Curtiss-Wright (CW) Morgan Stanley’s 13th Annual Laguna Conference summary

Defense market outlook and growth

• Defense business has consistently outpaced U.S. DOD budget growth, with strong positions in shipbuilding and defense electronics, supported by significant R&D investment.

• Well-aligned with FY 2026 defense budget priorities, including shipbuilding cadence and long-lead funding for major programs.

• Content spans 400 platforms and 3,000 programs globally, with robust aftermarket and growing foreign military sales, expecting 20% FMS growth in 2025.

• Golden Dome and aircraft modernization programs present significant new opportunities, leveraging tactical communications and networking expertise.

• Defense electronics margins are near 27%, with operational excellence and pricing strategies driving profitability; future margin growth expected but not specifically forecasted.

Commercial aerospace and nuclear power opportunities

• FAA's 25-hour cockpit recorder mandate is driving growth, with retrofits and new builds ramping up, especially after recent certifications and partnerships.

• Commercial nuclear is a top growth area, with strong aftermarket business and new build opportunities in the U.S. and Europe, accelerated by recent executive orders.

• First AP1000 order expected in 2026, with Poland and Bulgaria as leading opportunities; site-specific engineering milestones are key precursors to orders.

• Small modular reactors (SMRs) represent a major long-term growth vector, with partnerships like Rolls-Royce and X Energy, and content potential ranging from $20M to $120M per project.

• Regulatory streamlining and executive orders are improving the feasibility and affordability of new nuclear capacity.

Strategic initiatives and capital deployment

• Pivot to growth strategy launched 4.5 years ago is yielding results, with multiple new product lines and market entries beginning to ramp.

• Subsea pumps, leveraging core technology, are opening a new market, with $250M in orders targeted by decade's end.

• M&A remains the top strategic use of capital, focusing on differentiated IP and durable revenue streams, with both bolt-on and transformative deals considered.

• Strong cash flow supports record share buybacks ($450M in 2024), with a disciplined approach to valuation and capital allocation.

• Dividend growth continues, with a 14% increase this year and a conservative leverage profile, allowing flexibility for larger acquisitions if needed.