Curtiss-Wright (CW) Just Raised Guidance Again, So What’s The Catch?

Core Impact Points

• Curtiss-Wright's second-quarter sales climbed 5% year-over-year to $924 million, with operating income growing 12% and free cash flow jumping 37% to $160 million.
• The company's Defense Electronics segment led the charge, with orders up nearly 50% year-over-year in the quarter and more than 30% year-to-date, fueled by turret drive stabilization systems for international ground vehicles and tactical communications gear for the US Army, Marine Corps, and Air Force.
• Curtiss-Wright's Aerospace & Industrial segment stood out, with sales up 12%, operating income up 25%, and margin expansion of 180 basis points, helped by demand for actuation equipment on the Army's IFPC program.
• The company's Naval & Power segment is leaning on submarine production timing and the CVN-81 carrier program, with full-year sales guidance there raised to 7% to 9% growth.
• Curtiss-Wright's reactor coolant pumps are expected to be among the long-lead equipment purchased for the Department of Energy's conditional $17.5 billion loan commitment for up to 10 new Westinghouse AP1000 reactors.
• The company's third-quarter guide shows margin pressure has not disappeared, just shifted later in the year, with Defense Electronics sales expected to be flat sequentially and operating income and margin actually declining.