CURTISS WRIGHT CORP

Curtiss-Wright Corporation is a global integrated business that provides highly engineered products, solutions, and services mainly to Aerospace & Defense markets, as well as critical technologies in demanding commercial nuclear power, process, and industrial markets. The company maintains a unique presence on high-performance platforms and critical applications that require technical sophistication, benefiting from decades of engineering expertise and knowledge transfer. Curtiss-Wright has been involved in numerous industry firsts, including commercial aerospace (history dating back to the Wright Brothers), naval nuclear power (presence on the first nuclear naval vessel), commercial power (products utilized in the first commercial nuclear power plant), and defense electronics (use of commercial off-the-shelf electronics in military applications). The company's end market diversification provides opportunities to drive growth in new products and markets through ongoing innovation and collaboration across the portfolio, while also helping mitigate the impact of volatility caused by industry and economic cycles.

Curtiss-Wright maintains competitive positions in the majority of its key A&D and commercial end markets through engineering and technological leadership, precision manufacturing, and long-standing customer relationships where it is deeply embedded in customers' workflows. The company competes globally, primarily based on technology and pricing. As a supplier of Modular Open Systems Approach based solutions, Curtiss-Wright is aligned with best-in-class open standards-based architectures within the industry, resulting in widespread platform-level content on fighter jets, helicopters, unmanned aerial vehicles, ground combat equipment, tactical vehicles, and nuclear and non-nuclear surface ships and submarines, including a presence on more than 400 defense platforms ¹ and more than 3,000 programs worldwide ². No customer accounted for more than 10% of total net sales during 2025, 2024, or 2023. Approximately 47% of total net sales for 2025 ³, 48% for 2024 ⁴, and 46% for 2023 ⁵ were derived from contracts with agencies of, and prime contractors to, the U.S. Government.

Curtiss-Wright generates revenue through the design, manufacture, and sale of highly engineered products and services, with revenue recognized when control of a promised good or service is transferred to a customer. The company's revenue mix includes both over-time and point-in-time recognition, with over-time revenue recognition accounting for approximately 51% of total net sales for the year ended December 31, 2025 ⁶, and point-in-time recognition accounting for approximately 49% ⁷. The company serves hundreds of customers across defense prime contractors, commercial aerospace original equipment manufacturers, and numerous energy and manufacturing companies. Curtiss-Wright's Pivot to Growth strategy focuses on maximizing revenue, operating income, and free cash flow growth to drive continued value creation for shareholders, built upon a foundation of operational and financial excellence striving for consistent growth in sales, operating margin, diluted earnings per share, and free cash flow.

The Aerospace & Industrial segment provides a diversified offering of highly engineered products and services including sensors, controls, and electro-mechanical actuation components used on commercial and military applications; surface technology services such as shot peening, laser peening, and engineered coatings; and industrial and specialty vehicle products such as power management electronics, traction inverters, transmission shifters, and control systems. For the year ended December 31, 2025, this segment reported sales of $976,760,000 ⁸ and operating income of $166,166,000 ⁹ with an operating margin of 17.0% ¹⁰. The Defense Electronics segment provides COTS embedded computing board-level modules and processing equipment, data acquisition and flight test instrumentation equipment, integrated subsystems, instrumentation and control systems, tactical communications solutions for battlefield network management, and electronic stabilization products. For the year ended December 31, 2025, this segment reported sales of $1,018,610,000 ¹¹ and operating income of $278,016,000 ¹² with an operating margin of 27.3% ¹³. The Naval & Power segment provides naval propulsion and auxiliary equipment including main coolant pumps, power-dense compact motors, generators, steam turbines, valves, and secondary propulsion systems primarily to the U.S. Navy supporting Virginia-class and Columbia-class submarine programs and Ford-class aircraft carrier program, as well as ship repair and maintenance, aircraft arresting systems, and products for commercial nuclear power plants and process markets. For the year ended December 31, 2025, this segment reported sales of $1,503,002,000 ¹⁴ and operating income of $231,284,000 ¹⁵ with an operating margin of 15.4% ¹⁶.

In the Aerospace & Industrial segment, sales increased $44 million, or 5%, to $977 million from the comparable prior year period, with commercial aerospace market sales increasing $34 million primarily due to higher demand for sensors products and surface treatment services on various narrow-body and wide-body platforms, ground defense market sales increasing $16 million primarily due to higher sales of EM actuation equipment, and aerospace defense market sales increasing $8 million primarily due to higher demand for actuation equipment and surface treatment services on various domestic and international fighter jet programs. In the Defense Electronics segment, sales increased $108 million, or 12%, to $1,019 million from the comparable prior year period, with ground defense market sales increasing $38 million primarily due to the timing of domestic sales of embedded computing equipment, aerospace defense market sales increasing $35 million primarily due to higher sales of embedded computing equipment on various international programs as well as domestic unmanned aerial vehicle programs, naval defense market sales benefiting $17 million primarily due to higher sales of embedded computing equipment supporting various domestic and international programs, and commercial aerospace market sales increasing $16 million primarily due to higher sales of flight data recorder and avionics technology to OEM customers. In the Naval & Power segment, sales increased $225 million, or 18%, to $1,503 million from the comparable prior year period, with naval defense market sales increasing $106 million primarily due to higher demand and the timing of production on the Columbia-class and Virginia-class submarine programs as well as higher sales of aftermarket fleet services, power & process market sales increasing $99 million primarily due to the incremental impact from the I&C Solutions acquisition as well as higher organic sales of commercial nuclear products supporting the maintenance of existing operating reactors and the development of next-generation advanced reactors, and aerospace defense market sales increasing $12 million primarily due to higher sales of arresting systems equipment supporting various international customers.

During 2025, the company repurchased approximately 934,000 shares ¹⁷ of its common stock for $465 million ¹⁸. In 2024, the company repurchased approximately 766,000 shares ¹⁹ of its common stock for $250 million ²⁰. The company made dividend payments of $35 million ²¹ and $32 million ²² in 2025 and 2024, respectively. In February 2025, the company repaid $90 million ²³ of the 2013 Notes that matured on February 26, 2025. In 2025, the company did not complete any acquisitions. In 2024, the company acquired two businesses for $235 million ²⁴, inclusive of purchase price adjustments recorded in the current period. The company entered into two written trading plans under Rule 10b5-1 in the third quarter of 2025, the first including purchases in the total amount of $200 million ²⁵ which took effect on August 11, 2025 and was completed in the third quarter of 2025, and the second including purchases in the total amount of $200 million ²⁶ which took effect on September 10, 2025 and was completed in the fourth quarter of 2025. In November 2025, the company entered into two additional written trading plans, the first including purchases in the total amount of $60 million ²⁷ executed equally over the course of calendar year 2026, and the second including potential purchases in the total amount of $100 million ²⁸.

For the year ended December 31, 2025, total net sales were $3,498,372,000 ²⁹ compared to $3,121,189,000 ³⁰ in 2024, representing a 12% increase. Net earnings were $484,228,000 ³¹ compared to $404,978,000 ³² in 2024, representing a 20% increase. Diluted earnings per share were $12.87 ³³ compared to $10.55 ³⁴ in the prior year. Operating income increased $105 million, or 20%, to $634 million ³⁵, and operating margin increased 120 basis points compared with 2024. Cash provided by operating activities increased $99 million to $643 million ³⁶ from the comparable prior year period. New orders increased $357 million, or 10%, from the prior year period to $4,054 million ³⁷. Backlog as of December 31, 2025 was approximately $4.1 billion ³⁸.

Management's discussion of the outlook is embedded in the MD&A section, which provides forward-looking statements regarding market conditions and strategic positioning rather than specific quantitative guidance for the upcoming period.In the naval defense market, the company expects continued funding for U.S. shipbuilding programs which have received strong bipartisan support from Congress, in addition to supplemental maritime industrial base funding to support facility expansion and technology modernization initiatives. The company is recognizing significant production revenues on the Ford class aircraft carrier, Columbia class and Virginia class submarines, and numerous surface ship platforms, as well as development revenues on the future generation SSN(X) submarine. The President's FY2026 Budget Request included $150 billion ³⁹ in overall funding approved by Congress under the OBBBA, $113 billion ⁴⁰ of which is anticipated to support FY2026, with the potential to drive more than 13% topline growth over the FY2025 enacted budget to a discretionary defense budget approaching $1 trillion. Key priorities include naval shipbuilding, tactical battlefield communications and networking, vehicle modernization, tactical aircraft modernization, and Golden Dome. In the commercial aerospace market, the company expects the secular trends of electrification and decarbonization, along with tremendous customer backlog, to support a long-term ramp up in commercial aerospace production. The company's exposure continues to grow on Airbus platforms as it expands the reach of its electromechanical actuation business and pursues opportunities to provide high temperature sensors used in the hottest sections of the engine, and has expanded its offering of flight data recorder technology to support the FAA's 25-hour safety mandates.

In the commercial nuclear power market, the company sees a number of global forces driving a resurgence in nuclear power, as it continues to become more widely accepted as a critical source to meet rising future energy demand and decarbonization commitments, and more recently through its potential to meet surging data-center power demand driven by AI. In May 2025, the President signed a series of Executive Orders focused on stimulating growth in the industry by quadrupling U.S. nuclear capacity by 2050 from 100 gigawatts to 400 GW ⁴¹; reforming and modernizing NRC regulations to promote faster licensing; prioritizing the DOE to work with the nuclear energy industry to facilitate 5 GW ⁴² of power uprates to existing nuclear reactors; restarting stalled projects and half-built reactors; accelerating the deployment of advanced nuclear technologies; and supporting the construction of 10 new large reactors by 2030 ⁴³. In October 2025, the U.S. government announced it entered into a strategic partnership to provide at least $80 billion ⁴⁴ to support the construction of new Westinghouse nuclear reactors. The company continues to expect to play a role in new build nuclear plant construction and remains aligned with Westinghouse in their pursuits, with the potential for 20 to 25 reactors ⁴⁵ to be built in Central and Eastern Europe, along with at least 10 reactors ⁴⁶ proposed to be built in the United States. The company is actively engaged with all major 300MW+ reactor designers to develop partnerships and secure content for the design and development of critical systems and equipment expected to be deployed globally. According to a 2022 NEI survey, member utilities see a role for more than 90 gigawatts ⁴⁷ of nuclear power in support of their decarbonization goals, which translates to the potential for 300 new SMRs by 2050 ⁴⁸. The company anticipates SMR design and development will begin to shift to prototypes as soon as 2026 and transition to initial production orders by the end of this decade before reaching a steady-state of production by the middle of the next decade.

The company's Operational Growth Platform accelerates the Pivot to Growth strategy by driving continued opportunities for margin expansion and savings across the portfolio which allows the company to maintain steady investments in research and development to fuel both innovation and organic growth. In the Aerospace & Industrial segment, operating margin increased 110 basis points to 17.0% ⁴⁹ primarily due to favorable overhead absorption on higher sales, the benefits of the company's restructuring initiatives, and favorable foreign currency translation, partially offset by unfavorable mix. In the Defense Electronics segment, operating margin increased 260 basis points to 27.3% ⁵⁰ primarily due to favorable absorption on higher sales, the benefits from both operational excellence and restructuring initiatives, and favorable mix on defense electronics products, partially offset by higher investment in research and development. In the Naval & Power segment, operating margin decreased 20 basis points from the prior year period to 15.4% ⁵¹ primarily due to first year purchase accounting costs associated with the acquisition of I&C Solutions, unfavorable product mix, and higher investment in research and development in the current period.

The company's capital expenditures were $90 million ⁵² and $61 million ⁵³ for 2025 and 2024, respectively, with the increase primarily due to higher capital spending in the Aerospace & Industrial and Naval & Power segments during the current period. Cash generated from operations should be adequate to meet planned capital expenditures of approximately $110 million to $120 million ⁵⁴ and expected dividend payments of approximately $37 million ⁵⁵ in 2026. The company's research and development expenses were $95,161,000 ⁵⁶ for 2025 compared to $91,647,000 ⁵⁷ for 2024. The company utilizes a strong and healthy balance sheet to implement a disciplined capital allocation strategy prioritized by acquisitions as well as returns to shareholders, principally through share repurchases as well as dividends. As of December 31, 2025, the company had the ability to incur total additional indebtedness of $2.7 billion ⁵⁸ without violating its debt to capitalization covenant.

The company's supply chain has been and may continue to be impacted by a wide variety of factors, including supplier capacity constraints, sanctions and trade restrictions and other governmental regulatory actions or inactions, labor and material shortages as well as tariffs and other geopolitical events. The company strives to limit the volume of raw materials and component parts on hand, and its business could be adversely affected if unable to obtain these raw materials and components from suppliers in the quantities required. Several suppliers are the sole source of certain components, and if a sole-source supplier is delayed or should cease or otherwise be unable to deliver such components, the company may not be able to produce the related product in a timely manner or in sufficient quantities. The company is experiencing higher labor costs due to increased competition for personnel in many regions in which it operates as well as general inflationary conditions, including higher shipping costs, labor shortages, and rising energy prices. The company has attempted to mitigate the effects of increased costs through price increases, but there are no assurances that higher prices can effectively be passed through to customers or that the company will be able to fully offset the effects of higher raw materials costs through price increases on a timely basis.

The company faces structural headwinds from the cyclical nature of U.S. defense spending, which has historically been cyclical and subject to periodic congressional action, and can vary and may be impacted by numerous outside factors such as changes in the perceived threat environment, the U.S. Government's budget deficits, spending priorities, and possible political pressure to reduce U.S. Government military spending. The company's sales to large commercial aircraft manufacturers are cyclical in nature and can be adversely affected by a number of factors including current and future passenger traffic levels, increasing fuel and labor costs, environmental concerns, intense price competition, high interest rates, the retirement of older aircraft, regulatory changes, outbreak of infectious disease, terrorist attacks, labor strikes, geopolitical events, conflicts and wars, general economic conditions, worldwide airline profits, and backlog levels. The company also faces headwinds from the commercial nuclear power industry, where market demand and ability to supply products and services is dependent on the continued operation of nuclear power plants globally and, to a lesser extent, on the construction of new nuclear power plants, with a wide range of factors affecting the continued operation and construction including the political, regulatory and legal environment, the availability and cost of alternative means of power generation, the occurrence of future nuclear incidents, and general economic conditions.

The company identified several macro factors that management flagged as constraints, including the impact of tariffs and trade policies. The USMCA is subject to renewal in 2026 and the U.S. government has recently indicated that it intends to negotiate changes to the USMCA with the Mexican and Canadian governments, and the effects of such negotiations and any changes to the USMCA may negatively impact the company's operations in Mexico and Canada, and may significantly and materially increase costs by increasing the cost of shipping products from facilities in Mexico and in Canada. The company also faces constraints from global economic conditions, noting that in 2025, U.S. GDP is expected to grow approximately 2.2% ⁵⁹ according to various forecasts, and in the global environment, global GDP is expected to grow approximately 2.9% in 2025 ⁶⁰, decrease to 2.7% in 2026 ⁶¹, and remain well below 3% for the foreseeable future. The company also faces risks from foreign currency fluctuations, noting that approximately 27% ⁶² of total net sales were to customers outside of the United States during 2025, and if foreign exchange rates were to collectively weaken or strengthen against the U.S. dollar by 10%, net earnings would have decreased or increased, respectively, by approximately $13 million ⁶³ as it relates exclusively to foreign currency exchange rate exposures.

A substantial portion of revenues and earnings depends on the continued willingness of the U.S. Government and other customers in the defense industry to buy products and services, with approximately 47% ⁶⁴ of total net sales in 2025 derived from or related to U.S. defense programs, and U.S. defense spending has historically been cyclical and subject to periodic congressional action. The company faces significant risk from its reliance on sole-source suppliers for certain components, as several suppliers are the sole source of certain components and if a sole-source supplier is delayed or should cease or otherwise be unable to deliver such components, the company may not be able to produce the related product in a timely manner or in sufficient quantities. As of December 31, 2025, the company had goodwill and other intangible assets, net of accumulated amortization, of approximately $2.2 billion ⁶⁵, which represented approximately 43% ⁶⁶ of total assets, and future determinations of significant write-offs of goodwill or intangible assets as a result of an impairment test could have a material adverse impact on financial condition and results of operations. The company is subject to risks associated with fixed-price contracts with the U.S. Government, which usually provide that the company absorbs the majority of any cost overrun, and the company had approximately $1.0 billion ⁶⁷ of debt outstanding as of December 31, 2025, with debt servicing costs that could require use of a substantial portion of cash flows from operations to pay principal and interest, thereby reducing funds available for working capital, acquisitions, dividends, capital expenditures, and other investments.

Management's message emphasizes the Pivot to Growth strategy, which focuses on maximizing revenue, operating income, and free cash flow growth to drive continued value creation for shareholders, built upon a strong foundation of operational and financial excellence where the company strives for consistent growth in sales, operating margin, diluted earnings per share, and free cash flow. The key themes include a renewed drive for top-line acceleration through both organic and inorganic sales growth, building on strengths within A&D and commercial markets while deepening and expanding customer relationships by continuing to advance the One Curtiss-Wright vision through Commercial Excellence. Management emphasizes that the company is well positioned in the markets in which it operates and aspires to grow critical mass by expanding global manufacturing capabilities, sales channels and customer relationships, while also seeking to build upon cross-market opportunities that may exist within defense and commercial market technologies. The three strategic priorities emphasized are: driving continued opportunities for margin expansion and savings across the portfolio through the Operational Growth Platform to allow steady investments in R&D to fuel both innovation and organic growth; utilizing a strong and healthy balance sheet to implement a disciplined capital allocation strategy prioritized by acquisitions as well as returns to shareholders principally through share repurchases and dividends; and building strong momentum to compound sustained profitable growth. Management also highlighted that the company achieved its primary cybersecurity risk management objective of no material cybersecurity incidents in 2025 ⁶⁸.