Letter to
Shareholders

pivot to growth

In our renewed drive for top-line acceleration, we will build upon our core strengths and our positions within key markets to grow both organically and through strategic acquisitions to ensure our continued technological leadership.

We will advance those initiatives through internal investments, with a steady focus on strategic investments in technology and ideas that drive organic growth. Over the past few years, we created both Growth and Innovation Councils that will leverage our core strength in innovation and define pathways to accelerate growth in our business.

Further, we are laser focused on reaching our 17% operating margin target in 2022, and leveraging our strong and lean operating structure to drive continued, solid growth in diluted EPS and free cash flow.

We have a proud and motivated team, and we look forward to sharing more details of our new plans as the year progresses.

Enhancing our Long-Term Value Proposition

In early 2021, we concentrated on simplifying the Curtiss-Wright story as a means of improving investors’ understanding of our long-term value proposition. Our objective was straightforward — simplify how we present Curtiss-Wright to investors. We reconstituted our diversified portfolio to be less complex and easier to follow through an updated and simplified structure for both our segments and end markets. We sought to establish a consistent product alignment with improved concentration across all three segments and our end markets, and ensure that our constituents better understand how our businesses are aligned to industry drivers and metrics.

As a result, and beginning in 2021, the Company will report under the following three segments:

• Aerospace & Industrial,
• Defense Electronics, and
• Naval & Power

By enhancing our communication and alignment, we believe that this outcome will provide greater transparency and clarity into the growth rates and profitability for each of our segments, and also strengthen investors’ understanding of and appreciation for our long-term value proposition.

Disciplined and Balanced Capital Allocation Strategy

Curtiss-Wright’s commitment to a balanced capital allocation strategy consisting of a disciplined pace of acquisitions, reinvesting in our business, and providing steady distributions to our shareholders has created tremendous value.

2020 was no exception, and I’m proud to say that we accomplished the following:

• Completed two significant acquisitions, including the largest transaction in our history with the $400 million acquisition of Pacific Star Communications, Inc. (PacStar), a leading provider of tactical battlefield communications equipment,
• Returned more than $200 million to shareholders through share repurchases and dividends, including opportunistically deploying our capital to buybacks, while maintaining a steady pace of dividend payouts, and
• Spent approximately $200 million on operational investments, including capital expenditures and voluntary pension contributions

We maintain a strong and healthy balance sheet, with approximately $1.5 billion of borrowing capacity at the end of 2020 to support our balanced capital allocation strategy, providing the financial flexibility that will enable us to pursue our long-term growth strategies.

Focus on ESG and Sustainability

It would be remiss of me to not acknowledge the challenges that the pandemic presented to all of us in 2020. As Dave mentioned, protecting the health and safety of our employees, as well as ensuring our business continuity, were of paramount importance. Further, and as part of our diligence, we continued to track total recordable rate (TRR) and days away, restriction and transfer rate (DART) for all sites worldwide. The Company demonstrated a reduction of nearly 30% in its 2020 TRR and DART rates compared to 2015; the 2020 rates were 0.98 and 0.65, respectively, as we continually strive for best in class performance.

In 2020, we created a new Environmental, Social and Governance (ESG) council, built a new Sustainability section of our website and improved our ESG scores across numerous ratings platforms. We remain diligently focused on ways to measure and improve our performance, increase our transparency and highlight our commitment to our ESG efforts.

We also launched a new Sustainability Portal and established an energy baseline from which to track energy usage and spend; this data will be used to calculate greenhouse gas (GHG) emissions in accordance with industry standards.

We are dedicated to building on these efforts in 2021 and further progressing our diversity and inclusion programs.

Optimism for 2021 and Beyond

We are continuing to invest in our future through increased research and development funding in 2021, while driving solid execution and leveraging the benefits of our 2020 restructuring actions. We will continue to outperform in our defense markets, driven by our position as a critical supplier to the defense industry with long-term visibility on key platforms. We also expect to benefit from improved conditions in several of our commercial-facing businesses this year, especially in the industrial markets.

Our strong and stable balance sheet, as well as our continued ability to deliver solid earnings growth and free cash flow, have enabled us to consistently provide a steady and solid return to our shareholders. I look forward to Curtiss-Wright’s continued successes in 2021 and am excited for the future.

Lynn M. Bamford
President and Chief Executive Officer