Sign in

    CURTISS WRIGHT (CW)

    CW Q1 2025 Sales +13%, Margins +260bps; Raises 2025 Guidance

    Reported on May 8, 2025 (After Market Close)
    Pre-Earnings Price$378.03Last close (May 8, 2025)
    Post-Earnings Price$381.50Open (May 9, 2025)
    Price Change
    $3.47(+0.92%)
    • Strong Q1 Performance: The company delivered 13% YoY sales growth and 260 basis points of operating margin expansion in Q1 2025, highlighting effective execution and efficiency enhancements.
    • Robust Order Book & Backlog: With new orders exceeding $1 billion and a record backlog of over $3.6 billion, the company shows strong future revenue visibility and sustained demand support.
    • Upgraded Full-Year Guidance: The firm raised its outlook for 2025 with overall sales expected to grow 8% to 9% and improved EPS growth projections, reinforcing confidence in long-term growth.
    MetricYoY ChangeReason

    Total Revenue

    Up 13% (from $713.2M to $805.65M)

    Robust demand across key markets drove overall revenue growth, with strong contributions from the Defense Electronics and Naval & Power segments. The prior period's solid order book and timing of sales helped set the stage for these gains, reflecting a cumulative effect of earlier investments and favorable market conditions.

    Defense Electronics Revenue

    Up 16% (from $211.7M to $245.72M)

    Increased demand in defense markets, particularly from embedded computing and tactical communications solutions, underpinned the 16% growth. This improvement builds on previous restructuring efforts and a strong backlog from U.S. DoD and FMS programs, showing continuity from past momentum.

    Naval & Power Revenue

    Up 18% (from $282.1M to $333.36M)

    Submarine program sales and strategic acquisitions (such as WSC and Ultra Energy) drove an 18% increase. Earlier growth in submarine demand (e.g., Virginia-class and Columbia-class programs) laid the groundwork, while increased commercial nuclear aftermarket revenue further accelerated performance in Q1 2025.

    Operating Income

    Up 29% (from $99.96M to $129.21M)

    Operational excellence initiatives and improved fixed cost absorption contributed to a 29% surge. These gains are a result of strategic cost management, restructuring savings, and favorable foreign currency trends, all of which built upon the previous period’s initiatives that had begun to yield operational efficiencies.

    Net Earnings

    Up 32% (from $76.50M to $101.34M)

    Enhanced profitability and cost discipline drove net earnings up 32%. The increase is tied to operating income expansion, reduced interest expense due to debt repayment, and positive effects from earlier period improvements—all reinforcing a stronger bottom-line performance.

    MetricPeriodGuidanceActualPerformance
    Sales YoY Growth
    Q1 2025
    High single digits (~7–9%)
    13% YoY growth, from $713.2MTo $805.645M
    Beat
    EPS YoY Growth
    Q1 2025
    ~20% YoY growth
    ~32% YoY growth (using Net Earnings from $76,495To $101,337)
    Beat
    Operating Margin
    Q1 2025
    Mid-teens
    ~16% (Calculated from $129,205 Operating Income÷ $805,645 Net Sales)
    Met
    TopicPrevious MentionsCurrent PeriodTrend

    Financial Performance & Guidance Upgrades

    In Q4 2024, Q3 2024 and Q2 2024 earnings, the company detailed steady double-digit sales growth, operating margin expansion, and upgraded guidance for EPS, free cash flow, and segment-specific targets ( , , , , ).

    Q1 2025 showed strong financial performance with 13% sales growth, 34% operating income growth, and further upgraded full‐year guidance on sales, operating margins, EPS, and free cash flow ( , ).

    Continued strong performance with enhanced guidance and an even more positive outlook, reinforcing confidence in growth.

    Robust Order Backlog & Revenue Visibility

    In Q4 2024, Q3 2024 and Q2 2024, the company emphasized record order books/backlogs (ranging around $3.2–$3.7 billion) and high book-to-bill ratios, providing long‑term revenue visibility ( , , ).

    Q1 2025 reported a new record backlog exceeding $3.6 billion, reinforcing robust revenue visibility and long‑term growth confidence ( ).

    Upward momentum continues with consistently strong backlog figures, underpinning stable revenue visibility.

    Defense & Aerospace Growth Trends

    Previous quarters reported strong demand across Defense Electronics and Naval segments, with double-digit sales growth segments and record margins (e.g. 15% growth and 24.3% margins in Q4 2024, 15% growth in Q3 2024, and robust performance in Q2 2024) ( , , , ).

    In Q1 2025, defense and aerospace markets continued to show robust growth, with strategic investments in defense electronics and naval defense supporting high growth and margin expansion ( , , ).

    Sustained strong growth with continued momentum in core defense and aerospace markets, reflecting a resilient and expanding market position.

    Foreign Military Sales Expansion

    Q4 2024, Q3 2024 and Q2 2024 mentioned steady FMS activity with single- to low double-digit growth; orders driven by tactical communications and embedded computing for both domestic and direct foreign customers ( , , ).

    Q1 2025 highlighted high teens growth in direct foreign military sales, underscoring an increased focus on FMS as a vital driver of sales growth in Aerospace & Defense ( ).

    Consistent and growing FMS expansion, with the current period showing an acceleration in growth expectations, reinforcing its strategic importance.

    Commercial Nuclear Sector Outlook & Sentiment Shift

    Across Q4 2024, Q3 2024 and Q2 2024, the outlook was optimistic with high single-digit organic growth projections, long-term targets (e.g. fivefold increase), and strategic partnerships for SMRs and AP1000 projects ( , , , , ).

    Q1 2025 maintained positive momentum with increased aftermarket and development revenues, notable sentiment shift bolstered by pro-nuclear government support and new international engineering contracts ( , ).

    Heightened optimism as political support and strategic contracts boost long-term growth prospects in the commercial nuclear market.

    Subsea Pumps & Process Market Opportunities

    In Q2 2024, the company outlined a potential opportunity of $250 million by decade-end, with active development and strong customer engagements; Q3 2024 and Q4 2024 also addressed subsea pump potential and favorable process market dynamics ( , , ).

    Q1 2025 took a cautious stance by expecting flat process market sales, even as subsea pump development shows organic growth; internal automation improvements offset reduced industrial vehicle sales ( ).

    Steady potential remains with subsea pumps recognized as a transformative opportunity, though near-term outlook remains cautious and balanced with offsetting trends.

    Operational Challenges and Restructuring

    In Q4 2024, Q3 2024 and Q2 2024, the company discussed ongoing restructuring efforts (e.g. $15 million spend with annualized savings, minor disruptions in Defense Electronics, supply chain leveling), alongside addressing operational challenges in industrial and defense segments ( , , , ).

    Q1 2025 acknowledged macroeconomic uncertainties (e.g. tariff impacts) while continuing corporate restructuring initiatives, expecting further annualized savings and improvements in operational efficiency ( , ).

    Ongoing restructuring remains a priority with strategic actions in place to mitigate challenges; the current period reflects proactive management of operational headwinds and steady progress in efficiency gains.

    Tariff and Trade Headwinds

    Q4 2024 discussed historical tariff impacts, referencing a previous $9 million hit and strategies like cross-functional tiger teams, while Q3 and Q2 had no specific coverage ( ).

    Q1 2025 provided detailed proactive mitigation strategies with a cross-functional team, reducing potential tariff impacts by over $20 million, demonstrating a clear focus on managing trade-related risks ( ).

    Emerging emphasis on mitigating tariff and trade challenges with enhanced strategic measures, indicating an increased focus compared to earlier periods.

    Government Policy and Political Uncertainty

    Q4 2024 briefly mentioned political and macroeconomic uncertainty, with minimal coverage in Q3 and Q2 ( ).

    Q1 2025 offered an in-depth discussion on favorable U.S. defense budgets, pro-nuclear policies, and stable geopolitical support, greatly reducing uncertainty and boosting market sentiment ( , ).

    Increased focus on navigating political and regulatory environments, with a more positive tone as government policies support key business areas.

    Acquisition and Integration Delays

    Q4 2024 noted delays in closing the Ultra Energy acquisition, and Q3 2024 discussed integration delays due to U.K. administrative changes; Q2 2024 mentioned acquisitions with no delays ( , , ).

    Q1 2025 did not mention acquisition and integration delays, indicating that issues from previous periods have been resolved and integration is on track ( references from prior calls remain in the background).

    Diminishing focus on delays as previous integration challenges appear resolved, allowing management to focus on other strategic priorities.

    MOSA Adoption in Defense Electronics

    Q2 2024 featured an in-depth discussion on the adoption of MOSA, emphasizing its necessity, market share gains, and product enhancements ( ); Q3 and Q4 did not discuss MOSA.

    Q1 2025 did not mention MOSA adoption, indicating that the focus may have shifted away now that the MOSA transition is well underway and established in previous periods ( ).

    De-emphasized in the current period, suggesting that MOSA integration has matured and is no longer a primary discussion point.

    International Partnerships and Collaborations

    Q3 and Q4 2024 detailed new international partnerships, including the Ultra Energy acquisition’s European footprint, a memorandum with Westinghouse, and strategic partnerships for SMRs; Q2 2024 had no coverage ( , , , ).

    Q1 2025 did not specifically mention international partnerships or collaborations, indicating that earlier announcements are likely being integrated and no fresh updates were provided ( , from prior periods referenced).

    Reduced emphasis in the current quarter, as earlier international partnership initiatives continue to mature and integrate into overall operations.

    1. Tariff Impact
      Q: Which products face tariffs and how are they mitigated?
      A: Management explained that roughly 20% of their product portfolio is subject to tariffs, with a focused Tiger team mitigating nearly $20 million of potential impact by optimizing sourcing and pricing strategies, particularly for Chinese-sourced imports.

    2. Defense Margins
      Q: How did defense electronics margins perform?
      A: They noted that Q1 margins in defense electronics were strong—bolstered by favorable FX effects, restructuring benefits, and commercial excellence—although some of these factors are expected to moderate sequentially.

    3. Margin Sustainability
      Q: Will the higher defense margins hold?
      A: Management indicated that while the improved margins reflect solid operational initiatives and pricing discipline, they remain cautious and expect only modest sequential growth as costs like R&D ramp up, so a new higher baseline is emerging but not locked in for future years.

    4. Commercial Aerospace Guidance
      Q: What is driving commercial aerospace growth?
      A: The guidance increase is driven by the successful rollout of a new, record-setting voice recorder business meeting an FAA safety mandate, which is expected to generate sustainable revenue through retrofit programs well into the decade.

    5. Acquisition Reform
      Q: What are the prospects with acquisition reform?
      A: Management views acquisition reform positively, noting that a shift toward more commercial contracting practices and fixed-price engagements, including the use of OTAs, positions them well to win value-driven government business.

    6. Nuclear Outlook
      Q: How is the nuclear market outlook?
      A: They remain cautiously positive about U.S. nuclear support under the new administration, buoyed by recent engineering contract extensions in Poland and the early steps toward awarding Europe’s first AP1000 construction deal in Bulgaria.

    7. Shipbuilding Outlook
      Q: How will shipbuilding projects affect revenue?
      A: Shipbuilding remains a longer-term play; management highlighted that ongoing projects and industrial funding—up from $15 million to $21 million—are setting the stage for future contract wins, though shipbuilding orders naturally take time to mature.

    8. Book-to-Bill Breakdown
      Q: What is the book-to-bill ratio by segment?
      A: The Aerospace and Industrial segment posted a ratio of about 1.1x, while Defense Electronics, including a strong naval order quarter, reached around 1.6x, underscoring a robust order pipeline.

    9. SMR Partnerships
      Q: How are SMR content partnerships progressing?
      A: Management stated that partnerships with TerraPower, Ultra Energy, and Rolls-Royce are on track, with clear signs that innovative designs will move into prototyping within the next 12–24 months.

    10. Westinghouse Contract Timing
      Q: When can a Westinghouse-related contract be expected?
      A: They anticipate that, based on current triangulation, a construction contract linked to Westinghouse projects will likely materialize in 2026, potentially by midyear, rather than by the end of 2025.

    Research analysts covering CURTISS WRIGHT.