Slide 1: 3Q 2011 Earnings Conference Call
3Q 2011 Earnings Conference Call October 28, 2011
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: Overview of Third Quarter 2011 Results
Overview of Third Quarter 2011 Results • Solid sales and organic* operating income growth, despite lower profitability in oil & gas market • Commercial markets performed well, led by commercial aerospace and power generation • Solid increase in new orders across both commercial and defense markets •
Slide 4: Third Quarter 2011 Results
Third Quarter 2011 Results Key sales drivers: ($ in Millions) Third • Organic growth of 4%*, led by strong Quarter % Change metal treatment sales 2011 vs. Prior Yr Sales: • Solid, double-digit increases in the Flow Control $ 265.2 6% commercial aerospace, power Motion Control 176.9 9% generation and
Slide 5: Segment Review – Flow Control
3Q 2011 Segment Review – Flow Control 3Q 2011 Results • Sales up 6% Oil & Gas Navy 22% Defense • Operating income down 5% 29% • Operating margin impacted by lower profitability in oil & gas market • Achieved solid sales in the power generation and general industrial Gen markets Industrial Power Gen
Slide 6: Segment Review – Motion Control
3Q 2011 Segment Review – Motion Control 3Q 2011 Results • Sales up 9% Comm Aero Aero • Operating income down 13% 29% Defense 39% • Operating margin impacted by nearly $2M or 120 bps in unfavorable FX • Strong sales to the commercial Gen aerospace and general industrial Industrial markets 10% Other •
Slide 7: Segment Review – Metal Treatment
3Q 2011 Segment Review – Metal Treatment 3Q 2011 Results Comm Aero • Sales up 36% 39% • Operating income up 120%, Gen aided by acquisitions Industrial 37% • Strong operating margin improvement on higher sales, aided by non-recurring insurance recovery • Led by higher demand for shot Other Power Gen
Slide 8: End Markets Summary
3Q 2011 End Markets Summary Key Positives Aero Oil & Gas Defense • Commercial markets surged 20% 12% 15% • Benefiting from ongoing ramp up in Ground commercial aircraft production rates Defense 5% • Continued demand for sensor and Power Gen control products for ISR applications 19% • Strong sales fo
Slide 9: Summary – Aerospace Defense
3Q 2011 Summary – Aerospace Defense Aero Defense 3Q 2011 Results 15% Oil & Gas • 8% growth in sales 12% • Strength in helicopters, V-22 Osprey, Ground Defense F-35 Joint Strike Fighter and P-8 5% Poseidon Power Gen 19% • Solid sales performance offset the impact of the F-22 cancellation Navy Defense
Slide 10: Summary – Ground Defense
3Q 2011 Summary – Ground Defense 3Q 2011 Results Aero Oil & Gas Defense • 5% decrease in sales 12% 15% Ground • Improved international sales related Defense to turret drive aiming and 5% stabilization systems Power Gen 19% • Offset by lower sales on Bradley and Abrams Navy Defense 17% Outlook Other
Slide 11: Summary – Naval Defense
3Q 2011 Summary – Naval Defense 3Q 2011 Results Aero Oil & Gas Defense • 9% decrease in sales 12% 15% • Solid sales on Advanced Arresting Ground Gear (AAG) program supporting Defense 5% aircraft carriers Power Gen 19% • Winding down of CVN-78 and DDG- 1000 programs Navy • Reduced sales on VA class D
Slide 12: Summary – Commercial Aerospace
3Q 2011 Summary – Commercial Aerospace 3Q 2011 Results Aero Oil & Gas Defense • 43% growth in sales, 13% of which 12% 15% was organic* Ground Defense • Strong sales due to increased 5% demand from Boeing and Airbus Power Gen 19% • Increased demand for sensor and control products on various Navy Defe
Slide 13: Summary – Oil & Gas
3Q 2011 Summary – Oil & Gas Oil & Gas 12% 3Q 2011 Results Aero Defense 15% • 4% growth in sales Ground • Improved MRO and service sales in Defense U.S. 5% Power Gen • Continued delays in capital 19% spending worldwide, particularly on Navy coking projects Defense 17% Outlook Other Comm Aero Defense
Slide 14: Summary – Power Generation
3Q 2011 Summary – Power Generation 3Q 2011 Results Aero Oil & Gas Defense • 18% growth in sales 12% 15% • Led by U.S. and China AP1000 Ground Power Gen Defense sales 19% 5% • Increased valve sales to domestic and international customers Navy Defense Outlook 17% • Global interest in products to aid O
Slide 15: Summary – General Industrial
3Q 2011 Summary – General Industrial Aero 3Q 2011 Results Oil & Gas Defense 12% • 14% growth in sales 15% • Led by higher sales volumes in Ground Defense automotive and transportation 5% industries, along with industrial Power Gen 19% controls to international customers Navy • Strong demand for meta
Slide 16: 2011E Market Outlook
2011E Market Outlook (as of October 27, 2011) FY2011E FY2011E Management Guidance (Prior) (Current) Aero Defense 7 - 9% 7 - 9% Ground Defense 8 - 10% 6 - 8% Naval Defense 3 - 5% 1 - 3% Total Defense 5 - 7% 4 - 6% Including Other Defense Commercial Aero 26 - 28% 30 - 32% Oil & Gas (1) (3) - (5%) (3)
Slide 17: 2011E Financial Outlook
2011E Financial Outlook (as of October 27, 2011) (in 000’s) FY2011E FY2011E Management Guidance (1) (Prior) (Current) Total Sales $2,030 - 2,060M $2,060 - 2,075M 7% - 9% 9% - 10% Flow Control $1,075 - 1,085M $1,075 - 1,080M 5% - 6% ~5% Motion Control $683 - 693M $705 - 710M 6% - 7% 9% - 10% Metal Tr
Slide 18: 2011E Financial Outlook
2011E Financial Outlook (as of October 27, 2011) (in 000’s) FY2011E FY2011E Management Guidance (1) (Prior) (Current) Operating Income $207 - 214M $207 - 214M 15% - 19% 15% - 19% Diluted EPS (2) $2.58 - 2.68 $2.68 - 2.78 12% - 16% 17% - 21% Diluted Shares Outstanding 47.3M 47.3M Effective Tax Rate 3
Slide 19: 2011E Financial Outlook
2011E Financial Outlook (as of October 27, 2011) (in 000’s) FY2011E FY2011E Management Guidance (Prior) (Current) Free Cash Flow (1) $90 - 100M $90 - 100M Depreciation & Amortization ~$82M ~$90M Capital Expenditures ~$70M ~$80M Pension Expense ~$23M ~$22M (1) Free Cash Flow is defined as cash flow f
Slide 20: Outlook for 2011 and Closing Comments
Outlook for 2011 and Closing Comments • Sales up 9-10% with strong, double-digit growth in operating income and EPS • Continued execution and margin expansion • Strong performance expected in Commercial Aerospace market • Most economically-sensitive commercial markets rebounding solidly • Growing de
Slide 21: Appendix
Appendix Curtiss-Wright Corporation 21
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation 22 Curtiss-Wright Corporation