Slide 1: 4Q 2014 Earnings Conference Call
4Q 2014 Earnings Conference Call February 19, 2015 1 | February 19, 2015 | © 2015 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 web site from one to twelve months following the initial presentation, but content will not be updated to reflect
Slide 3: One Curtiss-Wright Vision
One Curtiss-Wright Vision Leveraging our critical mass Driving to top-quartile performance – Operating margin expansion -- Double-digit EPS growth – Free cash flow generation -- Improving ROIC Commitment to a balanced capital deployment strategy 2014 Highlights – 300+ bps improvement in Oper
Slide 4: Overview of Fourth Quarter 2014 Results
Overview of Fourth Quarter 2014 Results Sales decreased 3%, driven by decline in Defense segment – Commercial markets down 2%; Defense markets down 5% Operating income increased 5% Operating margin up 90 bps to 13.1% (Continuing ops basis) – Benefits of ongoing margin improvement initiatives –
Slide 5: Overview of Full Year 2014 Results
Overview of Full Year 2014 Results Sales increased 6%, led by double-digit growth in the Commercial / Industrial segment – Commercial markets up 8%; Defense markets up 3% Operating income increased 19%, led by 14% organic growth Operating margin up 140 bps to 12.6% (Continuing ops basis) – Ben
Slide 6: Full Year 2014 End Markets Sales
Full Year 2014 End Markets Sales Key Positives General Commercial Strong growth in industrial valves Industrial 29% Aero (chemical processing) and industrial 19% vehicles (on- and off-highway) Ongoing ramp up in commercial aircraft production rates (737, 787) Solid demand for embedded computin
Slide 7: 2015E End Market Sales Outlook (Guidance as of February 18, 2015)
2015E End Market Sales Outlook (Guidance as of February 18, 2015) % of Total FY2015E Sales Aero Defense (2) - 2% 12% Ground Defense 18 - 22% 4% Naval Defense (2) - 2% 17% Total Defense 2 - 4% 33% Including Other Defense Commercial Aero (2) - 2% 19% Power Generation (2) - 2% 18% General Industrial 5
Slide 8: 2015E Financial Outlook (Guidance as of February 18, 2015)
2015E Financial Outlook (Guidance as of February 18, 2015) (Prior Segment Structure) FY2014A FY2015E Total Sales $2,243M $2,280 - 2,330M Commercial / Industrial $1,075M - Defense $738M - Energy $431M - Total Operating Income $282M $303 - 312M CW Margin 12.6% 13.3% - 13.4% Commercial / Industrial $14
Slide 9: Transition to New Segment Structure (2015)
Transition to New Segment Structure (2015) Commercial / Commercial / Industrial Industrial ($1,265 - 1,285M) Nuclear naval defense and new build (AP1000) power generation businesses Defense Defense ($500 - 515M) Embedded computing and sensor businesses Power Energy ($515 - 530M) Power Gen Remaining
Slide 10: 2015E Financial Outlook (Guidance as of February 18, 2015)
2015E Financial Outlook (Guidance as of February 18, 2015) (New Segment Structure) FY2014 Pro Forma FY2015E Total Sales $2,243M $2,280 - 2,330M Commercial / Industrial $1,228M $1,265 - 1,285M Defense $490M $500 - 515M Power $525M $515 - 530M Total Operating Income $282M $303 - 312M CW Margin 12.6% 1
Slide 11: 2015E Financial Outlook (Guidance as of February 18, 2015)
2015E Financial Outlook (Guidance as of February 18, 2015) FY2014A FY2015E Total Operating Income $282M $303 - 312M Pension Expense / 401K $26M ~$33M Interest Expense $36M $37 - 38M Effective Tax Rate 31.2% 32.0% Diluted EPS $3.46 $3.80 - 3.90 Diluted Shares Outstanding 49.0M 47.8M * All figures pre
Slide 12: 2015E Financial Outlook (Guidance as of February 18, 2015)
2015E Financial Outlook (Guidance as of February 18, 2015) FY2014A FY2015E Free Cash Flow (1) $265M $100 - 120M Adjusted Free Cash Flow (2) $254M $245 - 265M Free Cash Flow Conversion(3) 156% 55 - 64% Adjusted Free Cash Flow Conversion(4) 149% 135 - 142% Depreciation & Amortization(5) $119M $100 - 1
Slide 13: Investor Day Cost Savings (2014)
Investor Day Cost Savings (2014) OI Margin Margin roll Op Margin Initiative Impact (bps) (starting 9.3%) Lean/Operational Excellence - - Supply Chain - - Shift to LCEs - - Segment Focus - - Shared Services - - Subtotal of above +20 bps 0.2% Consolidations / Corp Realignment +80 bps 0.8% Portfolio Ra
Slide 14: Strategic Margin Drivers
Strategic Margin Drivers Completed reshaping through portfolio review and rationalization Leveraging the benefits of One Curtiss-Wright – Lean – Supply Chain Management – Shared Services – Consolidation Programs Operational and productivity improvement initiatives Steady organic sales growth
Slide 15: Cost Savings – Resetting Expectations 2015 and Beyond
Cost Savings – Resetting Expectations 2015 and Beyond (Guidance as of February 18, 2015) Implied Total Revised Total Op Margin Initiatives 2015E - 2018E Savings Savings 2014 - 2018 Savings (@ Dec 2013) (@ Feb 2015) Portfolio Rationalization $10M $40M - Operational Excellence (Lean, SCM) $75M $25M $2
Slide 16: Outlook for 2015 and Closing Comments
Outlook for 2015 and Closing Comments Expect solid sales and operating income with double-digit growth in diluted EPS – Growth anticipated in both commercial and defense markets On track for significant operating margin expansion – Driven by operational improvement and cost reduction initiatives
Slide 17: Appendix
Appendix 17 | February 19, 2015 | © 2015 Curtiss-Wright
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Organic Revenue and Organic Operating income The Corporation discloses organic revenue and organic operating income because the Corporation believes it provides investors with insight as to the Company’s ongoing business performance. Organic revenue and organic operating inco