Slide 1: 2Q 2011 Earnings Conference Call
2Q 2011 Earnings Conference Call July 29, 2011
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: Overview of Second Quarter 2011 Results
Overview of Second Quarter 2011 Results • Strong sales, profitability and EPS growth • Earnings led by solid operating performance across all three segments • Strength in defense (up 11%) and commercial (up 12%) markets • Continued benefits from cost reduction and restructuring programs are improvin
Slide 4: Second Quarter 2011 Results
Second Quarter 2011 Results ($ in Millions) Second Key sales drivers: Quarter % Change • Organic growth of 6%*, led by strong 2011 vs. Prior Yr metal treatment sales Sales: Flow Control $ 266.6 6% • Solid performance in commercial Motion Control 176.5 13% aerospace, general industrial and Metal Trea
Slide 5: Segment Review – Flow Control
2Q 2011 Segment Review – Flow Control 2Q 2011 Results Oil & Gas 22% Navy • Sales up 6% Defense 31% • Operating income up 7% • Moderate margin improvement • Led by solid sales in naval defense and power generation, along with modest increase in Gen general industrial Power Gen Industrial 34% 11% • Co
Slide 6: Segment Review – Motion Control
2Q 2011 Segment Review – Motion Control 2Q 2011 Results Comm Aero • Sales up 13% 26% Aero Defense • Operating income up 3% 38% • Operating margin impacted by nearly $2M or 120 bps in unfavorable FX Gen Industrial • Strong sales to commercial aero 10% and general industrial Other Defense & • Solid pe
Slide 7: Segment Review – Metal Treatment
2Q 2011 Segment Review – Metal Treatment 2Q 2011 Results Comm Aero 39% • Sales up 31% • Operating income up 61% Gen Industrial 37% • Strong operating margin improvement • Led by higher demand for shot peening and coatings services • Strong sales to commercial Other Defense & Aero Power Gen 9% aerosp
Slide 8: End Markets Summary
2Q 2011 End Markets Summary Key Positives Aero Oil & Gas Defense • Commercial markets up 12% 12% 15% • Defense markets up 11% Ground • Benefiting from ongoing ramp up in Defense commercial aircraft production rates 6% Power Gen • Increased production-related sales on 19% various military aircraft pl
Slide 9: Summary – Aerospace Defense
2Q 2011 Summary – Aerospace Defense Aero Defense 2Q 2011 Results 15% Oil & Gas • 14% growth in sales YOY 12% • Strength in V-22 Osprey, helicopters, Ground Defense P-8 Poseidon and F-35 Joint Strike 6% Fighter Power Gen 19% • Solid sales performance offset the impact of the F-22 cancellation Navy De
Slide 10: Summary – Ground Defense
2Q 2011 Summary – Ground Defense 2Q 2011 Results Aero Oil & Gas Defense • 10% growth in sales YOY 12% 15% Ground • Improved international sales related Defense to turret drive aiming and 6% stabilization systems Power Gen 19% • Slight pickup on Abrams and Stryker • Partially offset by lower sales on
Slide 11: Summary – Naval Defense
2Q 2011 Summary – Naval Defense 2Q 2011 Results Aero Oil & Gas 12% Defense • 9% growth in sales YOY 15% • Led by solid sales on VA class Ground Defense submarine and Advanced Arresting 6% Gear (AAG) program for carriers Power Gen 19% • Reduced sales related to winding down of CVN-78 and DDG-1000 Nav
Slide 12: Summary – Commercial Aerospace
2Q 2011 Summary – Commercial Aerospace 2Q 2011 Results Aero Oil & Gas Defense • 31% growth in sales YOY 12% 15% • Strong sales due to increased Ground demand from Boeing and Airbus Defense 6% • Increased demand from the regional Power Gen 19% jet market Navy Defense Outlook 18% • Benefiting from ong
Slide 13: Summary – Oil & Gas
2Q 2011 Summary – Oil & Gas Oil & Gas 12% Aero 2Q 2011 Results Defense 15% • 4% reduction in sales YOY Ground • Solid MRO and upstream sales Defense 6% • Continued delays in capital Power Gen spending worldwide 19% • Primarily conducted base Navy maintenance at U.S. refineries Defense 18% Outlook Co
Slide 14: Summary – Power Generation
2Q 2011 Summary – Power Generation 2Q 2011 Results Aero Oil & Gas Defense • 9% growth in sales YOY 12% 15% • Led by domestic AP1000 sales Ground Power Gen Defense • Increased demand for pump and 19% 6% valve sales • Solid new orders supporting existing nuclear operating reactors Navy Defense 18% Out
Slide 15: Summary – General Industrial
2Q 2011 Summary – General Industrial Aero 2Q 2011 Results Oil & Gas Defense 12% 15% • 14% growth in sales YOY • Continue to see higher sales Ground Defense volumes in automotive and 6% transportation industries, along with Power Gen 19% HVAC customers • Strong demand for metal treatment Navy service
Slide 16: 2011E Market Outlook
2011E Market Outlook (as of July 28, 2011) Management Guidance (1) FY2011E Aero Defense 7 - 9% Ground Defense 8 - 10% Naval Defense 3 - 5% Total Defense 5 - 7% Including Other Defense Commercial Aero 26 - 28% Oil & Gas (3) - (5%) Power Generation 6 - 8% General Industrial 10 - 12% Total Commercial 9
Slide 17: 2011E Financial Outlook
2011E Financial Outlook (as of July 28, 2011) (in 000’s) FY2011E FY2011E Management Guidance (1) (Prior) (Current) Total Sales $2,010 - $2040 $2,030 - 2,060M 6% - 8% 7% - 9% Flow Control $1,075 - $1,085 $1,075 - 1,085M 5% - 6% 5% - 6% Motion Control $670 - $680 $683 - 693M 4% - 5% 6% - 7% Metal Trea
Slide 18: 2011E Financial Outlook
2011E Financial Outlook (as of July 28, 2011) Management Guidance (1) FY2011E Operating Income $207 - 214M 15% - 19% Diluted EPS $2.58 - 2.68 12% - 16% Diluted Shares Outstanding 47.3M Effective Tax Rate 33.0% (1) 2011 Guidance includes revisions to current outlook and recently announced transaction
Slide 19: 2011E Financial Outlook
2011E Financial Outlook (as of July 28, 2011) Management Guidance FY2011E Free Cash Flow (1) $90 - 100M Depreciation & Amortization ~$82M CapEx ~$70M Pension Expense ~$23M (1) Free Cash Flow is defined as cash flow from operations less capital expenditures and includes estimated payments of $35 mill
Slide 20: Outlook for 2011 and Closing Comments
Outlook for 2011 and Closing Comments • Sales up 7-9% with 12-16% EPS growth • Continued execution and margin expansion • Solid performance expected in Commercial Aerospace market • Economically-sensitive commercial markets rebounding solidly • Growing defense business showing ability to overcome se
Slide 21: Appendix
Appendix Curtiss-Wright Corporation 21
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation 22 Curtiss-Wright Corporation