Slide 1: 4Q and FY 2016 Earnings Conference Call
4Q and FY 2016 Earnings Conference Call February 16, 2017 NYSE: CW 1 | February 16, 2017 | © 2017 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: Full-Year 2016 Highlights
Full-Year 2016 Highlights (1) Operating margin of 14.6%, up 130bps – Achieved top quartile of our peer group – Exceeded expectations due to solid execution – Benefited from ongoing margin improvement initiatives (1) Diluted EPS of $4.20, up 12% (2) Strong Free Cash Flow of $376M, FCF conversio
Slide 4: Fourth Quarter 2016 Operating Income / Margin Drivers
Fourth Quarter 2016 Operating Income / Margin Drivers ($ in millions) Change 4Q’16 4Q’15 vs. 2015 Commercial / Industrial $48.5 $42.7 13% Change vs. 2015 Pro Forma, Margin 17.4% 14.7% 270 bps excluding one-time, (1) Defense 34.0 31.0 10% $20M AP1000 fee Margin 25.5% 24.4% 110 bps Power 31.6 40.5 (22
Slide 5: Rigorous Working Capital Management
Rigorous Working Capital Management Working Capital* as a % of Sales Key Drivers: 30.0% Company-wide (BU level) 25.4% drive to reduce working 25.0% capital 21.0% Reduced past due Top Quartile 20.0% 2016 (20.4%) receivables Extending vendor payment 15.0% terms / Deployed supply chain financing
Slide 6: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation Free cash flow ($ in millions) Free cash flow conversion (%) $450 240% FCF $400 $376 220% Targets (est. in 2016): $350 199% Minimum free cash 200% flow of $250 Million $300 $265 $272 180% Average free cash $250 156% flow conversion of at 160% least 125% $200 $166
Slide 7: 2017E Financial Outlook (Guidance as of February 15, 2017)
2017E Financial Outlook (Guidance as of February 15, 2017) ($ in millions) FY2017E FY2016A (Including TTC) Free Cash Flow (1) $376 $260 - 280 Free Cash Flow Conversion(2) 199% 135 - 142% Capital Expenditures $47 $45 - 55 Depreciation & Amortization $96 $105 - 115 (1) Free Cash Flow is defined as cas
Slide 8: 2017E End Market Sales Outlook (Guidance as of February 15, 2017)
2017E End Market Sales Outlook (Guidance as of February 15, 2017) FY2017E Sales Growth(1) % of Total (Including TTC) Sales(1) Aero Defense 28 - 30% 17% Ground Defense (4 - 6%) 4% Naval Defense (3 - 5%) 18% Total Defense 7 - 9% 39% Including Other Defense Commercial Aero Flat 18% Power Generation 3 -
Slide 9: 2017E Financial Outlook (Guidance as of February 15, 2017)
2017E Financial Outlook (Guidance as of February 15, 2017) FY2017E(1) Change vs ($ in millions, except EPS) FY2016A (Including TTC) 2016(1) Commercial / Industrial $1,119 $1,100 - 1,120 (0 - 2%) Defense $467 $540 - 550 16 - 18% Power $524 $525 - 535 0 - 2% Total Sales $2,109 $2,165 - 2,205 3 - 5% Co
Slide 10: 2017E Financial Outlook (Guidance as of February 15, 2017)
2017E Financial Outlook (Guidance as of February 15, 2017) ($ in millions, except EPS) FY2017E(1) Change vs FY2016A (Including TTC) 2016(1) Total Operating Income $308 $316 - 325 3 - 5% Pension/401K Expense $17 $17 - 18 Interest Expense $41 $40 - 41 Effective Tax Rate 29.3% 30.5% Diluted EPS $4.20 $
Slide 11: TTC Exemplifies M&A Strategy
TTC Exemplifies M&A Strategy Since 2013, CW has “earned the right to acquire again.” • Improved operating margin from 9.3% to 14.6% • Generated >$900M in free cash flow • Delivered avg. free cash flow conversion >150% • Produced TSR +61% thru Dec. 2016 Strategic and Financial Objectives Rationale fo
Slide 12: Positioned to Deliver Solid 2017 Results
Positioned to Deliver Solid 2017 Results Expect solid sales growth in defense and power markets, mitigating industrial headwinds Continued organic operating margin expansion, up 50 - 60 bps (excluding TTC) – Led by operational improvement and cost reduction initiatives – Goal to remain in Top Qu
Slide 13: Appendix
Appendix 13 | February 16, 2017 | © 2017 Curtiss-Wright
Slide 14: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended December 31, 2016 vs. 2015 Commercial/Industrial Defense Power Total Curtiss-Wright Operating Operating Operating Operating Sales income Sales income Sales income Sales income Organic (2%) 12% 6% 7% (11%) (22%) (3%) (3%) Acquisitions 0% 0% 0% 0% 0% 0% 0% 0%
Slide 15: Full-Year 2016 End Market Sales
Full-Year 2016 End Market Sales Key Drivers: FY’16 % of Total Aerospace Defense: Lower embedded computing Change Sales sales on fighter jets and ISR programs Aero Defense (3%) 14% Ground Defense: Lower sales of turret drive stabilization systems; Delayed U.S. modernization Ground Defense (2%) 4%
Slide 16: 2016 End Market Sales Waterfall
2016 End Market Sales Waterfall ($ Millions) Total CW End Markets $2,109 Defense Markets Commercial Markets 38% 62% Naval Commercial Aerospace Power Generation General Industrial 20% 19% 19% 24% Aerospace Aircraft Equipment Aftermarket Nuclear Industrial Vehicles 14% 70% 64% 35% Ground Surface Tech
Slide 17: 2016 Sales by Segment vs. End Market (1)
2016 Sales by Segment vs. End Market (1) Commercial / Industrial Segment Power Segment General Power Commercial Industrial Generation Naval Aerospace 44% 65% 32% Defense 35% Aerospace Defense 9% Defense Segment Naval Power Defense Aerospace Generation Naval 9% Defense 6% Defense 44% 27% Ground Defen
Slide 18: 2016 Sales by Segment vs. End Market (2)
2016 Sales by Segment vs. End Market (2) General Industrial (44%): Commercial / Industrial Segment Industrial vehicles (on-highway, off-highway, medical mobility) Commercial Aerospace Industrial valves (O&G, chemical, petrochemical) General 32% Surface Tech services (peening, coatings, Industr
Slide 19: 2016 Sales by Segment vs. End Market (3)
2016 Sales by Segment vs. End Market (3) Defense Segment Aerospace Defense (44%): Commercial Off-the-Shelf (COTS) embedded computing products Aerospace Defense Naval Avionics and electronics; flight test equipment 44% Defense 27% Aircraft data management solutions Naval Defense (27%): COTS e
Slide 20: 2016 Sales by Segment vs. End Market (4)
2016 Sales by Segment vs. End Market (4) Power Segment Power Generation (65%): Commercial nuclear aftermarket products and services Power Generation Naval AP1000 reactor coolant pumps (RCPs) and 65% Defense other new build equipment 35% Small modular reactors (SMRs) Fossil power generation e
Slide 21: 2017 End Market Sales Waterfall (Guidance as of February 15, 2017)
2017 End Market Sales Waterfall (Guidance as of February 15, 2017) ($ Millions) Total CW End Markets $2,165 - 2,205 Defense Markets Commercial Markets 39% 61% Naval Commercial Aerospace Power Generation General Industrial 18% 18% 20% 23% Aerospace Aircraft Equipment Aftermarket Nuclear Industrial Ve