Curtiss-Wright Corporation (CW) Earnings Call Transcript & Summary

Well, good morning, everyone. Welcome to Curtiss-Wright's 2024 Investor Day. Thank you to all of you here participating in person as well as those on the virtual audience. On behalf of the Curtiss-Wright team here today, we're thrilled to be back in front of everyone in New York City. We have an exciting day planned for you today. And we really hope you walk away with a greater appreciation for the avenues for growth of our company and the opportunities that we have to generate long-term shareholder value. We're also pleased to provide an opportunity for you to engage with several members of our team, not only in the room today, but also downstairs with our exhibits. So I'm Jim Ryan, Vice President of Investor Relations. I've been with Curtiss-Wright for nearly 14 years, all of which has been in the Investor Relations role. And I've have never been more excited for some of the opportunities that we have ahead of us as a company. So before we begin, a couple of housekeeping items that I want to run through for those in the room. First, please silence all of your electronic devices throughout today's presentations and prepared remarks. If need be, the closest emergency exit is located out this door. We do have several exhibits set up on the first floor. Really love to have you stop by not only during the break, but also during the lunch period that we'll have -- have a good hour or so to look at some of the critical technologies. So I encourage you to stop by to see some of those. And then today's presentation and our press release with our new long-term targets is available on our website. So turning to our safe harbor. Today's presentation will include certain forward-looking statements. These statements are based on management's current expectations and are not guarantees of future performance. We detail these risks and uncertainties associated with our forward-looking statements in our public filings with the SEC. We'll also reference certain non-GAAP financial measures today. GAAP to non-GAAP reconciliations are available in the appendix of our presentation as well as on our website. So turning to today's agenda. So Lynn Bamford, our Chair and Chief Executive Officer, will kick things off with an executive overview of the company and our pivot to growth strategy. Following Lynn, she'll turn it over to Kevin Rayment, our Vice President and Chief Operating Officer; to discuss our focus on operational excellence and digital transformation. Then we'll have the opportunity to hear from several of the leaders within our segments from our Aerospace and Industrial, defense, electronics and Naval and power businesses. Jeff Troutner will begin with an overview of the Aerospace and Industrial segment and a deep dive into the commercial aerospace business. Then Brian Perry will provide an overview of the Defense Electronics segment, and he'll be followed by Dave Micha, providing an overview of the Naval and Power segment with a deep dive into the Naval Defense business. Then we'll take about a 10 to 15 or so minute break, and then we'll return with our commercial nuclear panel. We're pleased today to have several industry leaders talking about some of the tremendous growth opportunities in commercial nuclear from the aftermarket to the new build with us today. Gary Wolski from our Nuclear division will moderate that panel, in the last 10 minutes or so, we'll have audience Q&A. And please note, this will only be in-person audience Q&A for that session. After a short break to realign the stage, Kurt Mitchell will cover the remainder of our enablement Power segment with a deep dive into the commercial nuclear business. He'll be followed by our Vice President and Chief -- sorry, Chief Financial Officer, Chris Farkas, provide an in-depth review of our financials and long-term outlook, and then Lynn will prepare -- close with some closing remarks. So following the formal presentations, we'll take a slight break just to reassemble the stage for about 40 minutes or so of Q&A, involving all of our presenters. If you're attending virtually, please submit a question at any time through the virtual portal and we'll incorporate that into our Q&A session. I'll moderate and take questions from the live audience and also incorporate some of those virtual questions as well. We do please ask that you hold all of your questions for the Q&A sessions. So next, we'd like to show you a short video to highlight some of our critical technologies and advancements and some of the major growth drivers for Curtiss-Wright that lie ahead. [Presentation]

With that, thank you very much. And now it's my pleasure to introduce our Chair and Chief Executive Officer, Lynn Bamford.

Well, everyone, it's been a journey getting here, but it's great to be here. And I want to say thank you to Jim for our introduction and for everyone joining us here in the audience here live and on the webcast. Thank you for your interest in Curtiss-Wright. And also to all my Curtiss-Wright colleagues, who I know are listening in, thank you for everything you do every day. Over the next few hours, you're going to hear from several of our key leaders around both the progress we've made over the past 3 years since launching our Pivot to Growth strategy as well as the opportunity set that is before us. I especially want to say I'm excited for our panel of commercial nuclear experts that are here today to give their unique privileges on this exciting industry for Curtiss-Wright as both a policymaker, a builder and a customer, I think you're going to find the panel really interesting. And so thank you for being here. And then yes, we will get to some numbers. 3 years ago, we introduced our Pivot to Growth strategy. It's working and there's more to come. I am confident we are building strong momentum to compound sustained profitable growth, as you will hear today. To capitalize on that positive momentum, we need to constantly invest in our business, investing in people, processes and tools to make it happen. Many key enablers are in place today, but there's many more that are in the works. It's truly an ongoing effort. And these enablers are going to help us with efficiency and performance. We expect to sustain our growth by winning in strong and expanding markets with exciting new technologies and solutions. My goal is for you guys to leave here today as excited about our end markets and the role Curtiss-Wright plays in them as we are. There are tremendous opportunities on the horizon. These will be covered by our 4 general managers, and I know you will feel confident and excited about the opportunities to further accelerate compounded profitable growth. As we execute and succeed and generate more and more cash, we will stay thoughtful and disciplined as we allocate capital to serve the long-term goals of our customers, employees and shareholders. Now for those of you who are maybe newer to our story, here is Curtiss-Wright at a glance. Curtiss-Wright was listed on the New York Stock Exchange in 1929. And in just a few months, we will celebrate our 95th anniversary. So we have a long established reputation as a leading provider of highly engineered mission-critical solutions. Our products are often and must not fail safety-critical applications. With over 8,600 employees around the globe, we will remain an engineering-centric innovative company that solves the most challenging customer solutions of our customers, and that's both in the aerospace and defense market as well as commercial markets. Operating at a component and subsystem level we leverage our core technologies not only across those other markets, but we also leverage our geographical reach of over 100 companies to bring our solutions around the globe and enhance the reach. Technology and innovation is essential, but truly understanding our customers' needs without truly understanding our customers' needs. It can only take us so far. We win because we are experts and are known to solve our customers' toughest problems. That kind of understanding only comes from experience and our teams have it. Curtiss-Wright has been part of aviation in the aerospace since its inception. The same is true with naval nuclear, commercial nuclear and COTS electronics and several others as well. Each year, we build on what we've learned and share what we know and those experiences to our growing team. Knowledge and understanding help us bolster our deep customer relationships, which in turn help us anticipate customer needs, enabling us to provide trusted solutions and create value. Our strong culture supports and underpins all we do. I am extremely proud of the dedication to total integrity and excellence in all our situations as well as our ability to continuously innovate for the future. It is not easy to develop and maintain a consistent culture across the globe, and I give total credit to our local leadership as they lead by example, through operational and customer excellence and a continuous improvement mindset, while delivering strong results. And as a global engineering organization, our unique IP is at the heart of our businesses and underpins our ability to deliver solutions that enhance safety, reliability and performance. Overall, our customers know that we are invested in working with them to solve their toughest challenges, and that's truly why we win. You will hear many of these themes echoed in today's presentations as we get into the details of our markets and technologies and plans for the future. I am thrilled to have an excellent team, a truly exceptional team with me here today and would like to thank them for their leadership and helping share our story. They will each introduce themselves at the start of their presentations. They're accomplished executives that embody what we look for and see in Curtiss-Wright leaders across the company. Experts in their field with deep industry knowledge, a passion for growth and integrity and discipline to do it right. Right for our customers, our team members and our shareholders. While we are excited to share with you today how we will continue to drive profitable growth. I would like to take a minute and highlight our recent past track record. We've accomplished a lot since our last Investor Day 3 years ago. We made great progress against our 4 goals we communicated starting with our pivot to growth strategy, which focused on accelerating organic growth, operational excellence, discipline capital allocation to drive long-term profitable growth. It is working and the results I will walk through in a minute demonstrate this. The products we brought to market and are currently development have deepened and we'll continue to deepen and expand our customer relationships. Kevin will talk more about the OGP and the ongoing role it is playing in preparing Curtiss-Wright to grow successfully with continuous improvement always on our mind. And as we have worked to be transparent in our communications about the company, including some of the challenges we have overcome, today, we will outline our strategic direction going forward in that same manner. As for the specifics, we achieved 4 out of our 5 financial goals and came very close on the 5th, and these were set back in 2021. We delivered 7.4% of total sales growth landing squarely in the middle of the 5% to 10% range we targeted. I am proud that we reached near the top end of our guidance on organic growth at a 4.7% CAGR. Operating income outpaced sales growth at 9.6%. We maintained top quartile margin performance and expanded margins 110 basis points since 2020, ending last year at 17.4%. EPS grew a strong 12.5%, and lastly, free cash flow conversion just came in under our goal of 110% at 108%. I'm proud of this performance and certainly recognize the hard work of all our team members to deliver these results, and I feel I must mention that there was a pandemic and some very disruptive supply chains in the middle of this time. This strong execution was recognized. Our stock price has more than doubled since our last Investor Day. We certainly focus on continuing to build on the positive momentum and strong execution of our growth initiatives that you will hear more about today. It takes a world-class team achieve world-class results. We understand how critical attracting, retaining and developing the right people is to our company. We constantly evaluate and refine our talent programs some of them are listed here. Two, from operational excellence to improve knowledge around best practices and the skills to implement tools to modern insightful leadership training, targeted at different stages in our employees' careers, which incorporates modules and workshops around leading teams, collaborating, financial acumen and business strategy to name a few, to a targeted engineering leadership career ladder training to disciplined succession program overseen by our Board of Directors. For our most distinguished technical experts many of whom are recognized across their industries, there is a technical fellow program. These individuals are valued not only to Curtiss-Wright but often to our customers. We drive and maintain a culture that values the individual, while helping people succeed as part of a team. And speaking of team, our focused team of talent managers and recruiters is a corporate level asset, ensuring we have scale to drive best practices and focus resources on the greatest needs across the company. Growing our team by 500 colleagues over the past 3 years was a big accomplishment and that will only need to continue into the future. Cultural and training programs are truly foundational to our success. Our fantastic talent will take us into the future, but sometimes it's fun to recognize the past. 97 years ago, on this very day, Charles Lindbergh landed in Paris behind a Wright Whirlwind Engine. He chose the Whirlwind engine because of its proven reliability. Of course, the Wright Brothers first flight had only been 2.5 decades prior, it's incredible how technology advanced in that short time. Curtiss-Wright's legacy is one of innovation, and as an engineer by education and practice for roughly the first 1/3 of my career, this is an area I'm very passionate about and wanted to include in my opening remarks as one part of the OGP that I wanted to cover. We understand the critical importance of bringing new ideas and technologies to our customers and their demanding markets. This is why we continue to invest not only in R&D, but in how we generate and manage new ideas, innovative ideas in the first place. Great ideas can come from anywhere across the organization and are often times because of deep customer relationships. Curtiss-Wright's innovation system is across enterprise platform that every employee can access. Currently, there are 1,250 ideas in the innovation platform and 300 are in active development. Our procedures are built to ensure we invest in the right ideas to bring the company forward. And if we fail, we fail fast and we always learn something. An idea as an idea evolves into an R&D project, our market and customer analysis ensures the innovative -- innovation meets the needs of the future and is aligned with the greatest areas of potential for the organization. Managing a portfolio of projects across businesses and markets requires an intense focus not only on how much we invest, but also how productive our teams are. We continue to work on ways to improve efficiency, enabling us to turn even more of those innovative ideas into R&D projects and hence solutions for our customers. Our customers need solutions to keep up with the pace of change in their dynamic markets. We stand today at an early phase of a tremendous opportunity driven by several key growth drivers across the vast majority of the areas where we compete. These include naval shipbuilding, advancing technology in the battlefield, the drive for carbon-free energy as well as energy independence and the move to electrification of many things as we assess the opportunities to target our investments in innovation and R&D, as I was just discussing, we look across the near, mid- and long-term opportunity set. We plan our investments to remain a critical supplier for the next decade and beyond. The details laid out in this slide highlight just a few examples of the meaningful drivers in our markets from next-generation naval platforms to the development and build-out of small modular reactors. You will hear much more on these opportunities and many others from the leadership today. Curtiss-Wright is well positioned to win significant business in all these areas. We make investments to deliver to deliver for our customers and our shareholders. Spurred by our culture of innovation, our dedication to R&D will continue. We will make balanced targeted disciplined investments, both in core IP and tailored solutions for our customers. I'm proud that over the past 3 years, R&D investments have outpaced sales growth and we accomplished this while delivering the results I covered just a couple of minutes ago. Our business development, sales and marketing investments span the enterprise from internal systems to customer-facing content and of course, our most important asset are people. I have always believed that investments in taking your products to market must be aligned with the development investments to create maximum value. Although less discussed than R&D, it is an area of great importance, and we are advancing various aspects of how we go to market. Kevin will talk about one of these in his remarks. New and comprehensive business systems will provide tremendous and almost real-time visibility into the company, increasing efficiency and agility in how we manage the business. And when we find companies that are the right fit in our growing markets, we will not hesitate to bring them into Curtiss-Wright and create further value through synergies. Of course, we will only do so in a reasoned disciplined manner. Our capital allocation strategy associated with M&A has proven successful because we are deliberate in our actions and have a clear strategic and financial criteria to guide our decision-making. I will quickly review from a strategic fit, what we look for, and Chris will discuss the financial fit later in our presentation. Strategically, we look to acquire to bolster our portfolio and accelerate our growth. We will evaluate targets against our requirements or filters. It's a high bar, but acquiring a company with a strong and defensible market position and unique IP that aligns to our operations and markets and meets our financial criteria, ensures we accept the appropriate amount of risk while reducing the challenges of cultural and strategic fit. I want to highlight 1 example. We just hosted our Board of Directors a couple of weeks ago at ESCO, the Aircraft Resting business that we acquired just over 2 years ago. It absolutely embodies these characteristics and is also significantly beating our financial model. So great job to anybody who's listening in from that team. We look forward to continuing this practice and adding the right companies over time. So we've waited long enough, it's time to introduce our new 3-year targets carrying us through 2026. We expect to grow sales at greater than a 5% CAGR organically, continue to deliver operating income greater than sales growth, maintain top quartile margins, grow EPS at greater than a 10% CAGR, and we expect to achieve over 105% free cash flow conversion over the period. Please note there are no benefits from AP1000 orders or deliveries in this forecast. To be clear, the AP1000 business holds great promise for Curtiss-Wright, but given the potential significance to our business, it seem more appropriate and transparent to provide targets without it. Chris will talk more about the prospects for commercial nuclear growth in his remarks. We believe that while no means easy, these are achievable goals, and I hope after this morning's presentations and discussions, you all agree. I would like to now invite Kevin Rayment, our Chief Operating Officer, to add some more details around the accomplishments and forward-looking plans for operational excellence and our drive for even greater performance. Thank you.

Thank you, Lynn. Good morning, everyone. My name is Kevin Rayment. I'm the Vice President and Chief Operating Officer here at Curtiss-Wright. And I'm very excited to be back in front of the investor community again. So thank you for your time with us this morning. As you heard from Lynn a few minutes ago, the team has been executing well on our Pivot to Growth strategy. And as a senior team, we are all very proud of the progress and the achievements of our staff which we believe has been reflected by the results over the past 3 years. But as always, we will continue to want to raise the bar and I'm very excited to be sharing some of our achievements and plans with you today to drive our next phase of growth here at Curtiss-Wright. There are 4 key messages I want to cover this morning as we walk through my presentation. First, we've made great progress accelerating our Pivot to Growth strategy through our operational growth platform and see plenty of opportunity for continued growth. Second, I'm going to focus on the new tools and systems that we've deployed and are expanding to further drive our digital transformation. Third, this then enables Curtiss-Wright right to improve quality, increase flow of information, optimize our operations and connectivity across the groups. And finally, how we're fueling the next part of our growth journey by maturing these processes and systems, building momentum by having better data enables better decision-making and driving better results. Let's look first at some of our key accomplishments since 2021. We've codified our enterprise-wide operational growth platform by creating our own tools to speed up the process, making it easier to audit score our performance and track our action plans. We're utilizing more lean techniques, processes and focusing on our execution. For example, in the recent supply chain challenge associated with electronic component shortages our dedicated teams overcame significant hurdles, ensuring no line stoppages for our customers and recovering quickly from the supply chain challenges. We have refined and driven our continuous assessments at our facilities, and we're developing databases to leverage best practices across CW. Our pricing tools and focus on commercial excellence delivered significant operating margin expansion of 110 basis points since 2020 despite significant inflationary challenges. Further investment in automation and digitization has continue to drive efficiency and quality across the corporation. Our Operational Growth Platform is driving focused execution on key elements of growth and operational improvements across the enterprise. At our last Investor's Day, I talked about the specific initiatives related to each of the 8 elements of OGP. Today, I want to focus on the tools that we've deployed and the systems to accelerate our operational efficiency and pursue digitization across the portfolio. We're using a number of external software packages and investing internally to ensure the right systems are deployed to help Curtiss-Wright grow. And today, I'm going to give examples in strategy business development and sales, commercial excellence, lean, talent and also our business optimization. These tools have been deployed and are beginning to pay dividends. I'm excited about how much more they can deliver and what we can achieve through collaboration as an organization and maximize our capital investments. Looking at tools and systems we've implemented in our manufacturing operations. One of our key drivers for manufacturing is the use of digitalization to optimize efficiency. We've continued to expand company-wide real-time information systems with over 200 now deployed and increasing every day as we continue to share best practices across the business groups. These systems provide us up-to-date performance data to effectively manage KPIs, driving our efficiency reducing our costs and boosting our overall performance. And we've implemented multiple new software tools. A good example of this is using AI in inventory management to effectively manage our inventory and supply chain, driving greater working capital management and improved delivery performance. Robotics and automation has also been part of our journey as we've deployed robots at a number of our surface technology sites. We're now using this in-house team to help evaluate and deploy robots at other sites, making the appropriate process and investment decisions to drive efficiency and quality. And we've seen some impressive results. An example you see on the graph here on the right-hand side of a measurement and sorting robot, we were able to reduce our processing time by 90%. Now turning to the tools and systems we're implementing in our sales and commercial operations. CRM is not new. But as you can imagine, many businesses struggle to get a unified approach, especially when companies span different markets, geographies and have grown through acquisitions. We're in the process of deploying a unified system across the entire business, standardizing our approach create a common language to better track business opportunities, share information and collaboration and drive sustainable long-term growth. The system will also provide us with better metrics and analytics linking common business opportunities and as Lynn said earlier, helping us create standard interfaces to our market-facing websites. It has also enabled us to record bookings over the past 2 years. As Lynn also mentioned, the tools that we've put into place have enabled us to enhance our incentive programs by focusing on organic growth. In addition, we've continued to drive commercial excellence across the teams. We've added new contracts and systems that uses AI to review terms and conditions to ensure contractual consistency across our businesses, speeding up reviews by 30% and reducing risk. Clearly, we've had a lot of incredible tools and systems that we have and are in the process of implementing within our manufacturing sales and finance operations. That being said, nothing can be more important than our talented workforce to drive and enable our Pivot to Growth strategy. Our Workday implementation has been a key tool in driving efficiency in our workforce. This system was introduced in 2022 with several phased implementations and replaced 21 systems, connecting all of our employees worldwide to a single system solution, enabling us to have full transparency of our organizational structure, it gives us key information on employees' benefits and payroll. It gives us a seamless management of approval for recruitment, pay changes, promotions and many more other HR functions. It also allows us to establish KPI dashboards, key check-in processes between management and employees, allows us to do incentive objectives in establishing tracking performance. It also increases the accuracy with regards to our workforce planning forecast. It also gives us the increased ability to change management initiatives. In summary, we feel like it's really transforming our HR functionality. Our next very exciting system is an enterprise-wide training development tool, enabling our entire workforce to access to online assessments. Again, it uses AI to produce innovative development material which matches both the individuals' needs and the important roles and practices that CWCs is important to the corporation to succeed, aiming once again to transform the way in which we develop our talent. At our last Investor Day, we talked about the annual strategic review and the criticality of our plan to long-term growth, and we've promised to strengthen the approach to make execution easier and to drive accountability across the team. With this in mind, we took several steps to improve our systematic approach. Culminating in the introduction of our own strategy execution tool called Stratix in 2023. Again, this has become an enterprise-wide tool that contains all of our strategies and respective strategic growth initiatives, providing a systematic approach to detailing, tracking and monitoring our key initiatives across the enterprise, creating what we like to call a single source of truth for all of our 94 strategies and allowing us to connect multiple strategies across different businesses. It also enables us to cascade actions of over 324 initiatives across the team to the individuals responsible for those actions, providing greater executive oversight, accountability and culminating in us tracking nearly $37 billion worth of opportunities. As this program was only implemented last year, we see enormous potential to drive further efficiency and execution with the tool. In summary, we've made significant progress in identifying and implementing tools and systems to elevate our operational excellence and accelerate growth across our organization. As you can see, these tools and systems are aligned with our OGP. We've had a lot of success to date with our tools and systems, resulting in operating margin expansion and record bookings. Importantly, we are not done yet. We have a long runway ahead of us in terms of continuous improvement and the implementation of our tools and systems. We will continue to fuel the next leg of our growth journey through our continuous improvement initiatives building that momentum for our digital future. Thank you very much for your time with us this morning, and I look forward to seeing some of you in the exhibitions later today. I'm now going to hand you over to Jeff Troutner, who's going to talk to you about the exciting developments in our Aerospace and Industrial segment. Thank you.

Good morning. Thank you, Kevin. I'm Jeff Troutner, Senior General Manager at Curtiss-Wright. I've been part of the Curtiss-Wright leadership team for the last 14 years. Initially focused on commercial nuclear power from 2010 to 2019 and in aerospace and industrial for the last 5. I really appreciate the opportunity to speak with you all today about our significant growth opportunities in our aerospace and industrial business segment. Getting started, I wanted to begin our discussion today with a few key messages before diving into the more detailed content. First, at our core, we are an engineered solution provider where we solve problems in our industries. We've been innovators and problem solvers for a very long time back to the beginning of aviation, and it is in our DNA. The products that we provide to our customer are critical in the sense that they improve performance, reliability and safety. The second key message, we are strategically aligned with global green and electrification mega trends. This is key for us as our industries invest their capital into renewing their fleets to current technology, and they also develop the next generation of platforms to further these trends. Significant organic growth opportunities exist right now with these fleet renewals. Our investments in product development have us well positioned to benefit from the ensuing ramp in production. Third key message, common across our businesses, we are a trusted and long-term partner with our customers. Our engineers and our customers are actively working hand in hand to extend the limits of what is currently possible and solve the most challenging application requirements to move our industries forward. Oftentimes, these solutions apply across market boundaries and further diversify our portfolio. Fourth, and really summarizing the message for today, we are actively capitalizing on the tremendous ramp in our commercial aerospace market, and I'll take a deep dive into the subsegment today. This ramp in commercial aerospace is further feeding our ability to expand into new markets and enhances our ability to navigate future aerospace and industrial cycles. As an overview and keep a quick recap of our Aerospace & Industrial segment, we provide actuation systems, sensors, valves, power electronics products and surface treatment services to a diverse customer base that is roughly evenly split between aerospace and defense and commercial customers. These customers range from the largest aircraft and vehicle OEMs to the primary Tier 1 and even Tier 2 suppliers of critical systems in aerospace in key industrial markets such as on and off-highway vehicles. Speaking briefly to our performance, our strategies are bearing fruit, and we have momentum across our markets as demonstrated by the achievements on the right-hand side of the slide, namely, in actuation systems, we have key wins building further Tier 1 system supply status to Airbus with the A350 freighter cargo door system and our position on the UpNext wing demonstrator. Also in key defense programs such as Leidos Dynetics Enduring Shield. In industrial vehicles, we've won placement of our power management electronics on a major truck OEM, providing 5 to 10 years of growth as this is rolled out across their heavy and medium-duty truck and bus fleet. Within our sensors products, we are a core participant in the future engine technology for the control of hydrogen, the FETCH project with major U.K. aerospace and academic institutions. This will take us to new extremes and temperature capability both hot and cold. Also, our surface treatment services continue to find new applications and establish long-term agreements, improving durability in the most critical applications such as commercial engines and the F-35 platform. Next, we have a number of key sustainable competitive advantages that will maintain our current momentum into the future. Starting at the top, we are a trusted and proven partner with our customers, and we've been developing critical solutions for a very long time. Our long-standing pedigree in aerospace is a differentiator for us. This differentiator is amplified when combined with our broad and diverse product portfolio, where we have custom-developed solutions designed to meet the exact need of critical applications throughout our markets and platforms. Next, looking specifically at industrial vehicles, we continue to invest to maintain our differentiated position in hybrid and electric power systems, where our technology enables electric powertrains with better range than the competition, enhancing our customer's ability to compete. In our aerospace components, we enable more efficient aircraft and engine performance by operating closer to set points and at higher temperatures, closer to engine cores. With Curtiss-Wright integrated actuation systems, we deploy our collective in-house capabilities to customers with seamless integration of our component and service technologies. This enables us to solve challenges faster and with more autonomy than our competition. With our global network of surface treatment facilities, we're making components stronger, enabling the use of lighter materials, increasing durability and reducing energy requirements in operation. As I mentioned earlier, we will be looking deeper at our commercial aerospace market today to really dive into our positioning in this market where we have seen and anticipate continued further significant growth. In commercial aerospace, we are really, for all intents and purposes, all over the airplane. We're on every major commercial aircraft platform with significant content from nearly all our major segment product lines. Naming a few examples, our actuation systems are utilized in both primary and secondary flight controls with componentry throughout. In engines, we provide numerous position sensors and valves along with surface treatments that improve durability in life. And structurally, our surface treatments are throughout the aircraft, especially where new composite construction requires high strength and lighter weight support structures and frames. We also have similar levels of content in the cells, utility systems and landing systems, such as our door actuation systems, motors, brakes, physician sensors, valves and numerous other surface improvement technologies. For many of these applications, we are the past and the future supplier with both current and future industry standards, such as legacy wire-wound sensors and new solid-state sensing technologies. We will continue expanding our product capabilities to extend and match customer and industry requirements, making sure that we not only maintain our strong position, but grow it as the industry evolves. On the left-hand side of the slide, when you roll these product lines up, we are nicely balanced between Boeing, Airbus and the combined bizjet, regional and rotorcraft platforms. From a revenue perspective, we are roughly 60% narrow-body platforms and 40% wide-body, and we're in a balanced position with regards to planned industry growth with roughly 90% of the revenues coming from OEM customers and 10% from the aftermarket. In terms of market trends and drivers, the commercial aerospace industry has been very dynamic over the last several years and will continue to be into the future. At the core, we have rising global demand for passengers that is moving far beyond pandemic recovery. This is happening with continued global economic development, increasing mobility of our populations and global businesses. With this long-term projected increase in travel, our industry's end users, the airlines are investing heavily in fleet renewal, and our airplane OEMs have record backlog levels that require a ramp-up of all levels of supply just to accomplish our committed orders. At the same time, our industry is redoubling commitments to safety and quality while highly publicized safety incidents are fresh in everyone's minds. This is absolutely the right thing to do and along with it comes opportunity for well-performing and trusted suppliers that are prepared to meet both the production ramp and the required focus on safety and quality. From a technology perspective, both electrification and decarbonization are fundamentally driving the marketplace forward. Electrification of aircraft systems is improving reliability and efficiency, while reducing complexity throughout the aircraft. A great example here is the replacement of hydraulic systems with lighter and more reliable electromechanical systems. With decarbonization, all systems and even aircraft themselves are being reevaluated for options to reduce the CO2 footprint from travel. Governments are regulating it, an industry is investing and innovating to accomplish it. On the last bullet, while we believe there will be one more generation of advanced petroleum-based engines developed and deployed, innovation is happening now for electric and alternative propulsion technologies such as hydrogen. Looking at what our industry needs to accomplish, it is a very exciting time in commercial aerospace. Backlog and fleet renewal has reached record levels, providing our team with a strong opportunity going forward. Big picture, Industry-wide, we expect to see around 17,000 commercial aircraft retirements over the next roughly 20 years. At the same time, the overall fleet is expected to grow from roughly 23,000 aircraft to around 47,000 aircraft. This means that collectively we need to deliver around 41,000 aircraft to the marketplace. These additions correlate with current production backlog across the platform types with narrow-body backlog at greater than 12,500 airplanes and wide-body backlog at greater than 2,200 airplanes. Backlogs in both of these submarkets has increased in the 8% to 9% annual growth rate range since 2020, further confirming the industry's necessary ramp. Regional and business jet submarkets, both also have significant backlog and are expected to continue to produce at maximum capacity for a number of years into the future. Shifting to our strategies, which further position Curtiss-Wright for long-term growth, on the left-hand side of the slide, in our core business, I've mentioned the broad base of product lines we supply to our customers. We continue to make targeted investments on these current programs to protect our position and expand it as upgrades are planned. Also, developments are ongoing now in the area of solid state sensing that will be baseline for the next-generation platforms. They'll also be electrically identical to legacy sensors so that they can be retrofit as part of an upgrade to achieve size, weight and value savings. This will be a key growth area for us as the technology and pedigree matures. We're also benefiting now from competitive displacement opportunities as our overall market is being challenged with significant growth at the same time is expanding quality expectations. In the middle column, in supporting industry carbon reduction initiatives, I'll show more detail on this in the next slide, but basics are in order to reduce the amount of carbon used in aerospace, we have to operate more efficiently with different materials and technologies than we previously thought possible. We have been developing improvements in our designs to enable aircraft to use less in different fuels, pushing us beyond current industry standards in both temperature accuracy and typical strength to weight ratios of materials. In alternative propulsion technologies such as hydrogen, we are formally working with our customer partners and industry to improve our collective capabilities together positioning us for long-term success that will sustain growth for decades to come. On the right, our segment strategies and electrification are another area where we have been extremely pleased with our results so far and we see significant opportunities still to come. Electromechanical actuation is a key area for us, where our collective capabilities across our product lines really do give us unique competitive advantages and allow us to integrate new solutions into current and future generation aircraft as well as into adjacent markets such as ground defense. Further, electrification in the industrial vehicles market is continuing with on-highway and off-highway vehicles. In these markets, we are making great headway with our power electronics and traction inverter technologies. More details on electrification strategies to come. Looking deeper into our strategy supporting decarbonization, our innovations and extreme temperature capabilities are key contributors to current and next-generation engines, allowing industry to use less fuel. Specifically, we have and continued to progress sensors and solanoid designed to operate closer to the engine core, enabling higher efficiencies and lower emissions. Also, our advanced thermal barrier coatings extend the life of engines in the extreme environments that current and next-generation engines are and will be designed to operate in. On the right-hand side, looking at what is to come, we have great momentum in this strategy already. We have content on all major current engine platforms and upgrade programs that will deliver growth for the next 10 years. Looking out at growth in the midterm, we have secured positions and are actively pursuing additional positions on top engine demonstrator programs. These current demonstrator programs in development today will be the next wave of higher efficiency petroleum-based fuel engines that bridge the gap between now and the future alternative propulsion technologies on the long-term horizon. For long-term growth, our in-house developments, along with our partnerships with the industry, such as the FETCH program I mentioned before, will benefit us with production revenues 15 years and more into the future. Looking deeper at our electrification and electromechanical actuation strategy. The breadth of our in-house capability is unique in terms of the amount of flexibility and control we have in the specification and production of our actuation systems. Leveraging these capabilities, we've had great success in providing the first certified rotary electromechanical distributed flap system in commercial aerospace and in providing fully electromechanically actuated flight controls on the aviation Alice all-electric aircraft, which had the industry-first crude flight demonstration project. Most recently, the same integrated One Curtiss-Wright approach has also led to placements with Airbus on the A350 freighter and their wing demonstrator program. The wing demonstrator is a success that I'm personally very proud of, with integrated solutions from our actuation product line, our sensors product line and our surface treatment product line, all coming together as part of a wing solution that is projected to become the baseline for future platforms. This is hardware that we've already developed and delivered for upcoming flight testing. On the right-hand slide, expanding our strategy and market adjacencies our electromechanical actuation solutions are also gaining foothold and expanding into ground defense applications. With collaborations across our product lines and customer bases, we have secured content on the enduring Shield program providing elevation and stabilization actuators for the mobile ground-based weapon system. We also have secured design wins on classified DoD programs that I won't name here, and our opportunity funnel for future expansion continues to grow. Flipping to electrification and industrial vehicles. Our developments in power distribution modules and traction inverters are similarly capturing market share. Our Curtiss-Wright solutions offer advantages relative to the competition that allow our customers improved overall range through higher torque, speed control and higher efficiency designs. Here, we have also designed for safe operation in critical areas, specifically 800-volt operation and accounting for cybersecurity threats. These advantages have led to successes on a number of platforms with leading vehicle manufacturers. These initial wins and our continuing developments in these products position us to perform ahead of overall market growth for the foreseeable future. Okay. Wrapping up my portion for today, we're actively capitalizing on the tremendous ramp in our commercial aerospace market. This ramp in commercial aerospace is feeding our ability to expand into new markets. It enhances our agility and our ability to navigate future aerospace and industrial cycles. It's truly an exciting time for our Aerospace & Industrial segment. Thank you very much for your time today and for the opportunity to be with you here in New York. Coming to speak with you next is my colleague, Senior Vice President and General Manager, Brian Perry, who will be discussing our Defense Electronics segment.

Thank you, Jeff. And good morning. Good morning to everybody here in New York City and to those who are attending via the live stream. It was shared with me that after our last Investor Day, one of the things that many of you asked about was to talk a little bit more about defense electronics. So I'm fortunate to have the opportunity to talk to you today about who we are and what we do and how we support this segment. In addition, I'll also share our insights on the prevailing market dynamics and how we intend to continue the momentum to our Pivot of Growth strategy. As a quick intro, my name is Brian Perry, and I'm one of the Senior Vice Presidents and General Managers at Curtiss-Wright. We have responsibility for multiple business units located across several countries in both North America and Europe. I joined the company about 9 months ago. However, my experience in the aerospace and defense goes back nearly 35 years, and then the embedded commercial off-the-shelf space about 25 of those years. Throughout my career, I've always had a healthy respect for Curtiss-Wright. And I became -- as I learned more about the company, I became enamored with our strategy, our investment thesis, and the opportunity to grow and operate these businesses at scale. And now after my first 9 months, I have a degree of confidence that we have the right people, the processes and the products to support those tenants of our company. So with that out of the way, I'd like to frame the conversation with a few key messages. First, Curtiss-Wright is a long-established technology leader providing a full range of advanced, highly engineered solutions to enhance safety, security and performance of some of the most demanding defense applications. Recently, I had an opportunity to host the keynote address to a face-to-face meeting of our sensor Open Systems Architecture Group, or SOSA. Our leadership role as a supplier of deployable, modular open systems gives us a win-win stance in the market, thanks to our ability to address requirements for both new and existing platforms and programs. Second, global security concerns have indeed prompted increased funding by the United States and many of our allies as the focus has shifted to a new and global regional threats. China is the primary strategic threat and continues to engage in rapid military modernization, while a resurgent Russia and North Korea's repeated regional provocations add to the overall threat. Thirdly, there's an urgency to innovate that arises from the fact that the U.S. -- that for the U.S., the main strategic competitor is different from the rival we faced during the cold war. They are agile, they are technologically advanced and they are rapidly evolving. So to achieve an enduring advantage requires a balance between both innovation and maintaining operational readiness of our enduring fleet, which is no easy task. Lastly, we are proud to be well positioned on programs of global importance with our broad global reach and our strong presence throughout the U.S., U.K. and Europe, we expect our strategy will enable us to capture increases in global defense spending. So I'd like to discuss a bit of who we are and what we do, but I thought I would start with a quick recap of some of the more significant achievements since our last Investor Day. As I mentioned earlier, our leadership in open architecture community goes back to the beginning, and that leadership continues to be recognized by our customers as well. Over the past 3 years, we have seen several design wins on key programs of record. Of particular importance was the selection by Raytheon for their next-generation special mission processor for the ACMC-130J aircraft. Secondly, we're selected by progeny, now part of General Dynamics for the processing modules for the use in the U.S. Navy's Mark 54 and MARK 48 upgrade programs. Another key accomplishment was the introduction of our Fabric 100 product line. This ecosystem of processors, switches and process accelerators will bring state-of-the-art capabilities to enable faster and broader band networking capabilities to sensor and mission processing applications. Already today, we are working with several lead customers on their next-generation high-performance processing applications. Looking at our history dating back to 1957, with aircraft accident data recorders, commonly known as the Black Box, Curtiss-Wright, along with our partner, Honeywell, received certification for our 25-hour cockpit voice and flight data recorders. This is a very important achievement, given the FAA's notice of its proposed rulemaking that stipulates a 25-hour cockpit voice recording duration following several recent safety incidences. Finally, it should be noted that despite facing strong headwinds in FY '22 because of the electronic component supply chain constraint, the team quickly adapted to minimize impact to our customers and on the business. And as we continue to see above average new order bookings, we continue to generate record-breaking backlog generally providing strong forward revenue coverage. So as we focus on the growing field of defense electronics, we provide to our nation into several international defense forces with vital aerospace, ground and naval defense building blocks and subsystems that are trusted on over 400 programs in nearly 3,000 plus programs. From an end market perspective, over 75% of our sales are derived from the aerospace and ground defense markets with naval and commercial aero programs accounting for the remaining 25%. Our extensive portfolio of regular electronic modules and systems enable prime contractors and defense agencies to deploy quickly, meet size, weight and power constraints, all the while having the latest technologies available in the marketplace. Reflecting our strong presence on key platforms, Curtiss-Wright's platform-agnostic portfolio is well positioned to provide a wide range of solutions and critical technologies across multiple mission domains. You'll have the opportunity later today to see some of these solutions firsthand at our demonstration pavilion on the first floor. So I won't go through the various applications here, rather I would like to take you through an illustrative case to show the breadth of our content in a real world mission environment. We've all seen the importance of secure communications in our personal lives, secure transactions in the financial markets, secured voice communications for platforms such as Teams, Webex and Zoom and encrypted e-mails for sensitive personal and business information. In the battlefield, secure communications and secure data are often the difference between mission success or failure. Lives are often on the line. Curtiss-Wright provides solutions for securing communication through several of our business units. First, our Tactical Communications Group is a leader in Link-16 tactical data link solutions as well as PacStar, who is a leader in advanced tactical communications. To illustrate this, just this past week, the PacStar team reached a major milestone as our IQ core software was granted inclusion on the Defense Information Systems Agency, or DISA, approved products list. This accreditation is the goal standard for software that runs on DoD networks, and demonstrates the trust that our customers have in our software and hardware solutions. Furthermore, this achievement raises the bar for new entrants, given the investment, time and expertise required to achieve such accreditations. In addition to the needs for secure tactical communications, the ongoing digital transformation within defense is driving the need for open systems architecture that are platform-agnostic, yet interoperate across the battlefield. Examples include our broad C5ISR and aerospace instrumentation portfolio that provides sensor and mission processing, networking and operationally deployed instrumentation on programs such as F-35, the Apache attack helicopter, the E-2D early warning aircraft and the Bradley fighting vehicle. Furthermore, a core competency of our data solutions business ensures that secure movement of critical data, mission sets and targeting information between mission domains with the high-density encrypted storage, and our Avionics business provides crash-protected flight recorders for many of the rotary wing aircraft that operate in this environment. The result is that we see Curtiss-Wright all across the battlefield on enduring platforms and programs that enable our customers to rapidly deploy hardware-enabled software-defined solutions at the forefront of military digital convergence. To unpack this a bit further, I'd like to talk to you about our PacStar business, which was acquired just prior to our last Investors Day. Joint all-domain command and control referred to as JADC2, is a war fighting necessity to keep pace with the volume and complexity of data in the modern warfare and to defeat adversaries decisively. JADC2 enables the joint force to sense, to make sense and to act upon information quickly using things like automation, artificial intelligence, predictive analytics and machine learning to deliver actionable information at the speed of relevance via a resilient and robust network. PacStar solutions provide enhanced situational awareness from the individual war fighter to a larger tactical team. Our patented software and hardware technologies play a crucial role in secure command control and communication systems, especially in remote or infrastructure [ star ] areas. The net result is that customers find the user interface simplified, which streamlines operations, especially dealing with equipment from multiple suppliers. In summary, with PacStar's focus on size, weight and power efficiency, robust functionality, accredited software assurance and interoperability, we believe we stand apart in the marketplace. With thousands of systems deployed, we are experiencing rapid adoption across the globe. So I'd like to share with you my experience and assessment of why we win in the Defense Electronics segment. As I mentioned earlier, we address with equal strength, both new program starts, tech insertions and life cycle extensions. That means as defense investments shifted over time, we are uniquely positioned to accelerate growth given our proven performance, our strong domain expertise, our deep customer intimacy and established intellectual property that has been developed through years of investments in technologies and capabilities. Our ability to supply and support our Tier 1 OEM partners has long been a hallmark of our success, not just our ability to supply quality products but also our ability to support these programs through the long life cycles of many extended programs. I will share an illustrative case in a few slides to delve into our proven ability to win in the Defense Electronics segment. So I'd like to share with you the market trends that are at the forefront of the market dynamics as we see them. I believe we can all acknowledge that we are seeing unprecedented opportunities in the defense electronics market. Today and in the future, the growing security concerns and the need for advanced technologies to counter emerging threats will be some of the key drivers for growth. To expand upon these demands a bit, we don't need to be reminded of the heightened geopolitical tensions and security threats worldwide that are driving the demand for sophisticated defense electronic systems. This in turn drives increasing defense investments that for the first time, have exceeded $2 trillion globally. And for the Tier 2 Defense Electronics segment, more than $50 billion. In the area of advanced technology, we continue to see R&D investments for example that are influenced by how quickly data can be processed, analyzed and acted upon. Achieving improvements in time to actionable information involves optimizing data acquisition, processing, decision-making and response across the sensor and effector systems, which are key value propositions of Curtiss-Wright's portfolio and experience. To illustrate this value, I'd like to share another exciting development that will speed the delivery of next-generation technology to the tactical edge. In a major step forward for the commercial off-the-shelf embedded computing market, Curtiss-Wright has just been approved as an NVIDIA OEM partner. We will leverage our core competencies in rugged MOSA-based solutions to accelerate the deployment of leading-edge compute technologies into multi-platform solutions. While technological advancements provide early tactical advantage, nation using winner loose conflicts over the long term based on the strength and endurance of the political and military alliances, their national treasuries, and their defense industrial bases. I'm fortunate to be a member of the Board of Directors for the National Defense Industrial Association, or NDIA. And my colleagues and I are all concerned with the ability of the defense industrial base to be responsible to the multiple demands that may occur simultaneously in the future. Thus, it's important for a step to acknowledge that we cannot continue to allow the industrial base to atrophy and to not rebuild its resiliency in an era of great power competition. This means that customers will seek out and reward quality suppliers who can partner with them through investment, innovation, capability and capacity as we address the increases in global demand. And as they do, the trend towards outsourcing noncore activities will fall on the Tier 2 suppliers like Curtiss-Wright. As I mentioned throughout my remarks thus far, it's important to highlight the importance of how the mission requirements drive shifts in technological innovation and how that drives trends in the market that we consider favorable. Adoption of autonomous and reconfigurable systems, cognitive man and unmanned teaming, edge computing and robust navigation systems to handle degraded and contested environments are all technical innovations that we have and continue to invest in. Finally, we cannot serve all these needs alone. It's an imperative as an industrial base to leverage the investment and innovation that occurs in the high-tech commercial markets. It is these contemporary capabilities that when tailored to defense applications provide the path to meet the demands of global militaries. So I'd like to share now how we have developed our strategy of investment to accelerate our pivot to growth in the Defense Electronics segment. First, and a key tenet of our strategy is our commercial mill costs model, which has proven successful for over 30 years and coincides with the cost initiative that then Sec Def William Perry introduced in 1994 and was later enacted into law with the passing of the 2021 NDAA. I believe that we, Curtiss-Wright, can offer some well-earned insights as an early champion of the benefits of commercial off-the-shelf and open standard architectures to deliver to our global customers. And our success today and in the future stems from this commitment and the decades of investment and innovation that Lynn nurtured over her years of leadership in the Defense Electronics segment. The second tenet of our strategy expands on our established baseline and familiarity with the architectures on various platforms that makes Curtiss-Wright a high-value partner for customers to consultant when discussing technology upgrades. Recent wins in SOCOM radar upgrades were born out of our trusted position with the radar OEM, who is tasked with improvement capabilities for special mission aircraft. In another example, recent experience with ULA indicated a desire to modify our commercial off-the-shelf solution to enable LEO operations which we successfully qualified and are in production with. Lastly, we recently modified a standard data storage solution for deployment on a small unmanned underwater vehicle. We continue to improve our international footprint across Europe, Asia and the Middle East for both design and manufacturing. In addition, with the recent trilateral security partnership between Australia, the United Kingdom and the United States, we see growth opportunities as these partners will develop and field joint military capabilities to promote security and stability in the Endo Paycom region. We are well positioned to grow additional share in foreign military sales and look to support our customers when direct offset obligations may be required. Our strong support capabilities and presence matched with our strong technical solutions, make us well positioned to grow internationally. Finally, given the platform-agnostic benefit of our solutions, I believe we are well positioned to expand into the fastest growing parts of the market and adjacencies. Today, we are engaged in executing to varying degrees with these market opportunities, and they are well within our reach to capture additional growth. As an example, a recent World Economic Forum Insight Report and cooperation with McKenzie & Company, describes the space economy will be worth $1.8 trillion by 2035, an increase from $230 billion just last year. So as we consider these expansion opportunities, we'll continue to evaluate and explore opportunities that leverage our core competencies and capabilities as well as our partners in our channel. Lastly, I want to conclude that we continue to be inquisitive and we will continue to target acquisitions that possess complementary capabilities and technologies to complement our organic growth and support our overall Pivot to Growth strategy. So with all of that as context, I wanted to quickly share a couple of proof points to support our growth thesis that I've shared with you thus far. The first case study reflects our history of innovation and how that plays an important part not only with initial fielding but over the life of the program. In this particular case, Curtiss-Wright provides high-performance processing modules for 2 critical line replaceable units on a Group 5 UAS program. By leveraging our forward-looking road map, our experience with the architecture and our life cycle management services, we were able to provide customer advice as obsolescence occurs -- obsolescence events occurred. The net result was the ability to maintain configuration control for over 2 decades and has now led to a new award to co-develop the next generation of these systems. As the prior case study showcased a bit, I feel it's important to delve a bit deeper into our total life cycle management services. In the commercial industry, life cycles range from 6 months to roughly 7 years, but never the 30-plus years that we expect our investments in new weapon systems to operate. As a result, it's important to work closely with our customers to arrive at operationally available and affordable increments of capability over the program platform life cycle. In this case, Curtiss-Wright was originally designed in around 2009 and provided a full range of products to support the processing requirements for the onboard radar. Working closely with the prime contractor, we engaged our total life cycle cost management services, which has allowed the system to maintain operational readiness despite the end of life of over 50 discrete components. Additionally, the success of this engagement has allowed us to expand our sustainment services by offering aftermarket sparing directly to the U.S. Navy. As a result of this commitment and performance on this program, we have now been selected for the next-generation modernization of this important center and platform. This final case study for me is an outstanding example of a low-risk program expansion that came about because of significant innovation in packaging and performance. Leveraging our experience in flight test instrumentation, which was recognized in 2023 with a 5-year $287 million IDIQ contract to support the U.S. Air Force. We continue to collaborate with the Air Force to bring advanced size, weight and power and performance, allowing the service to collect and crowd source flight data much more affordable than the service used to. In the past, test aircraft recorded data with a 2,500 pound pod that took up an entire weapons bay and cost nearly $25 million. That kind of device was too cumbersome and expensive to even think of integrating on an operational aircraft. So out of necessity more innovation and Curtiss-Wright designed the Quick Reaction Instrumentation Package or QRIP, an 8-pound device roughly the size of a football that is bolted into the aircraft's weapon Bay. The price for a single Curtiss-Wright made QRIP, a small fraction of the old system cost. So what's the opportunity? Given the increase in cost of sustainment, F-35 is the first operational aircraft to be equipped with QRIP. Next and well down the integration pipeline, our operational F-22s. We're also working on QRIP for F-16 and for A10 and the U.S. Air Force is looking more broadly at how to proliferate this capability over additional combat aircraft. The goal, as quoted by the Air Force, predictive maintenance. If you can get ahead of that, it's a game changer. So I'd like to thank you all for your attention and for your feedback to hear more about defense electronics. I hope you'll take away these 4 key messages and how they support our Pivot to Growth. In closing, as we work with our customers, partners and suppliers, we will continue to align our technology road maps for fielding rapidly commercial capabilities at the speed of scale. We are also committed to ensuring the foundation of future research and development by investing in our people and the infrastructure they require. Unfortunately, the world is not a safe place. I couldn't be more impressed with where Curtiss-Wright stands in the defense industrial base and the outlook for sustained growth. We have some incredibly smart employees, strong financial resources, targeted acquisitions we have our eyes on and expanding operational growth strategy and amazing portfolio of products and services. So thank you all for your time, and I look forward to our Q&A session later this morning. Now I'd like to introduce you to our next speaker, my colleague, Dave Micha, Senior Vice President and General Manager, who will share with you our unique capabilities and strategies for naval power. Thank you very much.

Thanks, Brian. Good morning, everyone. As Brian said, I'm Dave Micha, Senior Vice President here at Curtiss-Wright. Today, I'm going to be giving you an overview of our naval defense business, which is part of our Naval and Power segment. Later this morning, you'll be hearing from my colleague, Kurt Mitch, who will update you on our commercial nuclear business. Before I do that, I just wanted to spend a second on my background. I've been at Curtiss right now only 6 months. Before I joined, I've spent the last 35-plus years in the aerospace and defense industry with 2 primary large aerospace and defense companies. So before I came to Curtiss-Wright, I had a preconceived notion of what the company was and what I thought Curtiss-Wright was a company with a long heritage, a long outstanding history, highly engineered businesses a diverse management team that was flexible and nimble and can act quickly and most importantly, a very skilled workforce. And all the things I thought about Curtiss-Wright have proven to be true after my 6 months here. So I'm really excited to be here. I want to leave you start the day today with 4 key messages. The first and most important is in our naval defense business, we are a mission critical partner to the U.S. Navy. And what does that really mean we have a seat at the table with the Navy. When the Navy has really hard problems to solve in our area of expertise and critical domain skills, they call us. They ask us for help to provide solutions to those hard problems. Secondly, you heard from my colleague, the world is a very dangerous place. China is a near peer threat. The Russian invasion of Ukraine and the turmoil in the Middle East, what does that all mean? Well, the Department of Defense has said that naval superiority will be critical to maintaining our global presence around the world and Curtiss-Wright is right embedded in a with the work we do with the shipbuilders, the submarine providers, our NATO and allied partners. So we're right in the middle of all that. The third key message I want to leave you with is in addition to our current solutions, there is an opportunity for us to expand our content through the investment and research and development we are doing, which has been part of our strategic plan for a number of years. And we will continually to aggressively pursue the aftermarket where there is great demand. Many of these platforms have been in service for decades, and we think there's plenty of opportunity for growth in aftermarket. And finally, our position on critical surface and submarine platforms will provide us an exceptionally solid base of business for decades to come. Okay. Slide 3, I want to give you an overview really of our Naval Defense business. It comprises about 50% of the segment. First of all, we're about 80% OEM, 20% aftermarket. Who are our critical customers. So first of all, it's the U.S. Navy and various organizations with the Navy, the major shipbuilders in this country international AVs and in international shipbuilders. Those are our key customers. In terms of solutions, it's really important to understand a couple of these things. What we do for the nuclear Navy, we provide complex mechanical, rotating equipment. It's things like pumps, generators, turbines, motors, valves. There is no other people in the world that do this type of work, and we've been doing it for decades. In addition to that, when you think of our naval defense business, I want you to think of aircraft handling and arresting systems, where in both those markets, we are a market leader. And we also have merged and moved into adjacent markets in the oil and gas industry, which I'll touch on later. Since the last Investor Day in 2021, I want to touch on 4 key developments. First of all, we have transitioned from development to production on the Columbia class submarine which is the U.S. Navy's #1 priority. Second, we have received funding on the next generation of U.S. fast attack submarine, which is referred to as SSN(X), that's the follow-on to the Virginia-class submarine, and we've received significant development funding. Third, and Lynn mentioned this, the acquisition 2 years ago of ESCO, which is the aircraft secured arresting systems and they have been an excellent acquisition that Curtiss-Wright and done very well. And then finally, I'm going to talk to you about what we're doing in the oil and gas industry. We received a significant contract from Petrobras recently to develop that subsea technology even further. Okay. So why are we uniquely positioned at Curtiss-Wright in the Enable business. The first point I want to make is we are considered a national asset. I don't use that term lightly. That's not my term. That's not Curtiss-Wright terms. That's the U.S. Navy's term. And why is that? It's because of the skill, the IP, the facilities, the people all of those things, the decades of experience make up what we've done to gain that title from the United States Navy. We are a leading provider of engineered solutions. We have deep customer relations as we mentioned. We have many sole-source positions that we have been on for decades. We are doing things to advance our capabilities, both in manufacturing and test, and we have strategically located service centers around the West and East Coast that support fleet operations that are critical to maintaining our products and services. Okay. Next, I want to talk about market conditions. So what are the key market conditions. As Brian mentioned, the #1 issue in the Pentagon is China. If you go anywhere in the Pentagon, they will talk about the threat of China. They are building ships at 10x the rate we are in the U.S. I want you to think about how incredible that is, 10x the rate we are building ships. So naval power projection is going to be critical to our global power projection, and Curtiss-Wright is involved in all those things, including things like the Columbia-class submarine, which I mentioned, is the #1 priority in the U.S. Navy. The U.S. government realizes that the industrial base in this country is atrophied over the last 30 years. So they are investing $15 billion in the next 5 years, targeted towards that industrial base. We, at Curtiss-Wright have received about $15 million in the last couple of years, and we're going to aim to secure future funding as we go forward to support our part of the industrial base. Another issue that has driven the market conditions that we talk about are the shipyards. The shipyards simply do not have enough people to do all the work they have to do, so we can increase our shipbuilding production. So they're going to be outsourcing work. That's a business opportunity for Curtiss-Wright. And the areas we have expertise, we believe we can provide content and work to the shipyards. The next area is aftermarket. The aftermarket is absolutely going to grow in this business. And the reason is those platforms have been out there for decades. So we're now starting to see spares refurbishment, technology insertions, upgrades. And those are all for systems that Curtiss-Wright is in a very strong sole source position on for many of those systems. Next, our strategy globally in the U.S. depends on our partners around the world, and we have strong partnerships at Curtiss-Wright. We've done business and do -- continue to do key business in Australia, Japan, Taiwan, the U.K., India, many partners around the world. So that will absolutely continue for us. And that's the state of where things are in the market. And the last thing I want to mention, I think was mentioned earlier is the AUKUS program, which is a trilateral agreement between Australia, the U.K. and the U.S., that is going to be to develop the next class of fast attack of submarine and that's a generational opportunity for all of us to provide solutions and products. Okay. This chart -- the critical thing I want you to take away from this chart is if you look to the left, you see the 2 main carrier programs. And if you look to the right, you see the 2 U.S. main submarine programs. We are on those critical platforms in a big way. We have increased our content from the last Investors Days on both the Columbia submarine and the Ford aircraft carrier. And if you look across the bottom row, if you add all that up, it's over $700 million of shipset content when you add all 4 platforms. So we have a very significant presence on the most critical platforms that Navy has to offer in this country. Okay. On Slide 7 here, I want to talk about some strategic imperatives, and I look at them in 3 main themes or 3 main pillars. The first is one of the messages we have a very solid core of business for products and solutions we have been providing for a long time. And that's going to continue to stay exactly where it is. We're going to keep providing those things. But we have the opportunity to grow our footprint on those current platforms. The growth opportunities come in a couple of areas. They come in forms of systems upgrade, expanded content, technology insertion and the technology areas that we're going to be focused on for growth are things like propulsion systems, power systems and handling systems. And I want to give you 1 or 2 examples of where we're expanding our content. So I mentioned before, we provide these very sophisticated pumps for submarines, and there's a lot of pumps on a submarine. But we don't provide all the pumps but in some cases, we are designing new pumps because we believe we can supplant the incumbent on there with our new Curtiss-Wright technology for pumps. A second area that we're expanding on is a lot of things are becoming classified in the Department of Defense and the Department of Energy. More and more things are becoming classified because of the threats. We have invested significantly in our classified capabilities, both in people, technologies, facilities, and we see that as absolutely a growth area in both the Department of Defense and the Department of Energy and that's going to be based on the current portfolio of work we already have. And we are going to focus also on international business. As I mentioned before, in our aircraft resting systems and our helicopter handling systems, we have a very strong presence in Japan, Australia, Taiwan, a number of other countries, and those are great opportunities for us to grow strategically. And we will look at M&A where we find things that might fit our portfolio and are critical, we will always look at M&A opportunities. The next pillar is talking about increasing our content on next-generation platforms. So I mentioned the SSN(X), which is the next-generation U.S. fast attack submarine. We have been funded for several years developing new critical technologies that will go on that platform. And why is that important? Because that platform, like the current Virginia class platform, will be here for decades to come, and Curtiss-Wright is going to have a very strong position, both as we do on the current Virginia and the SSN(X), which is the next generation. We also -- the next area in terms of next-generation platforms, as I mentioned, classified work. We have invested as a company in classified manufacturing test capabilities. And what that does, it keeps us at the forefront of the Department of Defense's next-generation thinking and where things are going to have to go, and that's why it's important for us to be involved in that. And then finally, I want to talk about aftermarket, as I mentioned, the fleet, the Virginia-class submarine, for example, has been out there for 20 years. As those platforms mature, there is an opportunity for Curtiss-Wright to provide spares, refurbishment, upgrades technology insertions, and we are going to do that to all of our existing products. We are also investing in additive manufacturing, which is not only a big push by the Navy, but it's a big push by Curtiss-Wright. Additive manufacturing is going to give us the ability to provide products sooner, better prepared for parts obsolescence and will support mission tailorable solutions so we can serve our customer on a more rapid basis. So this chart is an example of how we're going to migrate and grow our business. So currently, as I mentioned, we are on the Virginia-class submarine have been for 20 years. and we have about $75 million of content. And we provide generators, pumps, valves, actuators, a lot of sophisticated mechanical rotating equipment. On the next-generation submarine, SSN(X), we expect to provide all that same equipment, but we have a significant opportunity to grow. And that opportunity to grow is going to be either new content or technology insertion. And it's going to be, as I mentioned before, in the area of propulsion systems, where we have a lot of strength in Curtiss-Wright, power systems and secure handling systems. And there is an opportunity for us to grow our current content from $75 million by 2 to 3x. So that is really part of our strategic growth plan. Okay. Now this is a really interesting slide. I want to talk to you about how we leverage technology in Curtiss-Wright, and it's part of the theme we have and part of our Pivot to Growth strategy. Our significant experience in reactor coolant pump technology for Westinghouse on the AP1000 has enabled us to develop critical subsea pumping technology. So we are taking what we do as a core competency, which is making no fail products. They cannot fail, they have to have incredible reliability, which is what the Navy has, which we have to have in the nuclear industry, and now we are moving that to subsea applications. We are providing significant value to those customers in the oil and gas industry because when these subsea pumps are down there, it costs a lot of money to retrieve them. It's very expensive. So they need high reliability, very sophisticated equipment. And the leading players in that industry, people like Petrobras, Shell, Sipan, have all adopted or are adopting our technology. And the proof in the pudding is we've received $100 million to date of customer funding to develop subsea pumping technology. We believe there are production opportunities, new orders that we could achieve up $250 million by the end of this decade and up to $500 million by the middle of next decade, providing this subsea technology and pumping equipment. It's really a great example of maximizing and utilizing our IP and our knowledge and our workforce to move into adjacent market. And I really hope you all get to the chance to go downstairs and see the subsea pumping technology. There is a replicate down there. It's a 10-foot section of what is a 120-foot long real pump when it's in service. It's really impressive. Take the time to go see it. So in summary, the future is very bright for Naval Defense and Curtiss-Wright. It's really exciting, we are incredibly well positioned, both domestically and internationally. The U.S. Navy programs that I talked about are long-cycle programs. When you get on those programs, you're on them for multiple decades. So that gives us a very solid business base looking forward. We continue to invest in our people, the IP, our facilities, our global customers, they all count on us for these critical naval solutions. I believe we're providing world-class solutions, and I can't be more thrilled to be here and be part of the Curtiss-Wright Enable team. So I want to thank you for your time today. I think now we're going to take a short break as we prepare for our commercial nuclear panel. [Break]

It's Gary Wolski, and I lead Curtiss-Wright Nuclear division sales and marketing team. I've been with Curtiss-Wright nearly 28 years focused on global civil nuclear energy industry. Prior to Curtiss-Wright, I worked for the U.S. Department of Energy at Hanford reservation and included some time and reactor operations at the FastFlex test facility, which is a Generation 4 sodium cold test reactor. I got started the nuclear energy in the U.S. Navy's nuclear power program on board a ballistic missile submarine. So I am pleased and honored to facilitate this panel today. It is made up of 3 industry leaders, which I have the pledge of knowing and working with for many years, Maria Korsnick. She is the President and CEO of the Nuclear Energy Institute. This is a policy organization of the nuclear technologies industry. Rita Baranwal, Senior Vice President at Westinghouse, a reactor developer; and Greg Cullen, he's a Vice President at Energy Northwest, a utility with plans to build additional nuclear energy capacity. So the format of this panel is I'll ask each of our panelists to spend a few minutes introducing themselves and sharing a bit about what they've been seeing in doing in civil nuclear energy space. I'll then ask the panelists a number of questions that should provide greater insights into the market. We'll then spend about 10 minutes taking questions from the in-person audience. And then I'll attempt to summarize just a moment or 2 this 45-minute session with a few key takeaways. So when asking questions, please limit questions to a broader industry focus and not specific questions to Curtiss-Wright order timing, revenue per reactor or long-term revenue assumptions. So with that, I'd like to start with you, Maria.

Great. Well, thank you. Thank you for that kind introduction. I really see a great opportunity, not only for Curtiss-Wright, but really the whole supply chain in commercial nuclear because as I look ahead, I think the future for commercial nuclear energy is very bright. And why is that? It's really a confluence of a couple of events. There's an energy security conversation. There's a climate security conversation, there's new technology, technology innovation. And these things are all coming together right now and the opportunity for nuclear uniquely answers all of those concerns. And why is that? Well, because nuclear brings firm, clean 24/7, 365 energy, resilience clean jobs. It just sort of answers all of the issues here. And I would tell you that it sits on a foundation. That foundation is significant load growth that we're going to see, not only here in the United States but around the world. It also has bipartisan political support. We can get into that a little bit more. And it's also sitting on a 50-year history in the United States of reliable, safe operations of our nuclear fleet. And so again, this confluence of events is a really unique time for the nuclear industry. I've been in this industry for 38 years. I started out as an engineer I went into operations. I have my license to operate commercial nuclear plants. I then became a site Vice President, I became a Corporate Vice President. Ultimately, I was a Chief Nuclear Officer, and I ran 5 reactors at 3 locations. I was responsible for the Ginna plant in New York for the Nine Mile Point plants in New York and for Calvert Cliffs nuclear power plant in Maryland. There has never been a time in my history, my career in nuclear as we are able to see today. And I'll slice and dice this from a couple of different angles. Let's talk about it from a global perspective. What's the global conversation around nuclear. And I would offer you to just sort of look at the headlines, right? There are countries across the globe that are talking about continuing to operate the plants that they have or are interested to invest in new. Last year, I went to the COP conference of the parties meeting. It's a large environmental meeting that's held every year. And this last one, COP28, was over in the UAE. Just a few years ago, if you would have gone to a COP meeting, you wouldn't even heard the word nuclear, okay? You wouldn't have heard the word nuclear in any of the items that came as a result of these meetings, et cetera. So this COP, right, not only was nuclear mentioned, but 25 countries signed a pledge to triple commercial nuclear by 2050, 25 countries. So in just a few short years, you went from not even talking about nuclear to having this alignment around not only do we need it, but we need a lot more of it. Let's look at ourselves. Let's look at the United States. Well, in the United States, we have bipartisan support for nuclear. Let's just talk about the last few years, right? Bipartisan infrastructure package, $6 billion for the civil nuclear program, $2.1 billion for the Advanced Reactor Demonstration program, $8 billion for the hydrogen hub for -- to be supported by nuclear. Most recently, you just saw in the last week or so, the President signed a bill on fuel supply and reshoring the nuclear fuel supply chain to the United States. And I would offer that was the U.S. contribution. But just last year in a clean energy ministers meeting in Japan, there was agreement by 5 countries to work together on the global supply chain for nuclear and U.S. was one of those, and this was our contribution. But there are others. You just saw the U.K. make an announcement about an investment in the fuel supply chain as well. So it's happening globally, okay? It's happening at a federal level. Now let's talk about our states. So in the past year, there's been 20 different states that have taken action to bring commercial nuclear power to their states. If 5 years ago, we were talking about state legislatures, I would have said it would have been exciting if there was 5 or 6 bills to have anything to do with nuclear. Last year, over 200 bills and state legislatures, this year alone, over 100 bills in state legislatures. Again, encouraging nuclear to come to their state. Now let's talk about individual companies, what are companies doing? Well, let's look across green bonds, for example. You've seen a green bond introduced for nuclear. You saw that in Canada. More recently, you just saw that in France. And right here at home, you saw Constellation Energy recently go for a green bond for nuclear investments, right? So nuclear, becoming mainstream, talking about, yes, it's clean, yes, we need it. Individual companies, you saw 2 microreactor companies go public this year. You've seen data centers express a bit of interest, Amazon Web Services, just recently went and purchased a nuclear campus that runs a data center. They purchased that from Talen Energy. You also saw recently what was at Google, Microsoft, Nucor going together to consolidate their demand as they went forward for a clean energy bid. So again, lots of signals that this is an incredibly unique time for nuclear. And I'll tell you the era of flat demand, that's over okay? And that's being driven by the data centers, by AI. And quite frankly, just by -- in the United States, that's the increase worldwide, it's just -- let's get from the energy we have and let's turn it into clean energy. So now there's a demand. Even if you're powering the same stuff, you want to power it in a different way because you want to power it in a clean way. So there's a unique demand for that clean energy. So again, I just want to share what's such an interesting inflection point that we're at and how unique it is for the U.S. to be positioned to be relevant in global nuclear. When I talk about bipartisan support, I guess I just would also add sort of why is that? What's for a lot of the reasons that I just mentioned, but I'm going to also add national security, right? China and Russia are really interested in being relevant in commercial nuclear. And why is that? Because they're interested in the geopolitical influence that they could wheel if they're building a power plant in your country. And so for that reason, we have a lot of interest on our side, on our Capitol Hill in our administration to ensure that the United States stays very relevant. And so it's for all of these sort of reasons coming together, that a company like Curtiss-Wright is uniquely positioned because they're not about sort of 1 maker model for nuclear, if you look at the products and services and the skills that they bring, they really support a broad array of nuclear and so again, as I look ahead, I see the commercial nuclear future very bright and for any companies in the supply chain that support that. I'll leave it there.

Thank you, Maria. Rita?

Great. Thank you. Thanks for inviting us here today and for the opportunity to talk about with the status of commercial nuclear. I'm Rita Baranwal. I am the Senior Vice President for Westinghouse, currently overseeing our AP300 small modular reactor. Our AP300 is a derivative of our AP1000 gigawatt scale reactor, and it's already received a few mentions in some of the presentations this morning. AP1000 is successfully operating in China and in the United States. So we have 4 plants that were constructed in China, several more are under construction as we speak, and 2 have been constructed in the United States. The last one, [ Vogtle ] 4 came online just last month. That brings the number of operating reactors in the United States to 94. And so we've seen really great success for those reactors. We have additional contracts for AP1000s in Poland. So that is our next big project. We also have interest from Bulgaria as well as from India. And so as Maria talked about, the global interest is enormous. And I saw this when I was Assistant Secretary for Nuclear Energy in the U.S. Department of Energy in the Trump administration. And I got to meet with many different international delegations that we're very interested in deploying nuclear in their communities. Many of them were new to nuclear and many of them said exactly what Maria just alluded to, was we have tenders from China, and we have tenders from Russia, but we totally understand that they may come with strings attached. And so we are looking for other technologies in my role at that time, specifically U.S.-centric technologies because we understand the decarbonization benefits of nuclear and also the energy independence and the energy security benefits of nuclear. Recently, just last fall, Westinghouse had the extreme privilege of delivering what's called VVER-440 fuel. It's a specific type of nuclear fuel, but it displaces a Russian source of fuel in the revenue plans in the Ukraine. And we delivered it in time for those communities to survive the winter. And I don't use that phrase lightly to survive the winter because their leadership literally told our leadership, thank you for making that deadline. We would not have survived the winter without it. So the energy security and the energy independence that Maria talked about, that is offered from nuclear fuel is not taking lightly around the world. And again, Westinghouse is in a very privileged position to be able to support our allies around the world. I want to talk a little bit about the portfolio Westinghouse has. So we understand that there are different markets around the world, and we already heard a lot about those different markets this morning, but there's a small microreactor demand for defense applications, for fusion surface power applications for the Moon and Mars and beyond. We currently have a project with NASA to explore that effort. We have interest from defense departments around -- well, specifically in the U.S. here, but other defense applications because our microreactor technology is portable. It can be deployed in emergency and disaster relief situations. And then also, there's interest from current communities that really rely on either expensive diesel to be trucked in or wood to be burned. And so again, looking at that decarbonization effort that is -- that we're seeing around the world, not only in communities in the United States, but all around the world, microreactors can solve that problem. You move up and scale a bit to our AP300 is a 300-megawatt reactor. And so why SMRs? There are several different reasons. One, there's a smaller footprint for small modular reactors that is required. There is a smaller capital outlay for SMRs that is required. And then also because it is smaller, it has a smaller footprint, it's faster to construct, and direct. And so the M in SMR is modular. And so we do -- we use modular construction techniques, very similar to some of the things we saw on the screen earlier this morning with respect to shipbuilding. And so we use modular construction techniques fabricated at a factory and then deliver it to the site for completion of the construction project. And the last thing I want to talk about is actually factories in manufacturing because the interest that we are seeing from nontraditional end users for nuclear power is enormous. Maria talked about data centers. There are -- there's interest from industrial operations where they just want the power. They want the reliability and the power behind the meter in some cases. And so we have interest from end users that are saying, well, can you help me power my factory so that I don't have to draw power from the grid. In industries like semiconductors, ammonia manufacturers steel manufacturers, a very energy-intensive industries that are looking to not only help decarbonize their communities, but selfishly frankly, have reliable power for their manufacturing process. So I'll stop there. Thank you.

Thank you very much, Greg?

Yes. So let me kind of give a unique or specific utility perspective on what Maria and Rita have talked about already. First of all, just to tell you about myself, been in the commercial nuclear industry for over 30 years. The first 25 or so spent in commercial operations like Maria in a variety of roles. Last 6 have been spent in this area of development of new nuclear, and I am involved in several technology advisory boards and industry groups and committees around that topic. But from an Energy Northwest perspective, we've really been looking at this possibility and helping support development of new nuclear projects since about 2010. But in 2019, the Washington State legislature approved a law that now says we have to be no more gas, no more coal by 2025 in the state's power system. 80% clean at least by 2030, and 100% clean by 2045. So we had a new and unique mandate to make our power system 100% clean. Also in 2019, we commissioned a study to look at what would be the most cost-effective system if we had to go 100% clean. And the study results came out in 2020 in January of 2020 and basically showed that when you look at things from a system perspective, the lease cost system is one that has resource as Maria described, clean, firm, reliable, like nuclear in it. That's the most cost-effective system. So taking that study along with the state mandate, we began to more seriously explore and study the idea of developing nuclear in the State of Washington -- additional nuclear. We are the only nuclear operator in Pacific Northwest. So that naturally fell on us to look at. We since then have been exploring very seriously the X-energy technology. That's our technology of choice at this point. We signed a joint development agreement with X-energy last year to follow closely behind their project that's going to be Dow Chemical resource down in Texas. And so our intent is to follow right behind them. That puts us on, again, with our 2030 mandates, we're trying to get as close to 2030 as we can. That puts us right now on what we believe to be probably around a 2032 schedule for reactors up and operating. But the most interesting thing for us, and Maria and Rita have already touched on this, but what we're seeing is what's actually going to help launch our project and probably many of these technologies around the country is this interest from large industrial companies and particularly data companies. They are realizing that they are going to need so much power. They want it to be clean. They needed to be reliable and 24/7. And so there's a real serious interest in getting nuclear developed for that purpose. And these companies have the bank statements, if you will, the ability to support these projects to take on some of the early costs and risks with getting these technologies moving. And so what we believe right now is that we'll be launching our project fully forward here in the next 6 months or so in partnership with data tech companies to help get those moving.

Excellent. Thank you, Greg. I'd like to start the Q&A part of this.

And Maria, I'd like to start with you. In your introduction, you spoke a lot about demand. We have 94 operating reactors in the United States today. They initially were licensed for 40 years. Many of them have done an extension of plant life extension to 60. And then many are looking at maybe 80% plus are looking at doing an 80 or another 20-year extension to 80-year life. If we're able to maintain the existing fleet operating, do we still need additional nuclear capacity?

Well, absolutely. And it's a beautiful thing that we're able to extend the lives of these plants. Maybe I'll just spend a little bit of time there. When we say they were initially licensed for 40 years that 40 years wasn't determined by any sort of technological reason. It was just a set period of time. And much like you get a certain mortgage for your house, they just determined the 40-year time frame was good to evaluate that asset over. So there's nothing magic. We went from 40 to 60. All of these assets are analyzed very closely to ensure that you have the right programs in place for aging management, et cetera. So 60 years has been given for some of these, now 80 years. And there's nothing magic about 80. So hopefully, in several years, we'll probably be talking about extending them from 80 years to 100 years. And so -- but again, that's the base load that you have today, right? That's just saying this is what we expect for today. But here what we're talking about, right? The era of that flat demand, okay, that's over. There was a 2022 5-year forecast and a 2023 5-year forecast and a grid strategies report just came out in December. The difference between that 2023 5-year forecast and the 2022 5-year forecast showed an increased need that was wrong by like 80%, okay? And just a 5-year forecast, right? That's just the U.S., looking at all the different ISOs across the United States. And so we are seeing a level of load growth, unlike we've really seen in well over a decade. So you need more than what you have today. When we talk to the Chief Nuclear officers and we said, what are your companies thinking, they're saying 100 gigawatts by 2050. In addition, if you look at the DOE Liftoff Report that came out a year or so ago, and they're looking at commercial nuclear, they're saying we need an additional 200 gigawatt by 2050 right? So the demand is there, the hunger is there for it to be clean. And so you have to keep up with that, and you need it to be clean. Rita mentioned some of the manufacturing sectors right? It's a competitive advantage if you can say, well, my steel is green steel or my fertilizer or my insert product here, right? They want to sell in the global market. The global market cares. So if you make that product by using clean energy, you get to sell that product a bit of a premium to say, look, I'm green. So a lot more demand is coming and it needs to be clean, and that means more nuclear.

Excellent. Rita, I'd like to follow up on a comment you made about the AP1000, the gigawatt size of reactors internationally. Do you see demand in the United States for AP1000 or gigawatts reactors?

I do. I do. And as Maria mentioned, the demand is going to skyrocket and that demand needs to be met with something of a large scale. So fortunately, Westinghouse has a portfolio of different reactors and depending on, again, that the land use footprint as well as the capital outlay that an end user operator, owner operator is willing to put out. Absolutely, I see the need for gigawatt scaled reactors in the United States. We also are seeing interest in the SMR technology because of some of the states that Maria mentioned that are new to nuclear and they may not need a gigawatt scale in their reactor in their community or they want to try nuclear and SMR is a good foray into that -- into the nuclear market as well. So again, there are markets that exist in the United States as well as around the world for every class of reactor that Westinghouse has to offer.

Excellent. Thank you. Greg, you are operating a nuclear power plant today. You're looking at building additional nuclear capacity. Could you describe a little bit about the difference in the design and the safety of what you operate today and what you're looking at going forward?

Sure. When I think about safety, I always want to start with saying that I believe nuclear is safe as it is today, as it operates today, and I think our track record proves that. But what we are seeing with these advanced technologies are leveraging engineering to basically make that safety a little more designed in, a little more simple in how it's approached. For water-cooled reactors, what we see in the new designs is they're less reliant on electric pumps and motors to make sure water stays in the core. They use more passive systems and ways to do that. We're seeing in the new fleet, the generation 4 non-water cooled reactors, we're seeing things like fuels that can't melt at the temperatures the reactor could achieve. We're seeing, in some cases, with different coolants, operating at atmospheric pressure, so there's really not a driving force to release anything, if you will, because it just operates in reactor pressure -- or excuse me, operates in pressure. So we're seeing a lot of these technological advancements that we think just make safety simpler and more designed in upfront. From a design standpoint, Rita has already talked about a lot of it, right? We're seeing this, using more modern construction techniques like modularity, which the AP1000 has used. We're also seeing the promise of the small module that she's talked about, right? Not just the ability to manufacture more in factories and bring it to the site, but also the ability to really do something in a smaller -- she said a smaller fashion, less capital outlay upfront, but then really do that in a way that we can then get good at replicating over and over, really speed that up and see the cost curve coming down quickly. So those are some of the things that we find exciting about the new designs and why we see such advantages about the future of nuclear, I guess -- it's not your father's [Indiscernible].

And Rita, you did mention this to some extent in the remarks, but do you have anything to add as a reactor developer about the difference in design and safety of the new generation?

Sure. So a little bit more about the, what's called Generation 3-plus reactor design. So our AP1000 is that class, AP300 is the same. And one of the benefits of having a passive safety system is that you aren't relying on pumps and actually human interaction even in the event of a what's called a design basis accident. So for our AP class, both the 1000 and the 300 reactors, we rely on natural convection and gravity. So there is a water storage tank above the reactor. And in the event of a design-basis accident, it performs as designed and you rely on gravity and natural convection for that water to cool the containment vessel. . I did get asked once, what happens if gravity doesn't work. It was all -- and I said, well, we may have some bigger problems if gravity is not working. But in seriousness, the AP reactors are designed such that you do not need any human intervention for 72 hours. And why that's important is that it allows time in the event that such an event happens, for emergency plans to be put in place. And so having an elegant design, a simple design is really key. And I do want to touch on the fact that the 4 reactors that are operating in China were of AP1000 design. And they have been setting operational records, which is fantastic in itself, but it is absolutely remarkable for a new nuclear technology and a new nuclear plant to be breaking records for operations. It speaks to the simplicity of the design, the elegance of the design and then also the fact that we're taking that AP1000, and we're going to extrapolate it and use that as the basis for AP300, it allows for accelerating to the extent possible, the licensing process for this technology. And Greg talked about Generation 4. I've considered those as being revolutionary technologies. I consider our AP300 as being an evolutionary technology. And so we need all of those different concepts in Gen 3 plus and Gen 4 in the mix, so that we are prepared to meet all of the needs as they come down the pike.

Thank you. Maria, I'd like to come to you next. Any time something new is built, typically costs more money to build. And there is some apprehension for people to want to be the first to build in a nuclear power plant because there's opportunity for cost overruns. Is there anything that can be done? Or do you have any recommendations on items that could be done to help remove that uncertainty of these cost overruns.

Yes. Thanks. We're actually active in that conversation right now on the hill. And if you think about -- and we're calling it early movers policy because what we're looking to do is encourage early movers to move. And we have several companies that are interested to being third or fourth in line, but you don't get to third or fourth if you don't have the first or second. And so why is it that there is that hesitancy. And it's for what you just said, well, the first time you build a new whatever, it doesn't happen to just be a nuclear plant, it's anything new. You're going to get learnings, you're going to figure out how to get a little better at that. Again, that DOE report on the Advanced Reactor Liftoff has a nice curve, and it talks about how you can come down that cost curve as you move from the first to the second to the third to fourth and approach end of a kind. And so it really is 2 areas that we're looking at. So the first is, well, you just have new things, new pieces and parts that you're putting together. And so there is a risk reduction piece, if you will, in building the first. And then there's also -- well, now that you're building it, now that you're putting it together an opportunity for cost overrun, construction challenges. And so the 2 pieces are really a grant type program, again, public-private partnership with the U.S. government to see if we can help do that risk reduction piece. And then the second one is also some cost mitigation overrun, construction overrun. And again, public private partnerships with the U.S. government. And it's really biased that if you're building the first or the second, you get a little bit more in both of those categories. And then sort of as you're building the third or the fourth, you get a little bit less because we're trying to encourage those to go early on. So Again, we're on the hill talking about those things. I'm not expecting there to be legislation next week. But these are active conversations that we're having on behalf of the industry.

And Craig, Energy Northwest is looking at being one of those early movers, probably following [Dallas], so being a second. Do you have any thoughts or comments on how you're going to mitigate your risk?

Well, I think the first thing to acknowledge is that the federal government has done a lot already for us with the Infrastructure bill and the Inflation Reduction Act. There are now incentives and tax credits available to us that were not available before. They've done a lot with the fuel support that Maria talked about, and we'll talk more about the continues to be bills moving around licensing reform and things, all of which are important for us in terms of risk mitigation. But as Maria said, we are interested in a little bit more help. For us, in particular, we'd like to see a little more help with some of the early licensing costs that are kind of that first highest risk money you spend, but they can also bridge to the fact where we would like to -- we expect to use the DOE's loan programs to help finance the project. And then as Maria said on the back end, some help in sharing what we know are going to be some cost overruns for these early technologies. It's just undeniable that the first time you build it, it's going to take a little more than you think to do it. So those are kind of the buckets. But as I mentioned, I think the good news is that we're seeing -- the other thing that I sort of give the federal government credit for is, I believe they've been instrumental in some of these conversations with the big tech companies and helping them realize that they should be the ones to self step forward and take on some of this early risk and these higher costs to get these technologies developed.

You mentioned fuel, and fuel was mentioned more than once. So fuel was in the news pretty heavily right now, and of course, X-energy being a Gen4 reactor using HALEU, are you concerned about the fuel supply and -- what is your position on the fuel supply right now?

Yes. Fuel supply has been one of the things we've watched the most closely over the last several years. I think, first of all, I should just say that nuclear fuel is a multi-step process and so to try to break it down a little bit, even then over -- simplifying it a little bit. First of all, we talk about you have to mine the radium out of the ground, right? So there's the raw uranium resource. We don't have major concerns about the availability of uranium around the world. Clearly, as we are trying to wean ourselves off of Russia, Russian uranium that restricts the supply a little bit, but we see sufficient supplies both in the U.S. and around the world. The enrichment is probably a major issue right now that's getting a lot of focus and attention, the ability to enrich the uranium from the levels you take out of the ground up to the levels we need. The water cold fleet uses low enriched uranium, which we have the infrastructure to enrich to right now, but we need to build out more of that. But then the generation -- a lot of the generation 4 technologies use a higher level of enrichment, and we need to build out that infrastructure. And so that was a very major risk area for us of concern. But the federal government has developed a plan. We like that plan. We think it's the right plan. And we've seen Congress give money to that plan to support it. DOE issued their request for proposals last -- end of last year. And so that process is moving. And so from our perspective, that risk has fallen from being one of our major risks to down a little bit. We continue to watch it, but we're watching with a lot more optimism. The final step is the manufacturing of the fuel itself. And the water cooled reactors are using pretty standard fuels. So most of them already know who will make that fuel and that we know how to make it here in the U.S. But for the Gen4, there's construction and manufacturing facilities starting right now to go be ready to manufacture that fuel in the forms we need. So again, it's an area we watch very closely, but it's one that right now we are pretty comfortable with the plans that are in place. We'd like to see some of them move a little faster, but we're pretty comfortable with the plans in place.

I'm going to be moving on in just a moment to questions from the in-person audience. But Rita as a reactor developer, any thoughts on the fuel before we move on?

Sure. So Westinghouse is not only a reactor developer, we're also a fuel fabricator. We have 3 fuel fabrication facilities around the world. We're one of the only company that does that. And so I share Greg's thoughts that it's, we're certainly keen on the developments, but it's not really a concern because we are a key player in that field cycle. Our AP1000 and AP300 reactors rely on low enriched uranium. So we currently have fabricated that not only for AP1000, but also our customers all around the world. So we'll continue to do that for AP300, again, not a concern. But we will take advantage of the opportunities that we have seen in the United States from the funding that's been announced by the government here, but also the U.K. government just recently announced its funding plans for supporting the fabrication of HALEU high assay, high-enriched uranium -- high assay, low enriched uranium is what HALEU stands for. So we're very keen on the global developments as well so that we can continue to fuel the existing reactors, which by the way, need to continue to operate for decades to come because that's the cheapest way to decarbonize any community is to keep your nuclear plants online. But then the Gen3 plus and the Gen4 reactors.

Thank you. Maria, if your okay, I'm going to go to the audience, unless -- okay, beautiful. We have a couple of microphones around.

Thanks so much, Peter Arment from Baird. Thanks all of you for joining us, really informative. Dr. Baranwal, I wanted to just ask you a question about how you think about SMR adoption, just on a broader scale. Maria talked about all the demand signals, which are obviously very high and you still have about 20% of the grid powered by coal, and it seems like SMRs would be a great placement for not only that. But you need to obviously continue to add to the grid. So just how do you think about the time line of just broader SMR adoptions and how acceptable that will be to kind of replacing some of the existing infrastructure and adding to it.

So some of the conversations we're having right now are with communities that are -- that have plants to retire -- their coal plants or on sites that already have retired coal plants on that premises. So one, you're talking about trying to keep the jobs in the community. So that's always good. Reskilling certain jobs. So that's always good. It's not going to be totally easy. I don't want to misinform. It's not just you take out the coal plant and you plunk in the nuclear power plant. There will be some work. The regulatory framework around nuclear is very different than that around coal. So you need to make sure that the NRC, we follow -- in the United States, we followed the Nuclear Regulatory Commission's policies, but the communities are willing. And I would say all of us here would not have thought 10 years ago that in the State of Wyoming, there would be more than one community. So there were actually 4 communities that were fighting over having a nuclear power plant built in their backyard. So that's a testament to the switch that we have seen over the past several years. Coal communities when they realize, well, the plant is going to retire, we're not coming in and saying, you need to shut your plant down. It's just a natural evolution where the coal plants are deciding to retire. You want to keep those jobs in the communities, and nuclear can help not only provide the power cleanly, but also maintain the jobs in those communities. Now for the time line, I mentioned that AP300 is based on our proven AP1000 technology. And so our timeline is that we actually are providing to the NRC our application for design certification at the end of next year. They take time to do their reviews. It's going to be about 2 years. So that puts us at 2027 when we can start doing site-specific design and site specific licensing and starting to procure long lead items. That takes about 3 years, and we know this from experience. We Westinghouse know this from experience. So that puts the 2030. First-of-a-Kind builds will probably take a little bit longer, Nth-of-a-Kind we estimate to be about 3 years, so let's say, about 3.5, 4 years, the First-of-a-Kind. So if I can get Gary to commit that we'll all get together a decade from now, we can celebrate the first SMR AP300 coming online. That's what it's going to take. And that's for a proven technology. So when you talk about the next generation, Gen4 technology, it might be a little bit longer. You might hear other time lines, by the way. But what I'm telling you from a Westinghouse perspective is rooted in our experience from our AP1000 build.

But maybe another part of your question is that we do see the possibility on projects like this. There are significant milestones, you can see where the risk is reduced, right? And so we do believe in Maria's organization is helping lead efforts to try to line up multiple projects to be taking steps along the way as they see first projects reduce the risk. So we don't think this is build 1 in 10 years and then the next will start. We think we'll be able to lay out basically a pathway for many to follow in [Indiscernible].

I mean I would offer Kairos, received their construction permit in December of last year for one of their reactors and they're looking to move ahead on their next-generation build after that. So I think you're going to see play out a mixture of micro reactors, small modular reactors definitely over the next few years. And as Rita said, don't be surprised if in future integrated resource plans, you don't start seeing some large reactors put in there.

Kristine Liwag from Morgan Stanley. So there's clear enthusiasm regarding the future of nuclear power from all of you in the panel. I guess looking back in the 2010s, the nuclear renaissance didn't pan out. Can you describe how the environment is similar or different then? I mean, it seems like with [Indiscernible] there would be positive momentum for nuclear power in the U.S. but then South Carolina was canceled. So can you just paint a picture of what's different this time? What's driving your conviction for growth? And Gary, I've got a follow-up for you.

Yes. I'm happy to start and then anybody else can sort of jump in. I see very different drivers for where we are right now in commercial nuclear again to just sort of describe the inflection point. Just a few years ago, we were shutting down nuclear plants, right? And today, we're not only talking about extending the lives, we're talking about power uprates and we're talking about building new. So to absolutely say that we're at an inflection, sort of a sea change within nuclear. It's not really overstated. So go back to the 2008, 2007 time frame when we talked about potentially a nuclear renaissance, sort of what was going on? Fracking was happening, right? And so right around that time, you saw a very sharp decline in the price of gas. You also had a lot of different tax credits, those were happening at the state level as well as at the federal level for wind and solar. So all of a sudden, you had this sort of pressure on nuclear, especially nuclear in the merchant market that was sort of fighting for a place to be relevant. And this is at a time where although maybe some States were interested in clean energy, there was nothing else really inspiring anything around clean energy. Those were renewable tax credits, not clean energy tax credits, right? So you really put a lot of external forces on nuclear sort of pushing it out of the marketplace. And so that was a time where people might have talked about clean energy, but there wasn't really anything driving it. And I would say fast forward to -- fast forward, if you will, to today, yes, you do have tax credits now. The tax credits in that IRA, those were clean energy tax credits. Those were tax credits that nuclear could qualify for, "oh, that's a wake-up call." You also had a tax credit on the current fleet, first ever tax credit on a current existing asset, what was that signal about? That was signal about please stop shutting down your nuclear plants, right? And so here's a tax credit to make sure that you're not doing that anymore. So I guess I just -- I can't enforce enough when I say that we're at a different moment. This moment is really being signaled very strongly by the federal government, very strongly globally and also very strongly at a state level. So I just don't see it changing.

And I guess I'll add from a utility perspective, as Maria said, the generating options back then with natural gas, there were other cheaper options with gas and coal now kind of coming out of favor and being removed, you have fewer options, certainly, that can provide that firm resource. But on the load side too, back then, of course, we had the big recession in 2008, '09, we've had efficiency, things like LED light bulbs and stuff that have led to really, as Maria said, very flat growth curves for utilities on load. But now we're seeing the opposite of that, right? We've talked a lot about data centers and AI. But think about electrifying transportation and electrifying home heating, all those things are just continuing to add up to say that we are going to have a surging load that has to be met. And again, as I mentioned, our study concluded, it's just way too expensive to try to do that on the backs of just a bunch of solar panels, wind turbines and batteries alone.

Great. And Gary, the follow-up question for you. I mean, for small modular reactors, can you talk about Curtiss-Wright's role and what technology you have to satisfy that demand? What would make you the partner of choice for some of these manufacturers? And it sounds like gravity could be your competitor, right?

Curtiss-Wright does have a very broad portfolio, and Kurt Mitchell will be speaking next about some of the things that we do offer. He can go into greater depth than I can. But I think we add -- we have the know-how. We have the knowledge. We have the breadth of offering. We are a global company. And I think it would be better to let Kurt go into the specific details because that will be discussed very shortly.

Gary, let me just answer a piece of that, though. One of the things we've seen a lot of the suppliers that can or should be involved in this, have taken sort of a wait-and-see approach. What we've really appreciated about Curtiss-Wright is that they've stepped forward and been a part of these conversations. They've been active in developing their capabilities and working with technology providers in a way that we haven't seen from all of them. And so they're very well poised and positioned because of what they've invested so far and effort they put in...

They know what it takes. Like you know what the quality assurance program is, right? That's required to do business in nuclear. And I was just [Indiscernible] yesterday looking at the demonstration on simulators and having had a license in my past, kind of interested in what you're doing on simulators. And I know that's a recent addition to your portfolio. So I think there's lots that make Curtiss-Wright attractive.

Appreciate that. We are running over, but I can give you an opportunity. So one last question. Is there one more question from...

Myles Walton, Wolfe Research. I was hoping to maybe follow up on Kristine's question, how relevant was Fukushima to what actually happened in the latter part of the last 10 to 15 years in terms of the reversal of momentum on nuclear. And then secondarily, could you comment on the policy changes that may or may not result as a result of the elections and whether or not you think that is a risk and/or opportunity? Or is it a bipartisan viewpoint, given your experience in the last administration?

Yes, I'm happy to jump in looking at that clock and feeling like we're a little bit overdue. So let me just -- I'll start with the bipartisan one first and go back to your other question. So you kind of hit the nail on the head. When I say that we have bipartisan support and some of the successes that we've talked about, some of those successes were in the Trump administration, right? And so early on that bipartisan infrastructure package and some of that work. So we got support in the Trump administration, and we got support in the Biden administration. Now there is not too much that you can get Washington, D.C. to agree on. But I'll tell you, commercial nuclear is one of them. And even in this election year, early on, people were saying, "Oh, there's not going to get any legislation passed. We're not going to make any progress. It's an election year, everybody is going to be distracted." Well, you know what, the President just signed on a law of the $2.72 billion for onshoring the uranium fuel supply. And so there, again, in a time of sort of significant partisanship I would say that commercial nuclear. And so we have confidence looking forward, regardless of the outcome of the election, whoever sits in the White House, whether the House flips, whether the Senate flips, I tell you, I think the commercial nuclear conversation will prevail. Your question on Fukushima, not exactly sure where you were going with that, but I can tell you that I ran the Fukushima Response Steering Committee for the United States on the commercial side. And I have a high level of confidence. I went to Fukushima after the accident. We took all of our Chief Nuclear Officers over there. We brought all the Japanese Chief Nuclear Officers to the United States to make sure that was clear understanding of what went on. And I have a high level of confidence of where we are positioned today. Not only do the designs we have, have all kinds of additional margin that's in them, additional equipment to operate and to run, but we have equipment that's available across the United States coordinated across all of the different plants that we have that we can get the necessary additional equipment to any company that we have here in the U.S. What Fukushima needed was power and water, and we have sufficient resources at the ready to be given to any plant if, for some reason, I doubt we're going to have a tsunami, but there might be other things that happen that take out sort of all of your equipment at your site, we have additional equipment that's poised and ready. And so I have a high level of confidence that there's no issues like that. And honestly, I think just look to today, and I would tell you the public support for nuclear is positive and increasing.