Curtiss-Wright (CW) 2 Nov 232023 Q3 Earnings call transcript

Welcome to the Curtiss-Wright Third Quarter 2023 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Jim Ryan, Vice President of Investor Relations.

Thank you, Risa, and good morning, everyone. Welcome to Curtiss-Wright's Third Quarter 2023 Earnings Conference Call.

call and Chair Financial Vice Farkas. the Officer, Chief Officer, on Bamford; Lynn President me today and are Executive Chris Joining and Chief

call company available also on for press through the this and a Our webcast section can of www.curtisswright.com. download being the of A Relations well of our copy presentation found as at website. as the financial today's Investor is today website be release webcast replay

are are the that as include Act and certain statements management's future projections the risks our detail of Please Securities defined current filings performance. guarantees note, today's Private those forward-looking statements in in public and discussion will of SEC. and XXXX. based expectations forward-looking Litigation associated Reform uncertainties our We with not These are statements on with

references a in unless the As certain ongoing financial excludes an the otherwise transparency include and and on in exclude greater noted. Any currency results organic reminder, view and translation, Curtiss-Wright's divestitures, foreign adjusted that non-GAAP acquisitions an adjusted company's to order operating growth basis provide are to costs performance.

on to website. for non-GAAP prior and and periods available GAAP in release earnings current are the year reconciliations our

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

everyone. our more cash full year review XXXX to earnings free to turn Jim, revenue, financial to flow and a covering for you, of our results on to call expectations and financial and updating quarter of will highlights Chris our are the in-depth Then stronger a generation. over outlook, Thank reflect third guidance. the our provide good updates I I'll morning, update by begin we and XXXX brief performance which

XX% our with quarter as all remarks we up higher improved to move sales highlights. increased to year-over-year end demonstrated and $XXX our wrap markets. our Sales before in we I'll overall XX% growth Finally, organically third million XXXX prepared Q&A. Starting

electronics in commercial growth the increases which ground easing as Our mid-teens benefited we from continued aerospace the and chain A&D markets supply in in grew both aerospace. XX% defense of defense drove as year-over-year as well strong

our industrial process detail and also widespread which shortly. in will growth We in experienced Chris commercial more cover nuclear markets,

Operating our challenges. within with while in as basis performance exceeded strong XX and growth, last Defense overcome chain XX% income of strong expanded we margin Underscored this Electronics operating the profitability points. to grew year's continue dramatic impact year-over-year supply segment sales

to in lead continue times component steady We full achieving further providing in outlook. year from improvements Defense within availability confidence and benefit Electronics our

up in of XX% while Diluted was free $X.XX resulting in earnings flow flow per increased XXX% conversion. cash year-over-year, share XX%, free cash adjusted

with year-to-date. in We the segment, continued tactical which strong the Leading demand communications our in and previous activity year's set order were now also This pleased equipment. achieved book, bookings was embedded driven continued up and quarter for quarter X% our with Defense X% way last record third growth the record the computing quarter. in exceeding Electronics a the up by

advanced commercial small Power support addition, segment, and plant continue designs. as as extensions maintenance, our experience for life modernization products modular and Naval demand strong to In in to well nuclear reactor we

Overall, book-to-bill is $X.X strong upon quarter, the up was now already building year-to-date of billion. in X.Xx third our in excess and backlog, XX% which

of full XXXX highlights our some year to Next, guidance.

This to to favorable date, growth deliver XX% and with backlog raise strong positions with performance end line with growing to markets projected all all top Our X confidence sales X% segments. to us our along sales us trends across increased provides again. in our outlook

by Naval points outlook to profitability XX whereby unchanged offset XX margin and electronics. reduction Overall, reflecting a balance a strong for with segment's profitability was basis expectations the improvement, portfolio, year-over-year the of in the in remains stronger combined Power defense in

our reminder, EPS diluted XX%, keeps targets. long-term to a XX% expected to as which, exceed grow result, to track is now a us As on

in the addition, guide flow performance year the to higher quarter, consecutive the reflect increased confidence second end year-to-date full In our and strong of for cash free the bottom we outlook. already

summary, in In Curtiss-Wright deliver another performance remains well to strong XXXX. positioned

the our like Chris prepared Now to over to call with continue turn remarks. to I would

Thank have XXXX the segment. third overall On and key Aerospace we begin quarter Lynn. line X, drivers you, our in with Industrial, Slide X% of I'll by our of where growth sales in performance expectations. was

the aerospace on OEM in double-digit ramp-up Boeing commercial production segment's and growth notably the and Within Airbus programs. in most . AXXX supporting market, on the experienced Airbus sales AXXX platforms, we

offsetting surface We general within aerospace also the driven markets in increases the by growth of ground timing actuation services. sales and was production higher Partially on those a industrial market, decline various segment's defense experienced due treatment and sales solid actuation programs. EM products to in in the

segment's to unfavorable the absorption actuation on by Favorable of principally sales higher was profitability. the in timing development Turning products. mix offset for contracts,

and and order aerospace increased book, in Next, note XX% increases of which markets. million drove and Sales from quarter at third supply defense $XX of fourth in the included into our our a pace. recovery $XX faster as or segment. Tactical performance, Communications Defense conversion the quarter the Electronics were the sales ground Of burn reflecting million chain we strong that within accelerated backlog in our strong approximately continued some Equipment down

from compliant the equipment, another our increased our on Defense, computing example demand we Ground for of of Elsewhere experienced solutions. the most strong platform, sales Stryker MOSA customers is notably in which embedded

Within military embedded program. instrumentation F-XX aerospace strong as defense, we test the various well computing sales flight equipment programs domestic as on foreign experienced and for on growth

performance. absorption to strong enable year-over-year income results future our of was strategic while XX%, million $X those Also a to growth. Regarding investments growth. IR&D increased the segment's organic within included margin points, increase the improved in basis operating operating sales favorable XXX due Operating on principally

reflected Naval to and A&D line and in was end XX% the both growth of markets. with Turning Overall growth segment. commercial Power and in sales our expectations essentially our

products. for our demand Within the well market, the continues Arresting Systems perform our segment's extremely aerospace defense strong business upon based global to

the the Virginia-class by reflected on growth offset and defense partially on the timing In Class production carrier program. of our subs, market, aircraft ramp-up supporting submarine naval the the the solid higher CVN-XX Columbia revenues results on

sales XX% revenue down and market higher increased headwind demand continued CAPXXXX and supporting the X-energy power reflected growth strong nuclear approximately of operation design. development existing and mainly in Reactor of wind mid-teens the results reflected In process revenues overall commercial as the our as production. the from supporting maintenance These excluding sales market, well when reactors the Advanced

and We as process growth as development strong also increased driven market well the sales maintenance experienced higher activity subsea and refinery revenues. pump by turnaround in

segment's partially operating performance, the the unfavorable was mix solid growth by sales to offset Turning CAPXXXX from absorption favorable on program.

the reflect of naval at development growth. support reflecting contract results hires small training a In to addition, our the as our profitability, you number adjustments look continued and in new segment's ramp of

overall, expansion. in operating results, sales growth again operating strong and To sum the up year-over-year in income resulted in XX exceeded in third margin growth once basis quarter points

to begin growth guidance prior with compared X. to XX%, where I'll Slide XXXX of X% expect up to our now grow we turning full year $XX sales total X% on end-market Next, our guidance. with with million outlook X% sales to X% our organic sales or

and market, we defense strong of growth in for demand our XX% closer expect at sales defense higher aerospace a expectations to we've range equipment sales embedded Across revenues defense arresting increased electronics. XX%. to to systems year based to markets, and total full computing aerospace look our for Taking a the XX% on increase the entirety XX% of now and

Next more and by of in year now XX% in receipt communications accelerated the full on based in for Ground favorable to sales to expect materials into easing driven we note, ground the the shifted strong continued Defense, equipment quarter. decline that revenue an demand even Of in expect chain. the sales timing XX%, we growth sequentially tactical of fourth supply market the of defense and our QX,

on Defense, program a year-over-year we we some now the mainly reduced the X% outlook timing solid to to XXXX. Naval out our while of outlook in expect CVN-XX aircraft carrier Next, shift of expect to due growth, as revenues we slightly X% for production

to conflict wrap the by and questions to a we the received spending our number defense countries GDP. we've commitment of since start year defense of NATO I a where an Before area wanted percentage highlight Ukrainian the as of up over past increase markets,

foreign arresting notable in the sales through grow Curtiss-Wright, spending in of and in progress ground these on drivers steadily aerospace to we've an and direct we as seen expect sales anticipated, year. higher Systems now year-over-year, Turret vessels. we Stabilization XX% across As the on handling increase systems approximately defense, Collectively, military include Drive and the strong equipment systems sales contribution aircraft avionics, flight naval platforms test of defense

Given the solid priorities, to this defense we area. domestic alignment long-term technologies opportunity to as and to rising threat this drive in and of an continue foreign see growth our revenue environment

to grow OEM on to and upon are by Based Turning wide-body now our we driven increasing expectations narrow-body sales year-to-date the sales to performance, of aerospace. strong XX% growth both platforms. commercial XX%

power headwind for as contract a based we down products. our A&D of $XX and of the completed this Outside the substantially the our valve market in revenue we the from as strong reminder, And continued includes CAPXXXX and year-over-year first slightly outlook million raised wind a process growth the in program quarter. this markets, market nuclear on for our commercial both demand industrial the outlook

of well that outages rate higher turnarounds, we SMRs. advanced market, well our ramp as in high in rate growth a in process impact, nuclear year low a the nuclear as growth process Excluding development commercial a double-digit expect market as full as single-digit reflecting and

our Slide year total with markets, full full commercial year X% growth our sales by across to segment Overall, outlook X. expect to X%. continue we Continuing of on

in and growth continue sales to Industrial, I'll slightly begin we and of our X%. Aerospace in the solid aerospace demand increased to commercial range reflect of to X% expect strong where sales

in outlook, XX in maintained operating expansion. profitability, segment's XX the we basis points growth Regarding year operating strong income and reflecting margin full to our

expect deliver a strong finish to XXXX. continue fourth quarter We and to segment the to

Electronics, based supply the XX% revenue continued grow now to performance, Defense to improvement the our in again and we record-level in year-to-date activity. XX% order expect Next, strong forecast chain and sales raised upon

to we profitability, prior XXX segment's XX XX.X% to operating expansion, now reflecting above is XX.X% in XX% basis the from to grow operating year full XX% XXX income range our to year-over-year which points expectations. points margin Regarding expect and basis to

As we margin in operating demonstrate the with of based profitability sales to noted an expect approximately earlier, results, third stronger-than-expected sequentially quarter on strong but XX%. QX, segment's still decrease

end sales and markets aforementioned expect And continue in the slightly lastly, of and to increased Power, XX%. strong reflect our sales X% growth changes Naval to of range to we

segment's Regarding the profitability.

sales, operating income anticipate prior contracts. number primarily by on naval reflect flat of our the XX overall timing to we our on growth margin trimmed and favorable the X% points small reduced now to to a due increase While absorption basis in guidance we and efficiency outlook

adjustment forward, further as an will this the see guidance, the contract going in immaterial While of address remarks. is her opportunity closing we Lynn overall Curtiss-Wright impact to which

our margins, margin mix pressures contracts on of segment's continues in the And unfavorable development lastly, revenues. and process to in power outlook the to lower timing regard the CAPXXXX associated and with reflect market

increase our which in related foreign losses assumptions to expenses, non-segment lower an in pension reflects now expect Regarding in costs. updated guidance increase exchange the corporate year-over-year offset XXXX to transactional fully or higher-than-anticipated we

more expect $XX of grow both we operating in outlook, total increase as and a with our year. our XXXX provided engineering in excess in reminder, this year-over-year than internal a And XX% growth. summarize remains to income spend to and on initial continue sales customer-funded So our guidance overall line X% million earlier to programs includes total of outlook to Curtiss-Wright in this

deliver XX as Investor Despite drive in to that commitments. points our we to XXXX on basis expansion margin day year -- Day offset, full XX expect to operating continue we

X Continuing with for to building solid upon and on finish Slide outlook year. expectations the performance our strong and financial year-to-date our a

$X XX% year guidance to diluted We full EPS range have $X.XX up to adjusted of a to or our increased XX%. new

a X lastly, historical through flow. us We more And first months with to of free turning cash in the that XXXX back delivered line puts strong our performance cadence.

raised the to capital financial $XX to our bottom improved outlook focus by working confidence range we of management. full reflect result, our increases and following end a intense year on As million our

of also million in is ranges from XX% $XXX XXXX. $XXX to achieved reflecting cash striking of now strong record distance million, adjusted growth nearly of our to outlook XX% Our $XXX within free and million flow

Our to continues XXX%. free a updated conversion rate in excess cash guidance imply flow of

Lynn. I'd Now to turn like over to the back call

turning And Slide Chris. you, Thank X. to

for have investments outstanding deliver we we and ability which our to growth quarter expect achieved strong to worth results year deliver we R&D, commitment that incremental It's these today, maintaining further sustain well strong our shareholders. to to remain organic into while track As third discussed another the reiterating future. on our results strengthens in

proud XXXX from defense leading put I effort are Investor ability the As I'm to today, we reflect in faced. and accomplish be growth Day of team, to are challenges our deliver to amidst environment ranging incredibly facing always staffing, When that our dynamic and strong a the pivot accomplishments forth global there upon a commitments. supply the the challenges many chain companies to market, to growth we of

the of XX% pandemic of For led our events of to example, nearly the unfortunate turnover the workforce.

Within consistently advance overall financial the these have found both types we improving operational and with Curtiss-Wright's goal resilience. of and opportunity challenges, of to excellence efficiency

focus the efficiency done and while high team to We've we processes, enhancing supported sales. that programs reshaped so on our continued engaged workforce, as we've increased to with is systems record driving the fully ensure have and

half pandemic added As the us, many we of meet lost which to engineers. back those we've about of strong are prepare ahead the during demand of jobs

new continue retention up on into and of opportunities, this our and to we hiring, decade. and see which remains continue as will growth We well employee in end to the critical focus turnover, ramp this projects our encouraging drive trends

committed we our continuing implement develop workforce. future training to to as generation Curtis we employees are Wright's processes Further, refine assure the to and new of programs onboard we

the that capitalize we commercial our growth third out look and As the our driving it well positioned tremendous to I CEO clear end of across end Curtiss-Wright secular markets. to are of year future, to is trends and near A&D as portfolio continue on the my

long-term confidence to our Before up, defense, supplier growth position ability for we I'll of an businesses. and deliver our a on global as across few increasing focus those security strong a growth. wrap In defense trusted provides our proven highlight in avenues

As the year-over-year the our this budget. XX% portfolio strength DoD year, and from to you alignment bill benefiting the of growth spending see can performance certainly appropriated which 'XX by our for billion we're FY or $XXX

an the calling we're least remain Although environment, legislation bill, the in signing defense budget naval 'XX continued with to name in elevated proposed spending to current just for shipbuilding, our faced offering resolution with U.S. continuing of delayed support growth FY few. opportunities MOSA X% and in efforts line top the expansion of at as well in FY product modernization, as Electronics We 'XX. our see a the Defense ground we

expected for global are by driving the its NATO defense U.S. allies spending, to trends and tailwind a and the The notably industry. Curtiss-Wright remain most strong

our In expected to growth to on drive the commercial platforms passenger need to expand the global our capabilities travel, fleet aerospace, years to and growth in existing replace continued the for commercial new is aging and come. provide

electrification and aerospace technological the another product Building Further, defense and yet in the vehicles to market. of opportunity electrification general of emergence new addressing provides expand reach. Curtiss-Wright's upon in industrial relationships the our introductions

look emerging that the and reactors plants. APXXXX as reactors of efforts as well to worldwide includes built opportunities reactors to large-scale be volume in energy security support existing supplement runway small of and in for the to I the advanced modular Europe This large coal replace technologies As existing to tremendous expected or nuclear nuclear global to long truly opportunities a decarbonization power Curtiss-Wright. commercial nuclear, impact exist provide

for All a to tremendous be strategic and aligned customers' commercial pace The meet demand to will needed relatively advance activity level as global energy. remain nuclear continues at needs. our supplier of rapid for support of which a the to we

potential X Finally, second I'm approved construction just to week, followed reactor to years reactor, by X anticipated the their XXXX, that government be they by go pleased share first Bulgaria's one. announced is to first online which this a of operational have APXXXX that expected or the after

first contract operational initial This APXXXX in is for XXXXs. X the the of engineering earlier and expected reactors. construction of recent reactor to reactors of with Westinghouse APXXXX exciting are early this an Those of news potentially Poland's be exciting -- selection the X the follows signing service the

for provides technology, X Bulgaria's multiple within for yet to endorsement reaffirming positive the also pumps opportunity Curtiss-Wright's coolant the reactor to another secure APXXXX while years. news contracts our X next

employees avenue, in growth investing serve. In customers. for our future, we continued closing, Across support and the the to our I'm value near shareholders, we long-term the enable every our Curtiss-Wright deliver momentum outlook to diligently and our and profitable for markets with today in and which for prospects Curtiss-Wright will employees and are tremendous pleased healthy our our technologies long-term critical and

the we providing that May our of commitments forward performance to our XXXX, outlook York. XXXX, in in sight on in X-year strong growth our providing Day working. to XXXX continue New confidence Day to Based look of in X-year Investor and line maintain followed established We Investor recap a results by strategy to pivot against our February, is our targets

at would Thank time, call And you. this like conference up questions. open I to for today's

Peter with first Our Arment comes Instructions] [Operator Baird. from question

just you the like more about about sizing look look results. big you of thinking of direct opportunities, certainly think the back Congrats had are It the the over do at the order a we you going terms business, days you kind China just the on in at the you there's years. SMRs, or nuclear framing on, nice when seems How next Lynn, opportunity. and think outlook at lot to more how several lot look when APXXXX it? whether you the a

Finland press the on keep about but Poland power. very opportunities Ukraine, taking with the are significant, to wide Bulgaria fronts. So talked RCP of they is even we're that them significant can and We There's nuclear building call Republic, of multiple Romania, are Slovakia, of this you here, very and steps and in all on -- the forward all Czech new U.K., see steady countries. the move group actually Sweden encouraged Slovenia, potential find all drumbeat the to across to pumps for the

record across win APXXXX that nuclear profile are begin of the but market, continue clearly plant. position, given Westinghouse a in power still competitive safety the Some track the great to -- and those of to continues

XXX and seem $X billion very RCPs, on $X for is XX the think pretty well north line, And this time over Curtiss-Wright. there's early in into we potentially business a to plants getting potentially country these and consistent be billion of targeting Today, room XXXXs. to for the of it's online

So order X with and making or even partner to to the to a do bringing Curtiss-Wright orders saw we're be to more coming similar what to X we we're ready and prepared sure and to in significance meaningful direct some the great years, to Westinghouse up China next ramp is of that. the

point time 'XX, So of now beginning it's the to for years, It's as moving X amazing flash And the we not to feel than years to is and things we're dramatic moving when X still line going fairly direction. consistently in remains said just it's Curtiss-Wright. at X it an X are past comes. the saying forward be and is that good a if year X%, X% meaningful to a very time this we line,

Appreciate over Middle on business, going what's on of impact seeing of and any your replenishment lot just in that. any are a overall sending your to that And defense in interest know on seeing East. order I guys everyone's of you kind given Are activity you we're Ukraine environment? there's kind activity. the

be that stuff the and heavily is being munitions type not of -- replenished. We're transparent. in We're not to very much

of However, equipment, much seeing communications systems, we we content. significant order some equipment tactical and there. of many the types are trends where definitely of very whether is that's a needed in the lot missile have defense To that from

Defense absolutely countries equipment the new year, one And it's for. is that. areas tend knocked of their outside their But acquisition the of assure is But Europe reaction lot little outside stuff having to it's we they're think a -- -- that to to the an is deal Electronics a that readiness spoke the asked increased So our that Chris of trying their of throughout a position U.S., and definitely, for trends. being of ESCO for business clearly, XX% about. essential not quick kind and is off doors the is of other

clearly, orders is been business. -- So that driving there ESCO the position our has into

Chris. just last And quick one one,

still strong how should profile days? forward? opportunities kind of Or guys about flow. just free seeing Are cash you generate going very working working we whether You to it's continue obviously think capital capital

and our and mean in high QX I most. the that that with just stronger able I'm even X performance been at a is back we years year-to-date. is were at on flow I pretty past percentage here the approximately us the happening sales pleased the capital of looking across XXX to points. to it But ramp able an we've throughput what close year-end. support which by Collections year-over-year, didn't over working sales cash than quarter reduce through for It as certainly basis we But free Yes. generated, in a accomplish think in came with lot to basis. opportunity organization third got increase And we've the through inventory. come the what's a really really in out lower to growth, collections.

make So I to think we're starting progress. some

don't know maybe us aggressive as with year. we aggressive. in of in here so as the range, throughput product. of think good that quite going points in improvement. We're our the down. get You're I last great situation collections year-over-year finish have will we past showing in off be here, stretching. now have to payable pretty not this burn I it's that given this suppliers with A that year-end expecting quite to XXX tough front the And opportunity And see inventory XX% that our burning we'll to to been and of we're as be of be that basis we lot

and is with ahead there were get we a of we those inventory bests yes, in hitting But 'XX as of some in back us. that to opportunities as this still into working that have to of mean burn think down back frame. I more capital time I XXXX head sales line opportunity historical percentage we

So more to come.

will next Kristine with Morgan Liwag come Our question Stamps. from

order of in they the I the terms Poland XXXXs. have want it Bulgaria order. to have If and timing both in early APXXXX power online like to the back like now. seems go pump to the want just I Lynn, So should mean for reactor the plant cooling

XXXX them. even discussion 'XX the Could a progress late understand to bit on timing a your want just order? with this a and or I of regarding little So be more

have a relationship with Westinghouse. great we So

them and very market with We seeing, cetera. have update they're what regular on et to know what bidding, work transparently they're meetings

the so to build to the And they in time -- plants early begin frame. -- going they're opportunities that to -- of trying as I more the XXXX in that security have have orders they're number think

we us I shared, for the line number make is pumps be date. X of build Westinghouse. sure reactor to the think What it with coolant to discussion does still years having the can we're put pressure to to with in we've X them

this RCPs, desired a to Poland the I number in . We build means this the really reactor pumps. XX what and they know order we the plants that very was XX So that that's But isn't -- is the for first clear see plant, being Bulgaria back and RCPs. discussion what XXXX with indicate. for for coolant feel, Westinghouse and know between we of potential as orders and know

delivery. So magnitude. that's curve to that anticipated of And an be us of X-year same order a it -- was initially bell took that

I there's company that are but we're getting plan more out earlier, But we being does. us that does has evolves into obviously say X-year but everybody started cash some speculate is And control that it to trying world putting really pressure aware to still point, this. point, is mean and off. will at put to -- pumps. a don't plants. of want these move over so clearly just And as us the at -- commitment earlier, this And APXXXX to pumps X So -- they're but I would it things turned years, trying costly every on it they're them TBD. a to flow trade-off hold all and very the on very

built right, same I for if for then in where RCPs the the you facility guys APXXXX recall submarine. RCP And the the

through, X mean I Can also ultimate all capacity plus it you a that Columbia come come capacity it build build? a you've opening in in interest is if Virginias who what your all for all Romania is annual put mean to the other should got in these incremental orders had sometimes, have orders right, could in capacity. and you've countries as rains want which have your an these well, they few remind I With and pours, APXXXX. us XXXX? plant what's class you the when

So even lot to and do adding shifts in shifts X running plant potentially capacity ramp [indiscernible] a current we have staff a up our with third adding and to full of the shifts shift.

with capital mean, the has equipment a up. well are we to we flex every limit. have obviously, that I -- positioned So always

One decade. of line of the customers of very various their this need positive with footprint and things broadly the platforms, later whether our as X-Energy are we in talked on notably much we our to all to content as would evaluating some about the very expansions process we across is, content SMR their continues sight in grow be do

like we for the Summerville, But And we're something considering to this just that, capital work business, built important meaningful and ongoing line is to so it's that plant in not on investment when of to is you consider that not there yet. whether sight afraid Curtiss-Wright see is make going be is needed. definitely can We're us. clearly

half now, in of some as there So we of about what out facility but can this in the back might be we're expansion of not produce worried Cheswick the decade.

expect on ramp circumstances. it's very us we business. to would it And cash be a help that, those in cash, this those those contracts just add that flows obviously, the front And I point, if CapEx profitable there significant, we are right? any would but spike up of also expect typically loaded type to fully contracts to is So think with I at wouldn't

will we that think do people in that anything So with really happy we be area.

We'll Stifel. take our next question Nathan Jones with from

points XXXX, bit into there's of not off number in takes. digging a the growth is start operating with margin like up and know overall margin a expansion profile more the And I X% just I'd puts leverage. on to organic XX huge and basis

into those little to bit like a dig So I'd more.

on you the of maybe comment know some headwinds like winding down. about specifically I could talked CAPXXXX So you R&D investments. additional

out maybe there. first in not may may as about little or we're that thinking XXXX and bit margin then talk unpack more profile repeat about So a what the

Yes.

look year, sales I you -- from to overall the said we're that it's which is the level, absorption in experienced XX% when we you line an getting think we've at on that XX% look fairly in this when Curtiss-Wright historically, at what range. with

I think about we margin. of guide at XX% of the midpoint incremental say would now, right our

talked number only the so trajectory on. about contract great not year, through growth have But as continue many also we a invest this IR&D, throughout great to of to times opportunities that R&D but we're we've

we year-over-year, bit contract which when things talked just the going various on look and naval million development R&D pumps as like look and segment $X we've a R&D, So the R&D, that excess IR&D margins. are that's to puts this at contracts on little about includes the A&I be million. And division. you with incremental of and in subsea advanced of the at mean a costs total $XX the bit of I we're year, actuation and pressure going spending across that little

that great that vectors beyond So I think that maintain But investment. we future. we're within capture had Naval then I growth year-over-year. the APXXXX the profitability these won't push on we important about get of and again we're that. million into Power reduction We've the a go And have and as in to $XX the for segment. growth talked It's in year-over-year that, headwind that's on our that numbers a contract. ourselves facing to

from a So not commercial that in organization I items, the points future. you pricing commercial investment if forward excellence a there's back some of for these but a operational excellence, on -- push think basis going year-over-year, XX to doing support only that we're also perspective to lot and the to pull XX

things of that of core So XX% in that position are that growth? you're the absorption, still on, if we all kind out stripped core discrete on to margins your XX% incremental is of kind going

Yes.

XXXX, decline of the going of. to out mean, I year-over-year CAPXXXX headwind off And contract is because going is the to into just running decline revenue

Obviously, You guys paid commitment growth. margin investment in there. further invest in we growth, continuing line? to increased have from in back made understand expect a to to I Should are getting those XXXX the headwinds

go 'XX? Just we puts how and there into about the as we think should takes

Yes.

lot our a strategic I naval be still mean, on as accomplish Day. in answering as this evaluating going of engaged that going and certainly are we've there's front mean, actively up, you're look XXXX, brought opportunities in the We the where investment on into we're margins still in goes question that to out and journey I to set what planning Investor But to specifically, some power process you forward. as it year. these of us at and next I stand you mean

positives got submarine. ramp we've that Class a naval Columbia here I defense outlook, on a the real solid the including think

know we be I happened have we we will nice integration very something still but on hits. We're FMS should if bit business have APXXXX mean, well. with year. this be would to X got years, next growing is going business We've resting our it this orders. that We're -- a -- that new little headwind no accelerant seeing forecasting it sales X sooner those when an systems

naval And adjustment had we'll have we a small tailwind from and this in third benefit quarter. a that contract here the

to front going We're opportunities in to in enabled the XX% as in here the in we absent subsea, get investments have investment in through past. So us quarter. planning I or process And technologies. other fourth R&D this we'll mean, tech-type advanced to factors, these advanced get look XX% incremental SMR, R&D at of are that that strategic we'll

So that's look that. at would I how

question Osterland comes from Our with Pete next Truist.

Mike morning. for on this I'm Ciarmoli

book-to-bill quarter. detail provide could end you by First I the if what I on ask was to like wanted for some segment or looked by markets. just wondering that on more the

electronics for trying signs if weakness any order strong any where and of markets a showing are are you defense Just relative there get call in sense . how were out would to orders trends

Yes.

that lot in So a question. to there's unpack

So XX%. X.Xx And sales very strong on the growth at were Curtiss-Wright book-to-bill. approximately let and total that's of say start we me level, off

across X third was the defense very that for you consecutive look strong was segments, a Industrial Aerospace As and about the X.Xx with really the Xx book-to-bill, segment, and that's book-to-bill. book-to-bill, electronics quarter

in were million. they XX X.Xx mean QX, of X.Xx in I months back last And orders, QX. $XXX

QX taking a nuclear in right? sales the XX% solid very the The up there some things in basis. process X.Xx in kind in submarket. in strong at bit markets. very but and Power really top X.Xx. that of year-to-date And commercial very on high orders here book-to-bill growth. mid-single-digit in that's about We're in still of growth markets we're place growth balance, about Naval the seeing a is markets, And aero. seeing our segment, some little a strong We're The above So commercial are defense stronger happening on

about a little the bit there seeing in we're talked We've industrial and market what past. the

since I decline highs in been on a think order the fairly the steady positive while is, we've very of XXXX. is that book a strong

little out. are in new dealing got of a that bit to little a product QX, to think, introductions, slack seems Here we customers' we projected. We've flattened bit forward. as We're that I balancing going some help in be with inventory. That had our going out

be very to Aero Commercial And continues strong. very,

and critical in an no regard, continue that that trajectories concerns produce produce Boeing their Airbus the laid platforms. have to out and with to for alignment expect So

conversations when And And be business? of signs timing then any that additive around activity have around Have do that you seen on just Defense. one to Naval follow-up increased AUKUS? updated for you potentially any or expectations could

kind very for tailwind and more in going becoming say definitely lot AUKUS the a we've to speak we really be not good past to. business, submarines A it's is clear. But of to continue Well, activity said but something freely very happening for it out details we hand Curtiss-Wright a -- that, replaced. of is our is I and going not the year it around -- to. of clear. in and plan be timing over can sure, that those are to for not can to free and a at it's how the There's background really that the built AUKUS lot the speak were figuring know

Myles question Walton [Operator Instructions] from with take Wolfe We'll Research. next our

Myles just Greg cleanup Walton. on SMR. is This on a Dahlberg for had quick I

X-Energy, I you commented you're on Hitachi content think mentioned with previously, Rolls-Royce. in and discussions

So and on maybe design 'XX revenues discussions beyond. maybe for know, I into expectations don't any and those updates

over X plant for been So content of we're unit on on public we've $XXX the very million X-Energy. --

a other won we we've out could and with release we with don't control or the go build. go maybe press that ahead ago can was that know for and public. to continue systems into put out, work that TerraPower, explore we them you We out I so I a so saw would month something system a major if -- put say

But things at point the move by have hoping May, customers that sit okay major of that really will we're hopefully, what SMR lot steady about is Investor across the be And all with reactors comply Day. talk Investor some our this to in we where the we're is reactors so about to that a time. those across very to we'll But become Day have a able goal really activity we are our our and the as of talk obviously, next clearer this the want. on board bit -- little and to we --

you your come So to that's tease Investor Day. our try to want to really and make

one. Great. just And on Anything more now. what right one then expectations year-end, broad in the on quick M&A, seeing you're color

sure those be year-end. very yet interesting by So want quite this forecast, really good. financial good, we could we to be matches we that something guess have that of lot something this have all capital have cost a at one but we considering and healthy, passed really really in as evaluated But of pipeline to that able year, No, very say strategic in we've talked to the those things but announcement is least there we're -- year, on chance optimistic it's I properties very I high said years -- a now, will see some it quite I solid, small property bar a of The solid large pipeline. I a few fit and coming right pretty both I ones, properties had we'll make in a properties very feel the about. the the wouldn't optimistic and a few that there's is are filters 'XX, about. to surely our have past,

completed then that acquisition, $XXX I shown I revolver. million flow I'm pleased June off mean, we and to generation that upon Yes. financing, strong in report year-to-date, point, notes QX. that we've just And to 'XX, just in based And we the of mean, third exited back cash relative really paid EAS then free we the down that of to that quarter

So those approximately rates are borrowing X%.

So with fourth quarter on much, any of XXXX. for that be the certainly present themselves sheet not to opportunities into move cash strong putting here, too ourselves these preparing we balance but finish, a some we'll as

[Operator Louis take Instructions] our William next with from We'll question DiPalma Blair.

of lead Virginia have referenced your are the submarine Boat time at class how Congress base the Virginia very is fragile, And the class. this remains industrial business Newport that Navy long all? the with there impacted materials, potential expands contractors how production expands. Has you as context ordering News Electric in and specific a

supplier And continues The back submarine be one 'XX thing ability a in about we the have our across programs. Day programs. true we're on to is the talked within deliver our the Investor submarine and or in back customer reputation base solid a to very great

it's say you potentially subs. twice we're again, other clear and always to about we're suppliers so specific that that, content during speak over those period expanding with around on the interested that that referenced free that continue customers discussions And something programs it have we're something guess, have I of in -- as proactive to those across that fail, call our making not and instances very really the topic this we

ramps year, like Virginia how we to are is come and about make ramp AUKUS that debated us that's But that. to as a it submarine might there current Israel want -- in really defense doing to the to and the money budgets money sure other plus support area been there's then considering potentially available Colombia the and apply -- the they that up to is do we're prepared for actually Congress we're there's money There's made associated those base that Ukraine. with things that in up to and in supplier in being things that

submarine So funds into those we solid really can those pursue that portion a proactive how considering of base supply programs. we're to about important be very

been a And potentially the you've of seems improves and But than able seeing manage and better industrial supply across supply to the should terms that you chain have But margins? your better reality segments. any competitors higher if chain headwinds? side. it that know defense the lead supply several still defense like referenced chain I most. to on like of new in output Are your

how referenced, on is it's chain supply no -- members And get at point new level responded, line there's chain interesting, just of chain just of the sight I that the to clear was week. earlier in near on this latest the I'm systems, the largely way as supply -- that stabilized. have its is XXXX. this is their the is the you teams really talking the to is, supply be It when of in with the new would kind again. that are approaches, of state. is right And have perspective there current and some new it the proud chain at the And middle -- responded. it implemented at was we of supply very in perform So team tools, to it successful nowhere

successful can you chain hardest defense this mean that and being completely a supply are And to And I to we've so isn't XX% we business. how that you think that projecting XX% we're year. now is in just I as the it and was growth in can the with electronics, responded normal we see were where with that segment back see the hit

there different pretty statistically just on supply lead think color broadly, it. to we even weeks, And look -- the to lot stability that considered delivery little out and in metrics have of what's XX been seen and across on of at But pandemic. longest a we on-time in consider the weeks And improvement we greater But nothing that anything there's are in would which the would those chain, what's long of of a in times XX when we some at there XX -- prior We are time. lead put the have weeks long. over it. the the on still there was much just lead parts, components parks. some our going

that. still there's So

components XX some XX back lead seen within those some the in in components less the down will volatility had some And some how come and lead XX I times in than are that that under We've kind the that weeks, they say prior. of to going recently XX, up on times from category. those of

So where some dynamic really are of with. the example, memory that areas they lead market see have industrial -- is older and were we down environment of around a XX, the businesses XX to they still legacy with have some components, from having is to is back legacy that back XX for deal The creeping times it's the where to up team processors brought issues our parts. in That true their ago. many, also many weeks largely where is to -- years but they dynamic come lead seen still the times the some have

customers do to the all And processors, bring with the Electronics various it's across FPGAs, GPUs, of part same combination the technologies products you up they've years, to with systems even is But state-of-the-art Defense in a for some latest to proposition, [indiscernible] XX, we value cases, many keep the team producing built of we that product to XX years. and our many, our can also ways market on computing. work XX

a we're those processors some to legacy are of very so we -- dependent lot And have that. do and hard on very working

kind I'm problems of any the -- is or it's foreshadowing So it. not team change managing forward. going

isn't a with it the dealing it, to I systems still but think we've got manage we're situation way be. to used that

on earlier provide as forward but incremental we 'XX, to are margin to and here in electronics as mean I expansion. it's think back and in of Yes. before, And entire and look there, the said lot historically, it those going where we XX.X% A up the see I you call on manage XX.X% I depend you we've had on outlook margins. at what Louis. really defense to really in our -- can the I just the XXXX. that portfolio been investment quickly XXXX regarding opportunities mean, have on to will comment I'll margins continue

one. least of on earnings the funding you that's is guess Can IIJA? your even do the significant saying relates it. industrial hopefully appears That's remind as quarter Thanks appreciate your have companies side final I It little infrastructure to at any you the third set Greatly one it some increase and good. all And exposure for been side have year, next detail. a calls. bill to what that their on investors, on federal IIJA

is Curtiss-Wright. a tailwind things, do from significant do we -- vehicles. a not -- So funding building that that of footprint we directly, a out And bridges tentacles whether we're not but lot construction we have that's good and across have

directly plants as driving content the the will types that areas building with so builds, of the the extensions. investments is a are fleet come of increases go in from various through Curtiss-Wright helping Inside infrastructures much there of that across life funding, is our XX-year nuclear their XX- also that's lot civil for it's these to those those customers. that And of there very

aftermarket no types the And by in money infrastructure bill. very vehicles. of our driven performance that of Chris out some talks clearly support being electric sales, about then what various available that for And we're seeing in the And strong team. of broadly, is that that's there's doubt there's

focused there's where don't from or see -- we're funding of buses, that equipment But we obviously the for type automobiles tailwinds those that. anything on trucks, that that lines. Now large buses, along is place school not another do we'll

it broadly. supportive business of So we is Curtiss-Wright's do --

to Lynn Officer, any floor the Chair turn Executive queue. over are questions will Bamford, in There Chief additional the closing no for further or remarks. and I

of us again for like our thank to call earnings fourth you in XXXX. speaking XXXX look We just you quarter with joining to today. during all say you I'd forward to

So have a great day.

concludes today's have this Conference Curtiss-Wright at Earnings day. wonderful XXXX Thank Please Call. Third you. and time, lines Quarter This disconnect your a