Curtiss-Wright Corporation delivered a record financial performance for the full year 2025, with Q4 sales increasing 15% year-over-year to $947 million and operating margin reaching 19.7%. For the full year, the company achieved a record operating margin of 18.6% (up 110 basis points), diluted EPS growth of 21%, and record free cash flow of $554 million, representing a 111% conversion rate. Growth was driven by strong momentum in Aerospace & Defense (A&D) markets, particularly Naval Defense and Commercial Aerospace, alongside a significant rebound in Commercial Nuclear. Looking ahead to 2026, management issued confident guidance for organic sales growth of 6% to 8%, operating margin expansion to 18.9%–19.2%, and EPS of $14.70 to $15.15, positioning the company to exceed its three-year Investor Day targets.
| Metric | Value | Change |
|---|---|---|
| Q4 2025 Sales | $947 Million | +15% |
| Q4 2025 Organic Growth | N/A | +11% |
| Q4 2025 Operating Margin | 19.7% | N/A |
| FY 2025 Operating Margin | 18.6% | +110 bps |
| FY 2025 EPS Growth | N/A | +21% |
| FY 2025 Free Cash Flow | $554 Million | Record |
| FY 2025 Book-to-Bill | 1.2x | N/A |
| FY 2026 EPS Guidance | $14.70 - $15.15 | +11% to +15% |
| FY 2026 Sales Growth Guidance | N/A | +6% to +8% |
Management emphasized a robust 'pivot to growth' strategy, evidenced by an 11% organic sales increase in Q4 and record margins. They highlighted that R&D investments are growing faster than sales, specifically in next-gen embedded computing (partnering with NVIDIA and Microsoft Azure) and Small Modular Reactors (SMRs). This focus on technology reinvestment supports their ability to secure content on future platforms like the Virginia-class submarines and next-generation fighters.
A major strategic highlight is the accelerating momentum in Commercial Nuclear, driven by U.S. executive orders and global SMR development. Management noted a 'tremendous uplift' from the U.S. government's $80 billion commitment to AP1000 reactors and a goal to quadruple nuclear capacity by 2050. CW is positioning itself as a critical supplier for plant life extensions and new builds, with specific content expected on the X-energy Xe-100 reactor.
In Defense Electronics, management signaled strong alignment with top U.S. priorities like 'Golden Dome' and aircraft modernization. Despite a temporary book-to-bill dip (0.96) due to government Continuing Resolution (CR) delays, they cited a pipeline of over $100 million in delayed orders expected to close in 2026. The recent C-17 order was highlighted as a tangible sign of recovery.
Capital allocation remains a key pillar of shareholder value creation. The company executed a record $465 million in share repurchases in 2025 and increased the dividend for the ninth consecutive year. For 2026, they plan to continue offsetting dilution with $60 million in repurchases while aggressively investing in CapEx (up 25%) to support capacity expansion for the nuclear and naval defense ramps.
Operational excellence continues to drive margin expansion, contributing approximately $12 million to the P&L in 2025. Management cited 'commercial excellence' initiatives, including improved pricing and supply chain management, which allowed them to achieve record working capital efficiency (19.2% of sales). This operational discipline enables them to absorb heavy R&D investments while still expanding margins.
Guidance for the Ground Defense market calls for a 4% to 6% decline in sales for 2026, a sharp reversal from the mid-teens growth seen in 2024-2025. Management attributed this to timing delays from government Continuing Resolutions (CR) and shutdowns, which pushed orders for tactical communications out of 2025. While they believe this is temporary, the conservative outlook introduces near-term revenue uncertainty.
The Defense Electronics segment reported a book-to-bill ratio of 0.96 times for 2025, driven by the aforementioned delays. Management noted that 'lighter than anticipated demand' in this specific sub-segment led them to take a conservative stance on the 2026 guide. Investors will need to monitor if the anticipated recovery in orders materializes in the first half of 2026.
Management explicitly stated that the 2026 guidance does not include any revenue from a potential AP1000 reactor order, despite expressing confidence that an order will be received in 2026. This creates a potential 'wildcard' upside scenario, but conversely, if the order is delayed further or the ramp is slower than expected, the current guidance might represent the ceiling rather than the floor for growth.
Significant increases in capital expenditures (up nearly 50% in 2025 and another 25% expected in 2026) are pressuring free cash flow. While management maintains they can achieve record FCF ($575M-$595M) through working capital efficiency, the heavy investment cycle increases the execution risk. Any failure to maintain the 'record levels of working capital efficiency' could result in FCF shortfalls.
Supply chain risks remain a watch item, specifically regarding 'memory, high bandwidth memories and storage parts' used in AI infrastructure, as well as 'raw materials in rare earths.' While management stated supply chains were stable in 2025, these specific components are critical for their high-growth embedded computing products.
Overall: Management exhibited a highly confident and assured demeanor throughout the call, frequently emphasizing 'record' performance and 'momentum' across the business. The tone shifted from celebratory regarding 2025 achievements to pragmatic but optimistic about 2026, particularly when addressing specific headwinds in Ground Defense. Executives spoke with precision about operational drivers and strategic alignment with defense priorities.
Confidence: HIGH - Management provided specific guidance ranges, detailed margin expansion targets, and cited a record backlog of over $4 billion. Their language was decisive regarding the 'pivot to growth' strategy and the company's ability to exceed long-term targets, despite acknowledging short-term timing delays in certain defense orders.
6% to 8%
18.9% to 19.2%
$14.70 to $15.15
$575 Million to $595 Million
$110 Million to $120 Million
Hedging & Uncertainty: Management generally used strong, declarative language ('record performance,' 'outstanding,' 'poised'), but employed hedging when discussing specific near-term headwinds and external dependencies. Phrases like 'I do not think we would get ahead of what that would mean' regarding AP1000 orders and 'we are beginning the year with a more conservative outlook' for Ground Defense served to lower expectations for the first half of the year. They also used temporal hedges such as 'anticipate' and 'expect' regarding the timing of government orders, acknowledging the lack of control over federal budget cycles.
The momentum continues to build at Curtiss-Wright Corporation. - Lynn M. Bamford, Chair and CEO
We are projecting organic sales of 6% to 8%. - Lynn M. Bamford, Chair and CEO
We are beginning the year with a more conservative outlook in this market [Ground Defense]. - K. Christopher Farkas, Executive Vice President and CFO
Our initial guidance does not include an AP1000 order. - K. Christopher Farkas, Executive Vice President and CFO
We have line of sight to exceed the three year financial targets. - Lynn M. Bamford, Chair and CEO
We delivered exceptional margin expansion up 110 basis points year over year. - Lynn M. Bamford, Chair and CEO
Analyst Sentiment: Analysts were highly engaged, focusing heavily on the sustainability of defense growth, the specific mechanics of the AP1000 opportunity, and the margin structure relative to rising R&D and CapEx. Questions were probing but constructive, seeking to clarify the distinction between timing delays and structural demand changes.
Management Responses: Management responses were detailed and open, providing specific color on order delays (e.g., the C-17 order moving from 2025 to Q1 2026) and the financial mechanics of the AP1000 bell curve. They effectively used the Q&A to reinforce the 'timing' narrative regarding defense electronics and to highlight the 'conservative' nature of their guidance.
Discussion on missile defense exposure, where management clarified direct content is minor but indirect exposure via 'Golden Dome' systems is significant.
Deep dive into the AP1000 order, with management confirming it is not in the 2026 guide but expected to land this year.
Analysis of working capital efficiency, with management explaining how deferred income and supply chain negotiations are funding the CapEx increase.
Inquiry into operational excellence contributions, quantified at roughly $12 million in 2025.
Curtiss-Wright is executing at a high level, successfully pivoting to a growth-oriented profile characterized by double-digit margin expansion and strong free cash flow generation. The company is leveraged to powerful secular tailwinds in Naval Defense (submarine build-out) and Commercial Nuclear (SMRs and AP1000 restarts), which provide a multi-year growth runway. While the near-term guidance for Ground Defense appears conservative due to government budget timing, the record backlog and robust book-to-bill suggest significant upside potential as orders normalize. The disciplined capital allocation strategy, combining aggressive R&D investment with substantial share buybacks, further enhances shareholder value. We view the current valuation as attractive given the company's top-quartile margin status and clear line of sight to exceeding long-term financial targets.
Management cited a record U.S. defense budget of approximately $1 trillion and NATO commitments to increase spending from 2% to 5% of GDP by 2035. This environment supports sustained growth in A&D, particularly in foreign military sales (FMS) which grew mid-teens plus.
The industry is experiencing a 'tremendous uplift' driven by U.S. executive orders aimed at quadrupling nuclear capacity to 400GW by 2050. This includes an $80 billion commitment for 10 new AP1000 reactors and accelerated licensing for plant life extensions.
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