Curtiss-Wright Corp (CW) Q2 2024 Earnings Call Highlights: Strong Sales Growth and Raised Guidance

GuruFocus News
4 min read

In This Article:

  • Sales: $785 million, increased 11% year-over-year.

  • Operating Income: Increased 16% year-over-year.

  • Operating Margin: Expanded by 60 basis points.

  • Diluted Earnings Per Share (EPS): $2.67, increased 24% year-over-year.

  • Free Cash Flow: $100 million, nearly 100% conversion.

  • Order Book: New orders up 18% year-over-year to nearly $1 billion.

  • Backlog: Exceeded $3.2 billion.

  • Full Year Sales Growth Guidance: 6% to 8% increase expected.

  • Full Year Diluted EPS Guidance: $10.40 to $10.65, up 11% to 14%.

  • Free Cash Flow Guidance: $425 million to $445 million, growth of 3% to 8%.

  • Restructuring Costs: Approximately $15 million in 2024.

  • Annualized Savings from Restructuring: Approximately $10 million in 2025.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Curtiss-Wright Corp (NYSE:CW) reported a strong 11% year-over-year increase in sales for Q2 2024, driven by better-than-expected performance in the Defense Electronics segment.

  • Operating income increased by 16% year-over-year, resulting in a 60 basis points expansion in operating margin.

  • Diluted earnings per share rose by 24% year-over-year, exceeding expectations due to higher sales.

  • The company achieved a record level of backlog exceeding $3.2 billion, providing strong visibility for the second half of 2024.

  • Curtiss-Wright Corp (NYSE:CW) raised its full-year guidance, expecting total sales growth of 6% to 8% and double-digit EPS growth.

Negative Points

  • The company anticipates approximately $15 million in restructuring costs in 2024, which may impact short-term financial performance.

  • There is a conservative outlook for the general industrial market, with expectations for flat sales growth due to weaker first-half performance.

  • The Naval & Power segment's profitability is pressured by unfavorable mix and increased concentration of development programs.

  • Curtiss-Wright Corp (NYSE:CW) faces ongoing challenges with long lead times for older components in the supply chain.

  • The company remains cautious about the commercial aerospace market, particularly concerning the 737 MAX program.

Q & A Highlights

Q: Supply chain has been a headwind for Defense Electronics in the past few quarters. Can you provide more color on where you are now on material receipts and shortages, and when you'd expect catch-up deliveries to level set? A: The major disruptions are behind us, and we see good stability across our supply chain. Lead times have come down for various components, but older components remain at around 40 weeks. Prices have been stable, with only minor incremental increases. We believe we are level set with our customers in industrial businesses and commercial aerospace.

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