Why did Curtiss-Wright raise its 2025 guidance?

Management pointed to strong Q1 execution, including adjusted sales growth of 13% and adjusted operating income growth of 34%. Momentum in Aerospace & Defense markets, particularly naval defense and Defense Electronics, drove the increase in sales, operating income, margin, and EPS guidance. Part of the Q1 outperformance was timing-related, such as submarine revenue recognition.

How does the adjusted EPS of $2.82 compare with reported EPS of $2.68?

The $0.14 difference reflects after-tax adjustments: $0.11 for first-year purchase accounting costs from acquisitions and $0.03 for 2024 restructuring expenses. Investors should review both GAAP and adjusted figures, since the company's non-GAAP adjustments are not standardized across peers.

Is the company's free cash flow weak?

Q1 free cash flow was negative $55M, which is consistent with the company's seasonal pattern and reflects collection timing and higher growth capital expenditures. Management still expects full-year FCF of $495M to $515M and FCF conversion above 105%, so the Q1 figure should not be read as a trend by itself.

What are the main risks to the updated outlook?

Forward-looking risks cited include tariffs between the U.S. and other countries, geopolitical developments, changes in government defense spending, potential contract performance issues at anticipated cost levels, and an economic downturn that could reduce orders. Guidance includes potential direct tariff impacts, which management says it plans to mitigate through pricing and operational initiatives.

CW 8-K SEC Disclosure — May 8, 2025

01—Abstract

Summary

Summary of the 8-K filed May 8, 2025. Cited figures are marked; the original filing is the authoritative source.

Curtiss-Wright (NYSE: CW) reported first quarter 2025 results on May 7, 2025 that beat expectations and prompted a raise to full-year 2025 guidance.

Sales rose 13% to $806 million^a, reported operating income rose 29% to $129 million, and reported diluted EPS was $2.68. On an adjusted basis (excluding first-year acquisition accounting costs and 2024 restructuring costs), operating income grew 34% to $134 million, operating margin expanded 260 basis points to 16.6%, and adjusted diluted EPS rose 42% to $2.82. Record new orders of $1.0 billion (1.26x book-to-bill) and backlog of $3.7 billion (up 7% from year-end 2024) point to continued momentum, with A&D markets up 15% and Commercial markets up 9%.

Management raised its 2025 adjusted guidance across the board: sales growth of 8% to 9% (previously 7% to 8%), operating income growth of 13% to 16%, operating margin of 18.3% to 18.5% (up 80 to 100 bps), diluted EPS of $12.45 to $12.80^b (up 14% to 17%), and free cash flow of $495 million to $515 million. Much of the outperformance was attributed to strong naval defense timing on submarine programs and better-than-expected operational performance in Defense Electronics, which the company partly characterized as timing-driven. Free cash flow was negative $55 million in the quarter, which is typical seasonality for the company, and guidance includes a potential direct tariff impact that management says it expects to mitigate.

The quarter's reported results and guidance were furnished under Item 2.02 rather than filed, and the company hosted a conference call on May 8, 2025. Investors should note that Q1 earnings were boosted by timing effects and a non-recurring prior-year naval contract adjustment, and that the adjusted metrics exclude certain items that management characterizes as non-recurring.

02—Key points

Key Highlights

Q1 2025 sales of $806M, up 13%, with A&D markets up 15% and Commercial markets up 9%
Adjusted operating margin of 16.6%, up 260 bps year over year; adjusted diluted EPS of $2.82, up 42%
Defense Electronics operating margin reached 27.5% (up 480 bps), driven by higher defense revenues and operational excellence initiatives
Record new orders of $1.0B (up 13%, 1.26x book-to-bill) and backlog of $3.7B (up 7% since December 31, 2024)
Full-year 2025 guidance raised: sales growth to 8–9%, operating income growth to 13–16%, diluted EPS to $12.45–$12.80, FCF to $495–$515M
Q1 free cash flow was negative $55M, reflecting seasonal collection timing and higher growth capex; company reaffirmed >105% FCF conversion for the full year
Company repurchased 42,383 shares for about $14M in Q1 and declared a $0.21 quarterly dividend

03—Questions

Frequently Asked Questions

Why did Curtiss-Wright raise its 2025 guidance?
Management pointed to strong Q1 execution, including adjusted sales growth of 13% and adjusted operating income growth of 34%. Momentum in Aerospace & Defense markets, particularly naval defense and Defense Electronics, drove the increase in sales, operating income, margin, and EPS guidance. Part of the Q1 outperformance was timing-related, such as submarine revenue recognition.
How does the adjusted EPS of $2.82 compare with reported EPS of $2.68?
The $0.14 difference reflects after-tax adjustments: $0.11 for first-year purchase accounting costs from acquisitions and $0.03 for 2024 restructuring expenses. Investors should review both GAAP and adjusted figures, since the company's non-GAAP adjustments are not standardized across peers.
Is the company's free cash flow weak?
Q1 free cash flow was negative $55M, which is consistent with the company's seasonal pattern and reflects collection timing and higher growth capital expenditures. Management still expects full-year FCF of $495M to $515M and FCF conversion above 105%, so the Q1 figure should not be read as a trend by itself.
What are the main risks to the updated outlook?
Forward-looking risks cited include tariffs between the U.S. and other countries, geopolitical developments, changes in government defense spending, potential contract performance issues at anticipated cost levels, and an economic downturn that could reduce orders. Guidance includes potential direct tariff impacts, which management says it plans to mitigate through pricing and operational initiatives.

04—Continue

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