Slide 1: 4Q and FY 2017 Earnings Conference Call
4Q and FY 2017 Earnings Conference Call February 22, 2018 NYSE: CW 1 | February 22, 2018 | © 2018 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 2017 Highlights and 2018 Business Outlook
Full-Year 2017 Highlights and 2018 Business Outlook FY 2017 Highlights Net Sales up 8% overall (5% organic) – Higher organic sales in all end markets, led by strong general industrial demand – Contribution from TTC acquisition in the Defense segment Operating Margin of 15.0% (15.7% excluding TTC
Slide 4: Fourth Quarter 2017 Highlights
Fourth Quarter 2017 Highlights Net Sales up 8% overall (3% organic) – Benefit of TTC acquisition (+$25M) in the Defense Segment – Higher organic sales in most end markets, led by improved industrial demand Strong Free Cash Flow(1) of $209M, FCF conversion 308% – Driven by substantial reduction i
Slide 5: Rigorous Working Capital Management
Rigorous Working Capital Management Working Capital* as a % of Sales Achieved Top Quartile 35.0% status vs. peers! 32.0% 30.0% Key Drivers: 25.4% 25.0% 23.4% Company-wide drive to 21.0% reduce working capital 20.0% 18.8% Top Quartile (19.8%) Reducing past due receivables 15.0% Extending vendor
Slide 6: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation Free cash flow Free cash flow ($ in millions) conversion (%) $450 240% FCF Key Drivers: $400 $376 220% Rigorous working capital $350 199% $336 management 200% $300 $272 $265 156% 180% More efficient execution and $250 156% cash flow management 160% $200 $166 Fo
Slide 7: Impact of Tax & Accounting Changes - 2017
Impact of Tax & Accounting Changes - 2017 Tax Cuts and Jobs Act: – The effective tax rate for fourth quarter and full-year 2017 includes a net charge of approximately $10M, or $0.23 decrease to EPS, reflecting: • $22M charge for the mandatory deemed repatriation of foreign earnings (“transition ta
Slide 8: Impact of New Accounting Rules - 2018
Impact of New Accounting Rules - 2018 Tax Cuts and Jobs Act: – U.S. corporate tax rate reduced from 35% to 21% – Overall effective tax rate at 24% reflecting the new tax law changes Pension Accounting Change: – Non-service cost components of Pension expense will be reclassified from Operating In
Slide 9: 2018E End Market Sales Growth (Guidance as of Feb. 21, 2018)
2018E End Market Sales Growth (Guidance as of Feb. 21, 2018) FY2017 % of Total FY2018E Reported Sales Aero Defense 20% 8 - 10% 17% Ground Defense 12% 0 - 2% 4% Naval Defense 1% 0 - 2% 17% Total Defense 10% 3 - 5% 39% Including Other Defense Commercial Aero 4% 0 - 2% 18% Power Generation 4% 6 - 8% 19
Slide 10: 2018E Financial Outlook (Guidance as of Feb. 21, 2018)
2018E Financial Outlook (Guidance as of Feb. 21, 2018) FY2017 FY2018E FY2018E FY2017 Adj. for FY2018E Pension Adj. for % Change ($ in millions, except EPS) Reported Pension (Unadjusted) Re-class Pension vs 2017 Reclass(1) Reclass(1) Adjusted(1) Commercial / Industrial $1,163 $1,163 $1,183 - 1,203 $1
Slide 11: 2018E Financial Outlook (Guidance as of Feb. 21, 2018)
2018E Financial Outlook (Guidance as of Feb. 21, 2018) FY2017 FY2018E FY2018E FY2017 Adj. for FY2018E Pension Adj. for % Change ($ in millions, except EPS) Reported Pension (Unadjusted) Re-class Pension vs 2017 Reclass(1) Reclass(1) Adjusted(1) Total Operating $340 $325 $369 - 379 ($14) $355 - 365 9
Slide 12: 2018E Financial Outlook (Guidance as of Feb. 21, 2018)
2018E Financial Outlook (Guidance as of Feb. 21, 2018) ($ in millions) FY2017A FY2018E Free Cash Flow (1)(5) $336 $230 - 250 Adjusted Free Cash Flow (2)(5) $336 $280 - 300 Free Cash Flow Conversion(3) 156% 91 - 96% Adjusted Free Cash Flow Conversion(4) 156% 111 - 116% Capital Expenditures $53 $50 -
Slide 13: Acquisition of Dresser-Rand Government Business
Acquisition of Dresser-Rand Government Business(1) Strategic and Financial Objectives Rationale for Acquisition Expands CW shipset content and increases footprint on naval vessels – CW: preferred supplier of pumps and valves used in nuclear propulsion system on subs / carriers – DR: preferred supp
Slide 14: Positioned to Deliver Strong 2018 Results
Positioned to Deliver Strong 2018 Results 2016 Investor Day Synchronized sales growth, up 3 - 5% – Increases in all end markets Continued operating margin expansion – Solid improvement of 90 - 110 bps – Improving sales outlook and ongoing benefit of operational and margin improvement initiatives
Slide 15: Appendix
Appendix 15 | February 22, 2018 | © 2018 Curtiss-Wright
Slide 16: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended December 31, 2017 vs. 2016 Commercial/Industrial Defense Power Total Curtiss-Wright Operating Operating Operating Operating Sales income Sales income Sales income Sales income Organic 6% (3%) 9% 4% (8%) (23%) 3% (6%) Acquisitions 0% 0% 18% 27% 0% 0% 4% 9% F
Slide 17: Full Year 2017 End Market Sales Growth
Full Year 2017 End Market Sales Growth % of Key Drivers FY2017A Total Defense Markets (10% sales growth, 3% organic) Sales Aerospace Defense: Higher sales of flight test equipment (TTC on JSF program) and embedded Aero Defense 20% 16% computing products (UAV programs) Ground Defense 12% 4% Groun
Slide 18: 2017 End Market Sales Waterfall
2017 End Market Sales Waterfall ($ Millions) Total CW End Markets $2,271 Defense Markets Commercial Markets 39% 61% Naval Commercial Aerospace Power Generation General Industrial 18% 18% 19% 24% Aerospace Aircraft Equipment Aftermarket Nuclear Industrial Vehicles 17% 71% 59% 41% Ground Surface Tech
Slide 19: 2017 Sales by Segment vs. End Market (1)
2017 Sales by Segment vs. End Market (1) Commercial / Industrial Segment Power Segment Power General Commercial Generation Industrial Aerospace 64% Naval 47% 31% Defense 36% Aerospace Defense 9% Naval Defense Segment Power Defense Generation Aerospace 7% Defense 6% 48% Naval Defense 24% Ground Defen
Slide 20: 2017 Sales by Segment vs. End Market (2)
2017 Sales by Segment vs. End Market (2) General Industrial (47%): Commercial / Industrial Segment Industrial vehicles (on-highway, off-highway, medical mobility) Commercial Industrial valves (O&G, chemical, petrochemical) Aerospace General 31% Surface Tech services (peening, coatings, Industr
Slide 21: 2017 Sales by Segment vs. End Market (3)
2017 Sales by Segment vs. End Market (3) Defense Segment Aerospace Defense (48%): Commercial Off-the-Shelf (COTS) embedded Aerospace Defense computing products 48% Avionics and electronics; flight test equipment Naval Aircraft data management solutions Defense 24% Naval Defense (24%): COTS e
Slide 22: 2017 Sales by Segment vs. End Market (4)
2017 Sales by Segment vs. End Market (4) Power Segment Power Generation (64%): Commercial nuclear aftermarket products Power and services Generation AP1000 reactor coolant pumps (RCPs) and 64% Naval Defense other new build equipment 36% Small modular reactors (SMRs) components Fossil power g
Slide 23: 2018 End Market Sales Waterfall (Guidance as of Feb. 21, 2018)
2018 End Market Sales Waterfall (Guidance as of Feb. 21, 2018) Guidance: ($ Millions) Total CW End Markets Defense Markets up 3-5% $2,335 - 2,375 Comm’l Markets up 3-5% Defense Markets Commercial Markets 39% 61% Naval Commercial Aerospace Power Generation General Industrial 18% 18% 19% 24% Aerospace