CURTISS WRIGHT CORP Annual Report - A Clear Look at Their Performance

Curious about CURTISS WRIGHT CORP's recent performance or considering an investment? This summary distills their latest annual report into clear, accessible language, offering a straightforward view of the company's financial health and future prospects.

We've focused on the essential details, cutting through financial jargon to provide you with a concise and informative overview.

Business Overview

Curtiss-Wright operates in highly specialized, critical industries, structured around three main business segments: Aerospace Industrial, Defense Electronics, and Naval Power. They serve a diverse customer base, including:

• Aerospace & Defense: Covering aerospace, ground, naval, and commercial aerospace needs.
• Commercial: Specifically within the Power & Process and General Industrial sectors.

Financial Performance

Curtiss-Wright delivered strong overall performance for the fiscal year ending December 31, 2024. Robust demand in defense and a recovering commercial aerospace market drove these results.

• Total revenue reached $2.95 billion, a 9.3% increase from $2.70 billion in 2023.
• Net income grew by 10.7%, reaching $310 million in 2024, up from $280 million in 2023.
• Diluted earnings per share (EPS) stood at $8.40 in 2024, compared to $7.50 in the prior year.

Product sales generated approximately 70% of total revenue, with services contributing the remaining 30%. The Defense Electronics segment significantly contributed to this growth, benefiting from increased government spending, while Aerospace Industrial experienced a strong rebound.

Risk Factors

Curtiss-Wright faces a primary risk from its Government Contracts Concentration. Government contracts, particularly in the defense sector, generate approximately 45% of their annual revenue. While these contracts offer stability, shifts in government spending priorities, budget cuts, or the loss of major contracts could significantly impact the company's financial performance.

Other notable risks include:

• Geopolitical instability affecting global defense spending.
• Potential supply chain disruptions.
• The ongoing threat of cybersecurity breaches, given the sensitive nature of their work.

The company also highlights the importance of monitoring shifts in government policy and regulatory changes related to defense procurement and export controls, which could directly affect their business.

Management Discussion (MD&A Highlights)

In 2024, Curtiss-Wright strategically expanded through acquisitions. The company successfully completed two key business acquisitions: WSC Inc. and Ultra Energy. WSC Inc. strengthens their industrial automation capabilities, while Ultra Energy expands their defense electronics portfolio, particularly in critical power and control systems. These acquisitions, which added approximately $175 million in combined revenue, are already successfully integrated and contributing positively to the company's financial results.

While the company navigated ongoing global supply chain disruptions and inflationary pressures, operational efficiency and strategic sourcing helped mitigate significant impacts. No significant changes in executive leadership occurred during the past year, providing continuity in strategic direction. Executive compensation, including Performance Shares and Restricted Stock Units (RSUs) under an Omnibus Plan for leaders like K. Christopher Farkas, aligns management incentives with long-term shareholder value creation.

The company is well-positioned to benefit from several key market trends:

• Increased global defense spending.
• The ongoing recovery in commercial aerospace.
• Growing demand for industrial automation.
• The push towards energy transition initiatives.

Financial Health

Curtiss-Wright maintains a healthy financial position. As of year-end 2024, the company held $400 million in cash and cash equivalents. Total long-term debt reached approximately $1.5 billion, primarily consisting of various Senior Notes with interest rates from 3.10% to 4.64%. They also utilize a Revolving Credit Facility, with $300 million currently drawn, providing additional financial flexibility.

With a manageable debt-to-equity ratio of 0.8x, the company maintains a balanced capital structure. Liquidity remains strong, demonstrated by a current ratio of 1.8x, indicating their ability to comfortably meet short-term obligations. Additionally, the company manages significant pension plans, with assets diversified across domestic and international stocks, bonds, and cash, ensuring long-term financial commitments are well-funded.

Future Outlook

Curtiss-Wright projects continued growth for fiscal year 2025. The company anticipates revenue growth of 6-8%, reaching approximately $3.15 billion to $3.20 billion, alongside continued expansion in operating margins. A robust backlog, ongoing demand in defense markets, and the full-year contribution from recent acquisitions support this outlook.

The company's strategy continues to focus on three pillars:

• Organic growth through innovation and market penetration.
• Strategic acquisitions that complement their core capabilities.
• Operational excellence to drive efficiency and profitability.

They expect to continue investing in R&D to maintain their technological edge and explore further strategic growth opportunities.

Competitive Position

Curtiss-Wright maintains a strong competitive position as a leader in highly specialized, niche markets within the aerospace, defense, and industrial sectors. Proprietary technologies, extensive engineering expertise, and long-standing customer relationships give them a competitive edge. They often provide critical components and systems where reliability and performance are paramount, making them a preferred supplier in their segments. Their focus on innovation and R&D helps them sustain this leadership.