Q2 2024 Curtiss-Wright Corp Earnings Call

August 8, 2024

Operator: BF-WATCH TV 2021, Please stand by, your program is about to begin. Welcome to the Curtiss-Wright second quarter 2024. At this time, all participants have been placed... The floor will be open for your questions. If you would like to ask a question at that time, please press the star and 1 on your, If at any point your question has been answered, you may remove yourself from the queue by pressing star and, so others can hear your questions clearly, handset for best sound.

Operator: Welcome to the Curtiss-Wright 2nd Quarter 2024 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 the star and one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star and two. I would now like to turn the call over to Jim Ryan, Vice President of Investor Relations.

Operator: Welcome to the Curtiss-Wright Second Quarter 2024 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation.

Operator: If you would like to ask a question at that time, please press the star and 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star and 2.

Operator: So 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 and zero. I would now like to turn the call over to Jim Ryan, Vice President of Investor Relations.

Operator: Leslie, if you should require operators. [inaudible] Express Store. I would now like to turn the call over to Jim Ryan, Vice President of Investor Relations. Thank you, David. And good morning, everyone.

Operator: Welcome to Curtiss-Wright's second quarter of 2024 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 curtisswright.com. A replay of this webcast also can be found on the website.

Jim Ryan: Thank you, David. And good morning, everyone.

Speaker Change: Thank you, David, and good morning, everyone. Welcome to Curtiss-Wright's second quarter 2024 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 Parks.

Jim Ryan: Welcome to Curtiss-Wright's second quarter of 2024 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 Park. Please note that 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. We detail those risks and uncertainties associated with our forward-looking statements and our public filings with the FTC. Any references to organic growth are on an adjusted basis and exclude foreign currency translation, acquisitions, divestitures, and restructuring, unless otherwise noted.

Jim Ryan: Our call today's 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 also can be found on the website.

Operator: Please note that 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. We detail those risks and uncertainties associated with our forward-looking statements and our public filings with the Attorney General. As a reminder, the company's results include an adjusted non-gap view that excludes certain costs in order to provide greater transparency into Curtiss-Wright's ongoing operating and financial performance.

Jim Ryan: Please note that 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.

Jim Ryan: We detail those risks and uncertainties associated with our forward-looking statements and our public filings with the FTC.

Jim Ryan: As a reminder, the company's results include an adjusted non-gap view that excludes certain costs in order to provide greater transparency into Curtiss-Wright's ongoing operating and financial performance.

Jim Ryan: any references to organic growth aren't an adjusted basis and exclude foreign currency translation acquisitions to divestitures and restructuring unonce' otherwise noted

Operator: Any references to organic growth are on an adjusted basis and exclude foreign currency translation, acquisitions, divestitures, and restructuring, unless otherwise noted. Gap-to-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. Thank you, Jim. And good morning, everyone.

Jim Ryan: Gap to non-gap reconciliations for current and prior year periods are available in the earnings release and on our website.

Lynn Bamford: Today marks our first earnings call following our May 2024 Investor Day. During the event, we provided investors with an overview of our pivot to growth strategy, a recap of our prior three years' journey, and our new three-year financial target. We appreciated the opportunity to showcase some of our critical technologies and several of our key business leaders across Curtiss-Wright. The event had a great turnout, and I value everyone's support and feedback.

Jim Ryan: Now I'd like to turn the call over to Lynn to get things started.

Lynn Bamford: Thank you, Jim. And good morning, everyone. Today marks our first earnings call following our May 2024 Investor Day. During the event, we provided investors with an overview of our pivot to growth strategy, a recap of our prior three years journey, and our new three year financial target.

Jim Ryan: We appreciated the opportunity to showcase some of our critical technologies and several of our key business leaders across Curtiss-Wright. The event had a great turnout and I value everyone's support and feedback.

Lynn Bamford: As you will see in our results today, we are off to a great start. Our performance emphasizes our focus on accelerating the pace of long-term organic growth across all of our end markets, along with the team's dedication to operational excellence, future margin expansion, and free cash flow generation. I am confident we are building strong momentum to compound sustained profitable growth in the years ahead. With that, I'll turn to today's presentation. I'll begin by covering the highlights of our second quarter performance, and we'll provide a few comments regarding our updated 2024 Financial Outlook. Then I'll turn the call over to Chris to provide a more in-depth review of our financials.

Lynn Bamford: I am confident we are building strong momentum to compound sustained profitable growth in the years ahead.

Speaker Change: With that, I'll turn to today's presentation.

Lynn Bamford: i'll begin by covering the highlight of our second quarter performance and will provide a few comments regarding our updated two thousand and twenty four financial outlook then i'll turn the call over to chris to provide a more in-depth forreview of our financials finally iall wrap up by discussing the recently announced acquisition of ultra energy and some closing remarks before we move to qanda

Lynn Bamford: Finally, I'll wrap up by discussing the recently announced acquisition of Ultra Energy and some closing remarks before we move to Q&A. Starting with the highlights of our second quarter of 2024 performance, sales of $785 million increased 11% year-over-year, driven by better-than-expected performance in the defense electronics segment and the timing of revenues in the naval and power segment. Underscoring this performance, we achieved strong mid to high teens growth across all our aerospace and defense markets.

Jim Ryan: Starting with the highlights of our second quarter of 2024 performance, sales of $785 million increased 11% year-over-year, driven by better-than-expected performance in the defense electronics segment and the timing of revenues in the naval and power segment.

Jim Ryan: Underscoring this performance, we achieved strong mid to high teens growth across all our aerospace and defense markets. Operating income increased 16% year-over-year, exceeding our sales growth and resulted in 60 basis points of overall operating margin expansion. Diluted earnings per share of $2.67 increased 24% year-over-year and also exceeded our expectations, primarily due to higher sales.

Jim Ryan: Underscoring this performance, we achieved strong mid-to-high teens growth across all our aerospace and defense markets.

Lynn Bamford: Operating income increased 16% year-over-year, exceeding our sales growth and resulted in 60 basis points of overall operating margin expansion. Diluted earnings per share of $2.67 increased 24% year-over-year and also exceeded our expectations, primarily due to the higher sales. Free cash flow was strong at $100 million and in line with the prior year, achieving nearly 100% conversion.

Jim Ryan: Operating income increased 16% year-over-year exceeding our sales growth and resulted in 60 basis points of overall operating margin expansion.

Jim Ryan: Deluded earnings per share of $2.67 increased 24% year-over-year and also exceeded our expectations, primarily due to the higher sales.

Jim Ryan: Free cash flow was strong at $100 million and in line with the prior year, reflecting nearly 100% conversion.

Lynn Bamford: Regarding our order book, we continue to experience strong growth, particularly within our A&E markets, driving overall new orders up 18% year-over-year to nearly $1 billion, or 1.3 times book-to-bill, in the second quarter. This strong demand enabled us to once again reach a record level of backlog, now in excess of $3.2 billion, which provides us with great visibility for the second half of 2024 and supports our long-term outlook. Within our A&D order book, we experience robust demand in our naval defense businesses supporting aircraft carrier and submarine programs, as well as increased aircraft handling equipment orders from both the U.S. and direct foreign military customers.

Jim Ryan: Regarding our order book, we continue to experience strong growth, particularly within our A&E markets, driving overall new orders up 18% year over year to nearly $1 billion, or 1.3 times book to bill in the second quarter. This strong demand enabled us to once again reach a record level of backlog, now in excess of $3.2 billion, which provides us with great visibility for the second half of 2024 and supports our long-term outlook.

Jim Ryan: Regarding our order book, we continue to experience strong growth, particularly within our A&D markets, driving overall new orders up 18% year-over-year to nearly $1 billion, or 1.3 times book-to-bill, in the second quarter.

Jim Ryan: This strong demand enabled us to once again reach a record level of backlog, now in excess of $3.2 billion, which provides us with great visibility for the second half of 2024 and supports our long-term outlook.

Jim Ryan: Within our A&D order book, we experience robust demand in our naval defense businesses supporting aircraft carrier and submarine programs, as well as increased aircraft handling equipment orders from both the U.S. and direct foreign military customers.

Lynn Bamford: We are also seeing positive order trends within our commercial markets. The most notable increases in demand were in our industrial businesses, and more specifically, industrial vehicles, where orders improved and have now essentially stabilized year over year.

Jim Ryan: We are also seeing positive order trends within our commercial markets. The most notable increases in demand were in our industrial businesses, and more specifically industrial vehicles, where orders improved and have now essentially stabilized year over year.

Jim Ryan: Next are some highlights of our full 2024 guidance. Our strong first-half performance, along with our growing order book, provided confidence to increase our overall guidance for the majority of our key metrics. We now expect overall sales to increase 6 to 8 percent, and we continue to target operating margin expansion while making significant incremental investments in both internally and externally funded research and development. This puts us on track to firmly deliver double-digit growth in diluted EPS this year.

Lynn Bamford: Next are some highlights of our full 2024 guidance. Our strong first-half performance, along with our growing order book, provided confidence to increase our overall guidance for the majority of our key metrics. We now expect overall sales to increase 6 to 8 percent, and we continue to target operating margin expansion while making significant incremental investments in both internally and externally funded research and development. This puts us on track to firmly deliver double-digit growth in diluted EPS this year. In addition, we increased our already strong free cash flow guide to reflect higher confidence in the full year outlook.

Jim Ryan: Next is some highlights of our full 2024 guidance. Our strong first half performance, along with our growing order book, provided confidence to increase our overall guidance for the majority of our key metrics.

Jim Ryan: We now expect overall sales to increase 6 to 8 percent and we continue to target operating margin expansion while making significant incremental investments in both internally and externally funded research and development.

Jim Ryan: This puts us on track to firmly deliver double-digit growth in diluted EPS this year.

Jim Ryan: In addition, we increased our already strong free cash flow guide to reflect higher confidence in the full year outlook. Overall, we are well positioned to deliver exceptional results in 2024.

Lynn Bamford: Overall, we are well positioned to deliver exceptional results in 2024. Finally, we launched a corporate-wide restructuring program and several cost-saving initiatives in the second quarter to support our future growth and improve our overall operational efficiency. We expect these actions to affect all three segments but mainly impact the A&I segment. We anticipate approximately $15 million in restructuring costs in 2024 and approximately $10 million in annualized savings through operating income in 2025.

Jim Ryan: Finally, we launched a corporate-wide restructuring program and several cost-saving initiatives in the second quarter to support our future growth and improve our overall operational efficiency.

Speaker Change: we expect these actions to affect all three segments but mainly impact the aandi segment we anticipate approximately fifteen million dollars in restructuring costs in two thousand and twenty four and approximately ten million dollars in annualized savings through operating income in two thousand and twenty-five

Lynn Bamford: In addition, we expect to recognize a portion of these savings this year in the A&I segment, which is embedded within our updated guidance. Additionally, we completed the consolidation of our UK legal entity structure, which Chris had initially discussed at Investor Day. He'll provide some more additional color on the specific benefits of this program later in our prepared remarks. Overall, the savings generated by these two initiatives support our ongoing pursuit of operating margin expansion and EPS growth and will generate additional funding to reinvest back into the business.

Jim Ryan: In addition, we expect to recognize a portion of these savings this year in the A&I segment, which is embedded within our updated guidance.

Jim Ryan: Additionally, we completed the consolidation of our UK legal entity structure, which Chris had initially discussed at Investor Day. He'll provide some more additional color on the specific benefits of this program later in our prepared remarks. Overall, the savings generated by these two initiatives support our ongoing pursuit of operating margin expansion and EPS growth and will generate additional funding to reinvest back into the business.

Jim Ryan: Overall, the savings generated by these two initiatives support our ongoing pursuit of operating margin expansion and EPS growth and will generate additional funding to reinvest back into the business.

Jim Ryan: We also expect them to contribute to our already strong fee-free cash flow position.

Lynn Bamford: We also expect them to contribute to our already strong fee-free cash flow position. In summary, Curtiss-Wright continues to build momentum through the execution of our pivot to growth strategy, and we remain confident in our ability to deliver long-term shareholder value. Now, I would like to turn the call over to Chris to continue with our prepared remarks. Thank you, Lynn.

Jim Ryan: In summary, Curtiss-Wright continues to build momentum through the execution of our pivot to growth strategy, and we remain confident in our ability to deliver long-term shareholder value. Now, I'd like to turn the call over to Chris to continue with our prepared remarks.

Chris Barker: On slide four, I'll review the key drivers of our second quarter 2024 performance by segment. I'll begin with aerospace and industrial, where overall sales growth of 3% was in line with our expectations. Within the segment's commercial aerospace market, we experienced strong low teens OEM sales growth supporting the continued ramp up in production across narrow body and wide body platforms. Within the segment's aerospace defense market, we experienced solid sales growth in both sensors and actuation equipment due to the timing of production on various programs. Those increases were partially offset by reduced sales in the general industrial market, principally due to the timing of industrial vehicle orders.

Chris: Thank you, Lynn. On slide four, I'll review the key drivers of our second quarter 2024 performance by segment.

Chris: A beginning aerospace and industrial where overall sales growth of 3% was in line with our expectations.

Jim Ryan: Within this segment's commercial aerospace market, we experienced strong, low-teens OEM sales growth, supporting the continued ramp-up in production across narrow-body and wide-body platforms. Those increases were partially offset by reduced sales in the general industrial market, principally due to the timing of industrial vehicle orders.

Chris: Within the segment's commercial aerospace market, we experienced strong, low-teens OEM sales growth, supporting the continued ramp-up in production across narrow-body and wide-body platforms.

Chris: within the segment'saerospace defense market we experienced solid sales growth in both centensers and actuation equipment due to the timing production on various programs

Jim Ryan: Those increases were partially offset by reduced sales in the general industrial market, principally due to the timing of industrial vehicle orders.

Chris Barker: And turning to this segment's profitability, our results reflect favorable absorption on higher sales, as well as a small contribution from our newly launched 2024 restructuring action. Next, in the defense electronics segment, strong sales growth of 16% was modestly ahead of our expectations as this business continues to benefit from the conversion of its healthy backlog. This performance was driven by better than expected growth within our ground defense market, due in part to the timing of tactical communication equipment revenues and deliveries which accelerated into the second quarter.

Chris: And turning to this segment's profitability, our results reflect favorable absorption on higher sales, as well as a small contribution from our newly launched 2024 restructuring actions.

Jim Ryan: Next, in the defense electronics segment, strong sales growth of 16% was modestly ahead of our expectations as this business continues to benefit from the conversion of its healthy backlog. Across this market, we continue to benefit from increased demand from both domestic and direct foreign military customers. Within Aerospace Defense, we once again experienced strong growth in embedded computing sales across a number of C5ISR programs, including the Black Hawk and Seahawk helicopter programs, to name a few.

Jim Ryan: Next in the defense electronics segment, strong sales growth of 16% was modestly ahead of our expectations as this business continues to benefit from the conversion of its healthy backlog.

Jim Ryan: This performance was driven by better-than-expected growth within our ground defense market, due in part to the timing of tactical communication equipment revenues and deliveries accelerated into the second quarter.

Jim Ryan: across this market we continue to benefit from an increase in demand from both domestic and direct foreign military customers

Chris Barker: Across this market, we continue to benefit from an increase in demand from both domestic and direct foreign military customers. Within Aerospace Defense, we once again experienced strong growth in embedded computing sales across a number of C5ISR programs, including the Black Hawk and Seahawk helicopter programs, to name a few. Regarding the segment's operating performance, we delivered a strong 25.7% operating margin of 390 basis points year over year, principally reflecting absorption on higher revenues and a shift in mix towards higher-margin C5ISR programs and tactical communications equipment.

Jim Ryan: Within Aerospace Defense, we once again experienced strong growth in embedded computing sales across a number of C5ISR programs, including the Black Hawk and Seahawk helicopter programs, to name a few.

Jim Ryan: Regarding the segment's operating performance, we delivered a strong 25.7% operating margin of 390 basis points year over year, principally reflecting absorption on higher revenues and a shift in mix towards higher-margin C5ISR programs and tactical communications equipment. This is partly due to the strength and timing of naval defense revenues and production ramps on a few key platforms, including the CVN-81 aircraft carrier. To sum up our Curtiss-Wright second quarter, overall, we generated solid absorption on stronger-than-expected top-line performance, resulting in 60 basis points of year-over-year operating margin expansion.

Chris Barker: Turning to the naval and power segment, sales growth of 15% exceeded our expectations. This was partly due to the strength and timing of naval defense revenues and production ramps on a few key platforms, including the CVN-81 aircraft carrier. In addition, our results reflected higher submarine revenues, including production on the Columbia-class and Virginia-class programs, as well as development on the SSNX program.

Jim Ryan: Turning to the naval and power segment, sales growth of 15% exceeded our expectations.

Jim Ryan: This is partly due to the strength and timing of naval defense revenues and production ramps on a few key platforms, including the CVN 81 aircraft carrier.

Jim Ryan: In addition, our results reflected higher submarine revenues, including production on the Columbia-class and Virginia-class programs, as well as development on the SSNX programs.

Chris Barker: Within the segment's aerospace defense market, our results reflected increased sales of aircraft arresting systems equipment, principally supporting U.S. military bases. In the power and process market, our results reflected continued strong demand in the commercial nuclear market, supporting the ongoing maintenance of U.S. operating reactors, along with modest growth in the process market, including higher subsea pump development revenue. As indicated in our recent July 29th press release, our subsea pump development efforts are proceeding well.

Jim Ryan: Within the segment's aerospace defense market, our results reflected increased sales of aircraft arresting systems equipment, principally supporting U.S. military bases.

Jim Ryan: In the power and process market, our results reflected continued strong demand in the commercial nuclear market, supporting the ongoing maintenance of U.S. operating reactors, along with modest growth in the process market, including higher subsea pump development revenues.

Jim Ryan: As indicated in our recent July 29th press release, our subsea pump development efforts are proceeding well.

Chris Barker: We recently achieved a significant development milestone with SciPem for technological readiness, and we continue to pursue the pathway towards commercialization. Turning to this segment's operating performance, and as expected, our results reflected both an unfavorable mix and an increased concentration of development programs across our naval defense, commercial nuclear, and process markets. To sum up our Curtiss-Wright second quarter, overall, we generated solid absorption on stronger-than-expected topline performance, resulting in 60 basis points of year-over-year operating margin expansion.

Speaker Change: We recently achieved a significant development milestone with SciPem for technological readiness and we continue to pursue the pathway towards commercialization.

Jim Ryan: Turning to this segment's operating performance, and as expected, our results reflected both unfavorable mix and an increased concentration of development programs across our naval defense, commercial nuclear, and process markets.

Jim Ryan: To sum up our Curtiss-Wright second quarter, overall, we generated solid absorption on stronger-than-expected top-line performance, resulting in 60 basis points in year-over-year operating margin expansion.

Chris Barker: Next, turning to our full year 2024 guidance. I'll begin on slide five with our end market sales outlook, where we now expect organic sales to grow 5 to 7% with total sales growth of 6 to 8% driven by an upward revision across most of our A&E markets. Starting in aerospace defense, we now expect full-year sales growth of 7-9%, driven by an improved outlook for sensors and actuation equipment sales supporting various fighter jet programs, including the F-35.

Jim Ryan: Next, turning to our full year 2024 guidance. I'll begin on slide five with our end market sales outlook where we now expect organic sales to grow five to 7% with total sales growth of six to 8% driven by an upward revision across most of our A&E markets.

Jim Ryan: Starting in aerospace defense, we now expect full year sales growth of 7-9%, driven by an improved outlook for sensors and actuation equipment sales supporting various fighter jet programs, including the F-35.

Chris Barker: In addition, we continue to expect strong embedded computing equipment revenues supporting various C5ISR programs and are projecting a sequential ramp-up in these revenues over the remainder of the year. Within ground defense, our outlook for 10 to 12% sales growth remains unchanged.

Jim Ryan: in addition we continue to expect strong embedded computing equipment revenue supporting various c five r programs and are projecting a sequential ramp in these revenues over the remainder of the year

Jim Ryan: Within ground defense, our outlook for 10 to 12% sales growth remains unchanged. This updated guidance includes our expectation for increased sales of aircraft handling systems, mainly supporting foreign military customers, as well as higher revenues for aftermarket fleet services as we look to the second half of this year.

Jim Ryan: Within ground defense, our outlook for 10-12% sales growth remains unchanged.

Chris Barker: In this market, we demonstrated very strong growth in the first half of the year, partly due to timing, and continue to experience overall solid demand for our tactical communications equipment. EnableDefense, we now expect full year sales to grow 5-7% based on the strong volume of orders received in the second quarter. This updated guidance includes our expectation for increased sales of aircraft handling systems, mainly supporting foreign military customers, as well as higher revenues for aftermarket fleet services as we look to the second half of this year.

Jim Ryan: In this market, we demonstrated very strong growth in the first half of the year, partly due to timing, and continue to experience overall solid demand for our tactical communications equipment.

Speaker Change: EnableDefense, we now expect full year sales to grow 5-7% based on the strong volume of orders received in the second quarter.

Jim Ryan: This updated guidance includes our expectation for increased sales of aircraft handling systems, mainly supporting foreign military customers, as well as higher revenues for aftermarket fleet services as we look to the second half of this year.

Chris Barker: Turning to commercial aerospace, a strong first half performance, particularly for our surface treatment services, provides us with confidence to raise our full year sales growth to a new range of 13 to 15%. We continue to expect higher OEM production on narrow-body and wide-body aircraft while maintaining a conservative view, specifically as it relates to the 737 MAX program.

Jim Ryan: Turning to commercial aerospace, a strong first half performance, particularly for our surface treatment services, provides us with confidence to raise our full year sales growth to a new range of 13 to 15 percent.

Jim Ryan: We continue to expect higher OEM production on narrow-body and wide-body aircraft while maintaining a conservative view, specifically as it relates to the 737 MAX program.

Chris Barker: Wrapping up our aerospace and defense markets, we now expect total sales to increase eight to 10% in 2024. Moving on to our commercial markets. In the power and process market, our outlook for 4 to 6% sales growth remains unchanged. Within our commercial nuclear market, we continue to expect a high single-digit full-year growth rate, principally driven by strong aftermarket revenues, while in the process market, we expect a low single-digit full-year growth rate driven by higher subsea pump development revenues and the general industrial market. Based on weaker first half industrial vehicle sales serving the on and off highway markets, we've reduced our full year expectations for this market.

Jim Ryan: Wrapping up our aerospace and defense markets, we now expect total sales to increase eight to ten percent in 2024.

Jim Ryan: moving on to our commercial markets and the power and process market our outlook for forward to six percent sales growth remains unchanged

Speaker Change: within our commercial nuclear market we continue to expect a high single-digit full year growth rate principally driven by strong aftermarket revenues while in the process market we expect the low single digit fu year growth rate driven by higher subsei pump development revenues

Jim Ryan: In the general industrial market, based on weaker first-half industrial vehicle sales serving the on- and off-highway markets, we've reduced our four-year expectations to flat for this market.

Chris Barker: However, looking to the remainder of the year, the generally positive trends in our shorter cycle surface treatment services, along with the improved order activity that Lynn highlighted earlier, provides us with confidence for an improved second half performance in this market. Wrapping up our total commercial markets, we are now targeting full year sales growth of 1 to 3%. Moving on to our full-year outlook by segment on slide six, I'll begin with aerospace and industrial, where we are increasing our revenue guidance to four to six percent.

Jim Ryan: However, looking to the remainder of the year, the generally positive trends in our shorter cycle surface treatment services, along with the improved order activity that Lynn highlighted earlier, provides us with confidence for an improved second half performance in this market.

Jim Ryan: Wrapping up our total commercial markets, we are now targeting full year sales growth of 1 to 3 percent.

Jim Ryan: Moving on to our full-year outlook by segment on slide six, I'll begin with aerospace and industrial, where we are increasing our revenue guidance to four to six percent. We then expect the segment to deliver a strong finish to the year, reflecting favorable absorption and mix, along with the benefits of our ongoing margin improvement initiative. Next, in defense electronics, we continue to expect sales to grow eight to 10% driven by a strong order book and demand across our A&E markets and anticipate the remaining sales to be evenly split over the back half of the year.

Jim Ryan: Moving on to our full year outlook by segment on slide 6. I'll begin in aerospace and industrial where we are increasing our revenue guidance to four to six percent.

Jim Ryan: This is principally driven by the strong first half sales growth and outlook in commercial aerospace along with improved expectations within our aerospace defense market.

Chris Barker: This is principally driven by the strong first half sales growth and outlook in commercial aerospace, along with improved expectations within our aerospace defense market. Regarding the segment's profitability, we now expect operating income growth of 8 to 11 percent and operating margin expansion of 50 to 70 basis points to a new range of 16.9 to 17.1 percent, which is 30 basis points above our prior expectations. For your modeling purposes, we expect third quarter sales and operating income to be largely on par with the segment's second quarter results due to the timing of sales within our European operation.

Jim Ryan: Regarding this segment's profitability, we now expect operating income growth of 8 to 11 percent and operating margin expansion of 50 to 70 basis points to a new range of 16.9 to 17.1 percent, which is 30 basis points above our prior expectations.

Speaker Change: for your modeling purposes we expect third quarter sales and operating income to be largely on par with the segment' second quarter results due to the timing of sales within our european operations

Chris Barker: We then expect the segment to deliver a strong finish to the year, reflecting favorable absorption and mix, along with the benefits of our ongoing margin improvement initiative. Next, in defense electronics, we continue to expect sales to grow eight to 10% driven by a strong order book and demand across our A&E markets and anticipate the remaining sales to be evenly split over the back half of the year. Regarding this segment's profitability, we continue to project operating income growth of 11 to 13 percent and operating margin to increase 50 to 70 basis points in the range from 24 to 24.2 percent.

Jim Ryan: We then expect the segment to deliver a strong finish to the year reflecting favorable absorption and mix along with the benefits of our ongoing margin improvement initiatives.

Jim Ryan: Next, in Defense Electronics, we continue to expect sales to grow 8 to 10 percent, driven by a strong order book and demand across our A&D markets, and anticipate the remaining sales to be evenly split over the back half of the year.

Jim Ryan: Regarding this segment's profitability, we continue to project operating income growth of 11 to 13 percent and operating margin to increase 50 to 70 basis points in range from 24 to 24.2 percent.

Chris Barker: As a reminder, this segment's profitability also includes an incremental $5 million or 50 basis point headwind in internally funded R&D investments, the bulk of which are expected to impact our second half results. And Enabling Power, following the strong first half growth in revenues and robust order activity in Naval Defense, we have raised our expectations for revenue growth to a new range of 5-7%. Regarding the segment's profitability, we raised our operating income guidance slightly to a new range of flat to down 2%.

Jim Ryan: As a reminder, this segment's profitability also includes an incremental $5 million or 50 basis point headwind in internally funded R&D investments, the bulk of which are expected to impact our second half results.

Jim Ryan: And in Naval Empower, following the strong first half growth in revenues and robust order activity in Naval Defense, we have raised our expectations for revenue growth to a new range of 5 to 7 percent.

Jim Ryan: regarding the segment's profitability we raised our operating income guidance slightly to a new range of flat to down two percent

Chris Barker: While we continue to anticipate favorable absorption on higher sails, we maintained our prior margin outlook primarily due to unfavorable mix and margin pressures associated with the accelerated ramp-up and development programs across naval and power. Of note, and for your modeling purposes, we expect this segment's third-quarter revenues to be slightly below the stronger than anticipated second-quarter results, primarily due to the timing of naval defense revenues. However, over the course of the second half of the year, we anticipate improved profitability as we move past the impact of the first quarter naval contract adjustment, experience a more favorable mix, and recognize the benefits of our operational excellence initiatives.

Jim Ryan: While we continue to anticipate favorable absorption on higher sails, we maintained our prior margin outlook primarily due to unfavorable mix and margin pressures associated with the accelerated ramp-up and development programs across naval and power. However, over the course of the second half of the year, we anticipate improved profitability as we move past the impact of the first quarter naval contract adjustment, experience a more favorable mix, and recognize the benefits of our operational excellence initiatives.

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Jim Ryan: Of note, and for your modeling purposes, we expect this segment's third-quarter revenues to be slightly below the stronger-than-anticipated second-quarter results, primarily due to the timing of naval defense revenues.

Jim Ryan: However, over the course of the second half of the year, we anticipate improved profitability as we move past the impact of the first quarter naval contract adjustment, experience a more favorable mix, and recognize the benefits of our operational excellence initiatives.

Chris Barker: So to summarize our outlook, overall, we now expect total Curtiss-Wright operating income to grow 6% to 9% and continue to expect operating margin to range from 17.4% to 17.6%, including a year-over-year increase of more than $20 million in total engineering spending. Continuing with our financial outlook on slide seven, as Lynn mentioned earlier, and as I outlined in a case study at our May Investor Day, Curtiss-Wright has executed a targeted legal entity consolidation.

Jim Ryan: So to summarize our outlook, overall, we now expect total Curtiss-Wright operating income to grow 6% to 9% and continue to expect operating margin to range from 17.4% to 17.6%, including a year-over-year increase of more than $20 million in total engineering spending.

Jim Ryan: Continuing with our financial outlook on slide seven. As Lynn mentioned earlier, and as I outlined in a case study at our May Investor Day, Curtiss-Wright has executed a targeted legal entity consolidation.

Chris Barker: This initiative, at a nominal cost, will facilitate efficient cash repatriation and have the added benefit of generating approximately $5 million in annual recurring savings impacting both tax expense and free cash flow. This is the main driver of our 100 basis point reduction in the effective tax rate to 22.5%.

Jim Ryan: This initiative, at a nominal cost, will facilitate efficient cash repatriation and have the added benefit of generating approximately $5 million in annual recurring savings, impacting both tax expense and free cash flow.

Jim Ryan: this is the main driver of our hundred basis point reduction in the effective tax rate to twenty-two point five percent

Chris Barker: Of note, we continue to pursue opportunities to facilitate tax efficiency and are actively looking to drive additional tax savings to Curtiss-Wright in 2025 and beyond. Next to our EPS guidance, we now expect full year 2024 diluted EPS to range from $10.40 to $10.65, up 11 to 14%, which aligns with our investor day target for double-digit growth. As we look ahead to the second half of this year, we expect our third quarter 2024 EPS to be relatively on par with our second quarter results, followed by a strong finish to the year.

Speaker Change: Of note, we continue to pursue opportunities to facilitate tax efficiency and are actively looking to drive additional tax savings to Curtiss-Wright in 2025 and beyond.

Jim Ryan: Next, to our EPS guidance, we now expect full year 2024 diluted EPS to range from $10.40 to $10.65, up 11-14%, which aligns with our investor day target for double digit growth.

Jim Ryan: As we look ahead to the second half of this year, we expect our third quarter 2024 EPS to be relatively on par with our second quarter results, followed by a strong finish to the year.

Chris Barker: And lastly, turning to free cash flow, based on our strong year-to-date performance, our projections for improved earnings, and the tax benefits from our UK consolidations project, we've raised our free cash flow outlook to a new range of $425 million to $445 million. This outlook reflects solid growth of 3-8% and a free cash flow conversion rate in excess of 105%, which is in line with our long-term target. Now, I'd like to turn the call back over to Lynn. Thank you, Chris.

Jim Ryan: And lastly, turning to free cash flow, based on our strong year-to-date performance, our projections for improved earnings, and the tax benefits from our UK consolidations project, we've raised our free cash flow outlook to a new range of $425 million to $445 million.

Jim Ryan: This outlook reflects solid growth of 3-8% and a free cash flow conversion rate in excess of 105%, which is in line with our long-term targets.

Jim Ryan: Thank you, Chris. And turning to slide eight, I'd like to spend the next few minutes reviewing the recently announced acquisition of Ultra Energy, which is a leading supplier of neutron and radiation monitoring systems, temperature and pressure sensors, as well as complementary reactor protection and control systems. They are led by an experienced management team backed by more than 90 engineers and have strong customer relations, all of which make them a great fit with Curtiss-Wright.

Jim Ryan: Now, I'd like to turn the call back over to Lynn.

Lynn Bamford: And turning to slide eight, I'd like to spend the next few minutes reviewing the recently announced acquisition of Ultra Energy, which is a leading supplier of neutron and radiation monitoring systems, temperature and pressure sensors, as well as complementary reactor protection and control systems. This business has a long legacy dating back to the 1950s and today maintains three facilities, two in the UK and one in Texas. They are led by an experienced management team backed by more than 90 engineers and strong customer relations, all of which make it a great fit with Curtiss-Wright.

Jim Ryan: this business has a long legacy dating back to theonethousand nine hundredand fiftys and p today maintains free facilities to in the uk and one in texas

Jim Ryan: they're led by an experienced management team backed by more than ninety engineers and strong customer relations

Jim Ryan: Ultra Energy is a diversified business that principally provides critical support to commercial nuclear operating reactors and other power generation plants across the globe, focused on the safe operation of the reactor from the core to the control room.

Jim Ryan: All of which make it a great fit with Curtiss-Wright. Ultra Energy is a diversified business that principally provides critical support to commercial nuclear operating reactors and other power generation plants across the globe, focused on the safe operation of the reactor from the core to the control room.

Lynn Bamford: Ultra Energy is a diversified business that principally provides critical support to commercial nuclear operating reactors and other power generation plants across the globe, focused on the safe operation of the reactor from the core to the control room.

Lynn Bamford: In the commercial nuclear aftermarket, it will add products and services to further advance Curtiss-Wright's support of plant life extensions and modernization projects for aging plants. In addition, the acquisition will extend our presence with the leading designers of small modular reactors, both domestically and in Europe. ALTRA also serves the defense markets by providing support to the legacy UK nuclear submarine fleet, as well as current and next generation designs. Regarding the key financials, we paid approximately $200 million for ULTRA at less than 12 times next 12 months' EBITDA.

Speaker Change: in the commercial nuclear aftermarket it will add products and services to further advanceced purchase rights support of plant life extensions and modernization projects for aging plant

Jim Ryan: In addition, the acquisition will extend our presence with the leading designers of small modular reactors, both domestically and in Europe . ALTRA also serves the defense markets by providing support to the legacy UK nuclear submarine fleet, as well as current and next generation designs.

Jim Ryan: ALTRA also serves the defense markets by providing support to the legacy UK nuclear submarine fleet, as well as current and next-generation designs. Regarding our 2024 restructuring program, we have positioned ourselves for future growth across the business and will continue to do what has been ingrained within our culture, that is, improving the overall efficiency of Curtiss-Wright operations. Throughout the course of today's call, we discussed a number of exciting growth opportunities and strategic investments that underpinned our second quarter and year-to-date results.

Speaker Change: Regarding the key financials, we paid approximately $200 million for Altra at less than 12 times next 12 months EBITDA.

Lynn Bamford: We expect the deal to be diluted to overall Curtiss-Wright operating margin in the first year of ownership but have line of sight for this business to contribute to our overall profitability and long-term operating margin expansion. The business very much aligns with Curtiss-Wright's long-term acquisition criteria, both as a strategic and a financial bid, giving it strong market positions and opportunities for profitable growth. We expect this transaction to close in the third quarter and, therefore, are not including ultra-energy within our guidance at this time.

Speaker Change: We expect the deal to be dilutive to overall Curtiss-Wright operating margin in the first year of ownership, but have line of sight for this business to contribute to our overall profitability and long-term operating margin expansion.

Jim Ryan: The business very much aligns with Curtiss-Wright's long-term acquisition criteria, both as a strategic and a financial fit, giving it strong market positions and opportunities for profitable growth.

Jim Ryan: We expect this transition transaction to close in the third quarter and therefore are not including ultra energy within our guidance at this time

Lynn Bamford: Overall, this is another example of the strength of Curtiss-Wright's balance sheet and an exciting acquisition that expands our global presence across our key end markets. Turning to slide nine and to summarize our prepared remarks today, we are well positioned to deliver a strong result in 2024. We are confident in our ability to generate 6 to 8% total sales growth this year, and we anticipate a strong second half performance. We remain committed to delivering incremental operating margin expansion while maintaining strategic investments in research and development as we continue to accelerate our long-term organic growth.

Jim Ryan: Overall, this is another example of the strength of Curtiss-Wright's balance sheet and an exciting acquisition that expands our global presence across our key end markets.

Jim Ryan: Turning to slide nine and to summarize our prepared remarks today, we are well positioned to deliver a strong result in 2024. We are confident in our ability to generate six to eight percent total sales growth this year, and we anticipate a strong second half performance.

Jim Ryan: We remain committed to delivering incremental operating margin expansion while maintaining strategic investments in research and development as we continue to accelerate our long-term organic growth.

Jim Ryan: We expect to generate double-digit EPS growth yet again in 2024 and strong free cash flow with a solid conversion rate in excess of 105%.

Lynn Bamford: We expect to generate double-digit EPS growth yet again in 2024 and strong free cash flow with a solid conversion rate in excess of 105%. Regarding our 2024 restructuring program, we have positioned ourselves for future growth across the business and will continue to do what has been ingrained within our culture, that is, improving the overall efficiency of Curtiss-Wright operations.

Speaker Change: regarding our two thousand and twentyfour restructuring program we have positionionsed ourselves for future growth across the business and we'll continue to do what has been rained within our culture that is improving the overall efficiency occurredis right operations

Lynn Bamford: Finally, I'd like to reemphasize some of the most important takeaways from our Investor Day that are driving our confidence in achieving our long-term organic growth targets. Throughout the course of today's call, we discussed a number of exciting growth opportunities and strategic investments that underpinned our second quarter and year-to-date results. Many of these will remain key drivers of our future growth and support our outlook to grow organic sales at a greater than 5% CAGR through 2026.

Speaker Change: Finally, I'd like to re-emphasize some of the most important takeaways from our Investor Day that are driving our confidence in achieving our long-term organic growth targets.

Jim Ryan: Throughout the course of today's call, we discussed a number of exciting growth opportunities and strategic investments that underpinned our second quarter and year-to-date results.

Jim Ryan: Many of these will remain key drivers of our future growth and support our outlook to grow organic sales at a greater than 5% CAGR through 2026. In commercial aerospace, we remain ideally situated to leverage our strong and growing backlog and support the anticipated ramp-up in narrow-body and wide-body production. Overall, I'm pleased to note that these markets, which represent more than two-thirds of Curtiss-Wright's overall business, are well-supported by strong demand that will enable us to deliver on our investor-day targets of mid-to-high single-digit A&E sales growth and proactively capture the medium and long-term secular growth trends that we discussed at Investor Today.

Jim Ryan: many of these will remain key drivers of our future growth and support our outlook to grow organic sales at a greater than five percent kagar through two thousand and twenty six

Lynn Bamford: For example, and starting in defense, technologies are well aligned to support the U.S. and the Allies in this elevated threat environment. Of note, this includes the importance of our C5ISR and tactical communications equipment, as well as our support of the U.S. Navy's most critical shipbuilding programs. Beyond that, the current state of naval ship construction and the need to shore up the overall industrial base afford us the opportunity to grow our aftermarket capabilities and further support our customers. Outside of the U.S., we have experienced strong international growth.

Speaker Change: For example, and starting in defense technologies.

Jim Ryan: are well aligned to support the U.S. and the Allies in this elevated threat environment. Of note, this includes the importance of our C5ISR and tactical communications equipment, as well as our support of the U.S. Navy's most critical shipbuilding programs.

Jim Ryan: Beyond that, the current state of the naval ship construction and the need to shore up the overall industrial base affords us the opportunity to grow our aftermarket capabilities and further support our customers. Outside of the U.S., we have experienced strong international growth.

Lynn Bamford: Driving increased direct foreign military sales that have and should continue to benefit each of our defense and commercial markets. In commercial aerospace, we remain ideally situated to leverage our strong and growing backlog and support the anticipated ramp-up in narrow-body and wide-body production. Overall, I'm pleased to note that these markets, which represent more than two-thirds of Curtiss-Wright's overall business, are well-supported by strong demand that will enable us to deliver on our investor-day targets of mid-to-high single-digit A&D sales growth.

Jim Ryan: driving increased direct foreign military sales that have and should continue to benefit each of our defense end markets

Jim Ryan: In commercial aerospace, we remain ideally situated to leverage our strong and growing backlog and support the anticipated ramp-up in narrow-body and wide-body production.

Jim Ryan: Overall, I'm pleased to note that these markets, which represent more than two-thirds of Curtiss-Wright's overall business, are well-supported by strong demand that will enable us to deliver on our investor-day targets of mid-to-high single-digit A&E sales growth.

Lynn Bamford: Within our commercial markets, the momentum continues for commercial nuclear power with new developments, such as the recent signing of the ADVANCED Act, driving continued support for the industry at large, particularly next-generation reactors. The Act, which received strong bipartisan support, was the first significant piece of commercial nuclear legislation passed in almost two decades.

Jim Ryan: Within our commercial markets, the momentum continues in commercial nuclear with new developments, such as the recent signing of the ADVANCE Act, driving continued support for the industry at large, particularly next generation reactors.

Lynn Bamford: Of note, it streamlines the regulatory approval process for new advanced reactor designs. This is one of many ongoing developments that are expected to help strengthen the nation's efforts to restore its competitive nuclear energy advantage and further support Curtiss-Wright's growth in this end market. We are also intently focused on managing Curtiss-Wright's consolidated portfolio as we navigate the changing market dynamics impacting some of our industrial and process businesses. In addition to addressing the opportunities that are driving our business today, we're also investing for Curtiss-Wright's future, to proactively capture the medium and long-term secular growth trends that we discussed at Investor Today. We have committed to spending more than $20 million in incremental R&D this year to support critical initiatives such as subsea pumps, small modular reactors, or the future SSNX submarine.

Jim Ryan: The Act, which received strong bipartisan support, was the first significant piece of commercial nuclear legislation passed in almost two decades. Of note, it streamlines the regulatory approval process for new advanced reactor designs.

Jim Ryan: This is one of many ongoing developments that are expected to help strengthen the nation's efforts to restore its competitive nuclear energy advantage and further support Curtiss-Wright's growth in this end market.

Jim Ryan: We are also intently focused on managing Curtiss-Wright's consolidated portfolio as we navigate the changing market dynamics impacting some of our industrial and process businesses.

Jim Ryan: In addition to addressing the opportunities that are driving our business today, we're also investing for Curtiss-Wright's future.

Jim Ryan: to proactively capture the medium and long-term secular growth trends that we discussed at Investor Today. We have committed to spending more than $20 million in incremental R&D this year to support critical initiatives such as subsea pumps, small modular reactors, or the future SSNX submarine.

Jim Ryan: We have committed to spending more than $20 million in incremental R&D this year to support critical initiatives such as subsea pumps, small modular reactors, or the future SSNX submarine. They represent but a few of the many development projects underway with the potential to drive hundreds of millions of dollars in additional growth through the end of this decade and well into the future. Lastly, we are an agile and flexible business with a strong track record of proactively addressing business efficiency and successfully navigating challenging market conditions. This has enabled us to drive continued margin expansion and returns for our shareholders.

Lynn Bamford: These represent but a few of the many development projects underway with the potential to drive hundreds of millions of dollars in additional growth through the end of this decade and well into the future. Lastly, we are an agile and flexible business with a strong track record of proactively addressing business efficiency and successfully navigating challenging market conditions. In closing, we're off to a great start, and the momentum continues.

Jim Ryan: They represent but a few of the many development projects underway with the potential to drive hundreds of millions of dollars in additional growth through the end of this decade and well into the future.

Jim Ryan: Lastly, we are an agile and flexible business with a strong track record of proactively addressing business efficiency and successfully navigating challenging market conditions. This has enabled us to drive continued margin expansion and returns for our shareholders.

Jim Ryan: in closing we're off to a great start in the momentum continues our technologies expertise and portfolio of solutions are incredibly wellallined with our customer and industry needs as well as the growth trends in our core market

Lynn Bamford: Our technologies, expertise, and portfolio of solutions are incredibly well aligned with our customer and industry needs, as well as the growth trends in our core markets. We are well positioned to deliver strong, profitable growth in 2024, and we remain confident in our ability to deliver on our long-term guidance. Thank you, and at this time, I would like to open up today's conference call for questions. Absolutely. The floor is now open for your questions at this time. If you have a question, R&1. At any point when your question is answered, you may remove it. Star A.

Jim Ryan: We are well-positioned to deliver strong, profitable growth in 2024, and we remain confident in our ability to deliver on our long-term guidance. Thank you, and at this time, I would like to open up today's conference call for questions.

Speaker Change: Absolutely. The floor is now open for your questions. At this time, if you have a question, please press the star and 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star and 2.

Speaker Change: Again, we ask that you pick up your handset when posing your question to provide optimal sound quality.

Operator: Thank you. Our first question is coming from Kristine Liwag with Morgan Stanley. Please go ahead. Your line is open.

Operator: Again, we have the handset when posing your question to provide optimal sound. Our first question is coming from Kristine Liwag with Morgan Stanley. Please go ahead. Hey, good morning.

Speaker Change: Thank you. Our first question is coming from Kristine Liwag with Morgan Stanley . Please go ahead. Your line is open.

Kristine Liwag: Hey, good morning. Lynn and Chris, you know, supply chain has been a headwind for defense electronics in the past few quarters, but with the acceleration of sales that we're seeing now, it seems like supply chain constraints have been easing. Can you provide more color on where you are now on material receipts and where you are in shortages and when you'd expect catch-up deliveries to level out?

Lynn Bamford: Lynn and Chris, you know, supply chain has been a headwind for defense electronics in the past few quarters. But with the acceleration of sales that we're seeing now, it seems like supply chain constraints have been easing. Can you provide more color on where you are now on material receipts, and where you are in shortages, and when you'd expect catch-up deliveries to level out? Sure.

Kristine Liwag: Hey, good morning. Lynn and Chris, you know, supply chain had been a headwind for defense electronics in the past few quarters, but with the acceleration of sales that we're seeing now,

Speaker Change: It seems like supply chain constraints have been easing. Can you provide more color on where you are now on material receipts and where you are on shortages and when you'd expect catch-up deliveries to level set?

Lynn Bamford: So it is true that I would say, you know, we haven't taken our eye off of the supply chain, but largely, the major disruptions are definitely behind us. And we see, we see good stability, you know, across our supply chain. And, you know, some of the best practices we put in place back in 2022 around various tools to manage our supply chain and different ways of engaging with the supply base continue to this day.

Kristine Liwag: Sure.

Speaker Change: So it is true that I would say, you know, we haven't taken our eye off of supply chain, but largely the major disruptions are definitely behind us. And we see, we see good stability, you know, across our supply chain and, you know, some of the best practices we put in place back in 2022 around, you know, various tools to manage our supply chain and different ways of engaging with the supply base continue on. So where there are little pockets of issues, you know, we've improved our processes and how we engage and those continue to prove to be successful.

Lynn Bamford: So where there are little pockets of issues, you know, we've improved our processes, and how we engage in those continues to prove to be successful. I would say that, you know, broadly, lead times have come down across a variety of components, but older components, which we built a lot of legacy products, specifically in defense electronics, those lead times seem to have come down from over 52 weeks to maybe more in the lines of 40 weeks. And that seems to be just, you know, where they're stuck.

Chris Park: Broadly, lead times have come down across a variety of components, but older components, which, you know, we built a lot of legacy products, specifically in defense electronics, those lead times seem to have come down from over 52 weeks to maybe more in the lines of 40 weeks. And that seems to be just, you know, where they're stuck, and we don't really anticipate any real notable change in that area going forward, and I think that is just the new norm for them.

Speaker Change: i would say that you

Chris Park: Broadly, lead times have come down across a variety of components, but older components, which we built a lot of legacy products, specifically in the defense electronics, those lead times seem to have...

Chris Park: You know, come down from the over 52 weeks to maybe more on the lines of 40 weeks. And that seems to be just, you know, where they're stuck. And we don't really anticipate.

Lynn Bamford: And we don't really anticipate, you know, any real notable change in that area going forward. And I think that is just the new norm for those. I will say I'm pleased to say prices have been, you know, very stable in the supply chain. We really started seeing at the end of 22, you know, but for sure in 23, and that continues. It doesn't mean there are no price increases, but they're just, you know, traditional, you know, incremental, you know, minor incremental price increases.

Chris Park: You know, any real notable change, you know, in that area going forward. And I think that is just the new norm for those.

Chris Park: I will say I'm pleased to say prices have been, you know, very stable in the supply chain. We really started seeing that at the end of 22, you know, but for sure in 23, and that continues. It doesn't mean there are no price increases, but they're just, you know, traditional, you know, incremental, you know, minor incremental price increases. So, that's very good.

Chris Park: i will pleased as say prices have been very stable in the supply chain we really started seeing at the end of twenty two but forsure in twenty three and that continues it doesn't mean there wasno price increases but they're just

Chris Park: traditional incremental minor incremental price increases so so that's very good

Lynn Bamford: So, that's very good. As we look at, you know, destocking, I guess, you know, the two places we are most, you know, conscious of this are, you know, across our industrial businesses, where we think we're level set and producing with our customers at this point in time. And, you know, we watch it; we work very closely with our customers. But we, you know, things are broadly good there. And, you know, the other place where people tend to ask about that is in commercial aerospace.

Chris Park: as we look at destocking i guess the two places we our most conscious of this is across our industrial businesses

Chris Park: where we think we're level set in producing with our customers at this point in time.

Chris Park: and we watch it we work very closely with our customers

Chris Park: But we, you know, things are broadly good there.

Chris Park: And, you know, the other place where people tend to ask about that is around commercial aerospace and

Lynn Bamford: And, you know, we can talk a lot about our orders, Chris added some color to, you know, what we're watching and taking some caution around how we, you know, view things, you know, specifically tied with the 737 MAX that, you know, you know, Boeing is producing a 25 per month, which I think is, you know, broadly known, we think our content ranges anywhere from 25 to 35 a month, given the wide variety of things we do. But something that we, you know, we've kind of, we use as one of the litmus tests for how we analyze this is we don't just look in the current quarter or even the past 12 months, but we look over a several year period and track our production rates compared to Boeing and Airbus, and they're largely in line slightly behind those multi-year production rates, which leads us to believe that we're not, you know, really in an overstocking situation.

Chris Park: We can talk a lot about our orders. Chris added some color to what we're watching and taking some caution around how we view things, specifically tied with the 737 MAX that...

Speaker Change: Boeing is producing at $25 per month, which I think is broadly known. We think our content ranges anywhere from $25 to $35 a month, given the wide variety of things we do.

Chris Park: But something that we use as one of the litmus tests for how we analyze this is we don't just look in the current quarter or even the past 12 months, but we look over a several year period.

Chris Park: and track our production rates compared to

Speaker Change: Boeing and Airbus and they're largely in line slightly behind those multi-year production rates which leads us to believe we're not you know really in an overstocking situation and

Lynn Bamford: And if you really also, you know, layer in some price increases and some spares type of work that gets mixed in with that, it makes us feel comfortable with where we are in how we're producing in those markets. Hopefully, that answers the things you were wondering about.

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Chris Park: If you really also, you know, layer in, you know, some price increases and some spares type of work that gets mixed in with that, you know, it makes us feel comfortable with where we are in how we're producing in those markets.

Lynn Bamford: Yeah, that's really great color in the supply chain. Thank you. And switching gears to margins, I mean, margins are at record levels, a testament to the strong operating performance of the team. Can you talk about the rationale for implementing restructuring plans now? And can you provide more details on exactly what your initiatives entail?

Chris Park: So hopefully that answers the things you were wondering about.

Speaker Change: Yeah, that's really great color and supply chain. Thank you. And switching gears to margins, I mean, margins are at record levels, a testament to the strong operating performance of the team.

Speaker Change: Can you talk about the rationale to implement restructuring plans now and can you provide more details on exactly what your initiatives entail and where margins could potentially peak because it seems like you're not done?

Lynn Bamford: And you know where margins could potentially peak because it seems like you're not done. So, you know, obviously, we committed to growing OI faster than sales again at our 2024 Investor Day, so we don't believe we're done. And, you know, we're a broad, diverse business, and as much as we're proud of the overall performance, and we are really proud, and the teams are doing a great job to achieve that, it doesn't mean that we don't continue to analyze and look inside of the businesses to see areas where we can drive efficiency in the business. And we'll tackle those, you know, regardless of how we're performing at the current time.

Chris Park: So, you know, obviously, we committed to growing OI faster than sales again at our 2024 Investor Day. So we don't believe we're done.

Chris Park: So, you know, obviously we committed to growing OI faster than sales again in our 2024 Investor Day, so we

Chris Park: We don't believe we're done, and we're a broad, diverse business, and as much as we're proud of the overall performance, and we are really proud, and the teams are doing a great job to achieve that, it doesn't mean that we don't continue to analyze and look inside of the businesses to see areas where we can drive

Chris Park: Efficiency in the business.

Speaker Change: and we'll tackle those regardless of how we're performing at the current time. But I'd also note that some of the restructuring that we're doing is to support volume increases and it's to better align ourselves and have our businesses prepared for that long-term profitable growth. So you tend to think of restructuring as taking out cost structures, but I'm very pleased to say some of this restructuring is also to support the volume increases. So...

Lynn Bamford: But I'd also note that some of the restructuring that we're doing is to support volume increases, and it's to, you know, better align ourselves and have our businesses prepared for that long-term profitable growth. So, you tend to think of restructuring as, you know, taking out cost structures, but I'm very pleased to say some of this restructuring is also to support volume increases. So it's just, I think, part of how we manage the business. We, you know, don't look at just the overall numbers.

Lynn Bamford: We look down through all the business units within and, you know, order trends in those businesses and try to be proactive. And as I think, you know, the chatter of a recession surely increased this week, you know, heightened back up a bit. You know, we feel good that we were proactive and have addressed this. And, you know, really, it's across all three segments, but really not, we're not prepared to give any real specifics about this action or that action. Great. Thank you very much.

Chris Park: It's just, I think, part of how we manage the business. We don't look at just the overall numbers. We look down through all the business units within and order trends in those businesses and try to be proactive. And as I think, you know,

Chris Park: The, you know, chatter of a recession surely increased this week, you know, you know, heightened back up a bit, you know, we feel good that we were proactive and have addressed this. And, you know, really, it's across all three segments, but really not, you know, we're not prepared to give any real specifics about this action or that action.

Chris Park: Great, thank you very much.

Operator: We will take our next question from Michael, from Truist Securities. Please go ahead.

Speaker Change: We'll take our next question from Michael Ciarmoli with Truist Securities. Please go ahead, your line is open.

Operator: Hey morning, guys. Thanks for taking the questions. Nice results. Lynn, you may have just answered this, but no more kinds of meat or substance.

Speaker Change: Hey, morning guys. Thanks for taking the questions. Nice results.

Lynn: Lynn, you may have just answered this, but no more kind of meat or substance, you can't give us anything kind of on that restructuring. Are you, you know, bringing in footprint, you know, are you cutting heads or trimming product lines or?

Operator: You can't give us anything kind of on that restructuring. Are you, you know, bringing in a footprint, you know, are you cutting heads or trimming product lines or, Yeah, I know you said it was across all segments, but any more detail? And is this, you know, I know you didn't give a specific margin bogeyman at the investor day, but you know, is this ongoing restructuring necessary to kind of be in that top quartile? Or is this kind of at? Maybe I'll have Chris take a shot at that and see if he can put a little more color on it.

Speaker Change: Yeah, I know you said it was across all segments, but any any detail and is this

Speaker Change: I know you didn't give a specific margin bogey at the investor day, but is this ongoing restructuring necessary to kind of be in that top quartile, or is this kind of additive?

Chris Park: Maybe I'll have Chris take a shot at that and see if he can put a little more color on it.

Chris Barker: I definitely can. It's so good. You know, I appreciate the question, Mike. And, you know, I'll answer your last question first. And I think the way that we're looking at this is, you know, to just echo what Lynn had said, it's really about positioning ourselves for future growth across the business. But, you know, as we've emphasized many times in the past and spent a lot of time talking about it at Investor Day, we are constantly looking to optimize our operations.

Speaker Change: I definitely can. So good, you know, I appreciate the question, Mike. And, you know, I'll answer your last question first. And I think the way that we're looking at this is, you know, to just echo what Lynn had said, it's really about positioning ourselves for future growth across the business. But

Chris Park: And, you know, we're a broad, diverse business. And as much as we're proud of the overall performance, and we are really proud, and the teams are doing a great job to achieve that, it doesn't mean that we don't continue to analyze and look inside of the businesses to see areas where we can drive efficiency in the business. And we'll tackle those.

Chris Park: As we've emphasized many times in the past and spent a lot of time talking about it at Investor Day, we are constantly looking to optimize our operations. We've done all of the things that you've mentioned in the past, whether it's footprint rationalization, labor efficiency moves across the organization, product line separations, and we continue to look at that constantly across the organization. In this case, the majority of the restructuring spend and benefit is going to be across the A&I segment, and we are heavily focused on areas of both growth and achieving efficiency. I think as you look across the other segments in defense electronics and naval and power,

Chris Park: I'd also note that some of the restructuring that we're doing is to support volume increases, and it's to, you know, better align ourselves and have our businesses prepared for that long-term profitable growth. So, you know, you tend to think of restructuring as, you know, taking out cost structures, but I'm very pleased to say some of this restructuring is also to support volume increases.

Chris Barker: We've done all of the things that you've mentioned in the past, whether it's footprint rationalization, you know, labor efficiency moves across the organization, product line separations, you know, and we continue to look at that constantly across the organization. So, in this case, the majority of the restructuring spend and benefits are going to be across the A&I segment.

Chris Park: So, it's just, I think, part of how we manage the business; we, you know, don't look at just the overall numbers; we look down through all the business units within and, you know, order trends in those businesses and try to be proactive. And as I think, you know, the chatter of a recession surely increased this week, you know, you know, heightened a bit, you know, we feel good that we were proactive and addressed this. And, you know, really, it's across all three segments, but really not, we're not prepared to give any real specifics about this action or that action.

Chris Park: I definitely can. So, you know, I appreciate the question, Mike. And, you know, I'll answer your last question first.

Chris Park: And I think the way that we're looking at this is, you know, to just echo what Lynn had said, it's really about positioning ourselves for future growth across the business. But, you know, as we've emphasized many times in the past and spent a lot of time talking about it at Investor Day, we are constantly looking to optimize our operations. We've done all of the things that you've mentioned in the past, whether it's footprint rationalization, you know, labor efficiency moves across the organization, product lines, separations, you know, and we continue to look at that constantly across the organization.

Chris Park: So, you know, in this case, the majority of the restructuring spend and benefits are going to be across the A&I segment. And we are heavily focused on areas of both growth and efficiency. I think as you look across, you know, the other segments and defense electronics and naval and power, you're looking at a little bit more of a movement that might be focused toward footprint rationalization and those activities that are set up to support, you know, future growth.

Chris Barker: And we are heavily focused on, you know, areas of both growth and achieving efficiency. I think as you look across, you know, the other segments in defense electronics and naval and power, you're looking at a little bit more of a movement that might be focused toward footprint rationalization and those activities that are set up to support, you know, future growth. But it is certainly growth-focused across each one of the segments.

Chris Park: You know, you're looking at a little bit more of a movement that might be focused towards footprint rationalization and those activities that are set up to support future growth. But it is certainly growth-focused across each one of the segments. So

Chris Park: But it is certainly growth focused across each one of the segments. So, you know, as we look at the total spend, I mean, it's important to note that it's about, you know, 12 to, you know, $13 million of that is going to be in cash. It's an expense, but it's cash. And about 2 to 3 million of that is non-cash. And that's just, you know, when you're moving your footprint around, you do have impairments and things like that that affect the results, but we're happy that we could, you know, raise our cashflow guidance here and not remove that from the results. So, you know, it really speaks to the health of the organization and what's happening with cash.

Chris Barker: So, you know, as we look at the total spend, I mean, it's important to note that about twelve to thirteen million dollars of that is going to be in cash. You know, it's expensive, but it's cash, and about two to three million of that is non-cash. And that's just, you know, when you're moving your footprint around, you do have impairments and things like that that are affected.

Chris Park: As we look at the total spend, I mean, it's important to note that it's about $12 to $13 million of that is going to be in cash. It's expense, but it's cash. And about $2 to $3 million of that is non-cash. And that's just when you're moving your footprint around, you do have impairments and things like that that affect it. But we're happy that we could raise our cash flow guidance here and not remove that from the results. So it really speaks to the health of the organization and what's happening in cash.

Chris Barker: But we're happy that we could raise our cash flow guidance here and not remove that from the results. So, you know, it really speaks to the health of the organization and what's happening in cash. Got it, got it.

Chris Barker: And then just, you know, you had a really strong quarter here, especially on earnings. I know you kind of previously called out, you know, the 40% 40 60 split, but just anything unusual. I mean, if I look at, you know, the cadence of this year, you grew first half revenues by 12%, you know, you raised money, but you're really going to see a step down in growth, probably like 3%, even at the high end. And I guess specifically honing in just on defense, you know, the low end of your market guidance there for again, just your defense would assume revenues are down second half first first half.

Speaker Change: Got it, got it. And then just, you know, you had a really strong quarter here, especially on earnings. I know you had kind of previously called out, you know, the 40%, 40-60 split, but just

Speaker Change: Anything unusual? I mean, if I look at, you know, the cadence of this year, you grew first half revenues, you know, 12%, you know, you raised, but you're really going to see a step down in growth, you know, probably like 3%, even at the high end.

Chris Park: And I guess, specifically honing in just on defense, you know, the low end of your market guidance there for, again, just your defense would assume revenues are down second half versus first half?

Speaker Change: Is there anything, and I don't think you've ever done that before, where we see revenues be, is there any kind of nuance or anything kind of unusual this year?

Chris Park: Yeah, I would say across aerospace and defense, you know, Mike, we are relatively flat. I mean, we are projecting a very slight increase in the back half of the year. And you are right, this is somewhat unusual.

Chris Barker: Is there anything, and I don't think you've ever done that before, where we see revenues be, is there any kind of nuance or anything kind of unusual this year? Yeah, I would say across aerospace and defense, you know, Mike, we are relatively flat. I mean, we are projecting a very slight increase in the back half of the year. And you are right, this is somewhat unusual.

Chris Park: Yeah, I would say across aerospace and defense, Mike, we are relatively flat. I mean, we are projecting a very slight increase in the back half of the year, and you are right, this is somewhat unusual.

Speaker Change: I think Lynn and Kristine kind of hit upon it, you know, some of this a little bit earlier in that, you know, the health and improvement of the supply chain has had a pretty dramatic effect, particularly on the businesses that we have within our ground defense market. So as we look at ground defense.

Chris Park: I think Lynn and Kristine kind of hit upon some of this a little bit earlier in that, you know, the health and improvement of the supply chain have had a pretty dramatic effect, particularly on the businesses that we have within our ground defense market. So as we look at ground defense, you know, with our very strong first half of the year, based upon the timing and recovery of that supply chain, and also some conservatism that we're taking in that market relative to some of the product, you know, the movement, and things that we're doing to support our restructuring, we're taking a little bit of a conservative view in that regard.

Chris Park: itwith our very strong first half of the year it based on the timing and recovery of that supply chain and also some conservatves and that we're taking in that market relative to some of the product the movement and things that we're doing to support our restructuring we're taking a little bit of a conservative view in that regard

Chris Barker: I think Lynn and Kristine kind of hit upon some of this a little bit earlier in that, you know, the health and improvement of the supply chain have had a pretty dramatic effect, particularly on the businesses that we have within our ground defense market. So as we look at ground defense, you know, with our very strong first half of the year, based upon the timing and recovery of that supply chain, and also some conservatism that we're taking in that market relative to some of the product, you know, the movement, and things that we're doing to support our restructuring, we're taking a little bit of a conservative view in that regard.

Chris Park: I mentioned on the call that, you know, the aerospace defense market is still expecting a good sequential ramp, but, you know,

Speaker Change: Some of the revenue here in Naval and Power, and this has really helped to contribute to our beat on the quarter, was timing, right? So you saw that slide from Q3, Q4 into the second quarter.

Chris Park: I mentioned on the call that, you know, the aerospace defense market is still expecting a good sequential ramp. But, you know, some of the revenue here in Naval Empower, and this really, you know, helped to contribute to our, our, beat on the quarter was timing, right? So you saw that slide from Q3, Q4 into the second quarter, you know, and we'll see how things go across the remaining half of the year.

Chris Barker: I mentioned on the call that, you know, the aerospace defense market is still expecting a good sequential ramp, but, you know, some of the revenue here in naval and power, and this really, you know, helped to contribute to our, our, beat in the quarter was timing, right? So you saw that slide from Q3, Q4 into the second quarter, you know, and we'll see how things go across the remaining half of the year.

Chris Park: you know and we'll see how things go across the you know remaining half of the year.

Chris Park: Within commercial aerospace, you know, we had a very, very strong first half of the year, but we continue to approach that cautiously. So I'm hopeful that as we look at these projected ramps that both Boeing and Airbus have for 2025, that there's opportunity that lies ahead. But at this point in time, we felt it was prudent to

Chris Barker: Within commercial aerospace, you know, we had a very, very strong first half of the year, but we continue to approach that cautiously. So, I'm hopeful that as we look at these projected ramps that both Boeing and Airbus have for 2025, that there's opportunity that lies ahead. But at this point in time, we felt it was prudent to.

Chris Park: Within commercial aerospace, you know, we had a very, very strong first half of the year, but we continue to approach that cautiously. So I'm hopeful that, as you know, when we look at these projected ramps that both Boeing and Airbus have for 2025, there's opportunity that lies ahead. But at this point in time, we felt it was prudent to

Chris Barker: And then just the last one, again, nuance with the guidance. I mean, I don't know where we are, you know, in the broader macro, but it sounded, you know, you had tougher growth in industrial, but you've got a really big 12% sequential step up in the second half to get to flat. And I think you called out the uptick in orders on the vehicle. So presumably, you've got line of sight there.

Chris Park: to take a conservative approach.

Speaker Change: Okay, and then just the last one again, nuance with the guidance. I mean, I don't know where we are, you know, in the broader macro, but it sounded, you know, you had

Speaker Change: Growth and Industrial. But you've got a really big 12% sequential step up in the second half to get to flat. And I think I think you called out the uptick.

Chris Park: Okay, and then just the last one again, nuance with the guidance. I mean, I don't know where we are, you know, in the broader macro, but it sounded like you had tougher growth in industrial, but you've got a really big 12% sequential step up in the 2nd half to get to flat. And I think you called out the uptick in orders on the vehicle. So, presumably, you've got line of sight there, and it sounds like some of those challenges, you know, you called out stabilization, and it looks like you've got pretty good visibility there.

Chris Park: in orders on the vehicle. So presumably you've got line of sight there and it sounds like some of those challenges, you know, you call that stabilization and it looks like you've got pretty good visibility there.

Chris Barker: And it sounds like some of those challenges, you know, you called out stabilization, and it looks like you've got pretty good visibility there. Yeah, it's definitely an area where when we talked to you last in the first quarter on the call, we talked about general industrial orders being down. And, you know, but we were encouraged and starting to see signs that things were stabilizing through the communication that we have with our customers and, you know, the awards that we saw ahead of us. Here in the second quarter, we have actually flattened out year to date.

Chris Barker: And that's actually a very big achievement for this business. Because since those highs of 2021, we have been, you know, we've had strong orders, but they've been decreasing quarter after quarter. So the stabilization that we had here is very encouraging. And then I will say, you know, as we're monitoring this very closely, and one month doesn't make a year by any stretch, but we had our highest order month in general industrial in the past 16 months. So we saw signs of strength, and some of that will convert, you know, here very late in the year. So, good question.

Speaker Change: Yeah, it's definitely an area where, when we talked to you last, in the first quarter on the call, we talked about general industrial orders being down and, you know, but that we were encouraged and starting to see signs that things were stabilizing and through the communication that we have with our customers and, you know, the awards that we saw ahead of us.

Speaker Change: Here in the second quarter, we have actually flattened out year-to-date, and that's actually a very big achievement for this business, because since those highs of 2021, we have been, you know,

Speaker Change: We've had strong orders, but they've been decreasing quarter after quarter. So the stabilization that we had here is very encouraging. And then I will say, you know, as we're monitoring this very closely, and one month doesn't make a year by any stretch, but we had our highest order month.

Speaker Change: in general industrial in the past sixteen months so we saw signs the strength and some of that will convert 's here very late in the year so good quest

Kristine Liwag: Okay, yeah, that's a great call. Thanks, guys. I'll jump back in the queue. Thank you very much.

Operator: Okay, yeah, that's a great caller. Thanks, guys. I'll come back on the queue.

Kristine Liwag: Okay, yeah, that's a great color. Thanks, guys. I'll come back in the queue.

Operator: Thank you very much. Next question from Nathan Jones. Go ahead. Good morning, Nathan. Hey, Nathan, we're not hearing you.

Operator: And we'll take our next question from Nathan Jones with Stiefel. Please go ahead. Your line is open.

Speaker Change: Thanks, Megan.

Speaker Change: And we'll take our next question from Nathan Jones with Stiefel. Please go ahead, your line is open.

Speaker Change: Morning, Nathan.

Operator: If you're talking, Nathan, you may need to check... Phone, we have you opened on our. My apologies, I was on mute.

Speaker Change: Hey Nathan, we're not hearing you if you're talking.

Speaker Change: Nathan, you may need to check the mute function on your phone. We have you opened on our end.

Nathan Jones: My apologies; I was on mute.

Operator: Unknown Speaker, So good morning, everyone. Maybe I'll start with a couple of questions on the subsea pump announcement.

Operator: ... Still in the process of commercializing it.

Lynn Bamford: I know you guys had that on display at Analyst Day, and the folks there involved with that project were pretty excited about it. I think you've sized that as a pretty material opportunity over the next 10 years. So maybe some commentary on the timeframe for commercializing that product and any discussion around the opportunity that you see over the next five to 10 years from that. Yeah, so it is an area that, you know, we're definitely, as the visibility in the market becomes clear about what we have, we can definitely see that there's strong demand for the reliability that we can bring to this market that is just dependent on a much more commercial kind of grade of products.

Speaker Change: Still in the process of commercializing it. I know you guys had that on display at the Analyst Day and the folks there involved with that project were pretty excited about it.

Nathan Jones: I think you've sized that as a pretty material opportunity over the next 10 years. So maybe any commentary on the time frame for commercializing that product and any discussion around the opportunity that you see over the next 5 to 10 years from that business.

Lynn Bamford: Yeah, so it is an area that, you know, we're definitely, as the visibility in the market becomes clear about what we have, we can definitely see that there's strong demand for the reliability that we can bring to this market that is just dependent on a much more commercial kind of grade of products. And so we feel great about, you know, the products we're building and, you know, proud that it's another example of our crossover technology, where we take a core investment and continue to take it to, you know, first the naval, then commercial nuclear, and now this market, and who knows what the future holds for us.

Lynn Bamford: Yeah, so it is an area that, you know, we're definitely, you know, as the visibility in the market becomes clear of what we have.

Lynn Bamford: We can definitely see that there's strong demand for the reliability that we can bring to this market that has just depended on much more commercial.

Lynn Bamford: And so we feel great about, you know, the products we're building and, you know, proud that it's another example of our crossover technology, where we take a core investment and continue to take it to, you know, first the naval, then commercial nuclear, and now this market, and who knows what the future holds for us. There are some other things we're even exploring.

Lynn Bamford: of grade of products. And so we feel great about, you know, the products we're building and, you know, proud that it's another example of our crossover technology where we take a core

Lynn Bamford: and continue to take it to, you know, first the naval, then commercial nuclear, and now this market, and who knows what the future holds for us. There's some other things we're even exploring. But, you know, with that...

Lynn Bamford: But, you know, with that, you know, I think we mentioned that there's a potential for $250 million in orders by the end of this decade. And I'm sure, you know, we've talked about the three major customers that we, you know, have had press releases on our engagements with PetroBask, which was announced back in February of 24. We signed a contract with them to develop and deploy a pump. And that project is off to a great start. We've talked about our shell development for, you know, quite some time. It goes back a while.

Lynn Bamford: There are some other things we're even exploring. But, you know, with that, I think we mentioned that there could be $250 million in orders by the end of this decade. And I'm sure, you know, we've talked about the three major customers that we have had press releases on our engagements with.

Lynn Bamford: I think we mentioned that there's a potential of $250 million in orders by the end of this decade. I'm sure you know we've talked about the three major customers that we have had press releases on our engagements with.

Lynn Bamford: Petrobask was announced back in February of 24, we signed a contract with them to develop and deploy

Lynn Bamford: And, you know, we're on track to be able to deliver and be ready for deployment our first subsea pumping system by the end of this year. And so we're really pleased with that. And then there was obviously the press release on Saipan about, you know, reaching, you know, completion of the qualification process, which is very major.

Lynn Bamford: A pump and that project is off to a great start.

Lynn Bamford: We've talked about our shell development for quite some time. It goes back a while, and we're on track to be able to deliver and be ready for deployment our first subsea pumping system by the end of this year, and so we're really pleased with that. And then there was obviously the press release on Saipan about, you know ...

Lynn Bamford: And we know for sure that, you know, some potential customers, PetroBask and Total are two that have been named publicly. We're really waiting for that milestone to figure out how they're going to work it into their operation. So just a lot of great things going on in that market. You know, we see that $250 million by the end of this decade, doubling to over $500 million in orders by the middle of the next decade.

Lynn Bamford: Reach, you know, completion of the qualification process, which is, which is very major. And we know for sure that, you know, some potential customers

Lynn Bamford: Petrovac and Total is two that have been named publicly.

Lynn Bamford: We're really waiting for that milestone to, you know, figure out how they're going to work it into their operation. So, just a lot of great things going on in that market. You know, we see, you know, that $250 million by the end of...

Lynn Bamford: And I think as we continue to open the doors with more customers using the technology, that number will only stand to grow as we go forward. Great question on the orders. I know you can have some lumpiness in some of the business on order rates, but the first and second quarter order rates were up significantly, and very high book to bills. Maybe a little bit more color on where you're seeing the strength in those order rates, how much that's increasing your confidence about, you know, the revenue profile and revenue growth as we head into 2025. Sure, I'll take that one on me.

Lynn Bamford: This decade, you know, doubling to over $500 million in orders by the middle of next decade. And I think as, you know, we continue to open the doors with more customers with the technology, you know, that number will only stand to grow as we go forward.

Nathan Jones: Great question on orders. I know you can have some lumpiness in some of the business on order rates, but the first and second quarter order rates were up significantly, and very high book to bills.

Speaker Change: Question on the orders. I know you can have some lumpiness in some of the business on order rates, but the first and second quarter order rates were up significantly and very high booked to bills.

Speaker Change: Maybe a little bit more color on where you're seeing the strength in those order rates, how, you know,

Speaker Change: How much that's increasing your confidence about the revenue profile and revenue growth as we head into 2025?

Chris Barker: And I, you know, we had another very strong quarter for sales. And I think that's always, you know, relevant when you start talking about, you know, book to bill. But, you know, our book to bill overall for the second quarter was about 1.3 times. And, you know, we had a 1.4 times book to bill across our aerospace and defense businesses, and certainly heavier weighted towards the defense side of things. And we had a one time book to bill across our commercial businesses.

Speaker Change: I'll take that one on me tonight. Yeah, we had a very another very strong quarter for sales. And I think that's always relevant when you start talking about, you know, book the bill, but

Speaker Change: Our book-to-bill overall for the second quarter was about 1.3 times.

Speaker Change: We had a 1.4 times book-to-bill across our aerospace and defense businesses, and certainly heavier-weighted towards the defense side of things, and we had a one-time book-to-bill across our commercial businesses.

Chris Barker: Yeah, as you break down the orders, we did have a large amount of orders come through this quarter, and we know it can be lumpy. But it's still a good sign for the business and what we're looking outward towards in naval defense. And we saw a good slug of orders just kind of continuing to support what we, you know, have is that existing business and key content on the carrier and sub platforms.

Chris Park: Yeah, as you break down the orders, we did have a large amount of orders come through this quarter, and we know it can be lumpy, but it's still a good sign for the business and what we're looking outward towards in naval defense. And we saw a good slug of orders just kind of continuing to support what we have as that existing business and key content on the carrier and sub-platforms. But I was also really encouraged to So some signs of life, we talked a little bit about that at Investor Day, that things are growing, and then beyond that, you know, we received some orders to support fleet services in the aftermarket, another thing that we talked about at Investor Day. So, we're starting to see some more activity in those areas, and that's encouraging.

Chris Park: yes as you break down the orders we did have a large amount of orders come through this quarter and we know it can be won'ttobe but it's still agood sign for the business and what we're looking ourward towards

Chris Park: and Naval Defense. And we saw a good slug of orders just kind of continuing to support what we, you know, have is that existing business and key content on the carrier and sub platforms. But I was also really encouraged to see here in the quarter, you know, we had a number of wins across our naval handling systems businesses, you know, to direct foreign military customers. And that's, that's good, good business. So some signs of life, we talked a little bit about that at Investor Day, that things are growing. And then beyond that, you know, we received some orders to support fleet services in the aftermarket, another thing that we talked about at Investor Day. So starting to see some more active

Chris Barker: But I was also really encouraged to see here in the quarter that we had a number of wins across our naval handling systems businesses, you know, to direct foreign military customers. And that's, that's good, good business.

Chris Park: All activities in those areas, and it's encouraging.

Nathan Jones: Great, thanks for taking my question.

Chris Barker: So some signs of life, we talked a little bit about that at Investor Day, that things are growing. And then, beyond that, you know, we received some orders to support fleet services in the aftermarket, another thing that we talked about at Investor Day. So we are starting to see some more activity in those areas, and it's encouraging. Great, thanks for taking my question. Thank you. Our next question is from Peter Arment with Baird. Please go ahead.

Speaker Change: Great. Thanks for taking my questions.

Speaker Change: Thank you. Thank you.

Speaker Change: We'll take our next question from Peter Arment with Baird. Please go ahead, your line is open.

Operator: Yeah, thanks. Good morning, Lynn, and Kristian. Nice results. Lynn, maybe just to talk about it from maybe, you know, follow up on Nathan's question about orders, just when we look at, particularly like defense electronics, your growth for the year, eight to 10%, you obviously just had a really strong quarter 16% growth. Maybe you could talk a little bit about the differences you're seeing, whether it's domestic versus FMS, and kind of how sustainable it is.

Speaker Change: Yeah, thanks. Good morning, Lynn, Christian. Nice results. Lynn, maybe just to talk about it from maybe, you know, follow up on Nathan's question about orders, just

Speaker Change: When we look at defense electronics, your growth for the year, 8-10%, you obviously just had a really strong quarter, 16% growth.

Speaker Change: Maybe you could talk a little bit about the differences you're seeing, whether it's domestic versus FMS and kind of...

Speaker Change: How sustainable it is. I know FMS is notoriously lumpy, but you know, is there, are we still like in the early innings for, for, you know, the, the build out of what they need internationally and maybe just talk about those differences. Thanks.

Operator: I know FMS is notoriously lumpy, but you know, are we still in the early innings for, you know, the build out of what they need internationally, and maybe just talk about those differences? Thanks. So thanks for that question. And it is something that we're, you know, I will say I very actively engage with the team to try and understand that this is, you know, say, a bubble or a pull forward of something that's not going to be sustained.

Speaker Change: So thanks for that question. And it is something that we're, you know, I will say I very actively engage with the team to try and understand that this is

Speaker Change: you know, say, a bubble or a pull forward of something that's not going to be sustained. And when we go through all the metrics that we look at across the board,

Operator: And when we go through all the metrics that we look at across the board, with, you know, the pipeline of total opportunities, the bidding activity, you know, a whole variety of things, it does not feel, you know, it feels like we're on a steady straight growth rate. No other holds at the exact same levels.

Speaker Change: With, you know, the pipeline of total opportunities, the bidding activity, you know, a whole variety of things. It does not feel, you know, it feels like we're on a steady straight growth rate. Now, whether it holds at the exact same levels, you know, we, you know, gave some guidance to this.

Lynn Bamford: You know, we gave some guidance on this, you know, at investor day, but not really getting into 25 or 26 specific targets. But, you know, we very much do think it is sustainable in what we're doing. And the drivers, you know, specifically through foreign military Sales, feel like they are in the early days. And I think we're starting to see even some of the ground vehicle programs across Europe finally start to take form and move in that scenario that, you know, I think we anticipated in 22, we would start seeing demand from in 23, you know, given, you know, the war activity over, you know, in Europe, and it's taken a lot longer than we would So I think that it's, you know, very early days.

Nathan Jones: at Investor Day, but not really getting into 25 or 26 specific targets.

Nathan Jones: But, you know, we very much do think it is sustainable in what we're doing.

Nathan Jones: on

Speaker Change: The drivers, you know, specifically through foreign military sales.

Speaker Change: I feel like they are at early days, and I think we're starting to see actually even some of the ground vehicle programs across Europe .

Speaker Change: Finally start to take form and move in that scenario that

Nathan Jones: You know, I think we anticipated in 22, we would start seeing demand from in 23.

Speaker Change: given the war activity over in europe and ' signal lot longer than we would have anticipateated but i think that's very early days

Lynn Bamford: You know, there's a lot of pull across the NATO countries for our tactical communications equipment, and I think there's a lot of, you know, tailwinds still with that. And then, you know, as Chris mentioned, you know, our aircraft handling equipment and the arresting systems that we have through the recent ESCO acquisition that, you know, we just have ongoing engagements around those activities. So I think things just are, you know, really solid across our, you know, broadly, you know, defense electronics specifically, then even our foreign military sales, that's obviously outside of defense electronics. I appreciate that, Culler.

Nathan Jones: a lot of poll cost nato countries for our tactical communications equipment and

Speaker Change: I think there's a lot of, you know, tailwinds still with that and then, you know, as Chris mentioned, you know, our handling, aircraft handling equipment and the arresting systems that we have through the recent ESCO acquisition that

Speaker Change: wewould just have ongoing engagement around those activities so i think things just are really solid across our broadly defense electronic specifically then even our formed the military sesthat'sobviously outside of defense electronics

Lynn Bamford: And then just for the follow-up and just switching gears on your nuclear aftermarket business, how does that get impacted by the ADVANCE Act? I know we've been tracking all the plant life extensions and the permitting that's been going on. Does that allow for any pull forward, or is it just kind of in line with what you were thinking when you laid out the investor day where this business is going to grow substantially? So the ADVANCE Act is more for new builds.

Culler: I appreciate that, Culler. And then just for the follow-up, I've been just switching gears on your nuclear aftermarket business.

Speaker Change: is that how does that get impacted by the advance actor or i know there's we've been tracking all the plant-life extensions and the permitting that's been going on

Speaker Change: Does that allow for any pull forward or is it just kind of in line with what you were thinking when you laid out the investor day where this business is going to grow substantially?

Lynn Bamford: You know, it's interesting, there's both the ADVANCE Act and something else that's happened since our investor day. The DOE has put forward a notice of intent to fund $900 million for Gen 3 plus small modular reactors, where the ADVANCE Act is broad, but it's more geared toward, you know, the Gen 4 advanced reactors. And so the ADVANCE Act actually has been moving through Congress for quite some time.

Speaker Change: So the ADVANCE Act is more for new build, you know, it's interesting there's both the ADVANCE Act and something else that's happened since our investor day is DOE, the DOE has put forward the notice of an intent to fund

Speaker Change: $900 million for Gen 3 plus at small modular reactors were advanced.

Speaker Change: The Advanced Act is broad, but it's more geared at, you know, the Gen 4 advanced reactors. And so, the Advanced Act actually had been moving through Congress for quite some time, so we were well aware of it, but it's nice to see it get signed into law, so, you know, that's definitely a great development.

Lynn Bamford: So we were well aware of it, but it's nice to see it get signed into law. So, you know, that's definitely a great development. I would say, in our, in our, broadly in our aftermarket business, you know, of the 94 operating reactors in the US, now over three-fourths of them, just barely over, but over three-fourths of them have declared that they're intending to do a plant pipe extension. So those numbers continue to, you know, inch up.

Speaker Change: i would say in ner inner

Speaker Change: Broadly in our aftermarket business, of the 94 operating reactors in the U.S., now over three-fourths of them, just barely over, but over three-fourths of them have declared that they are intending to do a plant pipe extension, so those numbers continue.

Nathan Jones: to inch up and we feel good about the low double-digit growth in our total nuclear business guide that we put forth at the investor day that

Lynn Bamford: And we feel good about the low double-digit growth in our total nuclear business guide that we put forth at investor day, that things continue on our development with small modular reactors, and the aftermarket continues to grow. And then, you know, early days, but we really are exploring some ways of broadening, you know, our footprint. And we're really excited that, you know, the Ultra acquisitions, the WSE acquisitions, both give us reach to different, new, and different customers and a European footprint where a lot of the spend for Europe they want to do inside of Europe.

Nathan Jones: things continue on our development with small modcular reactors

Speaker Change: and the aftermarket continues to grow and then, you know, early days but we really are exploring some ways of broadening, you know, our footprint and we're really excited that, you know, the Ultra acquisitions, the WSE acquisitions, both

Nathan Jones: Give us reach to different, to new and different customers.

Speaker Change: and a European footprint where a lot of the spend for Europe they want to do inside of Europe , so I feel really

Lynn Bamford: So I feel really, really great about the two recent acquisitions in bringing, you know, both the simulation capability that gives us a reach to a global reach that we didn't have and a European reach that we didn't have. And so I feel great about our nuclear business overall and the aftermarket business in the US. Bringing Ultra in gives us more capability, and they have some unique customer relationships doing things that, you know, we don't necessarily have. And so, you know, everything is just building on itself. It's great to hear. I'll jump back in the queue.

Speaker Change: really great about the two recent acquisitions in bring both the simulation capability that gives us a reach to a global reach that we didn't have in european reach that we didn't happen so

Speaker Change: I feel great about our nuclear business overall and the aftermarket business in the U.S., you know, bringing Ultra in gives us more capability and they have some unique customer relationships doing things that, you know, we don't necessarily have. And so, you know, everything is just building on itself.

Peter Arment: Great to hear. I'll jump back in the queue. Nice results.

Operator: Thank you, Peter. For a free search, please go ahead; your line is

Speaker Change: Great to hear. I'll jump back in queue. Nice results.

Operator: We'll take our next question from Myles Walton with Wolf Research. Please go ahead, your line is open.

Operator: Nice results. Thank you, Peter. Next question from Myles Walton. Hi, good morning, everyone.

Speaker Change: Thank you, Peter.

Speaker Change: We'll take our next question from Myles Walton with Wolf Research. Please go ahead, your line is open.

Operator: This is Greg Dahlberg on for Myles Walton, kind of continuing on Nathan's line of questioning. I was just wondering if you'd go into more details on new orders. I guess what are you seeing for pricing on the new orders? And, you know, as a follow-up to that, are there any LTAs that you still need to work through on the renegotiation side? So I'll maybe just talk a little bit about the LTAs and then see if Chris can provide a little more color on the orders.

Greg Dahlberg: Hi good morning everyone this is Greg Dahlberg on for Myles Walton. Kind of continuing on Nathan's line of questioning I was just wondering if you go into more details on new orders I guess what are you seeing for pricing on the new orders and you know as a follow-up to that are there any LTAs that you still need to be worked through on the renegotiation side?

Speaker Change: So I'll maybe just talk a little bit about the LTAs and then see if Chris can provide a little more color on the orders and so we still do have LTAs that we are negotiating. This is an ongoing activity that

Operator: And so we still do have LTAs that we are negotiating. This is an ongoing activity that can, you know, be, you know, just a topic; we have to work with our customers. And, you know, there are LTAs that expire at the end of this year that we're very much engaged in, working with our customers to find win-win solutions. But yes, it is very much an ongoing activity. But I'll let Chris talk about pricing and any more color on the order. Yeah, no; I think it captured it well.

Chris Park: You know, can, you know, be, you know, just topics; we have to work with our customers. And, you know, there's LTAs that expire at the end of this year that we're very much engaged in, you know, working with our customers to find win-win solutions. But yes, it is very much an ongoing activity. But I'll let Chris talk about pricing and any more color on the order. Yeah, I think it captured it well. I mean, we still have some opportunities that we're chasing.

Chris Park: You know can

Chris Park: You know, the.

Chris Park: You know, just topics we have to work with our customers, and you know, there's LTAs that expire at the end of this year that we're very much engaged in, you know, working with our customers to find win-win solutions, but yes, it is very much an ongoing activity, but I'll let Chris talk about

Lynn Bamford: I mean, we saw some opportunities that we're chasing on the LTAs. And we'll do that, and pricing is a constant exercise for us. Maybe just to touch upon a couple of the areas and orders that I didn't talk about.

Chris Park: Pricing and any more color on the orders.

Chris Park: I think you captured it well. We still have some opportunities that we're chasing on the LTAs, and we'll do that, and pricing is a constant exercise for us.

Chris Park: Maybe just to touch upon a couple of the areas and orders that I didn't talk about and I think as you, you know, look across

Chris Park: The Defense Electronics business for the second quarter.

Chris Park: I mean, they were at a one times book to bill, but again, the sales for the second quarter were up 16%, so very strong volume of order activity.

Chris Barker: You know, I think as you, you know, look across the defense electronics business for the second quarter, I mean, they were at a one times book to bill ratio, but again, the sales for the second quarter were up 16%. So, very strong volume of order activity. You know, year over year, we did see some impact on defense electronics orders from just timing of naval orders. I mean, they have, you know, a lot of content across these naval platforms as well. And sometimes that can be a little bit lumpy.

Chris Barker: But I think as you, you know, look to the second half of the year, with that business, we're encouraged by the continued trajectory and improvement that we're seeing in the month of July alone. Again, one month doesn't make a year. We saw a 24% increase in defense electronics orders in the month. So, good things are happening. And, you know, as you step back and you look across our power and process markets, you know, we were, again, in a position to be able to do a lot of things.

Speaker Change: But I think as you, you know, look to the second half of the year with that business, we're encouraged with, you know, the continued trajectory and improvement that we're seeing in the month of July alone. Again, one month doesn't make a year.

Speaker Change: We saw a 24% increase in Defense Electronics orders in the month, so good things are happening.

Chris Park: And, you know, as you step back and you look across our power and process markets.

Chris Barker: You know, we were again at about a one times book to bill ratio. We are expecting a bigger second half of the year for both of those businesses, not dramatically, but a lot of that just has to do with the timing of turnarounds and outages and the work that's being performed within those businesses. So overall, there were no real signs of weakness in the order book or anything that had us concerned in the second quarter. Great, thank you. I'll keep it at one.

Chris Park: We were, again, at about a one-time book-to-bill. We are expecting a bigger second half of the year for both of those businesses, not dramatically. But a lot of that just has to do with the timing of turnarounds and outages and the work that's being performed within those businesses. So, overall, no real signs of weakness in the order book.

Chris Park: or anything that has us concerned in the second quarter

Chris Park: Great, thank you. I'll keep it at one.

Operator: And once again, if you do have a question, you may press star and one on your telephone keypad at this time. We'll take our next question from Tony Bancroft with Gabelli Funds. Please go ahead. Your line is open.

Chris Barker: Once again, if you do have a question, you may press star and 1. We will take our next question in just a moment, and Tony Bancroft. Thank you, Lynn and Chris. Great job on your team. Another fabulous quarter.

Speaker Change: And once again, if you do have a question, you may press star and one on your telephone keypad at this time.

Operator: We'll take our next question from Tony Bancroft with Gabelli Funds. Please go ahead, your line is open.

Tony Bancroft: Thank you, Lynn and Chris. Great job to your team. Another fabulous quarter.

Operator: You know, you've done some acquisitions that are, you know, maybe not specifically your core companies, but you guys ended up building these, you know, sort of other core competencies. Now, you know, where do we look to next? Anything transformational?

Tony Bancroft: Thank you, Lynn and Chris. Great job to your team. Another fabulous quarter. You know, you've done some acquisitions that are maybe not specifically your core competencies, but you've ended up building these other core competencies now.

Lynn Bamford: You know, you've done some acquisitions that are, you know, maybe not specifically your core companies, but you guys ended up building these, you know, sort of other core competencies now. Where do we look next? Anything transformational, you know, more on the nuclear side, more on the aerospace side, or defense, ground defense? If you could just sort of give us your sort of view going forward on where you're going to grow.

Lynn Bamford: Where do we look to next? Anything transformational, more on the nuclear side, more on the aerospace side, or defense, ground defense, if you could just give us your view going forward on where you're going to grow.

Lynn Bamford: You know, more on the nuclear side, more on the aerospace side, or defense, ground defense? If you could just sort of just give us your view going forward on where you're going to grow. Sure. Thank you for that. And thanks for joining us. Um, you know, it's, I would say, a bit unusual that we had two back-to-back nuclear acquisitions. There's just not a lot of potential properties out there.

Speaker Change: Sure, thank you for that and thanks for joining us.

Speaker Change: You know, it's, I would say, a bit unusual that we had two back-to-back nuclear acquisitions. There's just not a lot of...

Lynn Bamford: So we were very purposeful in these acquisitions, and we did not overpay. I would definitely emphasize that. And so we feel great about bringing them into the portfolio of products and just broadening out, you know, our capabilities. And, you know, we do, we do, you know, have a lot of software modeling and content within the group. It doesn't get talked about quite as much.

Speaker Change: potential properties out there. So we were

Speaker Change: very purposeful in these and we did not overpay. I would like to definitely emphasize that and so we feel great about bringing them in.

Speaker Change: to the portfolio of products and just broadening out our capabilities. And we do have a lot of software modeling and content within the group. It doesn't get talked about quite as much. The WSC was really nice.

Lynn Bamford: So the WSC was really nice, you know, as a software product expansion of, of what we do and very complimentary to what we do. You know, we always, you know, when asked for priorities, you know, we always list defense electronics as the, the top of mind priority that, you know, we have such a great business that is well integrated that we know we can bring properties into that team and they can leverage, you know, many of the strengths that are within that group, whether it's their channel to market, the ruggedization expertise, their, you know, supply chain, you know, efficiency, manufacturing footprint.

Speaker Change: It was a software product expansion.

Speaker Change: of what we do and very complimentary to what we do.

Lynn Bamford: We always, when we ask for priorities, we always list Defense Electronics as the top of mind priority, that we have such a great business that is well integrated that we know we can bring properties into that team and they can leverage many of the strengths that are within that group, whether it's their channel to market, their ruggedization expertise, their supply chain.

Lynn Bamford: There's just so many ways that it's, you know, really, we can bring businesses in and make them better as being part of Curtis-Wright. So that's an area we're always looking at. Our naval footprint is very important to us.

Speaker Change: Efficiency, manufacturing footprint. There's just so many ways that it's, you know, really we can bring businesses in and make them better as being part of Curtiss-Wright. So that's an area we're always looking.

Lynn Bamford: Again, not as many properties, you know, available to look at, but, you know, where we can, you know, have major safety and propulsion systems to build out our portfolio. That's an area where we are always looking. And so, you know, I mean, we looked across all our end markets.

Speaker Change: Our naval footprint is very important to us.

Speaker Change: Again, not as many properties available to look at, but where we can have major safety and propulsion systems to build out our portfolio, that's an area where we always are looking.

Lynn Bamford: So I don't want to, you know, say we would not, you know, there's no hard stops that we would never consider something in any of our end markets, but, you know, across our defense markets, and specifically defense electronics, are probably the top priorities. And, you know, we always keep a keen eye for things we can continue to build out our nuclear footprint. That was great. Thank you so much. Great job. Yeah, and I didn't really just add one more thing. I didn't really specifically address the transformational aspect of your question.

Speaker Change: You know, I mean, we look across all our end markets, so I don't want to, you know, say we would not, you know, there's no hard stops that we would never consider something in any of our end markets.

Speaker Change: But, you know, across our defense markets and specifically defense electronics is probably the top priorities. And, you know, we always keep a keen eye for things we can continue to build out our nuclear footprint.

Lynn Bamford: Yeah, and I didn't really just add one more thing because I didn't really specifically address the transformational aspect of your question. And, you know, we are open to larger transactions. I think, you know, when money is expensive, the financial, you know, win with those, the dynamics change with that, you know, and it's not something we're targeting, but we're open to it. And we'll always have an eye to the art of the possible of what we can do with the business.

Lynn Bamford: That's great. Thank you so much. Great job.

Lynn Bamford: Yeah, and I didn't really, just to add one more thing, because I didn't really specifically address the transformational aspect of your question. And, you know, we are open to larger transactions, I think.

Lynn Bamford: And, you know, we are open to larger transactions. I think, you know, when money is expensive, that, you know, the financial winners with those, you know, the dynamics change with that, you know, and it's not something we're targeting, but we're open to it. And we'll always have an eye on the art of the possible of what we can do with the business. But, you know, we're on such a great growth trajectory.

Lynn Bamford: you know, when money is expensive, that, you know, the financial...

Lynn Bamford: You know, win with those.

Lynn Bamford: The dynamics change with that, you know, and it's not something.

Lynn Bamford: But, you know, we're on such a great growth trajectory. We have so many tailwinds coming with us across our end markets and the technologies that we're building. I would say we're, you know, mostly focused on really doing the right thing and preparing for the growth that is before us. And, you know, have the momentum to keep growing double-digit EPS and delivering value to our shareholders with the portfolio we have.

Lynn Bamford: We have so many tailwinds coming with us across our end markets and the technologies that we're building. You know, I would say we're, you know, mostly focused on really doing the right thing and preparing for the growth that is before us. And, you know, have the momentum to keep growing double-digit EPS and delivering value to our shareholders with the portfolio we have. To take our next question, from Louis...

Lynn Bamford: We're targeting, but we're open to it, and we'll always have an eye to the art of the possible of what we can do with the business. But we're on such a great growth trajectory. We have so many tailwinds coming with us across.

Lynn Bamford: R.N. Markets and the technologies that we're building.

Lynn Bamford: You know, I would say we're, you know, we are mostly focused on really doing the right thing and preparing for the growth that is before us.

Lynn Bamford: and you have the momentum to, you know, keep growing, you know, double-digit EPS and delivering value to our shareholders with the portfolio we have.

Operator: We'll take our next question from Louis DiPalma with William Blair. Please go ahead, your line is open.

Louis Dipalma: Thank you and appreciate it.

Speaker Change: We'll take our next question from Louis DiPalma with William Blair. Please go ahead, the line is open.

Operator: ... Hi, good morning, Lynn, Chris, and Jim. You've made significant investments from the R&D side in MASA for your defense electronics, which has seemingly led to market share gains. And it seems that the armed services are still in the early innings of this modular MASA transition.

Speaker Change: Hi, good morning, Lynn, Chris and Jim. You've made significant investments from the R&D side in MASA,

Louis Dipalma: for your defense electronics, which has seemingly

Speaker Change: led to market share gains. And it seems that the armed services are...

Lynn Bamford: I think the Army last week announced a $500 million contract to implement MASA for future vertical lift. Do you see more market share gains associated with the migration to MASA? And also, some of your competitors in defense electronics have struggled. Do you see market share gains associated with that as well?

Speaker Change: still in the early innings of this like modular.

Speaker Change: Massa Transition, I think the Army last week announced a

Louis Dipalma: $500 million contract implement MASA for future vertical lift. Do you see more market share gains associated with the migration to MASA? And also some of your competitors and

Louis Dipalma: Defense Electronics have struggled. Do you see market share gains associated with that as well? Thanks.

Lynn Bamford: Thanks. So we're really pleased with our position in our product portfolio and actually, you know, a handful of products that will be coming to market even in the back half of this year that, you know, have been in development for well over a year and are, you know, going to yet again increase the breadth and the sophistication of the products we bring to market. So we believe we are very well positioned, we believe we have taken some market share over the past 12, 24 months due to various dynamics in the, you know, across the industry, but I think that trend, I've been cautious to say that, you know, it's hard for our customers to change. So they cannot just change on a dime and one day be buying from supplier X, and three months later, be, you know, shipping products with supplier Y.

Speaker Change: So we're really pleased with our position of our product portfolio and actually, you know, a handful of products that will be coming to market even yet in the back half of this year that, you know, have been in development, you know, for well over a year, that are, you know, going to yet again up our

Speaker Change: We believe we are very well positioned. We believe we have taken some market share over the past 12-24 months.

Speaker Change: Due to various dynamics in the, you know, across the industry, but I think that trend, you know, I've been cautious to say that.

Lynn Bamford: And so there are definitely engagements going on to make transitions; we are focused on it and targeting it, but that still has the potential to be a tailwind for us and allow future growth. And, you know, the other thing that's out there is a dynamic, and, you know, we've talked about this off and on over the years, but it's, it's very much as true today as it has been for a long time. We're coming into a period in the US of potentially relatively flat defense budgets.

Speaker Change: It's hard for our customers to change, so they cannot just change on a dime and one day be buying from supplier X and three months later be shipping product with supplier Y. And so there is definitely engagements going on to make transitions. We are focused on it and targeting it, but that still has potential to be a tailwind for us and allow future growth.

Speaker Change: Out there is a dynamic, and we've talked about this off and on over the years, but it's very much as true today as it has been for a long time. We're coming into a period in the U.S. of potentially some relatively flat defense budgets.

Lynn Bamford: And, you know, we have strategies to make that be a growth opportunity for us. And some of that's through our life cycle maintenance programs that we touched on at investor day, and being able to continue to support maintaining the same product configuration for our customers where they're trying to control costs. And it also has the ability, if you have the right products, to drive outsourcing, as they do not have the engineering funding to do, you know, custom solutions for products.

Speaker Change: and, you know, we have strategies to make that.

Speaker Change: Be a growth opportunity for us and some of that through our lifecycle maintenance programs that we touched on in the investor day, and being able to continue to support, you know, maintaining the same product configuration for our customers where they're trying to control cost, and it also has the ability if you have the right products to drive outsourcing, as they do not have the engineering funding...

Lynn Bamford: So, it's, you know, we look to ensure we're doing the right things that, you know, we latch on to growth drivers in the industry and where budgets are growing, but making sure we're doing the right things to grow when budgets are a little compressed. So, the future is really great for that team. Okay, and so you see it as a very slow transition to this modular, open systems approach, but it does still benefit you, right?

Speaker Change: to do, you know, custom solutions for products. And so it's, you know, we look to assure we're doing the right things that, you know, we latch on to growth.

Speaker Change: drivers in the industry and where budgets are growing, but making sure we're doing the right things to grow when budgets are a little compressed. So the future is really great for that team.

Louis Dipalma: Okay, and so you see it as a very slow transition to this modular open systems approach, but it does still benefit you, right?

Lynn Bamford: Oh, 100%. And maybe I, you know, maybe I misspoke in some way about the transition to MOSA, and we've tried to do press releases over, you know, since 2021-2022 about where we have been designed in based on our MOSA compliant product offering. And there are a handful of them out there that you can find on our website. We win a lot of things based on having the MOSA offering, just most frequently, we cannot talk about those wins, but it's endemic in the industry now, and how customers, you know, the primes, or the, you know, the government itself are looking to acquire, and it is being viewed as a requirement, not a nice to have, but a gotta have, and we are really well positioned with that.

Speaker Change: Oh, 100% and maybe I, you know, maybe I misspoke in some way. You know, the transition to MOSA, we've tried to do press releases over, you know, since

Speaker Change: Unknown Speaker 2021-2022 of where we have been designed in based on our MOSA compliant product offering and there's a handful of them out there that you can find on our website. We win a lot of things based on having the MOSA offering, just most frequently we cannot talk about those wins, but it's endemic in the industry now and how customers

Speaker Change: You know the primes or the you know the government itself are looking to acquire and it is being viewed as a requirement not a nice to have but a gotta have and I'm we are really well positioned with that and winning business based on that.

Louis Dipalma: Awesome, thanks!

Lynn Bamford: Awesome. Thanks, Lynn. Thanks, Chris and Jim as well. That's it for me. Thank you, Luis. Any questions on the line at this time?

Louis Dipalma: Awesome, thanks Lynn. Thanks Chris and Jim as well. That's it for me. Thank you, Luis.

Operator: I'll now turn the floor over to Lynn Bamford Chair. Unknown Executive Officer for any additional comments. I just want to say thank you to everybody for joining us today. We'll be on the road at some public events in Q3 that if you have the chance to join, that would be great. And if not, we'll talk to you at our Q3 earnings call.

Lynn Bamford: And there are no further questions on the line at this time. I'll now turn the floor over to Lynn Bamford, Chair and Chief Executive Officer, for any additional or closing remarks.

Louis Dipalma: I just want to say thank you to everybody for joining us today. We'll be on the road at some public events in Q3 that if you have the chance to join, that would be great. And if not, we'll talk to you at our Q3 earnings call. Thank you.

Lynn Bamford: Thank you. Thank you. This is today's Curtiss-Wright. Disconnect your line at this time.

Speaker Change: 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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Q2 2024 Curtiss-Wright Corp Earnings Call

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