Given high demand for chips and electronics, are there any supply chain challenges, inventory prepositioning, or other considerations?

Supply chain pressures have increased in H1 FY26, similar to 2022, but the company is well-prepared due to past learnings and inventory management. They are largely secured for 2026 revenue and focusing on 2027. Strong supplier relationships, like priority allocation from Micron, and efforts to dual-source rare earth materials are key mitigation strategies. “Really, the team is we're largely secured for our 2026 revenue and the real focus at this point is positioning for 2027. So I feel positive about that.”

How does Curtiss-Wright view the opportunity presented by new generation defense tech companies that move fast and invest more in internal R&D, and how does its business model adapt?

Management sees this as a great growth opportunity because these new companies focus on end products, not Tier 2/3 supply chain where Curtiss-Wright plays. The company's quick, agile capabilities and broad product offering (including NVIDIA processing and varied price points) fit well with the needs of these nontraditional contractors, providing increased opportunities and additional customers. “And their mantra is quick nimble, agile, fast and what supports that better than cost capabilities that we have across our portfolio, specifically in Defense Electrics, but also some of the capabilities out of our A&I segment.”

What are the latest thoughts on the M&A market, and how does it influence capital allocation?

M&A remains a top priority, but the market is currently "frothy" with high multiples. Curtiss-Wright remains disciplined, seeking strategic and financial fit. While actively looking, they also significantly increased internal capital investments over the past few years to prepare factories for growth and potential second-source work, funded by free cash flow. “The market is a bit frothy right now, and you've seen some of the multiples that have up space. And we remain very disciplined in understanding that we are going to assure that we want the strategic fit and the financial fit that's going to create value for our shareholders.”

Curtiss Wright (CW) Q2 FY26 earnings call: guidance and Q&A

Q: Orders have been exceptionally strong for several quarters, significantly above revenue levels. How should this strong order rate translate into higher revenue levels, and what is the duration of the backlog?

Management is pleased with the strong order book momentum, which is driven by alignment with defense budgets and international strength. The Q2 order book included longer-term production orders for Turret Drive stabilization systems and multi-year programs like C-17. Commercial aerospace and general industrial also show strong order growth, indicating positive outlook for 2027 and beyond. “But embedded within some of the Defense Electronics order book, there are some things that are a little bit longer term in nature. We have the C-17 program press release that we talked about earlier this year. That's a multiyear.”

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 6, 2026

Source: earnings call transcript

Executive summary

Curtiss-Wright Q2 FY26 — Strong Performance, Raised Guidance, and Record Backlog

Curtiss-Wright delivered excellent second-quarter results, exceeding expectations and leading to raised full-year guidance across key financial metrics. The company's "Pivot to Growth" strategy continues to drive strong operational performance, record backlog, and increased investments in R&D and capital expenditures. Management highlighted significant opportunities in the commercial nuclear market and the evolving defense landscape, while actively managing supply chain dynamics and maintaining a disciplined approach to M&A.

Highlights

Sales grew 5% year-over-year to $924 million, reflecting solid growth across A&D and Commercial markets.
Operating income increased 12% year-over-year, resulting in 110 basis points of operating margin expansion.
Diluted earnings per share increased 15% year-over-year, ahead of expectations.
Generated $160 million of free cash flow, a 37% year-on-year improvement, with a strong 116% cash conversion rate.
New orders increased 8% with an overall book-to-bill in excess of 1.1x for the quarter, and 1.2x year-to-date.

Concerns

Defense Electronics sales were down 3% year-over-year due to the timing of prior year orders for tactical communications equipment.
Naval and Power segment orders were down year-over-year in Q2, principally due to the timing of Naval Defense orders on submarine programs.
Supply chain pressures have increased in the first half of FY26, particularly for chips, electronics, and some rare earth materials.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Sales Growth	8% to 9% high materiality	FY26	High
Full-year 2026 Operating Margin	19.1% to 19.3% high materiality	FY26	High
Full-year 2026 Diluted EPS Growth	14% to 16% high materiality	FY26	High
Full-year 2026 Diluted EPS	$15.10 to $15.40 high materiality	FY26	High
Full-year 2026 Free Cash Flow	$585 million to $605 million high materiality	FY26	High
Full-year 2026 Free Cash Flow Conversion Rate	approximately 105% medium materiality	FY26	High
Full-year 2026 Capital Expenditures	nearly 30% increase year-over-year medium materiality	FY26	High
Full-year 2026 Aerospace Defense Sales Growth	12% to 14% medium materiality	FY26	High
Full-year 2026 Ground Defense Sales Outlook	maintained low materiality	FY26	Medium
Full-year 2026 Naval and Defense Sales Growth	7% to 9% medium materiality	FY26	High
Full-year 2026 Commercial Aerospace Sales Growth	10% to 12% medium materiality	FY26	High
Full-year 2026 Power and Process Sales Growth	13% to 15% medium materiality	FY26	High
Full-year 2026 General Industrial Sales Growth	1% to 3% low materiality	FY26	Medium
Full-year 2026 Aerospace and Industrial Revenue Growth	8% to 10% medium materiality	FY26	High
Full-year 2026 Aerospace and Industrial Operating Income Growth	15% to 17% medium materiality	FY26	High
Full-year 2026 Defense Electronics Sales Growth	4% to 6% medium materiality	FY26	High
Full-year 2026 Defense Electronics Operating Income Growth	5% to 7% medium materiality	FY26	High
Full-year 2026 Enabling Power Sales Growth	10% to 11% medium materiality	FY26	High
Full-year 2026 Enabling Power Operating Income Growth	14% to 16% medium materiality	FY26	High
Q3 2026 EPS	on par sequentially with Q2 2026 results medium materiality	Q3 · FY26	High
Q4 2026 Operating Margin	in excess of 20% medium materiality	Q4 · FY26	High
Next Investor Day	Q2 2027 low materiality	Q2 · FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Aerospace and Industrial Sales growth driven by higher sales of actuation and sensors equipment in Aerospace Defense (fighter jet programs), EM actuation equipment (ground-based mobile launcher systems), solid OEM sales in commercial aerospace (narrow-body and wide-body platforms), and modest growth in industrial vehicle products. Operating performance benefited from favorable absorption on higher revenues, favorable mix, and restructuring savings, partially offset by investments in development programs.	—	12%	—	Operating income grew 25%, margin up 180 bps
Defense Electronics Sales decline due to timing of prior year orders for tactical communications equipment in ground defense, partially offset by higher Turret Drive stabilization systems revenues (international programs). Growth in aerospace defense from higher domestic sales of embedded computing equipment (aircraft modernization, UAV, next-generation development programs). Strong operating margin due to favorable mix and cost containment, offsetting higher R&D investment.	—	-3%	—	Operating margin 28%, up 120 bps YoY
Naval and Power Sales growth primarily from Naval and Defense markets (timing of production on submarine programs) and solid uplift in aftermarket revenues supporting naval shipyards (including CVN-75 refueling and complex overhaul program). Growth in Power and Process market mainly from commercial nuclear (advanced SMRs) and government nuclear (DOE projects). Operating performance benefited from favorable absorption on higher revenues.	—	7%	—	Operating income grew 12%, margin up 80 bps

CW operating KPIs by quarter

CW operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Change vs prior quarter
Book-to-bill ratio	1.1 ratio Growth in our order book was exceptionally strong in the fourth quarter, up 37% year-over-year, reflecting a 1.1x book-to-bill. Source: earnings call transcript	1.1 ratio+ We also experienced strong demand in the second quarter as new orders of $1 billion resulted in an overall book-to-bill in excess of 1.1x. Source: earnings call transcript	1.1 ratio So broadly speaking, good quarter, 1.1x book-to-bill. Source: earnings call transcript	<1.2 ratio Regarding our order book, new orders increased 18% in the fourth quarter, reflecting nearly 1.2x book to bill and were driven by continued solid demands within our naval, defense and commercial nuclear markets. Source: earnings call transcript	1.3 ratio Regarding our order book, new orders increased 15%, reflecting a 1.3x book-to-bill ratio, driven by mid-teens growth in each of our 3 segments. Source: earnings call transcript	—
Book-to-bill ratio A&D markets	—	1.2 ratio As a result, book-to-bill across our A&D markets was 1.2x. Source: earnings call transcript	1 ratio We had a 1x book-to-bill in aerospace and defense, and we had a 1.2x in commercial. Source: earnings call transcript	—	—	-16.7%
Backlog	—	$3.8B+ Overall, the second quarter growth in orders builds on our already strong backlog, which is now up 12% year-to-date, reaching a new record in excess of $3.8 billion. Source: earnings call transcript	$3.9B We're at a record backlog right now at $3.9 billion. Source: earnings call transcript	—	<$4.3B Overall, based on the healthy growth in Curtiss-Wright's order book, we reached a new record of nearly $4.3 billion, which provides us with great visibility and continued confidence in our future top line growth. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

New Orders 8% Q2 FY26

increase

Overall Book-to-Bill Ratio in excess of 1.1x Q2 FY26

Defense and Electronics Orders nearly 50% Q2 FY26

increase YoY

Defense and Electronics Orders more than 30% YTD FY26

increase YTD

Overall Orders 12% YTD FY26

increase YTD

Exceeding sales growth of 9%.

Overall Book-to-Bill Ratio in excess of 1.2x YTD FY26

Deals & partnerships

Boeing C-17 Globemaster modernization award

The program is off to a great start with face-to-face meetings and strong execution. There is a chance Boeing will leverage this capability on other platforms.

Capital programs

Pennsylvania facility expansion underway $80 million

Funding: internal capital investment, Maritime Industrial base (MID) funding, state assistance

Start: 2025

Benefit:support growing market demand across naval businesses and future commercial nuclear awards

Multiyear investment to expand facility within the Enable and Power segment. Approximately $95 million in MID funding awarded to date, up from $70 million in March.

Risks & headwinds

Supply chain pressures for chips, electronics, and rare earth materials H1 FY26

increased in the first half of this year

Mitigation:Leveraging lessons from 2022, managing inventory, strong supplier relationships, securing priority allocation (e.g., Micron), dual-sourcing, qualifying alternative powders, adjusting pricing.

Timing of orders and production in Defense Electronics Q2 FY26, Q3 FY26

Q2 sales down 3% YoY

Mitigation:Strong Q1 and Q2 order book, anticipating strong Q3 and Q4. Expecting flat Q3 sales sequentially, followed by a big Q4 ramp to meet full-year guidance.

Timing of Naval Defense orders on submarine programs Q2 FY26

Q2 orders down YoY

Mitigation:Strong first half results led to raised full-year Naval and Defense sales guidance (7-9% growth), mainly due to expectations for higher production revenue on submarine programs later in the year.

Frothy M&A market with high multiples ongoing

market is a bit frothy

Mitigation:Maintaining a disciplined approach, focusing on strategic and financial fit to create shareholder value. Actively evaluating properties but will not overpay.

What to watch in Q3 FY26

Defense Electronics Q4 Revenue Ramp

Q4 FY26

Current Q3 sales expected flat sequentially with Q2

Target Big Q4 revenue to meet full-year guidance

Why it matters

The segment's full-year performance relies heavily on a strong Q4, indicating execution risk and potential for significant sequential growth.

For your modeling purposes, we expect the segment's third quarter sales to be flat with our second quarter results, mainly due to the timing of ground defense revenues, followed by a strong finish to the year.

Find out whether CW delivers this. Inve re-checks your case every morning.

Q&A highlights

Orders have been exceptionally strong for several quarters, significantly above revenue levels. How should this strong order rate translate into higher revenue levels, and what is the duration of the backlog?

Management is pleased with the strong order book momentum, which is driven by alignment with defense budgets and international strength. The Q2 order book included longer-term production orders for Turret Drive stabilization systems and multi-year programs like C-17. Commercial aerospace and general industrial also show strong order growth, indicating positive outlook for 2027 and beyond.

“But embedded within some of the Defense Electronics order book, there are some things that are a little bit longer term in nature. We have the C-17 program press release that we talked about earlier this year. That's a multiyear.”

asked by Nathan Jones · answered by K. Farkas

2 min read 6 chapters

Detailed narrative

Pivot to Growth Strategy and Investments

Curtiss-Wright's "Pivot to Growth" strategy has been instrumental in delivering strong quarterly performance, reinforcing confidence in achieving record financials across all major metrics in 2026. The company is accelerating R&D investments at a faster pace than sales, focusing on long-term growth vectors and ensuring the workforce and factories have necessary tools and resources.

These investments are funded by strong free cash flow generation and are expected to build future growth, with early investments already paying off.

Commercial Nuclear Market Opportunity

The company highlighted significant opportunities in the commercial nuclear market, leveraging its long-established expertise. The U.S. administration's goal to quadruple nuclear generation capacity to 400 gigawatts by 2050, including restarts and new builds, positions Curtiss-Wright favorably. The Department of Energy's conditional financing for up to 10 new AP1000 reactors, with potential long-lead equipment purchases including Curtiss-Wright's reactor coolant pumps, is a key driver.

The company anticipates an AP1000 order this year and is excited to support domestic and international build-out.

Defense Market Dynamics and Product Portfolio

Curtiss-Wright is well-aligned with strategic growth priorities of the U.S. and Allied military, with strong demand in Defense Electronics and EM actuation technology. The company is adapting to the evolving defense landscape, including the rise of nontraditional defense contractors, by broadening its product offering to fit a wider range of size, weight, and power needs.

This includes participation in programs like Golden Dome for network capabilities and secure communications, and UAVs, as well as pursuing opportunities in directed energy and laser systems for defense.

Supply Chain Management and Resilience

Despite increased supply chain pressures in the first half of 2026, Curtiss-Wright is effectively managing challenges by applying lessons learned from 2022, including inventory management and strong supplier relationships. An example cited was securing priority allocation from Micron for chips.

The company is also addressing pressures in rare earth materials by seeking dual sources and qualifying alternative powders with customers, while adjusting pricing to reflect increased costs.

Capital Allocation and M&A Strategy

M&A remains a top priority for capital deployment, though the company maintains a disciplined approach in a currently "frothy" market with high multiples. The last acquisition was in late 2024, but the company has been actively evaluating properties. Alongside M&A, Curtiss-Wright is significantly increasing internal capital investments to prepare factories for growth, including potential second-source work, ensuring readiness for future demand across its customer base.

C-17 Globemaster Modernization and Future Programs

The C-17 Globemaster modernization award is progressing well, with positive customer feedback and potential for Boeing to leverage the capability on other platforms. This program exemplifies Curtiss-Wright's focus on taking on greater scopes of work with customers. The company has other similar opportunities in its pipeline, though many cannot be publicly disclosed due to customer preferences, indicating continued success in securing significant defense contracts.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.