CURTISS WRIGHT CORP CW

Curtiss-Wright reported a strong Q4 2024 with sales up 5% year-over-year, driven by Defense Electronics and Naval & Power. Operating income was flat, with a strong operating margin of 19.8%. Diluted EPS increased 3%. Full year 2024 saw double-digit growth in sales and operating income, with diluted EPS up 16% to $10.90. Adjusted free cash flow reached a record $483 million, converting at 116%, despite $16 million in incremental capital expenditures. The order book grew 20% to $3.7 billion, achieving a 1.2x book-to-bill, and total backlog increased 20% to over $3.4 billion.

In 2024, Curtiss-Wright expanded its commercial nuclear portfolio with two acquisitions: WSE in June (control room simulation) and Ultra Energy on December 31 (reactor protection systems, monitoring, sensors). Ultra Energy is strategically important for its European footprint, SMR design relationships (e.g., Rolls-Royce), and broader market applicability for its sensor technology. The company also accelerated share repurchases, buying back $100 million in December and $250 million for the full year, while increasing its dividend for the eighth consecutive year. Capital allocation prioritizes high-quality acquisitions, supplemented by consistent shareholder returns.

For 2025, Curtiss-Wright projects 7% to 8% total sales growth (mid-single-digit organic) and operating income growth exceeding sales, targeting an 18% operating margin at the midpoint (40-60 bps expansion). This is driven by the 'Pivot to Growth' strategy and the Operational Growth Platform, which focuses on manufacturing optimization and connectivity. The company plans continued incremental R&D investments and expects double-digit EPS growth, with free cash flow of $485 million to $505 million, maintaining over 105% conversion.

The company remains confident in its long-term nuclear growth prospects, projecting its commercial nuclear business to grow fivefold to $1.5 billion annually by the mid-next decade, primarily organically. This is supported by AP1000 plant construction (expecting an RCP order by end of 2026), SMR development (X-energy, TerraPower), and aftermarket demand. New opportunities include potential V.C. Summer plant restart and India's consideration of indemnification changes. The pro-nuclear stance of the new administration is seen as a significant positive, potentially streamlining bureaucratic processes and accelerating project implementation.

Curtiss-Wright is actively addressing potential tariff impact^🌐s, drawing on past experience where it mitigated about half of a $9 million impact in the late 2010s. Cross-functional teams are reviewing operations, contracts, and financial implications, focusing on mitigation actions like price recovery or alternative product delivery methods. While the situation is fluid, management expresses confidence in its ability to navigate these challenges, potentially making more significant changes if tariffs become permanent and broad, to protect the business.

The company is increasing its visibility and engagement with the Pentagon and Capitol Hill to emphasize its value proposition to the U.S. government. Management believes a more efficient government, potentially shifting towards firm fixed-price contracts, would benefit Curtiss-Wright, given its strong track record of delivering value. The administration's focus on domestic hiring and production, as well as initiatives like Iron Dome, are seen as aligning with Curtiss-Wright's operations and offering potential advantages.