Slide 1: Investor Overview
Investor Overview NYSE: CW 1 | © 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: Curtiss-Wright Corporation
Curtiss-Wright Corporation ~$2.5 billion in 2019 sales Leadership positions in growing markets Defense Comm. Aerospace Severe-service applications Enhancing safety, reliability and performance One Curtiss-Wright General Industrial Power Generation Global Diversified Industrial Company 3 |
Slide 4: Broad End Market Diversification
Broad End Market Diversification Defense: Defense Commercial – Naval (23%): Nuclear submarine and aircraft carrier (43%) Aerospace programs (17%) – Aerospace (16%): Fighter jet, helicopter and UAV programs – Ground (4%): Domestic and international armored vehicles Commercial Aerospace: Critical
Slide 5: One Curtiss-Wright Vision Driving Strong Returns (1)
One Curtiss-Wright Vision Driving Strong Returns (1) OPERATING MARGIN 18.0% Ongoing benefits of Operating Margin 17.0% 16.5% improvement initiatives: 16.0% 15.8% – Consolidations (segment structure and overhead; 14.6% 14.7% facilities) 15.0% 14.1% – Portfolio rationalization (including divesting m
Slide 6: One Curtiss-Wright Vision Driving Strong Returns (2)
One Curtiss-Wright Vision Driving Strong Returns (2) Free cash flow ($M) FREE CASH FLOW Free cash flow $450 conversion (%) Generated more than $1.6 billion in FCF $400 $376 $371 over the past 5 years, driven by: 199% $333 $350 $336 121% – Strong operational performance 156% 121% $300 $272 – Rigoro
Slide 7: Curtiss-Wright's Response to COVID-19
Curtiss-Wright’s Response to COVID-19 OPERATIONAL STATUS MANAGEMENT ACTIONS Primary focus: Employee health and safety Established Cross Functional Response Team – Continue to advise global workforce to follow CDC – Risk Identification & Mitigation (Customer/Internal/ guidelines Supplier) – Enact
Slide 8: Solid First Quarter 2020 Performance
Solid First Quarter 2020 Performance First Quarter 2020 Highlights Net Sales of $601 million, up 4% – Strong growth in defense markets, up 26%, led by aerospace and naval defense markets – Partially offset by lower power generation and general industrial revenues Adjusted Operating Income up 10%
Slide 9: First Quarter 2020 End Market Sales Growth
First Quarter 2020 End Market Sales Growth Key Drivers 1Q’20 % of Total Change Sales Defense Markets: Up 26% overall, up 20% organic Aerospace Defense: Higher COTS embedded computing revenues Aero Defense 29% 17% on UAV and helicopter programs; Higher actuation revenues on F-35 Ground Defense 9% 4
Slide 10: First Quarter 2020 Adjusted Operating Income / Margin Drivers
First Quarter 2020 Adjusted Operating Income / Margin Drivers ($ in millions) 1Q’20 Adjusted(1) 1Q’19 Adjusted(1) Change vs. 1Q’19 Key Drivers Higher sales and favorable mix for actuation products Commercial / Industrial $36.0 $35.2 2% Partially offset by lower sales and unfavorable Margin 13.6% 1
Slide 11: 2020 Financial Outlook and Assumptions
2020 Financial Outlook and Assumptions SALES Defense Markets: – Expect organic growth led by naval defense • Strong DoD support for submarines and aircraft carriers; Stable order activity Commercial Markets: – Expect growth to be challenging, primarily in the commercial aerospace and general ind
Slide 12: Strong Balance Sheet and Liquidity (at March 31, 2020)
Strong Balance Sheet and Liquidity (at March 31, 2020) CASH AND DEBT LEVELS LEVERAGE RATIOS(1) Cash balance: $158M Adjusted Debt / EBITDA: 1.7x Adjusted Debt: $896M Adjusted Net Debt / EBITDA: 1.4x – $750M private placement and $146M drawn from revolver Interest Coverage: 16.9x – $100M in
Slide 13: Capital Allocation Strategy
Capital Allocation Strategy Major accomplishments since 2013: Capital Allocation since 2013 Returned >$925 million to shareholders – ~$765 million via share repurchase (>9 million shares) Return of Operational Capital Investments – ~$160 million via dividends 42% 31% Spent approximately $700 mil
Slide 14: Acquisition Strategy
Acquisition Strategy Lots of dry powder available; willingness to commit capital – Capacity to invest up to $1.5 billion on acquisitions (as of Mar. 31, 2020) – Typically pay ~10x EBITDA Willing to pay slightly more for right deal Targets – companies w/ solid Earnings and Free Cash Flow – Must
Slide 15: Actions Taken to Offset COVID-19 Impact on 2020 Results
Actions Taken to Offset COVID-19 Impact on 2020 Results Implementing mitigation plans to protect Profitability – Reducing discretionary spend – Employee furloughs (including Executive Leadership team) – Reductions in force – Lower incentive compensation – Slowing pace of R&D investments slightly (
Slide 16: 2020 Summary and Expectations
2020 Summary and Expectations Expect solid revenue growth in Defense; Commercial market outlook impacted by pace of economic rebound/recovery – Recent acquisitions providing modest boost to top-line – Expect Q2 to be weakest for sales and operating income Agile business model helps mitigate impa
Slide 17: Appendix
Appendix Non-GAAP Financial Results The company reports its financial performance in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This press release refers to "Adjusted" amounts, which are Non- GAAP financial measures described below. We utilize
Slide 18: FY2019 End Market Sales Waterfall
FY2019 End Market Sales Waterfall Overall UP 3% ($ Millions) Total CW End Markets Defense Markets Up 12% $2,488 Comm’l Markets Down 3% Defense Markets Commercial Markets 43% 57% Naval Commercial Aerospace Power Generation General Industrial 23% 17% 16% 24% Industrial Vehicles: Aerospace Aircraft Equ
Slide 19: 2019 Sales by Segment vs. End Market: Realignment to New Structure
2019 Sales by Segment vs. End Market: Realignment to New Structure Commercial / Industrial Segment (OLD) Defense Segment (OLD) Power Segment (OLD) Commercial General Naval Aerospace 31% Aerospace Power Generation Industrial Defense 45% Defense 50% Naval 48% 49% Defense 25% Aerospace Defense 10% Nava
Slide 20: Non-GAAP Reconciliation – Organic Results
Non-GAAP Reconciliation – Organic Results Three Months Ended March 31, 2020 vs. 2019 Commercial/Industrial Defense Power Total Curtiss-Wright Operating Operating Operating Operating Sales income Sales income Sales income Sales income Organic (2%) (1%) 13% 38% (2%) (19%) 1% 1% Acquisitions 1% 0% 11%
Slide 21: Non-GAAP Reconciliation – Adjusted Debt and Adjusted Net Debt
Non-GAAP Reconciliation – Adjusted Debt and Adjusted Net Debt CURTISS-WRIGHT CORPORATION and SUBSIDIARIES Adjusted Debt and Adjusted Net Debt (Unaudited, in thousands) As of March 31, 2020 Current portion of long-term and short-term debt $ 427 Long-term debt 906,220 Total debt $ 906,647 Less: Unamor
Slide 22: Non-GAAP Reconciliation – EBITDA
Non-GAAP Reconciliation – EBITDA CURTISS-WRIGHT CORPORATION and SUBSIDIARIES EBITDA (Unaudited, in thousands) For the trailing 12 months ended 3/31/2020 Net Earnings $ 303,750 Add back: Interest 31,565 Add back: Income Taxes 92,949 Add back: Depreciation and Amortization 104,761 EBITDA $ 533,025 EBI
Slide 23: Non-GAAP Reconciliation – Leverage Ratios
Non-GAAP Reconciliation – Leverage Ratios CURTISS-WRIGHT CORPORATION and SUBSIDIARIES (Unaudited, in thousands, except ratios) Adjusted Net Debt-to-Net Capitalization As of March 31, 2020 Adjusted Net Debt $ 738,670 Total Stockholders' equity 1,669,837 Net Capitalization 2,408,507 30.7 % Adjusted De