Q4 2024 Curtiss-Wright Corp Earnings Call
The Curtiss Wright fourth quarter and full year 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 question following the presentation.
You'd like to ask a question at that time. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from queue by pressing star two.
The interest of time, we ask that you. Please limit yourself to one primary question and one follow up.
Speaker Change: Lastly, if you should require operator assistance. Please press star Zero I would now like to turn the call over to Mr. Jim Ryan Vice President of Investor Relations.
Jim Ryan: Thank you Shannon and good morning, everyone welcome to Curtiss Wright's fourth quarter and full year 2024 earnings conference call.
Jim Ryan: With me on the call today are chairman and Chief Executive Officer, Lynn Bamford, and Vice President and Chief Financial Officer, Chris Barnes.
Jim Ryan: For our call today is being webcast and the press release as well as a copy of today's financial presentation is available for download through the Investor Relations section of our company website at Curtiss Wright Dot Com also a replay of this webcast will be available on the website.
Jim Ryan: Please note today's discussion will include certain projections and statements that are forward looking as defined in the private Securities Litigation Reform Act of 95.
Jim Ryan: <unk> 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 in our public filings with the FCC.
Jim Ryan: As a reminder, the company's results, including adjusted non-GAAP view that excludes certain costs in order to provide greater transparency into Curtiss Wright ongoing operating and financial performance.
Jim Ryan: Any references to organic growth on an adjusted basis and exclude foreign currency translation acquisitions divestitures and restructuring unless otherwise noted.
Jim Ryan: GAAP to non-GAAP reconciliations for current and prior year periods are available in the earnings release and on our website I'd.
Now I'd like to turn the call over to Lynn to get things started.
Lynn Bamford: Thank you Jim and good morning, everyone 2024, it was an exciting year for Curtiss Wright and I want to begin by thanking our nearly 9000 employees for their contributions to our success.
Lynn Bamford: We executed on our growth strategy and continue to invest in some of our most critical areas, including talent systems and research and development, while we achieved record financial results for our shareholders.
Lynn Bamford: We are clearly building momentum and I'm pleased with the team's execution and the steady progress. We made this past year in pursuit of our three year Investor day objectives unveiled this past may.
Lynn Bamford: With that I'll turn to today's presentation.
Lynn Bamford: I'll begin by covering the highlights of our fourth quarter and full year 2024 performance then I'll provide a brief update on our capital allocation and a preview of our 2025 financial outlook before turning the call over to Chris to provide a more in depth review of our financials.
Lynn Bamford: Finally, I'll wrap up with some closing remarks about our long term prospects before we move to Q&A.
Lynn Bamford: Starting with our fourth quarter 2024 highlights sales increased 5% year over year due to a better than expected performance in both our defense electronics enable and power segments.
Lynn Bamford: Operating income was essentially flat while operating margin was strong at 19, 8%.
Lynn Bamford: As a reminder, our various restructuring actions some of which were undertaken to reshape our global footprint generated a few million dollars of initial savings in 2024 and provided a modest benefit to our results.
Lynn Bamford: <unk> earnings per share increased 3% year over year, which also exceeded our expectations and was primarily driven by higher a N D sale.
Lynn Bamford: Free cash flow was strong at $278 million, reflecting a 223% conversion rate due to improved operational performance and lower working capital.
Lynn Bamford: And our order book was exceptionally strong in the fourth quarter up 37% year over year, reflecting a one one times book to Bill.
Lynn Bamford: These results were driven by growth in all of our A&D markets and continued solid demand within commercial nuclear.
Lynn Bamford: Next I'll highlight our full year 2024 results, which included a number of financial records with.
Lynn Bamford: We generated double digit growth in sales and operating income in 2024, reflecting the underlying demand within our core portfolio and another record year of orders.
Lynn Bamford: Delivered modest margin expansion, while maintaining our firm commitment to grow R&D faster than sales.
Lynn Bamford: <unk> earnings per share of $10 90 increased 16% year over year.
Lynn Bamford: Adjusted free cash flow reached a record $483 million and reflected strong conversion of 116% of note. Our results included $16 million of incremental capital expenditures supporting growth investments across all three segments.
Lynn Bamford: Turning to our order book demand was exceptional reflecting a 20% year over year increase reaching a new record of $3 $7 billion and a 1.2 times book to Bill overall.
Lynn Bamford: Leading the way with our naval and power segment, which benefited from strong demand for naval nuclear propulsion equipment supporting the U S. Navy's most critical platforms.
Lynn Bamford: At the same time higher demand for embedded computing and tactical communications equipment in the ground and aerospace defense markets drove great results in our defense electronics segment, where orders crossed $1 billion for the first time.
Lynn Bamford: Total Curtiss Wright's backlog was up 20% in 2020 for reaching a record of more than $3 $4 billion, providing additional confidence in our long term growth outlook.
Lynn Bamford: Turning to slide four we begin with some comments about our acquisitions and share repurchase activity. We added two new businesses in 2024 to further expand our commercial nuclear portfolio in June we added WMC, a leading supplier of power plant control room simulation.
Lynn Bamford: Technology and then on December 31, we closed on the acquisition of Ultra energy, which is a leading provider of reactor protection systems.
Lynn Bamford: Aviation in flux monitoring systems, and specialized temperature and pressure sensors. As a reminder, ultra provides safety critical products and services to commercial nuclear and power generation plants globally, and also support defense markets, including the U K nuclear submarine marine as well.
Lynn Bamford: As various aerospace applications.
Lynn Bamford: This actually acquisition not only enables us to leverage our U K based nuclear manufacturing footprint, but it also expands our presence with leading global FMR designers.
Lynn Bamford: I'm pleased to welcome all of our new colleagues to Curtiss Wright.
Lynn Bamford: As we integrate these new acquisitions, our teams are already collaborating with customers to increase our opportunities for growth as we further expand the scope of Curtiss Wright's capability. In 2024, we also utilized our strong balance sheet and financial position to accelerate our share repurchase activity.
Lynn Bamford: In the month of December alone, we bought back $100 million in stock through an accelerated repurchase plan boosting our full year repurchase activity to $250 million.
We are clearly building momentum and I'm pleased with the team's execution and the steady progress. We made this past year in pursuit of our three year Investor day objectives unveiled this past may.
With that I will turn to todays presentation.
Lynn Bamford: This past year, we also increased our dividend for the eighth consecutive year.
I'll begin by covering the highlights of our fourth quarter and full year 2024 performance then I'll provide a brief update on our capital allocation and a preview of our 2025 financial outlook before turning the call over to Chris to provide a more in depth review of our financials.
Lynn Bamford: Now I would like to introduce our full year 2025 guidance. Overall, we are projecting mid single digit organic sales growth driven by increases in nearly all of our end markets and total growth of 7% to 8% including acquisitions.
Finally, I'll wrap up with some closing remarks about our long term prospects before we move to Q&A.
Lynn Bamford: Operating in growth income growth is once again anticipated to exceed our sales growth, reflecting 40 to 60 basis points and operating margin expansion.
Starting with our fourth quarter 2024 highlights sales increased 5% year over year due to a better than expected performance in both our defense electronics enable and power segment operating income was essentially flat while operating margin was strong at 19, 8%.
Lynn Bamford: This year to 18% at the midpoint of the range.
Lynn Bamford: At the heart of our drive for operational excellence is the operational growth platform, which fuels our pivot to growth strategy.
As a reminder, our various restructuring actions some of which were undertaken to reshape our global footprint generated a few million dollars of initial savings in 2024 and provided a modest benefit to our results Duluth.
Lynn Bamford: By driving continued opportunities for margin expansion and savings across the portfolio.
Lynn Bamford: In addition, we will continue to deploy new tools and systems to optimize our manufacturing operations and drive connectivity throughout the organization. This in turn will allow us to maintain incremental investment and research and development to drive organic growth, which we've successfully delivered over the past few years.
Diluted earnings per share increased 3% year over year, which also exceeded our expectations and was primarily driven by higher A&D sales free.
Free cash flow was strong at $278 million, reflecting a 223% conversion rate due to improved operational performance and lower working capital.
Lynn Bamford: Years, and anticipate ramping up yet again in 2025.
Lynn Bamford: It also provides an opportunity to overcome dilution from acquisitions, such as ultra energy as we integrate this business into our broader operations and seek opportunities to drive future margin accretion. These effort backed by our strong topline growth provide us with confidence to once again generate them.
And our order book was exceptionally strong in the fourth quarter up 37% year over year, reflecting a one one times book to Bill.
These results were driven by growth in all of our A&D markets and continued solid demand within commercial nuclear.
Lynn Bamford: <unk> digit growth and diluted EPS, along with strong free cash flow in summary, Curtiss Wright remains well positioned to deliver an outstanding performance in 2025, now I would like to turn the call over to Chris to continue with our prepared remarks.
Next I'll highlight our full year 2024 results, which included a number of financial records with.
We generated double digit growth in sales and operating income in 2024, reflecting the underlying demand within our core portfolio and another record year of orders.
Chris Barnes: Thank you and on slide five I'll review the key drivers of our fourth quarter 2020 for performance by segment.
Chris Barnes: I'll begin in aerospace and industrial where overall sales increased 5% and was in line with our expectations.
We delivered modest margin expansion, while maintaining our firm commitment to grow R&D faster than sales.
Chris Barnes: Within the segments defense markets, we experienced solid increases in actuation equipment sales, most notably within our aerospace defense market supporting U F 35 program.
<unk> earnings per share of $10.90 increased 16% year over year.
Adjusted free cash flow reached a record $483 million and reflected strong conversion of 116% of note. Our results included $16 million of incremental capital expenditures supporting growth investment across all three segments.
Chris Barnes: Within the segments commercial aerospace market, our results reflected solid OEM sales growth supporting increased production on both narrow body and wide body platforms.
Chris Barnes: And the general industrial market, our results reflected lower global off highway and specialty industrial vehicle sales as certain customers continue to reduce their inventory levels through year end.
Turning to our order book demand was exceptional reflecting a 20% year over year increase reaching a new record of $3 $7 billion and a 1.2 times book to Bill overall.
Chris Barnes: Partially offsetting those declines was a modest increase in domestic demand for on highway vehicle equipment and surface treatment services.
Chris Barnes: Of note and despite reduced sales in this market. We have continued to see improving year over year industrial vehicle order trends since the second quarter of 2024.
Speaker Change: Leading the way was our naval and power segment, which benefited from strong demand for naval nuclear propulsion equipment supporting the U S. Navy's most critical platforms.
Chris Barnes: And turning to the segments fourth quarter profitability, we delivered a record quarterly operating margin of 21, 3%.
Nader: At the same time higher demand for embedded computing and tactical communications equipment in the ground and aerospace defense markets drove great results in our defense electronics segment, where orders crossed $1 billion for the first time.
Chris Barnes: This was driven by favorable absorption on higher sales along with the benefits of our restructuring initiatives, while we continue to invest in R&D to support our future growth.
Chris Barnes: Madison and defense Electronics segment, if you recall, we implemented several restructuring initiatives beginning in the second half of 2024 to support this business as future growth.
Speaker Change: Total Curtiss Wright's backlog was up 20% in 2020 for reaching a record of more than $3 $4 billion, providing additional confidence in our long term growth outlook.
Chris Barnes: Given the expected ramp up in these efforts and to ensure on time delivery to our customer schedules, we accelerated some revenues and deliveries into the third quarter.
Nader: Turning to slide four we begin with some comments about our acquisitions and share repurchase activity. We added two new businesses in 2024 to further expand our commercial nuclear portfolio in June we added WMC, a leading supplier of power plant control room simulation.
Chris Barnes: The fourth quarter unfolded those restructuring efforts progressed ahead of schedule and we were able to effectively take on more volume.
Chris Barnes: As a result, while we recognized year over year and sequential declines in quarterly revenue performance was slightly ahead of our expectations.
Nader: Technology and then on December 31, we closed on the acquisition of Ultra energy, which is a leading provider of reactor protection systems.
Chris Barnes: Regarding the segments fourth quarter operating performance that we delivered a solid 24, 3% operating margin our profitability was impacted by under absorption and timing on lower revenues, partly due to the realignment of our manufacturing footprint as well as unfavorable mix.
Speaker Change: Aviation in flux monitoring systems, and specialized temperature and pressure sensors. As a reminder, ultra provides safety critical products and services to commercial nuclear and power generation plants globally, and also support defense markets, including the U K nuclear submarine marine.
Chris Barnes: Turning to enable and power segment sales growth of 12% was ahead of our expectations, principally driven by higher revenue across several key platforms enabled defense.
Nader: As well as various aerospace applications.
Chris Barnes: Within this market, we experienced stronger than anticipated growth in production on Columbia class and Virginia class submarines as well as receiving in 81 aircraft carrier program due in part to the timing of material receipts.
Nader: This acquisition not only enables us to leverage our U K based nuclear manufacturing footprint, but it also expands our presence with leading global FMR designers.
Chris Barnes: We also experienced higher development revenues on the next generation of <unk> submarine programs and increased demand for aircraft handling systems to international customers.
Speaker Change: I'm pleased to welcome all of our new colleagues to Curtiss Wright.
Speaker Change: As we integrate these new acquisitions, our teams are already collaborating with customers to increase our opportunities for growth as we further expand the scope of Curtiss Wright's capabilities in 'twenty 'twenty four we also utilized our strong balance sheet and financial position to accelerate our share repurchase activity.
Chris Barnes: Within the segments Aerospace defense market, our results reflected lower international aircraft arresting systems revenues based on timing and strong performance from the prior year period.
Chris Barnes: And the power and process market. Our results reflected continued strong demand in commercial nuclear supporting the ongoing maintenance of U S operating reactors.
Nader: <unk>.
Nader: In the month of December alone, we bought back $100 million in stock through an accelerated repurchase plan boosting our full year repurchase activity to $250 million. This past year. We also increased our dividend for the eighth consecutive year.
Chris Barnes: Partially offsetting this strong demand was lower sales in the process market based on the timing of domestic MRO valves sales following strong growth in the prior year period.
Chris Barnes: Turning to the segments fourth quarter operating performance despite favorable absorption on higher revenues profitability was mainly impacted by unfavorable mix across our defense and process markets.
Nader: Now I would like to introduce our full year 2025 guidance. Overall, we are projecting mid single digit organic sales growth driven by increases in nearly all of our end markets and total growth of 7% to 8% including acquisitions.
Chris Barnes: To sum of Curtiss Wright's fourth quarter overall results, we generated a strong operating margin of nearly 20%, while maintaining our commitment to R&D investment across the portfolio.
Nader: Operating in growth income growth is once again anticipated to exceed our sales growth, reflecting 40 to 60 basis points and operating margin expansion this year to 18% at the midpoint of the range.
Chris Barnes: Turning to our full year guidance 2025 guidance I'll begin on slide six with our end market sales outlook, we anticipate total sales to grow 7% to 8%, reflecting mid single digit organic growth plus the contribution from ultra energy.
Nader: At the heart of our drive for operational excellence is the operational growth platform, which fuels our pivot to growth strategy.
Chris Barnes: Please note that while the majority of ultra energy sales are tied to our power and process market business also sales of equipment to customers within our A&D markets.
Nader: By driving continued opportunities for margin expansion and savings across the portfolio.
Chris Barnes: Starting in aerospace defense, our outlook for growth of 6% to 8% mainly reflects higher embedded computing revenues in defense electronics, serving both domestic and international customers.
Nader: In addition, we will continue to deploy new tools and systems to optimize our manufacturing operations and drive connectivity throughout the organization. This in turn will allow us to maintain incremental investments in research and development to drive organic growth, which we've successfully delivered over the past few years.
Chris Barnes: We also expect increased sales of aircraft arresting systems equipment, principally supporting international customers.
Chris Barnes: With in ground defense, our outlook for 3% to 5% growth reflects continued strong demand for tactical communications equipment, which as a reminder, while a strong 15% sales growth in 2024.
Nader: Ears, and anticipate ramping up yet again in 2025.
Nader: It also provides an opportunity to overcome dilution from acquisitions, such as ultra energy as we integrate this business into our broader operations and seek opportunities to drive future margin accretion. These.
Chris Barnes: Enabled defense growth of 3% to 5% reflects higher revenue on aircraft carriers, including increased production on the C. V 81, as well as support for the <unk> 75 refueling and complex overhaul program, which is a multiyear effort that will begin to ramp up this year.
Nader: These effort backed by our strong topline growth provide us with confidence to once again generate double digit growth in diluted EPS, along with strong free cash flow in summary, Curtiss Wright remains well positioned to deliver an outstanding performance in 2025, now I would like to turn the call over to Chris to can.
Chris Barnes: We expect those increases to be partially offset by timing on submarine programs that accelerated into 2024.
Chris Barnes: Elsewhere within our defense electronics business, we anticipate higher embedded computing revenue supporting various domestic and international programs.
Chris: With our prepared remarks.
Chris: Thank you Ron.
Slide five I'll review the key drivers of our fourth quarter 2020 for performance by segment.
Chris Barnes: Looking more broadly across all three defense markets I'd like to highlight the expected contribution of direct foreign military sales.
Chris: I'll begin in aerospace and industrial where overall sales increased 5% and was in line with our expectations.
Chris Barnes: In 2025, we expect continued low double digit growth in Fms to be driven by the alignment of our technologies to support increased global defense spending priorities.
Chris: Within the segments defense markets, we experienced solid increases in actuation equipment sales, most notably within our aerospace defense market supporting the F 35 program.
Chris: Within the segments commercial aerospace market, our results reflected solid OEM sales growth supporting increased production on both narrow body and wide body platforms.
Chris Barnes: Turning to commercial aerospace or outlook for 10% to 12% sales growth reflects a strong order book driving higher early in production sales on narrow body and wide body aircrafts, including modest growth expectations on the 737 Max in the back half of the year.
Chris: And the general industrial market, our results reflected lower global off highway and specialty industrial vehicle sales as certain customers continue to reduce their inventory levels through year end.
Chris Barnes: We expect those increases to be driven by higher sales within our aerospace and industrial segment for sensors and surface treatment services as.
Chris: Partially offsetting those declines was a modest increase in domestic demand for on highway vehicle equipment and surface treatment services.
Chris Barnes: As well as our defense electronics segment for avionics and instrumentation equipment.
Chris: Of note and despite reduced sales in this market. We have continued to see improving year over year industrial vehicle order trends since the second quarter of 2024.
Chris Barnes: Wrapping up our aerospace and defense markets. We expect total sales in these markets to increase 5% to 7% in 2025.
Chris Barnes: Moving to our commercial markets and power and process our outlook for 16% to 18% growth reflects a combination of mid to high single digit organic revenue growth as well as the contribution from <unk>.
Chris: And turning to the segments fourth quarter profitability, we delivered a record quarterly operating margin of 21, 3%.
Chris: This was driven by favorable absorption on higher sales along with the benefits of our restructuring initiatives, while we continue to invest in R&D to support our future growth.
Chris Barnes: Starting in commercial nuclear growth in aftermarket revenues is expected to be driven by continued strong U S demand despite lower year over year domestic outages as well as increased sales supporting the UK aftermarket from newly acquired Ultra energy.
Chris: Next in the defense Electronics segment, if you recall, we implemented several restructuring initiatives beginning in the second half of 2024 to support this business as future growth.
Chris Barnes: Our commercial nuclear outlook also includes the ramp up in development revenues across several SM, our designs, including the ex energy and Terra power advanced reactors.
Chris: Given the expected ramp up in these efforts and to ensure on time delivery to our customer schedules, we accelerated some revenues and deliveries into the third quarter.
Chris Barnes: And as a result, we anticipate high single digit organic growth in this market and greater than 20% growth overall this year when including acquisitions.
Chris: The fourth quarter unfolded those restructuring efforts progressed ahead of schedule and we were able to effectively take on more volume.
Chris: As a result, while we recognized year over year and sequential declines in quarterly revenue performance was slightly ahead of our expectations.
Chris Barnes: Next in the process market our outlook for low to mid single digit organic growth reflects increased development on subsea pumps.
Chris: Regarding the segments fourth quarter operating performance that we delivered a solid 24, 3% operating margin or profitability was impacted by under absorption and timing on lower revenues, partly due to the realignment of our manufacturing footprint as well as unfavorable mix.
Chris Barnes: <unk> supporting Petrobras has deep sea operations as well as the contribution from ultra energy with sales to the oil and gas and non nuclear power generation markets.
Chris Barnes: Lastly, in the general industrial market, we anticipate sales to be flat in 2025.
Chris: Turning to enable and power segment sales growth of 12% was ahead of our expectations, principally driven by higher revenue across several key platforms enabled defense.
Chris Barnes: Our outlook reflects modest sales growth in industrial automation and surface treatment services, which typically aligns with global GDP growth rates, however that growth will be offset by reduced sales of industrial vehicles amid ongoing market challenges, but we remain cautiously optimistic based upon our improving order book throughout 2024.
Chris: Within this market, we experienced stronger than anticipated growth in production on Columbia class and Virginia class submarines.
Chris: Well as the C V. In 81 aircraft carrier program due in part to the timing of material receipts.
Chris Barnes: Wrapping up our total commercial markets, we're targeting full year sales growth of 9% to 11%.
Chris: We also experienced higher development revenues on the next generation of <unk> submarine program and increased demand for aircraft handling systems to international customers.
Chris Barnes: Moving onto our full year 2025 outlook by segment on slide seven I'll begin in aerospace and industrial where we expect sales to grow 3% to 5% overall, reflecting strong growth in commercial aerospace and flat sales in general industrial.
Chris: Within the segments Aerospace defense market, our results reflected lower international aircraft arresting systems revenues based on timing and strong performance from the prior year period.
Chris: And the power and process market. Our results reflected continued strong demand in commercial nuclear supporting the ongoing maintenance of U S operating reactors.
Chris Barnes: Regarding the segments profitability, we project operating income growth of 5% to 8% and operating margin to increase 40 to 60 basis points and range from $17 four to 17, 6%.
Chris: Partially offsetting this strong demand was lower sales in the process market based on the timing of domestic MRO valves sales following strong growth in the prior year period.
Chris Barnes: This outlook reflects our expectation for higher sales as well as the savings generated by our restructuring actions.
Chris: Turning to the segments fourth quarter operating performance despite favorable absorption on higher revenues profitability was mainly impacted by unfavorable mix across our defense and process markets.
Chris Barnes: Next in defense electronics, we expect sales to grow 7% to 9% principally driven by the strength of this business has record 2024 order book, which is driving solid growth across all A&D markets.
Chris: The sum of Curtiss Wright's fourth quarter overall results, we generated a strong operating margin of nearly 20%, while maintaining our commitment to R&D investment across the portfolio.
Regarding the segments profitability, we expect operating income growth of 8% to 10% and operating margin expansion of 10 to 30 basis points to a new all time high range of 25 to 25, 2%, which includes a $5 million or 50 basis point headwind from increased internally funded R&D investments.
Chris: Turning to our full year guidance 2025 guidance I'll begin on slide six with our end market sales outlook, we anticipate total sales to grow 7% to 8%, reflecting mid single digit organic growth plus the contribution from ultra energy.
Chris Barnes: And enable and power, we expect overall sales growth of 10% to 11% for 3% to 5% organically, reflecting solid growth across the segments defense and commercial markets.
Chris: Please note that while the majority of ultra energy sales are tied to our power and process market business also sales of equipment to customers within our A&D markets.
Chris Barnes: Regarding the segments profitability, we expect operating income growth of 13% to 16% and operating margin expansion of 50 to 70 basis points to a range of 16, three to 16, 5%, reflecting both favorable absorption on higher organic sales as well as the contribution from ultra energy, which will initially.
Chris: Starting in aerospace defense, our outlook for growth of 6% to 8% mainly reflects higher embedded computing revenues in defense electronics, serving both domestic and international customers.
Chris: We also expect increased sales of aircraft arresting systems equipment, principally supporting international customers.
Be dilutive to operating margin.
Chris: With in ground defense, our outlook for 3% to 5% growth reflects continued strong demand for tactical communications equipment, which as a reminder, while a strong 15% sales growth in 2024.
Chris Barnes: We will also move past the $10 million impact from last year's first quarter enable contract adjustment.
Chris Barnes: Additionally, our guidance reflects approximately $4 million in incremental R&D investments sports internally funded development programs.
Chris: Enabled defense growth of 3% to 5% reflects higher revenue on aircraft carriers, including increased production on the Cvs 81, as well as support for the CDN 75 refueling and complex overhaul program, which is a multiyear effort that will begin to ramp up this year.
Chris Barnes: Regarding ultra energy, we expect this business to generate high single digit revenue growth and produce a low double digit operating margin in 2025.
Chris Barnes: Of note. This outlook includes increased year over year investments in advanced reactor technology as this business. Similarly focuses on expanding its presence across major SM our designers.
Chris: We expect those increases to be partially offset by timing on submarine programs that accelerated into 2024.
Chris Barnes: So to summarize our 2025 outlook overall, we expect total Curtiss Wright operating income to grow 10% to 12%.
Chris: Elsewhere within our defense electronics business, we anticipate higher embedded computing revenue supporting various domestic and international programs.
Chris Barnes: We expect operating margin to range from 17, 9% to 18, 1% up 40 to 60 basis points.
Chris: Looking more broadly across all three defense markets I'd like to highlight the expected contribution of direct foreign military sales.
Chris Barnes: Next to aid in your quarterly modeling our sales and operating margin. We expect first quarter 2025 sales to grow by high single digits relative to the first quarter of 2024, including Ultra energy.
Chris: In 2025, we expect continued low double digit growth in Fms to be driven by the alignment of our technologies to support increased global defense spending priorities.
Chris Barnes: Within the Ani's segment based on the seasonality within these businesses, we expect the sales and operating margin will be in line with our first quarter 2024 results.
Chris: Turning to commercial aerospace or outlook for 10% to 12% sales growth reflects our strong order book drive entirely in production sales on narrow body and wide body aircraft, including modest growth expectations on the 737 Max in the back half of the year.
Chris Barnes: In defense electronics, we expect to demonstrate strong growth in sales and profitability and exceed last year's first quarter results.
Chris: We expect those increases to be driven by higher sales within our aerospace and industrial segment for sensors and surface treatment services as.
Chris Barnes: Lastly, in enabling power segment, while we expect solid growth in sales our first quarter 2025 profitability will reflect the initial margin solution from the ultra energy acquisition.
Chris: As well as our defense electronics segment for avionics and instrumentation equipment.
Chris Barnes: In summary, the overall Curtiss rate level, we're expecting mid teens first quarter operating margin on strong sales growth.
Chris: Wrapping up our aerospace and defense markets. We expect total sales in these markets to increase 5% to 7% in 2025.
Chris Barnes: Continuing with our financial outlook on slide eight I wanted to provide some color on a few non operational items.
Chris: Moving to our commercial markets and power and process our outlook for 16% to 18% growth reflects a combination of mid to high single digit organic revenue growth as well as the contribution from Walter energy.
Chris Barnes: I'll start with other income, which we expect to decrease by approximately $4 million to $5 million this year.
Chris Barnes: This is principally due to lower interest income as we entered the year with a slightly lower cash balance given our fourth quarter 2024 cash payment for alternatives and increased share repurchase activity.
Chris: Starting in commercial nuclear growth in aftermarket revenues is expected to be driven by continued strong U S demand despite lower year over year domestic outages as well as increased sales supporting the UK aftermarket for newly acquired Ultra energy.
Chris Barnes: Later this month, we'll pay down the $90 million in senior notes coming due which will have a positive offset in lower interest expense.
Chris: Our commercial nuclear outlook also includes the ramp up in development revenues across several SM, our designs, including the ex energy and Terra power advanced reactors.
Chris Barnes: And note. This current guidance assumes that we will have no borrowings against the revolver again in 2025.
Chris: And as a result, we anticipate high single digit organic growth in this market and greater than 20% growth overall this year when including acquisitions.
Chris Barnes: In addition, our outlook reflects a reduction in our 2025 tax rate to 22% further building on last year's tax optimization and efficiency efforts.
Chris: Next in the process market our outlook for low to mid single digit organic growth reflects increased development on subsea pumps, most notably supporting Petrobras has deep sea operations as well as the contribution from ultra energy with sales to the oil and gas and non nuclear power generation markets.
Chris Barnes: Turning to our EPS guidance, we expect full year 2025 diluted EPS to range from $12 10 to $12 40 up 11% to 14%, reflecting the strong profitable growth within our operations.
Chris Barnes: David in your quarterly EPS modeling, we expect first quarter EPS to reflect approximately 20% growth relative to the first quarter of 2024 and similar to last year, we expect sequential quarterly improvement with the fourth quarter being our strongest.
Chris: Lastly, in the general industrial market, we anticipate sales to be flat in 2025.
Chris: Our outlook reflects modest sales growth in industrial automation and surface treatment services, which typically aligns with global GDP growth rates, however that growth will be offset by reduced sales of industrial vehicles amid ongoing market challenges, but we remain cautiously optimistic based upon our improving order book throughout 2024.
Chris Barnes: Please note that our EPS outlook also includes a reduction in our share count following the completion of $250 million in share repurchases in 2024.
Chris Barnes: For 2025.
Chris: Wrapping up our total commercial markets, we're targeting full year sales growth of 9% to 11%.
Chris Barnes: Here, we anticipate $60 million in standard share repurchases, reflecting a $10 million year over year program increase as we continue to offset dilution.
Moving onto our full year 2025 outlook by segment on slide seven I'll begin in aerospace and industrial we are where we expect sales to grow 3% to 5% overall, reflecting strong growth in commercial aerospace and flat sales in general industrial.
Chris Barnes: And lastly, we are projecting our full year free cash flow of $485 million to $505 million in 2025, essentially in line to slightly above last year's record performance.
Chris Barnes: Growth in cash flow from operations is expected to benefit from higher cash earnings a small contribution from <unk> and our continued focus on working capital management.
Chris: Regarding the segments profitability, we project operating income growth of 5% to 8% and operating margin to increase 40 to 60 basis points and range from 17, 4% to 17, 6%.
Chris Barnes: And as a reminder, last year's free cash flow benefited from an all time record level of advances a portion of which we would expect to be consumed as work progresses in 2025.
Chris: This outlook reflects our expectation for higher sales as well as the savings generated by our restructuring actions.
Chris: Next in defense electronics, we expect sales to grow 7% to 9% principally driven by the strength of this business has record 2024 order book, which is driving solid growth across all A&D markets.
Chris Barnes: In addition, we expect capital expenditures to increase nearly $20 million year over year relative to the middle of our guide as we continue to invest in support of our future growth.
Chris Barnes: Overall, our outlook reflects a healthy free cash flow conversion rate in excess of 105% again this year, which remains in line with our long term targets.
Chris: Regarding the segments profitability, we expect operating income growth of 8% to 10% and operating margin expansion of 10 to 30 basis points to a new all time high range of 25 to 25, 2%, which includes a $5 million or 50 basis point headwind from increased internally funded R&D investments.
Lynn Bamford: Now I'd like to turn the call back over to Lynn. Thank.
Lynn Bamford: Thank you, Chris and turning to slide nine as we have discussed today, our record order book and growing backlog as well as our positioning within our end markets provides us with confidence to deliver profitable growth again in 2025, while we remain cautious in light of the ongoing political and macroeconomic environment, we expect.
Chris: And enabled empower we expect overall sales growth of 10% to 11% for 3% to 5% organically, reflecting solid growth across the segments defense and commercial markets.
Lynn Bamford: To generate high single digit total sales growth this year.
Chris: Regarding the segments profitability, we expect operating income growth of 13% to 16% and operating margin expansion of 50 to 70 basis points to a range of 16, three to 16, 5%, reflecting both favorable absorption on higher organic sales as well as the contribution from ultra energy, which will initially.
Lynn Bamford: This output outlook reflects both increases in both our A&D and commercial markets and the strength of our combined portfolio beyond the top line one of the most significant milestones that were forecasting in 2025 is to reach 18% operating margin at the midpoint of our guide are.
Chris: Be dilutive to operating margin.
Chris: We will also move past the $10 million impact from last year's first quarter naval contract adjustment.
Lynn Bamford: <unk> to generate operating income growth in excess of revenue growth continues to be a fundamental premise under the pivot to growth strategy and we expect this to result in an accelerated pace of margin expansion in 2025.
Chris: Additionally, our guidance reflects approximately $4 million in incremental R&D investments sport internally funded development programs.
Chris: Regarding ultra energy, we expect this business to generate high single digit revenue growth and produce a low double digit operating margin in 2025.
Lynn Bamford: Our steadfast focus on operational excellence allows us to continue to make incremental R&D investments are still targeting double digit EPS growth.
Chris: Of note. This outlook includes increased year over year investments in advanced reactor technology as this business. Similarly focuses on expanding its presence across major SM our designers.
Lynn Bamford: And as we've noted based on our strong outlook for free cash flow generation. This year, we are able to fuel investments in our systems and infrastructure as we continue to grow our operations and increase efficiency to better serve our customers.
Chris: So to summarize our 2025 outlook overall, we expect total Curtiss Wright operating income to grow 10% to 12%.
Lynn Bamford: These investments will better enable us to capture positions on next generation defense platforms or benefit from the continued development of <unk> technology and commercial nuclear.
We expect operating margin to range from 17, 9% to 18, 1% up 40 to 60 basis points.
Next to aid in your quarterly modeling the sales and operating margin. We expect first quarter 2025 sales to grow by high single digits relative to the first quarter of 2024, including Ultra energy.
Lynn Bamford: Next regarding our capital allocation and as we look beyond the recently completed Ultra energy acquisition, we continuously look to put the strength of our balance sheet to work through a disciplined and strategic approach to capital deployment and we are focused on investing our capital for the best possible.
Chris: Within the Ani's segment based on the seasonality within these businesses, we expect the sales and operating margin will be in line with our first quarter 2024 results.
Lynn Bamford: <unk> returns to drive long term shareholder value.
Chris: In defense electronics, we expect to demonstrate strong growth in sales and profitability and exceed last year's first quarter results.
Lynn Bamford: Our pursuit of high quality acquisitions has been and will continue to remain our highest priority for capital allocation beyond that will supplement those pursuits by driving consistent returns to our shareholders as I highlighted earlier in our remarks.
Chris: Lastly, in enabling power segment, while we expect solid growth in sales our first quarter 2025 profitability will reflect the initial margin solution from the ultra energy acquisition.
Lynn Bamford: Finally, having demonstrated strong financial results this past year and considerable progress towards our long term growth objectives, we remain confident and committed to achieving all of the three year targets established at our 2020 for Investor Day.
Chris: In summary, the overall Curtiss Wright level, we're expecting mid teens first quarter operating margin on strong sales growth.
Chris: Continuing with our financial outlook on slide eight I wanted to provide some color on a few non operational items.
Chris: I'll start with other income, which we expect to decrease by approximately $4 million to $5 million this year.
Lynn Bamford: Beyond these targets and as we look out across the next decade to the art of the possible that we proposed at last May's Investor Day, we remain confident in our focused strategy and the alignment of our technologies to key secular growth trends.
Chris: This is principally due to lower interest income as we entered the year with a slightly lower cash balance given our fourth quarter 2024 cash payment for alternative <unk> and increased share repurchase activity.
Lynn Bamford: The external market forces and related push for carbon free energy and energy independence is a global movement and one that is needed to address growing energy demands that remain at all time high.
Chris: Later this month, we'll pay down the $90 million in senior notes coming due which will have a positive offset in lower interest expense.
Chris: And note. This current guidance assumes that we will have no borrowings against the revolver again in 2025.
Lynn Bamford: This in turn will drive the continued expansion of projects to satisfy both traditional energy demand, including electricity and process and heat applications as well as the potential for incremental demand to support AI and data centers, we recognize that the impact of legislated and technological disruption.
Chris: In addition, our outlook reflects a reduction in our 2025 tax rate to 22% further building on last year's tax optimization and efficiency efforts.
Chris: Turning to our EPS guidance, we expect full year 2025 diluted EPS to range from $12 10 to $12 40 up 11% to 14%, reflecting the strong profitable growth within our operations.
Lynn Bamford: On these large and complex projects is likely to continue to create uncertainty along the way, but the core fundamentals remain unchanged and our view on Curtiss Wright's ability to generate strong growth in this market and provide continued value to our shareholders over the near medium and long term remains firm.
Chris: David in your quarterly EPS modeling, we expect first quarter EPS to reflect approximately 20% growth relative to the first quarter of 2024 and similar to last year, we expect sequential quarterly improvement with the fourth quarter being our strongest.
Lynn Bamford: Within our sight.
Lynn Bamford: We are aligned with Westinghouse and Theyre pursuits to construct new AP 1000 power plants across Europe, and North America, and we continue to expect an order for our reactor coolant pumps and the next one to two years.
Chris: Please note that our EPS outlook also includes a reduction in our share count following the completion of $250 million in share repurchases in 2024.
Lynn Bamford: We also continued to grow our presence with the leading designers of small modular reactors, both organically and through acquisition with construction of advanced reactor technology expected to accelerate later this decade the.
Chris: For 2025.
Chris: Here, we anticipate $60 million in standard share repurchases, reflecting a $10 million year over year program increase as we continue to offset dilution.
Chris: And lastly, we're projecting a full year free cash flow of $485 million to $505 million in 2025, essentially in line to slightly above last year's record performance.
Lynn Bamford: The numerous projects the Curtiss Wright is supported are all still moving forward and continue to build upon our very strong position supporting existing reactors across the globe.
Lynn Bamford: At this point nothing has changed that would impact our investor day outlook, which many of you know with the conservative and prudent assessment of the overall growth opportunity for Curtiss Wright.
Chris: Growth in cash flow from operations is expected to benefit from higher cash earnings a small contribution from ultra energy and our continued focus on working capital management.
Chris: And as a reminder, last year's free cash flow benefited from an all time record level of advances a portion of which we would expect to be consumed as work progresses in 2025.
Lynn Bamford: Finally, we remain encouraged by the new administration's pro nuclear stands and the recent appointment of Chris Wright as the New U S Energy Secretary and Doug Bergum as the Secretary of the interior as a reminder, the <unk> initiatives to regain our commercial nuclear advantage started in 2017.
Chris: In addition, we expect capital expenditures to increase nearly $20 million year over year relative to the middle of our guide as we continue to invest in support of our future growth.
Lynn Bamford: <unk> and this industry continues to garner strong bipartisan support.
Chris: Overall, our outlook reflects a healthy free cash flow conversion rate in excess of 105% again this year, which remains in line with our long term targets.
Lynn Bamford: Collectively.
Lynn Bamford: Positive market forces support our confidence in projecting our commercial nuclear business to grow fivefold by the middle of the next decade to an annual run rate of one $5 billion.
Lynn: Now I'd like to turn the call back over to Lynn. Thank.
Lynn: Thank you, Chris and turning to slide nine as we have discussed today, our record order book and growing backlog as well as our positioning within our end markets provides us with confidence to deliver profitable growth again in 2025, while we remain cautious in light of the ongoing political and macroeconomic environment, we expect.
Lynn Bamford: Providing tremendous long term value to Curtiss Wright and our shareholders and.
Lynn Bamford: In closing I am excited about Curtiss Wright's future and the many great pursuits across our operations beyond that nuclear ops optionality.
Lynn Bamford: Such as our World class Defence electronics portfolio, and our position as a mission critical partner to the U S. Navy, we expect to sustain our growth by winning in strong and expanding markets with exciting new technologies and solutions, while continued to build momentum in our pivot to growth strategy.
Lynn: To generate high single digit total sales growth this year.
This output outlook reflects both increases in both our A&D and commercial markets and the strength of our combined portfolio beyond the top line one of the most significant milestones that were forecasting in 2025 is to reach 18% operating margin at the midpoint of our guide our draw.
Lynn Bamford: Thank you and at this time I would like to open up today's conference call for questions.
Lynn Bamford: Certainly the floor is now open for questions. At this time, if you have a question or comment. Please press star one on your telephone keypad. If at any point. Your question is answered you may remove yourself from the queue by pressing star two.
Lynn: Right to generate operating income growth in excess of revenue growth continues to be a fundamental premise under the pivot to growth strategy and we expect this to result in an accelerated pace of margin expansion in 2025.
Speaker Change: So as you pick up your handset when posing your question to provide optimal sound quality and the interest of time, we ask that you. Please limit yourself to one primary question and one follow up. Thank you. Our first question is coming from Nathan Jones with Stifel.
Lynn: Our steadfast focus on operational excellence allows us to continue to make incremental R&D investments, while still targeting double digit EPS growth.
Lynn: And as we've noted based on our strong outlook for free cash flow generation. This year, we are able to fuel investments in our systems and infrastructure as we continue to grow our operations and increase efficiency to better serve our customers.
Nathan Jones: Good morning, everyone.
Speaker Change: Good morning, Nathan good morning.
Speaker Change: I guess I'll I guess I'll start on the ultra energy acquisition.
Speaker Change: Why do you guys have been excited about and.
Speaker Change: And you touched on some of these things in your in your prepared remarks, but <unk> be more color on.
Lynn: These investments will better enable us to capture positions on next generation defense platforms or benefit from the continued development of <unk> technology and commercial nuclear.
Speaker Change: How it improves your position on some of the European manufacturers, how you can leverage that business with your current businesses to maybe grow content on some of these platforms, just a little bit more color on kind of the strategic value usage.
Lynn: Next regarding our capital allocation and as we look beyond the recently completed Ultra energy acquisition, we continuously look to put the strength of our balance sheet to work through a disciplined and strategic approach to capital deployment and we are focused on investing our capital for the best possible.
Speaker Change: Out of the financial.
Speaker Change: Sure and thank you for that question, we've heard it took longer than we anticipated to get it to close by December 31, we got it done in the year. So it's a nice clean a breakpoint you can say from that position, but we're definitely out of the gate strong with these guys. We've had two main locations one in the U K went down in Texas.
Lynn: <unk> returns to drive long term shareholder value.
Lynn: Our pursuit of high quality acquisitions has been and will continue to remain our highest priority for capital allocation beyond that will supplement those persist by driving consistent returns to our shareholders as I highlighted earlier in our remarks.
Speaker Change: Cough meetings.
With both of them and both teams were.
Looking at the bit to get started on figuring out how we would collaborate together because the closing of the acquisition took longer than anticipated. So there's a lot of enthusiasm and activity going on so with that said to talk more about the strategic fit.
Lynn: Finally, having demonstrated strong financial results this past year and considerable progress towards our long term growth objectives, we remain confident and committed to achieving all of the three year targets established at our 2020 for Investor Day.
Speaker Change: A couple of aspects to it.
Speaker Change: One is.
Speaker Change: As a European supplier with a European footprint. It gives us the opportunity to possibly transitioning some products to be able to be sports supported through that facility and provide more localized content, which is.
Lynn: Beyond these targets and as we look out across the next decade to the art of the possible that we proposed at last May's Investor Day, we remain confident in our focused strategy and the alignment of our technology to key secular growth trends.
Speaker Change: As important as you think of the major reactor providers that are European based and most notably Rolls Royce that they have a great relationship with and.
Lynn: The external market forces and related push for carbon free energy and energy independence as a global movement and one that is needed to address growing energy demands that remain at all time high.
Speaker Change: Already initial meetings on how we can better.
Speaker Change: Advance our partnership with them with ultra being.
Speaker Change: We're engaged with them beforehand, but really opening the doors. There. So that's one example of leveraging that footprint, but it won't be done with that one customer I don't want to imply that but that's kind of the biggest on the Trump most before us right now.
Lynn: This in turn will drive the continued expansion of projects to satisfy both traditional energy demand, including the electricity in process and heat applications as well as the potential for incremental demand to support AI and data centers, we recognize that the impacts of legislative and technological disruption.
Speaker Change: They also do work as we mentioned with the U K submarine fleet dollar wise, it's not an overly significant part of their revenue stream, but its critical technologies and critical relationships that we'll see where potentially that can take us as a partnership.
Lynn: On these large and complex projects is likely to continue to create uncertainty along the way, but the core fundamentals remain unchanged and our view on Curtiss Wright's ability to generate strong growth in this market and provide continued value to our shareholders over the near medium and long term remains firm.
Speaker Change: There.
Speaker Change: Very high temperature pressure and sensor.
Speaker Change: That pressure and temperature sensors.
Speaker Change: Were produced and designed mainly for the nuclear market, but.
Lynn: Within our sight.
Lynn: We are aligned with Westinghouse and Theyre pursuits to construct new AP 1000 power plants across Europe, and North America, and we continue to expect an order for our reactor coolant pumps and the next one to two years.
Speaker Change: As the World tries to get more energy efficient.
Speaker Change: There is a much broader applicability of the products more globally and something that with our strong market breadth across.
Lynn: We also continued to grow our presence with the leading designers of small modular reactors, both organically and through acquisition with construction of advanced reactor technology expected to accelerate later this decade the.
Speaker Change: Commercial aerospace is one example.
Speaker Change: We will have a much greater reach and how we can take these products to market than was really <unk>.
Speaker Change: <unk> for that team and so we're early days of working with them on that area. So that's just to touch on a couple but their heritage one of the things I think is exciting from our Investor day, we talked about how.
Lynn: Numerous projects. The Curtiss Wright is supported are all still moving forward and continue to build upon our very strong position supporting existing reactors across the globe.
Speaker Change: We're proud that we have heritage in many of our businesses from the inception of the industries and these.
Lynn: At this point nothing has changed that would impact our investor day outlook, which many of you know with the conservative and prudent assessment of the overall growth opportunity for Curtiss Wright.
Speaker Change: <unk> brings that same heritage.
Speaker Change: And with it just deep industry knowledge that for some different customer connections that we have and so.
Lynn: Finally, we remain encouraged by the new administration's pro nuclear stand and the recent appointments of Chris Wright as the New U S Energy Secretary and Doug Bergum as the Secretary of the interior as a reminder, the U s's initiatives to regain our commercial nuclear vantage started in 2017.
Speaker Change: It's more than just the tangible things there.
Speaker Change: There are well established strong player in this with really unique and great technology that just broadens, what we can take to our customer base.
Speaker Change: Awesome. Thanks for the color I guess, some I guess my second question.
Lynn: <unk> and this industry continues to garner strong bipartisan support.
Speaker Change: I'm going to go on foreign military sales.
Lynn: Collectively these positive market forces support our confidence in projecting our commercial nuclear business to grow fivefold by the middle of the next decade to an annual run rate of $1 5 billion providing tremendous.
Speaker Change: Obviously it would be.
Speaker Change: The push from the U S administration to get Europe to ink.
Speaker Change: He said defense spending.
Speaker Change: Altogether think in ground defense will likely be areas of focus should shoot a foreign military or European governments look to increased military spending which should fit very well with Curtiss Wright portfolio, maybe you could just give us some color on.
Lynn: Tremendous long term value to Curtiss Wright and our shareholders and.
Lynn: In closing I am excited about Curtiss Wright's future and the many great pursuits across our operations beyond that nuclear ops optionality.
Speaker Change: What kind of improvement you would expecting foreign military sales in Europe increased by 1% or or just any kind of color you can give us on how you benefit.
Lynn: As our World class Defence electronics portfolio, and our position as a mission critical partner to the U S. Navy, we expect to sustain our growth by winning in strong and expanding markets with exciting and new technologies and solutions, while continuing to build momentum in our pivot to growth strategy.
Speaker Change: I'll, let Chris speak to the numbers before that.
Speaker Change: You're very much right ground defense is a great area over there we have a very sophisticated capability in stabilization equipment that is used on a variety of type of vehicle platforms and a very strong partnership with Ryan Natal, which.
Lynn: Thank you and at this time I would like to open up today's conference call for questions.
Lynn: Certainly the floor is now open for questions. At this time, if you have a question I'll comment. Please press star one on your telephone keypad. If at any point. Your question is answered you may remove yourself from the queue by pressing star two.
Speaker Change: Is it really the leading manufacturer of vehicles over in Europe, not the all in that that's not the only place we partner but.
Speaker Change: Very preeminent one and so.
Lynn: As you pick up your handset when posing a question to provide optimal sound quality and the interest of time, we ask that you. Please limit yourself to one primary question and one follow up. Thank you. Our first question is coming from Nathan Jones with Stifel.
Speaker Change: That and we have.
Speaker Change: Our systems capability to deliver.
Speaker Change: Other types of products into both ground.
Speaker Change: And.
Speaker Change: And Ariel vehicles that are there, but and we shipped a lot of stuff just out of the U S and sell directly into those customers. So you know.
Nathan Jones: Good morning, everyone.
Nathan Jones: Alright, good morning, I guess I'll I guess I'll start on the Ultra energy acquisition on a while you guys have been excited about.
Speaker Change: Our product flexibility is is pretty great, but with that maybe I'll turn it over to Tom let Chris walk through some of the numbers. Yes. Sure. This has been a great growth vector for us Nathan as you know.
Nathan Jones: And you touched on some of the things in your in your prepared remarks, but <unk> had a bit more color on.
Nathan Jones: How it improves your position on some of the European manufacturers, how you can leverage that business with your current businesses to maybe grow content on some of these platforms.
Tom: I will say that it's very difficult for us to predict what a 1% increase in GDP across NATO skin initial necessarily translate to for Curtiss Wright, but and we have seen some really great increases immuno spending over the past few years in 2024, and we now have 70% of the countries spending more than 2% of their GDP and if that continue.
Nathan Jones: Little bit more color on kind of the strategic value of usage.
Nathan Jones: Out of the financial.
Nathan Jones: Sure and thank you for that question, we've heard it took longer than we anticipated to get it to close by December 31, we got it done in the year. So it's a nice clean a breakpoint you can say from that position, but we're definitely out of the gate strong with these guys. We've had two main locations one in the U K went down in Texas.
Speaker Change: Use to accelerate and we would expect that that alone.
Speaker Change: Continue to help accelerate our portfolio, but back in 2003, Fms growth or direct Fms growth I should say grew more than 20% for Curtiss Wright and.
Speaker Change: In 2020 for our Ethernet sales grew 10%.
Nathan Jones: Take off meetings with.
Speaker Change: And that was really despite some some timing issues that we had in the prior year with our Ts business, which can kind of be a little bit lumpy.
Nathan Jones: With both of them and both teams were.
Nathan Jones: Chomping at the bit to get started on figuring out how we would collaborate together because the closing of the acquisition took longer than anticipated. So there's a lot of enthusiasm and activity going on and so with that said to talk more about the strategic fit there.
Speaker Change: But we saw really strong demand across our defense electronics business, given their very broad portfolio supporting arrow and ground markets as well as.
Speaker Change: Some benefit to our aircraft handling business with enabling our and as we enter into this next year, we're expecting that we're going to continue to grow at a low double digit plus pace and that will be mainly driven.
Nathan Jones: A couple of aspects to it.
Nathan Jones: One is.
Nathan Jones: As a European supplier with a European footprint. It gives us the opportunity to possibly transitioning some products to be able to do these sports supported through that facility and provide more localized content, which.
Speaker Change: Again by five ISR Naval aircraft handling and then also.
Speaker Change: Some of the ground based arresting systems that we have with power. So we see it as an opportunity for Curtiss Wright going forward for sure.
Nathan Jones: It is important as you think of the major reactor providers that are European based and most notably Rolls Royce that they have a great relationship with and.
Speaker Change: Excellent thanks, very much for taking my questions.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Mike <unk> with Truest Securities.
Nathan Jones: Already initial meetings on how we can better.
Speaker Change: Hey, good morning, guys and microphone.
Nathan Jones: Advance our partnership with them with ultra being.
Speaker Change: Microphone, thanks for taking the question Hey.
Nathan Jones: We're engaged with them beforehand, but really opening the doors. There. So that's one example of leveraging that footprint, but it won't be done with that one customer I don't want to imply that but that's kind of the biggest and most before us right now.
Chris: Chris I guess just.
Chris: Looking at Great order flow.
Chris: Record backlog, you've got the organic growth outlook.
Chris: 25, decelerating a bit defense has obviously been extremely strong, but any any other kind of puts and takes you know and I know the mid single digits in line with.
Nathan Jones: They also do work as we mentioned with the UK submarine fleet dollar wise, it's not an overly significant part of their revenue stream, but its critical technologies and critical relationships that we will see where potentially that can take us as a partnership.
Chris: With kind of what you laid out in Investor day.
Chris: It seems like I would've thought maybe the Aero piece would have been would have been a little bit better, but any other puts and takes on just kind of that revenue dynamic.
Nathan Jones: There.
Speaker Change: Very high temperature pressure and sensor.
Chris: And I think so.
Chris: We enter into the year, we feel really well positioned with where we are from a backlog perspective, particularly across our A&D markets.
Nathan Jones: High pressure and temperature sensors.
Nathan Jones: Were produced and designed mainly for the nuclear market, but.
Chris: A lot of the.
Nathan Jones: As the World tries to get more energy efficient.
Chris: Order activity that we experienced here in 2024, when you look at like a second quarter book to Bill of one seven times and enable empower that's multiyear work, that's that's coming to Curtis right.
Nathan Jones: There's a much broader applicability of the products more globally and something that with our strong market breadth across.
Chris: So as we look across naval defense, we certainly see a solid opportunity for growth.
Nathan Jones: Commercial aerospace is one example.
Nathan Jones: We will have a much greater reach and how we can take these products to market them was really a focus for that team and so we're early days of working with them on that area. So that's just to touch on a couple but their heritage one of the things I think is exciting you know from our Investor day, we talked about how.
Chris: For that business.
Chris: Within aerospace and defense.
Chris: There is a strong driver there not only what's happening with <unk> ISR, but.
Chris: Also what's happening over in the actuation business relative to.
Chris: <unk> got some additional work that they have with the F.
35 program and other fighter Jets, and then within naval empower Youre looking at some uplift relative to the ground based arresting systems on a on an international level.
Nathan Jones: Proud that we have heritage in many of our businesses from the inception of the industry and <unk>.
Nathan Jones: <unk> brings that same heritage and with it just deep industry knowledge defer some different customer connections that we have and so.
Chris: As we approach ground defense, we had 15% growth in that business. This last year and it was even stronger than the year before the order book is great.
Nathan Jones: It's more than just the tangible things there are well established strong player in this with really unique and great technology that just broadens, what we can take to our customer base.
Chris: But as we enter into the year some of that footprint capacity management that we're doing within that business.
Chris: So we will expect a little bit.
Chris: More chatter here, maybe in the first quarter.
Nathan Jones: Awesome. Thanks for the color I guess, some I guess my second question.
Chris: Until we get some of those efforts completed and then just overall I think as you look at defense electronics, and we've got some really exciting things that we're doing you saw it in the Capex and some of that is systems enhancements and improvements in the organization. Other other investments are really just to expand footprint and capacity and.
Nathan Jones: Go on foreign military sales.
Nathan Jones: Obviously a big.
Nathan Jones: The push from the U S administration to get Europe to increase their defense spending.
Nathan Jones: All of the data events in ground defense will likely be areas of focus should shoot a foreign military or European governments look to the increase in military spending which should fit very well with Curtiss Wright portfolio, maybe you could just give us some color on.
Chris: We just have to balance.
Chris: Some of those major projects that are going on across the organization to support future growth with the expectations for what we what we can achieve in 2025. So I think like I feel like we've taken an appropriate position entering into the year given given all of that.
What kind of improvement you would expecting foreign military sales order.
Nathan Jones: Europe increased defense spending by 1% or or just any kind of color you can give us on how you would benefit.
Speaker Change: Got it that's helpful. And then I guess just a question on the topic coming up across almost every call tariffs and I guess, we're going to get more news here at one o'clock, presumably but but going back and kind of looking back at your exposure I guess back in 2018, maybe you had a couple.
Nathan Jones: I'll, let Chris speak to the numbers, but before that.
Nathan Jones: You're very much right ground defense is a great area over there we have a very sophisticated capability in stabilization equipment that is used on a variety of type of vehicle platforms and a very strong partnership with Ryan Natal, which.
Speaker Change: <unk> million dollars here or there how are you thinking about potential tariff headwind.
Nathan Jones: Is really the leading manufacturer of vehicles over in Europe, not the all in and Thats not the only place we partner but.
Speaker Change: Either revenues or operating income kind of contemplated in the outlook.
Speaker Change: It's definitely a topic of.
Nathan Jones: Very preeminent one and so.
Speaker Change: Conversation.
Nathan Jones: That and we have.
Speaker Change: Our fluid situation to say the least but.
Nathan Jones: Systems capability to deliver.
Speaker Change: Kate you're bringing up.
Nathan Jones: Other types of products into both ground and.
Speaker Change: The past the past situation and I guess the thing I would communicate first is.
Speaker Change: And Ariel vehicles that are there, but and we shipped a lot of stuff just out of the U S and sell directly into those customers. So our product flexibility is pretty great, but without maybe I'll turn it over to Tom let Chris walk through some of the numbers sure. This has been a great growth vector for us Nathan as you know.
Speaker Change: Curtis rates over the recent past has dealt with a variety of disruptive situations, whether it was the tariff back in the late teens, which youre right were about.
Speaker Change: $9 million of which about half we were able to mitigate with our customers and have we absorbed.
Speaker Change: I will say that it's very difficult for us to predict what a 1% increase in GDP across NATO as an initial necessarily translate to for Curtiss Wright, but and we have seen some really great increases immuno spending over the past few years in 2024, and we now have 70% of the country's spending of more than 2% of their GDP and if that.
Speaker Change: But not material to the business, but you know we absorbed the pandemic than they came along and we lost $300 million of sales we have the supply chain disruption in defense electronics ongoing inflation that I think it's important to note.
Speaker Change: Curtiss Wright delivered steady growth and steady margin expansion through all of these situations. So we have our commitment to manage this current situation as we.
Speaker Change: To accelerate and we would expect that that will only.
Speaker Change: Continue to help accelerate our portfolio, but back in 'twenty three Fms growth of direct Fms growth I should say grew more than 20% for Curtiss Wright and.
Speaker Change: Have a very agile and.
Speaker Change: In 2020 for our Ethernet sales grew 10%.
Speaker Change: Or a field action.
Speaker Change: Action oriented team and so.
Speaker Change: And that was really despite some some timing issues that we had in the prior year with our tem business, which can kind of be a little bit lumpy.
Speaker Change: We're already doing the things that we can do with the information. We have we started some cross functional tiger teams that are really making sure that we have our handle around everything related to operations contracts financial legal et cetera.
Speaker Change: But we saw really strong demand across our defense electronics business, given their very broad portfolio supporting arrow and ground markets as well.
Speaker Change: Some benefit to our aircraft handling business with enable and power and as we enter into this next year, we're expecting that we're going to continue to grow at a low double digit plus pace and that will be mainly driven.
Speaker Change: Definitely reviewing things such as flow of products contracts terms than watching the formal government communications to consider all the options that we can lever now and continuously thinking through areas. We can improve to minimize the impact and are focused on mitigating.
Speaker Change: Again by five ISR Naval aircraft handling and then also.
Speaker Change: Some of the ground based arresting systems that we have with enable and power. So we see it as an opportunity for Curtiss Wright going forward for sure.
Speaker Change: <unk> whether thats.
Speaker Change: Nice recovery or a different.
Speaker Change: Approach to delivering the product to a customer that isn't overly disruptive and communicating those things. So we feel at this point in time that.
Speaker Change: Excellent thanks, very much for taking my questions.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Mike <unk> with Truest Securities.
Speaker Change: We will manage this as we age we have managed in situations in the past, but we're also contemplating.
Mike: Hey, good morning, guys.
Mike: Folks thanks for taking the question Hey.
Speaker Change: If the tariffs stay more permanent more broad more.
Speaker Change: Chris I guess just.
Speaker Change: Looking at Great order flow.
Speaker Change: And appear to be more durable.
Speaker Change: Record backlog, you've got the organic growth outlook.
Speaker Change: How we might make some other even more significant changes to protect the business and so on.
Speaker Change: 25, decelerating a bit defense has obviously been extremely strong, but any any other kind of puts and takes you know and I know the mid single digits in line with.
Speaker Change: Obviously, you need more details than we have right now to do those things, but we feel really good about our guidance and theyre entering the year and this is obviously.
Speaker Change: With kind of what you laid out at Investor day.
Speaker Change: And ongoing situation and we know of it but we feel as if we will be able to manage our way through it.
Speaker Change: It seems like I would have thought maybe the air.
Speaker Change: Aero piece would have been would have been a little bit better, but any other puts and takes on just kind of that revenue dynamic.
Speaker Change: Got it helpful. And then just last one that I think I heard you correct.
Speaker Change: You're expecting maybe a reactor coolant pump order in the next one to two years is that just maybe color on that that timeline is that sort of in line is it sliding to the right anything changing out there I guess I guess the latest news maybe Ukraine is looking at buying some Russian reactors from Bulgaria, but.
Speaker Change: And I think.
Speaker Change: We enter into the year, we feel really well positioned with where we are from a backlog perspective, particularly across our A&D markets.
Speaker Change: A lot of the.
Speaker Change: Order activity that we experienced here in 2024, when you look at like a second quarter book to Bill of one seven times and enable empower that's multiyear work, that's that's coming to Curtis right.
Speaker Change: Any any kind of general update on market opportunities with Rcp's per day.
Speaker Change: So as we look across naval defense, we certainly see a solid opportunity for growth.
Speaker Change: 1000.
Speaker Change: Yes so.
Speaker Change: <unk> been rollout.
Speaker Change: For that business.
Speaker Change: Honestly amazingly steady over the past three years from.
Speaker Change: Within aerospace and defense.
Speaker Change: There is a strong driver there not only what's happening within <unk> ISR, but.
Speaker Change: Coming out.
Speaker Change: With our February 24 2022.
Speaker Change: Also what's happening over in the actuation business relative to.
Speaker Change: Guidance when this whole situation over prepaying began that morning.
Speaker Change: <unk> got some additional work that they have with the F.
Speaker Change: That the timeline for our first RCP order has gone from three to five two to four one to two with a steady progression year over year and so it has remained very very stable and we work very closely with Westinghouse.
Speaker Change: <unk> 35 program and other fighter Jets, and then within naval empower Youre looking at some uplift relative to the ground based arresting systems on a on an international level.
Speaker Change: As we approach ground defense, we had 15% growth in that business. This last year and it was even stronger than the year before the order book is great.
Speaker Change: On the on monitoring the pipeline and when we say one to two years were really saying, we expect an initial order by the end of 2026, so just to be a little to a little bit more specific somewhere between now and then.
Speaker Change: But as we enter into the year some of that footprint capacity management that we're doing within that business.
Speaker Change: I wouldn't say.
Speaker Change: Now I would say more in the one to two year timeframe, but you know really the by the end of 2022 and one piece of news that's out there for those who follow all of the west.
Speaker Change: So we will expect a little bit more.
Speaker Change: More chatter here, maybe in the first quarter.
Speaker Change: Until we get some of those efforts completed and then just overall I think as you look at defense electronics, and we've got some really exciting things that we're doing you saw it in the Capex and some of that is systems enhancements and improvements in the organization. Other other investments are really just to expand footprint and capacity.
Speaker Change: News feeds is Poland has moved their operational date from 2031 to 2033, but that absolutely does not.
Speaker Change: Impact.
Speaker Change: Our timeline of expecting a first order westinghouse's known that for some time and it just was not made public so as we've worked with Westinghouse.
Speaker Change: We just have to balance.
Speaker Change: Some of those major projects that are going on across the organization to support future growth with the expectations for what we what we can achieve in 2025. So I think like I feel like we've taken an appropriate position entering into the year given given all of that.
Speaker Change: <unk>.
Speaker Change: You know anticipate that order.
Speaker Change: Let that.
Speaker Change: I think that that's that's a delay to that first order, which is still anticipated to be Poland.
Speaker Change: So that that's just one thing too.
Speaker Change: Got it that's helpful. And then I guess just a question on the topic.
Speaker Change: Two other <unk>.
Speaker Change: Of note is theres talk of.
Speaker Change: Coming up across almost every call tariffs and I guess, we're going to get more news here at one o'clock today, presumably but but going back and kind of looking back at your exposure I guess back in 2018, maybe you had a couple of million dollars here or there how are you thinking about potential tariff headwinds.
Speaker Change: Trying to get to the summer plant back online and that has the potential of being a very good tail.
Speaker Change: Opportunity for Curtiss Wright, if that were to happen I mean, theres not much specificity around that but.
Speaker Change: It hasnt been put forward and kind of the late breaking news this week.
Speaker Change: Either revenues or operating income kind of contemplated in the outlook.
Speaker Change: But again needs to be flushed out is that India is considering changing their approach to indemnification on nuclear power plants, which could break down what has always been the barrier for plants being sold into India. So those are kind of the two new things I don't think there either of those are going to play out in a manner, that's going to jump ahead of.
Speaker Change: It's definitely.
Speaker Change: Topic of conversation.
Speaker Change: Our fluid situation to say the least.
Speaker Change: I appreciate you bringing up.
Speaker Change: The past the past situation and I guess the thing I would communicate first is.
Speaker Change: Our Poland or potentially Bulgaria order, but there are things that are new and good.
Speaker Change: Curtis rates over the recent past has dealt with a variety of disruptive situations, whether it was the tariff back in the late teens, which youre right were about.
Speaker Change: Got it got it that's helpful. Thanks, guys I'll jump back in the queue. Okay. Thanks, Mike.
Speaker Change: $9 million of which about half we were able to mitigate with our customers and have we absorbed.
Speaker Change: Our next question is coming from miles Walton with Wolfe research.
Speaker Change: But not material to the business.
Speaker Change: Thanks.
Speaker Change: We absorbed the pandemic than it came along and we lost $300 million of sales we have the supply chain disruption in defense electronics ongoing inflation that I think it's important to note.
Speaker Change: Could you comment on what the order was that triggered the large deferred revenue to come through on the cash flow and then also as I look at your Naval Defense business that went from an expectation in 2000.
Speaker Change: Curtiss Wright has delivered steady growth and steady margin expansion through all of these situations. So we have our commitment to manage this current situation as we.
Speaker Change: 24 of started the year at 3% to 5% growth and ended up at 14%.
Speaker Change: Give some color as to.
Speaker Change: Seems like every quarter that was getting revised higher what exactly was going on there in.
Speaker Change: Have a very agile and.
Speaker Change: The new starting point for 2025% to 3% to 5%. So is there a similar upside opportunity.
Speaker Change: <unk> action oriented team and so.
Speaker Change: Yes.
Speaker Change: We're already doing the things that we can do with the information. We have started some cross functional tiger teams that are really making sure that we have our handle around everything related to operations contracts financial legal et cetera.
Speaker Change: Discuss the upside opportunity I think we feel pretty well positioned with where we are coming into the year.
Speaker Change: And I would say that.
Speaker Change: Yes.
Speaker Change: To answer maybe the first question that you asked I mean in the volume of Naval orders that we had received across this business. This last year was.
Speaker Change: We're definitely reviewing things such as flow of products.
Speaker Change: Very very strong.
Speaker Change: <unk> terms and watching the formal government communications and consider all the options that we can lever now and continuously thinking through areas, we can improve to minimize the impact.
Speaker Change: When you look at that business and then.
Speaker Change: Our ability to convert that whether it be through material receipts or the significant ramp up in staffing that we were able to achieve for this business. This last year.
Speaker Change: And are you focused on mitigating actions, whether thats price recovery or a different.
Speaker Change: I think we we certainly surpassed our own expectations and as that work gets completed.
Speaker Change: Approach to delivering the product to a customer that isn't overly disruptive and communicating those things. So we feel at this point in time that we will manage this as we ate we've managed in situations in the past, but we're also contemplating.
Speaker Change: Whereas those orders come on and that provides an opportunity for us to kind of bill and bill in advance.
Speaker Change: Certain milestones being achieved so if you step back and take a look at the balance sheet for Curtis right. I mean, we were up a $140 million in deferred revenue.
Speaker Change: If the tariffs stay more permanent more broad more.
Speaker Change: This last year, so a record level of advances not only across the full year, but in the fourth quarter as well so.
Speaker Change: Appear to be more durable.
Speaker Change: How we might make some other even more significant changes to protect the business and so.
Speaker Change: Most of that relates to what you saw in submarines and the acceleration of work that happened here into the fourth quarter, but I also want to say across our defense electronics business. They did a really solid job of getting in.
Speaker Change: Obviously, you need more details than we have right now to do those things, but we feel really good about our guidance and theyre entering the year and this is obviously.
Speaker Change: And ongoing situation and we know of it but we feel as if we will be able to manage our way through it.
Speaker Change: Advance is ahead of their work so.
Speaker Change: There was a lot they kind of went into that I wouldn't say, it's a single contract but.
Speaker Change: Got it helpful. And then just platform that I think I heard you correct.
Speaker Change: So that was all that was all good effort.
Speaker Change: Were expecting maybe a reactor coolant pump order in the next one to two years is that just maybe color on that that timeline is that sort of in line is it sliding to the right anything changing out there I guess I guess the latest news maybe Ukraine is looking at buying some Russian reactors from Bulgaria, but.
Speaker Change: And as we go into this year.
Speaker Change: Will there be upside enabled defense I think a lot of that is just going to continue to depend upon the ability to put the right capex and people in place.
Speaker Change: And execute on that backlog and get through that sooner, but I will say that again, we do feel good about it.
Speaker Change: Any any kind of general update on market opportunities with <unk> for the AP 1000.
Speaker Change: Entering into the year.
Speaker Change: Okay, and what was the book to Bill by segment.
Speaker Change: So it's been rollout I'd say honestly amazingly steady over the past three years from.
Speaker Change: For 2024, and if you have them.
Speaker Change: Yes. So if you look at aerospace and industrial was 1.15 defense electronics was 116 and naval empower Lisman III.
Speaker Change: Coming out.
Speaker Change: Our February 24 2022.
Speaker Change: Guidance and this whole situation over any propane began that morning.
Speaker Change: Okay.
Lynn Bamford: And then maybe Lynn on the subsea pump business given we now have the Gulf of America, and we're going to drill a lot what's the outlook for the subsea pumps.
Speaker Change: That the timeline for our first RCP order has gone from three to five two to four one to two with a steady progression year over year and so it has remained very very stable and we work very closely with Westinghouse on the on monitoring the pipeline and when we say one to two years were really saying we expect.
Lynn Bamford: That's a material opportunity over the next three to five years upside versus what you previously I'm thinking.
Lynn Bamford: Well I'd say across our entire process.
Speaker Change: An initial order by the end of 2026, so just to be a little a little bit more specific somewhere between now and then.
Lynn Bamford: And market is <unk>.
Lynn Bamford: Shirley.
Lynn Bamford: Drill baby drill is probably.
Lynn Bamford: A good thing so.
I wouldn't say now I would say more in the one to two year timeframe, but you know really the by the end of 2026 and one piece of news that's out there for those who follow all the all of the news feeds is Poland has moved their operational date from 2031% to 2033, but that.
Lynn Bamford: Joking aside.
Lynn Bamford: You know.
Lynn Bamford: The early executive orders and you know the first executive order a curse fresh right.
Lynn Bamford: Not only was very pro nuclear England, very pro LNG, and all things fossil fuels and that is going to be good for Curtiss Wright and so we size the opportunity for the subsea pumps at $250 million of potential by the end of this decade.
Speaker Change: Absolutely does not.
Speaker Change: Impact.
Speaker Change: Our timeline of expecting a first order westinghouse's known that for some time and it just was not made public so as we work with Westinghouse.
It has not changed as of yet we start going through the last stages of.
Speaker Change: And.
Lynn Bamford: Getting the shell pumps deployed.
Speaker Change: I anticipate that order don't let that.
Lynn Bamford: Early development with Petrobras, but I feel like it will surely only.
Speaker Change: I think that that's that's a delay to that first order, which is still anticipated to be Poland.
Lynn Bamford: Be a tailwind for not just at subsea.
Speaker Change: So that's just one thing too.
Lynn Bamford: Many things around our footprint and some other equipment that we sell across the process industry.
Speaker Change: Two other <unk>.
Speaker Change: Of note is theres talk of.
Speaker Change: Trying to get to the summer plant back online and that has a potential of being a very good tail.
Speaker Change: Okay, alright, thanks, so much.
Lynn Bamford: Thanks, Paul.
Speaker Change: Opportunity for Curtiss Wright, if that were to happen I mean, theres not much specificity around that but.
Speaker Change: We will take our next question from Jason Gursky with Citigroup.
Speaker Change: It has been put forward and kind of the late breaking news this week.
Jason Gursky: Hey, good morning, everybody.
Speaker Change: When I just do a couple of big picture questions.
Speaker Change: But again needs to be flushed out is that India is considering changing their approach to indemnification on nuclear power plant, which could break down what has always been the barrier for plant themes hold into India. So those are kind of two new things I don't think there either of those are going to play out in a manner, that's going to jump ahead of.
Speaker Change: With you if that's okay.
Speaker Change: Just starting with the.
The transition with the administration.
Speaker Change: And.
Speaker Change: Maybe just kind of reflect if you wouldn't mind for a minute on how.
Speaker Change: This transition has been different than what you all have seen in the past and what if anything you all are doing differently.
Speaker Change: Our Poland or potentially Bulgaria order, but there are things that are.
Speaker Change: New and good.
Speaker Change: As a result of.
Speaker Change: Got it got it that's helpful. Thanks, guys I'll jump back in the queue. Okay. Thanks, Mike.
Speaker Change: Any differences that you've seen in this transition.
Speaker Change: So in.
Speaker Change: Our next question is coming from miles Walton with Wolfe research.
Speaker Change: It's been a fast paced transition that I think everybody.
Speaker Change: Thanks.
Speaker Change: As that turns on the news and so I think thats universally true not necessarily tied to Curtiss Wright in any particular way I think the clarity of position on things such as nuclear coming out with an executive order in the first two weeks.
Miles Walton: Could you comment on what the order was that triggered the large deferred revenue to come through on the cash flow and then also as I look at your Naval Defense business that went from an expectation in 2000.
Miles Walton: 24 of started the year at 3% to 5% growth and ended up at 14%.
Speaker Change: You know how the.
Miles Walton: Some color as to it.
Speaker Change: Administrative fees energy dominance and that's very clear.
Miles Walton: It seems like every quarter that was getting revised higher what exactly was going on there.
Speaker Change: Support for nuclear and.
Miles Walton: The new starting point for 2025, 3% to 5%. So is there a similar upside opportunity.
Speaker Change: Really all things fossil fuel production I think those are the levels of clarity and speed of clarity that is is not typical now.
Miles Walton: Yes.
Miles Walton: Discuss the upside opportunity I think we feel pretty well positioned with where we're coming into the year, Myles and I would say that.
Speaker Change: What's not clear is the tariffs right. So I mean, that's kind of a.
Miles Walton: To answer maybe the first question that you asked I mean, it is the volume of naval orders that we had received across this business. This last year was.
Speaker Change: On the other side of the paper is that which is not clear.
Speaker Change: But I think hopefully that will sort itself out here in the next couple of weeks as to what the position is going to is going to be and.
Miles Walton: Very very strong.
Miles Walton: When you look at that business and then our.
Miles Walton: Our ability to convert that whether it be through material receipts or the significant ramp up in staffing that we were able to achieve for them.
Speaker Change: We'll just have to live with the ambiguity and do what we can in the meantime, but I also see things Don is obviously all over the news and.
Miles Walton: For this business this last year.
Miles Walton: I think we certainly surpassed our own expectations and as that work gets completed.
Speaker Change: Set aside.
Speaker Change: What anybody thinks about it broadly speaking if we have a more efficient government that wants to spend dollars wisely and if you just take that as what the big picture intent of it is.
Miles Walton: Or as those orders come on and that provides an opportunity for us to kind of bill and bill in advance of certain milestones being achieved so.
Speaker Change: I think that's going to be a great thing for Curtis right one of the beliefs out of it is that.
Miles Walton: If you step back and take a look at the balance sheet for Curtis right. I mean, we were up $140 million in deferred revenue.
Speaker Change: A lot less friendly attitude to all of these cost plus contracts and wanting to drive more fixed price contracts, which is the.
Miles Walton: This last year, so a record level of advances not only across the full year, but in the fourth quarter as well so.
Speaker Change: The vast vast majority of where Curtiss Wright plays.
Miles Walton: Most of that relates to what you saw in submarines and the acceleration of work that happened here into the fourth quarter, but I also want to say across our defense electronics business. They did a really solid job of getting in.
Speaker Change: Is a good thing and I.
Speaker Change: I believe that.
Speaker Change: If.
Speaker Change: On a.
Speaker Change: More efficient government and the value proposition Curtiss Wright gives for the dollars that we take.
Speaker Change: Directly from the government or through a prime to deliver equipment I think we we produce a great value I feel very confident that.
Miles Walton: Advances ahead of their work so.
Miles Walton: There was a lot they kind of went into that I wouldn't say, it's a single contract but.
Speaker Change: The money spent at Curtiss Wright delivers value to our military and with that.
Miles Walton: So that was all that was all good effort and as we go into this year.
Miles Walton: Will there be upside enabled defense I think a lot of that is just going to continue to depend upon the ability to put the right capex and people in place.
Speaker Change: I feel like it could only be good in that sense and then if you take that efficiency and apply it to the process of building out commercial nuclear which is clearly called out in the energy dominance is to finally deliver on our commercial nuclear footprint in a meaningful way across the U S.
Miles Walton: And execute on that backlog and get through that sooner, but I'll say that again, we do feel good about the guide entering into the year.
Speaker Change: Making that less bureaucratic only speeds up the timeline to some of these projects can be implemented so I think all of those things.
Speaker Change: Okay, and what was the book to Bill by segment.
Miles Walton: For 2024, and if you have that.
Miles Walton: Yes. So if you look at aerospace and industrial was 1.5 defense Electronics was 116 and naval and power was 1.3.
Speaker Change: We see it is way more positive than a negative.
Speaker Change: We will see what happens with the tax code I mean thats.
Miles Walton: Okay.
Speaker Change: See what where that goes but we don't produce everything in the U S. But we produce a lot of things in the U S and if theres a favorability towards <unk>.
Speaker Change: And then maybe Lynn on the subsea pump business.
Speaker Change: We now have the Gulf of America, and we're going to drill a lot what's the outlook for the subsea pumps and if that's a material opportunity over the next three to five years upside versus what you previously didn't think.
Speaker Change: Companies that hire in the U S and produced products in the U S that will be good for Curtiss Wright if that how that.
Speaker Change: Turns out and even take the executive order on Iron Dome.
Speaker Change: Well I'd say across our entire process.
Speaker Change: Have a lot of content, whether it's through our enduring chilled win back in 2022, and many other things across defense electronics that that would drive great content to us so.
Speaker Change: And market share.
Speaker Change: Surely.
Speaker Change: We drill baby drill is probably a good thing so but.
Speaker Change: But joking aside.
Speaker Change: The early executive orders and you know the first executive order a curse Chris right.
Speaker Change: There's a lot of areas again taxes tariffs.
Speaker Change: Not only was very pro nuclear it was very pro LNG and all things fossil fuels and that is going to be good for Curtiss Wright and so we size the opportunity for the subsea pumps at $250 million of potential by the end of this decade.
Speaker Change: Name it but you know we.
Speaker Change: We like to hire and build things here in America, and that's clearly a focus of this administration so.
Speaker Change: We're trying to stay nimble I will say that and take the news daily as it comes and consider how we can best take those moves by the federal government to our advantage.
Speaker Change: It has not changed as of yet we start going through the last stages of.
Speaker Change: Mhm, that's great and you touched on what it was.
Speaker Change: Getting the shell pumps deployed in.
Speaker Change: Really development with Petro bass, but I feel like it will surely only.
Speaker Change: You touched on what was going to be.
Speaker Change: Quick question, which was on <unk>.
Speaker Change: Yes.
Speaker Change: It sounds like those guys are going to make their way across the key bridge over to those kind of gone at some point here in the near term.
Speaker Change: Be a tailwind for not just that subsea.
Speaker Change: Many things around our valve footprint and some other equipment that we sell across the process industry.
Speaker Change: You touched on maybe more firm fixed price type con.
Speaker Change: Okay, alright, thanks, so much.
Speaker Change: Contracts.
Speaker Change: But maybe if you could step back and give some recommendations or prescriptions actions that you'd like to see those take.
Speaker Change: Thanks miles.
Speaker Change: Yeah.
Speaker Change: We will take our next question from Jason Gursky with Citigroup.
Speaker Change: At the Pentagon I think.
That might be.
Speaker Change: Interesting to hear your thoughts on what other than for fixed price contracts.
Jason Gursky: Hey, good morning, everybody.
Speaker Change: When I just do a couple of big picture questions.
Speaker Change: Should they be.
Speaker Change: Looking to get done.
Speaker Change: I would say broadly the whole acquisition process is fairly get.
Jason Gursky: With you if that's okay.
Jason Gursky: Just starting with the top 10.
Speaker Change: It.
Speaker Change: It is a slow process and I think attacking that.
In addition, with the administration and maybe.
Jason Gursky: Maybe just kind of reflect if you wouldn't mind for a minute on how.
Speaker Change: Broadly and you've heard some of the Ceos of even larger defense companies than us.
Jason Gursky: This transition has been different than what you all have seen in the past and what if anything you all are doing differently.
Speaker Change: Talk about that.
Speaker Change: And they are industry will produce more value for the government not less.
Jason Gursky: As a result of.
Speaker Change: The acquisition processes streamlined so I'd say, that's one that comes to the top of mind.
Jason Gursky: Any differences that you've seen in.
Jason Gursky: In this transition.
Speaker Change: Just I'd go back to your first question about things, we're doing different one of the things we are doing differently as a company in 2025.
Jason Gursky: So.
Jason Gursky: It's been a fast paced transition that I think everybody.
Speaker Change: And it's as much coincidental as response to this because we are.
Jason Gursky: Realizes that turns on the news and so I think thats universally true not necessarily tied to Curtiss Wright in any particular way I think the clarity of position on things such as nuclear coming out with an executive order in the first two weeks on you.
Speaker Change: Decided to make this a big initiatives later last year is.
Speaker Change: Really increasing our visibility and our touch points at the Pentagon and on Capitol Hill to really emphasize what Curtis right does and what value we bring to the government and I think.
Jason Gursky: How.
Jason Gursky: The administrator see energy dominance and.
Speaker Change: Connecting a drive for efficiency and I will stand up and proudly present, what we do for the dollars, we get and know that we are a great supplier to the U S government and.
Jason Gursky: Very clear support for nuclear and.
Jason Gursky:
Jason Gursky: Really all things fossil fuel production I think those are the levels of clarity and speed of clarity that is is not typical now.
Speaker Change: So I think that will align nicely, Australia, bringing that message out to the forefront as this is all going on.
Jason Gursky: What's not clear is the tariffs right. So I mean, that's kind of a on.
Jason Gursky: On the other side of the paper is that which is not clear.
Speaker Change: Okay I appreciate the thoughts.
Jason Gursky: But I think hopefully that will sort itself out here in the next couple of weeks as to what the position is going to is going to be and we'll.
Speaker Change: Our next question comes from Peter Arment with Baird.
Peter Arment: Yes, thanks, good morning, or good afternoon, now I guess linkous Jim.
Jason Gursky: We'll just have to live with the ambiguity and do what we can in the meantime, but I also see things Don is obviously all over the news and.
Speaker Change: Okay.
Speaker Change: And then could you comment a little bit about the outlook on commercial nuclear you've called out for a high single organic growth high single digit organic growth. This year, but you grew low double digits last year in your guidance for 2006.
Jason Gursky: Set aside.
Jason Gursky: What anybody thinks about it broadly speaking if we have a more efficient government that wants to spend dollars wisely and if you just take that as what the date picture intent of it is.
Speaker Change: Assumes low double digits are we is there is this just timing related or is there a deceleration something get pushed out.
Speaker Change: It.
Speaker Change: Has it changed from 24 versus 25.
Jason Gursky: I think that's going to be a great thing for Curtiss Wright one of the elite side of it is that.
Speaker Change: No I think Peter we did have a very strong year. This last year and as we committed to Investor day, we would grow and we still see the trajectory being a low double digit CAGR over the three year period.
Jason Gursky: A lot less friendly attitude to all of these cost plus contracts and wanting to drive more fixed price contracts glitches.
Jason Gursky: The vast vast majority of where Curtiss Wright plays.
Speaker Change: This year I will say that.
Speaker Change: While we are seeing and benefiting from some of the license renewals in flex work, that's starting to kind of happen.
Jason Gursky: <unk> is a good thing and I.
Jason Gursky: I believe that.
Jason Gursky: If.
Speaker Change: More around the industry and one of the headwinds that we're facing is that there are lower year over year outages and that's just something that's going to happen. Once every three years or so theres going to be a little bit of a dip there.
Jason Gursky: A more efficient government and the value proposition Curtiss Wright gives for the dollars that we take.
Jason Gursky: Directly from the government or through a prime to deliver equipment I think we greatly produce a great value I feel very confident that.
Speaker Change: But overall higher maintenance activity across the operating fleet to support that.
Jason Gursky: The money spent at Curtiss Wright delivers value to our military and with that.
Speaker Change: We are going to see.
Jason Gursky: I feel like it could only be good in that sense and then if you take that efficiency and apply it to the process of building out commercial nuclear which is clearly called out in the energy dominance is to finally deliver on our commercial nuclear footprint in a meaningful way across the U S.
Speaker Change: A steady ramp up in the design effort and we talked a little bit about that in the prepared remarks, but it's not just terrapower in ex energy.
Speaker Change: We're excited about what.
Speaker Change: Ultra energy can do and they are investing in research and development to secure.
Speaker Change: Some new and exciting wins themselves so.
Jason Gursky: Making that less bureaucratic only speeds up the timeline for some of these projects can be implemented so I think all of those things.
Speaker Change: Overall I think.
Speaker Change: We feel really good about the low double digit guide that we gave over the three year period and as we enter into 2026, we only expect that to continue to ramp up as this is where it gets closer to prototyping.
Jason Gursky: We see it is way more of a positive than a negative.
Jason Gursky: We will see what happens with the tax code I mean, Thats you know, we'll see what where that goes but we don't produce everything in the U S. But we produce a lot of things in the U S and if theres a favorability towards.
Speaker Change: Got it okay. So that's helpful color and then just when you made the comment about the nuclear business being buybacks.
Speaker Change: You get out into the next decade is that all organic or do you contemplate more M&A in this space.
Jason Gursky: Companies that hire in the U S and produce products in the U S that will be good for Curtiss Wright, if that how that turns out and even take the executive order on iron Dome. I mean, we have a lot of content, whether it's through our enduring chilled win back in 2022 and many.
Speaker Change: Did that buildup from an organic standpoint of.
Speaker Change: Where we are driving content that we know of today and what we anticipate from the AP 1000 build outs.
Speaker Change: Aftermarket and plant life extension and the beginning of the build out of <unk> at.
Jason Gursky: Other things across defense electronics that that would drive great content to us so.
Speaker Change: No.
Speaker Change: At a rhythm drumbeat that is anticipated so that is business that is within our wheelhouse to drive for Curtiss Wright.
Jason Gursky: There's a lot of areas.
Jason Gursky: Taxes tariffs.
Jason Gursky: Aimed at but you know.
Jason Gursky: We like to hire and build things here in America, and that's clearly a focus of this administration so.
Speaker Change: Very helpful. Thanks, so much nice results.
Peter Arment: Thank you Peter.
Speaker Change: Right.
Speaker Change: Our next question comes from Keith Skibinski with Olympic Global.
Jason Gursky: We're trying to stay nimble I will say that and take the news daily as it comes and consider how we can best take those moves by the federal government to our advantage.
Keith Skibinski: Hey, good morning, guys nice quarter.
Speaker Change: Okay.
Speaker Change: A couple of follow ups on naval empower first just a clarification.
Jason Gursky: That's great and you touched on what it was.
Speaker Change: So the material receipts that you.
Jason Gursky: Briefly touched on what was going to be.
Speaker Change: Brought in and book revenue on in the fourth quarter or is that that is what led to the strong revenue, but I assume the.
Jason Gursky: Quick question, which goes on.
Jason Gursky: <unk>.
Jason Gursky: It sounds like those guys are going to make their way across the Cambridge and over to the Pentagon at some point here in the near term.
Speaker Change: Low margin revenue on the material and Thats why I guess, the <unk> margin that enable came in a little below your expectations is that kind of the way it worked there.
Jason Gursky: And you touched on maybe more firm fixed price type con.
Speaker Change: Apparently so I'll definitely say the good portion of the beat in naval was associated with material, but other portions of it were just better progress and and and.
Jason Gursky: Contracts.
Jason Gursky: But maybe if you.
Jason Gursky: Could step back and.
Jason Gursky: Give some recommendations or prescriptions actions that you'd like to see those take.
Jason Gursky: At the Pentagon.
Speaker Change: And staffing and ramping up to support the strong order book.
Jason Gursky: That might be.
Jason Gursky: Interesting to hear your thoughts on what other than for fixed price contracts.
Speaker Change: And there's a little nuance here for those that have actually been out to the cheswick facility, where we do on enable work in AP 1000 work in the substation work.
Jason Gursky: Should they be.
Jason Gursky: Looking to get done.
Jason Gursky: Well I would say broadly the whole acquisition process is fairly.
Jason Gursky: It is a slow process and I think attacking that.
Speaker Change: Did see some resources shift from subsea pump development to support some of those naval milestones in the fourth quarter. So that's.
Jason Gursky: Broadly and you've heard some of the Ceos of even larger defense companies than us.
Speaker Change: Another little nuance here.
Speaker Change: But as you look at the overall, while we still had a very strong 19, 1% margin here in the fourth quarter by and large the biggest reason for.
Jason Gursky: Talk about that.
Jason Gursky: In the end they are industry will produce more value for the government not less.
Jason Gursky: The acquisition processes streamlined so I'd say, that's one that comes to top of mind.
Speaker Change: The Miss versus expectations is just higher defense business and.
I'd go back to your first question about things, we're doing different one of the things we are doing differently as a company in 2025 is and it's as much coincidental as response to this because we were.
Speaker Change: It's a great business there is very solid margins, there, obviously, a strong cash producer.
Speaker Change: But as you look across enable and power portfolio. When you think about nuclear products and process products and Aero defense products and international sales.
Jason Gursky: <unk> to make this a big initiatives later last year is <unk>.
Jason Gursky: Really increasing our visibility and our touch points at the Pentagon and on Capitol Hill to really emphasize what Kurdish right does and what value we bring to the government and I think.
Speaker Change: It can be dilutive. So it was really a combination of the strong naval defense sales lower process valve sales during the fourth quarter.
Speaker Change: Things are arresting systems, and we had a really great quarter of the prior year and international arresting systems and those carry a very high margin. So.
Jason Gursky: Connecting a drive for efficiency and I will stand up and proudly present, what we do for the dollars, we get and know that we are a great supplier to the U S government and.
Speaker Change: Mostly mix as you as you look across to explain.
Speaker Change: Got it that's helpful. I appreciate it and then looking ahead to 2025 and in the segment.
Speaker Change: The right way to think about the restructuring that you guys are doing there are you closing sites.
Jason Gursky: So I think that will align nicely, Australia, bringing that message out to the forefront as this is all going on.
Speaker Change: Other investments could you help us understand what's going on and it looks like that restructuring is going to impact margins positively by the end of the year just kind of.
Jason Gursky: Okay I appreciate the thoughts.
Speaker Change: Or maybe the mix shifts back, but it will just wondering if you could add some color there.
Speaker Change: Our next question comes from Peter Arment with Baird.
Speaker Change: Yes, so just to be just to be clear the vast majority of.
Peter Arment: Yeah. Thanks, good morning, or good afternoon, now I guess Lynn Chris Jim.
Speaker Change: The restructuring that we spent this year, we spent $15 million to get $10 million of annualized savings three of which fell into 2024 seven is going to fall into 2025 to get you to that $10 million spend but the $3 million the majority of that fell through the Eni.
Peter Arment: Okay.
Peter Arment: Could you comment a little bit about the outlook on commercial nuclear you've called out for a high single organic growth high single digit organic growth. This year, but you grew low double digits last year in your guidance for 2006.
Peter Arment: Assumes low double digits are we is there is this just timing related or is there a deceleration something get pushed out.
Speaker Change: And we increased our margin I think maybe in the second or third quarter call 30 basis points to account for that.
Peter Arment: It.
Peter Arment: Has it changed from 24 versus 25.
Speaker Change: The other biggest piece of that entering into 2025 is going to continue to benefit aerospace and industrial group.
Speaker Change: No I think Peter we did have a very strong year. This last year and as we committed to the Investor day, we would grow and we still see the trajectory being low double digit CAGR over the three year period.
Speaker Change: A lot of efficiency.
Speaker Change: Behind some of those actions that we took.
Speaker Change: Within that restructuring.
Speaker Change: But then as you step back and you look at defense Electronics, which is probably the second biggest contributor towards that spend and what we're doing is really just.
Peter Arment: This year I will say that.
Peter Arment: While we are seeing and benefiting from some of the license renewals in flex work, that's starting to kind of happen.
Speaker Change: We're moving footprint, we're expanding capacity.
Peter Arment: More around the industry and one of the headwinds that we're facing is that there are lower year over year outages and that's just something that's going to happen. Once every three years or so theres going to be a little bit of a dip there.
Speaker Change: There's still going to be some just there was disruption obviously here in the fourth quarter, even though we had very strong results, but that will continue a little bit into Q1.
Speaker Change: And.
Peter Arment: But overall higher maintenance activity across the operating fleet to support that.
Speaker Change: The order book looks incredibly strong we're excited about the outlook for that business going forward. So I hope that we're in a position as we get deeper into the year, where maybe we have to do some more of this but then I'll.
Peter Arment: We are going to see.
Peter Arment: A steady ramp up in the design effort and we talked a little bit about that in the prepared remarks, but it's not just terrapower in ex energy.
Speaker Change: I'll also say that.
Speaker Change: And that we are investing back not only in restructuring capex systems across the organization. We're doing some exciting things from a systems perspective, and that's made a lot of work is going on in defense electronics at this point to support that.
We're excited about what <unk> can do and they are investing in research and development to secure.
Peter Arment: Some new and exciting wins themselves so.
Peter Arment: Overall I think.
Peter Arment: We feel really good about the low double digit guide that we gave over the three year period and as we enter into 2026, we only expect that to continue to ramp up as this is some of our work gets closer to prototyping.
Speaker Change: <unk>.
Speaker Change: But the trajectory going forward and where we're spending most of that time and effort is really in.
Speaker Change: Aerospace and industrial and defense electronics.
Speaker Change: Okay.
Speaker Change: Got it okay. So that's helpful color and then just when you made the comment about the nuclear business being buybacks.
Speaker Change: Okay. Thanks for the color I appreciate it.
Speaker Change: It out into the next decade is that all organic or do you contemplate more M&A in this space.
Speaker Change: Once again, if you'd like to ask a question. Please press star one way your telephone keypad at this time.
Speaker Change: We really did that buildup from an organic standpoint of you know.
Speaker Change: We will take our next question from Brian Sandberg with William Baird.
Speaker Change: Where we are driving content that we know of today and what we anticipate from the AP 1000 build outs.
Speaker Change: I'll, let Chris and Jim Good morning, and thanks for the question.
Speaker Change: Good morning, good morning.
Speaker Change: Just wanted to ask on the naval business, we've seen pretty significant supply chain and labor disruption that one of the shipyards that impacting production, but obviously you had strong momentum in your naval business. So just kind of want to understand better how about disruption may or may not flow through your business and does that represent an opportunity for you to take on more work within the supply.
Speaker Change: Aftermarket and plant life extension and the beginning of the build out of <unk> that it's at.
Speaker Change: You know at a at a rhythm drumbeat that is anticipated. So that is business that is within our wheelhouse to drive for Curtiss Wright.
Speaker Change: <unk>.
Speaker Change: Very helpful. Thanks, so much nice results.
Speaker Change: So.
Speaker Change: The question, we get asked.
Peter Arment: Thank you Peter.
Speaker Change: All right.
Speaker Change: Fairly frequently and were to subsequent door reasonably decoupled from.
Speaker Change: Our next question comes from Keith Skibinski with Olympic Global.
Speaker Change: The exact flow into shipyards as our material is such long lead in.
Keith Skibinski: Hey, good morning, guys nice quarter.
Speaker Change: Okay.
Speaker Change: So a couple of follow ups on naval empower first just a clarification.
Speaker Change: Curious, Chris can walk through kind of the flow of material, but.
Speaker Change: Our equipment is usually order years in advance of couple of years in advance of the shipyards and so there really isn't a one to one coupling now from an opportunity standpoint.
Speaker Change: So the material receipts that you.
Speaker Change: Brought in and book revenue on in the fourth quarter or is that that is what led to the strong revenue, but I assume those low.
Speaker Change: Low margin revenue on the material and Thats why I guess, the <unk> margin that enable came in a little below your expectations is that kind of the way it worked there.
Speaker Change: We are always out presenting ourselves as a hungry ambitious naval equipment supplier and.
Speaker Change: Apparently so I will definitely say the good portion of the be enable was associated with material, but other portions of it we're just better progress and and and.
Speaker Change: Open to taking on new work is the Navy.
Speaker Change: To second source things or points of supply and those don't happen frequently but they do happen and we've won some content through taking that kind of attitude, but it's not really a one to one coupled with the shipyard.
Speaker Change: And staffing and ramping up to support the strong order book.
Speaker Change: Another little nuance here for those that have actually been out to the cheswick facility, where we do a lot of naval work in AP 1000 work in the subsea work.
Speaker Change: I will just add that one.
Speaker Change: One of the exciting things about our business and we've talked about this in Investor day. So it's really gratifying to see some of this play out when we talked a little bit about it in the script. It's just the aftermarket work, that's becoming available to Curtis right now we've got two service centers on the East coast and one on the West Coast.
Speaker Change: We did see some resources shift from subsea pump development to support some of those naval milestones in the fourth quarter. So that's.
Speaker Change: Another another little nuance here.
Speaker Change: But as you look at the overall, while we still had a very strong 19, 1% margin here in the fourth quarter by and large the biggest reason for.
Speaker Change: Not only is it <unk> work, but there's also just a.
Speaker Change: A lot of aftermarket coming Virginia class submarines with initial spares provisioning.
Speaker Change: Thats, helping Curtiss Wright to grow we've got a great footprint.
Speaker Change: The Miss versus expectations is just higher defense business and.
Speaker Change: Foot prints and naval arresting systems that also is growing internationally.
Speaker Change: It's a great business there is very solid margins, there, obviously, a strong cash producer but.
Speaker Change: So theres other ways for us to grow that or is that.
Speaker Change: But as you look across the enable and power portfolio. When you think about nuclear products and process products and Aero defense products International sales it.
Speaker Change: And what we are experiencing now that's not tied directly to what's happening in the shipyards.
Speaker Change: Okay.
Speaker Change: That's helpful. Thanks, Chris.
Speaker Change: It can be dilutive. So it was really a combination of the strong naval defense sales lower process valve sales during the fourth quarter lower arrest things are arresting systems, and we had a really great quarter of the prior year and international arresting systems and those carry a very high margin. So.
Speaker Change: Thank you.
Speaker Change: Yeah. Thank you there are no further questions from the phone lines I will now turn the call over to Lynn Bamford, Chairman and Chief Executive officer for additional or closing remarks.
Thank you everybody for joining us today, and we look forward to reconvene, England. We have our Q1 results have a good rest your day.
Speaker Change: Mostly mix.
Speaker Change: As you look across to explain.
Speaker Change: Got it that's helpful. I appreciate it and then looking ahead to 2025 and in the segment.
Speaker Change: Yes.
Speaker Change: This does conclude today's.
Speaker Change: The right way to think about the restructuring that you guys are doing there are you.
Speaker Change: Earnings Conference call. Please disconnect. Your line at this time and have a wonderful.
Speaker Change: Clothing sites.
Speaker Change: Doing other investments could you help us understand what's going on and it looks like that restructuring is going to impact margins positively by the end of the year just kind of.
Speaker Change: Or maybe the mix shifts back but it was just wondering if you could add some color there.
Speaker Change: Yes, so just to be just to be clear the vast majority of.
Speaker Change: The restructuring will be spent this year, we spent $15 million to get $10 million of annualized savings three of which fell into 2024 seven is going to fall into 2025 to get you to that $10 million spend but the $3 million the majority of that fell through the Eni.
Speaker Change: And we increased our margin I think maybe in the second or third quarter call 30 basis points to account for that.
Speaker Change: The other biggest piece of that entering into 2025 is going to continue to benefit aerospace and industrial group.
Speaker Change: A lot of efficiency.
Speaker Change: Behind some of those actions that we took.
Speaker Change: Within that restructuring.
Speaker Change: But then if you step back and you look at defense electronics, which is probably the second biggest contributor towards that spend and what we're doing is really just.
Speaker Change: We're moving footprint, we're expanding capacity.
Speaker Change: There's still going to be some just there was disruption obviously here in the fourth quarter, even though we had very strong results, but that will continue a little bit into Q1.
Speaker Change: And.
Speaker Change: The order book looks incredibly strong we're excited about the outlook for that business going forward. So I hope that we're in a position as we get deeper into the year, where maybe we have to do some more of this but then I'll.
Speaker Change: I also say that.
Speaker Change: And that we are investing back not only in restructuring capex systems across the organization.
Speaker Change: Doing some exciting things from a systems perspective, and Thats maintenance a lot of work is going on in defense electronics at the at this point to support that and.
Speaker Change: But but but the trajectory going forward and where we're spending most of that time and effort is really in.
Speaker Change: Aerospace and industrial and defense electronics.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks for the color appreciate it.
Speaker Change: Yes.
Speaker Change: Once again, if you'd like to ask a question. Please press star one way your telephone keypad at this time.
Speaker Change: Our next question from Brian Sandburg with William Baird.
Speaker Change: I'll, let Chris and Jim Good morning, and thanks for the question.
Speaker Change: Good morning, good morning.
Speaker Change: Just wanted to ask on the naval business seem pretty significant supply chain and labor disruption that one of the shipyards that impacting production, but obviously you've had strong momentum in your naval business. So just kind of want to understand better how about disruption may or may not flow through your business and does that represent an opportunity for you to take on more work within the supply chain.
Speaker Change: So.
Speaker Change: That's a question we get asked.
Speaker Change: Fairly frequently and were to subsequent door reasonably decoupled from.
Speaker Change: The exact flow into shipyards as our material is such long lead in.
Chris Wright: Curious, Chris can walk through kind of the flow of material, but.
Chris Wright: Our equipment is usually order years in advance of couple of years in advance of the shipyards and so there really isn't a one to one coupling now from an opportunity standpoint.
Chris Wright: We are always out presenting ourselves as a hungry ambitious naval equipment supplier and.
Chris Wright: Open to taking on new work is the Navy.
Chris Wright: <unk> to second source things or.
Chris Wright: Points of supply and those don't happen frequently, but they do happen and we've won some content through taking that kind of attitude, but it's not really a one to one coupling with the shipyard.
Chris Wright: I will just add that.
Chris Wright: One of the exciting things about our business and we talked about this in Investor day. So it's really gratifying to see some of this play out when we talked a little bit about it in the script. It's just the aftermarket work, that's becoming available to Curtiss Wright.
Chris Wright: Two service centers on the East coast and one in the West Coast.
Chris Wright: <unk>.
Chris Wright: Not only is it our coh work, but there's also just.
Chris Wright: A lot of aftermarket coming Virginia class submarines with initial spares provisioning.
Chris Wright: Helping Curtiss Wright to to grow we've got to agree.
Chris Wright: Princeton Naval arresting systems that.
Chris Wright: <unk>.
Chris Wright: Is growing internationally.
Chris Wright: So theres other ways for us to grow that or.
Chris Wright: And what we are experiencing now that's not tied directly to what's happening in the shipyards.
That's helpful. Thanks, Chris.
Chris Wright: Thank you.
Chris Wright: Thank you there are no further questions from our phone lines I will now turn the call over to Lynn Bamford, Chairman and Chief Executive officer for additional or closing remarks.
Chris Wright: Thank you everybody for joining us today, and we look forward to reconvene, England. We have our Q1 results have a good rest your day.
Chris Wright: Yes.
Chris Wright: Thank you this does conclude today's.
Chris Wright: Earnings Conference call. Please disconnect. Your line at this time and have a wonderful day.
Chris Wright: [music].