Something interesting is brewing at Curtiss-Wright (CW). While most analysts are focused on the company's strong defense performance, a subtle shift in the Q1 2024 earnings call transcript [Link to Q1 2024 Transcript] hints at a potentially explosive opportunity: commercial nuclear.

Curtiss-Wright has long been a player in the nuclear market, primarily focused on aftermarket services for existing reactors. However, the recent acquisition of WSC, Inc. and the accompanying commentary on the call suggest a more aggressive push into this rapidly expanding sector.

WSC specializes in state-of-the-art power plant control room simulation technology. While seemingly niche, this positions Curtiss-Wright as a critical partner in the development of Small Modular Reactors (SMRs), a burgeoning technology poised to revolutionize the energy landscape.

The implications are massive. SMRs, with their smaller footprint and modular design, offer a more flexible and cost-effective alternative to traditional large-scale nuclear reactors. They are garnering substantial interest globally as nations seek to decarbonize their energy portfolios.

Lynn Bamford, Chair and CEO of Curtiss-Wright, hinted at this strategic shift, highlighting WSC's existing relationships with prominent SMR developers like TerraPower and GE Hitachi. This early engagement grants Curtiss-Wright invaluable influence in the design phase of these next-generation reactors, paving the way for securing lucrative long-term contracts.

The call transcript reveals a strategic intent to leverage WSC's simulation capabilities to deepen relationships across the 94 operating nuclear reactors in North America. Through "simulated-assisted engineering," Curtiss-Wright can offer tailored solutions for reactor upgrades, both for regular maintenance and the increasingly common plant life extensions. This positions the company not just as a service provider but as a trusted partner guiding the evolution of the entire commercial nuclear ecosystem.

The potential financial upside is staggering. Bamford emphasized the "explosive growth potentials" of the commercial nuclear market, suggesting a scale far beyond the initial $15 million revenue contribution from WSC.

Hypothetical Scenario: The SMR Boom

Let's assume Curtiss-Wright, through its SMR partnerships and aftermarket strategy, secures contracts for critical components on just 50 new SMRs. If each SMR contract generates $50 million in revenue over its lifetime, that equates to a potential $2.5 billion revenue pipeline for Curtiss-Wright. This is on top of the steady recurring revenue from their existing aftermarket business.

Moreover, as development projects transition to production later this decade, Curtiss-Wright stands to benefit from significant margin expansion, pushing their already impressive profitability even higher.

Projected Growth in Commercial Nuclear Revenue

The chart below illustrates a potential growth trajectory for Curtiss-Wright's commercial nuclear revenue based on the hypothetical SMR scenario and continued strength in the aftermarket.

The Q1 call transcript offers a glimpse of a company strategically positioning itself to capitalize on a multi-billion dollar opportunity. While defense remains a strong pillar, Curtiss-Wright's quiet nuclear pivot is the story investors should be watching.

"Fun Fact: Did you know that the world's first nuclear reactor, Chicago Pile-1, was built on a squash court beneath the stands of the University of Chicago's Stagg Field? Perhaps Curtiss-Wright, with its simulation technology, will one day help design reactors that fit in even more unexpected places!"