Curtiss-Wright Corp (CW) Q1 2025 Earnings Call Highlights: Record Backlog and Strong Growth in Aerospace and Defense

Curtiss-Wright Corp (CW) reports impressive sales and earnings growth, raising full-year guidance despite tariff challenges and macroeconomic uncertainties.

Author's Avatar
May 09, 2025
Summary
  • Sales: $806 million, a 13% increase year-over-year, or 11% on an organic basis.
  • Operating Income: Increased 34% year-over-year, with a 260 basis points expansion in operating margin.
  • Diluted Earnings Per Share (EPS): Increased 42% year-over-year.
  • Free Cash Flow: Increased 5% year-over-year.
  • New Orders: Increased 13% year-over-year to over $1 billion, with a book-to-bill ratio of 1.26 times.
  • Backlog: Reached a record of over $3.6 billion.
  • Full Year Sales Guidance: Increased by 8% to 9%.
  • Operating Margin Guidance: Expected to increase by 80 to 100 basis points, reaching 18.3% to 18.5%.
  • Full Year EPS Guidance: Expected to grow 14% to 17%.
  • Free Cash Flow Guidance: Raised to $495 to $515 million, up 2% to 7% over 2024.
Article's Main Image

Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Curtiss-Wright Corp (CW, Financial) reported a 13% year-over-year increase in sales for Q1 2025, driven by strong growth in aerospace and defense markets.
  • Operating income increased by 34% year-over-year, resulting in a 260 basis point expansion in operating margins.
  • Diluted earnings per share rose by 42% year-over-year, exceeding expectations due to higher aerospace and defense sales.
  • The company achieved a record backlog exceeding $3.6 billion, providing strong visibility and confidence in long-term growth.
  • Curtiss-Wright Corp (CW) raised its full-year 2025 guidance for sales, operating margins, and earnings per share, reflecting improved outlooks in most aerospace and defense markets.

Negative Points

  • Approximately 20% of Curtiss-Wright Corp (CW)'s business is subject to tariff impacts, with an estimated $30 million gross impact for the remainder of 2025.
  • The company faces potential margin dilution from the Ultra Energy acquisition as it integrates this business into operations.
  • There is ongoing uncertainty related to macroeconomic conditions, including potential recessionary signals and tariff-related headwinds.
  • The general industrial market is expected to see flat sales in 2025, with modest growth in automation offset by reduced sales of industrial vehicle products.
  • Curtiss-Wright Corp (CW) is cautious about the commercial aerospace market due to ongoing supply chain issues and conservatism in Boeing's production outlook.

Q & A Highlights

Q: Can you provide more details on the tariff impact and how China plays into it? Are there any concerns about sourcing in this tariff environment?
A: Lynn Bamford, CEO, explained that Curtiss-Wright has been proactive in mitigating tariff impacts through a cross-functional team. They have managed to reduce the potential impact by over $20 million through operational adjustments and pricing strategies. Chris Farkas, CFO, added that about 20% of their product portfolio is subject to tariffs, with the greatest pressure in the Aerospace and Industrial segment. They have strategies in place to mitigate these impacts, including sourcing adjustments and leveraging tariff exclusions for military products.

Q: You raised the commercial aerospace guidance significantly. Was this due to Boeing's production or the FAA safety mandate? How long will the safety mandate-related sales drive revenue?
A: Chris Farkas, CFO, clarified that the guidance increase is entirely related to new cockpit voice recorders, not Boeing's production. Lynn Bamford, CEO, added that the FAA mandate requires airlines to retrofit by the end of the decade, providing a long-term revenue source. They are at the beginning of this growth, with ongoing efforts to receive certifications across various aircraft platforms.

Q: How has the Trump administration's approach to nuclear energy affected your outlook for US nuclear, and how has the geopolitical environment impacted international orders?
A: Lynn Bamford, CEO, noted that the administration's support for nuclear energy has been positive, with significant involvement in international projects like those in Poland and Bulgaria. The geopolitical environment has not negatively impacted their plans, and they see strong support for nuclear energy in the US, which aligns with their growth strategy.

Q: Regarding shipbuilding, when do you expect to see significant orders, given the emphasis on new programs?
A: Lynn Bamford, CEO, acknowledged that shipbuilding takes time but highlighted ongoing opportunities to take work share and support existing fleet operations. They are seeing industrial base funding increase and are positioning themselves for long-term growth in shipbuilding.

Q: Can you comment on the defense electronics margin performance and whether the first quarter's performance is sustainable?
A: Lynn Bamford, CEO, explained that the first quarter's strong performance is due to a combination of factors, including mix, commercial and operational excellence, and FX benefits. Chris Farkas, CFO, added that they expect modest sequential growth and are cautious about the rest of the year, but the strong margins are not one-time occurrences.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.