Curtiss-wright Corporation · NYSE:CW
Curtiss-wright — Q3 2020 Earnings Presentation
19 slides from Curtiss-wright's earnings presentation, Oct 29, 2020
Slide 1: Q3 2020 Earnings Conference Call
Q3 2020 Earnings Conference CallOctober 29, 2020 NYSE: CW Listen-Only dial-in numbers:(844) 220-4970 (domestic)(262) 558-6349 (international)Conference ID: 8071759
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: Agenda
Agenda Review of Q3 2020 Performance Updated Full-Year 2020 Financial Outlook and AssumptionsRestructuring Commercial Aerospace BusinessExecuting on Balanced Capital Allocation StrategyPacStar AcquisitionNew Share Repurchase AuthorizationStrengths of Curtiss-Wright’s Defense Businesses
Slide 4: Third Quarter 2020 Business Review and Financial Highlights
Notes: 2020 Adjusted results exclude restructuring costs, one-time inventory step-up, backlog amortization and transaction costs for current and prior year acquisitions, and one-time transition and IT security costs associated with the relocation of our DRG business. 2020 Adjusted Free Cash Flow exc
Slide 5: Third Quarter 2020 End Market Sales Growth
Third Quarter 2020 End Market Sales Growth Notes: Percentages in chart relate to Third Quarter 2020 sales compared to the prior year quarter. Amounts may not add due to rounding. Q3’20Change % of Total Sales Aero Defense 10% 21% Ground Defense (8%) 4% Naval Defense 15% 29% Total Defense 11% 54% Comm
Slide 6: Third Quarter 2020 Adjusted Operating Income / Margin Drivers
Third Quarter 2020 Adjusted Operating Income / Margin Drivers ($ in millions) Q3’20 Adjusted(1) Q3’19 Adjusted(1) Chg vs. Q3’19 Key Drivers Commercial / IndustrialMargin $32.5 14.6% $43.6 15.6% (25%) (100 bps) Lower sales / unfavorable absorption in comm’l marketsPartially offset by benefits of cost
Slide 7: 2020E End Market Sales Growth (Guidance as of October 28, 2020)
2020E End Market Sales Growth (Guidance as of October 28, 2020) 2020E(Prior) 2020E(Current) 2020E % Total Sales Key Drivers Aero Defense 4% - 6% 8% - 10% 19% Favorable growth on key platforms (esp. F-35) Ground Defense (5% - 7%) (5% - 7%) 4% Lower sales on international ground platforms Naval Defens
Slide 8: 2020E Adjusted Operating Income Guidance by Segment
Note: Amounts may not add down due to rounding. (1) 2019 Adjusted results exclude first year purchase accounting costs, specifically one-time inventory step-up, backlog amortization and transaction costs for acquisition of TCG (Defense segment), and one-time transition and IT security costs associat
Slide 9: 2020E Financial Outlook (Guidance as of October 28, 2020)
2020E Financial Outlook (Guidance as of October 28, 2020) ($ in millions, except EPS) 2020E Adjusted (3)(Prior) 2020E Adjusted (3)(Current) 2020E Change vs 2019 Adjusted (2)(3) 2020 Key Drivers Total Operating Income $376 - 389 $381 - 390 (5% - 7%) Other Income/(Expense) $23 - 24 $22 Lower interest
Slide 10: Restructuring Commercial Aerospace Business
Restructuring Commercial Aerospace Business Strategic management decision to lessen exposure to legacy aerospace equipmentRestructuring actuation business supporting Boeing 737 MAX programExiting historically low-margin (dilutive) and commodity-type build-to-print workReducing manufacturing footprin
Slide 11: Balanced Capital Allocation Strategy: PacStar Acquisition
Balanced Capital Allocation Strategy: PacStar Acquisition Announced acquisition of PacStar on Sept. 24, 2020Deal expected to close in 4th quarterBenefits of PacStar acquisitionLeading Defense industry supplier of secure tactical communications solutions (hardware + software) for battlefield network
Slide 12: Balanced Capital Allocation Strategy
Balanced Capital Allocation Strategy Consistent Return to Shareholders(1) Returned more than $1.1 Billion since beginning of 2014Board of Directors granted $200 Million increase in repurchase authorization (now $250 Million)Expect to repurchase minimum of $50 Million opportunistically in Q4’20 ($ in
Slide 13: Curtiss-Wright Remains Well-Positioned to Grow in Defense
Curtiss-Wright Remains Well-Positioned to Grow in Defense Maintain strong positions on “Big 3” naval platformsFord class aircraft carriers (CVN-80, 81), Virginia class submarine, Columbia class submarineLeading supplier of nuclear propulsion equipment since inception of U.S. nuclear navyConsistent,
Slide 14: 2020 Summary and Expectations
2020 Summary and Expectations Maintain outlook for solid revenue growth in Defense, as Commercial markets continue to reboundDefense acquisitions providing modest boost to top-lineAggressively driving improved profitability, despite global economic challengesBenefit of increased and accelerated cost
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 a
Slide 16: FY2020E Guidance: Sales Waterfall
FY2020E Guidance: Sales Waterfall (as of October 28, 2020) Guidance:Overall DOWN 4 - 5%Defense Markets UP 11 - 13%Comm’l Markets DOWN 16 - 18% Non-Nuclear:Fossil power gen equipment; Surface Technologies services (peening/coatings) Industrial Pumps & Valves:65% O&G, 35% Chem/Petro(All Downstream)75%
Slide 17: Non-GAAP Reconciliation – 2020 vs. 2019 (Adjusted)
Non-GAAP Reconciliation – 2020 vs. 2019 (Adjusted)
Slide 18: 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 19: Non-GAAP Reconciliation – Organic Results
Non-GAAP Reconciliation – Organic Results Organic Sales and Organic Operating IncomeThe Corporation discloses organic sales and organic operating income because the Corporation believes it provides investors with insight as to the Company’s ongoing business performance. Organic sales and organic ope