Curtiss-Wright (CW) Morgan Stanley's 14th Annual Laguna Conference summary

Capital allocation and M&A strategy

• M&A remains the top capital allocation priority, focusing on defense electronics, naval propulsion, safety systems, and commercial nuclear sectors.

• Strategic and financial fit are required for acquisitions, with a disciplined approach to valuation and willingness to walk away from overpriced deals.

• Financial targets include accretion to 19% ROS and strong cash flow, aiming to meet ROC targets by year five for long-term investments.

• Share buyback authorization increased to $700 million, with $460 million planned for the year, reflecting confidence in future growth.

• Capital allocation remains balanced between organic/inorganic investments and shareholder returns, with $2.5 billion deployed since 2021.

Alignment with government priorities and defense opportunities

• Strong alignment with U.S. defense priorities, especially in naval shipbuilding, with budgets nearly doubling for 2026-2027.

• Major content on key platforms like Virginia and Columbia submarines, and involvement in aircraft modernization and advanced threat detection.

• Well-positioned for the Golden Dome initiative, with technology relevant for sensors, effectors, and tactical communications.

• Recent $40 million award for IFPC program, with expectations for follow-on programs and continued funding despite budget uncertainties.

Financial outlook and operational execution

• Q1 and Q2 saw beat-and-raise results; Q3 expected to be flat with a strong Q4 recovery, driven by defense electronics.

• Record order books in Q2 (up 47% YoY) and continued strong orders in Q3, with healthy defense electronics pipeline.

• Supply chain improvements and advance buys ensure material availability for 2026 and planning underway for 2027.

• Revenue guidance for the year is a 4%-6% increase, with execution as the key variable.