercial aerospace guide solely on 25-hour recorder opportunity via Honeywell partnership; multi-year retrofit runway Emerging tailwind
Commercial nuclear / SMRsLDD growth; WSC acquisition Fivefold long-term ambition; Ultra Energy acquisition; order outlook (AP1000) Q1: HSD organic growth; TerraPower, X-energy, Westinghouse engagements; 2026 AP1000 RCP order timeline reinforced Building

Management Commentary

  • “We delivered significant increases in new orders, sales, operating income and diluted EPS… We have raised our full-year outlook and now expect… operating margin expansion of 80 to 100 basis points, and diluted EPS growth of 14% to 17%.” – Lynn M. Bamford, CEO .
  • “Roughly 20% of our product portfolio is subject to tariff risks… we estimate approximately $30 million gross impacts for the remainder of 2025… we expect the 2025 net impact of tariffs to be approximately $10 million” – K. Christopher Farkas, CFO .
  • “We’re bringing improved cockpit [voice and data recorder] capability to meet new safety mandates for longer recording… opportunity to serve thousands of registered aircraft” – CEO on the 25-hour mandate with Honeywell .
  • “Record new orders of more than $1 billion… reflects strong demand in our Aerospace & Defense and commercial nuclear markets” – CEO .

Q&A Highlights

  • Tariffs: Management formed a cross-functional “tiger team”; mitigation through pricing and operational flexibility; net ~$10M impact expected for 2025 after ~$30M gross exposure, primarily China imports .
  • Commercial aerospace uplift: FY25 increase driven entirely by cockpit recorder retrofits; multi-year runway through decade-end under FAA/EASA 25-hour mandate; certifications expanding across Boeing, Airbus and regional fleets .
  • Defense Electronics margin cadence: Q1 margin benefited from mix and FX; expecting R&D to ramp; planning to smooth typical 4Q skew; FY25 margin guide raised to 26.3–26.5% .
  • Orders/book-to-bill by segment: A&I ~1.1x; DE ~1.0x (tough compare vs lumpy 1Q24 orders); N&P ~1.6x reflecting strong naval orders .
  • Nuclear orders: Expect AP1000 reactor coolant pump order by 2026; positive developments in Poland/Bulgaria; Ultra Energy broadens EU footprint and SMR relationships .

Estimates Context

  • Q1 2025 beats vs consensus: revenue $805.6M vs $767.7M* and Adjusted EPS $2.82 vs $2.39*, with beats driven by earlier-than-expected naval revenue timing and stronger Defense Electronics execution; estimates likely move higher following the across-the-board FY25 guidance raise .
  • Estimate breadth: 7 revenue and 8 EPS estimates for Q1 were captured in S&P Global; the magnitude of the beat plus raised segment outlooks (especially Defense Electronics) suggest upward revisions to FY25 earnings and margin trajectory are warranted (consensus detail below).

Values marked with * are retrieved from S&P Global (Capital IQ) consensus estimates.

Key Takeaways for Investors

  • High-quality beat-and-raise quarter with record $1.0B orders and 1.26x book-to-bill supports sustained growth and pricing power in defense and commercial nuclear .
  • Defense Electronics is the margin engine: Q1 27.5% segment margin and FY25 margin guidance raised to 26.3–26.5% underpin consolidated margin expansion despite tariff noise .
  • Cockpit recorder mandate is a new multi-year aerospace tailwind; management explicitly raised that end-market guide on this alone, highlighting visibility of retrofit ramp .
  • Tariffs are a manageable headwind (net ~$10M in 2025) given mitigation playbook (pricing, sourcing, exclusions), but remain a monitored risk .
  • Nuclear optionality intact: commercial nuclear aftermarket solid; SMR development revenues ramping; AP1000 RCP order expected by 2026 offers medium-term upside .
  • Near-term setup: management guided 2Q sales up high single digits y/y with strong N&P timing; sequential EPS growth expected through the year with 4Q strongest .
  • Additional contract momentum (e.g., $50M NAVAIR FTI IDIQ) reinforces embedded positioning across key U.S. defense platforms .

Additional Context and Other Relevant Q1 2025 Press Releases

  • Curtiss-Wright awarded ~$50M NAVAIR IDIQ for flight test instrumentation through Jan 2030, covering F-35, F-18, CH-53K, E-2D, EA-18, C-130 among others, supporting long-term visibility in avionics/FTI .

All non-GAAP metrics reflect company-provided Adjusted results and reconciliations as furnished in Q1 2025 materials . Values marked with * are retrieved from S&P Global (Capital IQ) consensus estimates.