10-K: Curtiss-Wright 2025 Annual Report: Strong Growth in Defense & Nuclear

Curtiss-Wright Corporation reports robust 12% sales growth and 20% operating income increase in 2025, driven by strong performance in defense and commercial nuclear markets.

Summary

• Total sales increased 12% to $3,498 million in 2025, compared to $3,121 million in 2024.
• Operating income rose 20% to $634 million, with operating margin increasing 120 basis points from 2024.
• Net earnings increased 20% to $484,228 thousand, up from $404,978 thousand in 2024.
• Diluted earnings per share grew to $12.87 in 2025, from $10.55 in 2024.
• New orders increased 10% to $4,054 million, pushing backlog up 18% to $4.1 billion, indicating future revenue visibility.
• The Naval & Power segment led growth with an 18% sales increase, followed by Defense Electronics at 12%, and Aerospace & Industrial at 5%.
• U.S. Government sales represented 58% of total net sales in 2025, totaling $1,647 million.
• The company repurchased approximately 934,000 shares of its common stock for $465 million in 2025.
• Quarterly dividends paid totaled $0.93 per share in 2025, an increase from $0.83 per share in 2024.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a very positive report, highlighting strong financial performance, significant backlog growth, and strategic alignment with high-growth defense and nuclear markets, despite some minor order timing fluctuations and margin pressures in one segment.

Positives

• Strong overall financial performance in 2025 with 12% sales growth and 20% operating income growth.
• Significant increase in new orders (10%) and backlog (18%) to $4.1 billion, providing strong future revenue visibility.
• Robust sales growth in the Naval & Power segment (18%) driven by key submarine programs (Columbia-class and Virginia-class) and commercial nuclear products.
• Defense Electronics segment achieved 12% sales growth and a 260 basis point increase in operating margin due to higher sales and operational excellence initiatives.
• Aerospace & Industrial segment sales increased 5%, with operating income up 12% and operating margin up 110 basis points.
• Strong alignment with U.S. military priorities and long-term visibility on high-priority defense platforms, particularly in shipbuilding.
• Anticipated strong funding for U.S. shipbuilding programs and increased global military aircraft funding, including C5ISR, electronic warfare, and unmanned systems.
• Growing acceptance of nuclear power as a critical energy source, supported by strong U.S. government and bipartisan backing, with Executive Orders aiming to quadruple U.S. nuclear capacity by 2050.
• Significant opportunities in the new build nuclear market, including Westinghouse AP1000 reactors and Small Modular Reactors (SMRs), with prototypes expected by 2026 and initial production by the end of the decade.
• The company maintained effective internal control over financial reporting as of December 31, 2025, and reported no material cybersecurity incidents in 2025.

Negatives

• Other income, net decreased 23% to $30 million, primarily due to lower interest income and higher overall pension costs.
• New orders in the Defense Electronics segment decreased 8% due to the timing of orders for aerospace and ground defense equipment.
• The Naval & Power segment's operating margin decreased 20 basis points, primarily due to first-year purchase accounting costs associated with the I&C Solutions acquisition, unfavorable product mix, and higher R&D investment.
• Sales in the general industrial market were essentially flat year-over-year.
• Cash and cash equivalents decreased by $13.7 million in 2025.
• Capital expenditures increased to $90 million in 2025 from $61 million in 2024.

Risks

• Intrusion on systems could damage business, including cyber threats, data breaches, and non-compliance with privacy laws, potentially exacerbated by AI capabilities and work-from-home arrangements.
• Potential product liability risks exist from product failures, recalls, and damage to reputation, with insurance coverage potentially inadequate.
• Liability under warranty obligations, where insurance coverage may not be sufficient to cover all claims or may not be maintainable at an acceptable cost.
• Dependence on subcontractor performance and the availability and pricing of raw materials and components, including sole-source suppliers and inflationary pressures.
• Risks associated with complex manufacturing processes, including unexpected equipment failures, production delays, quality concerns, and increased costs from process changes.
• Implementing the acquisition strategy involves risks such as difficulties in identifying and executing acquisitions, increased competition for targets, integration challenges, and unforeseen liabilities.
• Future success depends on the ability to develop new technologies, with risks of delays, increased development costs, and market acceptance, including challenges related to AI development and evolving regulations.
• Operating in highly competitive markets against companies with greater resources, potential for customers to insource production, and increased international competition.
• Inability to protect the value of intellectual property rights, including patents, trademarks, and trade secrets, and potential for substantial litigation costs.
• A substantial portion of revenues depends on the continued willingness of the U.S. Government and other defense customers to buy products and services, subject to cyclical spending and political factors.
• A downturn in the commercial aircraft market due to factors like passenger traffic, fuel costs, geopolitical events, and economic conditions could adversely affect business.
• Backlog is subject to reduction and cancellation by government and commercial customers, which could negatively impact revenues.
• As a U.S. Government contractor, the company is subject to numerous procurement rules and regulations, with risks of fines, penalties, contract termination, and debarment for non-compliance.
• U.S. Government procurement practices may adversely affect cash flow or program profitability due to bidding prior to design completion, forecasting difficulties, and contract cancellations.
• Operations are subject to numerous domestic and international laws, regulations, and restrictions (e.g., False Claims Act, export controls, FCPA), with non-compliance risks.
• Any significant disruption in the commercial nuclear power industry, including delays in the development of small modular reactors, could adversely affect results.
• The nuclear business subjects the company to various regulatory and financial risks, including safety requirements, potential fines, and limitations of Price-Anderson Act indemnification.
• The airline industry is heavily regulated, and failure to comply with applicable requirements (e.g., FAA, EASA) could adversely affect operations.
• Subject to liability under environmental and health and safety laws and regulations, including potential fines, costly pollution control, and increasingly stringent standards related to climate change.
• Periodic litigation and regulatory proceedings, including asbestos and environmental exposures, intellectual property, and employment matters, could incur substantial costs and distract management.
• Climate change regulations could impose additional costs, require manufacturing process changes, or restrict operations.
• Increasing focus on environmental, social, and governance (ESG) responsibility may impose additional costs, expose the company to new risks, and impact investor perception.
• Political and economic changes in foreign countries and markets, including foreign currency fluctuations, restrictive trade policies, tariffs, and geopolitical events (e.g., Russia-Ukraine war, China-Taiwan conflict), may materially affect operating results.
• Unanticipated changes in tax provisions or exposure to additional income tax liabilities could affect cash flows and financial condition.
• Reliance on estimates when accounting for contracts that apply over-time revenue recognition, where changes in estimates could materially affect profitability.
• Future financial results could be adversely impacted by asset impairment charges, particularly for goodwill and other intangible assets.
• Current debt, and debt incurred in the future, could adversely affect business and financial position, limiting funds for other investments and increasing vulnerability to interest rate changes.
• Self-insurance for health benefits exposes the company to adverse impacts from unfavorable claims experience.
• Increasing costs of certain employee and retiree benefits (pension and other postretirement benefit plans) could adversely affect financial position, results of operations, or cash flows.
• Future growth and continued success are dependent upon key personnel, with risks of competition for talent, wage inflation, labor shortages, and difficulty retaining senior management.
• The business could be materially adversely affected if the United States were to withdraw from or materially modify certain international trade agreements (e.g., USMCA), or if tariffs or other restrictions on foreign-sourced goods were to increase.
• Global economic conditions, including inflationary pressures, rising interest rates, labor shortages, and supply chain disruptions, may adversely affect business, operating results, and financial condition.
• A percentage of the workforce is employed under collective bargaining agreements, with risks of negotiation breakdowns, increased labor costs, or work stoppages.
• Future terror attacks, war (including the Russia-Ukraine war), natural disasters, climate change-related events, or other events beyond control could adversely impact businesses, facilities, and supply chains.
• Pandemics, epidemics, or other public health emergencies could adversely impact demand, supply chain, operations, and financial results.

Future Outlook

The company anticipates continued strong funding for U.S. shipbuilding programs and increased global military aircraft funding, particularly in C5ISR, electronic warfare, and unmanned systems. Commercial aerospace production is expected to ramp up long-term, driven by electrification, decarbonization, and customer backlog. The commercial nuclear market is poised for resurgence with U.S. government support, aiming to quadruple capacity by 2050, and significant opportunities in new AP1000 reactors and Small Modular Reactors (SMRs) with prototypes expected by 2026 and initial production by the end of this decade. The process market expects growth from improved economic conditions and subsea pumping technology development. General industrial markets anticipate steady growth from electrification, emissions regulations, robotics, and automation. The U.S. economy is expected to slightly exceed 2025 growth levels in 2026, with global GDP growth remaining below 3%.

Management Comments

• "Curtiss-Wright's Pivot to Growth strategy focuses on maximizing revenue, operating income, and free cash flow growth to drive continued value creation for its shareholders."
• "We believe that Curtiss-Wright is differentiated by the strength of its combined portfolio, benefiting from long-term stability in our defense businesses and agility in our commercial businesses."
• "We are committed to continuously driving innovation and investment in technologies, while also aligning our core competencies with new applications and evolving market trends."
• "We are well positioned in the markets in which we operate, and aspire to grow our critical mass by expanding our global manufacturing capabilities, sales channels and customer relationships, while also seeking to build upon cross-market opportunities that may exist within our defense and commercial market technologies."
• "Our Operational Growth Platform accelerates the Pivot to Growth strategy by driving continued opportunities for margin expansion and savings across the portfolio which allows us to maintain steady investments in research and development ('R&D') to fuel both innovation and organic growth."
• "We also utilize a strong and healthy balance sheet to implement a disciplined capital allocation strategy prioritized by acquisitions as well as returns to shareholders, principally through share repurchases as well as dividends, which will collectively drive long-term shareholder value."
• "Through the Pivot to Growth strategy, we are building strong momentum to compound sustained profitable growth."
• "Management continually evaluates cash utilization alternatives, including share repurchases, acquisitions, and increased dividends, 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."

Industry Context

StockSavvy.ai notes that Curtiss-Wright's strong performance in defense and commercial nuclear aligns with broader industry trends of increased global defense spending due to geopolitical tensions and a renewed focus on nuclear power for energy independence and decarbonization. The company's emphasis on highly engineered products and critical applications positions it well within these demanding sectors, leveraging its long-standing expertise. The growth in SMRs and advanced reactors represents a significant secular trend that could provide substantial long-term opportunities, differentiating Curtiss-Wright from more traditional industrial players.

Comparison to Industry Standards

• The company's 2025 sales growth of 12% and operating income growth of 20% appear strong, especially compared to the forecasted U.S. GDP growth of 2.2% and global GDP growth of 2.9% for 2025, indicating outperformance relative to general economic conditions.
• The company's historical growth rate in the defense market has exceeded the average growth rate of the base U.S. defense budget over the past 20 years, suggesting a competitive advantage in securing government contracts.
• NATO allies' commitment to ramp up defense investment to 5.0% of GDP per year (from 2.0%) provides a favorable backdrop for Curtiss-Wright's international defense sales, which currently represent 10% of total revenues.
• The U.S. government's goal to quadruple nuclear capacity by 2050 (from 100 GW to 400 GW) and support for 10 new large reactors by 2030, along with the potential for 300 new SMRs by 2050, indicates a robust market opportunity for Curtiss-Wright's nuclear technologies, potentially outpacing growth in other energy sectors.

Management Changes

Corporate Governance

Legal Proceedings

• The company is involved in legal proceedings incidental to its business operations, including claims for asbestos and environmental exposures, intellectual property matters, copyright infringement, personal injury claims, employment and employee benefit matters, government contract issues, commercial or contractual disputes, and acquisitions or divestitures.
• The company continues to defend vigorously against all claims and does not believe that the disposition of any of these matters, individually or in the aggregate, will have a material adverse effect on its consolidated financial condition, results of operations, and cash flows.
• The company has been named in asbestos lawsuits but has not been found liable or paid any material sum in settlement; it believes material liability is unlikely due to minimal past use and non-friable condition of asbestos in its products.
• Insurance coverage is maintained for potential asbestos liabilities.

Stakeholder Impact

• Shareholders: Benefit from increased net earnings, diluted EPS, share repurchases, and increased dividends, aligning with the company's focus on long-term value creation.
• Employees: Benefit from competitive compensation, benefits, training, professional development, and equity-based incentive plans. Subject to strict insider trading policies and blackout periods. Workforce reductions were part of restructuring initiatives.
• Customers (Defense): Benefit from highly engineered products, solutions, and services for critical applications, supported by long-standing relationships and alignment with U.S. military priorities.
• Customers (Commercial): Benefit from products promoting efficiency, safety, reduced emissions, and longevity in commercial aerospace, nuclear power, process, and general industrial markets.
• Suppliers/Subcontractors: Their performance is critical to the company's operations, and supply chain disruptions or non-performance could impact the company's ability to fulfill contracts.
• Creditors: The company's debt levels and compliance with covenants are monitored, with significant available borrowing capacity under its credit facility.
• Regulatory Authorities: The company is subject to numerous U.S. and foreign laws and regulations (e.g., SEC, FAA, EASA, NRC, OFAC, FCPA) and is committed to compliance, which can involve significant costs and potential penalties for non-compliance.

Next Steps

• Continue implementing the "Pivot to Growth" strategy focusing on maximizing revenue, operating income, and free cash flow growth.
• Maintain steady investments in research and development (R&D) to fuel innovation and organic growth.
• Utilize a disciplined capital allocation strategy prioritizing acquisitions, share repurchases, and dividends.
• Expand global manufacturing capabilities, sales channels, and customer relationships.
• Build upon cross-market opportunities within defense and commercial market technologies.
• Actively negotiate price increases to mitigate inflationary pressures where not contractually stipulated.
• Continue developing critical subsea pumping technology for the oil and gas industry, with significant production orders anticipated by the middle of the next decade.
• SMR design and development expected to shift to prototypes as soon as 2026 and transition to initial production orders by the end of this decade.
• Expected capital expenditures of approximately $110 million to $120 million in 2026.
• Expected dividend payments of approximately $37 million in 2026.
• First Rule 10b5-1 trading plan for $60 million in share repurchases to be executed equally over calendar year 2026.
• Second Rule 10b5-1 trading plan for potential purchases of $100 million to take effect on January 2, 2026, and cease on December 31, 2026.
• The 2026 Annual Meeting of Stockholders is to be held on May 7, 2026.

Key Dates

Recommendation

The company demonstrated strong financial performance in 2025 with significant growth in sales, operating income, and net earnings, coupled with a substantial increase in backlog, indicating robust future revenue. Its strategic focus on high-growth defense and commercial nuclear markets, supported by favorable government funding and secular trends (electrification, decarbonization, SMRs), positions it for sustained profitable growth. The disciplined capital allocation strategy, including share repurchases and dividends, further enhances shareholder value. While some risks exist, the overall outlook and execution suggest a strong investment opportunity.

Keywords

Aerospace & Defense, Commercial Nuclear Power, Industrial Markets, Government Contracts, Naval Defense, Embedded Computing, Flight Controls, Surface Technology, Small Modular Reactors, SMRs, Cybersecurity, Supply Chain, ESG, Share Repurchase, Dividends, 10-K, Curtiss-Wright