Curtiss-Wright Corp.CW

Market position and competition · Pricing pressure and margin compression

While we have attempted to mitigate the effects of increased costs through price increases, there are no assurances that higher prices can effectively be passed through to our customers, or that we will be able to fully offset the effects of higher raw materials costs through price increases on a timely basis.

Innovation and product development · Intellectual property protection and infringement

Obtaining, maintaining, and enforcing our intellectual property rights and avoiding infringing on the intellectual property rights of others are important factors to the operation of our business. While we take precautionary steps to protect our technological advantages and intellectual property and rely in part on patent, trademark, trade secret, and copyright laws, we cannot assure that the precautionary steps we have taken will completely protect our intellectual property rights.

Innovation and product development · Product development and randd investment risks

Our future success will depend, in part, on our ability to develop new technologies. The commercial and government markets in which we operate are characterized by rapidly changing technologies. Accordingly, to remain competitive in the future, we will need to continue to invest financial resources, including through internal research and development, acquisitions, or other teaming arrangements, to identify emerging technological trends and develop and manufacture competitive products.

Cybersecurity and data protection · Data privacy and protection regulations

Various privacy and cybersecurity laws and regulations, both in the U.S. and globally, require us to manage and protect sensitive and confidential information, including personal data of our employees, from disclosure. For example, the European Union's General Data Protection Regulation, which became effective in May 2018, extends the scope of the European Union data protection laws to all companies processing data of European Union residents, regardless of the company's location.

Digital transformation and innovation · Artificial intelligence and automation

While we do not currently use artificial intelligence ('AI') in the design and development of our products, we may seek to utilize AI in the future. The development, deployment, and integration of AI technologies presents risks, challenges, and potential unintended consequences that could affect our business. Given that laws and regulations around AI are continuously evolving, our obligation to comply with them could entail significant costs, negatively affect our business, or hinder our ability to incorporate certain AI capabilities into our operations and products.

Cybersecurity and data protection · Data breaches and cyber attacks

We store sensitive data, including intellectual property, proprietary business information, and confidential employee information on our servers and databases. Despite our implementation of firewalls, switchgear, and other network security measures, our servers, databases, and other systems may be vulnerable to various cyber and other security threats, including those caused by computer hackers, physical or electronic break-ins, sabotage, computer viruses, malware, worms, and similar disruptions from unauthorized access and tampering with our computer systems.

Geopolitical and trade · Political instability and government changes

Although there are no immediate effects on our operations with respect to USMCA, we cannot predict future developments in the political climate involving the United States, Mexico and Canada, and thus, these may have an adverse and material impact on our operations and financial growth. The USMCA is subject to renewal in 2026 and the U.S. government has recently indicated that it intends to negotiate changes to the USMCA with the Mexican and Canadian governments.

Economic and market conditions · Inflation and deflation pressures

Historically, we have not been significantly impacted by inflation, with increases in raw material costs or payroll costs generally offset through lean manufacturing activities or pricing initiatives. However, in recent history, we have experienced heightened pressures in our costs of material, services, and especially labor, consistent with the overall high rates of inflation.

Geopolitical and trade · International conflicts and tensions

For example, in response to Russia's invasion of Ukraine, the United States, along with the European Union, have imposed restrictive sanctions on Russia, Russian entities, and Russian citizens. We are subject to these governmental sanctions and export controls, which may subject us to liability if we are not in full compliance with applicable laws.

Economic and market conditions · Economic recession and downturns

Global economic conditions may adversely affect our business, operating results and financial condition. Although we have significant discretionary funding capacity through our generation of significant operating cash flows coupled with access to the credit markets, our ability to fund our operations could be negatively impacted by the following factors: (a) global macroeconomic uncertainty, (b) the ongoing trade disputes between the United States, Canada, and China, (c) armed conflicts around the world, such as those in Ukraine.

Human capital and workforce · Talent acquisition and retention

Our future growth and continued success are dependent upon our key personnel. Our success in driving business performance and executing our growth strategy is dependent upon the efforts of our senior management personnel and our ability to attract and retain other highly qualified management and technical personnel. We face competition for management and qualified technical personnel from other companies and organizations, which has intensified for a variety of reasons, including wage inflation, sustained labor shortages, and a shift toward remote work.

Project and contract management · Large contract concentration

Backlog represents products or services that our customers have contractually committed to purchase from us. As we are a subcontractor to prime contractors for the vast majority of our government business, substantially all amounts in backlog are funded. Backlog as of December 31, 2025 was approximately $4.1 billion. Backlog is subject to fluctuations and is not necessarily indicative of future sales.

Human capital and workforce · Labor relations and union negotiations

A percentage of our workforce is employed under collective bargaining agreements. Approximately 6% of our workforce is employed under collective bargaining agreements, which from time to time are subject to renewal and negotiation. We cannot ensure that we will be successful in negotiating new collective bargaining agreements, that such negotiations will not result in significant increases in the cost of labor, including healthcare, pensions, or other benefits.

International and currency · Foreign exchange and currency exposure

During 2025, approximately 27% of our total net sales were to customers outside of the United States. There has been, and may continue to be, significant volatility in global stock markets and foreign currency exchange rates that could result in the strengthening of the U.S. dollar against foreign currencies in which we conduct business. To the extent that foreign sales are transacted in foreign currencies and we do not enter into currency hedge transactions, we are exposed to risk of losses due to fluctuations in foreign currency exchange rates, particularly for the British Pound, Euro, and Canadian dollar.

Market and investment · Asset valuation and impairment

As of December 31, 2025, we had goodwill and other intangible assets, net of accumulated amortization, of approximately $2.2 billion, which represented approximately 43% of our total assets. Our goodwill is subject to an impairment test on an annual basis, or more frequently, whenever events and circumstances indicate that goodwill may be impaired.

Capital structure and performance · Debt management and refinancing

As of December 31, 2025, we had approximately $1.0 billion of debt outstanding. Our level of debt and debt servicing costs associated with that indebtedness, in part because of increases in interest rates on variable rate indebtedness under our revolving credit facility, could have significant consequences for our business.

Legal and litigation · Employment and labor law compliance

We are also subject to federal, state, local, and foreign laws and regulations governing worker health and safety requirements. Failing to comply with these laws and regulations could have an adverse effect on our operating results.

Tax and financial reporting · Financial reporting and accounting standards

We use estimates when accounting for contracts that apply over-time revenue recognition. Accounting for contracts that apply over-time revenue recognition requires judgment relative to assessing risks, estimating contract net sales and costs, and making assumptions for schedule and technical issues. Due to the size and nature of many of our contracts, the estimation of total net sales and costs at completion is complicated and subject to many variables.

Legal and litigation · Litigation and legal proceedings

We may be subject to periodic litigation and regulatory proceedings, which may adversely affect our business and financial performance. From time to time, we are involved in lawsuits and regulatory actions brought or threatened against us in the ordinary course of business. These actions and proceedings may involve claims for, among other things, asbestos and environmental exposures, intellectual property matters, copyright infringement, compensation for alleged personal injury, workers' compensation, employment and employee benefit matters, government contract issues, commercial or contract disputes, and acquisitions or divestitures.

Reputation and brand · Brand damage and negative publicity

Furthermore, an accident caused by one of our products could damage our reputation for selling quality products. We believe that our customers consider safety and reliability as key criteria in selecting our products and believe that our reputation for quality assurance is a significant competitive strength.