CURTISS WRIGHT CORP (CW)

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Naval & Power

The following tables summarize sales, operating income and margin, and new orders within the Naval & Power segment.

Components of sales and operating income increase (decrease):

Sales in the Naval & Power segment are primarily to the naval defense and power & process markets, and, to a lesser extent, the aerospace defense market.

Sales during the three months ended March 31, 2026 increased $69 million, or 21%, to $402 million from the prior year period. In the naval defense market, sales increased $35 million primarily due to the timing of production on the Virginia-class and Columbia-class submarine programs, as well as higher sales of aftermarket fleet services. Sales in the power & process market increased $25 million primarily due to higher sales of commercial nuclear products supporting the maintenance of existing operating reactors and transition from development to the initial prototype stage on next-generation advanced reactors. In the aerospace defense market, sales increased $10 million primarily due to higher sales of arresting systems equipment supporting various international customers.

Operating income during the three months ended March 31, 2026 increased $18 million, or 43%, to $60 million, and operating margin increased 230 basis points from the prior year period to 14.9%, primarily due to favorable overhead absorption on higher sales as well as favorable product mix. These increases were partially offset by higher investment in research and development.

New orders during the three months ended March 31, 2026 increased $85 million, or 16%, from the prior year period to $616 million, primarily due to an increase in orders for naval defense and commercial nuclear products.

SUPPLEMENTARY INFORMATION

The table below depicts sales by end market and customer type, as it helps provide an enhanced understanding of our businesses and the markets in which we operate. The table has been included to supplement the discussion of our operating results.

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CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Aerospace & Defense markets

Sales during the three months ended March 31, 2026 increased $79 million, or 14%, to $641 million, primarily due to higher sales across all markets. Sales in the aerospace defense market increased primarily due to higher sales of embedded computing and avionics equipment, arresting systems equipment supporting various international customers, and sensors products. The ground defense market benefited primarily from higher sales of electromechanical actuation equipment. Sales increases in the naval defense market were primarily due to the timing of production on the Virginia-class and Columbia-class submarine programs, as well as higher sales of aftermarket fleet services. In the commercial aerospace market, sales increased primarily due to higher OEM sales of actuation equipment, sensors products, and surface treatment services on narrowbody and widebody platforms as well as higher sales of aerospace instrumentation equipment to OEM customers.

Commercial markets

Sales during the three months ended March 31, 2026 increased $30 million, or 12%, to $272 million. In the power & process market, sales increased primarily due to higher sales of commercial nuclear products supporting the maintenance of existing operating reactors and transition from development to the initial prototype stage on next-generation advanced reactors. Sales in the general industrial market benefited primarily from higher sales of industrial vehicle products to off-highway vehicle platforms.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Use of Cash

We derive the majority of our operating cash inflow from receipts on the sale of goods and services and cash outflow for the procurement of materials and labor; cash flow is therefore subject to market fluctuations and conditions. Most of our long-term contracts allow for several billing points (progress or milestone) that provide us with cash receipts as costs are incurred throughout the project rather than upon contract completion, thereby reducing working capital requirements. In some cases, these payments can exceed the costs incurred on a project.

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CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

Net cash used in operating activities decreased $33 million from the prior year period, primarily due to higher cash earnings and improved working capital in the current period.

Net cash used in investing activities decreased $13 million from the prior year period, primarily due to additional consideration paid in the prior year period pertaining to our I&C Solutions acquisition.

Net cash used in financing activities decreased $91 million from the prior year period, primarily due to the repayment of our 3.85% Senior Notes in February 2025. Refer to the "Financing Activities" section below for further details.

Financing Activities

Debt

The Corporation’s debt outstanding had an average interest rate of 3.8% for both the three months ended March 31, 2026 and 2025. The Corporation’s average debt outstanding was $965 million and $1,021 million for the three months ended March 31, 2026 and 2025, respectively.

Credit Agreement

As of March 31, 2026, the Corporation had approximately $29 million in letters of credit supported by the credit facility. The unused credit available under the credit facility as of March 31, 2026 was $721 million, which could be borrowed without violating any of our debt covenants.

Repurchase of common stock

For the three months ended March 31, 2026, the Corporation repurchased approximately 22,000 shares of its common stock for $14 million. For the three months ended March 31, 2025, the Corporation repurchased approximately 42,000 shares of its common stock for $14 million.

Cash Utilization

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.

Debt Compliance

As of the date of this report, we were in compliance with all debt agreements and credit facility covenants, including our most restrictive covenant, which is our debt to capitalization limit of 60%. The debt to capitalization limit is a measure of our indebtedness (as defined in the notes purchase agreement and credit facility) to capitalization, where capitalization equals debt plus equity, and is the same for and applies to all of our debt agreements and credit facility.

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CURTISS-WRIGHT CORPORATION and SUBSIDIARIES

PART I - ITEM 2

MANAGEMENT’S DISCUSSION and ANALYSIS of

FINANCIAL CONDITION and RESULTS OF OPERATIONS, continued

As of March 31, 2026, we had the ability to borrow additional debt of approximately $2.9 billion without violating our debt to capitalization covenant.

CRITICAL ACCOUNTING POLICIES

Our condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by the application of our accounting policies. Critical accounting policies are those that require application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our 2025 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on February 12, 2026, in the Notes to the Consolidated Financial Statements, Note 1, and the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") begins with an overview of our company, followed by economic and industry-wide factors impacting our company and the markets we serve, a discussion of the overall results of operations, and finally a more detailed discussion of those results within each of our reportable segments.

COMPANY ORGANIZATION

Curtiss-Wright Corporation is a global integrated business that provides highly engineered products, solutions, and services mainly to A&D markets, as well as critical technologies in demanding commercial nuclear power, process, and industrial markets. We maintain competitive positions in the majority of our key A&D and commercial end markets through engineering and technological leadership, consistent investments in research and development, precision manufacturing, and long-standing relationships. We continue to leverage our teams’ collaborative efforts and the strength of our combined portfolio, while also seeking to build upon cross-market opportunities that may exist within our defense and commercial market technologies.

Market Analysis and Economic Factors

Curtiss-Wright’s end market strategy is to grow leading market positions through the development of highly engineered products and services to deliver long-term profitable growth. We are well positioned on high performance platforms and benefit

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from decades of engineering expertise and knowledge transfer. We are committed to investing in technologies and aligning our core competencies with new applications and evolving market trends.

The Company’s global portfolio spans across the defense, commercial aerospace, commercial nuclear power & process, and general industrial markets. Our end market diversification provides opportunities to drive growth in new products and markets through ongoing innovation and collaboration across the portfolio. It also helps mitigate the impact of volatility caused by industry and economic cycles.

Economic Factors Impacting Our Markets

Many of Curtiss-Wright’s commercial businesses are driven in large part by global economic growth, primarily led by operations in the U.S., Canada, Europe, and China, and as measured by real gross domestic product ("GDP"). Our major geographical markets have seen economic growth rates weaken considerably over the past few years, due in large part to heightened macro uncertainty including rising inflation and the implementation of tariffs. In 2024, U.S. and Global GDP both grew 2.8%. In 2025, U.S. GDP is expected to grow approximately 2.2% according to various forecasts, despite a slightly less impactful headwind of rising inflation resulting from interest rate reductions. In 2026, based on a range of forecasts, growth in the U.S. economy is expected to slightly exceed 2025 levels despite continued economic uncertainty, as economists expect the U.S. Federal Reserve to implement further easing on interest rates to control inflation.

In the global environment, which is influenced by international trade, economic conditions, as well as geopolitical and tariff uncertainty, global GDP is expected to grow approximately 2.9% in 2025, decrease to 2.7% in 2026, and remain well below 3% for the foreseeable future.

Defense

Curtiss-Wright maintains a strong presence across the naval, aerospace, and ground defense markets, which collectively represent approximately 58% of our annual net sales. Curtiss Wright provides vast platform and program diversity, where we support over 400 platforms and 3,000 programs worldwide. Our portfolio of products and services supports critical high-performance programs and platforms serving all branches of the U.S. military, in addition to a strong and growing international defense presence. The most significant portion of our defense revenues is comprised of long-term programs and primarily fixed-price contracts driven mainly by U.S. DoW budgets and funding levels. We have strong alignment to U.S. military priorities and long-term visibility on high priority platforms, most particularly shipbuilding. As a supplier of COTS and COTS+ solutions, we continue to demonstrate that defense electronics technology will enhance our ability to design and develop future generations of advanced systems and products for high performance applications.

Curtiss-Wright is well-positioned to grow in strong U.S. defense budget environments. In more challenging budget years, or those impacted by funding delays, the Company is well-insulated from specific program funding decisions due to the breadth of our portfolio, which consists of unique, sole-source positions and larger, multi-year opportunities that provide continued stability. We also endeavor to capitalize on work typically outsourced from defense primes when budgets are more fiscally restrained. As a result, the Company has historically demonstrated solid growth in this market, particularly when including acquisitions, and has exceeded the average growth rate of the base U.S. defense budget over the past 20 years through various cycles and administrations. Our performance is supported by a strong backlog, especially in naval defense.

In the naval defense market, we expect continued funding for U.S. shipbuilding programs, which have received strong bipartisan support from Congress, in addition to supplemental maritime industrial base funding to support facility expansion and technology modernization initiatives. Of note, we are recognizing significant production revenues on the Ford class aircraft carrier, Columbia class and Virginia class submarines, and numerous surface ship platforms, as well as development revenues on the future generation SSN(X) submarine. We have a long legacy of providing products that support nuclear propulsion systems on naval vessels. In addition, through our service centers, we are a provider of ship repair and maintenance for the U.S. Navy’s Atlantic and Pacific fleets. In the aerospace defense market, we expect to benefit from increased funding levels supporting the global market for manned and unmanned military aircraft, particularly Command, Control, Computers, Communications, Cyber, Intelligence, Surveillance, and Reconnaissance ("C5ISR"), electronic warfare, encryption, unmanned systems, and communications programs. We also design and manufacture high-technology data acquisition and comprehensive flight test instrumentation systems, as well as critical aircraft arresting systems equipment. In the ground defense market, we are a supplier of advanced tactical communications solutions for battlefield network management, including COTS-based rugged, small form factor communications systems and integrated network communications management software. We are also well positioned with our electronics stabilization systems equipment supporting ground combat and tactical vehicles, particularly in the international ground defense market. Through continued innovation as well as incremental research and development

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investments, Curtiss-Wright maintains strong alignment with numerous high growth U.S. military priorities, modernization efforts and emerging technological trends, including security, cyber, hypersonics, and the net-centric connected battlefield. In addition, as a leading supplier of MOSA-based solutions, Curtiss-Wright remains well aligned with the best-in-class open standards-based architectures within the industry, and the critical mandates supporting major defense acquisition programs.

The U.S. government began its FY2025 fiscal year on October 1, 2024 under a continuing resolution ("CR"), which eventually led to a historic full-year CR with a base budget of approximately $840 billion, up slightly year-over-year, and a fully discretionary budget of approximately $895 billion. In addition to the longest shutdown in modern history, the government began its FY2026 fiscal year on October 1, 2025 under a CR to allow for more time to negotiate a full-year funding deal. The FY2026 Defense Appropriations Act was officially passed in February 2026, with base levels consistent with FY25 budget funding. In addition, the President’s FY2026 Budget Request included $150 billion in overall funding approved by Congress under the OBBBA, $113 billion of which is anticipated to support FY2026. This funding has the potential to drive more than 13% topline growth over the FY2025 enacted budget to a discretionary defense budget approaching $1 trillion. Key priorities include naval shipbuilding, with a focus on improving the maritime industrial base, tactical battlefield communications and networking, vehicle modernization, tactical aircraft modernization, and Golden Dome, all of which are anticipated to receive strong funding and provide numerous growth opportunities for Curtiss-Wright in 2026 and beyond.

Looking ahead, the DoW has yet to release a future year defense plan ("FYDP") through FY30, which is typically meant to cover longer-term spending priorities aimed at improving the defense industrial base and national security, modernization, and countering China as the “pacing challenge” in the global environment. However, there have been initial discussions about additional reconciliation funding for FY27.

We also see continued strong growth in non-U.S. military spending, supported by a renewed, global focus from NATO and allied countries in light of Russia’s invasion of Ukraine, as well as the continued threat from China. NATO’s Secretary outlined a ten-year commitment to ramp up NATO allies’ investment to 5.0% of GDP per year on defense (previously 2.0%), with a goal to reach 3.5% of GDP spent on core (or hard) military spending and 1.5% of GDP for critical infrastructure, cybersecurity, and other defense measures. Today, Curtiss-Wright’s total direct foreign military sales represent approximately 10% of the Corporation’s total revenues. International markets also represent a growing portion of overall sales for defense prime contractors, creating additional growth opportunities for Curtiss-Wright.

Commercial Aerospace

Curtiss-Wright derives revenue from the global commercial aerospace market, principally to the commercial jet market, and to a lesser extent the regional jet, business jet, and commercial helicopter markets. Our primary focus is OEM products and services for commercial jets, which represent approximately 90% of our sales in this market and are highly dependent on new aircraft production from our primary customers, Boeing and Airbus. We have significant content on the majority of the commercial aircraft programs, where our business is more leveraged to narrowbody (~60%) than widebody (~40%) commercial aircraft. We provide critical equipment supporting these platforms, including actuation, high-temperature and high accuracy sensors, flight controls, and other sophisticated electronics, as well as surface treatment services such as shot and laser peening, and specialty coatings utilized on highly stressed components of turbine engine fan blades and aircraft structures. Curtiss-Wright’s exposure continues to grow on Airbus platforms as we expand the reach of our electromechanical actuation business and pursue opportunities to provide high temperature sensors used in the hottest sections of the engine. Additionally, the Company has expanded its offering of flight data recorder technology to support the FAA's 25-hour safety mandates.

Despite economic uncertainty, global air travel reached record levels in 2025 and has steadily grown since the 2020 pandemic. The key drivers in the commercial aerospace market are passenger travel and freight logistics, along with the demand for and delivery of new aircraft to replace the existing, aging fleet. The prolonged production up-cycle experienced in the prior decade was driven by increases in production by Boeing and Airbus on both legacy and new aircraft, particularly narrow-body aircraft. Additionally, sustained low oil prices contributed to declining fuel prices, which in turn led to cheaper airfares for consumers and increased passenger growth.

While we closely monitor these industry metrics, our success and future growth in the commercial aerospace market is primarily tied to the anticipated growth in aircraft production rates (e.g., Boeing 737 and 787, Airbus A320 and A350), the timing of our order placement, continued partnering with aerospace OEMs on both the current fleet and the next-generation of single aisle programs and engines, and emerging opportunities to support more fuel efficient and all-electric aircraft. Overall, we expect the secular trends of electrification and decarbonization, along with tremendous customer backlog, to support a long-term ramp up in commercial aerospace production.

Commercial Nuclear Power & Process

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In the power market, Curtiss-Wright is a global supplier of nuclear reactor technologies. We derive sales from the commercial nuclear power generation market, whereby we supply a variety of highly engineered products and services, including reactor coolant pumps, control rod drive mechanisms, valves, motors, spent fuel management, containment doors, bolting solutions, enterprise resource planning, plant process controls, and coating services. We provide equipment and services to both the aftermarket and new build markets, and are aligned globally to support the entire commercial nuclear lifecycle. Today, we have content on every reactor operating in the U.S., Canada, and U.K., along with significant exposure within South Korea. Curtiss-Wright also plays a significant role in the new build market supporting the Generation III+ Westinghouse AP1000 reactor. Additionally, we are executing initiatives to leverage our capabilities into the broader conventional power generation market, capitalizing on advances in digital instrumentation and control systems, as well as next-generation SMRs and Advanced Reactor designs.

There are a number of global forces driving a resurgence in nuclear power, as it continues to become more widely accepted as a critical source to meet rising future energy demand and decarbonization commitments through the creation of clean, reliable, and affordable energy, and more recently through its potential to meet surging data-center power demand driven by AI. Within the U.S., nuclear power continues to benefit from both strong public and bipartisan government support. In May 2025, the President signed a series of Executive Orders ("EOs") titled "Reinvigorating the Nuclear Industrial Base," which focused on the importance of commercial nuclear to U.S. national security, as well as the country’s leadership in global nuclear power development and AI. Among the many highlights, these EOs are focused on stimulating growth in the industry by quadrupling U.S. nuclear capacity by 2050 from 100 gigawatts ("GW") to 400 GW; reforming and modernizing NRC regulations to promote faster licensing; prioritizing the DOE to work with the nuclear energy industry to facilitate 5 GW of power uprates to existing nuclear reactors; restarting stalled projects and half-built reactors; accelerating the deployment of advanced nuclear technologies; and supporting the construction of 10 new large reactors by 2030. In October 2025, U.S. new reactor construction was further supported by the U.S. government’s announcement that it entered into a strategic partnership to provide at least $80 billion to support the construction of new Westinghouse nuclear reactors and reinvigorate the nuclear power industrial base. Outside of the U.S., following the Russian invasion of Ukraine and the disruption that it caused to European energy markets, nuclear power is being viewed as a pathway towards energy independence and an opportunity for European economies to break free from Russian natural gas and oil.

According to the NRC, nuclear power comprises approximately 20% of all electric power produced in the U.S. today, with 94 reactors (including both Vogtle 3 and 4 AP1000 reactors) operating across 56 nuclear power plants in 28 states. Our growth opportunities for aftermarket products and services are driven by plant aging, plant closures, plant starts, requirements for planned outages, plant life extensions (from the end of their original 40-year operating lives to 60-year and now 80-year lives via subsequent license renewals), the levying of regulatory requirements, suppliers abandoning the commercial nuclear market, and plants seeking technology and innovation advances, such as digitalization, that further enable plant modernization.

The U.S. market continues to experience strong bipartisan support for nuclear power, with previous significant investments through the Civil Nuclear Credit Program (part of the Infrastructure Bill) and nuclear power production tax credits (provided by the Inflation Reduction Act), and, more recently, through proposed nuclear reactor restarts focused on helping to preserve and expand the existing U.S. reactor fleet. As a result, we have experienced and continue to expect increased opportunities for our vast portfolio of advanced nuclear technologies to aid safety, extend the reliability, and ensure the ongoing viability of U.S. nuclear plants. We also continue to expand Curtiss-Wright’s presence in Government Nuclear by providing equipment, systems, and construction products, such as safety-related control systems and plant performance and monitoring equipment, to key customers, including the Idaho National Laboratory and other government sites. Outside of the U.S. market, as international plants age, we foresee numerous opportunities to help solve operators’ needs to prevent obsolescence through plant safety and technology upgrades, plant life extensions, and upgrades of computer systems, and we continue to grow our relationships throughout Canada, Europe, and South Korea, among others.

In the new build market, we also play a significant role supporting the Westinghouse AP1000 reactor, for which we are a supplier of reactor coolant pumps, as well as a variety of ancillary plant products and services. On a global basis, nuclear plant construction remains active. According to the World Nuclear Association, there are more than 70 new reactors under construction in 15 countries, with nearly 120 additional reactors planned and more than 300 others proposed over the next several decades. We continue to expect to play a role in new build nuclear plant construction, and remain aligned with Westinghouse in their pursuits. Curtiss-Wright's growth in the new build market will be driven by new AP1000 orders, with the potential for 20 to 25 reactors to be built in Central and Eastern Europe, along with at least 10 reactors proposed to be built in the United States. This presents a tremendous opportunity to drive Curtiss Wright's long-term growth, as Poland, Bulgaria, and the U.S. are expected to begin construction of new plants before the end of the decade.

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Backed by strong funding and legislative support, the U.S. Department of Energy previously allocated $3.2 billion for advanced nuclear reactors through its Advanced Reactor Demonstration Program ("ARDP") to accelerate the development and demonstration of SMRs and advanced reactors through cost-shared partnerships with U.S. industry. The nuclear industry is also benefiting from an influx of investment from major technology companies including Amazon, Microsoft and Google to support electricity production to power data centers. We continue to grow our exposure in this market and are actively engaged with all major 300MW+ reactor designers to develop partnerships and secure content for the design and development of critical systems and equipment expected to be deployed globally. According to a 2022 Nuclear Energy Institute ("NEI") survey, its member utilities see a role for more than 90 gigawatts of nuclear power in support of their decarbonization goals, which translates to the potential for 300 new SMRs by 2050, and represents only a fraction of the potential global demand for these technologies. We anticipate SMR design and development will begin to shift to prototypes as soon as 2026 and transition to initial production orders by the end of this decade before reaching a steady-state of production by the middle of the next decade, providing a tremendous long-term growth opportunity.

In the process market, we derive revenue from the oil and gas, chemical, and petrochemical industries through severe-service pump and valve products, and surface treatment services, in which the majority of our sales are to the downstream markets. Sales in these industries are driven by global supply and demand, crude oil prices, industry regulations, and the natural gas market, with growth rates in this market closely linked to global GDP. We maintain a global maintenance, repair, and overhaul (MRO) business for our operation-critical, pressure-relief valve technologies as refineries opportunistically service or upgrade equipment that has been operating at or near full capacity. Following the pandemic, oil prices generally stabilized, spurring both increased MRO spending and turnaround activity particularly for industrial valves and some CapEx-driven project opportunities, as oil & gas companies reinvested to meet rising demand and depleted reserves. Despite some initial disruption at the start of the Ukrainian/Russian war, global supply generally stabilized, as industry worked to preserve and increase capacity for non-Russian alternatives. Within the past year, geopolitical tensions and tariffs have led to reduced production and capital spending. Over the long run, we believe improved economic conditions and continued global expansion will be key drivers for future growth of our severe service and operation-critical valves serving the process industry.

Aside from our traditional valves offering, the Company is also advancing several subsea pumping development initiatives, working with industry leaders to meet the growing demand for more reliable pumping systems in deep sea drilling and off-shore production facilities. We have leveraged our legacy expertise in naval defense pump technology to crossover into this adjacent market and anticipate significant production orders to begin materializing by the middle of the next decade.

General Industrial

We derive revenue from our widely diversified offering to the general industrial market, which primarily consists of electronic sensors and control systems, electro-mechanical actuation, and surface treatment services. We supply our products and services to numerous OEMs and aftermarket industrial customers, including the transportation, commercial trucking, off-road equipment, agriculture, construction, material handling and automotive industries, which lowers the risk associated with any specific headwinds or economic cycles across the various markets in which we compete. Our growth in these markets is typically aligned with changes in global GDP rates and industrial production, with the majority of our sales driven by customers in North America and Europe.

We have developed long-standing relationships with our customers and provide technologies that promote efficiency, safety, reduced emissions, and longevity. One of the key drivers within our general industrial market is our focus on electronification and electrification, where our electronic sensors and controls systems products serve the on-and-off highway, medical mobility, and specialty vehicles markets. Notable products include electronic throttle controls, shift controls, joysticks, power management systems and power electronics, charge switching units and traction inverter systems, enabling us to provide a full suite of in-cab operator control systems to our customers. Increased industry demand for electronic control systems and sensors has been fueled by the need for improved operational efficiency, safety, repeatability, enhanced functionality and connectivity, and reduced emissions with greater fuel efficiencies to customers worldwide. Key to our future growth is expanding the human-machine interface ("HMI") technology portfolio and providing a complete system solution to our customers. Existing and emerging trends in commercial vehicle safety, emissions control, and improved driver efficiency are propelling commercial vehicle OEMs toward higher performance subsystems. These trends are accelerating the evolution from discrete HMI components towards a more integrated vehicle interface architecture. Growth opportunities also exist with a range of intelligent actuators for factory automation and robotics and digitalization, which help our customers quickly leverage data and utilize analytics within the Internet of Things environment, while also driving improved efficiency of plant operations. Meanwhile, our surface treatment services, which include shot and laser peening, engineered coatings, and analytical testing services across an extensive global network, are used to increase the safety, reliability, and longevity of components operating in harsh environments. Sales are primarily driven by global demand from general industrial customers.

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In the long term, the global drive towards electrification and electronification, potential government regulations for emissions, investment in clean energy technologies, and advancements in robotics and automation, along with consistent new product introductions and market penetration will provide steady growth opportunities for Curtiss-Wright’s technologies serving this market.

RESULTS OF OPERATIONS

The following MD&A is intended to help the reader understand the results of operations and financial condition of the Corporation for the year ended December 31, 2025, as compared to the year ended December 31, 2024. Discussion and analysis of our financial condition and results of operations for the year ended December 31, 2024, as compared to the year ended December 31, 2023, is contained in our 2024 Annual Report on Form 10-K, filed with the SEC on February 13, 2025.

Analytical Definitions

Throughout management’s discussion and analysis of financial condition and results of operations, the terms “incremental” and “organic” are used to explain changes from period to period. The term “incremental” is used to highlight the impact that acquisitions and divestitures had on the current year results. The results of operations for acquisitions are incremental for the first twelve months from the date of acquisition. The definition of “organic” excludes the effects of costs associated with our 2024 Restructuring Program and foreign currency translation.

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Components of sales and operating income growth (decrease):

Sales for the year increased $377 million, or 12%, to $3,498 million, compared with the prior year period. On a segment basis, sales from the Aerospace & Industrial, Defense Electronics, and Naval & Power segments increased $44 million, $108 million, and $225 million, respectively. Changes in sales by segment are discussed in further detail in the results by business segment section below.

Operating income for the year increased $105 million, or 20%, to $634 million, and operating margin increased 120 basis points compared with 2024. In the Aerospace & Industrial segment, increases in operating income and operating margin were primarily due to favorable overhead absorption on higher sales, the benefits of the Company's restructuring initiatives, and favorable foreign currency translation, partially offset by favorable mix. Operating income and operating margin in the Defense Electronics segment increased due to favorable absorption on higher sales, the benefits from both our operational excellence and restructuring initiatives, and favorable mix on defense electronics products. In the Naval & Power segment, operating income increased primarily due to favorable overhead absorption on higher sales, while operating margin was negatively impacted primarily by first year purchase accounting costs associated with our acquisition of I&C Solutions and unfavorable mix.

Non-segment operating expense for the year decreased $2 million, or 4%, to $42 million, primarily due to lower corporate costs in the current period.

Interest expense for the year decreased $2 million, or 4%, to $43 million, primarily due to the repayment of our $90 million 3.85% Senior Notes in February 2025.

Other income, net for the year decreased $9 million, or 23%, to $30 million, primarily due to lower interest income and higher overall pension costs in the current period.

The effective tax rate of 21.9% for the year ended December 31, 2025, decreased as compared to an effective tax rate of 22.4% in the prior year period, primarily due to tax benefits associated with our legal entity restructuring in the prior year period.

New orders increased $357 million, or 10%, from the prior year period to $4,054 million, primarily due to the timing of naval defense orders as well as an increase in orders for commercial nuclear products in the Naval & Power segment. New orders also benefited from an increase in orders in the Aerospace & Industrial segment for sensors and electromechanical ("EM") actuation products within our A&D markets as well as general industrial products. These increases were partially offset by the timing of orders for aerospace and ground defense equipment in the Defense Electronics segment, including embedded computing and tactical communications products. Changes in new orders by segment are discussed in further detail in the "Results by Business Segment" section below.

Comprehensive income (loss)

Pension and postretirement adjustments within comprehensive income during the year ended December 31, 2025 were a $1 million gain, compared to a $14 million gain for the prior year period. The gain in the current period was primarily attributed to higher asset returns. The gain in the prior period was primarily attributed to increases in the discount rate.

Foreign currency translation adjustments during the year ended December 31, 2025 resulted in a comprehensive gain of $68 million, compared to a comprehensive loss of $44 million in the comparable prior period. The comprehensive gain in the current period was primarily attributed to increases in the British Pound and Canadian Dollar, while the comprehensive loss in the prior year period was primarily attributed to decreases in the British Pound and Canadian Dollar.

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RESULTS BY BUSINESS SEGMENT

Aerospace & Industrial

Sales in the Aerospace & Industrial segment are primarily generated from the commercial aerospace and general industrial markets and, to a lesser extent, the defense markets.

The following tables summarize sales, operating income and margin, new orders, and backlog within the Aerospace & Industrial segment.

Components of sales and operating income growth (decrease):

Sales increased $44 million, or 5%, to $977 million, from the comparable prior year period. In the commercial aerospace market, sales increased $34 million primarily due to higher demand for sensors products and surface treatment services on various narrow-body and wide-body platforms. Sales in the ground defense market increased $16 million primarily due to higher sales of EM actuation equipment. In the aerospace defense market, sales increased $8 million primarily due to higher demand for actuation equipment and surface treatment services on various domestic and international fighter jet programs. These increases were partially offset by lower sales of industrial vehicle products to off-highway vehicle platforms in the general industrial market.

Operating income increased $18 million, or 12%, to $166 million from the comparable prior year period, and operating margin increased 110 basis points to 17.0%, primarily due to favorable overhead absorption on higher sales, the benefits of the Company's restructuring initiatives, and favorable foreign currency translation, partially offset by unfavorable mix.

New orders increased $57 million as compared to the prior year, primarily due to an increase in orders for sensors and EM actuation products within our A&D markets as well as increase in orders for general industrial products.

Defense Electronics

Sales in the Defense Electronics segment are primarily to the defense markets and, to a lesser extent, the commercial aerospace market.

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The following tables summarize sales, operating income and margin, new orders, and backlog within the Defense Electronics segment.

Components of sales and operating income growth (decrease):

Sales increased $108 million, or 12%, to $1,019 million, from the comparable prior year period. In the ground defense market, sales increased $38 million primarily due to the timing of domestic sales of embedded computing equipment. Sales in the aerospace defense market increased $35 million primarily due to higher sales of embedded computing equipment on various international programs as well as domestic unmanned aerial vehicle programs. In the naval defense market, sales benefited $17 million primarily due to higher sales of embedded computing equipment supporting various domestic and international programs. Sales in the commercial aerospace market increased $16 million primarily due to higher sales of our flight data recorder and avionics technology to OEM customers.

Operating income increased $53 million, or 24%, to $278 million compared with the same period in 2024, and operating margin increased 260 basis points to 27.3%, primarily due to favorable absorption on higher sales, the benefits from both our operational excellence and restructuring initiatives, and favorable mix on defense electronics products. These increases were partially offset by higher investment in research and development.

New orders decreased $82 million as compared to the prior year, primarily due to the timing of orders on aerospace and ground defense equipment, including embedded computing and tactical communications products.

Naval & Power

Sales in the Naval & Power segment are primarily to the naval defense and power & process markets, and, to a lesser extent, the aerospace defense market.

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The following tables summarize sales, operating income and margin, new orders, and backlog within the Naval & Power segment.

Components of sales and operating income growth (decrease):

Sales increased $225 million, or 18%, to $1,503 million, from the comparable prior year period. In the naval defense market, sales increased $106 million primarily due to higher demand and the timing of production on the Columbia-class and Virginia-class submarine programs, as well as higher sales of aftermarket fleet services. Sales in the power & process market increased $99 million primarily due to the incremental impact from our I&C Solutions acquisition as well as higher organic sales of commercial nuclear products supporting the maintenance of existing operating reactors and the development of next-generation advanced reactors. In the aerospace defense market, sales increased $12 million primarily due to higher sales of arresting systems equipment supporting various international customers.

Operating income increased $32 million, or 16%, to $231 million, primarily due to favorable overhead absorption on higher sales as well as the benefits from our operational excellence initiatives. These increases were partially offset by higher investment in research and development. Operating margin decreased 20 basis points from the prior year period to 15.4%, primarily due to first year purchase accounting costs associated with our acquisition of I&C Solutions, unfavorable product mix, and higher investment in research and development in the current period.

New orders increased $383 million as compared to the prior year, primarily due to the timing of naval defense orders as well as an increase in orders for commercial nuclear products.

SUPPLEMENTARY INFORMATION

The table below depicts sales by end market and customer type, as it helps provide an enhanced understanding of our businesses and the markets in which we operate. The table has been included to supplement the discussion of our consolidated operating results.

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Net Sales by End Market and Customer Type

Aerospace & Defense Markets

Sales increased $281 million, or 13%, to $2,451 million, as compared to the prior year period, primarily due to higher sales across all markets. Sales in the aerospace defense market increased primarily due to higher sales of embedded computing and arresting systems equipment supporting various international customers, as well as higher demand for actuation equipment and surface treatment services on various domestic and international fighter jet programs. Sales in the ground defense market increased primarily due to higher sales of EM actuation equipment as well as embedded computing equipment. Sales increases in the naval defense market were primarily due to higher demand as well as the timing of production on the Columbia-class and Virginia-class submarine programs as well as higher sales of aftermarket fleet services. Sales in the naval defense market also increased due to higher sales of embedded computing equipment supporting various domestic and international programs. Sales in the commercial aerospace market primarily benefited from higher demand for sensors products and surface treatment services on various narrow-body and wide-body platforms as well as higher sales of our flight data recorder and avionics technology to OEM customers.

Commercial Markets

Commercial sales increased $96 million, or 10%, to $1,047 million. Sales in the power & process market increased primarily due to the incremental impact from our I&C Solutions acquisition, as well as higher organic sales of commercial nuclear products supporting the maintenance of existing operating reactors and the development of next-generation advanced reactors. Sales in the general industrial market were essentially flat.

Liquidity and Capital Resources

Sources and Uses of Cash

We derive the majority of our operating cash inflow from receipts on the sale of goods and services and cash outflow for the procurement of materials and labor; cash flow is therefore subject to market fluctuations and conditions. Most of our long-term contracts allow for several billing points (progress or milestone) that provide us with cash receipts as costs are incurred throughout the project rather than upon contract completion, thereby reducing working capital requirements.

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