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 ~$2.4 billion in 2020 sales Leadership positions in growing markets Defense Comm. Aerospace Severe-service applications Enhancing safety, reliability and performance One Curtiss-Wright General Industrial Power Generation Global Diversified Industrial Company 3 |
Slide 4: Broad End Market Diversification (2020E)
Broad End Market Diversification (2020E) Defense: – Naval (28%): Nuclear submarine and aircraft carrier Defense programs (51%) – Aerospace (19%): Fighter jet, helicopter and UAV programs Commercial – Ground (4%): Domestic and international armored Aerospace vehicles (14%) Commercial Aerospace: C
Slide 5: FY2020E Guidance: Sales Waterfall
FY2020E Guidance: Sales Waterfall (as of October 28, 2020) Guidance: Overall DOWN 4 - 5% ($ Millions) Total CW End Markets Defense Markets UP 11 - 13% $2,360 - 2,400 Comm’l Markets DOWN 16 - 18% Defense Markets Commercial Markets 51% 49% Naval Commercial Aerospace Power Generation General Industrial
Slide 6: Curtiss-Wright Remains Well-Positioned to Grow in Defense
Curtiss-Wright Remains Well-Positioned to Grow in Defense STRONG & STABLE NAVAL OUTLOOK LEADER IN DEFENSE ELECTRONICS Maintain strong positions on “Big 3” naval platforms Critical supplier of embedded computing equipment – Ford class aircraft carriers (CVN-80, 81), Virginia class to Primes with
Slide 7: 2020E End Market Sales Growth
2020E End Market Sales Growth (Guidance as of October 28, 2020) Updated 2020E 2020E 2020E (Prior) (Current) % Total Sales Key Drivers Aero Defense 4% - 6% 8% - 10% 19% Favorable growth on key platforms (esp. F-35) Ground Defense (5% - 7%) (5% - 7%) 4% Lower sales on international ground platform
Slide 8: 2020E Financial Outlook
2020E Financial Outlook (Guidance as of October 28, 2020) Updated (2) (2) 2020E Adjusted 2020E Adjusted 2020E Change vs ($ in millions) (Prior) (Current) 2019 Adjusted (1)(2) 2020 Key Drivers Reduced demand in commercial aerospace and general industrial Commercial / Industrial $935 - 965 $945 - 96
Slide 9: 2020E Financial Outlook
2020E Financial Outlook (Guidance as of October 28, 2020) Updated 2020E Adjusted (3) 2020E Adjusted (3) 2020E Change vs ($ 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 $22 Low
Slide 10: One Curtiss-Wright Vision Driving Strong Returns (1)
One Curtiss-Wright Vision Driving Strong Returns (1) OPERATING MARGIN Ongoing benefits of Operating Margin 18.0% improvement initiatives: 17.0% 16.5% – Consolidations (segment structure and overhead; 15.8% facilities) 16.0% 14.6% 14.7% 15.0% – Portfolio rationalization (including divesting majorit
Slide 11: One Curtiss-Wright Vision Driving Strong Returns (2)
One Curtiss-Wright Vision Driving Strong Returns (2) Free cash flow ($M) FREE CASH FLOW Free cash flow $450 conversion (%) On track to generate ~$1.8B in FCF $400 $376 $371 since 2015, driven by: $350-380 $350 199% $336 $333 121% ~130% – Strong operational performance 156% 121% $300 – Rigorous wor
Slide 12: Strong Balance Sheet Provides Stability
Strong Balance Sheet Provides Stability CASH AND DEBT LEVELS DEBT AND LEVERAGE RATIOS(1) Cash balance: $427M Adjusted Debt / EBITDA: 2.3x Adjusted Debt: $1.05B Adjusted Net Debt / EBITDA: 1.4x – $1.05B private placement and $0M drawn from revolver – $100M in notes maturing next year (2021)
Slide 13: Balanced Capital Allocation Strategy
Balanced Capital Allocation Strategy CONSISTENT RETURN TO SHAREHOLDERS(1) CAPITAL ALLOCATION SINCE 2013(1) ($ 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 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: 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 $100 million, down 7
Slide 17: Third Quarter 2020 End Market Sales Growth
Third Quarter 2020 End Market Sales Growth Q3’20 % of Total Key Drivers Change Sales Defense Markets: Aero Defense 10% 21% Aerospace Defense: Higher sales of actuation and sensors equipment on fighter jets (JSF) and defense electronics revenues on Ground Defense (8%) 4% UAV programs Ground Defen
Slide 18: Third Quarter 2020 Adjusted Operating Income / Margin Drivers
Third Quarter 2020 Adjusted Operating Income / Margin Drivers Q3’20 Q3’19 Chg vs. ($ 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 19: Commercial / Industrial Segment
Commercial / Industrial Segment 2017 2018 2019 General Industrial (49%): Sales $1,076 $1,113 $1,138 Industrial vehicles (on-highway, off-highway) Industrial valves (O&G, chemical, petrochemical) Operating Income $156 $168 $180 Industrial controls: Medical Mobility; Sensors & Controls; Operatin
Slide 20: Defense Segment
Defense Segment 2017 2018 2019 Aerospace Defense (46%): Commercial Off-the-Shelf (COTS) embedded computing products Sales $593 $603 $628 Avionics and electronics; flight test equipment Adj. Operating Income $129 $141 $140 Aircraft data management solutions Adj. Operating Margin 21.7% 23.3% 22.
Slide 21: Power Segment
Power Segment 2017 2018 2019 Power Generation (53%): Sales $602 $696 $724 Commercial nuclear aftermarket products and services AP1000 reactor coolant pumps (RCPs) and other new build Adj. Operating Income $84 $110 $126 equipment Adj. Operating Margin 13.9% 15.8% 17.4% Small modular reactor (SM
Slide 22: Non-GAAP Reconciliation – 2020 vs. 2019 (Adjusted)
Non-GAAP Reconciliation – 2020 vs. 2019 (Adjusted) 22 | © 2020 Curtiss-Wright
Slide 23: 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 24: 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%
Slide 25: 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 September 30, 2020 Current portion of long-term and short-term debt $ — Long-term debt 1,058,707 Total debt $ 1,058,707 Less:
Slide 26: Non-GAAP Reconciliation – EBITDA
Non-GAAP Reconciliation – EBITDA CURTISS-WRIGHT CORPORATION and SUBSIDIARIES EBITDA (Unaudited, in thousands) For the trailing 12 months ended 9/30/2020 Net Earnings $ 239,477 Add back: Interest 33,223 Add back: Income Taxes 76,817 Add back: Depreciation and Amortization 110,184 EBITDA $ 459,701 EBI
Slide 27: 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 September 30, 2020 Adjusted Net Debt $ 623,179 Total Stockholders' equity 1,799,463 Net Capitalization $ 2,422,642 25.7 Adjuste