Curtiss-wright Corporation · NYSE:CW

Curtiss-wright — Investor Presentation (August 2020)

26 slides from Curtiss-wright's investor presentation, Aug 4, 2020

  1. Slide 1: Investor Overview

    Investor Overview NYSE: CW 1 | August 4, 2020 | © 2020 Curtiss-Wright

  2. 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

  3. Slide 3: Curtiss-Wright Corporation

    Curtiss-Wright Corporation  ~$2.5 billion in 2019 sales  Leadership positions in growing markets Defense Comm. Aerospace  Severe-service applications  Enhancing safety, reliability and performance  One Curtiss-Wright General Industrial Power Generation Global Diversified Industrial Company 3 |

  4. Slide 4: Broad End Market Diversification (2020E)

    Broad End Market Diversification (2020E)  Defense: – Naval (27%): Nuclear submarine and aircraft carrier Defense programs (50%) – Aerospace (19%): Fighter jet, helicopter and UAV programs Commercial – Ground (4%): Domestic and international armored Aerospace vehicles (14%)  Commercial Aerospace: C

  5. Slide 5: FY2020E Guidance: Sales Waterfall (as of August 3, 2020)

    FY2020E Guidance: Sales Waterfall (as of August 3, 2020) Guidance: Overall DOWN 4 - 6% ($ Millions) Total CW End Markets Defense Markets UP 8 - 10% $2,350 - 2,400 Comm’l Markets DOWN 14 - 16% Defense Markets Commercial Markets 50% 50% Naval Commercial Aerospace Power Generation General Industrial 27

  6. Slide 6: 2020E End Market Sales Growth

    2020E End Market Sales Growth (Guidance as of August 3, 2020) Updated 2020E 2020E 2020E (Feb 2020) (Current) % Total Sales Key Drivers Aero Defense 4% - 6% No Change 19%  Favorable growth on key platforms (esp. F-35) Ground Defense 5% - 7% (5% - 7%) 4%  Lower sales on international ground platform

  7. Slide 7: 2020E Financial Outlook (Guidance as of August 3, 2020)

    2020E Financial Outlook (Guidance as of August 3, 2020) Updated 2020E Adjusted (2) 2020E Adjusted (2) 2020E Change vs ($ in millions) (Feb 2020) (Current) 2019 Adjusted (1)(2) 2020 Key Drivers Commercial / Industrial $1,140 - 1,160 $935 - 965 (15% - 18%)  Reduced demand in commercial aerospace and

  8. Slide 8: 2020E Financial Outlook (Guidance as of August 3, 2020)

    2020E Financial Outlook (Guidance as of August 3, 2020) Updated 2020E Adjusted (3) 2020E Adjusted (3) 2020E Change vs ($ in millions, except EPS) (Feb 2020) (Current) 2019 Adjusted (2)(3) 2020 Key Drivers Total Operating Income $428 - 437 $376 - 389 (5% - 8%) Other Income/(Expense) $24 - 25 $23 - 24

  9. Slide 9: One Curtiss-Wright Vision Driving Strong Returns (1)

    One Curtiss-Wright Vision Driving Strong Returns (1) OPERATING MARGIN  Ongoing benefits of Operating Margin 18.0% improvement initiatives: 17.0% 16.5% – Consolidations (segment structure and overhead; 15.8% facilities) 16.0% 14.7% 15.0% 14.6% – Portfolio rationalization (including divesting majorit

  10. Slide 10: One Curtiss-Wright Vision Driving Strong Returns (2)

    One Curtiss-Wright Vision Driving Strong Returns (2) Free cash flow ($M) FREE CASH FLOW Free cash flow $450 conversion (%)  On track to generate ~$1.8B in FCF $400 $376 $371 since 2015, driven by: $350-380 $350 $336 199% $333 121% ~130% – Strong operational performance 156% 121% $300 – Rigorous wor

  11. Slide 11: Strong Balance Sheet Provides Stability

    Strong Balance Sheet Provides Stability CASH AND DEBT LEVELS DEBT AND LEVERAGE RATIOS(1)  Cash balance: $155M  Adjusted Net Debt / Net Cap: 28% (1)  Adjusted Debt : $825M – Manage to internal 45% net debt / net cap limitation – $750M private placement; $75M drawn from revolver  Adjusted Net Debt

  12. Slide 12: Balanced Capital Allocation Strategy

    Balanced Capital Allocation Strategy Major accomplishments since 2013: Capital Allocation since 2013  On track to return $1.1B to shareholders by end of 2020 Return of – ~$915M via share repurchase (~10M shares) Capital 42% Operational Investments – ~$190M via dividends 29%  Spent approximately $7

  13. Slide 13: 2020 Summary and Expectations

    2020 Summary and Expectations  Maintain outlook for solid revenue growth in Defense; Commercial markets expected to gradually improve remainder of year – Acquisitions providing modest boost to top-line  Agile business model helps mitigate impact of reduced profitability – Benefit of increased and

  14. Slide 14: Appendix

    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

  15. Slide 15: Second Quarter 2020 Business Review and Financial Highlights

    Second Quarter 2020 Business Review and Financial Highlights  Maintaining comprehensive COVID-19 health and safety protocols  Net Sales of $550 million, down 14% – Solid defense market growth, up 5% – Reduced commercial market demand, as expected  Adjusted Operating Income down 27%; Adjusted Oper

  16. Slide 16: Second Quarter 2020 End Market Sales Growth

    Second Quarter 2020 End Market Sales Growth Q2’20 % of Total Key Drivers Change Sales Defense Markets: Aero Defense 5% 20%  Aerospace Defense: Higher defense electronics revenues on various ISR programs Ground Defense (24%) 4%  Ground Defense: Lower TDSS revenues on Int’l platforms and Naval Defen

  17. Slide 17: Second Quarter 2020 Adjusted Operating Income / Margin Drivers

    Second Quarter 2020 Adjusted Operating Income / Margin Drivers Q2’20 Q2’19 Chg vs. ($ in millions) Adjusted(1) Adjusted(1) Q2’19 Key Drivers Commercial / Industrial $22.1 $51.4 (57%)  Lower sales / unfavorable absorption in comm’l markets  Partially offset by benefits of cost containment / restruc

  18. Slide 18: Commercial / Industrial Segment

    Commercial / Industrial Segment 2017 2018 2019 General Industrial (49%): Sales $1,076 $1,113 $1,138  Industrial vehicles (on-highway, off-highway)  Industrial valves (O&G, chemical, petrochemical) Operating Income $156 $168 $180  Industrial controls: Medical Mobility; Sensors & Controls; Operatin

  19. Slide 19: Defense Segment

    Defense Segment 2017 2018 2019 Aerospace Defense (46%):  Commercial Off-the-Shelf (COTS) embedded computing products Sales $593 $603 $628  Avionics and electronics; flight test equipment Adj. Operating Income $129 $141 $140  Aircraft data management solutions Adj. Operating Margin 21.7% 23.3% 22.

  20. Slide 20: Power Segment

    Power Segment 2017 2018 2019 Power Generation (53%): Sales $602 $696 $724  Commercial nuclear aftermarket products and services  AP1000 reactor coolant pumps (RCPs) and other new build Adj. Operating Income $84 $110 $126 equipment Adj. Operating Margin 13.9% 15.8% 17.4%  Small modular reactor (SM

  21. Slide 21: Non-GAAP Reconciliation – 2020 vs. 2019 (Adjusted)

    Non-GAAP Reconciliation – 2020 vs. 2019 (Adjusted) 21 | August 4, 2020 | © 2020 Curtiss-Wright

  22. Slide 22: Non-GAAP Reconciliations – Q2 2020 Results

    Non-GAAP Reconciliations – Q2 2020 Results (In millions, except EPS) Q2-2020 Q2-2019 Change Sales $ 550.0 $ 639.0 (14%) Reported operating income (GAAP) $ 55.3 $ 105.7 (48%) Adjustments (1) 23.2 2.0 Adjusted operating income (Non-GAAP) $ 78.5 $ 107.7 (27%) Adjusted operating margin (Non-GAAP) 14.3%

  23. Slide 23: Non-GAAP Reconciliation – Organic Results

    Non-GAAP Reconciliation – Organic Results Three Months Ended June 30, 2020 vs. 2019 Commercial/Industrial Defense Power Total Curtiss-Wright Operating Operating Operating Operating Sales income Sales income Sales income Sales income Organic (28%) (59%) (2%) (11%) (11%) (14%) (17%) (35%) Acquisitions

  24. Slide 24: Non-GAAP Reconciliation – Adjusted Debt and Adjusted Net Debt

    Non-GAAP Reconciliation – Adjusted Debt and Adjusted Net Debt CURTISS-WRIGHT CORPORATION and SUBSIDIARIES Adjusted Debt and Adjusted Net Debt (Unaudited, in thousands) As of June 30, 2020 Current portion of long-term and short-term debt $ — Long-term debt 834,802 Total debt $ 834,802 Less: Unamortiz

  25. Slide 25: Non-GAAP Reconciliation – EBITDA

    Non-GAAP Reconciliation – EBITDA CURTISS-WRIGHT CORPORATION and SUBSIDIARIES EBITDA (Unaudited, in thousands) For the trailing 12 months ended 6/30/2020 Net Earnings $ 254,700 Add back: Interest 32,121 Add back: Income Taxes 81,136 Add back: Depreciation and Amortization 107,384 EBITDA $ 475,341 EBI

  26. Slide 26: Non-GAAP Reconciliation – Leverage Ratios

    Non-GAAP Reconciliation – Leverage Ratios CURTISS-WRIGHT CORPORATION and SUBSIDIARIES (Unaudited, in thousands, except ratios) Adjusted Net Debt-to-Net Capitalization As of June 30, 2020 Adjusted Net Debt $ 669,617 Total Stockholders' equity 1,713,295 Net Capitalization $ 2,382,912 28.1 % Adjusted D

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