Curtiss-Wright Corporation Q3 2024 Financial Results

Curtiss-Wright Corporation (NYSE:CW), a diversified global provider of highly engineered, technologically advanced products and services, reported robust financial results for the third quarter of 2024. The company's sales increased by 10% year-over-year to nearly $800 million, driven by significant growth in the Defense Electronics and Naval & Power segments. Aerospace & Defense markets experienced a 15% sales increase, while commercial nuclear saw low double-digit growth. Operating income and margins improved, with diluted EPS up 17% and free cash flow increasing by 19%. The order book grew by 2%, reaching a record backlog of $3.3 billion, supporting a positive long-term outlook. Curtiss-Wright raised its full-year 2024 guidance, forecasting sales growth of 7% to 9% and diluted EPS growth of 12% to 15%.

Key Takeaways

• Curtiss-Wright reported a 10% sales increase to nearly $800 million in Q3 2024.
• Operating income rose by 11%, increasing margins to 18.7%.
• Diluted EPS rose by 17%, and free cash flow reached $163 million, a 19% improvement.
• The order book expanded by 2%, with a record backlog of $3.3 billion.
• Full-year 2024 guidance was raised, expecting sales growth of 7% to 9% and diluted EPS growth of 12% to 15%.
• The company is set to close the Ultra Energy acquisition in Q4 and has completed a $100 million share buyback.
• Long-term growth is supported by investments in technology and talent, aiming for over 5% CAGR through 2026.

Company Outlook

• Aerospace & Defense sales growth is projected at 10% to 12% for 2024.
• The full-year outlook for Commercial Aerospace was raised to 16% to 18%.
• Sales growth in the power and process market was adjusted to 5% to 7%.
• General industrial market outlook downgraded to a 2% to 4% decline.
• Total sales growth in commercial markets anticipated at 1% to 3%.
• Diluted EPS is expected between $10.55 to $10.75, free cash flow projected at $430 million to $450 million.

Bearish Highlights

• A sequential decline in naval defense revenues is expected in Q4 due to timing issues.
• General industrial market outlook downgraded due to lower off-highway vehicle sales.
• The Defense Electronics segment is anticipated to experience a decline in Q4 revenues and margins.
• A $3 million impact is expected from restructuring in the A&I segment in Q4.

Bullish Highlights

• Strong demand in tactical communications and naval defense drives growth.
• Increased OEM production sales boosting Commercial Aerospace.
• Ongoing success in securing new business, particularly in the commercial nuclear sector.
• Positive momentum expected to continue in the commercial nuclear market.
• Amazon plans to bring 5 gigawatts of power online, projected to generate significant revenue through partnership with X-energy.

Misses

• Despite strong growth, some headwinds anticipated, including a slight year-over-year increase in IR&D investments and the effects of restructuring efforts.

Q&A Highlights

• Discussions with Westinghouse on AP1000 reactors continue, focusing on Eastern European markets.
• Bipartisan support for defense spending and nuclear leadership in the U.S. remains strong.
• Potential for new SMR partnerships and larger acquisitions, with a cautious approach to ensure proper integration.
• Next company update scheduled for February with full-year results.

Curtiss-Wright's third-quarter performance reflects a strong position in the market, with strategic investments and partnerships poised to drive future growth. The company's raised guidance and robust backlog underscore confidence in sustained profitability. Management's focus on operational efficiency and strategic acquisitions, including the upcoming Ultra Energy deal, signal a proactive approach to capitalize on emerging opportunities in commercial nuclear and defense sectors.

InvestingPro Insights

Curtiss-Wright's strong financial performance in Q3 2024 is supported by data from InvestingPro. The company's market capitalization stands at $13.29 billion, reflecting its significant presence in the aerospace and defense industry.

Notably, Curtiss-Wright has maintained dividend payments for 51 consecutive years, demonstrating a long-term commitment to shareholder returns, aligning with its robust financial results and positive outlook.

The company's P/E ratio of 33.77 indicates investors are willing to pay a premium for Curtiss-Wright's shares, likely due to its strong growth prospects. Revenue growth of 9.42% over the last twelve months closely matches the 10% sales increase reported for Q3 2024.

The 74.06% price total return over the past year reflects investor confidence in Curtiss-Wright's performance and future prospects.

For readers interested in deeper analysis, InvestingPro offers 16 additional tips for Curtiss-Wright, providing a comprehensive view of the company's financial health and market position.

Full transcript – Curtiss-Wright Corp (CW) Q3 2024

Operator: Welcome to the Curtiss-Wright Third Quarter 2024 Earnings Conference Call. All participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation.

Jim Ryan: Thank you, Todd, and good morning, everyone. Welcome to Curtiss-Wright's third-quarter 2024 earnings conference call. Joining me today are Chair and CEO, Lynn Bamford; and CFO, Chris Farkas. Today's discussion will include certain projections and statements that are forward-looking based on management's current expectations and are not guarantees of future performance.

Lynn Bamford: Thank you, Jim. As you saw in our results released last night, we delivered a strong third-quarter performance and continued to build momentum across our businesses. We continue to invest in the future of Curtiss-Wright, aligning with major growth vectors within our end markets and positioning us for meaningful and long-term returns.

… [The transcript continues]

Operator: The floor is now open for questions. Thank you. Our first question comes from Peter Arment with Baird.

Peter Arment: Yeah. Good morning, Lynn, Chris, Jim. Nice results.

… [The Q&A continues]