Welcome to the Curtiss-Wright Third Quarter 2024 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. I would now like to turn the call over to Jim Ryan, Vice President of Investor Relations.

Thank you, Todd, and good morning, everyone. Welcome to Curtiss-Wright's third quarter 2024 earnings conference call. Joining me on the call today are Chair and Chief Executive Officer, Lynn Bamford; and Vice President and Chief Financial Officer, Chris Farkas. Our call today is being webcast and the press release as well as a copy of today's financial presentation is available for download through the Investor Relations section of our company website at curtisswright.com. A replay of this webcast also can be found on the website. Please note, today's discussion will include certain projections and statements that are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. We detail those risks and uncertainties associated with our forward-looking statements in our public filings with the SEC. As a reminder, the company's results include an adjusted non-GAAP view that excludes certain costs in order to provide greater transparency into Curtiss-Wright's ongoing operating and financial performance. Also note that our updated full year guidance does not include the acquisition Ultra Energy, which we anticipate closing in the fourth quarter. Any references to organic growth are on an adjusted basis and exclude foreign currency translation, acquisitions divestitures and restructuring unless otherwise noted. GAAP to non-GAAP reconciliations for current and prior year periods are available in the earnings release and on our website. Now, I'd like to turn the call over to Lynn to get things started.

Thank you, Jim, and good morning, everyone. As you saw in our results released last night, we delivered a strong third quarter performance and continued to build momentum across our businesses. We continue to invest in the future of Curtiss-Wright, including our technology, systems and infrastructure and, of course, our talent. As a result of these investments, Curtiss-Wright remains deeply aligned with the major growth vectors within our end markets and well-positioned to generate meaningful and long-term returns for our shareholders. In addition, there have been a number of exciting industry developments and announcements over the past few months, particularly in commercial nuclear, which have the potential to create tremendous value for Curtiss-Wright over the course of this decade and beyond. I'll speak to some of those opportunities in more detail later in our remarks. Overall, we remain confident in our ability to accelerate the pace of long-term profitable growth and have demonstrated considerable progress towards our 2026 Investor Day objectives. With that, I'll turn to today's presentation. I'll begin by covering the highlights of our third quarter performance, and we'll provide a few comments regarding our updated 2024 financial outlook. Then I'll turn the call over to Chris to provide a more in-depth review of our financials. Finally, I'll wrap up with some closing remarks before we move to Q&A. Starting with the highlights of our third quarter 2024 performance. Sales increased 10% year-over-year to nearly $800 million, driven by a better-than-expected performance in both our Defense Electronics and Naval & Power segments. Underscoring these results, we achieved a strong 15% growth in our Aerospace & Defense markets as well as low double-digit growth in our commercial nuclear market. Operating income increased 11% year-over-year, once again exceeding our sales growth and resulted in the 20 basis points of overall operating margin expansion to 18.7%. This performance reflected the strong growth in sales, our team's commitment to operational excellence and the initial benefits of our corporate-wide restructuring actions. Diluted earnings per share increased 17% year-over-year, which also exceeded our expectations and was primarily driven by our higher A&D sales. Free cash flow was $163 million, up 19% year-over-year, reflecting more than 140% conversion due to the improved operational performance and lower working capital. Turning to our order book and starting in our A&D markets. We continue to experience strong demand for our Defense Electronics product within our ground and aero defense market with the third quarter results reflecting higher orders for tactical communications and flight test equipment. As a result, our Defense Electronics segment achieved its highest booking quarter on record. Elsewhere, orders within our naval defense and commercial aerospace markets were relatively flat compared with the prior year, but both have demonstrated very strong growth through the first nine months of 2024. Within our commercial markets, we benefited from improved demand in our commercial nuclear aftermarket businesses, primarily driven by the fall outage season which, as expected, was more pronounced than 2023. Elsewhere, we continue to see stabilization in order trends for our industrial businesses, most notably in industrial vehicles, despite some of the challenging dynamics impacting the global off-highway market. Overall, total new orders increased 2% year-over-year in the third quarter, reflecting a solid 1.1 times book-to-bill. Furthermore, new orders for the year continue to outpace our very strong overall sales growth. As a result, our year-to-date backlog is up 16% and reached a new record of $3.3 billion. This strong demand provides us with continued confidence to support Curtiss-Wright's long-term growth outlook. Turning to the topic of capital allocation. I would like to highlight the ramp-up in our share repurchase activity during the third quarter. Curtiss-Wright typically plans for at least $50 million of annual repurchases to cover share dilution. In May, the Board approved an increase in the total available authorization to $400 million, reflecting their confidence in the company's ability to deliver profitable growth and in our strong free cash flow position. Subsequently, in September, the Board approved a request for a $100 million expansion of our 2024 share buyback program. I'm pleased to report that we immediately began to repurchase our stock and completed the $100 million program on September 30. We are now on track to complete at least $150 million of share repurchases in 2024, and we remain well-positioned to deliver a constant return to capital in our shareholders going forward. Next, I'll provide some highlights of our updated full year 2024 outlook, as shown on the right-hand side of the slide. Our growing backlog and strong operational performance have provided confidence to once again raise our overall guidance for the majority of our key metrics. We now expect sales to increase 7% to 9%, principally reflecting the improved outlook in our A&D and commercial nuclear markets, driving a 7% to 10% increase in operating income. We continue to target our operating margin expansion, while making significant investments across the business to improve our competitive positioning and strengthen Curtiss-Wright for the future. Diluted EPS is now expected to grow 12% to 15%. In addition, for the second consecutive quarter, we raised our free cash flow guide to reflect the strong year-to-date performance and higher confidence in the full year outlook. In summary, Curtiss-Wright demonstrated strong operational performance in the third quarter, and the business remains primed to deliver exceptional results for the full year. Now I would like to turn the call over to Chris to continue with our prepared remarks.

Thank you, Lynn. On slide four, I'll discuss the key factors driving our third quarter 2024 performance by segment. I'll start with Aerospace & Industrial, where overall sales rose by 4%. In the commercial aerospace market, we saw significant OEM sales growth due to increased production of the A320 and various wide-body platforms. In defense markets, we experienced solid growth in actuation equipment sales for both aerospace and naval defense, driven by production schedules for several programs. This growth was somewhat offset by lower sales in the general industrial market, mainly due to the timing of off-highway industrial vehicle sales, despite modest growth in orders mentioned earlier. Regarding profitability in this segment, we experienced favorable absorption from higher sales and a slight restructuring benefit, which was mostly offset by an unfavorable mix, including a reduced volume of higher-margin industrial vehicle products. Next, in the Defense Electronics segment, we achieved 12% sales growth, which surpassed our expectations due to strong ongoing demand for these businesses and timing of production revenues. In ground defense markets, we benefited from increased demand for our tactical communications equipment from both domestic and foreign military customers. In aerospace defense, we saw robust growth in embedded computing sales across several C5ISR programs, and we also accelerated some revenues and deliveries this quarter, primarily due to planned restructuring activities announced last quarter to support future growth. Consequently, we anticipate a sequential decline in revenues within the Defense Electronics segment as we move into the fourth quarter. Our operating performance for this segment delivered a strong 26.5% margin, up 50 basis points year-over-year, marking a five-year high due to the conversion of backlog and favorable absorption on higher revenues. Moving to the Naval & Power segment, we achieved 14% sales growth, exceeding expectations, partly due to the timing of increased development revenues affecting our profitability this quarter. In naval defense, revenues grew by over 20% driven by higher production across key platforms, including the Columbia-class and Virginia-class submarines, as well as the CVN-81 aircraft carrier programs, aided by the timing of material receipts. We also saw increased development revenues for the next-generation SSN(X) submarine program and growing demand for our aftermarket fleet services and aircraft handling systems from international customers. In the power and process market, we maintained strong demand in commercial nuclear supporting ongoing maintenance of reactors in North America, while sales in the process market remained essentially flat year-over-year. For this segment's operating performance, favorable absorption on higher revenues was partially mitigated by an unfavorable mix from a greater concentration of customer-funded development programs supporting future growth. Overall, Curtiss-Wright's third quarter showed solid absorption linked to stronger-than-expected top-line performance, resulting in a 20 basis point year-over-year operating margin increase. Regarding our full year 2024 guidance, on slide five, we now project total sales to grow between 7% and 9% due to increased expectations across several end markets. In Aerospace & Defense, we raised our outlook to reflect full year sales growth of 9% to 11%, supported by increased customer-funded development on various C5ISR programs. Despite some timing issues between the third and fourth quarters, we maintain our 10% to 12% sales growth outlook in ground defense, reflecting strong demand for tactical communications equipment. In naval defense, we now expect sales to rise by 9% to 11%, driven by robust order volume thus far in 2024. However, we expect a sequential decline in naval defense revenues in the fourth quarter due to the acceleration of submarine development revenues and timing of material receipts. For Commercial Aerospace, we increased our full year outlook to a new range of 16% to 18% growth based on our solid order book and year-to-date performance, particularly for surface treatment services. We expect to benefit from higher OEM production sales on the A320 and, more widely, on large aircraft this year, despite the impact of the Boeing strike. In summary, we forecast total sales growth in Aerospace & Defense markets to be 10% to 12% in 2024. Shifting to our commercial markets, we raised our outlook in the power and process market to a full year sales growth of 5% to 7%. We anticipate low double-digit growth in the commercial nuclear segment, primarily driven by higher U.S. aftermarket revenues, and expect a strong finish to 2024. In the process market, we slightly adjusted our outlook downward due to the timing of subsea pump development, and now project flat sales for the year, which includes expectations for lower capital project revenues. However, we remain aligned with customer expectations for subsea pump development, with the reduction in full year growth reflecting a shift towards naval programs. Lastly, in the general industrial market, we adjusted our full year outlook downward due to lower global off-highway vehicle sales, now anticipating a decline of 2% to 4%. However, we expect fourth quarter sales to see sequential improvement based on stable order trends, aligning closely with the prior year quarter. Overall, we're still targeting full year sales growth in total commercial markets of 1% to 3%. On slide six, I will outline our full year outlook by segment. In Aerospace & Industrial, despite challenges in the general industrial market, we still expect sales to grow between 4% and 6% based on the strength of our Aerospace & Defense markets. For this segment's profitability, we forecast operating income growth of 8% to 11% and an operating margin increase of 50 to 70 basis points, reaching between 16.9% and 17.1%. In Defense Electronics, we've increased our revenue guidance to 9% to 11%, largely due to the sustained strength of our order book and improved expectations in aerospace defense, where we have successfully secured funding for various R&D programs. Regarding profitability, we now anticipate operating income growth of 13% to 15% and operating margin expansion of 70 to 90 basis points, targeting a new range of 24.2% to 24.4%, which is a 20 basis point increase over prior expectations. In Naval & Power, given strong performance in both naval defense and commercial nuclear markets, we raised our revenue growth expectations to a new range of 8% to 9%. For profitability, we have updated our operating income guidance to remain flat to up 2% based on higher revenue growth, though we maintained previous margin outlooks due to ongoing unfavorable mix pressures associated with accelerated development programs for next-generation naval defense platforms. To summarize our outlook, we now expect total operating income for Curtiss-Wright to increase by 7% to 10%. Operating margins are projected to range from 17.4% to 17.6%, reflecting a year-over-year increase of over $20 million in total engineering spending. Continuing with our financial outlook, on slide seven, I will start with updated EPS guidance. We now expect full-year 2024 diluted EPS to range from $10.55 to $10.75, representing an increase of 12% to 15%, reflecting greater confidence in our outlook and a slight reduction in our share count following the completion of the $100 million share repurchase program in September. Lastly, regarding free cash flow, due to strong performance to date and improved earnings projections, we've raised our guidance to a new range of $430 million to $450 million, indicating solid growth of 4% to 9% with a free cash flow conversion rate exceeding 105%, in line with our long-term targets. Now, I would like to turn the call back over to Lynn.

Thank you, Chris. And turning to slide eight. We've positioned Curtiss-Wright for a strong finish to 2024 and remain confident in our ability to generate the 7% to 9% total sales growth supported by strength in the majority of our end markets. While we've had to navigate some challenging market conditions this year, it's the strength of Curtiss-Wright's consolidated portfolio, our ability to bring critical technologies to new markets and our well-established leadership position that enable us to continue to capture new opportunities for growth. This top-line momentum, along with our continued focus on both commercial and operational excellence while making targeted investments across the business, are all contributing to the strong increases in EPS and free cash flow again this year. We also intend to put the strength of our balance sheet to work through disciplined capital deployment, whether that's acquisitions or returns to shareholders. Under our Pivot to Growth strategy, we remain focused on supplementing our organic growth with high-quality strategic acquisitions that meet our stringent financial criteria and long-term profitable growth. Earlier this year, we announced the acquisition of Ultra Energy, which we anticipate closing in the fourth quarter. As a reminder, Ultra provides safety-critical products and services to commercial nuclear and power generation plants globally and also to the naval defense market, including the U.K. nuclear submarine fleet. We look forward to this business strengthening our core positions within our naval defense and power generation markets and opening up new doors to a wider, more global customer base. Aside from acquisitions, we anticipate completing the $150 million in total share repurchases in 2024, and we remain committed to driving consistent returns to our shareholders. Looking beyond 2024 and as communicated at our recent May Investor Day, we are dedicated to being a leader in the markets we serve and capturing new opportunities for growth across the portfolio. We continue to execute our strategy to align Curtiss-Wright to a range of key secular trends in our end markets, from the growing demand for power to support AI and data centers to the rise in global defense spending. This focus, along with ongoing industry accelerators, further supports our Investor Day outlook to grow organic revenue at a greater than 5% CAGR through 2026. One of those key accelerators is the exciting momentum in commercial nuclear, highlighted by the recent news that Microsoft, Google and Amazon are investing in commercial nuclear to power their data centers with carbon-free energy. As an example, last month, Constellation Energy announced a 20-year power purchase agreement with Microsoft to restart Unit 1 reactor at the Three Mile Island nuclear power plant to provide electricity to power Microsoft data centers. The reopening of this plant should provide an opportunity for Curtiss-Wright to once again supply our critical plant equipment and services to support the long-term operation of this reactor. We were also excited to see X-energy's recent announcement of a partnership with Amazon to accelerate the development of the XE100's advanced SMR. With Amazon's goal to bring more than 5 gigawatts worth of power online in the United States by 2039, this represents the largest commercial deployment target of SMRs to date. As a reminder, we are a strategic supplier to X-energy and are actively engaged in design and development of this reactor. We remain aligned with X-energy and all major SMR designers and are working to secure content that has the potential to range from $20 million to more than $120 million of revenue per site. In addition, we recently issued a press release to highlight the finding of a memorandum of understanding with Westinghouse to support future new build plants in Canada, including both the AP1000 large light-module reactors and AP300 small modular reactors. Overall, we're excited to see the continued support from industry, the administration and the influx of funding for major technology companies. These recent advancements provide us with increased optimism and further proof points to support the long-term goals communicated at our Investor Day of doubling this portion of our business by 2028 and for our commercial nuclear market to reach $1.5 billion in annual revenues by the middle of next decade. In closing, we're pleased with our third quarter results and remain on track to achieve a number of financial and strategic milestones in 2024, including new records for total sales, free cash flow and backlog as we execute our Pivot to Growth strategy. We look forward to delivering continued success and long-term profitable growth for our shareholders. Thank you. And at this time, I would like to open up today's conference call for questions.

The floor is now open for questions. Thank you. Our first question will come from Peter Arment with Baird. Please go ahead.

Yeah. Good morning, Lynn, Chris, Jim. Nice results. Hey, Lynn, within Defense Electronics, obviously the demand signals for embedded computing, and tactical communications have been really strong along with FMS activity. How are you guys kind of measuring our share gain activity? Because it seems like that also is maybe a factor here.

Thank you. I want to start by expressing our satisfaction with the progress in that business, including their commitment to customer satisfaction and the overall performance of the team. Achieving a record order book in the third quarter is a significant accomplishment. This success is not just a temporary boost; over the past two years, we have maintained a consistent book-to-bill ratio of over one, indicating sustained growth. We are optimistic about the future of this team. While there are certainly opportunities for gaining market share that we are actively pursuing, these do not account for the success we've seen so far. Instead, this is the result of the team's hard work and what they have built. For years, we've invested in our motion and product offerings to establish ourselves as a leader in the industry, which has helped us secure new business. The team has put in a lot of effort to enhance customer satisfaction, effectively communicate, prioritize customer needs, and deliver on them. This commitment is what drives the impressive results we are proud of.

I appreciate all that color. And then, just quickly on commercial nuclear. With all the plant life extensions that are being planned, does the low double-digit growth ever accelerate? Or how does it work from just a roadmap perspective? Just because it seems like more than half, or I think you mentioned three-quarters of the existing 94 reactors have applied for plant life extensions. It just seems like there's just a bow wave of work that's coming your way.

I believe we are currently at 80%. This doesn't necessarily mean all have applied, but they have indicated intentions to apply, so I want to clarify that. We're very pleased with the low double-digit growth, especially considering that for many years, we struggled to achieve even low single-digit growth. It's encouraging to see that improvement. Looking ahead, I believe the future is promising. Whether we will see growth beyond that remains to be seen. The restart of Unit 1 at Three Mile Island represents another plant that is catching up due to maintenance delays before its shutdown in 2019. Our team is actively engaged in this effort. Additionally, we are addressing plant life extensions in Canada and South Korea, where we have a strong presence. Although this is more of a long-term focus, we are also exploring support for Eastern European reactors transitioning away from the Russian supply chain. Overall, there are many positive developments within the group, and I feel confident that we have the right products to meet the needs for these plant life extensions.

Got it. And just lastly on nuclear, on your SMR kind of commentary, you gave a lot of details. You've got obviously a relationship with X-energy. But can you talk about just broadly how you're positioned with some of the other players?

Thank you for that. It’s really important for us to communicate to the investment community that we are working hard and are dedicated to having content across all the major small modular reactor providers. Our partnership with Westinghouse regarding the reactor coolant pumps and their intention to maximize the design of the AP1000 puts us in a strong position. We're also exploring other opportunities with them. While the reactor coolant pumps significantly contribute to our revenue, we are not solely relying on that and continue to put in effort. NuScale was the first company with which we announced content several years ago; we are still engaged with them, generating about $40 million per reactor, and are pursuing additional work. We have some upcoming announcements with TerraPower, which includes the 2ARDP customers: X-energy and TerraPower, and we are advancing our collaboration with them. Currently, we have announced only one public engagement, but we hope to share more in the future. Rolls-Royce is another company with which we have strong engagement, discussing various content opportunities related to their reactor. We anticipate that closing the acquisition of Ultra will enhance our presence in the U.K. market and open additional avenues for us. We are pleased with our progress; while we are slightly behind with GE Hitachi, we have had productive discussions and I met with their leadership recently to explore how we can strengthen our supply relationship. Our goal is to be a comprehensive solution provider because I believe there will be significant market opportunities for all these players. We also note the recent developments with Kairos and their announcement with Google. Currently, we do not have established content with them, but they are aware of our capabilities and it seems they aim to be quite vertically integrated. We intend to make clear what we can offer, so that when they require items they can't integrate, we will be in a position to provide solutions. Additionally, we are involved in smaller projects like micro-reactors, which may not yield substantial revenue, but we are committed to winning content wherever possible. Our sales and engineering teams are excelling at demonstrating our capabilities and solidifying our position in this market.

Appreciate all the details. I'll jump back in queue. Thanks, Lynn.

Thank you, Peter.

Thank you. Our next question will come from Pete Skibitski with Alembic Global. Please go ahead.

Hey, good morning, everyone.

Good morning.

Lynn, I was wondering on the aerospace defense on the guidance increase, what's the biggest driver there in terms of dynamics? Is it new builds, new build platforms that drives the growth or aftermarket growth driven by usage? Or is it mostly upgrades? I just want to get a better sense.

I say, first, welcome to the call, and thanks for picking up the coverage. So, it's a pleasure to have you here today. And I think I might actually turn that question over to Chris to give a substantial answer to your question.

Yeah. So, Pete, just to be very clear, a strong overall increase year-over-year across Defense Electronics. And not only this year, but this past year, as Lynn started off mentioning, we've had very strong orders for the technologies that we produce in the C5ISR space, the commercial costs, tactical communications equipment and flight test equipment, supporting some pretty exciting projects that are kind of going on in the defense industry and some transitions that are taking in terms of the military's approach towards Defense Electronics. So very broadly, that's what's driving this. As Lynn has mentioned, record orders again in the third quarter. The Defense Electronics segment is nearly at $1 billion in orders over the past 12 months. And as we look at the backlog for that business, despite this high growth, 13% up year-over-year. So, the future is bright. As it specifically relates to the increase that you saw here in aero defense in the third quarter guidance, most of that is relative to an increase in secured funding that the team has had regarding IR&D programs. We're working on some pretty sophisticated technologies in the aerospace defense arena. I can't really go into any more detail than that. But that shift of research and development from IR&D, which is where they started and targeted the year planning for an internal spend, going into a customer fund that will drive the bulk of the most recent change.

Okay. That's great. I appreciate the color. And just one last one for me. I guess, I think, some of what you guys do is shorter cycle business. So, I'm just wondering, are you just not seeing any negative impact really from this ongoing CR? Could you talk through that with us? Thanks.

We're currently not experiencing any significant impact from the continuing Continuing Resolution. Our backlog position remains strong, and we have indicated before that we can manage typical resolutions lasting around 50 to 60 days without feeling it. However, during a longer resolution of 180 days a couple of years ago, we did notice effects due to the halt in new program starts, particularly in our internal research and development, which usually contributes significantly to our revenue. While we're optimistic that this extended timeframe won't affect us negatively now, as of today, we remain unaffected, which reinforces our confidence in our guidance.

Great. Thanks, guys.

Thank you.

Thank you. Our next question will come from Myles Walton with Wolfe Research. Please go ahead.

Thanks. Good morning. I was wondering if we could chat a bit about margins, particularly in A&I. And when I asked, I think, at the Investor Day about the opportunity of margin expansion across the segment, I was surprised when you answered that A&I would have potentially the largest, which I guess, is what's going to play out here if you hit your implied 20%-plus margins in the fourth quarter for A&I. So, what's going on there that's allowing that kind of margin uplift? And how sustainable is that going forward?

I believe one of the main factors contributing to this is the restructuring we've undertaken. This year, we plan to invest $15 million to achieve $10 million in annualized savings, some of which will impact the A&I segment. The most significant effect is expected in the fourth quarter, likely around $3 million for the full year in that segment. We anticipate a sequential improvement in savings from Q3 to Q4. Additionally, looking at the entire year, we expect about 25% volume absorption. The business will also invest in R&D this year, anticipating a slight headwind of approximately $1 million year-over-year. That’s how we arrive at the midpoint of our range.

Okay. And then conversely, I don't think in the history your Defense Electronics has ever had a down fourth quarter sequentially. But obviously, that's what you're implying both on top line and margins. And I hear you on the pull forward. I guess, the same thing happened in the second quarter has happened here in the third quarter. But is that the case that mix is what's driving the margins back towards where you were in the first quarter? And then, I guess, from a follow-on question, the seasonality you've taken out of this year, should we expect that to continue in '25?

Yeah. So, we've talked a little bit earlier this year about the efforts that the organization had been going through to try to level load the work across the business and try to get out of a little bit of this fourth-quarter hockey stick that we've existed in for a very long period of time, which was more exaggerated over the past two to three years. And I think the team has made some good successes. And certainly, solid improvements in the supply chain from the problems that we were experiencing two years ago has helped with the level loading of that work. So, I think the team has done a great job in that regard. As you approach the fourth quarter, I mean, this really is across Defense Electronics unusual for us. As you pointed out, we don't normally have a decline in revenues. But between the pull-forwards from Q4 to Q3 to stay ahead of customer expectations while we engage in this restructuring, which is really footprint-oriented, to execute on that very strong order book and backlog that we've already talked about, that's why you're going to see the reduction. It's certainly not a sign in any way, shape or form that the demand of that business is declining. Things are very strong. But we do have to take some steps to make sure that the footprint will support that future growth. And as you look at it across Defense Electronics, you're really going to see it in two areas. You're going to see it not only within the ground defense market, right, in tactical communications, and we've had some movements there that we've already talked about earlier this year. But you'll also see it within our aerospace defense markets, and it's just largely impacting some very profitable portions of our business and some higher-margin products within the Defense Electronics portfolio. So, we are expecting to see profit margins sequentially decline from Q3 to Q4 based upon that pull-forward of work into Q3.

Okay. Yeah. No, that's crystal clear. Thanks so much.

Thank you. Our next question will come from Nathan Jones with Stifel. Please go ahead.

Good morning, everyone.

Good morning.

I'm going to follow up on the Defense Electronics questions there. Maybe if you could just provide a little more color on what you're doing in restructuring the footprint, how that impacts capacity for growth as you go forward into '25 and '26, where capacity utilization is and kind of what savings you're looking to get out of this?

We are not able to share specific details right now, but we are actively preparing for growth and expanding our global presence. This includes changes at certain sites and relocating to a larger facility within Curtiss-Wright to optimize our space and improve our operational efficiency for future growth. My experience with restructuring usually involves cost-cutting, so it's refreshing to focus on preparing for expansion. We are currently making these changes in Defense Electronics and also gearing up for future requirements in our nuclear segment later in the decade. Regarding maintaining stability, our objective is to sustain the level of operations we've established this year moving forward. This approach minimizes overtime, benefits our employees, and creates a more manageable work environment, especially during the holiday season. While perfection every year isn't guaranteed, we successfully achieved it this year and are committed to doing the same next year. While a significant spike in Q4 isn't out of the question, we hope it'll be minor given the improvements we've made. Our supply chain is stronger now than in 2019, and the adaptations we made during the pandemic have reinforced our relationships and agreements with suppliers, enabling us to control our operations better. This, along with our order patterns, positions the business favorably for the future.

My follow-up is about commercial nuclear and the small modular reactors, particularly in relation to the Amazon announcement. Can you discuss X-energy's positioning at the higher end of your revenue range? If everything remains on schedule, what potential revenue could this generate for you? I understand this pertains to developments in the 2030s, so it won't impact the short term. Additionally, do you have any insights from market intelligence regarding the potential scale of this in the 2030s and beyond? If all goes well, I imagine the Amazon announcement might be just the beginning rather than a final step. Any insights into the market would be appreciated.

We've mentioned previously that we anticipated a shift in market dynamics with data center providers accelerating the deployment of nuclear energy. Utility companies are not moving at the speed required by these providers. Amazon recently made a significant announcement, becoming an anchor investor in a $500 million capital raise, which is a great step for them as they progress with their design project. They intend to add 5 gigawatts of power to the grid, equivalent to 15 four-packs. We are targeting $120 million in this ongoing partnership with X-energy, with whom we have a strong working relationship. As we've emphasized before, our focus is to deliver for our customers and earn our place as their supplier consistently. Additionally, Amazon signed a memorandum of understanding with Dominion to facilitate the online operation of small modular reactors in Virginia, although they have not specified which one. This indicates continued growth in the sector. We are hearing discussions of more announcements from significant AI consumers, which we will see if they materialize this year. During our Investor Day, we projected that our nuclear revenues could double by 2028, reaching $1.5 billion annually by the middle of the next decade. We remain committed to these goals, but we need to see tangible proof from the industry that supports these targets. We are diligently working with our existing customers and striving to secure additional business while preparing our capacity plans to be a reliable supplier to SMR providers.

Thanks very much for taking my questions.

Thank you.

Thank you. Our next question will come from Mike Ciarmoli with Truist. Please go ahead.

Hey, good morning, guys. Thanks for taking the question. Nice results.

Hi.

Hey, Lynn. You mentioned that there are no changes to the targets. If we start to see an increase in plant life extensions or more restarts of older plants, could you give us some insight into the potential revenues we might expect? Are there significant differences in revenue from a restart? I understand you may not have much exposure with fuel loading and reloading, but any information you could provide would be helpful, as this is a common question from investors.

I understand that we've discussed this as a group, and personally, I don't anticipate a large number of additional restarts. Many plants are too far along in their shutdowns for that to be practical, although there may be a few others. I’ve seen various estimates regarding the impact of Unit 1 at Three Mile Island on Curtiss-Wright, and it certainly represents significant business. When we talk about the market potential, as we mentioned during our Investor Day, we are considering a $7 billion market up to 2050. All these developments support that market estimate, though we don't view them as additional to our target. There's a substantial potential market that we can pursue. We haven’t specified a dollar amount for plant life extensions or restarts, but it's reasonable to expect that a restart would yield more than a typical plant life extension. Maintenance has been lacking at the end of the plants' operational lives, and they deteriorate while inactive. Thus, a restart is generally more beneficial for us than a standard plant life extension. The revenue we gain from plant life extensions can vary greatly, starting from over $10 million to potentially much more if significant upgrades, like transitioning from analog to digital, are undertaken. Therefore, we've been cautious about providing specific revenue expectations for each plant as they go through these life extensions.

Got it. Can you provide any updates on the AP1000? I understand Westinghouse mentioned an MOU. Does this significantly impact your opportunities? Canada has been using CANDU reactors for a long time, and I believe they decided against the AP1000 back in 2011. Is there any significant change in Canada's approach regarding CANDU?

It's too early for us to provide a definitive answer. We don't have any specific updates from Westinghouse, but we are maintaining ongoing marketing discussions with them and exploring opportunities. They view this as a significant prospect, but their primary focus remains on the 20 to 25 potential plants in Eastern Europe. Recently, there hasn't been much new information regarding Westinghouse. In October, they extended their FEED study in Bulgaria, continuing work on that front. Additionally, in September, the Polish government announced a substantial investment of $15.7 billion for their first nuclear plant. These developments are positive signals reinforcing the areas where Westinghouse believes they will succeed, and we share that belief based on current observations. We need to be patient regarding developments in Canada. Reflecting on the chart presented during our Investor Day, which outlines the process leading to when we receive orders, the initial stage revolves around political strategy and engagement. It's still early in the process for Canada.

The only other point I want to make, Mike, is that the structure of the agreement is interesting. Westinghouse is working to strengthen its presence in Canada, and the work will actually take place there, which is important for this engagement. Additionally, Westinghouse is now under the ownership of Cameco, a Canadian company. I think the dynamics are evolving, but it's still very early in the process.

Got it. Perfect. Thanks, guys.

Thanks, Mike.

Thank you. Our next question will come from Kristine Liwag with Morgan Stanley. Please go ahead.

Hi. This is Justin on for Kristine this morning. Thanks for taking the questions.

Hey, Justin,

Maybe just one on the upcoming elections here. Lynn, if we can get your thoughts on just how you're thinking about any potential risk, I guess, both to the defense business and to the commercial nuclear outlook.

So, those are the two areas that people are examining. The positive aspect is that the support for defense spending and our efforts to regain leadership in commercial nuclear energy has shown strong bipartisan support over the years, not only during this administration but also in the previous one. It's worth noting that the ARDP program actually began during the Trump administration with the objective of restoring our global nuclear leadership, which is crucial for the United States. I believe we will see consistency in support, regardless of the political leadership. Moreover, the passage of the ADVANCE Act, which was highly bipartisan, reflects this momentum. Given the current global climate, which feels increasingly unsafe, I don't anticipate any major disruptions to defense spending. There are only modest increases projected over the next few years. We've had substantial growth in recent years, so I feel optimistic about that. There are other factors to consider, such as potential tariffs and changes in the tax code, but it's too early to predict their impact. However, with the ongoing support for defense spending in the U.S. and NATO countries increasing their contributions, I believe our business prospects remain very strong and unaffected. We will need to stay alert and adapt as circumstances evolve, but I don't see it as a significant concern.

Okay. Great. That's helpful. And then maybe if I could sneak one more in, just on M&A. You're talking capital deployment at the top of the call. Maybe just if you could provide an update on how the pipeline is shaping up. We've heard from a number of A&D peers that activity has picked up in the last few months. So, just curious if that tracks with what you're seeing out there.

Yes, I believe it does. There has been a good flow of business. Right now, our main priority is closing the Ultra deal. We are not worried about it not happening; it's just caught up in the administrative changes in the U.K., which has slowed things down more than we expected. However, we hope to finalize the deal in the fourth quarter, and we are excited about its potential impact on Curtiss-Wright. The pipeline looks promising, we executed some share repurchase, but we still have capital available. I’ll let Chris provide more insights on how we might approach this in the future.

Thanks, Lynn. I enjoy discussing the balance sheet and our current position. At the end of the third quarter, we had $440 million in cash, which was after completing a $100 million share buyback. We are set to finalize the Ultra Energy deal in the fourth quarter, which will use $200 million of that balance. Additionally, we plan to generate another $200 million. Therefore, we expect to finish the year with around $400 million in cash, with about half of that tied up overseas. We will have access to a clear line of credit, and we are well-positioned as we enter the next year, ready to explore potential opportunities with other properties on the horizon. Overall, our balance sheet is strong.

Great. Thank you both.

Thank you. Our next question will come from Bryce Sandberg with William Blair. Please go ahead.

Lynn, Chris and Jim, good morning and nice quarter.

Thank you.

Another one on the SMR opportunity. You have partnerships with NuScale, X-energy and TerraPower. As you look at the pipeline for new partnerships, won't you expect more partnerships to potentially be announced? And when would you expect the design for those SMRs to be finalized?

I believe we will announce new formal partnerships within the next three to six months. However, these situations are complex, so there's a chance I may not meet that timeline. Given our engagement with several major suppliers, that timeframe seems reasonable, but we'll have to see how things develop as the companies work out what's best for both sides. It appears that everyone is aiming to have their initial small modular reactor (SMR) producing power by 2030, 2031, or 2032. Currently, all opportunities are still in the design phase, and I expect that within the next few years, these design phases will progress to prototyping. This suggests that the designs will be largely finalized, although adjustments often happen post-prototyping. I am confident that we will make significant progress this decade, and while it may seem like a long wait, I believe that by the latter half of this decade, we will be substantially finished and moving forward to our first deployments.

Great. Thanks, Lynn. That's all for me.

Thank you.

Thank you. We'll take our next question from Tony Bancroft with Gabelli Funds. Please go ahead.

Good morning. Lynn and Chris and Jim, great job. You've obviously done an excellent job here, Lynn, with your leadership, balance sheet is strong, strong growth outlook looking ahead. You just mentioned that the pipeline is looking strong as well. Has your view changed at all on potentially doing something more transformational? You obviously just have a great backdrop here. And there's obviously a lot of acquisition potential out there maybe in the public space or something that's maybe outside your wheelhouse. Does it make sense? Maybe just to talk through your logic there. Thank you. Great job.

Thank you for the comments. We have consistently stated for four years that we are open to pursuing acquisitions that are larger than what we have done so far. For those who may not be familiar, our largest acquisition was PacStar at the end of 2020, which we often refer to in relation to our tactical communications as a positive influence for us, primarily due to their equipment. This has been beneficial. We are looking at larger acquisitions, but I hesitate to say our risk tolerance changes because we hold a high standard. We need to clearly understand how we will integrate these acquisitions and how they can leverage Curtiss-Wright’s strengths. I also consider the team's capacity and the growth potential from existing opportunities. I want to avoid overstretching our management resources. At some point, this will influence our considerations. Nevertheless, we will continue to evaluate acquisitions, balancing them with the growth we are experiencing in the commercial nuclear market, which is in the low double digits this year, and in Defense Electronics, where we are also interested in acquiring. If we do proceed with an acquisition, we need to ensure we have the capacity to manage it along with our ongoing projects. So, while there may be some slight shifts in my thinking, I still believe pursuing something larger than what we have done so far remains a viable option.

Thanks so much. Great job.

Thank you.

Thank you.

Thank you. At this time, I show no further questions in queue. I will turn the floor back to Lynn Bamford for any additional or closing remarks.

Thank you, everyone, for joining us today, and we look forward to speaking to you in February with our full year results.

Thank you. This concludes today's Curtiss-Wright earnings conference call. Please disconnect your line at this time, and have a wonderful day.