Attached files
file | filename |
---|---|
8-K - FORM 8-K - CURTISS WRIGHT CORP | f8k_021511.htm |
For 80 Years & Counting
SOARING TO NEW HEIGHTS
4Q 2010 Earnings Conference Call
February 15, 2011
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 new information that may become
available after the original presentation posting. The presentation contains forward-looking statements
including, among other things, management's estimates of future performance, revenue and earnings,
our management's growth objectives and our management's ability to produce consistent operating
improvements. These forward-looking statements are based on expectations as of the time the
statements were made only, and are subject to a number of risks and uncertainties which could cause
us to fail to achieve our then-current financial projections and other expectations. We undertake no
duty to update this information. More information about potential factors that could affect our business
and financial results is included in our filings with the Securities and Exchange Commission, including
our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, including, among other
sections, under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which is on file with the SEC and available at the SEC's website
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 new information that may become
available after the original presentation posting. The presentation contains forward-looking statements
including, among other things, management's estimates of future performance, revenue and earnings,
our management's growth objectives and our management's ability to produce consistent operating
improvements. These forward-looking statements are based on expectations as of the time the
statements were made only, and are subject to a number of risks and uncertainties which could cause
us to fail to achieve our then-current financial projections and other expectations. We undertake no
duty to update this information. More information about potential factors that could affect our business
and financial results is included in our filings with the Securities and Exchange Commission, including
our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, including, among other
sections, under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which is on file with the SEC and available at the SEC's website
at www.sec.gov.
1
Overview of 2010 Results
2
• Solid sales and profitability
• Continued focus on execution and cost control
• Earnings led by solid operating performance across all
three segments
three segments
• Strong financial position and cash flow generation
heading into 2011
heading into 2011
Fourth Quarter 2010 Results
3
Key sales drivers:
• Organic growth of 2%*
• Led by strength in naval defense, power
generation, general industrial and
commercial aerospace
generation, general industrial and
commercial aerospace
• Expected softness in ground defense
and oil & gas
and oil & gas
Key operating income drivers:
• Continued benefits of cost reduction and
restructuring programs
restructuring programs
• Segment organic operating margin 14%*
• Higher corporate legal costs
• FX impact $1M unfavorable
|
|
|
|
|
Fourth Quarter
2010
|
|
% Change
vs. Prior Yr |
Sales:
|
|
|
|
Flow Control
|
$ 283
|
|
3%
|
Motion Control
|
182
|
|
3%
|
Metal Treatment
|
59
|
|
13%
|
Total Sales
|
$ 523
|
|
4%
|
|
|
|
|
Operating Income:
|
|
|
|
Flow Control
|
$ 37
|
|
4%
|
Motion Control
|
26
|
|
(14%)
|
Metal Treatment
|
8
|
|
73%
|
Total Segments
|
$ 71
|
|
1%
|
Corporate and Other
|
(14)
|
|
(11%)
|
Total Operating Income
|
$ 57
|
|
(2)%
|
*Organic results exclude the impact of FX and acquisitions
Full Year 2010 Results
4
Key sales drivers:
• Organic growth of 3%*
• Led by strength in general industrial,
naval defense, aerospace defense and
commercial aerospace
naval defense, aerospace defense and
commercial aerospace
• Expected softness in ground defense
and oil & gas
and oil & gas
Key operating income drivers:
• Cost reduction and restructuring
programs providing a lift to profitability
programs providing a lift to profitability
• Organic operating income +12%*
• Segment organic operating margin 12%*
• FX impact $10M unfavorable
|
|
|
|
|
Full Year
2010
|
|
% Change
vs. Prior Yr |
Sales:
|
|
|
|
Flow Control
|
$ 1,025
|
|
4%
|
Motion Control
|
647
|
|
4%
|
Metal Treatment
|
221
|
|
9%
|
Total Sales
|
$ 1,893
|
|
5%
|
|
|
|
|
Operating Income:
|
|
|
|
Flow Control
|
$ 104
|
|
13%
|
Motion Control
|
80
|
|
(1%)
|
Metal Treatment
|
26
|
|
30%
|
Total Segments
|
$ 211
|
|
9%
|
Corporate and Other
|
(31)
|
|
(27%)
|
Total Operating Income
|
$ 180
|
|
6%
|
*Organic results exclude the impact of FX and acquisitions
2010 Results - Additional Metrics
5
• New Orders up 11%
• Backlog up 3%
• Strong Free Cash Flow*
• Full Year 2010: $119 M
• Lower Capital Expenditures
• Stable Balance Sheet
• Pension Update
* Defined as cash flow from operations less capital expenditures
2010 Segment Review - Flow Control
6
4Q 2010 Results
• Sales up 3%, organic operating income
up 5%*
up 5%*
• Led by strong sales in naval defense and
power generation
power generation
• Reduced demand to oil & gas and
general industrial
general industrial
Full Year 2010 Results
• Sales up 4%, organic operating income
up 15%*
up 15%*
• Strong sales in naval defense
• Commercial markets flat despite modest
growth in power generation
growth in power generation
• FX impact $2 million unfavorable on OI
Segment Sales: $1,025 M
*Organic results excludes impact of FX and acquisitions
2010 Segment Review - Motion Control
7
Segment Sales: $647 M
4Q 2010 Results
• Sales up 3%, organic operating income
down 13%*
down 13%*
• Led by strong sales in commercial aero and
general industrial
general industrial
• Reduced demand in aerospace and ground
defense
defense
Full Year 2010 Results
• Sales up 4%, organic operating income
up 8%*
up 8%*
• Strong sales in aerospace defense, general
industrial and commercial aerospace
industrial and commercial aerospace
• Significant reduction in ground defense
• FX impact >$7 million unfavorable on OI
*Organic results excludes impact of FX and acquisitions
2010 Segment Review - Metal Treatment
8
Segment Sales: $221 M
4Q 2010 Results
• Sales up 13%, organic operating income
up 78%*
up 78%*
• Led by higher demand for shot peening
and heat treating services
and heat treating services
• Strong sales to general industrial and
modest increase in aerospace defense
modest increase in aerospace defense
Full Year 2010 Results
• Sales up 9%, organic operating income
up 32%*
up 32%*
• Led by strong sales to general industrial
with increased demand for comm. aero
with increased demand for comm. aero
• FX impact <$1 million unfavorable on OI
*Organic results excludes impact of FX and acquisitions
2010 End Markets Summary*
9
Key Positives
• Naval defense remained strong
• Continued demand for embedded
computing, and sensors and controls
products
computing, and sensors and controls
products
• Most Commercial/Industrial markets
ended strongly
ended strongly
Key Negatives
• Cancellation of F-22 and FCS programs
• Winding down of sales related to CVN-78
• Weaker overall ground defense market
• Lower China AP1000 sales
• Slower recovery in oil & gas industry
* Percentages in chart relate to full year 2010 sales.
2010 Summary - Aerospace Defense
10
4Q 2010 Results
• Strength in helicopters, P-8 Poseidon,
Global Hawk and other UAV programs
Global Hawk and other UAV programs
• Overall sales relatively flat due to impact
of F-22 cancellation
of F-22 cancellation
Full Year 2010 Results
• Strong sales of embedded computing
products on Global Hawk and helicopters
products on Global Hawk and helicopters
• Lower overall sales on F-22 and F-16
2010*
* Percentages in chart relate to full year 2010 sales.
2010 Summary - Ground Defense
11
4Q 2010 Results
• Impacted by lower sales on Bradley and
cancellation of FCS program
cancellation of FCS program
• Slightly higher sales on other platforms
Full Year 2010 Results
• Continued overall weakness in ground
defense market
defense market
• Improved demand for international
ground defense platforms
ground defense platforms
2010*
* Percentages in chart relate to full year 2010 sales.
2010 Summary - Naval Defense
12
4Q 2010 Results
• Led by strong sales on VA class
submarine and CVN-79 aircraft carrier
submarine and CVN-79 aircraft carrier
• Reduced sales related to DDG-1000
Full Year 2010 Results
• Continued strength in submarines and
aircraft carrier sales
aircraft carrier sales
• Full production on EMALS aircraft
launching system
launching system
2010*
* Percentages in chart relate to full year 2010 sales.
2010 Summary - Commercial Aerospace
13
4Q 2010 Results
• Improved sales due to increased
production levels at Boeing
production levels at Boeing
• Performed metal treatment services on
various commercial aircraft
various commercial aircraft
Full Year 2010 Results
• Benefitted from ongoing ramp in
commercial aircraft production rates
commercial aircraft production rates
• Experienced strong sales for single-aisle
aircraft, as well as Boeing 787
aircraft, as well as Boeing 787
2010*
* Percentages in chart relate to full year 2010 sales.
2010 Summary - Oil & Gas
14
4Q 2010 Results
• Improved demand for aftermarket sales
opportunities
opportunities
• Continued delays in capital spending
worldwide
worldwide
Full Year 2010 Results
• Rebound in coker equipment sales in
second half of 2010
second half of 2010
• Prolonged delays in capital spending on
larger projects
larger projects
• Received 3Q’10 order for complete coker
system
system
2010*
* Percentages in chart relate to full year 2010 sales.
2010 Summary - Power Generation
15
4Q 2010 Results
• Driven by demand for upgrades and
plant maintenance projects
plant maintenance projects
• Decrease in new nuclear construction
revenues related to China AP1000
revenues related to China AP1000
Full Year 2010 Results
• Continued demand for content related to
plant life extension process and power
uprates on existing operating reactors
plant life extension process and power
uprates on existing operating reactors
• Uptick in domestic AP1000 sales
• Expected reduction in China AP1000
2010*
* Percentages in chart relate to full year 2010 sales.
2010 Summary - General Industrial
16
4Q 2010 Results
• Improving economy led to higher sales
volumes
volumes
• Surge in demand for metal treatment
services
services
• Strong sales to automotive industry
Full Year 2010 Results
• Recovery starting to take hold
• Strong demand from automotive and
transportation industries
transportation industries
• Modest sales to HVAC industry
2010*
* Percentages in chart relate to full year 2010 sales.
2011E Market Outlook (as of February 14, 2011)
17
Management Guidance
|
FY2011E
|
Aero Defense
|
1 - 3%
|
Ground Defense
|
8 - 10%
|
Naval Defense
|
1 - 3%
|
Total Defense
Including Other Defense |
2 - 4%
|
Commercial Aero
|
10 - 12%
|
Oil & Gas
|
3 - 5%
|
Power Generation
|
1 - 2%
|
General Industrial
|
9 - 11%
|
Total Commercial
|
5 - 7%
|
Total Curtiss-Wright
|
4 - 5%
|
2011E Financial Outlook (as of February 14, 2011)
18
Management Guidance
|
FY2011E
|
Total Sales
|
$1,960 - 1,990M
4% - 5%
|
Flow Control
|
$1,050 - 1,060M
2% - 3%
|
Motion Control
|
$670 - 680M
4% - 5%
|
Metal Treatment
|
$240 - 250M
9% - 13%
|
Operating Income
|
$200 - 207M
11% - 15%
|
Diluted EPS
|
$2.48 - 2.58
8% - 12%
|
Diluted Shares Outstanding
|
47.3M
|
Effective Tax Rate
|
33.0%
|
2011E Financial Outlook (as of February 14, 2011)
19
Management Guidance
|
FY2011E
|
Free Cash Flow
|
$90 - 100M
|
Depreciation & Amortization
|
~$82M
|
CapEx
|
~$70M
|
Pension Expense
|
~$23M
|
Outlook for 2011 and Closing Comments
20
• Sales up 4-5% with 8-12% EPS growth
• Continued execution and margin expansion
• Solid performance across all end markets
• Defense business is stable and will start to
overcome several 2010 headwinds
overcome several 2010 headwinds
• Commercial markets rebounding as economy
continue to improve
continue to improve
• Well positioned for long term organic growth
Appendix
21
22