Slide 1: Q3 2020 Earnings Conference Call
Listen-Only dial-in numbers: (844) 220-4970 (domestic) (262) 558-6349 (international) Conference ID: 8071759 Q3 2020 Earnings Conference Call October 29, 2020 NYSE: CW 1 | October 29, 2020 | © 2020 Curtiss-Wright
Slide 2: Safe Harbor Statement
Safe Harbor Statement Please note that the information provided in this presentation is accurate as of the date of the original presentation. The presentation will remain posted on this website from one to twelve months following the initial presentation, but content will not be updated to reflect n
Slide 3: Agenda
Agenda Review of Q3 2020 Performance Updated Full-Year 2020 Financial Outlook and Assumptions Restructuring Commercial Aerospace Business Executing on Balanced Capital Allocation Strategy – PacStar Acquisition – New Share Repurchase Authorization Strengths of Curtiss-Wright’s Defense Busin
Slide 4: Third Quarter 2020 Business Review and Financial Highlights
Third Quarter 2020 Business Review and Financial Highlights Net Sales of $572 million, down 7% – Solid defense market growth, up 11%, aided by acquisitions and timing of naval production – Reduced demand across all commercial markets, as expected Adjusted Operating Income of $100 million, down 7
Slide 5: Third Quarter 2020 End Market Sales Growth
Third Quarter 2020 End Market Sales Growth Q3’20 % of Total Key Drivers Change Sales Defense Markets: Aero Defense 10% 21% Aerospace Defense: Higher sales of actuation and sensors equipment on fighter jets (JSF) and defense electronics revenues on Ground Defense (8%) 4% UAV programs Ground Defen
Slide 6: Third Quarter 2020 Adjusted Operating Income / Margin Drivers
Third Quarter 2020 Adjusted Operating Income / Margin Drivers Q3’20 Q3’19 Chg vs. ($ in millions) Adjusted(1) Adjusted(1) Q3’19 Key Drivers Commercial / Industrial $32.5 $43.6 (25%) Lower sales / unfavorable absorption in comm’l markets Margin 14.6% 15.6% (100 bps) Partially offset by benefits o
Slide 7: 2020E End Market Sales Growth (Guidance as of October 28, 2020)
2020E End Market Sales Growth (Guidance as of October 28, 2020) Updated 2020E 2020E 2020E (Prior) (Current) % Total Sales Key Drivers Aero Defense 4% - 6% 8% - 10% 19% Favorable growth on key platforms (esp. F-35) Ground Defense (5% - 7%) (5% - 7%) 4% Lower sales on international ground platform
Slide 8: 2020E Financial Outlook (Guidance as of October 28, 2020)
2020E Financial Outlook (Guidance as of October 28, 2020) Updated (2) (2) 2020E Adjusted 2020E Adjusted 2020E Change vs ($ in millions) (Prior) (Current) 2019 Adjusted (1)(2) 2020 Key Drivers Reduced demand in commercial aerospace and general industrial Commercial / Industrial $935 - 965 $945 - 96
Slide 9: 2020E Financial Outlook (Guidance as of October 28, 2020)
2020E Financial Outlook (Guidance as of October 28, 2020) Updated 2020E Adjusted (3) 2020E Adjusted (3) 2020E Change vs ($ in millions, except EPS) (Prior) (Current) 2019 Adjusted (2)(3) 2020 Key Drivers Total Operating Income $376 - 389 $381 - 390 (5% - 7%) Other Income/(Expense) $23 - 24 $22 Low
Slide 10: Restructuring Commercial Aerospace Business
Restructuring Commercial Aerospace Business Strategic management decision to lessen exposure to legacy aerospace equipment – Restructuring actuation business supporting Boeing 737 MAX program – Exiting historically low-margin (dilutive) and commodity-type build-to-print work Reducing manufacturi
Slide 11: Balanced Capital Allocation Strategy: PacStar Acquisition
Balanced Capital Allocation Strategy: PacStar Acquisition Announced acquisition of PacStar on Sept. 24, 2020 PacStar – Deal expected to close in 4th quarter Purchase Price $400M (cash) Benefits of PacStar acquisition EBITDA ~12x NTM – Leading Defense industry supplier of secure tactical communic
Slide 12: Balanced Capital Allocation Strategy
Balanced Capital Allocation Strategy CONSISTENT RETURN TO SHAREHOLDERS(1) CAPITAL ALLOCATION SINCE 2013(1) ($ in millions) $350 $325 Return to $300 Shareholders 37% $250 $227 $228 Operational Investments $200 25% $150 $125 $100 $91 $78 $77 $50 $0 Acquisitions 2014 2015 2016 2017 2018 2019 2020E 38%
Slide 13: Curtiss-Wright Remains Well-Positioned to Grow in Defense
Curtiss-Wright Remains Well-Positioned to Grow in Defense STRONG & STABLE NAVAL OUTLOOK LEADER IN DEFENSE ELECTRONICS Maintain strong positions on “Big 3” naval platforms Critical supplier of embedded computing equipment – Ford class aircraft carriers (CVN-80, 81), Virginia class to Primes with
Slide 14: 2020 Summary and Expectations
2020 Summary and Expectations Maintain outlook for solid revenue growth in Defense, as Commercial markets continue to rebound – Defense acquisitions providing modest boost to top-line Aggressively driving improved profitability, despite global economic challenges – Benefit of increased and accel
Slide 15: Appendix: Non-GAAP Financial Results
Appendix Non-GAAP Financial Results The company reports its financial performance in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This press release refers to "Adjusted" amounts, which are Non- GAAP financial measures described below. We utilize
Slide 16: FY2020E Guidance: Sales Waterfall (as of October 28, 2020)
FY2020E Guidance: Sales Waterfall (as of October 28, 2020) Guidance: Overall DOWN 4 - 5% ($ Millions) Total CW End Markets Defense Markets UP 11 - 13% $2,360 - 2,400 Comm’l Markets DOWN 16 - 18% Defense Markets Commercial Markets 51% 49% Naval Commercial Aerospace Power Generation General Industrial
Slide 17: Non-GAAP Reconciliation – 2020 vs. 2019 (Adjusted)
Non-GAAP Reconciliation – 2020 vs. 2019 (Adjusted) 17 | October 29, 2020 | © 2020 Curtiss-Wright
Slide 18: Non-GAAP Reconciliations – Q3 2020 Results
Non-GAAP Reconciliations – Q3 2020 Results (In millions, except EPS) Q3-2020 Q3-2019 Change Sales $ 571.6 $ 614.9 (7%) Reported operating income (GAAP) $ 84.6 $ 105.6 (20%) Adjustments (1) 15.3 1.6 Adjusted operating income (Non-GAAP) $ 99.9 $ 107.2 (7%) Adjusted operating margin (Non-GAAP) 17.4% 17
Slide 19: Non-GAAP Reconciliation – Organic Results
Non-GAAP Reconciliation – Organic Results Three Months Ended September 30, 2020 vs. 2019 Commercial/Industrial Defense Power Total Curtiss-Wright Operating Operating Operating Operating Sales income Sales income Sales income Sales income Organic (22%) (28%) 3% 2% (4%) 3% (10%) (11%) Acquisitions 1%