Curtiss‑Wright Corp Signals Durable Growth After Record Year
Curtiss-Wright Corp ((CW)) has held its Q4 earnings call. Read on for the main highlights of the call.
President's Day Sale - 70% Off
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential
Curtiss‑Wright Corp’s latest earnings call struck an upbeat tone, underscoring strong momentum across the portfolio and record full‑year results. Management acknowledged some near‑term timing and mix headwinds, but consistently emphasized durable defense and nuclear tailwinds, disciplined capital deployment, and rising R&D as foundations for continued profitable growth.
Q4 Revenue Surge Anchored by Organic Growth
Q4 2025 revenue climbed to $947 million, a 15% year‑over‑year increase powered by 11% organic growth. The company also benefited from its I&C Solutions acquisition, which added scale and helped reinforce Curtiss‑Wright’s position in high‑value engineered systems.
Aerospace & Defense and Commercial Markets Outperform
Aerospace & Defense markets led the charge with 16% growth in Q4 as key programs ramped. Commercial aerospace sales rose more than 20%, while overall commercial markets advanced 13%, highlighting broad demand strength beyond the defense core.
Margin Expansion Highlights Strong Profitability
Q4 operating income rose 14%, with operating margin reaching a robust 19.7% despite higher development spending. Defense Electronics posted an impressive 25.9% margin, up 160 basis points, while Aerospace & Industrial delivered a 20.1% margin, underscoring disciplined cost control.
Earnings Power and Cash Generation Remain Robust
Diluted EPS grew 16% in Q4, reflecting both solid revenue growth and margin gains. Free cash flow reached $315 million, up 13%, translating into a striking 224% cash conversion for the quarter as working capital efficiency improved.
Record Full‑Year Performance Caps 2025
For 2025, Curtiss‑Wright expanded operating margin by 110 basis points to 18.6% as mix and execution improved. Diluted EPS grew 21% year‑over‑year, and adjusted free cash flow hit a record $554 million with 111% conversion, confirming the business’s strong cash profile.
Orders and Backlog Signal Continued Growth
New orders in Q4 rose 18%, driving a book‑to‑bill ratio close to 1.2 times, well above replacement levels. Full‑year 2025 orders reached a record $4.1 billion, up 10%, pushing backlog to more than $4.0 billion, an 18% increase that provides multi‑year revenue visibility.
Capital Returns Underline Shareholder Focus
Management paired growth investments with aggressive capital returns, repurchasing a record $465 million of shares in 2025. The company also raised its annual dividend for the ninth straight year, reinforcing its commitment to returning excess cash to shareholders.
Segment Outperformance Drives Top and Bottom Line
Enablement Power sales surged 21% in Q4, supported by naval defense demand and the I&C acquisition’s contributions. Defense Electronics sales rose 17%, while Aerospace & Industrial grew 5% but still posted a strong 20.1% operating margin, showing resilience even in slower areas.
R&D and Technology Investments Build Future Pipeline
The company is deliberately growing R&D faster than sales, accelerating work on next‑generation platforms and systems. Initiatives include ruggedized NVIDIA GPU solutions, the Fabric 100 architecture, and Microsoft Azure validation, supported by nearly 50% higher 2025 capex to expand capabilities.
Timing‑Driven Ground Defense Delays Temper Near Term
Management flagged timing issues in Ground Defense due to government funding uncertainty and continuing resolution impacts. Some Defense Electronics orders slipped from 2025 into 2026, leaving the segment with a 0.96 book‑to‑bill and a cautious 4%–6% revenue decline outlook for 2026 Ground Defense.
AP1000 Nuclear Opportunity Remains Off the Forecast
The company still expects an AP1000 reactor coolant pump order from a key nuclear customer but stressed visibility remains limited. Given uncertainty on timing and customer decisions, management excluded AP1000 revenue from 2026 guidance, effectively preserving upside if contracts land.
Development Mix Weighs on Margins Near Term
Higher levels of customer‑funded R&D and internally funded development created some unfavorable mix in Q4. Management pointed to SMR‑related prototyping and other advanced programs as temporary drags on margin, but positioned them as necessary investments to secure future high‑margin production.
Elevated Capex Creates Short‑Term Cash Headwind
Capex nearly rose 50% in 2025 to fund capacity, technology, and operational improvements across the portfolio. For 2026, Curtiss‑Wright expects another more than 25% increase to $110–$120 million, a near‑term cash outlay headwind that management views as critical for sustaining long‑term growth.
General Industrial Markets Stay Subdued
Not all end markets are firing, with general industrial sales essentially flat in Q4. Management expects this trend to persist in 2026, guiding to roughly flat performance for general industrial, which limits growth but also avoids significant downside risk.
Defense Growth Still Positive but Slower in 2026
Despite strong multi‑year demand signals, management’s initial 2026 view for defense is more conservative than recent averages. They attribute the deceleration to timing, funding phasing, and backlog burn patterns rather than a structural change in defense spending.
Forward‑Looking Guidance Points to Continued Upside
For 2026, Curtiss‑Wright projects 6%–8% organic sales growth with operating income up 8%–11% and margins rising to 18.9%–19.2%. EPS is expected to climb 11%–15% to $14.70–$15.15, underpinned by record free cash flow of $575–$595 million, higher segment margins, and improved working capital, even as capex and R&D step up.
Curtiss‑Wright’s earnings call painted a picture of a company balancing aggressive investment with strong execution and shareholder returns. While order timing, capex, and development mix create modest near‑term noise, record results, rising backlog, and confident 2026 guidance suggest the growth story in defense and nuclear markets remains firmly intact.
