All right, 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 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 wanted 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, and 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 encourage you to stop by to see some of those.
Then today's presentation and our press release with our new long-term targets is available on our website. 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 and our public filings with the SEC. We'll also reference certain non-GAAP financial measures today. GAAP to non-GAAP reconciliations are available on the appendix of our presentation, as well as on our website. Turning to today's agenda. 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 you'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 Trautner 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 Mica, providing an overview of the Naval and Power segment with a deep dive into the naval defense business. Then we'll take about a 10-15 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, and 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 Naval and Power segment with a deep dive into the commercial nuclear business. He'll be followed by our Vice President and Chief Financial Officer Chris Farkas to provide an in-depth review of our financials and long-term outlook. And then Lynn will prepare or 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, our Q&A session. I'll moderate and take questions from the live audience and we'll 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.
At Curtiss-Wright, the legacy of excellence and innovation pioneered by Glenn Curtiss and the Wright brothers lives on across our global portfolio. Today, we're building momentum through the execution of our pivot to growth strategy to continue to be a leading global provider of must not fail, mission-critical technologies for the aerospace and defense, commercial nuclear power, process, and industrial markets. Curtiss-Wright's strong relationship with the U.S. military and allied forces is driven by their reliance on our highly engineered and trusted solutions. Our defense pedigree is enhanced by numerous wins in aircraft arresting systems, MOSA-based open architectural electronics, and critical flight test and monitoring systems.
Our legacy with the U.S. Nuclear Navy began with the USS Nautilus, the first nuclear submarine, and our continued expertise and reliability positions us as a premier supplier and national asset to America's submarines fleet, driving tremendous growth in order to support critical U.S. Navy platforms. Continued success in commercial aerospace is demonstrated by our enduring focus on the future of flight, improving wing and engine efficiencies, and doing our part to aid in decarbonization and flight safety. This includes our first electromechanical actuation win with Airbus and our partnership with Honeywell to develop the next generation of cockpit voice and flight data recorders. As pioneers in the world of commercial nuclear power, our innovations not only deliver next-gen technologies and equipment to existing reactors across the globe, but also ensure our position to support new advanced small modular reactors, including key development contracts with X-energy and TerraPower.
Our focus on targeted investments while leveraging cross-market synergies will drive our future growth, and our sustained emphasis on operational excellence will harness the power of digitalization and automation as we optimize our business for long-term success. We are excited to celebrate our ninety-fifth anniversary and continue the journey as one Curtiss-Wright, dedicated to a strong defense, clean and affordable power, and trusted security. Meeting the future head-on takes vision and investments in the people, tools, and technologies that bring the solutions of tomorrow to market today.
All right, well, with that, thank you very much. 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. I wanna 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. 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 gonna hear from several of our key leaders around both the progress we've made over the past three 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 gonna 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 four 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 in 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 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 and 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 leaderships as they lead by example through operational and customer excellence and a continuous improvement mindset while delivering strong results. 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'm 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 ex-executives that embody what we look for and see in Curtiss-Wright's leaders across the company, experts in their field with deep industry knowledge, a passion for growth, and integrity and discipline to do it 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 three years ago.
We made great progress against our four goals we communicated, starting with our Pivot to Growth strategy, which focused on accelerating organic growth, operational excellence, disciplined 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 developing have deepened and will 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. 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 four out of our five financial goals and came very close on the fifth, and these were set back in 2021. We delivered 7.4% of total sales growth, landing squarely in the middle of the 5%-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 to 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.
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 ingenuity-innovation, and as an engineer by education and practice for roughly the first third 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 oftentimes because of deep customer relationships. Curtiss-Wright's innovation system is a cross-enterprise platforms that every employee can access. Currently, there are 1,250 ideas in the innovation platforms, 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. As an idea evolves into an R&D project, our market and customer analysis ensures the 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 three years, R&D investments have outpaced sales growth, and we accomplished this while delivering the results I covered just a couple 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, our 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 one example. We just hosted our board of directors a couple weeks ago at ESCO, the Aircraft Arresting business that we acquired just over two 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 you've waited long enough. It's time to introduce our new three-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 seemed 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 by no means easy, these are achievable goals, and I hope after this morning's presentations and discussions, you will agree. I would like to now invite Kevin Rayment, our Chief Operating Officer, to add some more details around our, 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 Grow 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 three years. But as always, we 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 four key messages I want to cover this morning as we walk through my presentation. First, we've made great progress accelerating our Pivot to Grow strategy through our Operational Growth Platform and see plenty of opportunity for continued growth. Second, I'm gonna 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 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 100 basis points since 2020, despite significant inflationary challenges. Further investment in automation and digitization has continued 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 Day, I talked about the specific initiatives related to each of the eight elements of the 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, and 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. 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. 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've 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 two 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 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. It allows us to do incentive objectives and 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 individual's needs and the important roles and practices that CWC sees as important to the corporation to succeed, aiming once again to transform the way in which we develop our talent. At our last Investors 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 StratEx 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 gonna hand you over to Jeff Trautner, 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 Trautner, 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 tough 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 customers are critical in the sense that they improve performance, reliability, and safety. Second key message: we are strategically aligned with global green and electrification megatrends. 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 this sub-segment 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 quick recap of our Aerospace and 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 One and even Tier Two suppliers of critical systems in aerospace and 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 this slide. Namely, in actuation systems, we have key wins building further Tier One 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 5-10 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 UK aerospace and academic institutions.
This will take us to new extremes in 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 customers' 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 and life. 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, position 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 biz jet, 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 already 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, and 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%-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 as 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 were previously thought possible.
We have been developing improvements in our designs to enable aircrafts to use less and 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 continue to progress sensors and solenoid designs 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 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 Eviation Alice all-electric aircraft, which had the industry-first crewed flight in a demonstration project. Most recently, this same integrated 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 in 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 platform 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 and 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 had 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, where I 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 in 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 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 high degree of confidence that we have the right people, the processes, and the products to support those tenets 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 fleets, 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.
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 three 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 AC-130J aircraft. Secondly, we were 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 Fabric100 product line.
This ecosystem of processors, switches, and process accelerators will bring state-of-the-art capabilities to enable faster and broadband 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 proposed rulemaking that stipulates a 25-hour cockpit voice recording duration following several recent safety incidents. Finally, it should be noted that despite facing strong headwinds in FY 22 because of the electronic component supply chain constraint, the teams quickly adapted to minimize impact to our customers and on the business.
As we continue to see above average new order bookings, we continue to generate record-breaking backlog, generally providing strong forward revenue coverage. As we focus on the growing field of defense electronics, we provide to our nation and to several international defense forces with vital aerospace, ground, and naval defense building blocks and subsystems that are trusted on over 400 programs and nearly 3,000 platform 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 rugged 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 emails 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 gold 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 re-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 solutions. 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 Investor's Day. Joint All-Domain Command and Control, referred to as JADC2, is a warfighting 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 warfighter 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-starved 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're 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 lifecycle extensions.
That means as defense investments shift 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 One 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 Two defense electronics segment, more than $50 billion. In the area of advanced technologies, 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'll 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 advantages, nations usually win or lose conflicts over the long term based on the strength and endurance of their 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 first 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 non-core activities will fall on the tier two 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 manned 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 in 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 MIL-COTS model, which has proven successful for over 30 years and coincides with the COTS initiative that then SECDEF 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. Our success today, and in the future, stems from this commitment and the decades of investment in 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 consult with when discussing technology upgrades.
Recent wins in SOCOM radar upgrades were born out of our trusted position with the radar OEM, who was tasked with improving capabilities for a 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 INDOPACOM 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 in adjacencies. Today, we are engaged and 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, in cooperation with McKinsey & 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 two critical line replaceable units on a Group 5 UAS program.
By leveraging our forward-looking roadmap, our experience with the architecture, and our lifecycle management services, we were able to provide customer advice as obsolescence occurred, obsolescence events occurred. The net result was the ability to maintain configuration control for over two 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 lifecycle management services. In the commercial industry, life cycles range from six months to roughly seven 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 lifecycle.
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 lifecycle 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 sensor 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 crowdsource 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, bore 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 increasing cost of sustainment, F-35 is the first operational aircraft to be equipped with QRIP. Next, and well down the integration pipeline, are operational F-22s. We're also working on QRIP for F-16 and for A-10, 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 four 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 roadmaps 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, an 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 your next speaker, my colleague, Dave Mica, 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 Mica, 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 Mitchell, 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 six months. Before I joined, I've spent the last 35+ years in the aerospace and defense industry, two, with two primary large aerospace and defense companies.
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 could act quickly, and most importantly, a very skilled workforce. All the things I thought about Curtiss-Wright have proven to be true after my six months here, so I'm really excited to be here. I wanna leave you, or start the day today with four key messages. The first and most important is, in our naval defense business, we are a mission-critical partner to the U.S. Navy. 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 all of that with the work we do with the shipbuilders, the submarine providers, our NATO and ally partners, so we're right in the middle of all that.
The third key message I wanna 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're 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 wanna 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 navies, and 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. 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 wanna 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 number one 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 arresting systems, and they have been an excellent acquisition to 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 naval business? The first point I wanna 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's term. 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.
We have strategically located service centers around the West Coast and East Coast that support fleet operations that are critical to maintaining our products and services. Okay, next I wanna talk about market conditions. So what are the key market conditions? As Brian mentioned, the number one 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 10 times the rate we are in the U.S. I want you to think about how incredible that is, 10 times 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 number one priority in the U.S. Navy.
The U.S. government realizes that the industrial base in this country has atrophied over the last 30 years, so they are investing $15 billion in the next 5 years, targeted, targeted towards that industrial base. We at Curtiss-Wright have received about $15 million in the last couple of years, and we're gonna 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. In 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 gonna 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 UK, 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 wanna mention, I think, was mentioned earlier, is the AUKUS program, which is a trilateral agreement between Australia, the UK, and the U.S..
That is going to be to develop the next class of fast-attack submarines, 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 two main carrier programs, and if you look to the right, you see, see the two 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-class submarine and the Ford-class aircraft carrier. And if you look across the bottom row, if you add all that up, it's over $700 million of ship set content when you add all four platforms up.
So we have a very significant presence on the most critical platforms the Navy has to offer in this country. Okay, on slide seventeen here, I wanna talk about some strategic initiatives imperatives, and I look at them in three main themes or three 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 gonna 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.
I wanna give you one or two 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 gonna be based on the current portfolio of work we already have. We are going to focus also on international business. As I mentioned before, in our aircraft arresting 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. 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 SSNX, 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. 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 SSNX, which is the next generation. 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. Then finally, I wanna 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, 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 that 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.
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. 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. There is an opportunity for us to grow our current content from $75 million by 2-3 times. So that is really part of our strategic growth plan. Okay, now this is a really interesting slide. I wanna 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, Saipem, have all adopted or are adopting our technology.
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 of $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. I really hope you all get to the chance to go downstairs and see the subsea pumping technology. There is a replica 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 it, take the time to go see it.
In summary, the future is very bright for naval defense in 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-cycled 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 Naval team. I wanna thank you for your time today. I think now we're gonna take a short break as we prepare for our commercial nuclear panel.
... My name is Gary Wolski, and I lead Curtiss-Wright's 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 in reactor operations at the Fast Flux Test Facility, which is a Generation IV sodium-cooled test reactor. I got started in 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 three industry leaders, which I have the pleasure 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, sorry, Rita Baranwal, Senior Vice President, Westinghouse, a reactor developer, and Greg Cullen. He is 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 and 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 in a moment or two, 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.
With that, I'd like to start with you, Maria.
Great. Well, thank you. Thank you for that kind introduction. You know, 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, you know, 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, and we can get into that a little bit more. It's also sitting on a 50-year history in the United States of reliable, safe operations of our nuclear fleet. So again, this confluence of events is a real 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, I'll slice and dice this from a couple of different angles. Let's talk about it from a global perspective. You know, what, 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 have 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 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 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. I would offer that was the U.S. contribution. Just last year, in a clean energy ministers meeting in Japan, there was agreement by five countries to work together on the global supply chain for nuclear, and U.S. was one of those, and this was our contribution. There are others.
You just saw the UK 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 five years ago, we were talking about state legislatures, I would have said it would've been exciting if there was five or six bills to have anything to do with nuclear. Last year, over 200 bills in 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 two 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 it? 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?
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, you know, 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 wanna power it in a different way 'cause you wanna power it in a clean way. So there's a unique demand for that clean energy. So, again, I just want to share what 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, you know, I guess I just would also add, you know, sort of why is that?
Well, it's for a lot of the reasons that I just mentioned, but I'm gonna 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 wield 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 one make or 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 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, a gigawatt-scaled 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, you know, 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 were 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's, it displaces a Russian source of fuel, in the Rivne plants in the Ukraine. And we delivered it in time for those communities to survive the winter. And I don't use that phrase lightly, "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 taken lightly around the world. And again, Westinghouse is in a very privileged position to be able to support our allies around the world. I wanna talk a little bit about the portfolio that 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 fission 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, you know, 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 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 in scale a bit to our AP300, which is a 300-megawatt reactor. And so, you know, why SMRs? There's 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, has a smaller footprint, it's faster to construct, and erect. And so the M in SMRs is modular, and so 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, fabricate it at a factory, and then deliver it to the site for you know, completion of the construction project. And the last thing I wanna talk about is actually factories and manufacturing, because the interest that we are seeing from non-traditional end users for nuclear power is enormous. Maria talked about data centers.
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, you know, 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, so very energy-intensive industries that are looking to not only help decarbonize their communities, but selfishly, frankly, have reliable power for their manufacturing processes. So I'll stop there. Thank you.
Thank you. Thank you very much. Greg?
Yeah, well, 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. 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, excuse me, 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, well, what would be the most cost-effective system if we had to go 100% clean?
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 least cost system is one that has a 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 the 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 gonna be a 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 you know, the most interesting thing for us, and Maria and Rita have already touched on this, but what we're seeing is what's actually gonna 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 gonna need so much power. They want it to be clean, they need it 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, you know, 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 six 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. 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. You know, 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 a 40-year timeframe 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 a 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, you know, 80 years to 100 years. But again, that's the base load that you have today, right? That's just saying, "This is what we expect for today." But hear what we're talking about, right? The era of that flat demand, okay, that's over. There was a 2022 five-year forecast and a 2023 five-year forecast, and a Grid Strategies report just came out in December. The difference between that 2023 five-year forecast and the 2022 five-year forecast showed an increased need that was wrong by, like, 80%, okay? In just a five-year forecast, right? That's just the U.S., looking at all the different ISOs across the United States.
And so, you know, 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 talked 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 gigawatts 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, and you need it to be clean. Rita mentioned the, 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, you know, insert product here," right? They wanna sell on 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's coming, and it needs to be clean, and that's, that means more nuclear.
Excellent. Thank you. Rita, I'd like to follow up on a comment you had made about the AP1000, the gigawatt size of reactors internationally. Do you see demand in the United States for AP1000 or gigawatt-style 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 footprint, the land use footprint, as well as the capital outlay that an end user operator, owner, 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 those 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're, you know, they wanna 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. You know, when I think about safety, I always wanna 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, you know, 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 IV 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, you know, 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, atmospheric pressure. So we're seeing a lot of these technological advancements that we think just makes safety simpler and more designed in upfront. From a design standpoint, Rita's already talked about a lot of it, right? We're seeing this, the using more modern construction techniques like modularity, which the AP1000 has used. We're also seeing the promise of the small modular that she's talked about, right?
Not just the ability to manufacture more of this 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, and really speed that up and see the cost curve come 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, you know, it's not your, it's not your father's nuclear.
Thank you. And Rita, you did mention this to some extent in your 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 III+ reactor design. So our AP1000 is that, 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, "Well, what happens if gravity doesn't work?" And it was all serious. I said, "Well, you know, 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.
I do wanna touch on the fact that the four 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, you know, we're taking that AP1000, and we're gonna 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 Four. I've considered those as being revolutionary technologies. I consider our AP300 as being an evolutionary technology.
So we need all of those different concepts and Gen III+ and Gen IV 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. Anytime something new is built, it typically costs more money to build. There is some apprehension for people to want to be the first to build a new 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?
Yeah, 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, you know, 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 gonna get learnings, you're gonna 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 nth of a kind. And so it really is two 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's 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 two pieces are really a grants-type program, again, public-private partnership with the U.S. government, to see if we can help do that risk reduction piece.
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 you know those to go to go early on. So again, we're on the Hill talking about those things. I'm not expecting there to be you know legislation next week, but these are you know active conversations that we're having on behalf of the industry.
Thank you. And Greg, 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 gonna 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. You know, there are now incentives and tax credits available to us that were not available before. They've done a lot with, you know, the fuel support that Maria talked about, and we'll talk more about the, you know, there 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 gonna be some cost overruns for these early technologies. It's just undeniable that the first time you build it, it's gonna take a little more than you think-
Right
... 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 help step forward and you know take on some of this early risk and these higher costs to get these technologies developed.
Well, thank you. You mentioned fuel, and fuel was mentioned more than once, and fuel is in the news pretty heavily right now. And of course, X-energy being a Gen IV reactor using HALEU. Are you concerned about the fuel supply? And what is your position on the fuel supply right now?
Yeah, fuel supply has been one of the things we've watched the most closely over the last several years. You know, I think, first of all, I should just say that, you know, nuclear fuel is a multi-step process, and so to try to break it down a little bit, even then oversimplifying it a little bit. You know, first of all, we talk about you have to mine the uranium 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 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-cooled 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 IV 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, and 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 fuel, so most of them already know who will make that fuel, and then we know how to make it here in the U.S., But for the Gen IV, there's construction and manufacturing facilities starting right now to go be ready to manufacture that fuel in the forms we need.
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.
Well, thank you. I'm gonna be moving on in just a moment to questions from the in-person audience. But, Maria, as a reactor developer, any thoughts on the field before we move on?
Sure. So Westinghouse is not only a reactor developer, we're also a fuel fabricator. We have three fuel fabrication facilities around the world. We're one of the only companies that does that. And so I share Greg's thoughts that, you know, it's-- we're certainly keen on the developments, but it's not really a concern because we are a key player in that fuel 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, you know, 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, 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 Gen III plus and the Gen IV reactors.
Thank you. Maria, if you're okay, I'm gonna go to the audience, unless you-
Sure.
Okay, beautiful. We have a couple of microphones around.
Thanks so much, Peter Arment from Baird. Thanks to all of you for joining us, really informative. Dr. Baranwal, I wanted to just ask you a question about, you know, how you think about SMR adoption, you know, 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 timeline 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 have plans to retire coal, their coal plants, or on sites that already have retired coal plants on the premises. So one, you're talking about keep trying to keep the jobs in the community, so that's always good. Reskilling certain jobs, so that's always good. It's not gonna be totally easy. I don't wanna, you know, misinform. It's not just you take in-- 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, you know, the NRC, we follow...
In the United States, we follow 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 four communities that were fighting over having a nuclear power plant built in their backyard.
So, you know, that's a testament to the switch that we have seen over the past several years. Coal communities, when they realize, well, the plant's going to retire. We're not, we're not coming in saying you need to shut your plant down; it's just a natural evolution. When the coal plants are deciding to retire, you wanna keep those jobs in the communities, and nuclear can help, you know, not only provide the power cleanly but also maintain the jobs in those communities. Now, for the timeline, 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 gonna 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 us at 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 gonna take, and that's for a proven technology. So when you talk about the next generation, Gen IV technology, it might be a little bit longer. You might hear other timelines, by the way, but what I'm telling you from a Westinghouse perspective is rooted in our experience from our AP1000 builds.
But maybe another part of your question is that, you know, 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, and 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 staggered steps.
I mean, I would offer Kairos received their construction permit in December of last year for you know one of their reactors, and they're looking to move ahead on their next-generation build after that. So I think you're gonna see play out a mixture of microreactors, small modular reactors, you know, 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.
Great. Hey, good, good morning, everyone. 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, you know, looking back in the 2010s, you know, the, the nuclear renaissance, it didn't pan out. Can you, can you describe how the environment is similar or different then? I mean, it seems like, you know, with Vogtle 1 and 2, there would be, positive momentum for nuclear power in the U.S., but then South Carolina was canceled. So, so can you just paint the picture of what's different this time? What's driving your conviction for growth? And, Gary, I've got a follow-up for you.
Yeah, 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 upgrades, 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 understated. So go back to the 2008, 2007 timeframe, when we talked about potentially a nuclear renaissance, you know, 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 steep pressure on nuclear, especially, you know, nuclear in the merchant market, that was sort of, you know, who were 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, you know, 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, if you will, to today. You know, yeah, 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 emphasize enough when I say that we're at a different moment.
You know, 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.
... I guess I'll add from utility perspective, as Maria said, that the generating options back then with natural gas, you know, were other cheaper options. But 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, you know, back then, of course, we had the big recession in 2008, 2009. We had, 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, you know, think about electrifying transportation and electrifying home heating.
All those things are just continuing to add up to say that we are gonna 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, thank you. 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, you know, Gravity could be your, 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, very shortly.
But Gary, let me just answer a piece of that, though. You know, 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 we'll-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, they're very well poised and positioned because of the-- what they've invested so far and the effort they've put in to be-
They know what it takes.
Appreciate it.
Like, you know what the quality assurance program is, right? That's required to do business in nuclear. And I was just downstairs yesterday, looking at the demonstration on simulators. And having had a license in my past, I'm kinda interested in what you're doing on simulators, and I know that's a recent addition, you know, to your portfolio. So I think there's, you know, there's lots that, that make Curtiss-Wright attractive.
Appreciate that. We are running over, but I can give you a opportunity. So one last question. Is there one more question from-
I think I have one over here. Sorry.
Sorry. Great.
Right here. Myles Walton, Wolfe Research.
Hi.
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 10-15 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 or and/or opportunity, or is it a bipartisan viewpoint, given your experience in the last administration? Thanks.
Yeah, I'm happy to jump in. I'm looking at that clock, and I'm 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, you know, 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, you know, 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 gonna get any legislation passed. We're not gonna make any progress. It's an election year. Everybody's gonna be distracted." Well, you know what? The President just signed into law the $2.72 billion for ensuring the uranium fuel supply. And so, there again, you know, in a time of, of sort of, you know, 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, I tell you, I think, I think the, the commercial nuclear conversation will prevail.
Your question on Fukushima, I'm not exactly sure, you know, 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, you know, 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 there 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 gonna 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, you know, additional equipment that's poised and ready.
And so I have 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.
I think as far as the effect on the industry, you could see a measurable dip in public support that then immediately started recovering and now has far exceeded where it was before. We've seen a couple countries, like Japan and Germany, that have made decisions based on that, to sort of reduce their nuclear. But in the U.S., I think it was far more the price of natural gas that affected nuclear than it was Fukushima.
... All right, we, we're definitely at time. Thank you very much for the questions and the responses. We do have a couple of our panelists that will be joining us for lunch, so if you have additional questions, you can speak to them then. I was trying to take notes. I wanted to summarize, but again, being late, there's obviously a lot of passion for nuclear. We believe that nuclear is here. There's a market for it. We have bipartisan support for it, so I think the future for civil nuclear is very bright. I'd like to thank you all very much for taking the time to coming here, spending the time with us at the Curtiss-Wright Investor Day. Appreciate your thoughts here and your efforts.
Great, thank you.
All right. Well, good morning, everyone. I'm Kurt Mitchell. I'm a Senior Vice President and General Manager at Curtiss-Wright, and I'm here today to talk to you about our commercial nuclear power business. I've been with the company for almost 30 years. I've worked in the industry for almost 40 years, and I can tell you, I've never been more excited. Maybe during the panel, though, I got really excited, but I've never been more excited about the state of the nuclear power industry or the opportunities for our company. So I'm happy to be here today to talk to you about that. I think in my prepared remarks, I'm gonna reinforce a lot of what you just heard, but that also emphasizes why we're so excited by this opportunity.
Okay, the key messages, the takeaways from my presentation today are, you know, we're a recognized leading provider of highly engineered critical solutions for the most challenging customer needs. Now, customers come to us to solve their hardest problems. As a result, our solutions are mission-critical, and they must work. You know, as we heard from our panel, you know, strong global support for energy independence and for carbon reduction is driving a shift to nuclear power. And as a result, we're growing our core and expanding globally to capture both current and future market needs. And last, and most importantly, you know, we have a clear path to capturing tremendous growth in our commercial nuclear power business. So first, I'll provide a brief overview of our business.
You know, we provide equipment, technology, and services to the nuclear power industry, and we've been doing this really since the beginning of the industry for over 60 years. 80% of our sales are into North America. The U.S. is our largest market, followed by Canada and then Asia, which is primarily South Korea and China. All right. We have a balanced portfolio. You know, we wanna be able to meet our customers' needs across a wide spectrum, so we provide critical equipment, advanced technology, and expert services, and we have an extensive portfolio, as you can see by a partial list of products and services on this slide. Now, since our last Investors Day, we've made some significant progress. We secured a partnership with Westinghouse for the supply of reactor coolant pumps for future AP1000s. We secured design wins with two advanced reactor developers, X-energy and TerraPower.
We penetrated the digital safety systems market, both in operating reactors and with new build, which establishes our capability to provide digital upgrades in the future. And finally, we acquired WSC, a leading supplier of high-fidelity simulators, and I'll talk more about them later in my presentation. So there's, there's some special things about our company. You know, first, you know, we've been doing this for a long time, really since the beginning, and during that time, we've amassed a vast amount of experience, experience that our customers rely on. And we have capabilities that set us apart. Not just anybody can do this. You know, the depth of our subject matter expertise, the breadth of our quality systems, and the uniqueness of our plants and plant equipment, really create significant barriers to entry. So we have an extensive portfolio.
We can meet our customers' needs across a wide spectrum, and that makes us more than just a supplier. It makes us their strategic partner. As a result, we've developed deep customer relationships. We have decades-long relationships with our customers, with the industry, with government, and that's built on shared objectives and trust. We have a great team, and it's the strength of that team that gives us the confidence to take on and tackle the new and hard challenges. Finally, it's our commitment to nuclear safety and nuclear quality. I mean, that's our culture. You know, from the top of the organization to the bottom of the organization, we're committed to our customer safety mission. These things make us special, they set us apart, and they enable us to win.
So as we heard just a few minutes ago from our panel, you know, nuclear power is undergoing a major strategic shift. There are three imperatives that are converging and pushing nuclear power to an inflection point. There's a broad consensus that we cannot solve these challenges without nuclear power being part of the mix. And as we heard, that consensus is global, with 25 nations committing at COP 28 to a tripling of nuclear power by 2050, as well as a recent NEI survey that showed that their members intend to double their nuclear power output by 2050 or add another 100 gigawatts. And that consensus is bipartisan, as we heard, as evidenced by the significant legislation that's been enacted in the current administration, as well as the previous administration.
This is significant, and I don't think I've included an exhaustive list on this slide. I've heard it said that the Inflation Reduction Act is the most significant government support for nuclear power since the Eisenhower Atoms for Peace program in the 1950s, which fundamentally created the commercial nuclear power industry. On top of this significant support, as we heard, energy demand is increasing. Electricity is increasing for the first time, really, in decades, driven by an onshoring of manufacturing, the rise of these mega data centers, and artificial intelligence. These trends make us very optimistic for nuclear power, both today and for the foreseeable future.
And our outlook for our own commercial nuclear power business is very optimistic, as we see all three of our focus markets: operating reactors, new build of large reactors, and small modular reactors, as benefiting from this trend and this strategic shift to nuclear. So first, I'll start with what we call the aftermarket, and that's operating nuclear power plants. There's about 430, approximately 430 or so, operating plants around the world, 115 in North America and 94 in the U.S. And in all, we have good access to about 250 of those plants. The aftermarket, which today is our largest market, is healthy, 'cause it's widely accepted that operating reactors must continue to operate to achieve our carbon reduction objectives, and that's led to tremendous government support, which has improved the economic outlook of the plants.
So for the first time in a long time, no operating reactor in the U.S. is scheduled for early closure, and in fact, one plant, the Palisades plant, which is closed, is planning to reopen and received a $1.5 billion loan to get back on the grid. Operating reactors are exploring new uses for their power, including generating clean hydrogen and powering data centers. You know, a plant in Pennsylvania, the Susquehanna Steam Electric Station, recently sold a data center that it built on its site to Amazon Web Services, along with a power purchase agreement, so this stuff is happening. And all of it's a very positive indication that the aftermarket is healthy today and will stay healthy for the foreseeable future.
With favorable financial conditions, our customers are investing in their plants to ensure that they can continue to operate efficiently and reliably. They're performing or planning to perform life extensions, power uprates, and plant modernization projects, and this bodes well for us, because with our extensive portfolio, we can meet our customers' needs on all those initiatives. Life extensions are really just the beginning. With longer lives, plants are looking to modernize their operation, to invest in equipment and technology that will enable their digital transformation. You know, as a reminder, these plants were built with analog technology, so upgrading to digital is a significant opportunity, and that's exciting for us because we offer those products that allow or enable that digital transformation.
So in summary, the aftermarket is healthy, and we see $7 billion in incremental opportunity related to life extension and power uprates and modernization. All right, turning now to new build, and specifically the new build of large light water reactors. So these are gigawatt-scale, 1,000+-MW reactors, like the Westinghouse AP1000 or the Korean APR1400. Now, as recently as a few years ago, new build of large reactors was not thought to be viable in most Western countries, but that's no longer the case. You know, the Russian invasion of Ukraine, energy security, carbon reduction, have created an urgency for new nuclear power, and large reactors, with their proven design, their construction experience, and their existing supply chains, are seen as ready now to meet that demand.
Just last month, a significant milestone was achieved in the U.S. when Vogtle 4 entered commercial operation, only the second of two modern reactors, you know, Westinghouse AP1000s, to go into service on the U.S. grid at really in the last several decades. This was a significant accomplishment for Southern Company, for Westinghouse and their partners, and we're proud of the role that we played, because as you're aware, we have a strong incumbent position on the AP1000 with our technology-leading reactor coolant pump. Speaking of Westinghouse, they're pursuing a large number of large new-build projects across Europe in places like Poland, Bulgaria, Ukraine, and others. Furthermore, we're starting to see signs of early, say, early political engagement in places like Canada. Now, new-build projects are complex.
They take a long time to get to commercial operation from the initial engagement.... We included on this slide, down toward the bottom, an illustrative timeline of what you go through to get a new-build plant online. This timeline will help you follow the public events that will lead to our next pump order. In all, across Europe, there's the potential for 20-25, you know, large new-build projects, several of which are on track to begin construction in the next 5-10 years, like Poland and Bulgaria. Westinghouse is making good progress on these projects, and we expect to be their strategic partner. So in summary, large reactors are still critically important to meeting energy demand, and we have visibility into over $1.5 billion of opportunity in Europe.
It's also important to remember that every new-build project eventually becomes an operating reactor, and that provides 60-plus years of future predictable and profitable aftermarket support. So pivoting from large to small modular reactors, this is an extremely exciting opportunity for us, for us. I'd say it's transformative. Dozens of companies are designing advanced reactors, both small modular reactors and Generation IV high-temperature reactors, and I, I'll use the term SMR to refer to all of the above. Okay, while all the designs are different, they all share some common characteristics. They're smaller, they're safer, they're cheaper, and they're quicker to build with modular construction. SMRs are popular because they can serve multiple missions. They can generate electricity or create process heat for industrial applications. Their smaller size fits some grids better, and they're ideally suited for replacing retiring coal plants.
They're ideal for powering data centers and large industrial installations. So we are working with all of the leading SMR developers, some of which you can see on the slide, others as well. And these customers came to us because of our unique capabilities and our experience designing and manufacturing critical equipment for nuclear power plants. And one advantage that we bring these reactor developers is our breadth of capability, because we can support them across numerous complex, critical systems, and that simplifies their business. And it makes us, again, more than just an equipment supplier, it makes us a strategic partner to them. So today, we're working engineering and design contracts. By the middle of the decade, we'll enter prototype and we'll be into prototype and qualification contracts, and we fully expect to be manufacturing equipment for the first-of-kind plants in the late 2020s.
So in summary, SMRs are a tremendous opportunity for us, and we have or intend to capture between $20 million and $120 million-plus of content on each of the leading platforms. So as you can see, it's a tremendous opportunity, and I'll speak briefly about our strategies to ensure that we capture that opportunity. And first, we're gonna leverage our strong brand and our unique capabilities to capture content on every leading SMR. Our aim is to be the leading merchant supplier of equipment and technology to SMRs. And as discussed, we're well on our way to achieving that objective, and we'll continue to focus on that over the next several years. Our strategy ensures that we'll be engaged regardless of who is winning the SMR race.
Second, we'll continue to expand our portfolio to meet the ever-changing needs of our customers, and we'll do that in three ways. First, we'll develop innovative new products through our commitment to IR&D. Second, we'll team with companies that have good products but lack a strong channel into the nuclear market, and that's something we do exceedingly well. And finally, we'll acquire bolt-on companies that complement our portfolio and help us to gain an increasing share of customer spend, as we did with our recent acquisition of WSC. Finally, we'll leverage our core position to grow in international markets. We'll follow the reactor developers overseas and establish a presence in markets where localization helps for both new build and for us to establish an alternative source of supply for Eastern Europe.
And to that end, we're pursuing a number of partnerships and acquisitions that will strengthen our presence in these international markets. So I'll end my presentation by saying a few words about our recent acquisition, WSC. WSC is a supplier of high-fidelity simulators used in the design, commissioning, and operation of plants. They provided over 225 unique simulation solutions to customers in the power, process, industrial, and naval markets. They supply simulators to colleges, which means that our technology will be used to train the nuclear engineers of the future. So this is an important acquisition for several reasons. One, is it expands our portfolio of mission-critical technology, technology which is becoming more important to operating reactors that are looking to modernize operations, as well as reactor developers looking to optimize their designs.
Second, it grows our customer base both domestically and internationally, enabling cross-sell opportunities of our existing monitoring and control technologies. And finally, it positions us early in the design life cycle of SMRs, and that allows us to deepen customer relationships, to influence the design and equipment selection, and to really grow our share through additional content.... So in summary, WSC kind of checks all the strategic boxes for us, and it's a good example of the investments that we're making to maximize our share of a growing commercial nuclear power market. We have several WSC simulators in the product gallery, and I encourage you to stop by and check out this exciting technology, as well as some of the other things we do. So in closing, we have a large opportunity in commercial nuclear power.
We're well-positioned to win, and we have a clear path to capture tremendous future growth. I wanna thank you for your time. Hopefully, I've piqued your interest, and I look forward to talking to you later. Next, I'd like to introduce Chris Farkas, our Chief Financial Officer, who will talk to you about our long-term financial outlook. Thank you.
Good morning, everyone. I'm Chris Farkas. I'm the Chief Financial Officer here at Curtiss-Wright, and I've been at Curtiss-Wright for the past 15 years, and during this timeframe, I've had the pleasure to work with Lynn, Kevin, and the rest of this leadership team to lead Curtiss-Wright through a remarkable transformation. But as bright as this past has been, the future is even brighter. Today, I'll talk about the expected results of the strategies that were shared with you earlier today and how that translates into our long-term financial outlook. In today's presentation, I have four key messages. First, I'll discuss the financial premise behind the Pivot to Growth strategy, how that's driving record financial performance, and creating strong value for our shareholders.
Second, I'll talk about the company's deep foundation and operational excellence, the opportunities that lie ahead, and how that creates funding for investments that will then accelerate profitable organic growth. Third, based upon our strong free cash flow generation and very healthy balance sheet, we're well-positioned to deploy capital towards inorganic growth. Lastly, I'll discuss our 3-year financial targets in greater detail, including the commercial nuclear optionality that we expect to be a significant midterm to long-term accelerant to our business financials. As of March 31st, we begin with a record $3+ billion in backlog, and from this baseline, the fundamental financial thesis in the Pivot to Growth strategy is that we continuously drive operational and commercial excellence through the core of the existing business to drive margin expansion and free up funding for investments back into the business.
Those investments, which you've heard about today from many of the presenters, target the fastest growth vectors within the markets that we serve through research and development, as well as the people, systems, and capacity that will allow us to deliver on a pipeline of higher growth and higher margin opportunities. The execution of that pipeline and the subsequent efficient conversion into free cash flow then accelerates our capital allocation strategy, which allows us to invest back into the core operations of the business, into inorganic growth opportunities, or return capital to shareholders. This cycle then moves forward in a continuous and compounding loop of value creation. Earlier in the day, Lynn briefly walked you through the successful performance versus our 2021 Investor Day commitments, and here you can see the annual details behind that performance, and to the right of that, the successes and the key drivers.
During this time frame, we grew organically across all of our end markets, and we're able to expand our operating margin by 110 basis points. But it's important to note that we invested back into this business significantly during that time frame. In fact, we invested back into R&D at a faster rate than our sales growth, and this performance did not come easy as we overcame significant macroeconomic and supply chain challenges. While we achieved new record levels of organic growth in the company, achieving nearly 5%, we supplemented that through high-quality acquisitions and returning capital to shareholders that impacted all of these metrics favorably. The result, we entered into 2024 with a strong and record-breaking order book. This performance has been well-received and has generated strong interest for what we're building here within Curtiss-Wright.
This, in turn, is reflected in the appreciation of our stock price, which is generating significant value for our shareholders. Going forward, we continue to build momentum, and we have significant room to grow, not only through our financial performance and the growth that lies ahead, but also in relative free cash flow valuation. With the wind at our tail in the form of a strong backlog and growing order book, we remain focused on execution at the core. The CW culture that we've developed over the past decade that's allowed us to expand our operating margin by over 800 basis points is thriving, and we continue to find opportunities in commercial and operational excellence. As we've done in the past, we will continuously optimize our portfolio, and we maintain active playbooks for our more economically sensitive businesses. We've also expanded our focus.
As Lynn and the management team discussed, the challenges for growth are different, and we're enhancing our focus on workforce management, supply chain efficiency, and coordination and business intelligence that will bind the portfolio to achieve higher levels of execution. Then, with a focus on both bottom line and top line growth within our incentive plans, we're also finding new opportunities below the operating income line through the efficiency of our treasury operations, cash management, and tax optimization, for example. Tax management is a complex topic, and there's many factors which can impact an organization's effective tax rate and the resulting cash tax paid. These include, first and foremost, geographic footprint, R&D activities, forms of compensation, and the structures that exist in moving cash between legal entities, to just name a few.
Right now, our organization is currently undergoing a targeted legal entity consolidation that will revamp our international holding company structure to facilitate more efficient cash repatriation. Not only will this simplify compliance and cash management efficiency, but it has the added benefits of reducing our effective tax rate and improving our free cash flow. We expect to complete this exercise in the second quarter, but right now, I would loosely estimate this benefit to be greater than 100 basis points to our effective tax rate and greater than $5 million in annual recurring free cash flow. This is just another small example as to how our efforts are expanding within Curtiss-Wright, and I look forward to sharing more upon the benefits of this exercise at our Q2 earnings call. Turning to our capital structure, we continue to be highly efficient and disciplined in our capital allocation framework.
The challenging economic backdrop and rising interest rate environment has required companies to be extra diligent in the use of capital over the past three years. And during this timeframe, we generated nearly $1.2 billion in operating cash flow, which we fully deployed 100%, not over-deployed, avoiding locking ourselves into expensive long-term debt and interest payments when current rates are at a 10-year high. In total, we spent $300 million in high-quality acquisitions, providing critical adjacent technologies that help to supplement our portfolio. We spent nearly $400 million in operational investments to enhance our efficiency and capacity, as well as meeting maturities on long-term notes.
We also bought back more than $450 million of stock at an average price of $133 per share, where today we're trading at approximately 2 times that value, and we continue to believe we're a good buy. Lastly, while we believe that share repurchase is a more effective way to return capital to shareholders, we have continued to steadily increase our dividend over the past 5 years to align with sales growth. So with our thoughtful capital allocation and strong free cash flow over the past 3 years, we were able to keep our debt levels constant and our leverage ratios low, and we now have some accumulated cash on the balance sheet and a fully undrawn revolver to help kickstart the next 3 years' journey.
It's important to note that we're constantly watching the market for financing opportunities and exercise great care to ensure that we have a consistent and steady stream of cash flow available to deploy towards capital allocation. As an example, back in the middle of 2022, when we began to see signs of rising interest rates, we took the opportunity to upsize and renew our revolver five years ahead of its expiration to secure favorable spreads in the market. Our current revolver now carries us out to 2027, which should provide some time for conditions to improve before we have to renew.
Additionally, back in 2020, we fully funded our pension plan, and then in early 2022, we implemented an effective glide path strategy, where we began to gradually move the asset allocation towards fixed income to longer duration bonds for higher yields, while more closely matching the fixed income duration to plan liabilities. As a result, we don't anticipate making any pension payments between now and 2028. Going forward, our approach towards capital allocation remains fully aligned to the Pivot to Growth strategy. Acquisitions remain our top priority beyond enhancing the core. Earlier, Lynn there shared her thoughts on capital allocation and the strategic filters that any acquisition must pass through. In addition, these acquisitions must pass through stringent financial filters or have a clear path to achieve them in a relatively short period of time.
As you can see, these include long-term sustainable growth, adjusted EPS accretion in year 1, and return on invested capital greater than cost of capital by year 3, to name just a few. And as you look at this, it's important to note that every acquisition will not meet every criterion all of the time, but all of these acquisitions will contribute to our goals for top quartile financial performance. On this next slide, I'm pleased to share our M&A scorecard, which embodies our strong track record for successful acquisitions over the past 4 years. By and large, their performance has gone extremely well, and we're incredibly pleased with the integration into CW and their financial performance.
Overall, PacStar and ESCO have both significantly exceeded our financial filters and generated compounded sales growth rates in the high teens plus, and each has generated a strong return to CW's margin profile and return on invested capital. As you heard from Lynn, Kevin, and the GMs, we've talked a lot about investments today, investments that are necessary to fuel the growth engine, some organic and some inorganic.... It's important to note that almost every investment, whether it's R&D, systems, capital, or acquisition, goes through a stringent financial evaluation here at Curtiss-Wright. You've seen the benefit in our top-line growth, margin expansion, and free cash flow conversion, but it's also visible in return on invested capital.
Over the past three years, we've expanded our return on invested capital by more than 300 basis points, staying steadily above the rising cost of capital, and we've also overcome acquisition hurdles, which can typically represent a 100-200 basis point hurdle to this calculation in its first two years of operation. This is another proof point that we take our investments at Curtiss-Wright very seriously. So before I move on to our long-term outlook, I'd like to start by reaffirming our 2024 guidance, where we positioned ourselves for yet another strong year. We continue to project revenue growth of 5%-7%, of which 4%-6% is organic, driven by increases in all end markets.
We continue to project operating margin of 17.4%-17.6%, which is 10 basis points of margin expansion at the midpoint, despite a 40-50 basis point headwind from increased R&D investments. Our adjusted diluted EPS guidance of $10.10-$10.40 offers the potential to exceed double-digit growth this year, while reflecting only our minimum $50 million standard for share repurchase activity. Lastly, our free cash flow generation remains strong, and with a free cash flow projection of $415 million-$435 million, we expect to exceed 100% adjusted free cash flow conversion, as we have done repeatedly over the past decade.
Now, turning to our three-year financial targets, we start with the top line, where we expect to accelerate the pace of organic growth and expect an organic revenue CAGR of greater than 5%. This is underpinned by the favorable broad market trends that we participate in and our continued investment in research and development to capture the faster underlying growth vectors. We continue to project operating income growth greater than revenue growth, which implies continued operating margin expansion, but we will continue to invest to maximize investor returns while ensuring top-quartile margin performance. We expect to generate a greater than 10% EPS CAGR over the next three years, which in order to achieve, will require efficient capital deployment in the form of acquisitions or share buyback.
And lastly, we continue to project free cash flow conversion in excess of 105%, with slightly more pressure from growth CapEx going forward, and we expect to generate more than $1.3 billion in cumulative free cash flow. Please note these targets exclude any impact from the AP1000 program, and we continue to project an order within the next 1-3 years. Taking a deeper look at our long-term revenue projections, you can see the assumptions for growth in each market at the top of the slide. Underneath each column, as discussed by the GMs today, you can see the key drivers that will enable market outperformance. I won't discuss each market in detail, but I'll quickly touch upon a few highlights.
First, you can see across our A&D portfolio, which represents nearly two-thirds of our business, that we expect to grow between mid-single digits to high single digits over the next three years. Thematically, across our defense markets, between the alignment of our portfolio to a growing portion of DoD spending towards advanced technology and a deeper expansion into direct foreign military sales, we expect to exceed the 2025 FYDP growth projections for DoD funding over the next three years. And so far in 2024, we are off to a great start. Turning to our commercial markets in power and process, we expect that building momentum in the commercial nuclear aftermarket, including the beginning of a renewed cycle in plant life extensions, as well as our design contracts for SMRs transitioning into production prototypes, will support the commercial nuclear market growing at low double digits.
This market will also benefit by mid-single-digit growth in process, as we expect our customers to begin to transition from development to production for the subsea pumps that Dave discussed earlier. Turning to our general industrial market, while the market forecast for the next few years appears to be more challenged, we expect to achieve this market's low single-digit growth rate outlook through the introduction of new power management electronics. Lastly, with $1.3 billion of free cash flow expected to be generated over the next 3 years, we expect to supplement this revenue growth with high-quality acquisitions, as we have done in the past. On this next page, I wanted to address our commercial nuclear optionality, or the strong upside that sits on top of our core. This is the art of the possible.
While we cannot say when we'll receive our next AP1000 order, we continue to project that this will happen within the next 1-3 years. Earlier, Kurt provided some guidance on the size of the opportunity in Europe and the key events to watch that will lead us to a contract in production as our customer works abroad. For your modeling purposes and based upon our last commercial negotiation in 2015, each plant order, or 4 RCPs, is worth approximately $110 million, and we would expect to recognize the revenue over a 5-year production cycle. Then, as we look out further to 2028, we can see a pathway for our commercial nuclear business to double in size from the 2023 baseline of $300 million. That's a 5-year CAGR in the mid-teens.
Underlying this estimate, and on this slide, we would expect to see approximately 15 U.S. plants undergoing multi-year plant life extensions. We would expect to be under contract and in production on RCPs supporting both Poland and Bulgaria, and for our SMR contracts to begin to shift from prototypes into production units. And lastly, looking out further to the middle of this next decade, we can see a pathway for our commercial nuclear business to reach $1.5 billion in annual recurring revenue. That's a 10-year CAGR in the high teens, based upon an even higher number of U.S plants undergoing multi-year plant life extensions. Our AP1000 RCP contracts reaching a steady state of production across the total European opportunity, and an expectation that SMR orders reach an estimated 10-20 plants per year based upon publicly disclosed data in the market and customer feedback.
All of these things are necessary to achieve declared carbon-free energy goals by 2050. So with that, before I turn things back over to Lynn, I'd like to say thank you. Thank you for your support and your continued engagement. We are really, truly building something special here at Curtiss-Wright. We have core momentum and significant optionality in commercial nuclear for our investors, and I hope that you're gonna join us in the journey ahead. So thank you.
Well, I hope that we have really communicated so much about our end markets, the positions we have in those markets, and why we are excited about our future. I hope you can see throughout these presentations, we're committed to investing in the company, in talent, tools, processes, and unique IP to maintain our unique positions in these end markets. I definitely wanna say thank you to our commercial nuclear panel for the time to be here today and sharing your insights. It, I really personally appreciate it, and I know the whole company appreciates.
I wanna say thank you to the team members that presented today, the team members that are outside at our displays, and I really do hope. I know we're a little bit behind, so we're gonna try and maybe shorten Q&A a little bit, but there's some really neat displays down there, and I hope you'll take the time to go meet and see what we have to display out there. And clearly, the entire team that's either listening in or hard at work right now. So with that, I think we look forward to addressing your questions at this time. We're now gonna take just a very short break to reconfigure the stage, and I'm gonna have the other Curtiss-Wright employees come up here and join me. So thank you for your attention.
... Thank you. So now we'll begin our Q&A session. We'll do a couple from the audience, and then we'll look to the virtual audience, after that, and then we'll go back to the in-room audience. So, start off, Nathan, go ahead.
Hi, Nathan Jones from Stifel. Thanks for all the detail today. It was great. Question for Lynn, I guess, to start with. About a 5% organic revenue CAGR from 2021 to 2023, and that's the target again from 2024 to 2026. But I would think there was a large component of price in that, 2021 to 2023 CAGR. It's probably not baked into the next three years. So there is some anticipation of acceleration in volume, I guess, in that outlook. So can you talk about what's driving that, whether it's just underlying markets, whether it's your investments in growth or, or how you see that, that organic underlying organic revenue growth CAGR accelerating next three versus the last three?
Well, I appreciate your perspective on some of the changing dynamics between the prior three years and the next three years, so thank you for the framing of the question. I think I'll talk, start out and talk about our aerospace and defense markets. Whoa. And maybe get Chris to talk a little bit about the commercial markets. So, you know, from the perspective of, you know, setting our growth targets at 5% or greater, you know, there were some unique things that went on, during the prior three years. There was, you know, really dramatic acceleration in defense budgets here in the U.S., at a 10% and a 5% increase in two of the, the later years. And as we look forward to the FYDP, you know, it is anticipated to have low single-digit growth going into this next cycle.
And that kind of matches what we're expecting to see around the globe. So, as Chris put up in the end marks, you know, we see mid- to high single-digit growth across our defense and aerospace markets. So, you know, we're going to beat those growth rates. Brian talked about some things, Dave talked about some things in our defense markets that we're, you know, we are confident we will outpace defense spending, but it is still a slightly different dynamic. Then, when I talk about aerospace, you know, we've projected a high double-digit growth rate in aerospace, and I know there's, you know, lots of things you can read about ramp rates and things that you can come up with different levels of growth.
You know, we've taken a slightly conservative approach to how we predicted the commercial aerospace growth, just knowing what's going on in this, some of the, in, you know, industry dynamics right now. And so conceivably, if, you know, ramp rates do increase faster than, you know, we've seen demonstrated over the past year and two, there, there might be some tailwind in that portion of our market, and we might see a, a, you know, a little bit of a lift in that. But we wanted to take a, a more conservative approach, and so maybe I'll get Chris to talk about our commercial markets.
Okay, sure. You know, with everybody here in the room today, it's really hard to think back about what actually happened in 2020. The pandemic was pretty traumatic. We lost $300 million of commercial revenue practically overnight. And you know, to the credit of the organization and the agility that they were able to demonstrate, we only allowed our margins to deteriorate roughly ten basis points. But those more economically sensitive markets that we have in general, industrial, and process, snapped back very quickly. Again, I don't wanna underestimate how difficult that was for the team to be able to respond to that growth and volume that rapidly, but those businesses grew at a low double-digit CAGR over the past three years. They've done some great things to build the momentum moving forward.
As we look across our process markets and our industrial markets, and just given the economic outlook, it's gonna be more challenging. So you heard today from both Dave, as he talked about, you know, the deployment of subsea pump technologies. I mean, that's gonna help us to achieve that mid-single digit growth rate going forward. You heard Jeff talk a little bit about the CSU and some of the power management electronics that we're introducing. There's a really cool display outside regarding that as well. I think that's probably the only one we didn't plug today, but please go check that out. And that's gonna help us to achieve that low single-digit growth rate over the next three years.
So the team continues to do the right things to invest, to try to outpace those market growth rates, but there are some challenges that lie ahead.
I'd lastly, you know, really like to emphasize that as a team, we have a track record of meeting the targets that we set forth to the investment community, and we've set a target that we believe we have strong confidence we can meet.
I guess my follow-up question is on R&D. You guys have talked about some internally funded, some externally funded. Can you talk about how that influences the pricing and the margin structure when those products come to market? And then, just any color you can give us on the focus for internally funded R&D over the next couple years. Thanks.
Yes, I'll start with the end of your question, and we really don't give forward-looking projections on what we're gonna spend in R&D, because we really do make the decisions dynamically, you know, as we look at our total financial picture and really where the returns are, and we look to find dollars when the returns are positive, that, you know, we will work hard to allocate dollars to those positions. There isn't as much, you know, as a connection as one might think about when we're funded and when we self-fund the R&D. Now, obviously, our defense electronics segment, where we talk about we spend the vast majority or the largest portion of our internally funded R&D, makes the highest margins in the company. So you can connect those two dots together pretty clearly.
But, you know, across the A&I and NNP segments, you know, it's a blend. It's just more what the, you know, kind of the characteristics of different industries and how they see working with us as a partner. Obviously, in our naval business, you know, there's cost constraints because, you know, we're doing government work, and so, you know, and that portion of the market is a little different.
... Kristine in the back, back row there.
Thanks. And, heads up, I have two questions, if that's okay. So, first, Brian, you kinda dropped in there that, Curtiss-Wright is the OEM partner of choice for NVIDIA. I mean, I think that perked up a lot of ears here in the audience, in person, and, virtually. Can you expand on what that means, and if there are any numbers you can provide, that'd be helpful.
Sure thing. So it's exciting, first of all. We've worked with NVIDIA and other contemporary silicon manufacturers pretty extensively to do what we do. This, I think, for us, represents kind of the next phase of intimacy with them, and you know, our ability to leverage their competencies and their technology so that we can tailor it for defense applications. And so, it is an extremely new relationship, the formality of that being in that OEM partner program. So don't have much, you know, forward visibility in terms of what that's gonna mean quite yet, but we are very excited to be working with them going forward.
Great, that sounds exciting.
Yeah.
Is that an exclusive partnership with them?
No. No.
Okay. Great, and then, in terms of, the small modular reactor, I mean, you've got your three-year outlook, and it looks like it's embedded in there, so I'm not sure who the question is for. But what's embedded in that number, especially if you're starting to see coal plants shut down for 2030 or 2035? How early does the work have to be done, and what's embedded in your three-year outlook versus, you know, the beyond?
I will... I don't know if you wanna talk a little bit about where we are in SMRs, and then Chris can maybe take the financial-
Yeah, I mean, sure. Currently, right now, we're focused on, as I mentioned during my presentation, engineering and design contracts. So that's working with our customers to, you know, develop this new first-of-kind equipment for these reactors, and that'll be really the focus over the next, 2-3 years, primarily during where we've set our targets.
Yeah, so as we look at the three-year targets specifically, we're gonna see those design contracts begin to transition into prototypes. And then, I think as you step out just another 2 years, being in 2028, given some of the publicly disclosed timelines that we have for, you know, Dow and Darlington and other plants that are intending to come on at the end of this decade, we will see prototypes transitioning into production units. And then, the volume, as you look out across the next decade, when you start to look at some of those staggering numbers that were put up in the NEI studies, thank you for providing us with such fantastic information, it's staggering. So you've gotta be at the middle of this next decade in order to meet those carbon-free goals with 10-20 orders per plant.
With our portfolio, what Kurt showed you, with the content across all the small modular reactors we're chasing, it's a pretty exciting revenue number for us.
Thanks, Kristine.
Yeah. Go to Peter. Go ahead.
Yeah, thanks. Peter Arment from Baird. Kurt, just to follow up back on your, presentation regarding the, plant life extensions. So you guys put out a kind of a $7 billion TAM out through 2050, but I'm sure it's not linear, right? 'Cause there's-- I think there's 40 plants that have already applied for plant life extensions, and, just in the U.S. alone. So how do we think about just how you start to feel the impact of those plant life extensions, you know, in terms of the timeline is, you know, once they get agreed to, what are the lead times, and how does that affect your aftermarket business?
Sure. Maybe I'll start with looking in the U.S., Most plants have already gone through their first life extension from 40 to 60 years, so what we're really talking about here is that second license renewal from 60 to 80. So we know when those plants... We know when the existing plants expire, and what we do is we don't look at the license, you know, the projects associated with the license extension, all being, say, before or after the license expires. We kinda think the work will straddle it. Some of the, you know, plants will move forward, doing, you know, replacing equipment or whatever before they actually have to, and some will come, you know, after they've received their license extension.
So we think there's, like a, you know, about an 8-year or so straddle around that date, and that's when we usually model our revenues from our expected content.
Great.
So we, you see, the thirties as probably when you're gonna see, say, the heavier volume of all that.
Great. Appreciate it. And then just , Dave, on the, you mentioned the outsourcing opportunity with the Navy. Just, there was so much pressure on the yards, you know, and there's been a lot of dollars that are putting into the industrial base to improve the throughput. You know, what is the opportunity for Curtiss-Wright when you think about the outsourcing opportunity?
Sure. So the different shipyards have work that they simply can't staff, right? So in one particular shipyard, they've already called in companies to look at some of the different things they need. It wasn't necessarily a perfect fit for us, but in August, there's gonna be another opportunity at one of the major shipyards for us to go in, look at all the work they have, and it'll be in the area of things that we have in our core competencies: complex, rotating mechanical equipment. And they're looking to send some of that work to suppliers like ourselves and other people. So we think we have a great opportunity to help them.
Thanks.
Thanks, Dave.
Take one from the virtual audience. Spent a lot of time today talking about all the positives, all the different opportunities. I guess directed to Lynn first, you know, what are some of the negatives or concerns that would keep you up at night or keep you worried about the next couple of years here?
Yeah, it's a question you know you're gonna get, because we've painted a pretty good picture about our future is bright, and it really is bright. And I think we've set targets that, you know, anticipate everything won't go always exactly as you plan. But, you know, with that said, I'd say the primary thing that I think about and worry about is talent, and that is, you know, as I spent, you know, a decent time during my prepared remarks talking about the attracting, retention, and training of that talent.
You know, adding the 500 people during the pandemic when we had the great resignation and all of the things associated with this, I'm really proud of the teams, and I think it shows, you know, I highlighted definitely our recruiters, but it really shows, you know, the reputation we hold in the industries we play, how we're viewed as a great place to work, and so there's a lot of things that go into that. And so, that's really I'd say what is, is the top of mind, and maybe Kevin, my Chief Operating Officer, would like to say what keeps him up at night.
Many things. I think from my perspective, thinking about things like, obviously, the economic conditions, you know, especially for some of our more sensitive businesses in that specific sort of market. But I think as we've talked about previously, both with the initiatives and the things that we're working on to ensure that we maintain our profitability and drive our margins, excuse me, and from the perspective of we're very nimble, we've watched those cycles very carefully. So we do a lot of work to ensure that we get ahead of that, those sorts of issues.
Thank you. Jim?
All right. Go to Louis.
For Lynn and Brian, as it relates to defense, what have you seen in terms of the Ukraine and Gaza conflicts that are perhaps influencing your strategic investments in future technologies versus your outlook five years ago? And is PacStar proving to be more strategic than you originally thought?
Great question. So I think there's been we've witnessed a lot of unconventional warfare, if you will, in that particular conflict. And yeah, it just continues to be a you know, a heart-wrenching kind of thing to watch. What it has done is it's talked about the resiliency of communications, the resiliency of data, and as I talked about in my prepared remarks, those things sometimes are the difference between, you know, mission success and not. So you know, we see for instance, the PacStar acquisition as being very strategic. I wasn't with the company when they put forward that acquisition thesis, but it continues to be an outstanding asset for us. They've got deep domain expertise.
As you go downstairs, you'll talk to some of the folks who have come out of that user community, and so they know the challenges that are in the market.
Great. Are drones a focus area for you? It seems the Department of Defense seems to be rapidly accelerating several new drone platforms. I think you mentioned-
So we've had a history on unmanned flight since Global Hawk, you know, many, many years ago. Oh, and so it is definitely a focus. And, you know, there's obviously a scale at which our products are applicable, and then a scale where it's not really a match for Curtiss-Wright. But I think you can see some things downstairs that will kind of show you some of the breadth of what we can do. And, you know, the Parvus acquisition from many years ago, you know, was really focused on a different class of size, weight, and power electronics, and, you know, is enabling some of that expansion. And I don't know, Brian, if there's anything you'd add to that, but-
Well-
I fell back into my defense electronics. Sorry.
You know, I think there's some uniqueness. You know, as we look at the portfolio today, we're actively looking at smaller and smaller defense electronics that can be deployed in a defense environment. In some cases, attritable types of technologies that you wouldn't expect to, you know, get back. So, those are some of the, you know, advanced things that we're working with the community with. We're looking at opportunities to leverage our experience in size, weight, and power. And much like the case study on the QRIP, that instrumentation package went from 2,500 pounds to 8 pounds, right? And so I think the opportunity exists for us to do similar transitions.
Great, and maybe you can shrink it even further.
Yeah.
Thanks.
All right. Quick question, Miles.
All right. Thanks, Jim. Miles Walton, Wolfe Research. This might be for Chris, on margins and, in particular, margins across the segments. So if you look at the largest margin opportunity across the segments, could you comment on that? And also, the Naval and Power segment actually has been in a downdraft on a margin basis as you've been investing and having some mix. Could you talk about that as a contributor to the margin expansion? And then just one follow-up for Lynn afterwards.
Sure. So, you know, we didn't provide a margin expansion target as we move forward, you know, based upon, you know, the premise and how we're gonna operate to continue to invest in the future. But I think as you take a look at the individual segments, defense electronics margins are very high right now, and we're guiding above 24%. That organization requires the highest portion of our research and development spending to continue to sustain and advance that technology to meet the customers' needs and drive these very strong growth rates that you're seeing within that business. So we're very cautious with how we manage that margin profile going forward. We did talk a little bit on our first quarter earnings call about the challenge that we had on a naval contract during the quarter.
That was roughly a $10 million charge, and we do expect that to be a one-time item. We're doing well on that contract. We expect to close it out this year, and that would be a tailwind for us as we move forward. I think as you look across the aerospace and industrial segment, that segment is on a consistent mission to drive, you know, value through growth, absorption, and pricing. It's probably one of the segments that has the greatest opportunity in front of it from a commercial excellence and pricing standpoint as we move forward, so there'll be some expansion there as well.
Then I think, you know, as you look out longer term, we're hopeful with the volume and some of these development contracts that we're working on right now within the Naval and Power Segment, as those transition into production, you know, that lower margin development work that we're working on today will also bring those margins back up to, to where we've seen them in the past. So,
... everyone will contribute, and margin will expand.
Okay, this, I guess that's a lead-in to Lynn on the question of portfolio, if I could, in the aerospace and industrial business, where it's about half of it is industrial. It, and it has the slowest growth, best I can tell from Chris's chart. Is that a business that is strategic to the company for the reasons that Chris just articulated, that the margin and potential commercial pricing opportunity is there? Or what is the connection and strategic import of that 15% of your company on the general industrial side? Thanks.
Thanks, Miles. So there's really a lot of connectivity of that business across the aerospace and defense markets. And, you know, one example Jeff highlighted was the electromechanical actuation. That's a core capability we, and that was created to target the industrial automation market. And so that is, you know, the underpinnings of its market, and we very successfully, and I think are early in the journey, are using that core technology to cut across the defense applications. And so, as we continue to make investments in that area, you know, we can win in both of those markets. And, you know, one of the things I've talked about over the years is, I think, you know, one of the things that's critical to Curtiss-Wright's margin expansion is we try very hard to take core investments in R&D and then maybe tweak them.
I'm not saying it's always the exact same product, but leverage that core investment and take it to multiple markets, and that's really inherent in how we achieve the margins we do across the company. But I would say it's not just the electromechanical actuation. You take the vehicle portion of the power electronics we do today in commercial vehicles, and it's down the road, but you know, there is a strong belief that the army will go to electric vehicles. And you know, some of the stuff that was talked about by our panel today with some of the microreactors, you know, the vision is there will be a microreactor on the battlefield, and that will charge vehicles.
You know, you know, people can say things, you know, "I don't think our military should be focused on green." This isn't, this is that—in that case, it's really not a green drive. The logistics of fuel is one of the most dangerous parts of having a forward operational battlefield, and so this is a critical move that will, you know, save soldiers' lives. And so, you know, we look at that technology that we're, you know, really a leader in and, you know, do on some pretty heavy-duty, vehicles, so we're, you know, it's reasonably rugged. We'll work with that team, and then we'll partner with the defense electronics team that has, you know, more advanced ruggedization capabilities and be able to take that, that capability out in the future. That one's a little bit over the horizon. The electromechanical actuation is here and now.
I just wanted to take one more from the virtual audience. Just in commercial aerospace, obviously a lot of new wins that you covered today. Can you talk a bit more about the competitive landscape overall?
Thanks, Jeff.
Sure. So commercial aerospace is a competitive industry. We have a lot of highly respected competitors. I would say it's a high barrier to entry marketplace, where, you know, a lot of the things that we have in place, there is a great cost to them, to QA systems, to investments in R&D and technology to get into the marketplace. And then also, the initial qualification cost of getting a product qualified to go into service, to go onto a platform. So there's a lot of competitive activity in terms of winning placements on new platforms, but then once you're on the platform, there is a very high barrier to entry, barrier to entry. A lot of our competitors are very capable. We do believe that we have differentiators that put us places above them, though.
Thanks, Jeff.
Sure.
Rob, yeah.
One right here. Yeah. Be our last question.
Thanks for fitting me in. Sam Struwe, Siebert Williams Shank. You guys mentioned the relatively high R&D spend within defense electronics, as well as the partnership with NVIDIA, and I was just curious if you guys are kind of thinking about things and potentially, shifting interest towards more of a integrated subsystem type interest, or kind of just general trends you're seeing in shifts in market share as well within that group?
Sure. Thanks for the question. Well, today we do quite a bit of integrated subsystem work. And we've got several of our plants, so it's a nice model. That no-COTS model supports, you know, not only like a merchant board model, but also an integrated subsystem model. So I think, you know, as it relates to NVIDIA, we just, you know, we see the trends in, you know, workload and AI and autonomous vehicles, and we believe that they're, you know, a leading silicon company that does that both in hardware and in software. So I think we're gonna continue to use that as a building block in our solutions to our customers.
Thank you, everybody. Again, I encourage you to come meet some of our other team members downstairs and check out our displays. Thank you.