CURTISS WRIGHT CORP Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Fourth Quarter 2025 Results: Total sales were $947,000,000, up 15% year over year, with organic growth of 11% and contribution from I&C Solutions acquisition. Aerospace and defense markets grew 16%, commercial aerospace sales increased over 20%, commercial markets grew 13%. Operating income rose 14% with an operating margin of 19.7%, diluted EPS grew 16%, and free cash flow was $315,000,000, up 13%.
• Full Year 2025 Results: Delivered record financial performance with revenue and operating income growth across segments. Operating margin was 18.6%, up 110 basis points. Diluted EPS increased 21%, free cash flow was $554,000,000, and the order book reached $4,100,000,000, up 10% year over year.
• 2026 Outlook: Organic sales projected to grow 6%-8%. Aerospace Defense to grow 9%-11%, Ground Defense -4%-6%, Naval Defense 5%-7%, Commercial Aerospace 10%-12%, Power and Process 12%-14%, General Industrial flat. Operating income expected to grow 8%-11% with operating margin 18.9%-19.2%. EPS expected $14.70-$15.15, up 11%-15%, and free cash flow $575,000,000-$595,000,000.

Segment Performance

• Aerospace and Industrial: Fourth quarter sales increased 5%, with an operating margin of 20.1%. For full year 2026, sales are expected to grow 5%-7%, operating income to grow 11%-14%, and operating margin to range from 18.3% to 18.5%.
• Defense Electronics: Fourth quarter sales grew 17%, with an operating margin of 25.9%. Full year 2026 sales are projected to grow 4%-6%, operating income to grow 4%-6%, and operating margin to be in the range of 27.3% to 27.5%.
• Enablement Power: Fourth quarter sales increased 21%, with operating income growing 13%. Full year 2026 sales are expected to grow 8%-9%, operating income to grow 10%-13%, and operating margin to expand by 30 to 50 basis points.

Guidance

• Organic sales projected to grow 6%-8% in 2026.
• Operating income growth to outpace sales growth, with operating margin ranging from 18.9% to 19.2%, up 30 to 60 basis points.
• EPS expected to be between $14.70 and $15.15, representing an 11%-15% increase.
• Free cash flow projected to be $575,000,000 to $595,000,000.

Risks

• Delays in government funding and shutdowns impacting order timing in ground defense.
• Supply chain challenges with memory, high bandwidth memories, and rare earths.
• Uncertainty around the timing of AP1000 orders and their financial impact.

Question and Answer

Q: Color on exposure to missile growth sectors?

A: Minor telemetry/flights test instrumentation content; well positioned in Golden Dome technology buckets (sensors, networking, effectors).

Q: AP1000 order details?

A: Expected in 2026, could be from US or Europe; labor upfront, material uplift later; working capital focus maintained.

Q: Working capital dynamics?

A: 19.2% working capital to sales in 2025, targeting 18% in 2026; improved collections, DSO, inventory turns, DPO.

Q: Operational excellence impact?

A: $12M+ contribution in 2025; 25% incremental contribution margin; 30-60 basis points margin expansion in 2026.

Q: Defense revenue deceleration?

A: Timing issues due to CR/shutdown; line of sight to over $100M orders pushed to 2026; well-positioned technologies.

Q: SMR growth?

A: Continued ramp in SMR designs, partnership with Rolls Royce, content in South Korea new builds.

Q: Supply chain and M&A?

A: Stable supply chain, watch items in memory/rare earths; M&A not high priority but considered for global diversification.