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Item 7. Management’s Discussion and Analysis

2025-02-13 compared with 2024-02-20 · 146 added, 145 removed, 312 unchanged (48% of the section changed)

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We hold competitive positions in a majority of our key A&D and commercial end markets through engineering and technological leadership, precision manufacturing, and strong relationships with our customers.

Through One Curtiss-Wright, we are also well positioned to build upon crossover applications for our defense and commercial market technologies that leverage our teams’ collaborative efforts and the strength of our combined portfolio.

Through One Curtiss-Wright, we are also well positioned to continuously leverage our teams’ collaborative efforts and the strength of our combined portfolio, while also seeking to build upon crossover applications that may exist across our defense and commercial market technologies.

We manage and evaluate our operations based on the products and services we offer and the different markets we serve.

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Historically, we have not been significantly impacted by inflation, with increases in raw material costs or payroll costs generally offset through lean manufacturing activities or pricing initiatives.

However, in recent history, we have experienced heightened pressures in our costs of material, labor, and services consistent with the overall rates of inflation in the wake of the COVID-19 pandemic.

However, in recent history, we have experienced heightened pressures in our costs of material, services, and especially labor, consistent with the overall rates of inflation in the wake of the COVID-19 pandemic.

We have consistently focused on mitigating inflation through pricing and operational excellence initiatives, and generally have been able to offset these cost increases, as a portion of our contracts contain terms and conditions that enable us to pass inflationary price increases to our customers.

In those cases whereby inflationary increases are not contractually stipulated, we actively negotiate price increases.

In those cases whereby inflationary increases are not contractually stipulated, we aim to actively negotiate price increases.

We have consistently made annual investments in capital that deliver efficiencies and cost savings, while continuing to focus on negotiating better contract terms, especially on long-term agreements.

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In March 2020, the World Health Organization characterized the global outbreak of COVID-19 as a pandemic, which resulted in significant disruption to travel, transportation of goods and services, and financial markets globally, and caused adverse and residual impacts to both industry supply chains and production levels.

Though to a lesser degree today, the impact of COVID-19 variants continues to cause supply-chain disruptions to global economies, including our business, as well as our customers and suppliers.

economic activity has rebounded since 2021, due in part to the availability of vaccines, increased government support to rebuild the country’s infrastructure, increased U.S.

consumer spending and continued low levels of unemployment, though the pace of year-over-year real gross domestic product (GDP) growth has slowed.

Following the events of 2020, U.S.

economic activity rebounded sharply in 2021, due in part to the availability of vaccines, increased government support to rebuild the country’s infrastructure, increased U.S.

consumer spending and continued low levels of unemployment.

In 2021, U.S.

GDP declined 3.4%, principally due to the impact of the COVID-19 pandemic, before it rebounded sharply in 2021, increasing 5.8% and at the fastest pace since 1984, led by an acceleration in industrial activity.

GDP grew 1.9% in 2022.

real gross domestic product (GDP) increased at nearly 6% and at the fastest pace since 1984, led by an acceleration in industrial activity.

However, the pace of year-over-year GDP growth has slowed in recent years based on high levels of inflation and rising interest rates and, as a result, it increased 1.9% in 2022 and 2.5% in 2023.

In 2024, U.S.

GDP is expected to grow approximately 2.5%, according to the most recent estimates, as strong U.S.

consumer spending and easing of prior supply chain disruptions continued to support GDP growth despite the dual headwinds of rising interest rates and high inflation.

In 2024, economists expect a combination of a steady easing in headline and core inflation to prompt the U.S.

Federal Reserve to start cutting interest rates, though growth in the broader U.S.

economy is only expected to be moderate, based upon current estimates for U.S.

GDP growth ranging from approximately 1.5% to 2.5%.

Similarly, the global environment, which is typically influenced by international trade, economic conditions, and geopolitical uncertainty, had also been greatly impacted by the pandemic in 2020 before it rebounded in 2021 and 2022.

According to the International Monetary Fund’s World Economic Outlook, global GDP in world economies is expected to grow 3.1% in 2023 followed by growth of approximately 3.0% in 2024, according to the most recent estimates.

Looking ahead to the next few years, we remain cautiously optimistic that our economically sensitive commercial and industrial markets will continue to improve based upon a return to normalized global growth conditions, continued easing of supply chain conditions, and lower interest rates.

We have a well-diversified portfolio of products and services that supply all branches of the U.S.

military, with content on critical high-performance programs and platforms, as well as a growing international defense business.

A significant portion of our defense business operations is comprised of long-term programs and contracts driven primarily by U.S.

GDP is expected to grow between 2.5% and 2.8%, according to various forecasts, driven by healthy employment and income growth, strong U.S.

consumer spending and easing of prior supply chain disruptions, despite the headwind of rising inflation that has only recently lessened as a result of interest rate reductions.

In 2025, based on a range of forecasts, growth in the U.S.

economy is expected to be at or slightly below 2024 levels, as most economists expect the U.S.

Federal Reserve to implement further easing on interest rates to control inflation.

In the global environment, which is typically influenced by international trade, economic conditions, and geopolitical uncertainty, GDP had also been greatly impacted by the pandemic in 2020, before it rebounded in 2021.

In 2024, global GDP is expected to grow between 2.5% and 3.0%, according to various forecasts.

Global GDP is expected to grow at a similar pace in 2025, given optimism for a continued reduction in inflation, but remain below 3% for the foreseeable future, based on uncertainty regarding the long-term impacts of potentially higher tariffs and trade uncertainty, particularly in China.

Curtiss-Wright maintains a strong presence across the naval, aerospace, and ground defense markets with vast platform and program diversity, where we support over 400 platforms and 3,000 programs worldwide.

Our portfolio of products and services supplies all branches of the U.S.

military, where our content is on critical high-performance programs and platforms, and also supports a growing international defense business.

A significant portion of our defense business operations is comprised of long-term programs and fixed-price contracts driven primarily by U.S.

DoD budgets and funding levels.

As such, the U.S.

Defense budget serves as a leading indicator of our growth in the defense market.

We derive revenue from the naval defense, aerospace defense, and ground defense markets, which collectively represent more than 55% of our annual net sales.

The Company has historically demonstrated solid growth in our defense markets, particularly when including acquisitions, and has exceeded the average growth rate of the U.S.

defense budget over the past 20 years through various cycles and administrations.

In addition, the Company is well-insulated from periods of U.S.

defense budget flatness or trimming due to the breadth of our portfolio, unique, sole-source positions and opportunities to capitalize on work outsourced from defense primes, while we continue to expand our potential for growth in non-U.S.

military spending.

We derive a portion of our revenues from the naval defense, aerospace defense, and ground defense markets, which collectively represent approximately 57% of our annual net sales.

In the naval defense market, we expect continued funding for U.S.

shipbuilding programs, particularly as it relates to production on the Ford class aircraft carrier, as well as Columbia class and Virginia class submarines, which have received strong bipartisan support from Congress.

shipbuilding programs which have received strong bipartisan support from Congress.

Of note, we are recognizing significant production revenues on the Ford class aircraft carrier, along with the Columbia class and Virginia class submarines, as well as development revenues on the future generation SSN(X) submarine.

We have a long legacy of providing products that support nuclear propulsion systems on naval vessels.

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Navy’s Atlantic and Pacific fleets.

In the aerospace defense market, we expect to benefit from increased funding levels on Command, Control, Computers, Communications, Cyber, Intelligence, Surveillance, and Reconnaissance (C5ISR), electronic warfare, encryption, unmanned systems, and communications programs.

As a supplier of COTS and COTS+ solutions, we continue to demonstrate that defense electronics technology will enhance our ability to design and develop future

generations of advanced systems and products for high performance applications, while also meeting the military’s Size, Weight, and Power considerations.

In the aerospace defense market, we expect to benefit from

increased funding levels on Command, Control, Computers, Communications, Cyber, Intelligence, Surveillance, and Reconnaissance (C5ISR), electronic warfare, encryption, unmanned systems, and communications programs.

As a supplier of COTS and COTS+ solutions, we continue to demonstrate that defense electronics technology will enhance our ability to design and develop future generations of advanced systems and products for high performance applications, while also meeting the military’s size, weight, and power considerations.

We are also a designer and manufacturer of high-technology data acquisition and comprehensive flight test instrumentation systems, as well as critical aircraft arresting systems equipment.

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ground vehicle fleet is expected to recover slowly, while international demand should remain strong, particularly for our electronics stabilization systems.

Through continued innovation as well as incremental research and development investments, Curtiss-Wright remains aligned with high growth DoD priorities, modernization efforts and emerging technological trends, including security, cyber, hypersonics, net-centric connected battlefield, soldier survivability, and MOSA capabilities.

In December 2022, the DoD approved and enacted a FY’23 defense budget of $817 billion, reflecting an approximate $75 billion increase from FY’22.

In early 2023, the President’s FY24 budget request was released, calling for a 3.2% increase in defense spending.

Key priorities in the President’s initial request included naval shipbuilding, tactical battlefield communications, vehicle modernization, missiles, munitions, space, and cyber capabilities, many of which provide opportunities for Curtiss-Wright.

House and Senate mark-ups have been favorable thus far, and Congress has reached a tentative agreement establishing the topline appropriations for FY24 at $886 billion, including supplementals.

However, the U.S.

Through continued innovation as well as incremental research and development investments, Curtiss-Wright remains aligned with numerous high growth DoD priorities, modernization efforts and emerging technological trends, including security, cyber, hypersonics, net-centric connected battlefield and soldier survivability.

In addition, Curtiss-Wright’s alignment to open systems architecture has positioned the Company to benefit from the DoD’s Modular Open Systems Approach (MOSA) mandate supporting major defense acquisition programs.

Former President Biden's FY’24 defense budget request of approximately $842 billion reflected a 3% increase over the FY’23 enacted budget.

The House and Senate Appropriations committees later approved a defense budget of approximately $825 billion for FY’24.

In addition, the DoD approved a $95 billion supplemental to support aid to Ukraine, Israel and Taiwan, while also providing funding to shore up the U.S.

naval industrial base.

Former President Biden's FY’25 Budget Request was submitted to Congress in March 2024 requesting nearly $850 billion, with an additional $58 billion expected for supplementals.

The initial base budget is subject to the spending caps under the Budget Control Act (set to expire after FY25) authorizing only 1% growth from the prior year’s budget request.

Key priorities in the initial request included naval shipbuilding, tactical battlefield communications, vehicle modernization, missiles and hypersonics, munitions and space, many of which provide opportunities for Curtiss-Wright.

House and Senate mark-ups have been favorable thus far, and Congress has prepared the National Defense Authorization Act (NDAA) policy bill that is in-line with the aforementioned caps but includes funds for an additional Virginia-class submarine that was removed from former President Biden’s budget.

In addition, the U.S.

government began its October 1 fiscal year under yet another continuing resolution (CR), which has yet to be resolved.

As such, the potential remains for a shutdown at the expiration of the CR, or implementation of a sequester if not passed by April 30th, which would mandate a 1% cut to defense spending.

Looking ahead, the President’s Future Years Defense Program (FYDP), which covers longer-term spending priorities aimed at improving the defense industrial base and U.S national security, is expected to reflect modest increases in total defense budget funding through FY28.

Beyond the U.S., we have seen a renewed, global focus on defense spending in light of Russia’s invasion of Ukraine.

International markets represent a growing portion of overall sales for defense prime contractors, creating additional growth opportunities for Curtiss-Wright over the planning period as North Atlantic Treaty Organization (NATO) countries throughout Europe ramp up their spending to or above 2.0% of annual GDP.

As a result, and including recent acquisitions, Curtiss-Wright’s total direct foreign military sales represent approximately 9% of the Corporation's total net sales.

Looking ahead, the DoD's future year defense plan (FYDP) forecasts spending at an approximately 2% CAGR through FY29, covering longer-term spending priorities aimed at improving the defense industrial base and national security, modernization, and countering China as the “pacing challenge” in the global environment.

Beyond the U.S., we have seen a renewed, global focus on defense spending in light of Russia’s invasion of Ukraine and the continued threat from China.

International markets represent a growing portion of overall sales for defense prime contractors, creating additional growth opportunities for Curtiss-Wright as NATO countries throughout Europe commit to ramping up their spending to 2% or more of annual GDP, with nearly 70% thus far announcing their intentions to meet those spending levels.

As a result, and including recent acquisitions, Curtiss-Wright’s total direct foreign military sales represent approximately 9% of the Corporation’s total revenues.

Commercial Aerospace

Curtiss-Wright derives revenue from the global commercial aerospace market, principally to the commercial jet market, and to a lesser extent the regional jet, business jet, and commercial helicopter markets.

Our primary focus is OEM products and services for commercial jets, which represents more than 80% of our sales in this market, and is highly dependent on new aircraft production from our primary customers, Boeing and Airbus.

Our primary focus is OEM products and services for commercial jets, which represent approximately 90% of our sales in this market, and are highly dependent on new aircraft production from our primary customers, Boeing and Airbus.

We have significant content on the majority of the commercial aircraft programs, including both narrow-body and wide-body aircraft.

Currently, more than 50% of our sales in this market are linked to the narrow-body market.

We provide a combination of critical equipment, including flight controls, actuation, high-temperature and high accuracy sensors, and other sophisticated electronics, as well as shot and laser peening services utilized on highly stressed components of turbine engine fan blades and aircraft structures.

We are also focused on expanding our content, where for example, we were selected by Airbus to provide custom electric actuation technology for the main deck cargo door on the Airbus A350F freighter aircraft.

Passenger travel and freight logistics, along with the demand for and delivery of new aircraft, are the key drivers in the commercial aerospace market.

Over the prior decade, there was an extended production up-cycle for the commercial aerospace market, which was driven by increases in production by Boeing and Airbus on both legacy and new aircraft, particularly narrow-body aircraft.

Currently, approximately 60% of our sales in this market are linked to the narrow-body market.

We provide a combination of critical equipment, including flight controls, actuation, high-temperature and high accuracy sensors, and other sophisticated electronics, as well as shot and laser peening and coatings services utilized on highly stressed components of turbine engine fan blades and aircraft structures.

Curtiss-Wright’s exposure continues to grow following wins on critical Airbus platforms to expand the reach of our electromechanical actuation business and pursuits to provide high temperature engine solutions.

Passenger travel and freight logistics, along with the demand for and delivery of new aircraft to replace the existing, aging fleet, are the key drivers in the commercial aerospace market.

The prolonged production up-cycle experienced in the prior decade was driven by increases in production by Boeing and Airbus on both legacy and new aircraft, particularly narrow-body aircraft.

Additionally, sustained low oil prices contributed to declining fuel prices, which in turn led to cheaper airfares for consumers and increased passenger growth.

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Beginning in 2022, the industry experienced a strong rebound in global passenger growth, benefiting from the propensity for the general public to travel by air, decisions by most governments to lift COVID-19 travel restrictions, and the continued availability and implementation of vaccines.

According to industry reports, global travel demand is expected to fully recover and exceed pre-pandemic levels in 2024, though rising inflation and higher oil prices all remain watch items for the commercial aero industry going forward.

order placement, and continued partnering with aerospace OEMs on both the current fleet and the next-generation of single aisle programs and engines, as well as emerging opportunities to support more fuel efficient and all-electric aircraft.

According to industry reports, global travel demand reached a record high in 2024 and fully recovered to pre-pandemic levels, though high levels of inflation and higher oil prices remain watch items for the commercial aero industry going forward.

While we closely monitor these industry metrics, our success and future growth in the commercial aerospace market is primarily tied to the growth in aircraft production rates (e.g., Boeing 737 and 787, Airbus A320 and A350), the timing of our order placement, and continued partnering with aerospace OEMs on both the current fleet and the next-generation of single aisle programs and engines, as well as emerging opportunities to support more fuel efficient and all-electric aircraft.

Overall, we expect the secular trends of electrification and decarbonization, along with tremendous customer backlog, to support a long-term ramp up in commercial aerospace production.

Power & Process

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We provide equipment and services to both the aftermarket and new build markets, and have content on every reactor operating in the U.S.

Additionally, we are executing initiatives to leverage our capabilities into the broader conventional power generation market, including next-generation advanced Small Modular Reactor (SMR) designs.

Nuclear is expected to play a critical role in meeting rising future energy demand, driving energy independence and supporting global clean energy and carbon-free emissions goals, and Curtiss-Wright remains well positioned to support these objectives.

Additionally, we are executing initiatives to leverage our capabilities into the broader conventional power generation market, capitalizing on advances in digital instrumentation and control systems, as well as next-generation Small Modular Reactors (SMRs) and Advanced Reactor designs which have the potential to bring transformational growth to the nuclear industry.

There are a number of global forces driving a resurgence in nuclear power, as it is becoming more widely accepted as a critical source to meet rising future energy demand and decarbonization commitments, benefiting both the energy and process industries.

Within the U.S., nuclear power has both strong public and bi-partisan government support, which is driving legislation to decarbonize the existing energy infrastructure and create clean, reliable, and affordable energy.

In addition, following the Russian invasion of Ukraine and the disruption it has caused to European energy markets, nuclear power is being seen as a pathway towards energy independence and an opportunity to break free from Russian natural gas and oil.

According to the Nuclear Regulatory Commission (NRC), nuclear power comprises approximately 20% of all electric power produced in the U.S.

today, with 93 reactors (includes the recently started Vogtle 3 reactor) operating across 54 nuclear power plants in 28 states.

today, with 94 reactors (including both Vogtle 3 and 4 AP1000 reactors) operating across 54 nuclear power plants in 28 states.

Our growth opportunities for aftermarket products and services are driven by plant aging, plant closures, requirements for planned outages, plant life extensions (from the end of their original 40-year operating lives to 60-year and now 80-year lives via subsequent license renewals), the levying of regulatory requirements, suppliers abandoning the commercial nuclear market, and plants seeking technology and innovation advances, such as digitalization, that further enable plant modernization.

One of the industry’s most significant challenges is maintaining electricity market competitiveness.

Throughout the past decade, U.S.

reactor operators faced increased security measures and post-Fukushima regulatory requirements, and were also tasked with reassessing operating practices, improving efficiency, and reducing plant costs to compete with sustained low natural gas prices.

All of those factors contributed to plant operators diverting and deferring their typical plant capital expenditure budgets significantly away from normalized maintenance schedules, while also leading to numerous plant closures (down from 104 reactors in 2012).

In recent years, we have seen sentiment shift dramatically towards nuclear power, as many countries have begun or are starting to recommit to advanced technologies, while realizing the strategic importance of energy independence.

In addition, the continued supply constraints and environmental concerns attributed to the current dependence on fossil fuels have led to a greater appreciation of the value of nuclear technology as the most efficient and environmentally friendly source of energy available today.

In 2023, the U.S.

market experienced strong bipartisan support for nuclear power, with significant investments through the Civil Nuclear Credit Program (part of the Infrastructure Bill) and nuclear power production tax credits (provided by the Inflation Reduction Act) focused on helping to preserve the existing U.S.

market continues to experience strong bipartisan support for nuclear power, with significant investments through the Civil Nuclear Credit Program (part of the Infrastructure Bill) and nuclear power production tax credits (provided by the Inflation Reduction Act) focused on helping to preserve the existing U.S.

reactor fleet.

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nuclear plants.

Similar to the U.S., as international plants age, we foresee opportunities to help solve operators’ needs to prevent obsolescence through plant safety and technology upgrades, plant life extensions, and upgrades of computer systems, and we continue to build upon our relationships throughout Canada, Europe, and South Korea, among others.

We also play an important role in the new build market for the Generation III+ Westinghouse AP1000 reactor design, for which we are a supplier of reactor coolant pumps, as well as a variety of ancillary plant products and services.

Outside of the U.S.

market, as international plants age, we foresee numerous opportunities to help solve operators’ needs to prevent obsolescence through plant safety and technology upgrades, plant life extensions, and upgrades of computer systems, and we continue to build upon our relationships throughout Canada, Europe and South Korea, among others.

We also play a significant role in the new build market for the Generation III+ Westinghouse AP1000 reactor design, for which we are a supplier of reactor coolant pumps, as well as a variety of ancillary plant products and services.

On a global basis, nuclear plant construction remains active.

According to the World Nuclear Organization, there are currently 60 new reactors under construction across 17 countries, with 111 planned and more than 300 proposed over the next several decades.

We continue to expect to play a role in new build nuclear plant construction, where we are aligned with Westinghouse to support future construction in central and eastern Europe, including Poland, Ukraine, Bulgaria, and the Czech Republic, among others, with the potential to see approximately 25 plants begin construction in the next 5 to 10 years.

We also continue to seek additional opportunities in China and India.

According to the World Nuclear Association, there are approximately 65 new reactors under construction in 15 countries, with another 85 planned and more than 300 proposed over the next several decades.

We continue to expect to play a role in new build nuclear plant construction, and remain aligned with Westinghouse in their pursuits.

Long-term growth in this market will be driven by new AP1000 orders, with the potential for 20 to 25 reactors to be

built in Central and Eastern Europe, presenting a tremendous opportunity for long-term growth as both Poland and Bulgaria are expected to begin production before the end of the decade.

We also continue to seek opportunities in the U.S., China and India.

Backed by strong funding and legislative support, the U.S.

Department of Energy has allocated $3.2 billion for advanced nuclear through its Advanced Reactor Demonstration Program (ARDP) to accelerate the development and demonstration of SMRs and advanced reactors through cost-shared partnerships with U.S.

We continue to grow our exposure in this market, and are actively engaged with all the major 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 Nuclear Energy Institute (NEI) survey, its member utilities see a role for more than 90 gigawatts of nuclear power in support of their

decarbonization goals, which translates to the potential for 300 new SMRs by 2050, and represents only a fraction of the potential global demand for these technologies.

The industry is also benefiting from an influx of investment from major technology companies including Amazon, Microsoft and Google to support electricity production to power data centers.

We continue to grow our exposure in this market, and are 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 Nuclear Energy Institute (NEI) survey, its member utilities see a role for more than 90 gigawatts of nuclear power in support of their decarbonization goals, which translates to the potential for 300 new SMRs by 2050, and represents only a fraction of the potential global demand for these technologies.

We anticipate SMR development and prototypes will begin to shift to production orders by the end of this decade, before reaching a steady-state of production by the middle of the next decade, providing a tremendous long-term growth opportunity.

In the process market, we service the oil and gas, chemical, and petrochemical industries through severe-service pump and valve products, and surface treatment services, in which the majority of our sales are to the downstream markets.

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We produce severe service, operation-critical valves for the power and process industries.

We are also advancing several subsea pumping development initiatives to meet the growing demand for more reliable pumping systems in deep sea drilling and off-shore production facilities.

Since the pandemic, oil prices have improved and generally stabilized, spurring both increased MRO spending and turnaround activity particularly for industrial valves, and some CapEx-driven project opportunities, as oil & gas companies reinvest to meet rising demand and depleted reserves.

Global supply has stabilized since the onset of the Ukrainian/Russian war, as industry worked to preserve and increase capacity for non-Russian alternatives.

Sales in these industries are driven by global supply and demand, crude oil prices, industry regulations, and the natural gas market, with growth rates in this market closely linked to global GDP.

Over the long run, we believe improved economic conditions and continued global expansion will be key drivers for future growth of our severe service and operation-critical valves serving the process industry.

Aside from our traditional valves offering, the Company is also advancing several subsea pumping development initiatives, working with industry leaders, to meet the growing demand for more reliable pumping systems in deep sea drilling and off-shore production facilities.

We have leveraged our legacy expertise in naval defense pump technology to crossover into this adjacent market and anticipate significant production orders to begin materializing by the middle of the next decade.

General Industrial

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Sales are primarily driven by global demand from general industrial customers.

In the long term, the global drive towards electrification and electronification, push for zero or low-emissions vehicles, investments in green technology, advancements in robotics and automation, and new government regulations will provide steady growth opportunities for Curtiss-Wright’s technologies serving this market.

In the long term, the global drive towards electrification and electronification, new government regulations for emissions (expected to go into effect in 2027), investment in green technology, and advancements in robotics and automation, along with consistent new product introductions will provide steady growth opportunities for Curtiss-Wright’s technologies serving this market.

RESULTS OF OPERATIONS

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Analytical Definitions

Throughout MD&A, the terms “incremental” and “organic” are used to explain changes from period to period.

Throughout management’s discussion and analysis of financial condition and results of operations, the terms “incremental” and “organic” are used to explain changes from period to period.

The term “incremental” is used to highlight the impact that acquisitions and divestitures had on the current year results.

The results of operations for acquisitions are incremental for the first twelve months from the date of acquisition, after which they are reported

The definition of “organic” excludes costs associated with the sale of our industrial valves business in Germany as well as the effects of foreign currency translation.

The results of operations for acquisitions are incremental for the first twelve months from the date of acquisition.

The definition of “organic” excludes the effects of costs associated with our 2024 Restructuring Program and foreign currency translation.

Year Ended December 31, Percent

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Acquisitions — % — %

Divestiture-related costs — % 1 %

Restructuring — % (3) %

Foreign currency 1 % — %

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Changes in sales by segment are discussed in further detail in the results by business segment section below.

Operating income for the year increased $61 million, or 14%, to $485 million, and operating margin increased 40 basis points compared with 2022.

In the Defense Electronics segment, increases in operating income and operating margin were primarily due to favorable overhead absorption on higher sales, partially offset by higher investments in research and development.

Operating income in the Naval & Power segment benefited from the absence of a prior year loss on sale of our industrial valves business in Germany as well as favorable overhead absorption on higher organic sales.

These increases were partially offset by

unfavorable product mix, unfavorable naval contract adjustments, and higher intangible amortization related to our arresting systems acquisition.

In the Aerospace & Industrial segment, favorable overhead absorption on higher sales was partially offset by unfavorable mix in actuation products.

Non-segment operating expense for the year decreased $4 million, or 9%, to $42 million, primarily due to lower pension costs in the current period.

Interest expense for the year increased $4 million, or 9% , to $51 million, primarily due to the issuance of $300 million Senior Notes in October 2022, as well as higher interest rates under our Credit Agreement in the current period.

This increase was partially offset by the repayment of our 2013 Notes in February 2023.

Other income, net for the year increased $17 million, or 135% , to $30 million, primarily due to lower overall pension costs against the comparable prior year period.

The effective tax rate of 23.4% for the year ended December 31, 2023, decreased as compared to an effective tax rate of 24.4% in the prior year period, primarily due to a favorable change in the valuation allowance on foreign branch tax credit versus an unfavorable change in the prior year.

New orders increased $147 million, or 5% , from the prior year period to $3,090 million, primarily due to an increase in orders for tactical communications as well as embedded computing products in the Defense Electronics segment.

In the Naval & Power segment, an increase in orders for commercial nuclear aftermarket products was partially offset by the timing of naval defense orders.

New orders in the Aerospace & Industrial segment benefited from an increase in orders for actuation and sensors products within our A&D markets as well as surface treatment services within our commercial markets, partially offset by the timing of new orders for industrial vehicles.

Operating income for the year increased $44 million, or 9%, to $529 million, while operating margin decreased 10 basis points compared with 2023.

In the Defense Electronics segment, increases in operating income and operating margin were primarily due to favorable overhead absorption on higher A&D sales.

In the Aerospace & Industrial segment, operating income increased while operating margin decreased, as favorable overhead absorption on higher sales was partially offset by current period restructuring costs and higher investment in research and development.

Operating income in the Naval & Power segment increased while operating margin decreased, as favorable overhead absorption on higher sales as well as the absence of first year purchase accounting costs from our arresting systems acquisition were partially offset by an unfavorable naval contract adjustment and unfavorable product mix.

Non-segment operating expense for the year increased $2 million, or 5%, to $44 million, primarily due to higher corporate costs in the current period.

Interest expense for the year decreased $7 million, or 13% , to $45 million, primarily due to lower borrowings under our revolving Credit Agreement (the “Credit Agreement” or “credit facility”) as well as the repayment of our 2013 Notes in February 2023.

Other income, net for the year increased $8 million, or 28% , to $38 million, primarily due to higher interest income in the current period.

The effective tax rate of 22.4% for the year ended December 31, 2023, decreased as compared to an effective tax rate of 23.4% in the prior year period, primarily due to the benefits of a legal entity restructuring as well as lower provisional tax expense associated with foreign withholding taxes.

New orders increased $606 million, or 20% , from the prior year period to $3,696 million, primarily due to an increase in naval defense orders supporting aircraft carrier and submarine programs in the Naval & Power segment.

New orders also benefited from an increase in orders for avionics and embedded computing equipment in the Defense Electronics segment as well as increase in orders for surface treatment services within our A&D markets in the Aerospace & Industrial segment.

Changes in new orders by segment are discussed in further detail in the "Results by Business Segment" section below.

Comprehensive income (loss)

Pension and postretirement adjustments within comprehensive income during the year ended December 31, 2023 were a $8 million gain, compared to a $7 million loss for the prior year period.

The gain in the current period was primarily attributed to higher asset returns, partially offset by decreases in the discount rate.

The loss in the prior period was primarily attributed to lower asset returns, partially offset by increases in the discount rate.

Foreign currency translation adjustments during the year ended December 31, 2023 resulted in a comprehensive gain of $38 million, compared to a comprehensive loss of $61 million in the comparable prior period.

The comprehensive gain in the current period was primarily attributed to increases in the British Pound, while the comprehensive loss in the prior year period was primarily attributed to decreases in the British Pound and Canadian Dollar.

Pension and postretirement adjustments within comprehensive income during the year ended December 31, 2024 were a $14 million gain, compared to a $8 million gain for the prior year period.

The gain in the current period was primarily attributed to increases in the discount rate.

The gain in the prior period was primarily attributed to higher asset returns, partially offset by decreases in the discount rate.

Foreign currency translation adjustments during the year ended December 31, 2024 resulted in a comprehensive loss of $44 million, compared to a comprehensive gain of $38 million in the comparable prior period.

The comprehensive loss in the current period was primarily attributed to decreases in th e British Pound and Canadian Dollar, while the comprehensive gain in the prior year period was primarily attributed to increases in the British Pound.

RESULTS BY BUSINESS SEGMENT

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Organic 5 % 8 %

Acquisitions — % — %

Restructuring — % (7) %

Foreign currency — % 1 %

Total 5 % 2 %

Sales increased $51 million, or 6%, to $887 million, from the comparable prior year period primarily due to higher sales in the commercial aerospace and general industrial markets.

In the commercial aerospace market, sales increased $37 million primarily due to higher demand for sensors products and surface treatment services on various narrow-body and wide-body platforms.

The general industrial market benefited from sales increases of $13 million primarily due to higher demand for industrial automation products as well as higher sales of surface treatment services.

Operating income increased $8 million, or 6%, to $145 million, and operating margin of 16.4% was flat against the comparable prior year period, as favorable overhead absorption on higher sales was partially offset by unfavorable mix in actuation products.

New orders increased $11 million as compared to the prior year, primarily due to an increase in orders for actuation and sensors products within our A&D markets as well as surface treatment services within our commercial markets.

These increases were partially offset by the timing of new orders for industrial vehicles.

Sales increased $45 million, or 5%, to $932 million, from the comparable prior year period primarily due to higher sales in the commercial aerospace and aerospace defense markets.

In the commercial aerospace market, sales increased $43 million primarily due to higher OEM sales of sensors and actuation products, as well as surface treatment services, on narrowbody and widebody platforms.

The aerospace defense market benefited from sales increases of $15 million primarily due to higher actuation development and production on various fighter jet programs.

These increases were partially offset by lower sales of $18 million in the general industrial market, primarily due to lower sales of industrial vehicle products to off-highway vehicle platforms.

Operating income increased $3 million, or 2%, to $148 million from the comparable prior year period, while operating margin decreased 50 basis points to 15.9%, as favorable overhead absorption on higher sales was partially offset by current period restructuring costs and higher investment in research and development.

New orders increased $87 million as compared to the prior year, primarily due to an increase in orders for surface treatment services within our A&D markets.

Defense Electronics

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Organic 12 % 18 %

Acquisitions — % — %

Restructuring — % (1) %

Foreign currency — % — %

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Sales increased $95 million, or 12%, to $911 million, from the comparable prior year period.

In the ground defense market, sales increased $92 million primarily due to higher demand for tactical battlefield communications equipment.

Sales in the aerospace defense market increased $16 million primarily due to higher demand for embedded computing and flight test instrumentation equipment on various domestic and international programs.

Sales increases of $12 million in the commercial aerospace market were primarily due to higher demand for avionics and flight test equipment on various domestic and

international platforms.

In the naval defense market, sales increased $6 million primarily due to higher demand for our embedded computing equipment supporting various programs.

Operating income increased $37 million , or 24% , to $192 million compared with the same period in 2022, and operating margin increased 110 basis points to 23.5%, primarily due to favorable overhead absorption on higher sales, partially offset by higher investments in research and development.

New orders increased $100 million as compared to the prior year, primarily due to an increase in orders for tactical communications as well as embedded computing products.

In the ground defense market, s ales increased $47 million primarily due to higher demand for tactical battlefield communications equipment.

Sales in the aerospace defense market increased $42 million primarily due to higher demand for embedded computing equipment on various helicopter and fighter jet programs.

In the commercial aerospace market, sales benefited $10 million primarily from higher OEM demand for avionics and electronics on various platforms.

Operating income increased $33 million , or 17% , to $225 million compared with the same period in 2023, and operating margin increased 120 basis points to 24.7%, primarily due to favorable overhead absorption on higher A&D sales.

New orders increased $120 million as compared to the prior year, primarily due to an increase in orders for avionics and embedded computing equipment.

Naval & Power

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Acquisitions 1 % — %

Divestiture-related costs — % 2 %

Foreign currency — % 1 %

Total 12 % 6 %

Sales increased $111 million, or 11%, to $1,142 million, from the comparable prior year period, primarily due to higher sales across our aerospace defense, naval defense, and power & process markets.

In the aerospace defense market, sales increased $59 million primarily due to the incremental impact from our arresting systems acquisition.

Sales in the naval defense market benefited $16 million primarily due to higher sales on the Columbia-class and Virginia-class submarine programs, partially offset by the timing of sales on various aircraft carrier programs.

In the power & process market, sales increased $35 million primarily due to higher demand for industrial valves in the process market and higher demand supporting the maintenance of existing operating reactors as well as increased development on advanced small modular reactors in the commercial nuclear market.

These increases were partially offset by the wind-down on the China Direct AP1000 program.

Operating income increased $12 million, or 7%, to $189 million, while operating margin decreased 60 basis points to 16.6%.

Operating income benefited from the absence of a prior year loss on sale of our industrial valves business in Germany as well as favorable overhead absorption on higher organic sales.

These increases were partially offset by unfavorable product mix, unfavorable naval contract adjustments, and higher intangible amortization related to our arresting systems acquisition.

New orders increased $36 million as compared to the prior year, primarily due to an increase in orders for commercial nuclear aftermarket and subsea pumping products.

These increases were partially offset by the timing of naval defense orders.

Sales increased $136 million, or 12%, to $1,278 million, from the comparable prior year period.

In the naval defense market, sales increased $95 million primarily due to higher demand and timing of sales on various submarine programs, as well as higher foreign military sales.

Sales in the power & process market increased $33 million primarily due to higher commercial nuclear aftermarket sales supporting the maintenance of operating reactors in North America, partially offset by the wind-down on the China Direct AP1000 program.

In the aerospace defense market, sales increased $7 million primarily due to higher demand for arresting systems equipment supporting various domestic customers.

Operating income increased $10 million, or 6%, to $200 million, while operating margin decreased 100 basis points to 15.6%, as favorable overhead absorption on higher sales as well as the absence of first year purchase accounting costs from our arresting systems acquisition were partially offset by an unfavorable naval contract adjustment and unfavorable product mix.

New orders increased $399 million as compared to the prior year, primarily due to an increase in naval defense orders supporting aircraft carrier and submarine programs.

SUPPLEMENTARY INFORMATION

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Sales increased $265 million, or 14%, to $2,170 million, as compared to the prior year period, primarily due to higher sales across all markets.

In the aerospace defense market, sales benefited from the incremental impact from our arresting systems acquisition as well as higher demand for embedded computing and flight test instrumentation equipment on various domestic and international programs.

Sales in the ground defense market increased primarily due to higher demand for tactical battlefield communications equipment.

Sales increases in the naval defense market were primarily due to higher sales on the Columbia-class and Virginia-class submarine programs, partially offset by lower sales on various aircraft carrier programs.

Sales in the commercial aerospace market primarily benefited from higher demand for actuation and sensors products as well as surface treatment services on narrow-body and wide-body platforms, in addition to higher demand for avionics and flight test equipment on various domestic and international platforms.

Sales in the aerospace defense market increased primarily due to higher demand for both arresting systems equipment supporting various domestic customers as well as embedded computing equipment on various helicopter and fighter jet programs.

Sales in the ground defense market increased primarily due to higher demand for tactical battlefield

communications equipment.

Sales increases in the naval defense market were primarily due to higher demand and timing of sales on various submarine programs as well as higher foreign military sales.

Sales in the commercial aerospace market primarily benefited from higher demand for OEM sensors and actuation products, surface treatment services on narrowbody and widebody platforms, as well as avionics equipment on various platforms.

Commercial Markets

Commercial sales increased $11 million, or 1%, to $951 million.

In the power & process market, sales benefited from higher demand for industrial valves in the process market and higher demand supporting the maintenance of existing operating reactors as well as increased development on advanced small modular reactors in the commercial nuclear market.

These increases were partially offset by the wind-down on the China Direct AP1000 program.

Sales in the general industrial market increased primarily due to higher demand for industrial automation products as well as higher sales of surface treatment services.

Sales in the power & process market primarily benefited from higher commercial nuclear aftermarket sales supporting the maintenance of operating reactors in North America, partially offset by the wind-down on the China Direct AP1000 program.

The general industrial market was negatively impacted by lower sales of industrial vehicle products to off-highway vehicle platforms.

Liquidity and Capital Resources

11 unchanged sentences

Effect of exchange rates (11,298) 10,726

Net increase in cash and cash equivalents $ 149,893 $ 85,970

Net increase (decrease) in cash and cash equivalents $ (21,825) $ 149,893

Operating Activities

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Capital Expenditures

Our capital expenditures were $45 million and $38 million for 2023 and 2022, respectively, primarily due to higher capital spending in the Naval & Power segment during the current period.

No material divestitures took place during 2023.

In January 2022, the Corporation completed the sale of its industrial valve business in Germany, for gross cash proceeds of $3 million.

In 2023, we did not complete any acquisitions.

Our capital expenditures were $61 million and $45 million for 2024 and 2023, respectively, primarily due to higher capital spending in the Defense Electronics and Naval & Power segments during the current period.

No material divestitures took place during 2024 or 2023.

In 2024, we acquired two businesses for $226 million.

In 2023, we did not complete any acquisitions.

Future acquisitions will depend, in part, on the availability of financial resources at a cost of capital that meet our stringent criteria.

3 unchanged sentences

In February 2023, we repaid $203 million of the 2013 Notes that matured on February 26, 2023.

On October 27, 2022, we issued $300 million Senior Notes, consisting of $200 million 4.49% notes that mature on October 27, 2032 and $100 million 4.64% notes that mature on October 27, 2034.

Revolving Credit Agreement

3 unchanged sentences

Repurchase of Common Stock

During 2023, the Company repurchased approximately 0.3 million shares of its common stock for $50 million.

In 2022, the Company repurchased approximately 0.4 million shares of its common stock for $57 million.

During 2024, the Company repurchased approximately 766,000 shares of its common stock for $250 million.

In 2023, the Company repurchased approximately 270,000 shares of its common stock for $50 million.

The Company made dividend payments of $32 million and $30 million in 2024 and 2023, respectively.

11 unchanged sentences

C ash and cash equivalents as of December 31, 2024 and December 31, 2023 were $385 million and $407 million, respectively.

The increase in cash held by U.S.

subsidiaries during 2023 as compared to 2022 was primarily due to higher cash from operations in the current period as well as no acquisition activity during the current period.

The decrease in cash held by U.S.

subsidiaries during 2024 as compared to 2023 was primarily due to acquisition activity during the current period.

The increase in cash held by foreign subsidiaries during 2024 as compared to 2023 was primarily due to lower foreign cash repatriation during the current period.

1 unchanged sentence

Cash Utilization

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, increased dividends, capital expenditures, and repaying debt to determine the most beneficial use of available capital resources.

We believe that our cash and cash equivalents, cash flow from operations, available borrowings under the credit facility, and ability to raise additional capital through the credit markets are sufficient to meet both the short-term and long-term capital needs of the organization, including the return of capital to shareholders through dividends and share repurchases and growing our business through acquisitions.

Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, and increased dividends, to determine the most beneficial use of available capital resources.

Debt Compliance

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Cash generated from operations should be adequate to meet our planned capital expenditures of approximately $75 million to $85 million and expected dividend payments of approximately $32 million in 2025.

There can be no assurance, however, that we will continue to generate cash from operations at the current level, or that these projections will remain constant throughout 2024.

There can be no assurance, however, that

we will continue to generate cash from operations at the current level, or that these projections will remain constant throughout 2025.

If cash generated from operations is not sufficient to support these operating requirements and investing activities, we may be required to reduce capital expenditures, borrow from our existing credit line, refinance a portion of our existing debt, or obtain additional financing.

While all companies are subject to economic risk, we believe that our cash and cash equivalents, cash flow from operations, available borrowings under the credit facility, and ability to raise additional capital through the credit markets are sufficient to meet both the short-term and long-term capital needs of the organization, including the return of capital to shareholders through dividends and share repurchases and growing our business through acquisitions.

The following table quantifies our significant future contractual obligations and commercial commitments as of December 31, 2024:

27 unchanged sentences

Typically, over-time revenue recognition is based on the utilization of an input measure used to measure progress, such as costs incurred to date relative to total estimated costs.

Application of an over-time revenue recognition method requires the use of reasonable and dependable estimates of future material, labor, and overhead costs that will be incurred as well as a disciplined cost estimating system in which all functions of the business are integrally involved.

Application of an over-time revenue recognition method requires the use of reasonable

and dependable estimates of future material, labor, and overhead costs that will be incurred as well as a disciplined cost estimating system in which all functions of the business are integrally involved.

These estimates are determined based on industry knowledge and experience of our engineers, project managers, and financial staff.

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Changes in these assumptions, if significant in future years, may have an effect on our pension and postretirement expense, associated pension and postretirement assets and liabilities, and our annual cash requirements to fund these plans.

The discount rate used to determine the plan benefit obligations as of December 31, 2023, and the annual periodic costs for 2024, was decreased from 5.04% to 4.86% for the Curtiss-Wright Pension Plan, and from 4.99% to 4.79% for the nonqualified benefit plan, to reflect current economic conditions.

The discount rate used to determine the plan benefit obligations as of December 31, 2024, and the annual periodic costs for 2025, was increased from 4.86% to 5.55% for the Curtiss-Wright Pension Plan, and from 4.79% to 5.46% for the nonqualified benefit plan, to reflect current economic conditions.

The rates reflect the hypothetical rates at which the projected benefit obligations could be effectively settled or paid out to participants on that date.

1 unchanged sentence

Interest cost is determined by applying the spot rate from the full yield curve to each anticipated benefit payment.

The discount rate changes contributed to an increase in the benefit obliga tion of $12 million in the CW plans.

The discount rate changes contributed to an decrease in the benefit obliga tion of $41 million in the CW plans.

The rate of compensation increase for base pay in the pension plans remained unchanged at a weighted average of 3.39% for the current period, based upon a graded scale of 4.1% to 2.9% that decrements as pay increases, which reflects the experience over past years and the Company’s expectation of future salary increases.

5 unchanged sentences

Based on a review of market trends, actual returns on plan assets, and other factors, the Company’s expected long-term rate of return on plan assets was increased to 7.25% as of December 31, 2024, which will be utilized for determining 2025 pension cost.

An expected long-term rate of return of 6.50%% was used for determining 2023 expense, with 5.75% used for 2022 pension expense and 6.50% used for 2021 pension expense.

An expected long-term rate of return of 6.75% was used for determining 2024 expense, with 6.50% used for 2023 pension expense.

The timing and amount of future pension income or expense to be recognized each year is dependent on the demographics and expected compensation of the plan participants, the expected interest rates in effect in future years, inflation, and the actual and expected investment returns of the assets in the pension trust.

The funded status of the Curtiss-Wright Pension Plan increased by $34 million in 2023, primarily driven by favorable asset returns in 2023, partially offset by a higher benefit obligation due to a lower discount rate.

The funded status of the Curtiss-Wright Pension Plan increased by $36 million in 2024, primarily driven by a higher discount rate in 2024.

The following table reflects the impact of changes in selected assumptions used to determine the funded status of the Company’s U.S.

22 unchanged sentences

As a supplement, we conduct additional sensitivity analysis to assess the risk for potential impairment based upon changes in the key assumptions such as the discount rate, expected long-term growth rate, and cash flow projections.

Based upon the completion of our annual test as of October 31, 2023, we determined that there was no impairment of goodwill and that all reporting units’ estimated fair values were substantially in excess of their carrying amounts.

Based upon the completion of

our annual test as of October 31, 2024, we determined that there was no impairment of goodwill and that all reporting units’ estimated fair values were substantially in excess of their carrying amounts.

Other Intangible Assets

Other intangible assets are generally the result of acquisitions and consist primarily of purchased technology, customer related intangibles, and trademarks.

Intangible assets are recorded at their fair values as determined through purchase accounting, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows arising from

follow-on sales.

Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, which generally range from 1 to 20 years.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis