Curtiss-Wright at Morgan Stanley Conference: Strategic Growth Insights

On Thursday, 11 September 2025, Curtiss-Wright Corporation (NYSE:CW) presented a strategic overview at Morgan Stanley’s 13th Annual Laguna Conference. The discussion, led by CEO Lynn Bamford and CFO K. Christopher Farkas, highlighted growth opportunities in defense, commercial aerospace, and nuclear sectors. While the company remains optimistic about its expansion strategy, challenges such as regulatory changes in nuclear capacity costs were also acknowledged.

Key Takeaways

• Curtiss-Wright is aligning with increased defense budgets, particularly in shipbuilding and defense electronics.
• The company anticipates a significant boost in commercial aerospace, driven by FAA mandates.
• M&A is a top priority, with a focus on acquiring differentiated intellectual property.
• Strong cash flow supports both acquisition opportunities and a record $450 million in share buybacks.
• The subsea pumps market is expected to grow, with major orders anticipated by the end of the decade.

Financial Results

• Defense electronics margins are nearing 27%.
• Foreign military sales are projected to grow by 20% in 2025.
• The company marked its ninth consecutive year of dividend growth with a 14% increase.
• Share buybacks are set to reach a record $450 million this year.
• Debt to EBITDA ratio stands at 1.3 times, with flexibility for future acquisitions.

Operational Updates

• Curtiss-Wright is active on 400 platforms and 3,000 programs globally in the defense sector.
• The company delivered its first subsea pump to Shell, with significant future orders expected.
• Partnerships with Honeywell aim to capitalize on FAA mandates for cockpit voice recorders.
• The acquisition of Ultra has strengthened their position in small modular reactors with Rolls-Royce.

Future Outlook

• The company expects its first AP-1000 nuclear order in 2026, with Poland as a potential client.
• NATO’s military spending commitments offer a $400 billion opportunity.
• Focus on expanding in defense electronics and commercial nuclear through strategic acquisitions.
• Prototyping work for small modular reactors is planned for 2026 and 2027.

Q&A Highlights

• The subsea pumps market is projected to reach $250 million in orders by the decade’s end.
• Site-specific engineering for nuclear projects in Poland and Bulgaria is on track for 2026 orders.
• Discussions included the impact of regulatory changes on nuclear capacity costs.

Curtiss-Wright’s strategic presentation at the conference highlighted its growth trajectory across multiple sectors. For further details, readers are encouraged to refer to the full transcript below.

Full transcript - Morgan Stanley’s 13th Annual Laguna Conference:

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: OK, Jim, you’re only going to publish those if they look good, right? All right. Hi, good afternoon, everyone. I’m Morgan Stanley’s Aerospace & Defense Analyst, Christine Liwag. I’m very excited to have with us today Curtiss-Wright for this session. Welcome, Lynn Bamford. She’s the Chair, President, and CEO of Curtiss-Wright. We also have K. Christopher Farkas, who’s CFO. Welcome, both of you. Thank you for being here.

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Thank you for having us.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Maybe kicking off on the historical U.S. Department of Defense budget, we’re seeing the fiscal year 2026 budget for the modernization accounts maybe up a little more than 20%, so a pretty robust number. Historically, your defense business has outgrown the overall U.S. Department of Defense top line and the overall U.S. Department of Defense modernization accounts. Can you give us an idea in terms of how these higher funding flows will affect your business and what kind of growth rate you’re looking at with your portfolio?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Sure. Just for those in the room and maybe online that are less familiar, I might just take a second and introduce Curtiss-Wright real briefly. Today’s statements may contain forward-looking statements that contain risks and uncertainties. Curtiss-Wright is a 95-year-old company. We are over 50% defense business. Your question is right on to the heart, to the biggest portion of our business. Broadly speaking, we’re an engineering and manufacturing company who builds highly engineered systems that operate in critical must-not-fail applications. They’re often safety critical to the people that operate that equipment. It’s very important things that we do across the business. We serve a variety of end markets. As I said, defense is the largest of those end markets. I’ll get to just one second about the alignment with the budgets. That’s very good.

I’ll maybe just go there, because I know you’re probably going to ask questions on the other topics. We have outpaced the growth of the defense budget over the past many years. We spend a lot of money. Our biggest two areas are shipbuilding and defense electronics. We put a lot of R&D into our defense electronics to assure we have state-of-the-art product offerings. There’s great stuff in the FY 2026 budget around shipbuilding, trying to get to the cadence of the two Virginia-class and one Columbia-class. It looks like some long-lead funding on the CVN 82. All things that work very nicely for Curtiss-Wright. Our MOSA and SOSA product offerings are very well aligned to some of those big priorities that are in that should be in the past defense bill here, hopefully this fall.

Whether that’s Iron Dome, where we are pursuing very aggressively some very meaningful content for what’s obviously an entirely new system, or aircraft modernization, whether it’s the F-47, the MB-75, the F-15EX, these are all things, places where Curtiss-Wright has great content to ground modernization programs, and whether that’s the tactical battlefield build-out or Abrams and Bradley modernization programs. If you step back and think about Curtiss-Wright’s business in defense, we’re on 400 platforms, 3,000 programs internationally, and are well positioned to, as the defense budgets grow, to find those pockets of growth. We’re also well positioned for the aftermarket business. As that work is very much needed across the U.S. fleet, we’re well positioned there. We have a very strong and growing presence in foreign direct military sales, the sales directly into global defense contractors.

All those things are leading to really great confidence that we will continue to have very strong growths in our defense business.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Thanks, Lynn. Maybe taking a step back, you have other segments outside of defense. If we look at your end markets, you’ve got defense, commercial aerospace, industrial. You’ve got the commercial nuclear power opportunity. When you look at these end markets, which segment are you most excited about for growth? Can you rank and stack them?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Yeah, so we do have a variety of end markets. The thing that’s really exciting for Curtiss-Wright now is I think there are very unique things going on in each of those end markets that we’ve had very strong growth, that are new things coming in those end markets that are just going to continue to provide new avenues of growth. Commercial nuclear is top of mind for everyone, so that’s clearly one. We have a well-established position in commercial nuclear, have been in this market since its inception, largely the aftermarket. There are things going on in the aftermarket with the NRC helping facilitate the existing plants, accelerate their plant life extensions. That’s great business for Curtiss-Wright. Obviously, the intent to build AP-1000s across Europe and all these executive orders to help drive growth of new large plants here in the United States, that’s definitely meaningful growth.

We are very active and well positioned on the small modular reactors, and that growth is, we’ve been working on that for a couple of years, and that’s kicking into prototyping. Commercial nuclear is top of mind. The things we’re doing in our defense, aerospace, and ground-enabled markets to really take new market share, bring new products to market, to bring an NVIDIA product line to market, our flight data recorders, which we’ve been talking about that are just beginning to ramp into production. There’s just a lot of different things going on. I go down into our process markets, which is an end market that does not get a lot of headlines when people are talking about Curtiss-Wright. We shipped our first subsea pump this quarter and are hoping it will get deployed in the back half of this year. That’s another brand new market that we’re opening up.

Those are just some examples. We work really hard to make sure that we’ve got really meaningful growth initiatives across all of our end markets.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Yeah, that’s wonderful to hear. I think this has been your pivot to growth strategy finally materializing, right?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Yes, very much. Launched four and a half years ago, and it’s bearing fruits. I do think it’s important to talk about those new things that are just beginning to help potential investors understand we’re at the beginning of many cycles across these industries. The new commercial nuclear hasn’t kicked in. The flight data recorders haven’t kicked in. Subsea pumping hasn’t kicked in. I can go on and on on things like that that are the things we’ve invested in prior to the pivot to growth strategy, but during it that are just beginning to come to fruition with a very strong focus on profitable growth.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Great. Maybe we could dive deeper into defense. We’ll go through the other end markets next. On Curtiss-Wright for Iron Dome, can you talk about the opportunity set for the company? What does this mean? Where do you see yourself fitting in with the program?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Iron Dome, I believe, will be a very strong program for Curtiss-Wright. At a high level, you can think of the fact that there are sensors to figure out maybe what would be attacking the United States. There’s effectors to defend against those, and then there’s the networking that ties all those systems together. A lot of the sensors and effectors will be a lot of programs and platforms that exist currently, maybe with upgrades, maybe changed slightly. That great content we have across hundreds of programs and thousands of platforms makes us well positioned to already have content on those. Our tactical communications equipment is well positioned for the command and control and networking with necessary encryptions, et cetera, to be able to serve as a backbone for a large portion of what is networking those sensors and effectors together. It’s an exciting program for us.

We’re very active in making sure we secure content where we have appropriate products.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Thank you, Lynn. You highlighted the strong growth internationally and your direct international sales. There’s also foreign military sales. These budgets abroad continue to grow at some higher pace in the U.S. It looks like you’re about to recognize 20% growth in FMS in 2025, which is up from mid-teens year-over-year growth the past several years. We’re seeing that inflection above the historical norm. I guess, what are you seeing for the higher defense budget internationally? How long do you think this higher growth sustains for? What product lines are you seeing the most interest from customers?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: I turn that over to Chris.

K. Christopher Farkas, CFO, Curtiss-Wright: OK, thanks. Yeah, no, we’re really excited about the momentum that we’re building. It certainly is, to your point, Christine, accelerating that broad base of platforms that Lynn was talking about. I mean, yeah, while we’re well positioned here domestically, we also have great content overseas. We’ve seen growth in embedded computing over the past few years along with tactical communications. Even outside of our defense electronics segment within naval and power, the demand for increased naval aircraft handling equipment, specifically rotorcraft. As we look forward and into 2025 and beyond, it’ll certainly be much of the same in embedded computing, maintaining that state-of-the-art technology. As those programs begin to upgrade, it’ll be the naval aircraft arresting system, but also ground-based arresting systems. You may recall the acquisition of ESCO that we made a few years back. That business is off to a great start.

I think as you take a look at longer term and the growth prospects, what’s making us excited about it is as you think about the commitments that have been made by NATO recently, Secretary General Mark Rutte stating that they’re going to get up to 5% of GDP in military spending over time over the next 10 years, 3.5% of that coming in core military hardware, the other part coming through infrastructure, cybersecurity, and others. Just by getting from where we are today to that 3.5%, in today’s dollars, it represents roughly a $400 billion opportunity. That’s significant, not only for Curtiss-Wright, but for all defense companies that are selling their products internationally. We expect that to continue to grow as we look out into the future at a good pace.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Great. On top of the higher defense growth, we’re seeing your defense electronics business, the margins are just, I think your guidance for the year is just shy of 27%. That’s just close to 30%, but not quite yet. I guess when you look at the margins here, how long can this higher margin sustain? When you look at, you’ve already highlighted that you’re at the cusp of this incremental growth. When we see these growths kind of materialize and some of these programs mature even more, what’s the margin profile for defense electronics? Could this be a 30% margin business?

K. Christopher Farkas, CFO, Curtiss-Wright: Sure. Yeah, we are seeing great growth in defense electronics this year. If you recall, last year in 2024, we were restructuring for growth. We saw we had a record backlog, and we needed to deliver on this. We’re seeing some accelerated throughput through the shop, which is yielding improved absorption as well. When we started the pivot to growth strategy, we launched what we refer to as the operational growth platform, which is really the way that we get best practices across the organization, leverage those best practices in both commercial and operational excellence. We’re seeing that in defense electronics this year. It’s not just about cost containment. It’s not about just employee efficiency and reducing cost of poor quality, but it’s in maximizing pricing effectivity. Some of that is coming through this year.

I think as you look out in defense electronics into the future, while we’re committed to kind of growing our margins faster than sales over time, it’s important to note that we spend the greatest portion of our IR&D in defense electronics to maintain that state-of-the-art technology so that that business will continue to stay at the forefront and grow profitably into the future. We’re not really willing to commit to saying where exactly we’re going to be in the future, recognizing that. Boy, it’s a great business, and there’s a lot in front of it.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Wonderful. Maybe switching gears to the commercial aerospace business, the FAA’s mandate for the 25-hour cockpit voice recorders has presented some nice lifts for your business. Can you talk about the wins and the possibilities for retrofits and the size, the opportunities set ahead?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Yeah, so I kind of mentioned in one of the new growth areas, so thank you for bringing it back up, that Curtiss-Wright built cockpit data recorders since the inception of the concept 60 years ago. Across defense and commercial aircraft, those have typically been two-hour recorders. There were a few accidents where that was not long enough and talk of making that a 25-hour mandate. That was mandated in Europe a couple of years ago and mandated in the U.S. just last summer. The thing about the mandate in the U.S. last summer is not just for new build, but also to retrofit the existing fleet in the U.S. by the end of the decade.

We’ve announced our partnership with Honeywell, which is important, a few years ago, and had our 25-hour cockpit recorder type certified for the Boeing set of platforms, the 37, 67, and 77 last year, and are seeing that ramp up. We’re working very hard to get certified with the Airbus A320 set of platforms and do believe we will have that type certification for both new build and retrofit in the first half of 2026. The airlines are just figuring out how they’re going to retrofit their existing fleet. Honeywell is a very important partner for us in that, in helping with the logistics trail with that. Our increase in our commercial aerospace guide at the end of Q1 was really driven exclusively by that ramp beginning to come into focus and really starting in the back half of this year.

We’re at the very beginning of that cycle of growth of retrofits across the U.S. fleet, new build here in the U.S., hopefully with Airbus. The mandate even reaches across some of the regional jets in its early days in figuring those out. We’ve been a little cautious about sizing this market or giving a unit cost, as we’re still in a competitive situation in some of these areas. A lot of this has to unfold yet. This is definitely going to be a meaningful growth area for Curtiss-Wright.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Wow, that’s a lot of growth. I mean, I’ve got more questions. There’s going to be other growth topics.

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Yeah.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Let’s pivot to commercial nuclear power.

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: OK.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Right? For commercial nuclear power, we’ve seen a lot of executive orders from this administration supporting domestic production, domestic new builds, and also life extensions of existing nuclear power plants. I feel like we’ve talked about this a lot, especially in the 2010s of the U.S. nuclear renaissance. It didn’t happen. It feels different this time. Can you level set us regarding what’s different this time? What are you seeing on the ground regarding actions you’d have to see from key players to show that we’re going to be breaking ground on these new reactors? What’s the timeline you think we could see these first orders really come through if they’re going to build some AP-1000s?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Yeah, so I would, for anybody who’s not really familiar with our nuclear story, I’d encourage you to go back to our May 2024 Investor Day review of this topic, which laid out some three-year targets, targets through the middle of the end of this decade and into 2035 as a baseline. I do take note that those targets were all set before the executive orders that were released just this past May. We participate in really the three main buckets for this market. We’ve been active in the aftermarket. That’s what drives our revenues today. It’s 90% of our commercial nuclear revenues as of today are working in that aftermarket, which the regulatory parts of the executive orders are really going to accelerate, helping existing plants do some bold things and be able to drive increased aftermarket activity. That’s great business for Curtiss-Wright.

On top of that, we had put in a forecast for revenues for AP-1000 bids in Eastern Europe with different forces than the nuclear renaissance. It really does feel very, very different than 15 years ago, whether it’s carbon-free energy or energy independence in Eastern Europe, really sizable business over in Eastern Europe. Now that is added to by this push to build, have 10 large light water reactors under production, under construction, excuse me, by 2030. The activity that we see with our participation in working groups with the NRC makes it clear that the traction on making this happen is real. The administration, whether it’s Administrator Wright or Doug Burgum, are out there trying to break down barriers and make sure this can happen. We saw shortly after that, Fermi applied for four operating licenses in June and reaffirmed their alignment with Westinghouse in August.

You can see the activity. You can’t even go through all the announcements of more plants being built. The power of the data center revenue that’s behind pushing not necessarily as much the AP-1000s, although Fermi is a site to power data centers. The small modular reactors, which is also a big area for us, has just a level of traction and spending and attention that makes this opportunity very, very different now than before. We feel very positive about what’s coming to Curtiss-Wright in this area.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: What is the timeline when you think you would get an order for the U.S.?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Yeah, we still believe strongly that we will get our first AP-1000 order in 2026. That’s pretty exciting, and we’ve held that timeline for quite a few years. It’s really exciting to see the industry demonstrate it can set forth plans and hold those plans. One of the things that’s different this time than before is just that. We still think that order will be from the Poland opportunity. I’ll tell you, the activity in the U.S. is bringing it up pretty much to a horse race as to how all these orders are going to line up. We’re very focused on our capacity planning, testing our supply chain for their capacity planning, and working very close with Westinghouse to make sure we’re really prepared to be a great supplier to them and meet their needs so they can maximize their ability to win business.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Lynn, you’ve been very consistent about Poland being the first opportunity, also Bulgaria in Eastern Europe. Can you talk about the milestones for these programs and the timelines they’re at? When do they still want to plug into the grid? Is it 2033, 2032? Also, how early they’d have to or how late they’d have to order your parts and what milestones we should be watching for these contract orders?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Hey, Christine, talk to the timelines and some of the milestones.

K. Christopher Farkas, CFO, Curtiss-Wright: Yeah, as Lynn mentioned in your call from Investor Day, we’ve got a timeline in there that will allow you to kind of watch these events unfold with Curtiss-Wright. We’re obviously having conversations with Westinghouse, but they’re working with their customers. It’s really important to stay in tune with what’s happening in those projects globally. As you look at that timeline that we laid out, one of the last things that you’re going to see happen is what they refer to as site-specific engineering. These engineering service agreements are one of the last phases where they’re doing the site-specific engineering. Within Poland, they renegotiated the engineering services agreement in April of this year and extended it through year-end. The thought process is, once you complete the site-specific engineering, you will enter into an engineering procurement and construction contract, Westinghouse will with its customer.

That opens the door for the long-lead material negotiation of reactor coolant pumps that we provide into Westinghouse. Another great data point, just looking externally beyond the internal discussions that we’re having to say, hey, ’26 is a good time frame. You had mentioned Bulgaria. I think one of the interesting things about Bulgaria is they do have a standing nuclear program. Westinghouse held a supplier symposium in the month of April. The energy minister from Bulgaria was there, along with U.S. Secretary of Energy. At that meeting, Bulgaria said, hey, we want to have the first AP-1000 online in Europe. They’re operating underneath an engineering services agreement that they opened up in the month of April. That could take a year. I love the spirit of the competition and seeing who can get their AP-1000 online first, because obviously that’s a good thing for Curtiss-Wright. We’re excited.

I think there’s an opportunity in the short-term future.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Great. Shifting back to the U.S., large new reactor builds, 10 by 2030, that’s a lot. We’ve only built one so far in the U.S. We have one operational. Can you talk about, you talked about talking to your supply chain, being able to potentially support this build. What are key bottlenecks you’re watching? What other preparations do you need to have? The reactor coolant pumps you provide are in the earlier part of the build, so you’re going to be a key gatekeeper for those builds to really get underway.

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Yeah, so the goal is under construction by 10, under construction by 2030. There will be some build-out time from that. To these ends, we’ve been very proactive with our supply chain, really over the past 18 to 24 months, to work with them and to take steps with them to assure they’re ready. I think we’re doing the right things along those lines. We’re also very actively working with Westinghouse Electric Company for their broader supply chain outside of the reactor coolant pumps and maybe some source of supplies that have gone away over the past 10 years where we have relevant product and can be a good supplier to them for additional content. That’s ongoing work. It’s an exciting time that we’re looking to see what all we can do with Westinghouse and very much working our supply chains. It’s a complicated problem.

I definitely would not minimize it. I think there’s a lot of transparency about how things are going to play out. That’s really good so we can have teams of people get on this and work. From a capacity capability within the plant, we have the ability to ramp within our existing infrastructure and meet the initial needs for capacity planning. For thinking of needing to truly expand facilities and do things along those lines, that’s a little further down the road. We have time to plan for that. There’s a lot of watch items in this and a lot of items to keep track of and really for Curtiss-Wright Corporation to be a good supplier into Westinghouse. I think the teams are doing a fantastic job with it.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Great. I think for commercial nuclear power, we’ve talked about the aftermarket stream, the large builds. The last piece would be small modular reactors. Going to the SMR piece, can you talk about the opportunity set ahead of you there? I know you’ve laid out some things in the Investor Day, but since then, you’ve also announced the partnership with Rolls-Royce on their SMR fleet. What are the key gatekeeping items for this industry to really get to volume? Where do you see your particular strengths? Any color you could provide on this Rolls-Royce partnership and what it means for you would be really helpful.

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Sure, thank you for that question. Our goal is across the larger small modular reactors, and that’s really ones putting out 300 megawatts, example, and above. We have less applicability to some of the micro reactors, the 50 megawatts. We might do a few things, but that’s not really our main place where we’ll garner business, is to really be active across all of those. I think there’s places for all of them. They have different characteristics, different strengths, and different ways that they can provide energy on the grid, provide things such as high-power steam for processing applications, which is unique to the X Energy reactor to a large degree. There’s different characteristics of each. Our goal, and I think an advantage for us as a place to invest, is we are agnostic. We intend to have content across that spectrum.

The acquisition of Ultra, which we only closed on at the end of last year, one of two nuclear acquisitions in 2024, we’re pretty pleased with that, was really the spearhead for getting our partnership with Rolls-Royce being put into the public with the announcement of their partnership. We’re working on a variety of other things with Rolls-Royce, too early to talk about. I feel confident that that launchpad, that position of having localized UK content, has really set the stage that we’re well positioned to build a very strong relationship with Rolls-Royce and become a meaningful supplier to them. We’ve talked about our content with X Energy being up to $120 million plus in content. That’s the one we’ve been the most bullish and visible about the content.

We’ve set the floor at $20 million across the other major players and think we’ll be in the middle there for many of them. If this industry takes off and reactors are being purchased at 10, 20 a year, you can definitely see what this stands, the potential to do for Curtiss-Wright into the 2030s. People wonder, how is this meaningful in my investment horizon? We’ve been doing the design work over the past couple of years. We’re moving to prototyping work across some of these platforms in 2026, in 2027, and all that content. We need to build portions of that, if not all of it, to allow for testing of the reactors and then build content for the first reactors to really ideally go on the grid. 2030-ish is the target for a lot of them.

There’s a lot of work that we will be doing through the end of that decade before there’s that big exciting ramp.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Thank you. You called out the two acquisitions you did last year. How do you think about M&A more broadly now when you look at your portfolio? Are there things you want to add, like bolt-ons? What’s your appetite for a transformative deal? Do you really need it with all these growth vectors that you have in the portfolio? Is it time to prune?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: We are very purposeful and have been very consistent in saying M&A is our top strategic use for capital. We have very specific criteria, both financial and strategic, for where we would look to buy properties. We clearly wanted differentiated intellectual property with durable revenue streams that align largely within our end markets. We have very specific financial criteria that also drive us to be fairly selective. We will say we do not need to buy businesses that are accretive to our margins on year one. We are willing to work in businesses and apply some of the goodnesses of Curtiss-Wright to have them fit. It is fantastic that we could buy two nuclear acquisitions last year. Our top priorities remain tuck-ins across our defense electronics portfolio, naval nuclear propulsion and safety systems, and commercial nuclear. To the size, Pacstar is our largest acquisition to date at $400 million.

We have looked at many acquisitions over this past year to two years that extend well above that to the transformative level that we would consider and believe we have the financial wherewithal to do. Obviously, we would take great rigor before we would act on something like that. We are exploring acquisitions across a wide range from bolt-on to transformative. For use of our capital, maybe I would turn it over to Chris to talk about how we see share buyback and some of the other options for capital deployment.

K. Christopher Farkas, CFO, Curtiss-Wright: Sure. Yeah, thanks. I mean, we’re generating very strong cash flow. It’s something we’ve worked hard on for a very long time. Our objective is to grow cash flow faster than earnings over time. That takes strong work in capital management. We’ve got a long track record, as you know, and doing in excess of 105% free cash flow conversion. That all kind of powers the balance sheet that we’re looking at here. We’ve got a fully untapped revolver, $750 million, $250 million accordion feature. We’re not going to be on that this year. We’re well positioned for when those acquisitions come in to be able to seize them and bring them into Curtiss-Wright. Beyond acquisitions, we believe that share buyback is the most effective way to return capital to shareholders. This year, we are going to have another record year of share buyback at $450 million.

We just announced, coming out of our board meeting the other day, another $200 million this year, executed another $200 million back in the August time frame. We operate, obviously, under a 10(b)(5)(1) to cover dilution. I think the important thing that I want people to understand when we go do this buyback, acquisitions are our first priority. We do this consciously. Lynn and I spend a lot of time. We look at the valuation of the company. It’s very important to look at future growth and earnings. We have these discussions with our board. When we make decisions to buy back stock, it’s not just a cash dump. We’re looking at the valuation. We’re looking at what lies ahead for us. We’re a good buy. We’ve talked about a lot of exciting growth vectors and where we’re going in terms of profitability and cash flow.

That speaks to that future. Beyond returning capital to shareholders through share buyback, we have a modest dividend approach. We grow our dividend with sales growth over time. This year, we grew it 14%. It was our ninth consecutive year growing the dividend. We’re really well positioned from a capital standpoint. We’re at about 1.3 times debt to EBITDA today. You had mentioned something transformational. I think if Lynn and I found ourselves in that situation, we maybe have the comfort level to go on up to 3.5 to 4 times debt to EBITDA, but would quickly de-lever back below 3, given that strong cash flow generation that we have.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Great. We had opened up the Q&A to the audience. If you have a question, please raise your hand. The mic will bring a mic to you. Yes, right here. We’ll get to you next, yeah.

Unidentified speaker: Thanks again for taking my question. You spoke about earlier the subsea pumps. That’s a growth area that people haven’t really appreciated. Could you talk a bit more about that, whether it’s like the strategic value, the timing, if you’re able to size it up somehow?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Yeah, so it’s a great example of one of the things Curtiss-Wright focuses on that I think is very critical to the margin expansion we’ve been able to realize over the past decade. That is, we look to take really specialized core capabilities and look across end markets and take one technology, maybe adjust it, tweak it, and then take it to a different end market. Our canned motor pumping is absolutely a great example of this, from the Navy nuclear to commercial nuclear and now to subsea, surely repackaged in a different format for this application, but that same core capability. We’ve been working on this for five plus years on working this capability. It’s great we delivered our first subsea pump to Shell this quarter. We’re hoping it’s not in our control, but hoping that it will be deployed at the back half of this year.

Shell is often looked to as a technology leader and demonstrator. As it gets deployed there, I think it’s going to open up a whole new market for us. You said, we anticipate $250 million of orders by the end of this decade and $500 million by the middle of next decade. Make sure my number’s right.

Unidentified speaker: Thanks. The point on site engineering leading to orders in 2026, I just wanted to understand that a bit more. Are you seeing that accelerate, like the time shortened from the NRC? What was the commentary around site engineering that gives you a lot of positivity on 2026 orders?

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Yeah, if you go back and you take a look at the timeline that we provided, and this is a Westinghouse Electric Company published timeline for the specific events that will precede the construction of a plant and then all the way through completion, site engineering is one of the last phases that they go through, working with the customer, defining how the plant’s going to go in, how the technology is going to fit in that plant. At the end of the site engineering, they then commence the construction of the plant. When they complete these site engineering contracts, these engineering service agreements that they’re currently operating under, which are supposed to come to conclusion at the end of the year for Poland and shortly thereafter for Bulgaria, the next step is the placement of the engineering procurement and construction contract between Westinghouse Electric Company and its customer.

Our RCP orders will follow that shortly thereafter.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: I think we just had one more question. We’ll take it, and then we’ll wrap.

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Keep in mind, those are Poland and Bulgaria. It’s not tied to anything with the NRC, obviously.

Unidentified speaker: Yeah, I was wondering if you had any perspective on the cost of new nuclear capacity these days, whether it be Poland or Bulgaria, and what that could mean for the United States.

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: I think that is where the new regulatory environment that has not just been spurred by these executive orders. If you go back to our May 2024 Investor Day, we had a leader of the Nuclear Energy Institute as a guest on the panel talking about the NRC realizing they need to streamline the regulatory environment for everything from getting sites kicked off to the running of sites to make nuclear be able to fall in and be affordable across other energy sources. I think these executive orders have put extra oomph behind it. I think the new administration is surely putting a strong focus on this. There’s a lot going on. Whether that’s with the funding streams, trying to accelerate fuel manufacturing, workforce development, there’s a lot of things going on to make that entire nuclear build-out realistic and doable.

The executive orders are a really good approach to attacking that from a lot of different angles.

Christine Liwag, Aerospace & Defense Analyst, Morgan Stanley: Thank you very much. This concludes our session on Curtiss-Wright.

Lynn Bamford, Chair, President, and CEO, Curtiss-Wright: Thank you very much.

K. Christopher Farkas, CFO, Curtiss-Wright: Thank you.

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