Release Date: October 31, 2024
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 strong third quarter performance with sales increasing by 10% year over year, reaching nearly $800 million.
- The company achieved a 15% growth in its aerospace and defense markets and low double-digit growth in the commercial nuclear market.
- Operating income increased by 11% year over year, resulting in a 20 basis points expansion in operating margin to 18.7%.
- Free cash flow was $163 million, up 19% year over year, reflecting more than 140% conversion due to improved operational performance and lower working capital.
- Curtiss-Wright Corp (CW) raised its full-year guidance, expecting sales to increase by 7% to 9% and diluted EPS to grow by 12% to 15%.
Negative Points
- The company anticipates a sequential decline in revenues within the defense electronics segment in the fourth quarter due to the timing of production revenues.
- Sales in the general industrial market were lower, principally due to the timing of off-highway industrial vehicle sales.
- Despite strong growth, the naval and power segment's profitability was weighed down by increased development revenues.
- The process market sales are expected to be flat for the full year due to the timing of development on subsea pumps.
- Curtiss-Wright Corp (CW) reduced its full-year outlook for the general industrial market, anticipating a decline of 2% to 4%.
Q & A Highlights
Q: Within defense electronics, how are you measuring your share gain activity given the strong demand signals for embedded computing and tactical communications?
A: Lynn Bamford, CEO, highlighted the strong execution and customer satisfaction efforts within the defense electronics segment, noting a record order book in Q3. She mentioned that while there are opportunities for market share gains, the current success is largely due to organic growth and the team's investment in leading product offerings.
Q: With the plant life extensions in commercial nuclear, does the low double-digit growth have the potential to accelerate?
A: Lynn Bamford, CEO, acknowledged the positive outlook with 80% of reactors indicating plans to apply for extensions. She noted that while low double-digit growth is promising, the future could be even brighter with opportunities like the Three Mile Island restart and international plant life extensions.
Q: Can you discuss your positioning with other SMR (Small Modular Reactor) providers beyond X-energy?
A: Lynn Bamford, CEO, emphasized Curtiss-Wright's strategy to have content across all major SMR providers, including partnerships with Westinghouse, NuScale, TerraPower, and Rolls Royce. She highlighted ongoing efforts to secure content and the potential for significant revenue per site.
Q: What is driving the increase in aerospace defense guidance, and is it related to new builds or aftermarket growth?
A: Chris Farkas, CFO, explained that the increase is driven by strong orders in the C5ISR space and tactical communications, with a significant portion due to secured funding for R&D programs in aerospace defense.
Q: Are you seeing any negative impact from the ongoing Continuing Resolution (CR) on your business?
A: Lynn Bamford, CEO, stated that they are not currently feeling the impact of the CR due to a strong backlog position. However, she noted that extended CRs, like the 180-day one experienced previously, could affect new program starts and revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
