Curtiss-Wright (CW) Stifel 2024 Cross Sector Insight Conference summary

Margin expansion and growth strategy

• Operating margins have expanded from single digits to over 17% in the past decade through operational and commercial excellence.

• The Pivot to Growth strategy, launched in 2021, continues to prioritize operating income growth above sales growth, implying ongoing margin expansion.

• Current guidance targets 10-30 basis points of margin expansion in 2024, despite a $20 million increase in R&D investment.

• Margin expansion could be higher if not for significant investments in future growth.

R&D investment and talent management

• R&D spending has increased by $20 million in both 2023 and 2024, outpacing sales growth.

• Investment decisions are disciplined, balancing customer-funded and internally funded R&D for maximum return.

• About 20% of employees are engineers, with ongoing efforts to attract and retain technical talent.

• Over 500 employees were added in the last three years, with 400 technical positions currently open.

• A dedicated corporate talent management group supports recruitment and best practices.

Organic growth and market drivers

• Achieved 4.7% organic growth and 7.4% total growth over the last three years, meeting high-end guidance.

• New 5%+ organic growth target is considered achievable, excluding potential AP1000 orders.

• 30% of business is in naval defense with long-term contracts and strong visibility.

• Defense electronics and foreign military sales are growing, with 20% growth in foreign direct sales last year.

• Commercial nuclear market projected to grow at low double digits, driven by energy demand and policy support.