Slide 1: 4Q and FY 2015 Earnings Conference Call
4Q and FY 2015 Earnings Conference Call February 25, 2016 NYSE: CW 1 | February 25, 2016 | © 2016 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 web site from one to twelve months following the initial presentation, but content will not be updated to reflect
Slide 3: Key 2015 Highlights
Key 2015 Highlights Full-year 2015 operating margin of 14.1% – Improved execution driving margin expansion – Achieved top quartile vs peers Secured China AP1000® order exceeding $450M Full-year 2015 EPS up 17% to $4.04 Strong defense but…challenging industrial environment – Commercial/Indust
Slide 4: Fourth Quarter 2015 Operating Income / Margin Drivers
Fourth Quarter 2015 Operating Income / Margin Drivers ($ in millions) Change 4Q’15 4Q’14 vs. 2014 Commercial / Industrial $42.7 $43.4 (1%) Margin 14.7% 14.4% +30 bps Change vs. 2014, excluding one-time, Defense 31.0 26.3 18% $20M AP1000 fees Margin 24.4% 19.9% +450 bps Power 40.5 11.2 262% 83% Margi
Slide 5: Overview of Full-Year 2015 Results
Overview of Full-Year 2015 Results Net Sales decreased 2% (flat organic) – Defense markets increased 4% overall (up 6% organic) – Commercial markets decreased 5% overall (down 3% organic) Operating Income increased 10% (Up 6% organic) Operating Margin up 150 bps to 14.1% Diluted EPS of $4.04
Slide 6: 2016E End Market Sales Outlook (Guidance as of February 24, 2016)
2016E End Market Sales Outlook* (Guidance as of February 24, 2016) % of Total FY2016E Sales Aero Defense 1 - 3% 14% Ground Defense 4 - 6% 4% Naval Defense 0 - 2% 18% Total Defense Up 2% to 4% 37% Including Other Defense Commercial Aero (2 - 4%) 18% Power Generation 4 - 6% 20% Total Oil & Gas General
Slide 7: 2016E Financial Outlook (Guidance as of February 24, 2016)
2016E Financial Outlook* (Guidance as of February 24, 2016) FY2015 Growth % ($ in millions) FY2016E Pro Forma vs 2015 Commercial / Industrial $1,185 $1,145 - 1,170 (1 - 3%) Defense $477 $490 - 500 3 - 5% Power $523 $535 - 550 2 - 5% Total Sales $2,186 $2,170 - 2,220 Down 1% to Up 1% Commercial / Ind
Slide 8: 2016E Financial Outlook (Guidance as of February 24, 2016)
2016E Financial Outlook* (Guidance as of February 24, 2016) ($ in millions, except EPS) FY2015 Growth % FY2016E Pro Forma vs 2015 Total Operating Income $291 $304 - 315 5 - 8% Pension/401K Expense $30 ~$22 Interest Expense $36 $38 - 39 Effective Tax Rate 30.1% 31.0% Diluted EPS $3.74 $4.00 - 4.15 7
Slide 9: 2016E Financial Outlook (Guidance as of February 24, 2016)
2016E Financial Outlook (Guidance as of February 24, 2016) ($ in millions) Growth % FY2015A FY2016E vs 2015 Free Cash Flow (1) $127 $280 - 300 - Adjusted Free Cash Flow (2) $272 $280 - 300 3 - 10% Free Cash Flow Conversion(3) 66% 152 - 157% Adjusted Free Cash Flow 141% 152 - 157% Conversion(4) Depre
Slide 10: New China AP1000 Order - Financials
New China AP1000 Order - Financials Curtiss-Wright providing reactor coolant pump (RCP) technology on Westinghouse AP1000 power plant Secured new China AP1000 order on December 31, 2015 Total revenue: $448M ($28M / reactor coolant pump) Cadence of China AP1000 Revenue – Expected to represent
Slide 11: AP1000 Program Highlights and Outlook
AP1000 Program Highlights and Outlook Successfully concluded final design modifications and reached full qualification of RCP design Began shipping RCPs to China in 4Q’15 (2007 contract) – Four shipped to Sanmen 1 and installed in the plant – Four en route to Haiyang 1 Expect to begin shipping
Slide 12: Strategic Margin Drivers
Strategic Margin Drivers 9.3% 12.6% 14.1% 2013 Investor Day 2014A 2015A Leveraging the benefits of One Curtiss-Wright – Operational Excellence (Lean, Supply Chain Management) – Consolidation Programs – Low Cost Economies – Shared Services – Segment Focus Operational and productivity improvement
Slide 13: Balanced Capital Allocation
Balanced Capital Allocation Committed to steady return of capital to shareholders – $300M in total share repurchases in 2015 plus steady dividend Return of – $100M in expected share repurchases Capital in 2016 Seeking select bolt-on acquisitions Operational Requirements Acquisitions Internal i
Slide 14: Outlook for 2016 and Closing Comments
Outlook for 2016 and Closing Comments Expect solid sales growth in defense and power markets, mitigating a challenging industrial outlook On track for continued operating margin expansion, up 70 - 90 bps to 14.0% - 14.2%* – Led by operational improvement and cost reduction initiatives – Goal to
Slide 15: Appendix
Appendix 15 | February 25, 2016 | © 2016 Curtiss-Wright
Slide 16: Non-GAAP Reconciliation
Non-GAAP Reconciliation Organic Revenue and Organic Operating income The Corporation discloses organic revenue and organic operating income because the Corporation believes it provides investors with insight as to the Company’s ongoing business performance. Organic revenue and organic operating inco
Slide 17: Full-Year 2015 End Market Sales
Full-Year 2015 End Market Sales FY’15 Results: FY’15 % of Total Defense Markets +4%; organic +6% Change Sales Commercial Markets (5%); organic (3%) Aero Defense 5% 14% Key Drivers: Ground Defense 16% 4% Aerospace Defense: Driven by solid demand Naval Defense 2% 18% for embedded computing produ
Slide 18: 2015 End Market Sales Waterfall
2015 End Market Sales Waterfall ($ Millions) Total CW End Markets $2,206 Defense Markets Commercial Markets 36% 64% Naval Commercial Aerospace Power Generation General Industrial 18% 18% 20% 26% Aerospace Aircraft Equipment Aftermarket Nuclear Industrial Vehicles 14% 67% 66% 33% Ground Surface Tech
Slide 19: 2015 Sales by Segment vs. End Market (1)
2015 Sales by Segment vs. End Market (1) Commercial / Industrial Segment Power Segment General Commercial Power Naval Industrial Aerospace Generation Defense 48% 30% 67% 33% Aerospace Defense 9% Naval Defense Segment Power Defense Aerospace Generation 7% Naval Defense 6% Defense 44% 27% Ground Defen
Slide 20: 2015 Sales by Segment vs. End Market (2)
2015 Sales by Segment vs. End Market (2) General Industrial (48%): Commercial / Industrial Segment Industrial vehicles (on-highway, off-highway, medical mobility) General Commercial Industrial valves (O&G, chemical, petrochemical) Industrial Aero 48% Surface Tech services (peening, coatings, 3
Slide 21: 2015 Sales by Segment vs. End Market (3)
2015 Sales by Segment vs. End Market (3) Defense Segment Aerospace Defense (44%): Commercial Off-the-Shelf (COTS) embedded computing products Aerospace Defense Naval Avionics and electronics; flight test equipment 44% Defense 27% Aircraft data management solutions Naval Defense (27%): COTS e
Slide 22: 2015 Sales by Segment vs. End Market (4)
2015 Sales by Segment vs. End Market (4) Power Segment Power Generation (67%): Commercial nuclear aftermarket products and services Power Naval AP1000 reactor coolant pumps (RCPs) and Generation Defense 67% 33% other new build equipment Small modular reactors (SMRs) Fossil power generation e
Slide 23: 2016 End Market Sales Waterfall (Guidance as of February 24, 2016)
2016 End Market Sales Waterfall (Guidance as of February 24, 2016) ($ Millions) Total CW End Markets $2,170 - 2,220 Defense Markets Commercial Markets 37% 63% Naval Commercial Aerospace Power Generation General Industrial 18% 18% 20% 25% Aerospace Aircraft Equipment Aftermarket Nuclear Industrial Ve