Q4 2023 Curtiss-Wright Corporation Earnings Call
Operator: The Ultimate Parody Site! BF-WATCH TV 2021, Bye! [inaudible] Please stand by, we're about to begin. Welcome to the Curtiss-Wright fourth quarter and full year 2023 earnings conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2.
Sure.
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Please standby we're about to begin.
Welcome to the Curtiss Wright fourth quarter and full year 2023 earnings conference call.
This time, all participants have been placed on a listen only mode and the floor will be open for your questions. Following the presentation.
If you would like to ask a question at that time. Please press star one on your telephone keypad.
Epic any point. Your question has been answered you may remove yourself from the queue by pressing star two.
Operator: So that others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Jim Ryan, Vice President of Investor Relations. Thank you, Jamie. And good morning, everyone.
So the others can hear your questions clearly, we ask that you pick up your handset for best sound quality.
Lastly, if you should require operator assistance, please press star zero.
I would now like to turn the call over to Jim Ryan Vice President of Investor Relations.
Yeah.
Thank you Jamie and good morning, everyone welcome to Curtiss Wright's fourth quarter and full year 2023 earnings conference call joining.
James M. Ryan: Welcome to Curtiss-Wright's fourth quarter and full year 2023 earnings conference call. Joining me on the call today are Chair and Chief Executive Officer Lynn Bamford and Vice President and Chief Financial Officer Chris Barker. Our call today is being webcast, and the press release, as well as a copy of today's financial presentation, is available for download through the investor relations section of our company website, at Curtiss-Wright.com. A replay of this webcast can also be found on the website.
Joining me on the call today are chairman and Chief Executive Officer, Lynn Bamford, and Vice President and Chief Financial Officer for Spark.
Our call today is being webcast and the press release as well as a copy of today's financial presentation.
Helpful for download through the Investor Relations section of our company website at Curtiss Wright Dot Com a.
A replay of this webcast also can be found on the website.
James M. Ryan: Please note, today's discussion will include certain projections and statements that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance, to detail those risks and uncertainties associated with that forward-looking statement and our public filings with the SEC. As a reminder, the company's results include an adjusted non-gap view that excludes certain costs in order to provide better transparency into Curtiss-Wright's ongoing operating and financial performance. Any references to organic growth are on an adjusted basis and exclude foreign currency translation, acquisitions, and divestitures unless otherwise noted. GAP and non-GAP reconciliations for current and prior year periods are available in the earnings release and on our website. Now, I'd like to turn the call over to Lynn to get things started.
Please note today's discussion will include certain projections and statements that are forward looking.
The private Securities Litigation Reform Act of 995.
Statements are based on management's current expectations and are not guarantees of future performance in.
A detail those risks and uncertainties associated with forward looking statements in our public filings with the SEC.
As a reminder, the company's results include an adjusted non-GAAP view that excludes certain costs in order to provide better transparency into Curtiss Wright's ongoing operating and financial performance.
Any references to organic growth on an adjusted basis, and excluding foreign currency translation acquisitions and divestitures unless otherwise noted.
The non-GAAP reconciliations for current and prior year periods are available in the earnings release and on our website.
I'd like to turn the call over to win to get things started.
Lynn M. Bamford: Thank you, Jim, and good morning, everyone. Curtiss-Wright delivered a solid operational performance in the fourth quarter and a strong finish to 2023. For the second consecutive year, we achieved several new financial records as we continue to execute our Pivot to Growth strategy. We generated double-digit growth in sales and earnings per share in 2023 as we benefited from the underlying demand within our core portfolio. We achieved these results while maintaining our commitment to incremental investments in R&D, and we generated significant growth in orders, which are proof points that our strategy to build momentum in our organic growth is working. Overall, we delivered another outstanding year for our shareholders, and I look forward with confidence to Curtiss-Wright's future. Turning to today's presentation, I'll begin by covering the highlights of our fourth quarter of full year 2023 performance and a brief preview of our 2024 financial outlook. Then I'll turn the call over to Kris to provide a more in-depth review of our financials.
Thank you Jim and good morning, everyone Curtiss Wright delivered a solid operational performance in the fourth quarter and a strong finish to 2023 for the second consecutive year, we achieved several new financial records as we continue to execute our pivot to growth strategy, we generated double digit growth in sales and earnings per share.
In 2023, as we benefited from the underlying demand within our core portfolio. We achieved these results while maintaining our commitment to incremental investments in R&D and we generated significant growth in orders, which are proof points that our strategy to build momentum in our organic growth is working.
Overall, we delivered another outstanding year for our shareholders and I look forward with confidence to Curtiss Wright's future.
Turning to today's presentation I'll begin by covering the highlights of our fourth quarter and full year 2023 performance and a brief preview of our 2024 financial outlook, then I will turn the call over to Chris to provide a more in depth review of our financials. Finally, I'll wrap up our prepared remarks with a recap of our.
Lynn M. Bamford: Finally, I'll wrap up our prepared remarks with a recap of our performance and the notable achievements against our 2021 Investor Day commitment before we move to Q&A. Starting with our fourth quarter 2023 highlights, sales of $786 million increased 4% year-over-year and exceeded our expectations due to a stronger than expected performance in the defense electronics segment, which continues to benefit from a healthy backlog and easing in the supply chain. Our performance was once again led by growth in our aerospace and defense markets, as we benefited from 20 percent growth in commercial aerospace along with higher tactical communications equipment revenues in ground defense. We also experienced solid growth in our commercial nuclear and process markets. Adjusted operating income grew 2% year-over-year to a quarterly record of $163 million and resulted in a strong operating margin of 20.8%. Diluted earnings per share increased 8% year-over-year to a quarterly record of $3.16, while free cash flow was $270 million, resulting in a 221% free cash flow conversion.
Our performance in the notable achievements against our 2021 Investor day commitments before we move to Q&A Steve.
<unk> with our fourth quarter 2023 highlights sales of $786 million increased 4% year over year and exceeded our expectations due to a stronger than expected performance and the defense electronics segment.
Which continues to benefit from a healthy backlog and easing in the supply chain.
Performance was once again led by growth in our aerospace and defense market as we benefited from 20% growth in commercial aerospace along with higher Tactical communications equipment revenues in ground defense. We also experienced solid growth in our commercial nuclear and process markets.
Adjusted operating income grew 2% year over year to a quarterly record of $163 million and resulted in strong operating margin of 28%.
Diluted earnings per share increased 8% year over year to a quarterly record of $3 16, while free cash flow was $270 million.
<unk> and a 221% free cash flow conversion.
Lynn M. Bamford: Next, I'll turn your attention to the right-hand side of the slide and recap our full year 2023 results, where key metrics including sales, operating income, earnings per share, free cash flow, and orders were all records for the company. Sales increased 11% overall to more than $2.8 billion, driven by 10% organic growth, as well as a better than expected contribution from the arresting systems business acquired in the mid-2022. We delivered continued operating margin expansion reaching 17.4% in 2023, which included more than $20 million in incremental strategic investments in research and development to further position us for future organic growth. (Inaudible) Diluted earnings per share of $9.38 increased 15% year-over-year while adjusted pre-cash flow was $413 million, a reflection of our strong growth in earnings and working capital management.
Next I'll turn your attention to the right hand side of the slide and recap our full year 2023 results, our key metrics, including sales operating income earnings per share free cash flow and borders were all record for the company sales increased 11% overall to more than $2 8 billion.
Driven by 10% organic growth.
As well as a better than expected contribution from the arresting systems business acquired in mid 2022.
We delivered continued operating margin expansion, reaching 17, 4% in 2023, which included more than $28 million and incremental strategic investments in research and develop to further position us for future organic growth.
Of note our 2023 total R&D investments included both internal and customer funded projects exceeded six 5% of total sales. We also overcame the significant headwind associated with the wind down of the profitable cap 1000 program.
Diluted earnings per share of $9 38 increased 15% year over year, while adjusted free cash flow was $413 million in reflection of our strong growth in earnings and working capital management.
Lynn M. Bamford: Growth in our order book was exceptionally strong in 2023, up 5% year-over-year to a record $3.1 billion, reflecting 1.1 times book-to-bill overall and solid demand across the majority of our A&E and commercial markets. Of note, we generated double-digit bookings in our defense electronics segment, driven by strong demand for embedded computing and tactical communications equipment, as well as higher growth in our naval and power segments for both commercial nuclear and process equipment As a result, we concluded the year with a backlog of $2.9 billion, up 9% year-over-year.
Growth in our order book was exceptionally strong in 2023 up 5% year over year to a record $3 1 billion, reflecting one one times book to Bill overall and solid demand across the majority of our A&D and commercial markets.
Of note, we generated double digit bookings and our defense electronics segment, driven by strong demand for embedded computing and tackle tactical communications equipment as well as higher growth in our naval and power segment for both commercial nuclear and process equipment. As a result, we concluded the year with a bang.
Clause of $2 9 billion.
Up 9% year over year.
Lynn M. Bamford: With this strong performance, we exceeded expectations for nearly all of our three-year targets set at our 2021 Investor Day, including sales, operating income, EPS growth, and delivering close to 110% average free cash flow conversion. I'll provide greater detail on our performance against our long-term targets later in the call. Overall, I'm exceptionally proud of the team's continued dedication to deliver consistent, profitable growth and a tremendous performance this past year. Finally, I would like to introduce our full year 2024 guidance, where our successful pivot to growth journey continues. Overall, we are projecting mid-single-digit sales organic growth as we continue to benefit from our steadily growing backlog and the strong alignment of our technologies to favorable end market trends. We intend to continue our pursuit of investing for growth by making incremental investments in both internally and externally funded research and development.
With this strong performance, we exceeded expectations for nearly all of our three year target set at our 2021 Investor day, including sales operating income EPS growth.
Delivering close to 110% average free.
Free cash flow conversion.
I'll provide greater detail on our performance against our long term targets later in the call.
Overall I'm exceptionally proud of the team's continued dedication to deliver consistent profitable growth and a tremendous performance this past year.
Finally, I would like to introduce our full year 2024 guidance, where our successful pivot to growth journey continues.
Overall, we are projecting mid single digit sales organic growth as we continue to benefit from our steadily growing backlog and the strong alignment of our technologies to favorable end market trends, we intend to continue our pursuit of investing for growth by making incremental investments in both internally and externally.
Internally funded research and development.
Lynn M. Bamford: We expect to generate solid growth in diluted EPS and free cash flow this year, with the potential to reach double-digit EPS growth and up to $435 million of free cash flow at the high end of our guidance ranges. In summary, Curtiss-Wright remains well positioned to deliver another exceptional performance in 2024. Now, I'd like to turn the call over to Chris to continue with our prepared remarks. Thank you, Lynn.
We expect to generate solid growth in diluted EPS and free cash flow this year with the potential to reach double digit EPS growth and up to $435 million of free cash flow at the high end of our guidance ranges in summary, Curtiss Wright remains well positioned to deliver another exceptional performance.
In 2024, now I'd like to turn the call over to Chris to continue with our prepared remarks.
Thank you and on slide four I'll review the key drivers of our fourth quarter 2023 performance by segment.
Chris Barker: On slide four, I'll review the key drivers of our fourth quarter 2023 performance by segment. I'll begin with aerospace and industrial, where overall sales growth of 7% is at the high end of our expectations. Within the second commercial airspace market, we experienced a strong 20% growth in OEM sales supporting the ramp-up in production across narrow body and wide body platforms. However, this performance is partially offset by the timing of actuation development programs across the segment's A&D markets. In the general industrial market, improved demand for our new power management electronics supporting the on-highway market was essentially offset by lower off-highway sales to the construction market.
I'll begin in aerospace and industrial where overall sales growth of 7% was at the high end of our expectations.
Within the segments commercial aerospace market, we experienced a strong 20% growth in OEM sales supporting the ramp up in production across narrow body and wide body platforms.
This performance was partially offset by the timing of actuation development programs across the segments A&D markets.
And the general industrial market improved demand for our new power management electronics supporting the on highway market was essentially offset by lower off highway sales to the construction market.
Chris Barker: And turning to the segment's profitability, our results reflected favorable absorption on higher sales and a strong operating margin of 18.5%. Next, in the Defense Electronics segment, our results exceeded our expectations and were slightly ahead of last year's record fourth quarter results. This performance was principally driven by better-than-expected sales growth in our ground defense market, resulting from continued stability in the supply chain and the conversion of our strong order book. Of note, we experienced higher sales of tactical communications equipment, as well as increased sales of embedded computing equipment, most notably on the Stryker platform.
And turning to the segments profitability, our results reflected favorable absorption on higher sales and a strong operating margin of 18, 5%.
Next in the defense Electronics segment, our results exceeded our expectations and was slightly ahead of last year's record fourth quarter results.
This performance was principally driven by better than expected sales growth in our ground defense market, resulting from continued stability in the supply chain and the conversion of our strong order book.
We experienced higher sales in tactical communications equipment, as well as increased sales of embedded computing equipment, which notably on the Stryker platform.
Chris Barker: Within Aerospace Defense, despite higher sales for flight test instrumentation on the F-35, our fourth-quarter results were impacted by the timing of a vetted computing sale supporting C-5ISR programs, principally on the Black Hawk helicopter. Regarding this segment's operating performance, we delivered a strong 28.8% operating margin reflecting favorable absorption on higher A&D revenues, mainly offset by higher strategic R&D investments. Turning to the naval Overall sales growth of 3% was slightly below our expectations.
Within aerospace defense, despite higher sales for flight test instrumentation on the F 35, our fourth quarter results were impacted by the timing of embedded computing sales supporting <unk> ISR programs, principally on the Black Hawk helicopter.
Regarding the segment operating performance, we delivered a strong 28, 8% operating margin, reflecting favorable absorption on higher A&D revenues, mainly offset by higher strategic R&D investments.
Turning to enable and power segment.
Overall sales growth of 3% was slightly ahead of our expectations.
Chris Barker: Starting in the naval defense market, our performance reflected higher revenues supporting the Columbia-class and Virginia-class submarine programs. However, our results were partially offset by the timing of production revenues on the CVN-81 aircraft carrier program. Within this segment's aerospace defense market, our results reflected continued strong global demand for our resting systems equipment. In the power and process market, sales grew at a low single-digit pace overall but reflected high single-digit growth when excluding cap-and-files and production revenues. This performance is principally driven by higher growth in the process market due to increased valve sales supporting refinery maintenance and turnaround activity, as well as higher subsea pump development revenues. In our commercial nuclear market, we experience higher development revenues, mainly supporting the X-energy advanced reactor design. And turning to the segment's operating performance, favorable absorption on solid revenue growth was offset by unfavorable mix on lower cap 1,000 revenues and increased margin pressure related to both SMR and sub-c pump development contracts as we continue to advance these critical growth initiatives.
Starting in the Naval defense market, our performance reflected higher revenues supporting the Columbia class and Virginia class submarine programs. However, our results were partially offset by the timing of production revenues on the CV in 81 aircraft carrier program.
Within the segments Aerospace defense market our results reflect the continued strong global demand for our arresting systems equipment.
And the power and process market sales grew at a low single digit pace overall, but reflected high single digit growth when excluding cap 1000 production revenues.
This performance was principally driven by higher growth in the process market due to increased valve sales supporting refinery maintenance and turnaround activity as well as higher subsea pump development revenues.
Within our commercial nuclear market, we experienced higher development revenues, mainly supporting the synergy advanced reactor designs.
And turning to the segments operating performance favorable absorption on solid revenue growth was offset by unfavorable mix on lower cap 1000 revenues and increased margin pressure related to both SME and subsequent development contracts as we continue to advance these critical growth initiatives.
Chris Barker: To sum up our fourth quarter results, overall, we generated solid absorption on a stronger than expected top line performance resulting in record fourth quarter operating income and a solid finish to 2023. Next, turning to our full year 2024 guidance, I'll begin on slide 5 with our end market sales outlook, where we expect organic sales to grow 4 to 6 percent driven by growth in all of our end markets. [inaudible] Next, in ground defense, our outlook for 4-6% sales growth reflects continued strong demand for our tactical communications equipment and higher electromechanical actuation revenues supporting ground missile launchers within the ANI segment. We expect those increases to be partially offset by the timing of turret stabilization systems in lower sails on ground combat vehicles.
To sum up our fourth quarter results overall, we generated solid absorption on the stronger than expected topline performance, resulting in record fourth quarter operating income and a solid finish to 2023.
Next turning to our full year 2024 guidance I'll begin on slide five with our end market sales outlook, where we expect organic sales to grow 4% to 6% driven by growth in all of our end markets.
In aerospace defense growth of 5% to 7% principally reflects higher embedded computing revenues in defense electronics on various fighter jet and helicopter programs as well as flight test instrumentation on the F 35 program supporting the Tech refresh three our tier three upgrade.
Next in ground defense, our outlook for 4% to 6% sales growth reflects continued strong demand for our tactical communications equipment and higher electromechanical actuation revenue supporting ground missile launches within the Eni segment.
We expect those increases to be partially offset by the timing of stabilization systems and lower sales on ground combat vehicles.
Chris Barker: In naval defense, our outlook for 3 to 5 percent sales growth principally reflects higher revenues driven by the ramped-up production of both CVN-81 aircraft carrier and Columbia Class I Marine programs. We expect those increases to be partially offset by reduced year-over-year production revenues on the CVN 80 aircraft carrier program. I also wanted to highlight the expected contribution of foreign military sales, or FMS, across these markets as increased global spending on defense continues to positively influence our performance. In 2024, we expect mid-single-digit growth in FMS to be driven by the alignment of our technologies to support global defense priorities, which follows a strong 20% growth in FMS in 2023. Turning to commercial aerospace, our outlook for 10 to 12 percent sales growth is driven by higher OEM production rates on narrow-body aircraft, including the A320, and wide-body aircraft, including the 787 and A350. We're also beginning the year with some conservatism in our guidance relative to the 737 MAX based upon the FAA's recent pause in Boeing's production ramp.
Enabled defense our outlook for 3% to 5% sales growth principally reflects higher revenues driven by the ramp up in production on both CDN 81 aircraft carrier and Columbia class submarine programs.
We expect those increases to be partially offset by reduced year over year production revenues on the Cvs <unk> 80 aircraft carrier program.
I also wanted to highlight the expected contribution of foreign military sales or Fms across these markets as increased global spending on defense continues to positively influence our performance.
In 2024, we expect mid single digit growth in Fms to be driven by the alignment of our technologies to support global defense priorities, which followed a strong 20% growth in Fms and 2023.
Yes.
Turning to commercial aerospace our outlook for 10% to 12% sales growth is driven by higher OEM production rates on narrow body aircraft, including <unk> hundred 20, and wide body aircrafts, including the 787 and <unk> hundred 50.
We're also beginning the year with some conservatism in our guidance relative to the 737 Max based upon the recent pause in Boeing's production ramp.
Chris Barker: Wrapping up our aerospace and defense markets, we expect total sales to increase a healthy 5 to 7% in 2024. Outside of our A&D markets, in the power and process market, our outlook for 3 to 5% sales growth principally reflects increased demand for our commercial nuclear aftermarket products and includes a 1% headwind related to the completion of the CAPM 1000 program early in 2023. Within our commercial nuclear market, we expect a mid-single-digit full-year growth rate, principally reflecting strong demand supporting the ongoing maintenance and subsequent license renewals that extend the life of existing nuclear reactors. In the process market, we expect growth to be mainly driven by higher subsea pump development revenue supporting the newly announced Petrobras contract. In addition, following very strong 20% growth in valve sales in 2023, we expect these sales to be essentially flat in 2024 with higher MRO sales being offset by the timing of large capital projects. And lastly, in the general industrial market, we expect growth of one to three percent driven by higher sales of industrial vehicle products, notably due to increased sales of our power management electronics and increased sales of surface treatment services. Wrapping up our total commercial markets, we are targeting full year sales growth of 2 to 4 percent.
Wrapping up our aerospace and defense markets, we expect total sales to increase a healthy 5% to 7% in 2024.
Outside of our A&D markets and the power process market, our outlook for 3% to 5% sales growth principally reflects increased demand for our commercial nuclear aftermarket products and includes a 1% headwind related to the completion of the cap 1000 program early in 2023.
Within our commercial nuclear market, we expect a mid single digit full year growth rate, principally reflecting strong demand supporting the ongoing maintenance and subsequent license renewals that extend the life of existing nuclear reactors.
And the process market, we expect growth will be mainly driven by higher subsea pump development revenue supporting the newly announced Petrobras contract.
In addition, following very strong 20% growth in valve sales in 2023, we expect these sales to be essentially flat in 2024 with higher MRO sales being offset by the timing of large capital projects.
And lastly in the general industrial market, we expect growth of 1% to 3% driven by higher sales of industrial vehicle products, notably due to increased sales of our power management electronics and increased sales of surface treatment services.
Wrapping up our total commercial markets, we are targeting full year sales growth of two 4%.
Chris Barker: Continuing with our four-year outlook by segment on slide six, I'll begin with aerospace and industrial, where we expect sales to grow three to five percent, principally driven by double-digit growth in commercial aerospace and low single-digit growth in general industrial. Regarding this segment's profitability, we expect operating income growth of 5% to 8% and operating margin expansion of 20 to 40 basis points to a range of 16.6% to 16.8%, reflecting higher sales and improved product mix and power management electronics, partially offset by incremental R&D investments. Next, in defense electronics, we expect sales to grow five to seven percent, principally driven by this business's record 2023 order book, reflecting solid growth in our A&D markets. Regarding the segment's profitability, we expect operating income to grow 3-6% and full-year operating margins to range from 23.1% to 23.3%, which includes a $5 million or 50 basis point headwind from internally funded R&D investments. And lastly, in Naval Empower, we expect sales to grow 4% to 6% driven by solid growth in our naval defense, commercial nuclear, and process markets. Regarding the segment's profitability, operating income is expected to grow 2 to 5 percent, while operating margin is expected to range from 17 to 17.2 percent.
Continuing with our full year outlook by segment on slide six I'll begin in aerospace and industrial where we expect sales to grow 3% to 5% principally driven by double digit growth in commercial aerospace and low single digit growth in general industrial.
Regarding the segments profitability, we expect operating income growth of 5% to 8% and operating margin expansion of 20 to 40 basis points to a range of $16 six to 16, 8%.
Selecting higher sales and improved product mix in power management electronics, partially offset by incremental R&D investments.
Next in defense electronics, we expect sales to grow 5% to 7% principally driven by this businesses record 2023 order book, reflecting solid growth in our A&D markets.
Regarding the segments profitability, we expect operating income to grow 3% to 6% and full year operating margin to range from 23, 1% to 23, 3%, which includes a $5 million or <unk> 50 basis point headwind from internally funded R&D investments.
And lastly, enabling power, we expect sales to grow 4% to 6% driven by solid growth in our enabled defense commercial nuclear and process markets.
Regarding the segments profitability operating income is expected to grow 2% to 5% while operating margin is expected to range from 17% to 17, 2%.
Chris Barker: While we anticipate favorable absorption on the overall increase in sales, our outlook reflects margin pressures associated with the shifted development contracts for both advanced small modular reactors and subspeed pumps, as well as a $3 million internally funded R&D project increase, which will collectively create a 50-basis point headwind on our projection. So to summarize our outlook, overall, we expect total Curtiss-Wright operating income to grow 4 to 7% in excess of sales growth and operating margin to improve 10 basis points at the midpoint of our guide, ranging from 17.4 to 17.6%. This outlook reflects at least 25% incremental margins across the consolidated portfolio, as well as a year-over-year increase of more than $20 million in our total engineering spending on both internal and customer-funded programs, equating to a record pace of investment and ahead of last year's 6.5% of sales. We expect first quarter 2024 sales to grow by mid-single digits relative to the first quarter of 2023, followed by sequential quarterly improvements. Regarding our first quarter 2024 profitability, starting with the A&I segment, we expect that operating margin will be in line with the first quarter 2023 results.
While we anticipate favorable absorption on the overall increase in sales our outlook reflects margin pressures associated with the shift to development contracts for both advanced small modular reactors and subsea pumps as well as a $3 million internally funded R&D project increase which will collectively create at 50.
<unk> point headwind on our projections.
So to summarize our outlook overall, we expect total Curtiss Wright operating income to grow 4% to 7% in excess of sales growth and operating margin improved 10 basis points at the midpoint of our guide ranging from 17, 4% to 17, 6%.
This outlook reflects at least 25% incremental margins across the consolidated portfolio as well as a year over year increase of more than $20 million and our total engineering spending on both internal and customer funded programs equating to a record pace of investment and ahead of last year's six 5% of sales.
To aid in your quarterly modeling the sales and operating margin.
We expect first quarter 2024 sales to grow by mid single digits relative to the first quarter of 2023, followed by sequential quarterly improvement.
Regarding our first quarter 2020 for profitability starting with EBITDA. In this segment, we expect that operating margin will be in line with the first quarter 2023 results.
Chris Barker: Within the enabling power segment, as discussed, the ramp-up in development costs is expected to drive profitability below our first quarter 2023 results, followed by a steady improvement in segment operating margin over the course of the year. And lastly, we expect our defense electronics segment to demonstrate strong growth and profitability in excess of last year's first quarter results. In summary, at the overall Curtiss-Wright level, we are expecting modest improvement in year-over-year first quarter operating margin on solid organic sales growth. Moving on to our financial outlook on slide 7 and starting with our EPS guidance. We expect full-year 2024 diluted EPS to range from $10 to $10.30, up 7% to 10%, mainly driven by our strong growth in operating income.
Within the enabling power segment as discussed the ramp up in development cost is expected to drive profitability below our first quarter 2023 results followed by a steady improvement in segment operating margin over the course of the year.
And lastly, we expect our defense electronics segment to demonstrate strong growth and profitability in excess of last year's first quarter results.
In summary, the overall Curtis train level, we're expecting modest improvement in year over year first quarter operating margin on solid organic sales growth.
Continuing with our financial outlook on slide seven and starting with our EPS guidance.
We expect full year 2024 diluted EPS to range from $10 to $10 30.
Up 7% to 10%, mainly driven by our strong growth in operating income.
Chris Barker: Our guidance also reflects higher interest income as well as lower borrowing based upon our strong free cash flow generation and healthy balance sheet as we prepare for greater capital deployment in 2024. Additionally, to aid in your quarterly EPS modeling, we expect our 2024 quarterly EPS to follow a similar cadence to the last year. We expect the first quarter EPS to reflect low teens growth relative to the first quarter of 2023 and to generate approximately 40% of our full-year earnings per share in the first half. For the remainder of 2024, we expect sequential quarterly improvement, with the fourth quarter being our strongest. And lastly, turning to our free cash flow guidance, we are projecting a full-year free cash flow of $415 to $435 million, up 0% to 5%.
Our guidance also reflects higher interest income as well as lower borrowing based upon our strong free cash flow generation and healthy balance sheet as we prepare for greater capital deployment in 2024.
The eight year quarterly EPS modeling, we expect our 2020 for quarterly EPS to follow a similar cadence to last year.
We expect the first quarter EPS to reflect low teens growth relative to the first quarter of 2023 and to generate approximately 40% of our full year earnings per share in the first half.
For the remainder of 2024, we expect sequential quarterly improvement with the fourth quarter being our strongest.
And lastly, turning to our free cash flow guidance, we are projecting full year free cash flow of $415 million to $435 million of zero to 5%.
Chris Barker: Growth in cash flow from operations is driven by expectations for higher cash earnings and our intense focus on working capital management, while capital expenditures are expected to increase $10 million at the midpoint of our guidance as we continue to invest in support of our future organic growth. And as a reminder, we will recognize the remaining $5 million in revenues and $20 million in cash on the CAP 1000 program in the first quarter of 2023 as we have essentially completed the contract. While revenue will no longer be a substantial headwind for us, we do expect the $20 million cash headwind to impact our first quarter and full year 2024 comparisons year over year. Absent this headwind, our 2024 free cash flow guidance would reflect strong growth of 5 to 10 percent. And finally, our 2024 free cash flow conversion rate is expected to be near 110% based upon the midpoint of our guidance and in line with our recent strong performance. Now, I'd like to turn the call back over to Lynn. Thank you, Chris. And turning to slide eight.
Growth in cash flow from operations, driven by expectations for higher cash earnings and our intense focus on working capital management, while capital expenditures are expected to increase $10 million at the midpoint of our guide as we continue to invest in support of our future organic growth.
And as a reminder, we recognized the remaining $5 million in revenues and $20 million in cash on the Caf 1000 program in the first quarter of 2023, as we essentially completed the contract.
While the revenue will no longer be a substantial headwind for us we do expect the $20 million cash headwind to impact our first quarter and full year 2024 comparisons year over year.
Absent this headwind our 2020 for free cash flow guidance would reflect strong growth of 5% to 10%.
And finally, our 2020 for free cash flow conversion rate is expected to be near 110% based upon the midpoint of our guidance and in line with our recent strong performance now I would like to turn the call back over to Lynn.
Thank you, Chris and turning to slide eight.
Lynn M. Bamford: As I reflect upon the past three years, our pivot to growth strategy, and the Investor Day commitments established in 2021, I'm pleased with our team's execution and our overall financial performance. I'd like to spend the next few minutes revisiting the four key messages from our 2021 Investor Day, as shown on the top of this slide, and discuss how our accomplishments have translated into meaningful results for Curtiss-Wright, providing confidence that our strategy is working. First, our commitment to accelerating Curtiss-Wright's top-line growth, both organically and through acquisition, as discussed throughout our prepared remarks. We have maintained our commitment to incremental R&D investment and supplemented this target spending with an intense and dedicated focus on innovation and collaboration across our three segments. We've also discussed the alignment of our technologies to key secular trends, which has propelled organic growth in all of our markets over the past three years. In addition, our top-line growth has been underpinned by a very disciplined approach to capital allocation, and we have grown through acquisition as a means to enhance our customer offering and a strategic accelerator of top-line growth.
As I reflect upon the past three years, our pivot to growth strategy in the Investor day commitments established in 2021, I'm pleased with our team's execution and our overall financial performance.
To spend the next few minutes revisiting the four key messages from our 2021 Investor day as shown on the top of the slide and discuss how our accomplishments have translated into meaningful results for Curtiss Wright, providing confidence that our strategy is working.
First our commitment to accelerating Curtiss Wright topline growth, both organically and through acquisition.
As discussed throughout our prepared remarks.
We have maintained our commitment to incremental R&D investments and supplemented this targeted spending with an intent and dedicated focus on innovation and collaboration across our three segments.
We would also discuss the alignment of our technologies to key secular trend, which has propelled organic growth in all of our markets over the past three years.
In addition, our top line.
Growth has been underpinned by a very disciplined approach to capital allocation and we have grown through acquisition as a means to enhance our customer offering and as a strategic accelerator of topline growth.
Lynn M. Bamford: Closely following the strategic and financial criteria that we laid out in 2021, we have added some very complementary businesses, such as the arresting systems business acquired in 2022, which has expanded our market share and international presence. Second, our focus on the customer, where we have been leveraging the critical mass of one Curtiss-Wright through our sales channels and technologies to provide better value to our customers, expand relationships, and build upon the content on key platforms, such as the inclusion of our critical commercial nuclear technologies on several advanced small modular reactor designs. In addition, our continued execution provides our customers with confidence in Curtiss-Wright to drive increased funding and investment for key projects, which we expect to contribute to our future organic growth.
Closely following the strategic and financial criteria that we laid out in 2021, we've added some very complementary businesses such as the arresting systems business acquired in 2022, which has expanded our market share in international presence.
Second our focus on the customer.
We have been leveraging the critical mass of one Curtiss Wright through our sales channels and technologies to provide better value to our customers expand relations and build upon the content on key platforms, such as the inclusion of our critical commercial nuclear technologies on several advanced small modular reactors.
Designed.
In addition, our continued execution provides our customers the confidence and Curtiss Wright to drive increased funding and investment for a key project, which we expect to contribute to our future organic growth.
Lynn M. Bamford: Third, our focus on advancing our strong track record of operational and financial excellence. This has led to continued top quartile operating margin performance relative to our peers. We have made great strides advancing the operational growth platform, or OGP, by combining our strong performance in operational excellence with new opportunities in commercial excellence and strategic pricing and the development of new systems and tools to improve Curtiss-Wright's overall efficiency. These efforts have created underlining margin expansion to support a ramp-up in R&D investment or to cover first-year dilution from acquisitions as we invest significantly for our future. And last but not least, our focus on simplifying the business model. This started with the new segment structure released in 2021, aimed at reducing the perceived complexity of our business mix and diverse end market exposure.
Third our focus on advancing our strong track record of operational and financial excellence.
This has led to continued top quartile operating margin performance relative to our peers. We have made great strides advancing the operational growth platform, our OTT by combining our strong performance and operational excellence with new opportunities and commercial excellence and strategic pricing and the development.
Of new systems and tools to improve Curtiss Wright overall efficiency.
These efforts have created underlying margin expansion to support a ramp up in R&D investment or to cover first year dilution from acquisitions as we invest significantly for our future.
And last but not least our focus on simplifying the business model. This started with the new segment structure released in 2021 aimed at reducing the perceived complexity of our business mix and diverse end market exposure.
Lynn M. Bamford: Since then, we've improved the clarity of our messaging regarding our strategies to leverage inherent synergies and crossover technologies that exist throughout our portfolio and continue to illustrate why these technologies remain a part of Curtiss-Wright today. We've communicated these efforts through a number of channels and offered continuous proof points to ensure the benefits of our combined portfolio were well understood. With that in mind and shifting to the bottom of the slide, I'm proud to say that the team has successfully achieved nearly all of our major targets issued in 2021. Starting with the top line, where we projected a total revenue CAGR ranging from 5 to 10%, with organic growth ranging from 3 to 5%. As you can see, we firmly achieved those goals by generating a 7.4% CAGR for total revenue, along with a 4.7% organic CAGR. Operating income grew at 9.6%.
Since then we improved the clarity of our message Jim regarding our strategy is to leverage inherent synergies and crossover technologies that exist throughout our portfolio and continue to illustrate why these technologies remain a part of Curtiss Wright today.
We've communicated these effort through a number of channels and offer continuous proof points to ensure the benefits of our combined portfolio, we are well understood.
With that in mind and shifting to the bottom of the slide I'm proud to say that the team has successfully achieved nearly all of our major target issued in 2021, starting with the top line, where we projected a total revenue CAGR ranging from 5% to 10% with organic growth ranging from 3% to five <unk>.
As you can see we firmly achieve those goals by generating a 77, 4% CAGR for total revenue along with a four 7% organic CAGR.
Operating income grew at nine 6%.
Lynn M. Bamford: CAGR over the three-year period and exceeded our strong sales growth while operating margin expanded 110 basis points over the period to a record of 17.4 percent in 2023. As a result, we maintained top quartile financial performance compared with our peers. Diluted EPS grew at 12.5% CAGR over the three-year period, well in excess of the 10% minimum target, benefiting from solid operational performance and continued share repurposing. Regarding our final metric, we have generated more than $1 billion in adjusted free cash flow over the past three years, despite the impact of the pandemic and the very challenging supply chain environment. Those factors left us just shy of achieving our target as we delivered an average free cash flow conversion of 108% over the three-year period.
<unk> over the three year period and exceeded our strong sales growth, while operating margin expanded 110 basis points over the period to a record of 17, 4% in 2023.
As a result, we maintained top quartile financial performance compared with our peers.
Diluted EPS grew at 12, 5% CAGR over the three year period, well in excess of the 10% minimum target benefiting from the solid operational performance and continued share repurchases.
Regarding our final metric, we have generated more than $1 billion in adjusted free cash flow over the past three years. Despite the impacts of the pandemic in a very challenging supply chain environment. Those factors left us just shy of achieving our target as we delivered an average free cash flow conversion of 100.
Third 8% over the three year period.
Lynn M. Bamford: As a reminder, aside from 2022, we have consistently delivered greater than 100% adjusted pre-cash flow conversion for the past decade. Our initial 2024 pre-cash flow conversion guidance maintains this strong pattern of performance. In closing, our journey continues. Based on a healthy outlook for the near and long-term prospects for Curtiss-Wright and the continued momentum in the key markets we serve, we are trying to deliver a strong performance yet again this year. We enter the year with a very healthy balance sheet and remain committed to growing diligently through strategic acquisitions while continuing to provide solid returns to our shareholders through consistent share repurposing. Finally, I wanted to make a few comments about our upcoming Investor Day, which will take place on Tuesday, May 21st in Midtown, New York City.
As a reminder, aside from 2022, we have consistently delivered greater than a 100% adjusted free cash flow conversion for the past decade. Our initial 2020 for free cash flow conversion guidance maintained a strong pattern of performance.
In closing our journey continue based on the healthy outlook for the near and long term prospects for Curtiss Wright and the continued momentum in the key markets. We serve we are primed to deliver a strong performance yet again this year.
We entered the year with a very healthy balance sheet and remain committed to growing diligently through strategic acquisitions, while continuing to provide solid returns for our shareholders through consistent share repurchases.
Finally, I wanted to make a few comments about our upcoming Investor day, which will take place on Tuesday May 21 in Midtown New York City <unk>.
Lynn M. Bamford: We're excited to once again host an in-person event where you will not only have the opportunity to hear from me and Chris but several members of our senior leadership team, including the general managers responsible for various A&D and commercial businesses. We look forward to providing a more thorough recap of the success of our pivot-to-growth strategy and the past three years of performance against our prior investor-based targets. We also intend to discuss our long-term strategy and organic growth initiatives and establish new financial targets as we drive this business forward. In addition, we're pleased to announce that we will be hosting what we anticipate being a very engaging and educational commercial nuclear panel. Joining us will be three highly knowledgeable and respected industry experts to cover several facets of the nuclear industry, from the aftermarket to advances in small modular reactor technology. We are excited to provide a deeper dive into an industry where the momentum has never been stronger and one that will surely fuel Curtiss-Wright's potential for long-term growth. Please look out for the formal registration form in a few weeks, and we hope that you will join us.
Were excited to once again hosting an in person event, where you will not only have the opportunity to hear from me and Chris but several members of our senior leadership team, including the general managers responsible for various A&D and commercial businesses.
We look forward to providing a more thorough recap of the success of our pivot to growth strategy in the past three years, our performance against our prior Investor day targets.
We also intend to discuss our long term strategy and organic growth initiatives and established new financial targets as we drive this business forward. In addition, we're pleased to announce that we will be hosting what we anticipate being a very engaging in educational commercial nuclear panel joining us will be.
Three highly knowledgeable in respected industry expert to cover several facets of the nuclear industry on the aftermarket so that enhances and small modular reactor technology.
We are excited to provide a deeper dive into an industry, where the momentum has never been stronger and one that we are selling fuel Curtiss Wright's potential for long term growth.
Please look out for the formal registration within a few weeks and we hope that you will join us.
Operator: This represents one of the many exciting events taking place at Curtiss-Wright in our 95th year as a public company, as we look forward to delivering tremendous value for our shareholders, our employees, and our customers. Thank you, and at this time, I would like to open up today's conference call to questions. Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press star 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star 2.
This represents one of the many exciting events, taking place at Curtiss Wright and our 90 <unk> year as a public company as we look forward to delivering tremendous value for our shareholders our employees and our customers. Thank you and at this time I would like to open up today's conference call for questions.
Thank you the floor is now open for questions. At this time, if you have a question or comment. Please press star one on your telephone keypad.
If at any point. Your question is answered you may remove yourself from the queue by pressing star Q.
Myles Alexander Walton: Again, we ask that you pick up your handset when posing your question to provide optimal sound quality. Thank you. Our first question is coming from Myles Walton with Wolf Research. Thanks. Good morning.
Again, we ask that you pick your handset when posing your question to provide optimal sound quality. Thank you.
Our first question is coming from Myles Walton with Wolfe research.
Thanks, Good morning, if I look back to 2023 outperformance on revenue it looks like the ground defense was actually probably the largest single contributor.
Lynn M. Bamford: If I look back at the 2023 performance on revenue, it looks like the ground defense was actually probably the largest single contributor. You can correct me if I'm off on that. And it even looked like you had momentum carrying you into the fourth quarter above where you were thinking. So just looking at the 2024 outlook, could you talk maybe about ground defense specifically, but more broadly, the areas of upside and downside risk on your end market growth rate? Yeah, thank you for that. And maybe I'll speak a bit at a high level, and then Chris can give you a few financial details behind that. I am really pleased with what happened this past year.
From off on that and it didn't look like you had momentum carrying into the fourth quarter above where you were thinking.
So just looking at the 2024 outlook could you talk maybe about ground defense, specifically, but more broadly the areas of upside and downside risk on your <unk>.
End market growth rates.
Yes, thank you for that and maybe I'll speak a bit at a high level and then Chris can put a little financial.
Details behind that so really pleased with what happened this past year.
Lynn M. Bamford: Very strong demand for our tactical communication system sales was really, you know, the primary driver of that outstanding growth. But it is more broad than that. You know, we're looking to move towards the initial volumes of Endurance Shield and our third stabilization capability that, you know, is produced over in Europe and we've talked about as, you know, being aligned with some of the increased foreign military spending as countries move towards funding their NATO commitment. So really, you know, a lot of different pockets across the organization driving that. And maybe Chris can speak to what we're expecting here in 24.
Very strong demand for our tactical communication systems sales. It was really the primary driver in that outstanding growth, but it is more broad than that.
We're looking to move towards the initial volumes towards the enduring shield and our term stabilization capability that.
Is produced over in Europe that we've talked about as being aligned with some of the increased foreign military.
Spending as countries move towards funding their NATO commitments.
A lot of different pockets across the organization driving that.
Just to speak to what we're expecting here in 'twenty four.
Chris Barker: Yeah, sure. You know, it certainly was a significant part of what we had this last year, Miles. And, you know, across 2023, I mean, we saw a fairly strong improvement in the supply chain, right, and that acceleration of material continued as we got deeper into 2023, which, you know, contributed towards our beat in sales here at year end. For 24, we're entering the year with a very strong order book. And we, you know, we're not expecting lead times to improve.
Yes sure.
Certainly was a significant part of what we had this last year Myles.
And across 2023, and we saw a fairly strong improvement in the supply chain and that acceleration of material continued as we got deeper into 2023, which contributed towards our beat in sales here at year end and for 'twenty four we're entering the year with a very strong order book.
And we were not expecting the lead times to improve we expect continued stability in the supply chain and on time delivery from our suppliers, which will continue to have strong growth in tactical comms for 'twenty four we expect that business is going to grow.
Chris Barker: We expect continued stability in the supply chain and on-time delivery from our suppliers, which will continue to drive strong growth in practical comms. For 24, we expect that business is going to grow at a mid-teens pace. So, and it's been on a mid-teens pace since we bought the PACSTAR acquisition several years ago. Within the defense electronics segment, though, we do have a few things that are going to offset that growth rate. One is the timing of sales to international PDSS, and we spent a lot of time earlier this year talking about the opportunities that were emerging in the European theater with international PDSS and some of the programs we were working on, such as the Challenger. And, you know, those programs can be a little bit lumpy, and there's timing. And then, beyond that, we talked a little bit about how the Stryker program had benefited our ground defense market this year with some of the modernization that was going on there for that ground vehicle. So this helps to boost 23.
At a mid teens pace, so and it's been on a mid teens pace since we bought the <unk> acquisition several years back.
Within and Defense Electronics segment, though we do have a few things that are going to offset that growth rate.
And one is the timing of sales to international PSS and we spent.
A lot of time earlier this year talking about the opportunities that are emerging in.
In the European Theater with International Pds and some of the programs that we're working on such as the challenger.
And those programs can be a little bit lumpy and there is timing and then beyond that there.
<unk> talked a little bit about how the Stryker program had benefited our ground defense market. This year with some of the modernization that was going on there for that ground vehicle. So those helped to boost 23.
Chris Barker: I'll say those kind of more lumpy, you know, ground defense items are not going to exist here in 2024, but there's still a very healthy growth rate in tactical comms as we look forward. And then, you know, as Lynn had mentioned, just briefly outside of the defense electronics segment, you know, we've got the CM actuation on the Enduring Shield platform, which was a development contract for us, you know, a little over a year ago. And now that's starting to kind of transition into production. So we'll see a little bit of benefit there, you know, to a much lesser extent than the things I've talked about within the ANI segment. So.
But I'll say those kind of more lumpy ground defense items are not going to exist here in 2024, but it's still a very healthy.
Growth rate in tactical Comms as we look forward and then.
<unk> had mentioned just briefly outside of the defense electronics segment.
Got this is a cm actuation on MB enduring shields platform, which was a development contract for us.
A little over a year ago and now that's starting to kind of transition into production. So we'll see a little bit of benefit there.
Yes, but to a much lesser extent than the things I talked about within the Ini segment sales.
Lynn M. Bamford: Okay, and then maybe, could you comment on the M&A pipeline? It's been a bit since the last larger deal, and I'm just curious as to how much leverage has come down here with the size that you're looking at, as well as end market preferences. Yeah, I mean, it's, you know... Definitely, we looked at a lot of properties in 23 and didn't find one that we felt really matched the criteria, and I'll tell you when I do reflect on how the ESCO business and the PACSTAR business are contributing to our growth. Chris just talked a little bit about the PACSTAR acquisition. You know, it really reinforces why you remain very diligent in not acquiring for acquiring sake.
Okay.
And then maybe could you comment on the M&A pipeline, it's been a bit since the last larger deal and just curious as collaborators come down here.
Size that youre looking at as well as end market preferences.
Yes.
No.
Definitely.
<unk> did a lot of properties in 'twenty three and.
Didn't find one that we felt really matched the criteria and I'll tell you when I do reflect on how.
The <unk> business in the past our business are contributing to our growth, meaning purchase talked a little bit about the <unk> acquisition.
Reinforces why you remain.
Very diligent.
Acquiring <unk> acquiring sake, but with that said I will say that the acquisition pipeline right now is as healthy as I can remember it being.
Lynn M. Bamford: But with that said, I will say that the acquisition pipeline right now is as healthy as I can remember it being for many years. And it's not just their acquisitions. There are always properties coming available.
For many years and it's not just there is acquisitions, there's always properties coming available. These are properties that we see as being potentially very strong strategic fit for Curtiss Wright and bouncing out.
Lynn M. Bamford: These are properties that we see as potentially being a very strong strategic fit for Curtiss-Wright and rounding out product capabilities and customer access in markets that are, you know, very important and critical to our growth. Several of these we've had pre-looks at, and, you know, they will be coming to the market. Any chance we can have them be exclusively with Curtiss-Wright? We'll always have a keen eye to pursue that; whether we accomplish that or not is TBD. We are in due diligence with a fairly small property right now that I anticipate we will close on. It's not meaningful really from a revenue standpoint, but it's a critical piece of technology.
Product capabilities and customer access in markets that are very important and critical to our growth.
Several of these we've had pre looks at and even though they will be coming to.
The market.
Any chance, we can have them be exclusively with Curtiss Wright, we're always have a keen eye to pursue that whether we accomplish that or not is TBD.
R&D diligence with a fairly small property right now.
Anticipate we will.
Close on its not meaningful really from a revenue standpoint.
Critical piece of technology.
Lynn M. Bamford: So that might be something coming out, you know, in the near future. But the other properties we're looking at that are in the pipeline, you know, will significantly move the needle revenue-wise and profitability-wise for Curtiss-Wright. And we feel that they can, you know, become part of Curtiss-Wright and, you know, over a couple years, continue to be accreted to our overall margin expansion. So the acquisition pipeline is really great, and, you know, some of that is, you know, with our current cash position, knowing that and the cost of capital to borrow is, you know, we've given ourselves a bit of a pause in how That's great. Thanks so much.
It'd be something coming out.
In the near future, but the other properties were looking at that are in the pipeline.
We will significantly move the needle revenue and profitability wise for Curtiss Wright and we feel that they can become part of Curtiss Wright and over a couple of years continue to be.
Would be accretive to our overall margin expansion. So the acquisition pipeline is really great and some of that is.
With our current cash position knowing that in the cost of capital to borrow is we've given ourselves a bit of a pause of power using the cash we have on hand to make sure. We're ready to act and can do it in the most affordable way for Curtiss Wright.
That's great. Thanks, so much.
Myles Alexander Walton: Thank you. We'll go next to Nathan Jones with Stiefel. Good morning, this is Adam Farley on for Nathan Jones.
Thank you.
We'll go next to Nathan Jones with Stifel.
Good morning. This is Adam Farley on for Nathan Jones.
Adam Michael Farley: Hey, good morning. I was wondering if we could first start with some of the increased R&D spend. Can you talk about where the investments are being made? I expected commercialization and maybe an expected impact on growth for the future. Sure, I'd love to take that question.
Adam.
Hey, good morning, I was wondering if we could.
First start with <unk>.
Some of the increased R&D spend can you talk about where the investments are being made.
I, just want to commercialization and maybe specific impact on growth for the future.
Sure I'd love to take that question so.
Lynn M. Bamford: So, I'm pleased to say that we have, you know, opportunities across all three of our segments, that we have products and technologies that are very much aligned to healthy end market trends that we feel passionate about the investments we're making. You know, just to restate what you heard, we increased our total engineering spend in 23 by $20 million, and we're targeting another $20 million increase in 2024. Those are some significant investments that are really very laser-focused on driving organic growth that we know will be profitable organic growth going forward. And so, kind of just walking across the segments, you know, we spend most of our IRAD on defense electronics.
Pleased to say that we have really opportunity across all three of our segments that we have products and technologies that are very much aligned to healthy end market trends that we feel passionate about the investments, we're making you'll just to restate what you heard Julie increased our total engineering spend.
In 'twenty three by $20 million and we're targeting another $20 million increase in 2024 of those are some significant investments there are really.
Very laser focused on driving organic growth that we know will be profitable organic growth going forward and so I was just walking across the segments and we spend the most of our IRA and defense electronics, we continue.
Lynn M. Bamford: We continue to look to drive increased IR&D spending in that segment again this year. You know, we're very much focused on building out our MOSA and SOSA cost product offering, which is just really the open standard approach that our DoD is demanding as, you know, the criteria and system selection and just continuing to gain force across all branches of the government. So, that's kind of the most notable from IR&D, but right behind it in the A&I segment, you know, our building out of our power electronics capability, you know, we talked about that, you know, our bringing new products to market in this area is really what's underpinning our ability to put forth growth in this industrial area that isn't seeing a lot of natural growth in the market, but it's really our So, that's another area of IR&D.
To listen to drive increased <unk> spending in that segment again this year with very much opposed against around.
Building out our motion Sosa cost product offering which is just really the open standards approach that our Vod is demanding as being the key criteria in system selection and just continuing to Green Green Gale force across all branches of the government. So that's eight patents.
The most notable from IR Indeed, the right right behind it in the Eni segment, our building out of our power power electronics capability, we've talked about that are bringing.
Bringing new products to market in this area is really what.
<unk>, our ability to put forth growth in this industrial area that is not.
<unk> seen a lot of natural growth in the market, but it's really our new product injunctions, and bringing new products and winning new customers that <unk>.
What's driving that so that's another area of the IR, Andy and then when I think of some of the R&D.
Lynn M. Bamford: And then when I think of, you know, some of the CR&D increases, you know, also in the A&I segment, a lot of, you know, a lot of electromechanical actuation capabilities. We're still executing on our first one with Airbus for electromechanical actuation. It is going very well and is supporting opportunities for new and additional programs with Airbus, which is just, you know, going to provide great growth for purchase rights going forward, but also some of that same electromechanical actuation on a variety of defense platforms. And, you know, we talked about Endurance Shield, some of the other ones we can't really speak about openly, but a lot of the capability that that team has is pretty unique and outstanding, and we're finding homes for it both across commercial and defense markets.
Kris.
Also up in the <unk> segment model.
A lot of electromechanical actuation capabilities, we're still executing on the our first win with Airbus for electromechanical actuation. It is going very well and is affording us opportunities for.
New and additional programs with Airbus, which is just going to provide great growth for purchase rights going forward, but also some of that same electromechanical actuation on a variety of defense platforms, and we talk about enduring shield some of the other ones, we can't really speak about openly but.
A lot of the capability that that team has is pretty unique and outstanding in.
We're finding homes for those across commercial and defense markets.
Lynn M. Bamford: And then last but not least, in our Naval Empower segment, you know, there's a lot, you know, if you read the press across naval platforms, there's a lot of work going on for next-generation platforms across many critical platforms. Curbside is a thought leader with our Navy in these spaces, and they're doing advanced work to help position our technologies and content on those future platforms. That's one area.
Then last but not least in our naval empower.
Segment, where there is a lot of you read the precedents across naval platforms that a lot of work going on for next generation platforms across many critical platform.
Right is a thought leader with our Navy in these spaces and we're doing advanced work to help.
Position, our technologies and content on those future platforms.
That's one area and then obviously the work we've been very much highlighting around our investments, we're making along with customers to assure that we have strong positions across all of the SMA platform. So we've talked openly about a few of those announcements with <unk> energy in Terrapower.
Lynn M. Bamford: And then obviously, the work we've been very much highlighting around the investments we're making along with customers to assure that we have strong positions across all the SMR platforms. So, you know, we've talked openly about a few of those announcements, but that was Energy and TerraPower. But I assure you, you know, we are active with all the major providers that are voting out. We'll have a future, you know, next generation SMRs. And so that's all I think really, you know, some of the top areas. But, you know, these are exciting investments, and we are really excited about what it's going to do for Curtis Wright for decades to come. That's a really, really helpful detail.
But I assure you that we are active with all of the all the major providers that our ability now.
We'll have feature next generation <unk> and so that's all.
I think really some of the top areas, but.
These are exciting investments and.
We feel really great about what it's going to do for Curtiss Wright for decades to come.
That's really really helpful detail. Thank you I'll leave it there.
Adam Michael Farley: Thank you. I'll leave it there. Thank you. We'll turn next to Peter Arment with Baird. Good morning, Lynn, Kris, Jim.
Thank you.
We'll turn next to Peter Arment with Baird.
Hey, good morning, Lynn Chris Jim.
Maybe just to pick up on.
Peter J. Arment: Maybe just to pick up on the R&D question, just where do you see yourself in kind of a baseball analogy of like, it feels like defense electronics and kind of the investments that you're making there on an IRAD perspective, you know, you'd be further along just given your market position and where you are. Whereas I would think that the kind of investments you're making in naval power, particularly tied to, there is probably still, earlier innings, and that might linger. I guess I'm just trying to wonder whether we will see this as a further headwind as we get into 25 and beyond. So, a very reasonable question.
<unk>.
The R&D question.
Where do you where do you see ROIC, it's kind of like baseball analogy of like you feel.
It feels like defense electronics, and kind of the investments that youre, making there on an iPad perspective would be you'd be further along just given your market position and where you are.
Whereas I would think that the.
How did the investments youre, making in naval power, particularly tied to the commercial nuclear it's probably still.
Earlier innings and that might linger I guess I'm, just trying to wonder whether we see this as a further headwind as we get into 'twenty, five and beyond things like that.
So.
Very.
Please no question I think we were really proud in the defense electronic space I'd say, we're very proud of the product offering we have in industry today.
Lynn M. Bamford: I think we're really proud in the defense electronics space. I think we're very proud of the product offering we have in the industry today. We have a couple, actually quite a handful of really major developments that will hit the market in this calendar year that I say, to some degree, I appreciate your point, you know, we will be very solidly into delivering what we need to do to have the state be our product offering. Always in this area, though, there's new technology coming to bear that is of interest by our defense department for finding different applications. And we're also always, you know, our goal isn't to just have the next generation on, you know, the current platforms we have, but to really broaden our product offering to be able to attack more and more of the market.
We have a couple.
Actually quite a handful of really major developments that will hit the market in this calendar year that I would say to some degree.
Nate your point, we will be very solidly.
Into delivering what we need to do that at the state of the art product offering all within this area, though there's new technology coming to bear that are of interest by our defense department or finding different applications and we're also always our goal has been to Jeff had next generation on the current platform.
We have to really broaden our product offering to be able to attack more and more of the market.
Lynn M. Bamford: I mean, we talked, I think, in our last investor day that, you know, it's hard to get back inside, but the belief for us is that the total spend just in the U.S. on ruggedized electronics is somewhere north of $40 billion, and as proud as we are of the size of our defense electronics team, which is still under a billion dollars, there's a heck of a lot of electronics content out there that we can go after And so, I don't think we're going to see a rapid acceleration in that space, but I think we don't, surely don't want to let our foot off the pedal as we really become such a dominant player and, you know, without, you know, going too deep into it.
<unk> I think at our last Investor day.
CRA targets bacterin side, but the belief for us is.
The total spend just in the U S. On Ruggedized electronics is somewhere north of $40 billion in there.
As part of that we are of the size of our defense electronics team, which is still under $1 billion does a heck of a lot of electronics content out there.
We can go after with.
May be doing customer funded projects the spins of our own.
The technologies, we've invested in and so on.
I don't think were going to see a rapid deceleration in that space, but I think we don't certainly don't want to let our foot off the pedal.
We really become such a dominant player in without going too deep into it but there is.
Lynn M. Bamford: But, you know, there's some issues going on in the industry across some of our competition, and when you have those kinds of situations, it's the perfect time to strike, and we're making sure we're aggressive to get in with customers and to provide solutions where some of those opportunities begin. So, your fair, good point in the SMRs and even in some of these naval platforms, that these are going to, you know, carry on for a handful more years, and I think, you know, we talked about, you know, anticipating, you know, there's everywhere you turn, everyone's trying to have their first new platform, you know, be on the grid producing power 2030, 2031, 2032, you know, there's lots of examples, whether the AP1000 plants or the AP300s over in the UK or, you know, wherever.
Some issues going on in the industry across.
Some of our competition and when you have those kinds of situations is the perfect time to strike and were making sure were aggressive to get in with customers and to provide solutions, where some of those opportunities begin. So if there is a good point in the <unk> and even in some of these enabled platforms. These are in.
Carry on for a handful more years and I think so.
We talked about anticipating.
Anticipating every.
Return on everyone's trying to have their first new platforms beyond the current producing power 2000, 32031 2032, there's lots of examples whether new AP 1000 plan third AP three hundreds over in the UK or wherever and so we are to move through development work for the next couple of years.
Lynn M. Bamford: And so, you know, we are going to, you know, move through development work for the next couple of years with that, but that should be turning to prototyping work and early production work, you know, in this decade, towards the back half of this decade. And, you know, I don't want to say the design work will go away, but you don't redesign an SMR every year. And so, I think as we do work through some of this development work right now, you know, tied to these next-generation reactors, we will see that slow down as we move through the next couple of years. A really helpful caller on that.
Years with that but that should be turning to prototyping work and early production work in this decade towards the back half of this decade, and I don't want to say.
Design work will go away, but we designed and FMR every year and so I think as we work through some of this development work right now tied to these next generation reactors, we will see that slowdown as we move through the next couple of years.
That's super helpful color on that how do you how do you see not taking any thunder from your Investor day, where it gets spent all this time on nuclear but how do you see the bookings environment right now in terms of I guess the timeline.
Peter J. Arment: Thanks. Um, how do you, how do you see not to take any thunder from your investor day? We're going to spend all this time on nuclear, but how do you see the bookings environment in terms of the, you know, kind of SMR and some of the other projects that you're working on there, you know, going? So, it seems steady, you know, as these, you know, companies secure their funding and move through their contracts that, you know, we just continue to work with them. You know, we saw a pretty nice surge in 2023. I don't think we're going to see a big surge in 2024 on top of that.
Thinking God I missed if you said, how do I think the environment the.
The bookings environment in terms of the.
<unk> some of the other.
Projects that youre working on in commercial nuclear.
Going forward.
For.
It seems steady.
These.
Company's secure their funding and move to the contract that.
We just continue to work with them and we saw a pretty nice turns in 2023.
Don't think were going to see a big surge in 2024 over top of that.
Lynn M. Bamford: I will say, though, where the order book does remain very, you know, strong compared to these next-generation reactors is in the aftermarket work. And, you know, talking with some key individuals in that business yesterday, they were really, you know, celebrating how strong the order book is already out of the gate this year. And then, obviously, the needle-moving activity of when the first AP1000 RCP pumps come in is obviously unlike any other type of orders we get across this organization. So, I'd say the SMR development is more steady than expanding. Great. I'll leave it there. Thanks again.
I will say, though where the order book does remain very.
Strong compared to the next generation reactor is in the aftermarket work.
Talking with some key individuals in that business yesterday.
Really celebrate how strong the order book is already out of the gate this year.
And then obviously the needle moving activity a win the first AP 1000 RCP pumps.
Yes, obviously.
Unlike any other type of orders, we really get across this organization. So.
I would say is the <unk> development is more steady than expanding.
Okay I'll leave it there thanks again nice results.
Peter J. Arment: Nice result. Thank you, Peter. We'll turn next to Michael Ciarmoli with Truth.
Thank you Peter.
We'll turn next to Michael <unk> with Trust.
Michael Frank Ciarmoli: Hey, good morning, guys. Nice result. Thanks for taking the questions. Chris, maybe just the housekeeping modeling first.
Hey, good morning, guys.
First of all bringing us for taking the questions.
Chris maybe just a housekeeping modeling first I think I heard you correct.
Chris Barker: I think I heard you correctly. First quarter, 24 earnings are going to be up low teens. I guess you gave the margins for each segment, but I guess it implies defense electronics would be somewhere maybe 18% or so. Do we have that right? Did I hear that correctly?
First quarter 'twenty four earnings are going to be up low teens I guess you gave the margin.
For for each segment, but I guess, it implies defense electronics would be somewhere maybe 18% or so.
Chris Barker: Well, I didn't provide an exact number, but we definitely said that defense electronics margins were going to be very strong here in the first quarter. So I think, you know, okay. I think you're thinking in the right direction for sure. Okay, okay. Got it. I just wanted to make sure I heard EPS in the low teens.
We have that right did I hear that correct.
Well I didn't provide an exact number but we definitely said that defense electronics margins were going to be very strong here in the first quarter. So I think.
Hey.
I think youre thinking in the right in the right direction for sure.
Okay. Okay got it I just wanted to make sure I heard EPS low teens.
Lynn M. Bamford: And then, you know, maybe just on to the last question, defense, kind of disruption in the defense electronics marketplace, some of your competitors. Are you guys looking to move into any different market segments like higher-end radar processing or some of that subsystem, or are you kind of sticking to your knitting and maybe taking some of the opportunities in your sweet spots? So I think we're going to protect the core always as a priority, but, you know, kind of talk, you know, at a high level without, you know, tipping our hands about, you know, some strategic investments we're making as part of, you know, always pushing the window of what types of products we can bring to bear in the market.
And then.
Maybe just talk to the last question defense.
Kind of disruption in that defense electronics marketplace. Some of your competitors are you guys looking to.
To move anything to any different market segments like higher end radar processing or some of that sub system or are you kind of sticking to your to your knitting and maybe taken some of the opportunities in your sweet spot.
So I think we're going to protect the core always as a priority.
But you kind of talk at a high level.
Without <unk>.
Tipping our hand.
Some strategic investments, we're making as part of always pushing the window of what types of products, we can bring.
Lynn M. Bamford: And, you know, we've talked about an area for focus for investments in the topics of encryption and cybersecurity and anti-camper. And so that is an area that I will say openly that we are continuing to focus on and is a critical capability that we could bring to bear in the market that will allow us to grow market share, and I might leave it at that. Okay, okay.
To bear in the market and we've talked about an area for focus for investment is around the topics of interest in correction and cyber security and anti tamper and so that is an area that I will say.
Openly that we are continuing to focus on and.
Is critical capabilities that we can bring to bear in the market.
Will allow us to grow market share.
And I believe that okay.
Okay. Okay.
Lynn M. Bamford: And then, yeah, Lynn, not to kind of, you know, make you spill the beans here on the upcoming investor day, but you guys have done a tremendous job with margin expansion. But if I, I guess I'm just trying to figure out, you've got the R&D investment, you've got, I guess, some of the initial dilutive development work for SMRs. I mean, should we think about the sort of operating model being mature here for the next, you know, kind of couple years, you know, and maybe even just color on when some of these SMR development programs might flip to margin accretion? And I guess this is also thinking absent any big high-margin 81,000 orders that would come in, that would clearly, you guys haven't modeled for that.
Yes, Matt.
Making a spill the beans here on the upcoming Investor day, but you guys have done a tremendous job with margin expansion, but if I.
I guess I'm, just trying to figure out you've got the R&D investment you've got I guess some of the initial development work for us that bars, I mean should we think about the sort of operating model being mature here for the next you know.
Kind of couple of years and maybe even just color on on when some of these LCM our development programs Mike Mike.
Margin accretion and I guess this is also thinking absent any big high margin AP 1000 orders that would come in that would clearly.
You guys haven't modeled for that but just thinking about kind of a steady state business should we think about some just some normal margin pressure with some of these bigger development programs.
Lynn M. Bamford: But just thinking about kind of steady state business, should we think about some just some normal margin pressure with some of these bigger development programs? Yeah, so I mean, obviously, we're projecting modest margin expansion next year. But I don't want to at all project that that is the new normal, and there isn't more opportunity long-term outside of that.
Yeah, So I mean.
Obviously.
Sure.
Projecting moderate modest margin expansion next year I don't want it all project that that is the new normal and there isn't more opportunity long term outside of that I mean, these all of this and we're doing a significant amount of work in developing these FMR than even the subsea pump.
Lynn M. Bamford: I mean, we're doing a significant amount of work in developing these SMRs and, you know, even the sub-C pump that we had the Petrobras press release about last week. But when you're getting paid development work from your customers, you're not making margins that are going to be accretive to the operation. And, you know, that Petrobras' development work is significant. Shell and Taipan continue to go on.
The Petrobras press release last week.
And Youre getting paid development work from your customers.
We're not making margins that are going to be accretive to the corporation.
Yeah that Petrobras development work is significant shallow insight and continues to go on until we have all of that going on.
Lynn M. Bamford: And so we have all that going on. Those projects will turn production revenue, all of them, in this decade and later in this decade and really have the ability to provide meaningful margin expansion as, you know, the low-margin work goes away and is replaced. And then I think, you know, if we can drive the type of growth we think is the art of the possible in our defense electronics team, which, you know, delivers very accretive margin to Curtiss-Wright, that continues to provide uplifts across the organization. And I will comment that a couple of the acquisitions we're looking at, the devil's in the detail when you go through due diligence, but some of those So right now, you know, the guy for 24 is doing the right thing this year to really secure a fantastic future for Curtiss-Wright.
Those projects will turn to production revenue all of them late in this decade and later this decade and really have the ability to provide meaningful margin expansion as the low margin go work goes away and was replaced those they're in solid margin production work and so.
And then I think if we can drive the type of growth. We think is the or did the possible in our defense electronics team, which.
Delivered very accretive margin to Curtiss Wright.
That continues to provide uplift across the organization and I will comment that a couple of the acquisitions, we're looking at.
The Devil's in detail and going through due diligence, but some of those are.
A very healthy looking margin profile. So right now the guide for 'twenty four is doing the right things in this year.
To really secure.
A fantastic future for Curtis right, but again, we will continue to look at top quartile and challenge ourselves to be in the top quartile, we do talk about that ultimately inside of the company with.
Lynn M. Bamford: But, you know, again, we will continue to look at the top quartile and challenge ourselves to be in the top quartile. We do talk about that openly inside of the company with, you know, everyone that we had a goal, you know, quite a few years ago of getting to 17%. And so that was then.
Everyone.
We have a goal quite a few years ago getting to 17%.
Lynn M. Bamford: And, you know, top quartile margins continue to go up amongst our peer group. And so we need to continue to challenge ourselves to do that. So I know that you weren't expecting me to say, yes, here's our new two-year margin target. But hopefully, that puts some color on the thinking. Pick up, pick up. Last one, and I'll get out of the way.
But that was that was been in top quartile margins continue to grow up amongst our peer group and so we need to continue to challenge ourselves to do that so I know that we werent expecting me to say, yes, here's here's our new two year margins are but hopefully that put some color on the thinking.
Okay, just last one and I'll get out of the way bookings looked like the weakest level since first quarter 'twenty. Two I know you called out off highway just in general being weaker anything to read into that timing or even if you could parse through the bookings a little bit more strength weakness isn't there.
Michael Frank Ciarmoli: Bookings look like the weakest level since first quarter 22. I know you called out off-highway just in general being weak, or anything to read into that. Timing or even if you could parse through the bookings a little bit more strength, weaknesses in there? Sure, let me take that one, Mike.
Sure Let me, let me take that one Mike.
Chris Barker: So in the fourth quarter, we continued to see positive order trends across commercial aerospace and commercial nuclear, both fairly strong quarters for us, but we definitely faced some softness in aero and ground defense. We saw pressure in A&D. Turn back to the fourth quarter of this last year. We had a few large multi-year orders, and the main decline year over year was actually within defense electronics for us. We were down about $45 million, so that was really the timing of some of those large multi-year orders, but also the continuing resolution. You know, within defense electronics, I mean, we had these FTI orders that we, you know, on the F-35. We talked a little bit about that earlier this year in a press release, but we also had large multi-year orders outside of defense electronics in the arresting systems business and then also, you know, a large multi-year laser peening contract on the F-35 within the A&I segment.
In the fourth quarter, we continued to see positive order trends across commercial aerospace and commercial nuclear both.
Fairly strong quarters for us so we definitely faced some softness.
And arrow in ground defense.
We saw pressure in A&D from turn back to the fourth quarter of this last year, we had a few large multiyear orders.
And the main.
The decline year over year was actually within defense electronics for US we were down about $45 million. So that was really the timing of some of those large multiyear orders, but also the continuing resolution.
Within defense Electronics, I mean, we had these F 30, STI orders that we are on the F 35, we've talked a little bit about that earlier this year in the press release.
But we also have large multiyear orders outside of defense electronics, and the arresting systems business and then also.
<unk> multiyear laser training contract on the F 35.
Within the United statement, because Theyre looking at ground defense ground defense in Tactical Communications, we saw.
Chris Barker: As we look at ground defense, you know, ground defense and tactical communications, we saw this last year, but that direct connectivity that they have to the government customer, you know, they feel these CRs a little bit harder than most. So sometimes you get a rush to get ahead of those orders into Q3 before things hit, and you know, but I will say, year over year, Q4 to Q4 within that business, very similar levels. So there is nothing there that would kind of, you know, concern us. And then I think, you know, on a positive note. I mean, as you look forward into 2024, you know, we had a very strong January. Our order book was up $70 million over the prior year and January, and $40 million of that was within defense electronics. So I know the NDA got signed here in December. People are feeling a little bit more confident about their spending. Obviously, we've got the CR that's still kind of an overhang.
This was last year, but that direct connectivity that they have to the government customer.
<unk> is a little bit harder than most so sometimes you get a rush to get ahead of those orders into Q3 before things head in.
But I will say year over year Q4 to Q4 within that business very similar levels. So nothing there that would concern us.
And then I think on a positive note I mean as you look forward into 2024.
We had a very strong January our order book was up $70 million over the prior year January and $41 million of that within defense electronics. So I know the NDA got time here in December.
People are still a little bit more confident in their spending obviously, we've got the CR that still kind of an overhang.
Michael Frank Ciarmoli: But I think, you know, in 2024, we feel good about the guidance that we're providing for sales. And, you know, if there's any watch areas for us here from the market perspective, it's really just in the general industrial space and maybe a little bit in process and balance. You know, those are more economically sensitive, and it's prudent to be cautious as you approach those.
But I think in 2024, we feel good about the guidance that we're providing and sales.
If there is any watch areas for us here from a market perspective, it's really just in the general industrial space and maybe a little bit in process in Dallas, but those are more economically sensitive than and prudent to be cautious as you approached us.
Michael Frank Ciarmoli: Got it. Perfect. Thanks, guys. Thank you. Bye. We'll go now to Louis DiPalma with William Blair.
Got it thanks.
Thanks Scott.
Thanks, Mike.
We'll go now to Louie Dipalma with William Blair.
Michael Louie D DiPalma: Lynn, Chris, and Jim, good morning. Morning, morning.
Humana, Chris and Jim Good morning.
Good morning, good morning.
Hi, there.
Lynn M. Bamford: There have been higher volumes for many of the end market ground defense and aero defense platforms that you are providing content for associated with the elevated geopolitical tensions and higher commercial aero demand. Beyond the higher volumes, were you able to increase the scope of content that you are providing to the different platforms in 2023? And are there expectations for market share increases and scope increases for the next several years based on your research and development investments? And there are a lot of special operations provisions and new capabilities added to older fighter jets. So, you know, as much as the F-35 is relatively stable, they're putting in TR-3, that's a growth area for us as we have all our support we provide for the testing of those aircraft. It's, you know, we look to grow our content on those platforms, you know, across those production platforms, as they, you know, have new and incremental capabilities that they're looking for. But the default is that they're stable.
Higher volumes for many of the end market ground defense and Aero defense platforms that you are providing content to associated with that.
Elevated geopolitical pensions and.
Higher commercial air demand beyond.
The higher volumes were you able to increase the scope of content you are providing to the different platforms and in 2023 and are there expectations for like market share increases in and scope increases for the next several years based on our year researching.
Development investment bank.
Thank you for that.
Okay.
Broadly the content stays relatively stable on the platform. So that's a start.
And now we're always looking to change that and there are tap refreshes theres been a lot of tech mutations in ground vehicles over the past year.
They will work consistently chasing those which are opportunities for new.
New content on those platforms.
And there is lots of special operations provisions and new capabilities added to older fighter jet so as much as <unk>.
The F 35 is relatively stable, but heading in tier three that's a growth area for us as we have all our.
Support we provide through the testing of those aircrafts.
<unk>.
Lynn M. Bamford: So I don't know if that's answered your question, but... Yeah, no. I was thinking also along the lines of the Columbia class and Virginia class submarines, on which the supply chain has repeatedly been described as fragile, and you seem to be executing very well on those platforms. So I was thinking perhaps there's the potential for you to add content from other suppliers that may be struggling to handle the demand. Those are not decisions that the Navy would make on a very rapid-fire basis.
We look to grow our content on those processes production platforms.
Uh huh.
<unk>, new and incremental.
The capabilities that they're looking for but the default is they are stable. So I don't know if that.
The answer to your question, but.
Yes.
Thinking also along the lines of that.
Columbia Class and Virginia class submarine and rich.
Supply chain has repeatedly been described as fragile and you seem to be executing very well on the platforms.
Perhaps there is the potential for you to add content from other suppliers that may be struggling to handle the demand.
Yes.
Those are not decisions that the navy would make.
On a very rapid fire basis, I mean they.
Chris Barker: I mean, these are very stable platforms on which they want stable suppliers. But, you know, we are a solid supplier across those submarine platforms and stay in close contact with our customers so that if there is an opportunity to, you know, take over, you know, supply the capability, you know, that we're there to explore new opportunities. They don't come very often, but our reputation, you know, across the Virginia and Columbia class programs would afford us to be that person or that company, I think, if the relevant opportunity became available. But I'd be cautious to speak of anything specifically, and that's not really how the Navy runs itself, you know, on a normal basis. Great, and one final one. You spoke very enthusiastically about the Enduring Shield program. I believe you are partnering with Dianetics slash Leidos on that. Is there significant growth for that program in 2024? I guess I'll let you. Yeah, sure. So we are, as I mentioned, transitioning out of a development contract and into production this year. And, you know, it's a significant program for us. I mean, it showcases our EM naturally.
These are very stable platform that they want stable suppliers.
We are a solid supplier across a submarine platforms and.
I will stay in close contact with our customers that if there is opportunities to take over.
Supplying the capability.
We're there to explore new opportunities they don't come very often but our reputation product. So Jamie on the Columbia class program would afford us to be that person or.
That company I think it relevant opportunities became available.
But I'd be cautious to speak anything specifically, that's not really how the navy lends itself on a normal basis.
Great and one final one you spoke very enthusiastically about the enduring Shield program. I believe you are partnering with dianetics slashed laid out for that.
Their significant growth for that program in 2024.
Thanks, Doug.
Yes sure. So we are as I mentioned transitioning out of a development contract and into production. This.
This year.
<unk>.
It's a significant program for us and showcases our Ian maturation technology and in ground defense applications and.
Leading edge ground defense applications. So we're very proud of what's happening there and overall I think as you look at the increase year over year the contribution to the Ani's segment, but thats somewhere in the range of about $5 million.
But.
Despite the size, it's enough to kind of move the ground defense market.
And.
There are some other things that are happening there clearly to offset what we're seeing but it's an exciting program.
We're excited about its future.
And when you put in perspective quite candidly some of the things going on around the world and the upper a visible critical role.
These types of systems.
For countries, where there is active conflicts I think our enthusiasm.
Tied only to 2024, it's more what we know is going on.
The long term potential for where this capability will be deployed around the globe to provide protection.
Yes.
Some of the excitement.
Great. Thanks, everyone.
Thank you.
Once again, if you do have a question you May press star one on your telephone keypad at this time.
We'll turn next to Kristine <unk> with Morgan Stanley.
Hi, This is Justin on for Christine Thanks for taking my question.
Yes.
Just a quick one on maybe 1000 there was some reporting earlier this week it looks like the Polish government might be reevaluating the feasibility of the 2033 target.
I know you've laid out a framework for what to expect in order to materialize, but just any updates on this at this point sort of around timing expectations.
No not at this point in time I know there is some press really broadly things has gone very well in Poland, and they're making steady progress and so.
I think from our perspective and working closely with Westinghouse we don't see.
Any change to out of what we're expecting.
I will say, though that we've learned enough and time.
Regarding these large orders from these large projects that theres a lot of people and a lot of things that need to get aligned to get them off the ground and that's why we provided this range. When we said Hey. This is the timing for next order I think you could back into the initial production timelines.
And schedules that they provided in the order initially we're looking at it should have been in our hands immediately but these things do take a little bit of time theyre moving through some engineering contracts.
We still continue to hope to the timeline that we initially established.
Okay makes sense I'll stick to one thanks.
Thank you.
At this time as there are no further questions standing by I'd like to turn the floor over to Lynn Bamford Chair and Chief Executive officer for additional or closing remarks.
Thank you everybody and I look forward to speaking with you again at our Q1 earnings call and hopefully seeing all of you at our Investor day. Thank you.
Thank you. This concludes today's Curtiss Wright earnings Conference call. Please disconnect. Your line at this time and have a wonderful day.
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Mhm.
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