Curtiss-Wright (CW) Q4 2025 Earnings Transcript

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DATE

Feb. 12, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chair and Chief Executive Officer — Lynn M. Bamford
• Vice President and Chief Financial Officer — James Ryan
• Vice President, Finance and Corporate Controller — K. Christopher Farkas
• Vice President, Investor Relations — Alexandra Eleni Mandery
• Director, Investor Relations — Bryce Sandberg

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TAKEAWAYS

• Total Revenue -- $947 million, up 15% with 11% organic growth and additional contribution from the I&C Solutions acquisition.
• Aerospace and Defense Revenue -- Grew 16%, exceeding expectations due to accelerated Ground and Naval Defense deliveries.
• Commercial Aerospace Sales -- Increased more than 20% amid A&D strength.
• Commercial Markets Revenue -- Rose 13%, primarily from higher Power and Process market revenues.
• Operating Income -- Increased 14%, supported by higher R&D investment, with a 19.7% margin.
• Diluted Earnings Per Share -- Up 16%, slightly ahead of internal expectations, driven by A&D sales.
• Free Cash Flow -- $315 million, representing 13% year-over-year growth and a 224% conversion rate.
• New Orders -- Rose 18% to nearly 1.2x book-to-bill, reflecting strong naval and nuclear demand.
• Record Full-Year Orders -- $4.1 billion, a 10% increase, resulting in a nearly 1.2x book-to-bill for the year.
• Backlog -- Increased 18% to over $4 billion, reinforcing visibility into future revenue streams.
• Annual Dividend -- Increased for the ninth consecutive year; $465 million in share repurchases completed during 2025.
• 2026 Organic Sales Guidance -- Projected at 6%-8%, with operating income anticipated to grow faster than sales and margin to expand to 18.9%-19.2%.
• 2026 Diluted EPS Guidance -- Expected to grow 11%-15%, reaching $14.70-$15.15 per share, driven by operational improvement and lower share count.
• Segment Guidance – Aerospace & Industrial -- Sales expected to grow 5%-7%, and operating margins to expand by 90-110 basis points to 18.3%-18.5%.
• Segment Guidance – Defense Electronics -- Sales projected to grow 4%-6%, with operating margins reaching 27.3%-27.5%.
• Segment Guidance – Naval & Power -- Anticipates sales growth of 8%-9% and operating margin expansion of 30-50 basis points.
• Capital Expenditures -- Planned at $110 million-$120 million for 2026, more than 25% higher than prior year after a near 50% increase in 2025.
• 2026 Free Cash Flow Guidance -- Targeted at $575 million-$595 million and a 105% conversion rate, despite higher capital investment.
• Working Capital -- 2025 closing at 19.2% of sales; aiming for further improvement in 2026 to reach a new record.
• Operational Excellence Contribution -- $12 million benefit recognized in 2025, primarily operational excellence, with continuing gains from restructuring.
• Defense Electronics Book-to-Bill -- 0.96x due to order delays from U.S. government funding issues, affecting the 2026 ground defense outlook.
• Commercial Nuclear Fourth Quarter Orders -- Increased 50%, driven by SMR activity and development-to-prototype transitions.
• First Quarter 2026 Expectations -- Anticipates high single-digit sales growth, double-digit operating income growth, and first quarter EPS growth in the high teens, with a $0.10 benefit from a lower tax rate.
• Direct Foreign Military Sales -- Cited as a critical, sustained growth driver, facilitated by expanded NATO and allied defense spending.

SUMMARY

Curtiss-Wright (NYSE:CW) delivered record annual results, reporting strong growth in sales, profitability, and free cash flow, supported by robust demand across aerospace, defense, and commercial end markets. The company raised its annual dividend and completed a record level of share repurchases, emphasizing a disciplined approach to capital return. Management cited a significant multi-year U.S. defense budget, higher NATO and allied spending, and substantial U.S. government support for commercial nuclear as enduring industry tailwinds, reinforcing the outlook for 2026.

• Chair Bamford stated, "we have line of sight to exceed the three year financial targets that we issued at our 2024 Investor Day."
• The 2026 outlook was framed as "conservative" for the ground defense segment, with management attributing the position to specific order delays and a multi-month U.S. government continuing resolution.
• Shareholder value initiatives included continued R&D investment "at a faster pace than sales," and a focus on "operational excellence and pricing" to drive ongoing margin expansion.
• Discussions confirmed that the anticipated AP1000 reactor orders from Westinghouse are excluded from 2026 guidance, pending clarity on customer decisions and timing.
• Management identified a substantial shift in SMR (Small Modular Reactor) industry activity from design to prototype, enhancing mid-term revenue potential in commercial nuclear markets.
• Question-and-answer commentary clarified the company's limited direct exposure to missile OEM volume increases, but outlined significant positioning across sensor, networking, and effector technologies for broader defense systems such as Golden Dome.
• Management highlighted a targeted working capital percentage of 18% for 2026, with internal systems and contract negotiation cited as factors in improving operational efficiency.
• Operational initiatives over the past year yielded $12 million in benefits, largely from operational excellence and continuing restructuring actions, with ongoing opportunity cited for 2026.
• The company confirmed no material impacts from external AI supply chain initiatives as of the call date, but is actively engaged in related discussions.
• Cost control and supply chain management were described as stable, with high bandwidth memory and rare earth elements monitored as potential "watch items."

INDUSTRY GLOSSARY

• Book-to-Bill: Ratio comparing orders received to units billed in the same period, indicating demand trends.
• AP1000: A widely deployed advanced pressurized water nuclear reactor designed by Westinghouse.
• SMR (Small Modular Reactor): A class of compact, scalable nuclear reactors typically under 300 megawatts electrical output, allowing incremental deployment and installation.
• MRO Valves: Maintenance, repair, and operations valves used in process industries to ensure reliability and ongoing system functionality.
• I&C Solutions: Instrumentation and control solutions segment acquired by Curtiss-Wright, providing systems for monitoring and controlling industrial processes, especially in nuclear and process markets.
• Direct Foreign Military Sales: U.S. government-facilitated military sales of defense equipment and services to allied foreign governments.

Full Conference Call Transcript

Lynn M. Bamford: As you saw in last night's results, the momentum continues to build at Curtiss-Wright Corporation. I would like to begin by acknowledging our 9,100 hardworking employees for driving another record year of financial performance. We continue to deliver on our pivot to growth strategy, which resulted in strong growth in sales, profitability, free cash flow, and new orders in 2025.

Our performance reflects the critical positioning of our technologies across our A&D and commercial markets, our ongoing pursuit of operational and commercial excellence, and our commitment to delivering exceptional results for our shareholders I will start with highlights of our fourth quarter 2025 results Overall, of $947,000,000 increased 15% year over year, highlighted by strong organic growth of 11% and the solid contribution from our I&C Solutions acquisition. We delivered 16% growth in our aerospace and defense markets, which exceeded our expectations driven by an acceleration of Ground and Naval Defense revenues into 2025. Of note, growth in our A&D markets reflected our continued strong alignment to U.S. Military priorities and accelerated pace of growth in NATO and allied funding.

While commercial aerospace sales increased more than 20% Growth in our commercial markets was also impressive, up 13% year over year, primarily driven by higher revenues in the Power and Process market. Operating income increased 14% and included higher R&D investments to drive future organic growth, while operating margin was strong at 19.7%. We delivered diluted earnings per share growth of 16% year over year, slightly ahead of our expectations, was primarily driven by higher A&D sales. Free cash flow was strong at $315,000,000 up 13%, which reflected a 224% conversion.

Regarding our order book, new orders increased 18% in the fourth quarter, reflecting nearly 1.2 times book to bill were driven by continued solid demands within our naval defense and commercial nuclear markets. Next, I will highlight our full year 2025 results. We delivered another record financial performance with higher growth in revenue and operating income across all three segments reflecting the underlying demand and the momentum that continues to build across our portfolio. We delivered exceptional margin expansion up 110 basis points year over year to reach a new record of 18.6%. This performance reflected the strong growth in sales the benefits of our operational excellence initiatives, and the savings generated by our restructuring actions.

Furthermore, we continue to accelerate investments in research and development across the portfolio to support future organic growth and reinforce our commitment to grow R&D faster than sales over time. Diluted earnings per share increased 21% year over year, driven by improved operational performance as well as a lower share count. Adjusted free cash flow also reached a record $554,000,000 which reflected strong conversion of 111% based on the growth in earnings and near record level of working capital efficiency. We achieved these strong results despite a nearly 50% increase in capital expenditures in 2025 to support growth investments across all three segments. Turning to our full year 2025 order book.

Strong overall demand in our A&D and commercial markets yielded a new record of $4,100,000,000 up 10% year over year and a book to bill of nearly 1.2 times. Starting with our A&D markets, continued strong demand for nuclear propulsion equipment supporting submarine programs in naval defense was partly offset by lighter than anticipated demand within our aerospace and ground defense markets due to delays resulting from the continuing resolution government shutdown. This principally impacted timing of orders with some of our short cycle Defense Electronics businesses including Tactical Communications.

As a result, we delivered a book to bill of 0.96 times in Defense Electronics initially leading us to take a more conservative 2026 guide in our overall ground defense market. However, looking across the pipeline of opportunities for these businesses, our customers have expressed their confidence that this is timing Our programs remain in good standing and our technologies closely aligned with the modernization priorities of The U.S. And our allies. Wrapping up our A&D markets, in Commercial Aerospace, we remain aligned with the anticipated production ramps across the major OEM platforms which continues to drive demand for our products. Within our commercial markets, we concluded the year with tremendous growth in commercial nuclear.

Driven by strong demand for aftermarket equipment supporting scheduled plant outages and restarts as well as continued advancement across leading SMR designs. Additionally, we continue to see stabilization across two of our consistent watch areas, process and industrial, each of which recognized solid order demand to close to conclude the year. Overall, the healthy growth in orders builds on Curtiss-Wright Corporation already strong backlog, which increased 18% in 2025 to reach a new record of in excess of $4,000,000,000 and provides greater confidence in our future top line growth. Another important takeaway from this past year was our disciplined approach to capital allocation to ensure deployment towards the highest return opportunity in order to enhance shareholder value.

We executed a record $465,000,000 in total share repurchases in 2025 and we increased our annual dividend for the ninth straight year. Now, I would like to briefly introduce our full year 2026 guide. Overall, we are projecting organic sales of 6% to 8%. Supported by growing momentum in our overall order book and our commitment to continued investment in the business. Operating income growth is once again anticipated to outpace sales growth and reflects 30 to 60 basis points in operating margin expansion this year to range from 18.9% to 19.2%.

As a result, diluted EPS is expected to grow 11% to 15% Furthermore, we anticipate another year of record free cash flow generation and continue to expect strong conversion in line with our long term targets. In summary, Curtiss-Wright Corporation is poised to deliver an outstanding performance in 2026 And as we will discuss later in our remarks, we have line of sight to exceed the three year financial targets that we issued at our 2024 Investor Day. Now, I would like to turn the call over to Chris to provide a more in-depth review of our financials.

James Ryan: Thank you, Lynn. Turning to Slide four, I will begin by reviewing the key drivers of our fourth quarter 2025 performance. I will start with the Aerospace and Industrial segment where overall sales increased 5% and was in line with our expectations. In the segment's commercial aerospace market, our results reflected solid OEM sales growth supporting increased production on both narrow body and wide body platforms. Within the segment's defense markets, we experienced increased demand for EM actuation equipment supporting ground based mobile launcher systems. And in the general industrial market, sales were essentially flat overall, but outpaced the global macro conditions affecting industrial vehicle markets.

Turning to the segment's fourth quarter operating performance, we delivered a strong operating margin of 20.1% and benefited from favorable absorption on higher A&D sales the overall profitability was tempered by a less favorable mix of business mainly due to higher customer funded R&D. Next, in the Defense Electronics segment, sales growth of 17% exceeded our expectations. Mainly due to timing within Ground Defense as embedded computing revenues accelerated into the fourth quarter. We also experienced solid year over year growth in sales of tactical communications equipment as well as increased turret drive stabilization systems supporting international customers.

Within the segment's aerospace defense market, higher direct foreign military sales of embedded computing and flight test instrumentation was offset by the timing of domestic fighter jet and UAV programs In this segment's commercial aerospace market, our results reflected solid growth in flight data recorder sales as well as higher avionics equipment supporting various helicopter programs. Regarding the segment's operating performance, we delivered a strong 25.9% operating margin up 160 basis points and in line with our expectations. Reflecting favorable absorption on higher revenues and the benefits of our ongoing operational excellence initiatives.

Those increases were partially offset by higher investments in research and development, Turning to the Enablement Power segment, Overall sales increased 21% and were well ahead of our expectations. This performance was once again driven by strong revenue growth in Naval Defense following continued improvements in the supply chain and an acceleration of production on submarine programs. We also experienced an increase in aftermarket revenues supporting naval shipyards through fleet services work, Within this segment's aerospace defense market and as expected, we experienced a strong sequential and year over year increase in revenues for a arresting systems products principally supporting international programs.

In the power and process market, our results reflected a strong contribution from our INC Solutions acquisition, which contributed to higher sales in both our commercial nuclear and process markets. On an organic basis, growth in commercial nuclear sales reflected the continued ramp up in development across several SMR designs as well as higher government nuclear revenues. Additionally, strong growth in the process market was driven by higher MRO valve sales where demand continued to improve throughout 2025 providing us with increased optimism for growth in 2026. Regarding the segment's operating performance, operating income grew 13% while operating margin was solid at 17.9%.

Our results reflected favorable absorption on higher sales, which was more than offset by unfavorable mix including higher research and development supporting next generation SMR designs. To sum up Curtiss-Wright Corporation’s fourth quarter results, we delivered teens growth in sales and operating income which resulted in an overall strong operating margin of 19.7%. Building on our strong performance in 2025, I would like to take the next few minutes to review our full year 2026 guidance. I will begin on Slide five with our end market sales outlook where we total sales to grow 6% to 8% driven by continued strong organic growth in our A&D and commercial markets.

In Aerospace Defense, our outlook for 9% to 11% growth mainly reflects the alignment of our technologies to the FY 2026 U.S. Defense budget including key military priorities such as aircraft modernization and Golden Dome. This in turn is driving increased demand for embedded computing solutions across numerous applications from communications and radar to various mission packages supporting both existing and next generation platforms. Within Ground Defense, we anticipate sales to decline 4% to 6% As a reminder, this follows a strong pace of mid teen sales growth in both 2024 and 2025.

Based on the acceleration of computing revenues into 2025 and the delays in the orders for tactical communications equipment that Lynn referenced in her opening remarks, we are beginning the year with a more conservative outlook in this market. Aside from those timing delays, we expect continued growth in embedded computing towards radar and strategic missile defense applications across a wide number of programs, In addition, we expect increased EM actuation sales supporting the U.S.

Army's IFPC program and higher sales of turret drive stabilization systems supporting international ground vehicles through our relationship with Rheinmetall, In Naval Defense and building upon our strong performance this past year, growth of 5% to 7% mainly reflects higher revenues on the CVN-eighty one aircraft carrier and Virginia class submarine programs. Looking more broadly across all three defense markets, based on our strong backlog across key platforms globally and the alignment of our technologies to support NATO and allied countries, we expect direct foreign military sales to remain a key contributor to our overall defense growth in 2026.

Turning to Commercial Aerospace, our outlook for 10% to 12% sales growth reflects the high teens growth in our order book this past year and the anticipated ramp up in OEM production on narrow body and wide body aircraft.

Lynn M. Bamford: To wrap up our aerospace and defense

James Ryan: outlook, we project total sales in these markets to increase 5% to 7%. Moving on to our commercial markets. In Power and Process, our outlook for 12% to 14% sales growth reflects mid teens growth in our commercial nuclear market along with low double digit growth in process. Our outlook in commercial nuclear reflects continued strong U.S. Demand driven by a step up in year over year outages well as higher revenue supporting both plant life extensions and restarts of existing plants. In addition, we anticipate higher international aftermarket sales mainly from Canada and South Korea.

Our guidance also reflects strong growth in SMR revenues as we begin to transition from development to the initial prototype stage for critical systems on the Xenergy Advanced Reactor including both the helium circulator and reactivity control and shutdown systems. Please note that our initial guidance does not include an AP1000 order that we continue to anticipate that we will receive an order for reactor coolant pumps in 2026. And in the process market, our outlook is mainly driven by improving demand for our severe service valves as well as higher sales of instrumentation solutions from our I&C business.

Lynn M. Bamford: Lastly, in the general industrial market, while we anticipate sales to be

James Ryan: flat once again in 2026, we saw signs of improvement in our Q4 2025 order book and entered 2026 with a solid backlog. Looking deeper, we expect modest growth in medium duty industrial vehicle sales this year as well as a small benefit from international growth. We remain cautiously optimistic that conditions within our overall industrial vehicle business will improve through the year and into 2027. Wrapping up our total commercial markets, we are targeting strong full year sales growth of 7% to 9%. Moving on to our full year 2026 financial outlook by segment on Slide six.

I will begin in Aerospace and Industrial, where we expect sales to grow 5% to 7% overall reflecting strong growth in commercial aerospace and ground defense as well as flat sales in general industrial. Regarding the segment's profitability, we project operating income growth of 11% to 14% and operating margin expansion of 90 basis to 110 basis points ranging from 18.3% to 18.5%. This outlook reflects our expectations for higher sales the benefits of our operational excellence initiatives and the savings generated by our restructuring while we continue to accelerate investments in R&D.

Next in Defense Electronics, we expect sales to grow 4% to 6% mainly driven by strong growth in Aerospace and Defense partially offset by the timing of orders in Ground Defense. Regarding the segment's profitability, we expect operating income growth of 4% to 6% and operating margin to be flat to up 20 basis points to a new all time high range of 27.3% to 27.5%. Of note, this outlook reflects our expectations for higher sales and the savings generated by our restructuring actions as well as $4,000,000 in incremental investments in internally funded R&D.

In Enable and Power, we expect sales to grow 8% to 9% reflecting the strength of our orders and backlog in both our naval defense and commercial nuclear Regarding the segment's profitability, we expect operating income growth of 10% to 13% and operating margin expansion of 30 to 50 basis points. Estalgic reflects our expectations for strong revenue growth and the savings generated by our restructuring actions while we continue support investments in both internal and customer funded development programs. To summarize our 2026 outlook, overall, we anticipate total Curtiss-Wright Corporation operating income to grow 8% to 11% and expect operating margin to range from 18.9% to 19.2%, up 30 to 60 basis points.

Next, to aid in your quarterly modeling, we expect first quarter 2026 sales to grow by high single digits relative to the 2025 and we are targeting low double digit growth in operating income with solid year over year operating margin improvement across all three segments. Continuing with our financial outlook on Slide seven, I wanted to provide some color on a few non operational items. I will start with other income, which we expect to increase by approximately $3,000,000 to $4,000,000 this year based upon our strong free cash flow generation and the resulting impact on interest income.

Looking ahead to December, we will pay down $200,000,000 in senior notes coming due, which will have a minor benefit and lower interest expense. Regarding our 2020 tax rate, we are targeting a slight reduction to 21.5% which reflects our ongoing success in reducing our effective tax rate.

Lynn M. Bamford: Turning to our EPS guidance,

James Ryan: we expect full year 2026 diluted EPS to range from $14.70 to $15.15 up 11% to 15% reflecting strong profitable growth within our operations and a reduction in our share count following record share repurchases in 2025. For 2026, to start the year, we anticipate $60,000,000 in standard share repurchases as we continue to offset dilution. To aid in your quarterly modeling, we expect first quarter EPS to reflect high teens growth relative to the 2025 mainly driven by a strong operational performance with a supplemental benefit of $0.10 from a lower year over year first quarter tax rate.

And similar to last year, we expect sequential quarterly EPS improvement with the fourth quarter being our strongest, And lastly, we are projecting a record full year free cash flow of $575,000,000 to $595,000,000 reflecting our expectations for strong growth in earnings in our continued focus on working capital management, more than offsetting increased growth investments in capital expenditures. As Lynn mentioned earlier, we delivered near record levels of working capital in 2025 reaching 19.2% of sales. And for 2026, we expect to further improve upon that and to reach a new record level of performance.

Beyond that, our outlook for $110,000,000 to $120,000,000 in capital expenditures represents an increase of more than 25% year over year which follows last year's nearly 50% increase and reflects our ongoing investments to support future growth.

Lynn M. Bamford: Overall, as we accelerate investments across our operations this year,

James Ryan: we continue to expect free cash flow in excess of earnings and a healthy free cash flow conversion rate of approximately 105%. Now I would like to turn the call back over to Lynn.

Lynn M. Bamford: Thank you, Chris. And turning to Slide eight, where I will wrap up today's prepared remarks. Curtiss-Wright Corporation has demonstrated strong growth in financial performance over the past two years since our May 2024 Investor Day event and we are well positioned to continue that momentum by delivering strong profitable growth again in 2026. I will spend the next few minutes providing a few insights into the increasingly favorable industry tailwinds for two of our largest end markets, defense and commercial nuclear. Which are benefiting from positive market forces and provide us with increased confidence as we look into the future. I will also provide some additional color on a few of our targeted growth initiatives across the portfolio.

Then I will conclude today's presentation by reviewing our progress against the major 2024 Investor Day financial targets shown at the bottom of the slide. I will start with Defense. Curtiss-Wright Corporation is primed to benefit from the tremendous acceleration in global defense spending driven by a record U.S. Budget of approximately $1,000,000,000,000 including reconciliation funding and the increased commitments from NATO and Allies. Starting in Naval Defense where we continue to benefit from strong demand and the call for accelerated production across the U.S. Navy's most critical platforms.

As a key supplier of nuclear propulsion equipment, our decades long relationships along with capacity to take on additional business uniquely positions Curtiss-Wright Corporation to secure new content across existing and future platforms. In Defense Electronics, we stand to benefit from the administration's focus on commercial solutions and agile contracting and also through our strong alignment to the DOW top strategic priorities. These include areas such as next generation fighters, Golden Dome and aircraft modernization just to name a few. Our broad offering of embedded computing products are used in a wide number of ARC and ground based systems and are an integral part of mission critical applications such as comms, networking, threat detection, jamming, targeting and fire control.

Curtiss-Wright Corporation continues to make purposeful and focused investments in research and development to advance our technology portfolio. To name a few significant examples, we are designing and building ruggedized computing solutions with NVIDIA's GPUs ranging from the high end Blackwell to the swap optimized store, tailoring them to match the compute needs of those different applications. Additionally, our Fabric 100 family of products provides industry leading 100 gigabit connectivity enabling the highest performance in deployable computing systems today. Also, we recently announced our ruggedized servers are now validated as part of Microsoft Azure ecosystem, bringing the enterprise class computing to the tactical edge. These solutions and others uniquely position Curtiss-Wright Corporation as a leader in defense technology.

Supporting next generation applications while ensuring our alignment to the US government's most standard and highest priorities.

Operator: Overall, this is but a sample

Lynn M. Bamford: of our ongoing investments in and development of new technologies help ensure Curtiss-Wright Corporation maintains a strong position on leading defense programs today and well into the future. On the international front, there is a clear recognition of the need and movement by our NATO allies to strengthen their defense capabilities. This year NATO committed to boost defense spending from 2% of GDP per year to upwards of 5% by 2035. Similar to our market position in The U.S, we have a very broad reach across a large number of platforms.

As a result, over the past few years, we have recognized mid teens plus growth in our direct FMS revenues and we continue to solidify our positions with technologies that support operational readiness such as embedded tactical computing ground based arresting systems, and Navy aircraft handling systems. In addition, we remain well aligned with Brian Mittal, where we expected growth in ground vehicle platforms affords us the opportunity to supply our turret drive stabilization systems technology to thousands of new vehicles over the coming decade. These represent just a few of the many ways the Curtiss-Wright Corporation stands to benefit from the continued acceleration of global defense spending. Turning to Commercial Nuclear.

During the last two years, the momentum and pace of activity has accelerated globally. Broadening the near and long term scope of opportunities for Curtiss-Wright Corporation in the

Operator: industry.

Lynn M. Bamford: Here in The U.S, the President's executive orders issued last May are providing tremendous uplift by advancing support for the industry at large and in keeping with the focus on U.S. Nuclear energy dominance. These directives are already advancing the speed at which approvals for reactor licensing are being completed particularly for plant life extensions of U.S. Reactors. This in turn is creating a pathway for a broad acceleration across our customers' business models while further supporting the administration's goal to quadruple U.S. Nuclear generation capacity to 400 gigawatts by 2050.

Additionally, and perhaps the largest potential boost for Curtiss-Wright Corporation is the administration's $80,000,000,000 commitment to support the construction of 10 new Westinghouse AP1000 reactors This expanded scope across The U.S. Builds upon the existing AP1000 opportunities in Europe, particularly in Poland and Bulgaria, which continued to demonstrate steady progress. Overall, we remain aligned in those these pursuits and continue to expect our next order this year. Meanwhile, the SMR development continues to evolve in The U.S. And globally, including Canada, The UK and Europe. And we expect to benefit as these efforts transition from ongoing design activities to building prototypes before shifting to production later in the decade.

Of note, we have maintained a steady pace of investment to support Curtiss-Wright Corporation’s growth as we work to enhance our relationships and expand our content across the leading 300 megawatt plus SMR developers. Overall, Curtiss-Wright Corporation is extremely well positioned to capitalize on the expected surge in demand and future growth in this industry providing us with increased confidence in our ability to deliver on our growth targets in commercial nuclear. Next, I will review our progress against our three year Investor Day targets.

Starting with sales, we are currently on track to deliver an organic revenue CAGR of approximately 8.5% well ahead of our target of 5% and a clear acceleration relative to our historical top line growth rates. In addition, we are consistently delivering operating income growth in excess of revenue growth, which is a foundational premise under the pivot to growth strategy that opens funding for reinvestment back into the company Since 2023, we have grown R&D at a faster pace than sales and at the same time are driving towards operating margin expansion of 170 basis points over the three year span.

This year, we expect to reach a new milestone with the potential to deliver an operating margin of 19% which firmly entrenches our position as a top quartile margin performer relative to our peers. We are also well positioned to expand our EPS growth target by more than 700 basis points and are on track to deliver a 17% EPS CAGR over the three year period. Through a combination of strong operational performance and our dedication to a balanced capital allocation strategy, we are compounding earnings at a mid teens pace over time. And finally, we are driving record levels of free cash flow across our business.

We are tracking well ahead of our expectations while more than offsetting increased growth investments in CapEx and expect to generate 110% average free cash flow conversion over the three year period. Our strong free cash flow generation helps to fuel organic and inorganic investments across the business that drive efficiency, expand capacity and help enhance our overall customer offering. Along with our commitments to returning capital to shareholders. In closing, we look forward to the year ahead and achieving another record financial performance in 2026.

Looking on this year, I am very excited about the medium and long term prospects for Curtiss-Wright Corporation that will continue to provide momentum under our pivot to growth strategy drive long term value for our shareholders. Thank you. And at this time, I would like to open up today's conference call for questions.

Operator: Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press 1 on your telephone Thank you. Our first question will come from Kristine Liwag with Morgan Stanley. Please go ahead. Hey, good morning, everyone. And Lynn, thank you for the details you provided on the different growth vectors in defense. I wanted to dive a little bit deeper on missiles. We have seen multiyear agreements that increased volume by 300% to 600% on certain programs at Lockheed and at Raytheon. I was wondering, can you provide more color regarding your exposure to this? Is it in your radar or sensors business or defense electronics?

How do you think about the potential opportunity of this specific growth sector? And what is your exposure?

Lynn M. Bamford: Thank you for that question, Christine. So we have some content directly on the missiles, but it is relatively minor. It is telemetry and flight test instrumentation type of content. Which can be meaningful revenue, but maybe not deployed across every single missile that is produced. So just to level set that you know, focus in our portfolio. However, as the demand and the belief that we need to restock pile is all connected to the Golden Dome and very many things that are related to the defense of our country where we have fantastic exposure.

So we have talked about in Golden Dome, there is kind of you think of it in three technology buckets, the sensors, the networking of those sensors, and then the effectors to combat any incoming threats. And across all three of those areas, we are very well positioned and have very many active developments mean, system will be built up of existing capabilities. That our long history has us well positioned on. We are very well positioned in the networking with the various standards that are going to be used for the command and control across it.

And on top of the existing platforms, are engaged in quite a few exciting new developments across industry to provide some upgrades into those systems and deliver new capability. So just broadly speaking, the overall growth of defense I would say we are very well positioned not just here in The U.S. But across Europe.

Operator: Great. Super helpful, Lynn. If I could do a follow-up question on, no surprise, the AP1000. So you guys mentioned that you are expecting an order in 2026. But it is not in the financial outlook. I wanted to clarify, one, which customer do you expect this to come from? Is this Poland, Bulgaria, a U.S. Customer? And the second question to that is, how many are you expecting in this order for 2026? And the third one would be, if you do get this order, and noted that it is not in your 2026 guidance, how do we think about potential moving pieces

Alexandra Eleni Mandery: to your outlook for the full year? Sorry, I know that is three questions into one, but basically an AP1000 question, Dylan.

Lynn M. Bamford: So it is a topic we definitely anticipated being asked about. And so really, mean, the first orders could come from either a European customer Poland or Bulgaria or from The U.S. How this $80,000,000,000 that, the government has committed to jumpstart the build out of AP1000 reactors in The US is gonna flow is still something I think everybody's coming to understand. And for us, our customer is Westinghouse. We work very hard to stay aligned with Westinghouse. We are definitely communicating with them on different scenarios. Of production ramp and are just committed to being a great supplier to Westinghouse. And working with them.

So I do not think at this time we can give any color on the size of the first order. It could be different quantities and really until Westinghouse decides how they want to do that, I do not think we would get ahead of what that would mean for Curtiss-Wright Corporation.

Operator: Great. Thank you very much.

Alexandra Eleni Mandery: I am sorry. Go ahead.

James Ryan: I was just going to add, you had asked about the financial impact. And I think, Tito, as you think about timing of the order and when that hits us during the year, There is going to obviously be some labor that we are going to incur upfront in the contract, but we mentioned the bell curve and that taking place over a five year period. So there will be a little bit of

Lynn M. Bamford: a startup.

James Ryan: And then as we are able to place orders for material, and start to see that material come in the door, which I would expect a greater portion of that material to start coming in this next year. We will see some uplift in the revenues. That is when we will really start to accelerate within the bell curve. And then just from the cash perspective, I mean, we are in negotiations with Westinghouse. We are here ensure that they are successful in their deployment of BAP1000.

But think you can see from our focus on working capital and what we have demonstrated in free cash flow that the team is dedicated to ensuring that we continue to improve upon that. So I think that there will hopefully be some good news of that in that area as we progress through the year.

Alexandra Eleni Mandery: Wonderful. Thank you very much, Chris.

Operator: We will move now to Myles Alexander Walton with Wolfe Research. Please go ahead.

James Ryan: Hi, good morning everyone. This is Greg Galberg on for Myles. I wanted to start on the free cash flow guidance just because you have seen you know, big step up in CapEx in 2025 and you are calling for it again in 2026. With minimal impact to free cash flow conversion. And Chris, I know you mentioned the working capital performance in your prepared remarks. So I was curious if you could just kind of put a finer point on what is actually happening with the working capital to enable this? Like are you getting better advances from your customer? Or kinda can you just talk through the dynamics there? Sure.

So I mentioned on the call that we were 19.2% working capital as a percentage of sales in 2025. And if you take a look at our financial statements, you are going to see that our deferred income has been increased

K. Christopher Farkas: gradually over the past several years. A lot of that has to do with the team's focus on commercial excellence and success that they have had in negotiating contracts. And kind of supports the way that our sales are growing, a lot of naval defense work, a lot of strong commercial nuclear growth ahead of us. So the team has been doing a good job in that regard. This last year, we had higher DPO. We did some good things with supply chain, ensure that they were protected at the same time, participate participating in our cash flow goals. But as we head into this next year, we are going to continue to improve upon collections.

We have got opportunity across the board whether it is DSO, inventory turns, DPO. We will be targeting a working capital percentage of sales of the approximately 18% That will be a record. I think if you step back to the years when we had the last AP1000 contract, we were somewhere in that high 18s rate and we are expecting to beat that this year. The team outside of commercial excellence and negotiating with contracts has done a lot of good systems work. We talked about that at Investor Day. We have new levels of information at our disposal regarding daily billings, and progress on cash flow across the corporation.

That scales all the way from Lynn and myself down to the business unit level. We have done some good things there to improve the systems that help to enable improved cash flow management.

James Ryan: Got it. And then just quickly on the C-17 order you guys announced earlier this week. Was that order booked for you in 4Q just because I think that is when Boeing got the order? Or is that a 1Q order? And if not, we expect the relatively quick snapback in Defense Electronics bookings, just giving what seems to be a timing issue

Lynn M. Bamford: Yes. So it is we definitely saw delayed bookings and we mentioned in the script the 0.96 book to bill. In Defense Electronics, and that was very much affected by the delay. So to be clear, was a Q1 order for us and it is a very exciting new platform for us, but it is also very indicative of the bookings we clearly saw that we believe would come in 2025 that were delayed, partly due to the CR, some structure changes within the government. And so it is a very meaningful example of one of those and a platform we are pretty excited about.

Alexandra Eleni Mandery: Great. Thank you.

Operator: We will turn now to Peter John Skibitski with Citi. Please go ahead.

K. Christopher Farkas: Great. Thank you. This is Bradley Oyster on for John Gaudin.

James Ryan: Thank you for taking my question. Just want to dial a little bit in on the aerospace and industrial and sorry, naval and power headwinds that you called out for fourth quarter. Particularly around mix. Is this something that is more of a

K. Christopher Farkas: seasonality item here? Or is it more structural? And how should we think about that

James Ryan: going to '26 with the guide that you have?

K. Christopher Farkas: Yes. So as we enter into 2026, we are going to continue to see a heavy ramp up in not only naval defense and as I mentioned on the script that will be work in performance to accelerate where we are on the CDN 81, but also the Virginia Class submarine program. But we are also accelerating in commercial nuclear and our process markets. The process markets, I will start there first. We saw a healthy order book and continued growth in the order book here later in the year in 2025 and that is positioning us really well in 2026 for MRO growth. And there is some accompanying margin benefits to higher concentration of MRO valves.

But we also had mentioned in the script that commercial nuclear is going to accelerate quite a bit here in 2026 The fourth quarter order growth in commercial nuclear alone was up 50% year over year A lot of orders coming in relative to SMRs and work that is beginning to transition from development to prototype, which is happening this year in 2026. So that work does represent a little bit more of a challenge for us from a margin As you would imagine, it is not production work. Eventually, it will transition there and that convert into stronger margins.

But we are also underpinned by a strong increasing footprint in global aftermarket content and that will help as we move through the year as well. So thematically, think process and maybe the transition into prototyping are probably the two things that you can think about as we go into 2026. Got it. I appreciate all the color. Thank you. Pass it along.

Operator: We will turn now to Nathan Hardie Jones with Stifel. Please go ahead.

K. Christopher Farkas: Hello, everyone. This is Andres on for Nathan Jones. I wanted to talk a little bit about operational and commercial excellence. Obviously, that was a big part of driving margin expansion over the last three years. How should we think about these initiatives moving forward? And what was the contribution the last three years?

Lynn M. Bamford: Maybe I will start off and talk about some of the efforts and such and

K. Christopher Farkas: I will let

Lynn M. Bamford: Chris speak to what he can about the contribution. But when you run a complex business, there is a lot of things that go into how you expand margins and it is you cannot always completely bucketize them from one thing to the next. But our operational growth platform has really become a fundamental part of the company and how the teams evaluate themselves. And it has a robust set of focus areas with everything from the commercial excellence and which includes pricing and making sure we can analyze that. Aspect with as there has been inflation in the world. And such that making sure we are really understanding how we are pricing our products is very critical.

And we have become much more sophisticated in how we can do that. So not people do not always think about that as part of operational excellence, but it is very much how we manage the company. But we continue to do things in our supply chain We have added commodity managers at a corporate wide level is just one example. That are helping making sure we maximize the buying power across the organization. And achieving the best results there to ever ongoing activity on integrating robotics into our operations. So I will just pull those out as some examples. It is very widespread and the team has made great successes over the past three years.

But we have a clear list of things that are still in our windshield that we are going to go after. And in no way shape or form does this end. So it is definitely still an ongoing focus and something that is part of our DNA at this point.

K. Christopher Farkas: Yeah and maybe I will not go all the way back to 2024 at this point in time. But if I just kinda start with what happened here in 2025 as a base, We had close to $12,000,000 of commercial and operational excellence roll through our P&L this last year. The operational growth platform is affecting all

James Ryan: the

K. Christopher Farkas: all entities and the greater portion of that was really operational excellence, but still some pricing successes this last year. Additionally, we have been conducting restructuring programs, restart restructuring for growth in many areas of the business, but also efficiency and you saw some of that benefit come through in 2025. Now as we enter into 2026, we are going to continue to see some of that restructuring benefit from the programs that we started in prior year continue to roll through our P&L. You will see some uplift from that and operational excellence and pricing initiatives again not quite at the same pace.

But as Lynn had mentioned, there is plenty of opportunity in front of us and we will continue to kind of drive towards that opportunity. But overall, looking at Curtissite margins for this next year, we are going to have a good strong incremental contribution margin on sales of roughly 25%. We will benefit from all those initiatives that are helping us in the P&L and that is going to more than offset what is happening in our increase in IR&D and CRAD this next year. So pleased to be able to come on out of the gate with a guide of 30 to 60 basis points of expansion. Awesome. Thank you so much for that context.

Also, a quick one here. With 4Q power and process benefiting from strong growth in industrial valve sales. Called that out earlier. Are you seeing any improvements in the underlying process mark Maybe an update there. Yes. I think we are seeing some improvement in the underlying process market. I mean, as you look forward in twenty North America MRO is really projected to grow in that low single digit to mid single digit range. We are seeing some good benefits across North America related to CapEx. I think the and that is particularly in the oil and gas side of things. When you look at the chempetrochem, the global growth is going to be a little bit below GDP.

North America will probably be in line with GDP. But I think one of the things that is important to point out and really just kind of credit back to the team is that they have done an exceptional job really focusing on customer satisfaction, being able to tighten lead times, get product in the hands of the customer sooner, heavy focus on quality and at the same time kind of expanding some of those sales channels globally so that they could take advantage and gain some market share in the process.

So really doing some good things and I think that is going to help us kind of beat the overall industry market growth rates as we head into 2026. I appreciate it. Thank you. I will jump back in the queue.

Operator: We will move now to Michael Frank Ciarmoli with Truist Securities. Please go ahead.

James Ryan: Hey, morning guys. Nice results. Thanks for taking the questions. Lynn or Chris, I think I know the answer to this, but figured I would ask it anyway. Mentioned some of the timing in defense, but you have got pretty big deceleration in just your pure defense revenue growth. I think you have averaged 13% over the past three years. The guide points to six I think naval growth is down too. And again, tough comps, I understand what you are lapping. You did talk about the strong direct foreign military sale. But anything else

George Anthony Bancroft: going on beside timing and just kind of what has been a strong kind of prior trajectory? I know you talked about the bookings in Defense Electronics being below one, but any other color there?

James Ryan: So

Lynn M. Bamford: we feel very strongly optimistic about our ability to continue to grow our defense business at a pace that matches or beats what The U.S. Is doing. And that does military sales are part of that, but we are very well aligned here in The U.S. And there can be just some timing issues and having a multi month CR and then the shutdown definitely had an impact And so we have taken a bit of a conservative stance, as Chris mentioned, in our ground guide that we think now that we have a budget, we expect the normal order flow would begin in 60 to 90 days. But we are watching that.

We thought it was a great sign to see that the C-17 order come in so quickly after the appropriations. Broadly speaking across Defense Electronics specifically, we can clearly have line of sight of over $100,000,000 of orders we fully expected to get in twenty five. That have been pushed into 2026 and that C-17 is one of the first ones that has landed. And again, we are very close contact with our customers. There is nothing going on that is disruptive to the long term. We are very well positioned with our technologies.

And I think of things that the team is doing and whether it is the Fabric 100 we have got over 20 or what 20 MOSSA, CMOS compliant products to market in 2025. We will exceed that number in 2026. Our relationship with NVIDIA is just at its beginning for being a growth factor vector. The Microsoft Azure is also just at the beginning. And those are the things we made public in 2025 and the team continues to do things that will provide other differentiated capabilities that are unique to Curtiss-Wright Corporation and bring those to And so whether it is that portion, our alignment with the systems around Golden Dome, and we are aligned in our shipbuilding.

I think regardless of the shipbuilding, to your comment there, fact that at our Investor Day, had $15,000,000 of maritime industrial based funding and that is up to $55,000,000 now. That is a clear indication that of how the Navy sees Curtiss-Wright Corporation is a critical supplier and they want to assure we are ready for the growth that is coming our way. And so that is a tangible thing we can point to tied to the Navy. So there is no concerns looking out to '27 and potentially having a $1,000,000,000,000 budget is very exciting and we are doing the things make sure we are ready for the growth that our customers are signaling to us.

George Anthony Bancroft: Okay, perfect. That is really helpful. And then maybe just totally shifting gears back to nuclear. You have given us sort of the end market waterfall detail for 2025 and '26. So we can probably back into what looks to be maybe $60,000,000 of OE revenue on new nuclear builds this year growing close to 40% over last year. Is anything else you mentioned ex energy transitioning into prototype build. Are there any other SMR reactors that are expected to transition to drive that growth? Or can you point to other specific platforms or partnerships that are kind of driving that sort of SMR growth this year?

Alexandra Eleni Mandery: So we have

Lynn M. Bamford: made some announcements on our partnership with Rolls Royce. We continue to build out the capabilities of what we are going to do with Rolls Royce and some of those will turn into early prototyping types of revenue in 2026. You are well positioned with TerraPower, we really work across the gamut, and everyone is maturing in their designs and working hard to be bringing plants online in the 2030s. So without getting ahead of our customers, I do not think I would say anything else.

But the revenues from these three restarts to the trying to build out and complete some of the reactors that were stalled All in all, these things are all very active, very real and our teams doing real work and gaining real business opportunities across the industry. And so thing I like is it is very widespread. It is not one thing. And, as we said, the AP1000 work is still in our futures. The order we believe strongly is coming in 2026. And that will be pretty dramatic when it comes in a very, very good way.

K. Christopher Farkas: And Mike, would just add one other one other kind of interesting data point as you think about this because we get a lot of questions about newbuilds and AP1000 and SMRs. But we also have content on other reactors. As you look at the ATR 1,400 out of South Korea, and we talked about $10,000,000 to $20,000,000 of content per new build there. Now those are multiyear projects. We did have some order activity here in the fourth quarter for new build in South Korea. So some content there that is affecting the new build splits as well.

George Anthony Bancroft: Perfect. That is helpful. Thanks, guys. I will jump back in the queue.

K. Christopher Farkas: Thanks, Mike.

Operator: We will turn now to Louie DiPalma with William Blair. Please go ahead.

James Ryan: Lynn, Chris and Jim, good afternoon.

Lynn M. Bamford: Hey, Louie.

K. Christopher Farkas: In December, the Secretary of the Navy, John Phelan, announced the implementation of the shipbuilding operating system powered by Palantir to use AI to achieve supply chain efficiencies for submarine construction. And Phelan indicated that 30 key suppliers were on the platform. Has this software platform had any impact on Curtiss-Wright Corporation in terms of volumes and the impressive margin expansion that you are seeing.

Lynn M. Bamford: So very much in tuned with what is going on and have had discussions with Palantir around that topic. I would say today it is definitely still in the forming stage. So no, I would not say there is any impact to date, but it is something that is an initiative by the Navy and Curtiss-Wright Corporation will participate as is appropriate for us as a business. And those discussions have begun. Makes sense. Thanks, Lynn. And

K. Christopher Farkas: is there the potential another topic that has been in the news, is there the potential for Curtiss-Wright Corporation to be involved in the development for a lunar nuclear reactor. The secretary of NASA discussed the need for like, nuclear propulsion in space and a nuclear reactor to provide consistent power generation. Do you view these opportunities as viable over the long term? Or is it just something that is just too early to provide a specific opinion on.

Alexandra Eleni Mandery: So there is different ways that we potentially will have an impact. And, you know, we

Lynn M. Bamford: when we talk about our nuclear footprint, we tend to talk and focus and we have as a company on the 300 megawatt and larger reactors. But we do work with a variety of the more microreactors And there are a few names that are more in the press. And we have content with a lot of those. It is not something that is ever gonna it appears today anyways, you know, be as significant to Curtiss-Wright Corporation revenue wise as say, what is going on with AP1000. But we do work with them.

Our capability and quality as you put something into space and wanting to assure you are gonna have that generations of reliability that fits into Curtiss-Wright Corporation's sweet spot. So we will see on top of electronics capabilities in that space. So nothing specific to mention yet, but there could be relevance.

Alexandra Eleni Mandery: Great. And

Lynn M. Bamford: as it relates to your

K. Christopher Farkas: to the last question and answer, do you expect to announce

Bryce Sandberg: more SMR content agreements similar to what you announced with Rolls Royce and X Energy and TerraPower?

Lynn M. Bamford: Yes. I do. I mean, we it is we are continuing to develop and expand our content across some of the providers and or most of the providers. And believe we will have more announcements in 2026 of new systems that we have reached a level of confidence with our customer that they are okay with us talking about it publicly. And again, we really work very hard to be a great supplier into our customers and not get ahead of them with things that were announced seeing. But there is a lot more activity going on and there will definitely be more announcements.

Bryce Sandberg: Fantastic. Thanks, Lynn. Thank you.

Operator: We will move now to George Bancroft with Gabelli Funds. Please go ahead.

James Ryan: Hey, Ken. Congratulations, Lynn and Chris and team on all your accomplishments. Very well done.

George Anthony Bancroft: There has been a lot of discussion, you heard major OEM, commercial OEM talking about supply chain improvements. And on the other side, you have seen maybe some countervailing commentary that there is still a lot of need in especially further down the supply chain just you know just difficulties in getting those up to up to speed. What are you seeing maybe in your supply chains? And is there any opportunities, to, for M&A where it would make sense to be accretive for you to have that and be internalized and obviously, you know, opportunities there with that. Any thoughts on that, Lynn?

Lynn M. Bamford: Yes. So I think broadly speaking, supply chain remained fairly stable in 2025 and there was not a lot of disruption. But that is not to say we do not have watch items. One thing that is very much in the news is memory, high bandwidth memories and storage parts. As tie as their common things used in this AI infrastructure build out. And then there is some raw materials in rare earths that are watch items for us. But really what I for Curtiss-Wright Corporation, we have learned a lot as a and it started in during COVID, we have implemented many, many new tools that we use across the organization in all three segments.

And have added these centralized resources that I mentioned a moment ago to really assure we are driving the best performance we can broadly across where we are leveraging the supply chain. We do things like we look for getting dual sources, We very much leverage our government high priority ratings, which is very often we are able to do with a lot of our naval work and even some of our defense electronics work. And so that keeps us at the front. And we spend a lot of time in with our supply chain working with them.

So the team does a great job and is really staying on top of it, but, you know, it is something you have to continuously be in tune to and work.

An acquisition standpoint, it is not something that is currently a high priority for us that does not our strategic priorities But it is not to say, I would never say never to a lot of things that there was an opportunity, it could be something we would consider if we were looking for global diversification to be able to be better aligned to end markets where they want low localization would be an example where it really opened up the ability for you to have a good active business in an end market. And so I would not say never, but team does a great job managing it.

George Anthony Bancroft: Great job. Thank you, Lynn.

Operator: And ladies and gentlemen, in the interest of time, that will conclude today's Q&A session. I would like turn the floor back over to Lynn M. Bamford, Chair and Chief Executive Officer, for any additional or closing remarks.

Lynn M. Bamford: Thank you, everybody, for joining us today, and we look forward to speaking to you either on the road or we release our first quarter results. Have a good day.

Operator: Thank you. This concludes today's Curtiss-Wright Corporation earnings conference call. Please disconnect your line at this time and have a great weekend.

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