Curtiss-Wright (NYSE:CW) raised its full-year 2026 earnings, revenue and free-cash-flow outlook after reporting second-quarter results that management said exceeded expectations, supported by growth across aerospace and defense and commercial markets, expanding margins and a growing order book.
Second-quarter sales rose 5% from a year earlier to $924 million, while operating income increased 12%, producing 110 basis points of operating-margin expansion. Diluted earnings per share increased 15% year over year, Chair and Chief Executive Officer Lynn Bamford said. The company generated $160 million of free cash flow during the quarter, up 37% from the prior year, with free-cash-flow conversion of 116%.
Orders Outpace Sales as Defense Electronics Bookings Surge
New orders increased 8% in the second quarter, resulting in a book-to-bill ratio above 1.1x. Through the first half, orders rose 12%, exceeding sales growth of 9% and producing a year-to-date book-to-bill ratio above 1.2x, according to the company.
Defense Electronics posted a record order performance, with bookings increasing nearly 50% from a year earlier in the quarter and more than 30% year to date. The segment received awards for Turret Drive Stabilization Systems for international ground vehicles, tactical communications equipment for U.S. military operations, modernization efforts for helicopters, unmanned aerial vehicles and fighter jets, as well as initial Golden Dome orders and development contracts for next-generation programs.
Chief Financial Officer Chris Farkas said the strengthening order book reflects Curtiss-Wright’s alignment with U.S. and international defense spending, as well as momentum in commercial aerospace and industrial markets. He noted that some Defense Electronics orders, including those related to the C-17 program and turret-drive systems, have multiyear characteristics.
Management also said it has seen no indication that prior timing delays in Defense Electronics orders reflect weakening demand. Bamford said the company’s strong first- and second-quarter order activity, along with a strong July and expectations for the third quarter, support the view that the delays were timing-related.
Segment Performance Reflects Aerospace, Naval and Nuclear Strength
Aerospace & Industrial sales increased 12% during the quarter. Growth included higher defense sales of actuation and sensor equipment for U.S. and foreign fighter programs, as well as electromagnetic actuation equipment for ground-based mobile launcher systems. Commercial aerospace also benefited from higher original-equipment-manufacturer sales across narrow-body and wide-body platforms.
Operating income in Aerospace & Industrial rose 25%, while margin expanded 180 basis points, driven by higher revenue absorption, favorable business mix and restructuring savings. Those factors were partly offset by continued investment in development programs.
Defense Electronics sales declined 3%, in line with company expectations, as lower tactical communications revenue due to the timing of prior-year orders was partly offset by higher turret-drive revenue for international programs. The segment’s operating margin increased 120 basis points to 28%, reflecting favorable mix and cost containment despite higher research-and-development spending.
Naval & Power sales increased 7%, led by submarine-program production timing, higher naval shipyard aftermarket revenue, and growth in commercial and government nuclear programs. Segment operating income rose 12%, with margin expanding 80 basis points on higher revenue absorption.
Full-Year Guidance Raised
Curtiss-Wright now expects 2026 sales to increase 8% to 9%, citing improved expectations in defense and general industrial markets. The company projects operating margin of 19.1% to 19.3%, representing expansion of 50 to 70 basis points, and forecasts diluted EPS of $15.10 to $15.40, or growth of 14% to 16%.
- Aerospace & Industrial: Sales are expected to increase 8% to 10%, with operating margin of 18.5% to 18.7%.
- Defense Electronics: Sales are expected to rise 4% to 6%, with operating margin of 27.5% to 27.7%.
- Naval & Power: Sales are expected to grow 10% to 11%.
- Free cash flow: The company raised its outlook to a record $585 million to $605 million, including a nearly 30% year-over-year increase in capital expenditures.
Farkas said third-quarter sales are expected to show modest growth from the second quarter, while operating income and margin should be roughly flat sequentially due to revenue timing, less favorable Defense Electronics mix and higher R&D investment. The company expects a record fourth-quarter revenue performance and an operating margin above 20% to finish the year.
Investment Plans Target Naval and Nuclear Opportunities
The company announced an $80 million multiyear investment to expand its Cheswick, Pennsylvania, facility to support naval demand and anticipated commercial nuclear awards. The expansion began in 2025 and will be supported by internal capital investments, Maritime Industrial Base funding and state assistance.
Bamford said Curtiss-Wright has received about $95 million in industrial-base funding to date, compared with $70 million at the end of March. The funding could support increased content and potential second-source opportunities for critical U.S. Navy platforms.
In commercial nuclear, management said it expects mid- to high-teen sales growth in 2026, supported by its order book. Bamford said Curtiss-Wright continues to expect an AP1000 reactor order this year and sees opportunities tied to potential U.S. deployment of Westinghouse AP1000 reactors, as well as international projects.
The company said it plans to provide updated long-term financial targets at its next Investor Day, which is being planned for the second quarter of 2027.
About Curtiss-Wright (NYSE:CW)
Curtiss-Wright Corporation (NYSE: CW) is a diversified, global engineering company that designs, manufactures and services highly engineered products and integrated systems for the aerospace, defense, and industrial markets. Its offerings span a range of electromechanical, motion control and flow control technologies, including flight control and actuation systems, sensors and avionics components, pumps and valves, power conversion and heat exchangers, and platform integration solutions for marine and ground systems.
