Curtiss-Wright — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported sales of $953 million for Q3 2026, a 10% increase year-over-year from $869 million.
• Reported operating income was $188 million, up 13% from $166 million, with an operating margin of 19.7% (up 60 basis points).
• Adjusted operating income was $189 million, up 11% from $170 million, with an adjusted operating margin of 19.9% (up 30 basis points).
• Diluted earnings per share (EPS) were $3.77; adjusted diluted EPS was $3.94, up 16% from $3.40.
• Free cash flow (FCF) was $157 million, representing 108% FCF conversion; FCF decreased $19 million year-over-year due to higher capital investments and tax payments offsetting higher cash earnings.
• Net cash provided by operating activities was $180 million, down 6% from $193 million.
• Net capital expenditures were $23 million, up 36% from $17 million.
• Total assets were $5.37 billion as of September 30, 2026, compared to $5.22 billion at December 31, 2025.
• Deferred revenue increased to $643.5 million from $561.5 million.
• Total debt (current and long-term) was $957.1 million, compared to $957.9 million previously.

Guidance and Future Outlook:

• Raised full-year 2026 adjusted sales growth guidance to 8% to 10% (previously 8% to 9%), reflecting strong growth in Aerospace & Defense (A&D) and Commercial markets.
• Raised full-year 2026 adjusted operating income growth guidance to 12% to 14% (previously 11% to 13%).
• Raised full-year 2026 adjusted operating margin guidance to 19.2% to 19.4% (previously 19.1% to 19.3%).
• Raised full-year 2026 adjusted diluted EPS guidance to $15.40 to $15.60 (previously $15.10 to $15.40), representing 16% to 18% growth.
• Raised full-year 2026 free cash flow guidance to $595 million to $615 million (previously $585 million to $605 million), maintaining over 105% FCF conversion.
• Anticipates sales growth of 14% to 16% in Aerospace Defense and 9% to 11% in Naval Defense for 2026.
• Expects 13% to 15% growth in Power & Process and 3% to 5% growth in General Industrial for 2026.

Business Segments and Product Lines:

• Aerospace & Industrial: Sales of $282 million, up 14%. Growth driven by actuation equipment and sensors for fighter jet programs, OEM sales of sensors and surface treatment services for narrowbody/widebody platforms, and industrial vehicle products. Adjusted operating income up 19% to $55 million with an adjusted margin of 19.4%.
• Defense Electronics: Sales of $259 million, up 2%. Growth in aerospace defense (embedded computing for helicopters/international fighter jets) and ground defense (turret drive stabilization systems), partially offset by timing of UAV program production and commercial aerospace avionics sales. Adjusted operating income down 5% to $70 million with an adjusted margin of 27.0% due to unfavorable product mix and higher R&D investment.
• Naval & Power: Sales of $412 million, up 12%. Growth driven by Columbia-class and Virginia-class submarine programs, aircraft carrier refueling/overhaul projects, arresting systems equipment, and commercial nuclear solutions for next-generation advanced reactors. Adjusted operating income up 25% to $76 million with an adjusted margin of 18.6%.
• New orders totaled $1.1 billion, up 15% year-over-year, with a book-to-bill ratio of 1.1x.
• Backlog reached $4.6 billion, up 12% year-to-date.

Market and Competitive Landscape:

• Total A&D market sales increased 9%, while total Commercial market sales increased 11%.
• Defense markets showed strong demand, particularly in aerospace defense (fighter jets, helicopters) and naval defense (submarines).
• Commercial markets saw growth in power & process (commercial nuclear solutions) and general industrial (industrial vehicles).
• The company leverages a workforce of approximately 9,300 employees to provide engineered solutions in A&D, Commercial Nuclear Power, Process, and Industrial markets.

Risks and Challenges:

• Forward-looking statements are subject to risks including reduction in anticipated orders, economic downturns, geopolitical risks, and evolving impacts from tariffs.
• Risks include changes in government spending, inability to perform contracts at anticipated cost levels, supply chain constraints, and inflationary impacts on raw materials.
• Potential risks from failure of subcontractors or suppliers to perform contractual obligations.
• Defense Electronics segment faced margin pressure due to unfavorable product mix and higher R&D investment.

Management Commentary and Tone:

• Lynn M. Bamford, Chair and CEO, described the quarter as "strong," highlighting double-digit growth in revenue and operating income and mid-teens growth in adjusted diluted EPS.
• Management expressed confidence in delivering consistent and durable future growth, citing the strength of the product portfolio and the "Pivot to Growth Strategy."
• The company remains committed to disciplined capital allocation, deploying a strong balance sheet to support share repurchases and internal investments.

Other Key Points:

• Total share repurchases in Q3 2026 were $352 million (approximately 538,000 shares).
• The Board authorized an additional $510 million for future share repurchases in September 2026, increasing total authorization to $700 million; entering 2027, the company expects $600 million in remaining open authorization.
• The company declared a quarterly dividend of $0.26 per share.
• The company is on track to repurchase a total of $460 million in shares in 2026, in-line with the record $466 million buyback program from the prior year.
• Adjusted financials exclude first-year purchase accounting costs, restructuring program costs (2024 and 2026), and gains/losses on equity securities held for investment.