Curtiss-Wright (CW) Morgan Stanley 12th Annual Laguna Conference summary

Strategic achievements and operational resilience

• Achieved ambitious 2021–2023 financial targets despite supply chain and inflation challenges, with only a slight shortfall in free cash flow conversion at 108% versus a 110% target.

• Growth driven by strong employee commitment, operational flexibility during COVID, and deep customer relationships in critical applications.

• Implemented new processes and tools to manage semiconductor shortages and supply chain instability, especially in Defense Electronics.

• Enhanced contracting and pricing strategies, including inflation provisions, supported margin expansion in a volatile environment.

• Delivered 7.4% total growth, 4.7% organic growth, 9.6% operating income growth, and 12.5% EPS growth, with operating margins expanding by 110 basis points.

New three-year growth targets and market drivers

• Set new targets: >5% organic growth CAGR, operating income growth outpacing revenue, >10% EPS growth CAGR, and >100–105% free cash flow conversion.

• Increased R&D investment by $20 million in both 2023 and 2024 to support innovation while maintaining margin expansion.

• Aerospace and defense expected to grow mid- to high-single digits; commercial nuclear to grow at low double digits; process markets at mid-single digits.

• Growth supported by secular trends: increased NATO spending, energy independence, decarbonization, and electrification.

• Committed to generating $1.3 billion in free cash flow over three years, funding both organic growth and shareholder returns.

Defense market positioning and resilience

• Confident in outgrowing DoD budget due to alignment with key priorities like shipbuilding, battlefield modernization, and high-tech defense capabilities.

• Strong presence in fleet services and defense electronics, with strategies to extend product life and support customers during budget constraints.

• Investments in open-standard architectures (MOSA, SOSA) and R&D position the company to win new defense programs.

• Well positioned to benefit from increased NATO spending and tactical communications build-out.