Slide 1: 1Q 2018 Earnings Conference Call
1Q 2018 Earnings Conference Call May 3, 2018 NYSE: CW 1 | May 3, 2018 | © 2018 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: 2018 First Quarter Performance and Full-Year Business Outlook
2018 First Quarter Performance and Full-Year Business Outlook First Quarter 2018 Highlights Diluted EPS of $0.98, up 35% – Reflects increased sales and profitability in C/I and Defense segments Net Sales up 5% overall (3% organic) – Driven by strong demand in aerospace and naval defense, partly
Slide 4: First Quarter 2018 End Market Sales Growth
First Quarter 2018 End Market Sales Growth Key Drivers 1Q’18 % of Total Defense Markets (12% sales growth, 11% organic) Change Sales Aerospace Defense: Higher sales of actuation and Aero Defense 16% 14% flight test equipment on fighter jet programs Ground Defense: Higher sales on domestic ground
Slide 5: First Quarter 2018 Operating Income / Margin Drivers
First Quarter 2018 Operating Income / Margin Drivers ($ in millions) Change 1Q’18 1Q’17 vs. 2017 Key Drivers Higher sales and favorable absorption Commercial / Industrial $39.2 $30.6 28% Benefit of Op margin improvement initiatives, Margin 13.2% 11.0% 220 bps including savings from 1Q’17 actions
Slide 6: 2018E End Market Sales Growth (Guidance as of May 2, 2018)
2018E End Market Sales Growth (Guidance as of May 2, 2018) Updated (in blue) FY2018E FY2018E % of Total (Prior) (Current) Sales Aero Defense 8 - 10% No change 17% Ground Defense 0 - 2% No change 4% Naval Defense 0 - 2% 16 - 18% 19% Total Defense 3 - 5% 9 - 11% 40% Including Other Defense Commercial
Slide 7: 2018E End Market Sales Waterfall (Guidance as of May 2, 2018)
2018E End Market Sales Waterfall (Guidance as of May 2, 2018) Guidance: ($ Millions) Total CW End Markets Defense Markets up 9-11% $2,415 - 2,455 Comm’l Markets up 3-5% Defense Markets Commercial Markets 40% 60% Naval Commercial Aerospace Power Generation General Industrial 19% 17% 19% 24% Aerospace
Slide 8: 2018E Financial Outlook (Guidance as of May 2, 2018)
2018E Financial Outlook (Guidance as of May 2, 2018) Updated (in blue) FY2018E FY2018E FY2018E ($ in millions, except EPS) $ Change (Prior) (Current) Change vs 2017 Commercial / Industrial $1,183 - 1,203 $10 $1,193 - 1,213 3 - 4% Defense $565 - 575 $565 - 575 2 - 4% Power $587 - 597 $70 $657 - 667 1
Slide 9: 2018E Financial Outlook (Guidance as of May 2, 2018)
2018E Financial Outlook1 (Guidance as of May 2, 2018) Updated (in blue) FY2018E FY2018E FY2018E ($ in millions, except EPS) Change vs (Prior) (Current) 2017 Total Operating Income $355 - 365 $343 - 353 6 - 9% Other Income/(Expense) $14 $14 Interest Expense $37 - 38 $36 - 37 Provision for Income Taxe
Slide 10: 2018E Financial Outlook (Guidance as of May 2, 2018)
2018E Financial Outlook (Guidance as of May 2, 2018) Updated (in blue) ($ in millions) FY2018E FY2018E (Prior) (Current) Free Cash Flow (1) $230 - 250 $240 - 260 Adjusted Free Cash Flow (2) $280 - 300 $290 - 310 Free Cash Flow Conversion(3) 91 - 96% 98 - 103% Adjusted Free Cash Flow Conversion(4) 11
Slide 11: CW Acquisitions Deliver Shareholder Value
CW Acquisitions Deliver Shareholder Value TTC Dresser-Rand Purchase Price $226.0M $212.5M EBITDA Multiple(1) <10x NTM <10x NTM Sales $68M (2018) $70M (2018) Accretive to Defense Operating Margin Accretive to CW(3) segment and CW(2) ~$0.30 Accretive ~$0.20 Accretive EPS Impact to 2018 EPS(2) to 2018
Slide 12: Long-term Approach to High-Value Acquisitions
Long-term Approach to High-Value Acquisitions HIGH IP CONTENT Strategic HIGHLY ENGINEERED Fit COMPLEMENTS CW PORTFOLIO STRONG COMPETITIVE POSITION $100 MILLION IN SALES PREFERRED Financial CONTRIBUTES TO MARGIN EXPANSION Fit ACCRETIVE TO EARNINGS AND FCF SUPPORTS TOP QUARTILE PERFORMANCE Extensive e
Slide 13: Completed Acquisition of Dresser-Rand Government Business
Completed Acquisition of Dresser-Rand Government Business Strong strategic fit with CW – Long-term relationships with nearly identical customer base – Fills technology gaps in existing portfolio – Opportunity to leverage DR’s prominent presence at U.S. Navy shipyards – Complementary capabilities:
Slide 14: Positioned to Deliver Strong 2018 Results
Positioned to Deliver Strong 2018 Results Synchronized sales growth, up 6 - 8% – Up 3 - 5% organic, increases in all end markets Continued operating margin expansion – Organic improvement of 90 - 110 bps – Improving sales outlook and benefit of ongoing margin improvement initiatives Solid, dou
Slide 15: Appendix
Appendix 15 | May 3, 2018 | © 2018 Curtiss-Wright
Slide 16: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended March 31, 2018 vs. 2017 Commercial/Industrial Defense Power Total Curtiss-Wright Operating Operating Operating Operating Sales income Sales income Sales income Sales income Organic 4% 28% 2% 85% 1% (1%) 3% 37% Acquisitions 0% 0% 0% 0% 0% 0% 0% 0% Foreign Cu
Slide 17: 2017 End Market Sales Waterfall
2017 End Market Sales Waterfall Chart includes re-classes of all medical mobility sales to newly named ‘Industrial Controls” category, and adds industrial sales previously in Other GI to Industrial Vehicles / ($ Millions) Total CW End Markets Off-Highway category. $2,271 Defense Markets Commercial M