CW - Earnings call transcript Q4 2017 | Curtiss-Wright Corporation

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Operator

Good day, ladies and gentleman. And welcome to Curtiss-Wright Fourth Quarter 2017 Financial Results Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn conference over to Jim Ryan, Senior Director of Investor Relations. yours. is podium the Sir,

James Ryan

Thank you, Fourth Call. Welcome Curtiss-Wright's morning, And and Full good Quarter Conference everyone. Year to Brian. XXXX Earnings

Joining and today and me Officer. President call Adams, Financial on Chairman our and are Chief Chief Tynan, Glenn Dave Officer; our Vice Executive the

and of as available of today call replay for certain the be Private not www.curtisswright.com. performance. future the detail Relations are section well Securities download company can with that webcast, of These website in today's A guarantees press forward those release the Act and We today's uncertainties associated through filings public risks call Reform Our copy the statements defined the expectations of financial forward-looking XXXX. our found at Please in SEC. being website. on projections as discussion is also the with are and this Litigation our based our statements of presentation are Investor looking include will statements are on and as current note, management's

the certain on will divestitures, this and translation, unless the Please growth organic of non-GAAP measures references A and exclude in any today. earnings to be note financial foreign at end is discussed effects the release of presentation. addition, the acquisitions reconciliation In available call currency otherwise noted.

Dave things started. get to Dave? would I to the to like over Now call turn

David Adams

Thanks, Jim. Good morning, everyone.

in Q&A. key were our followed wrap general reflects guidance. the in by remarks or today, with highlights in full XXXX X%, which we along Defense X% For contribution from Glenn, our XXXX, return industrial our that operational performance, Commercial of begin sales our will the on exceeded we acquisition I'll year were move markets, to experienced nice for organic. overall review pleased growth with solid our segment. organically rebound X%, agenda the up Then of defense provide quarter was which to a TTC expectations. strong before increased including principally prepared all fourth Overall, end I with will quite led of driving our who of X% XXXX sales gain by up a Total initial the our We performance sales market. XX%

expansion also operating achieving generated margin the would benefits We ongoing our excellent year which accounting excluding improvement XXXX cost initiatives. of execution been on XX%, performance continued for the This an margin our XX.X% TTC. in purchase margin have focus first reflects of and

the of result a delivered As of XX% growth strong performance operational year-over-year. EPS we

a was As few Glenn full minutes, explain tax XXXX impact in net the reform year from will results. minimal to

will share, However, while future benefit balance meaningful long-term other and flexibility capital benefits. and manage among per to earnings it year's to XXXX our strategy providing also provide allocation a

million the since conversion of This move far performance in and cash group to we peer quartile $XXX generated XXX%, for into our in by metric XXXX. the We reduction significant flow of which free Curtiss-Wright this exceeded top expectation versus free flow first cash also driven robust a established working time capital. our

in along all operating and per margin strong earnings increased sales with end higher expect markets, share flow. we cash XXXX, For free ongoing continued expansion

Next, TTC. I'd with discuss beginning some highlights like to acquisition

business, period into defense of which during announced our Curtiss-Wright The fits of business budget. portfolio naval especially within been this portfolio just robust a it portfolio well profitability. recently, one and ago As as acquired that to market, of key we this as our right from significant growing breadth expands purchase Siemens, Dresser-Rand which an market with addition week year It TTC. our continue was a its a the the aware, government brand to its naval we you wheelhouse. are has addition great be positioning agreement defense to rising to will the More attractive

the on to We this navy on share guidance the of growth have more later vessels. not our in expect that business. Note line to include call. Dresser-Rand We'll this expand our acquisition boost ships does content our business footprint and potential and top the at government

like Glenn to our review and outlook the to provide financial turn performance for Glenn? of call I'd a Now over thorough XXXX. to and XXXX quarter more fourth

Glenn Tynan

up in Thank saw to which XXXX X%, organic And TTC We seasonally you, strength end particular our in spending We X% driving want quarter few market solid good gains Dave. highlights. sales as is produced defense growth minutes a strong fourth the most in the I ramp of the in organic. was by the due from fourth which growth sales quarter. well X% of a a of everyone. of morning, as to begin strongest market discussing quarter

solid of We excess primarily free also of cash flow X% we well very exceeding market conversion growth for products. the in fourth expectation. general our cash strong organic improved a to demand million quarter XXX%, in industrial produced flow and the in $XXX a as due industrial Free both was generated vehicle

Our driven cash capital. time. XX.X% by and significant to sales top reaching the of XXXX, achieved point in performance reduction we In working substantial XXX working for earnings capital quartile results a were basis first higher a reduction in

APXXXX $XX million early Direct was a X. impact expectations Jobs resulting In for fourth scheduled on Tax related accounting primarily were $X.XX and payment that on milestones flow Diluted changes our quarter the share despite in received earnings also Cuts in originally various tax discuss detail from quarter fourth higher XXXX. I'll from free ahead tax and advance more addition, Act. of benefited December effective slide cash rate order of was beginning per but of to in XXXX China a

industrial performance. controls quarter we the highway for serves computing on concluded serving Which markets? demand and a products solid widespread In In products market, markets. aerospace commercial demand the our XX% we off and orders. from sensor the led with and new across by and market vehicle fourth fourth commercial defense improved summary, to products XXXX in quarter defense Next experienced serving particular, embedded

on XXXX, free from and reflect on to our move want capital working flow historical we cash performance. I Before

goals was significantly percent Looking top since as group, set peer on our performance XX%. as We dedicated working indicated this metric working quartile reach versus sales XXXX through on back to focus in capital; working slide, and company X,XXX to we to points aggressive capital our our the reduce order of reduced XXXX. wide capital a basis by

and target is reach result, expectations. status to enabling the a we As testament top achievement year connectivity in ahead achieved a for an us top and our beat of quartile XXXX, to in team, performance. their This quartile a exciting

cash latter generation. contributed of. working are to next conversion Turning those strongly free And XXXX, is company's $XXX of that the cash proud conversion we flow rate slide, well free improvements quartile an capital Since robust average very group. the top to million generated cash free within flow free we've average the flow XXX%, north flow a cash of peer of which and

spend effective influencing quarter projections. to impacts I want to tax our the of our few XXXX, and of of the accounting XXXX In results. XXXX had tax the on results and XXXX move discussing we I'll rate. on tax guidance, begin two impact our with reform fourth XXXX Before reform on impact a tax various minutes changes the reform

foreign the one-time First of million mandatory repatriation transition the charge $XX for is earnings. tax deemed on a

XX%. charge the million XX% net These corporate the US or $XX of tax a two the to items deferred from net is in due million liabilities rate quarter. tax to resulted decrease of our to from EPS reduction in $X.XX revaluation in Second $XX the

the tax basis, year of the or employee the net million, Next increase to is $X.XX impact In per a offset throughout results share impact change fourth impact or accounting related to of EPS. the quarter, that benefited was from the in the full legislation. compensation is earnings was which million increase benefit share On this XXXX. based $X.X $X.X quarterly most our charge $X.XX tax new

fourth $X.XX two As on in a respectively. quarter a impact and EPS $X.XX XXXX result, and netting year resulted these negative full our items

XXXX, Moving overall on certainly benefit to XX% And we Curtiss-Wright are from rate. tax rate. to guiding US the tax a in effective reduction the a result, corporate as will

accounting analysis recognition we've when basis be accounting our results. to This projected operating adoption, pension to In per a report new XX the accounting is impact cash flows. reclassified change to other margin. that our not thorough components I of a effective to $XX new This and but income operating income completed cost from impacts on will are or change XXXX non-service will Next XXXX few reduction the in more expense. provide expense that acquired to is this rules am regarding overall change and of Curtiss-Wright below the immaterial million detail of to pleased in to income and points expense XX net statement income results. the $XX other reclassification of to require resulting operating reported be we line revenue review effect our The share guidance. the earnings XXXX to I'll to in million minutes a the

XXXX slightly ground naval defense, instrumentation the expected end overall mostly market, test higher defense expect in to we by a where expected sales to sales improve and in driven be from primarily timing. beginning to In expect sales related be the driven to increasing sales X% our drive SXX. higher be embedded we both for submarine and actuation on sales revenues products and flight defense, market. X% In on up the to are tariff spending demand the products to XXXX, of to XXXX stabilization program to moving by due defense, Class to X% guidance to CVNXX In our to computing And the customers. sales by benefit up from our Now continue the international and reduced revenues trends SXX. higher the increased defense systems market for In commercial with in our sales defense primarily aerospace ramp budgets. aircraft we XX% carrier favorable system Columbia in are expecting Class will as Virginia defense grow are offset up to and slightly

and have XXXX. the currently production are substantially revenues completed the in development up our ramp on to before Columbian law in program begin Class We

commercial Moving on to markets. the

will Industrial sales and And sales generation, primarily General actuation strong between sales supporting projected business. vehicles X% expect to and The program serving be the in the the Industrial which more improve and to Class-A we growth growth gas in our economically oil by X% be slightly Industrial we industry trends between Trucking in to China businesses off-highway X%. In sensors the nuclear demand up of be aftermarket and to driven agricultural you sales narrow market. Now find on full for on for Direct tend are are expected are digits as and increased vehicles valves, commercial sensitive breakdowns expecting up to general waterfall demand XXXX XX, Slide mid-single grow as expected and led markets revenue expect remainders continue respectively. sales starting to increase be as X% power industrial aerospace end-market of chart. up platforms. slightly. the our finally APXXXX detailed by finally presentation, market, sales well on principally sales by and of And body improved slightly, are we XXXX appendix market to in year systems the our end our

next by XXXX our be basis of an X% to Our the for XX.X% and segments financial column, by operating is of is in benefits rules, XXXX the XXXX reflects continued margin and as impact expectations compared our reduces for million. show to all the income pension reported using ongoing operating operating the up executions sales expected strong led total X,XXX XX%. green, across On new to three basis our points and $XX results. we margin initiatives. which growth accounting solid improvement This performance Curtiss-Wright adjusted middle In from guidance XX%, to column highlighted growth income

accounting up segment, XXXX case reflects our operating XXXX our were to basis basis In on and X% the range XXXX for a by result, to to operating Commercial/Industrial guidance our points. the and the XX of points primarily sales outlook XX.X% be volumes to pension impacted specifically XX.X%. in will Defense markets. Continuing the approximately driven reduced And XXXX initiatives that in industrial our are is products. restructuring primarily XX R&D, XXX oversize our well Partially of implemented we in for the expansion reclassification. right increase growth on operating with plus be income Industrial sales account a by Aerospace as we million Higher net focused also to charges for XXXX. $X reported of as segment benefit As margin by of the expect to adjusted because in based offsetting million restructuring X%, is margin General $X new higher results change, improvement

operating in to As slight a to XX.X%. a margin result, we range expect improvement a XX.X% of

share offset to the where projecting XX.X%. increased led embedded in basis operating profitability by to to in will to segment well increase Next, X% XX.X% to Aerospace/Defense range support absorption as by beyond a We the now segment, XXX drive margin is sales. X% purchase continue to with a That XXX moved XX% to that expected to accounting operating reflects from our growth TTC, the costs growth. income primarily per increase to be defense sales market? are to which partially and we have R&D increased This improvement high-tech as associated are outlook million grow XX% of $X grow computing organic will products favorable points

with market, X% naval market. X% Next sales primarily is the higher due modest and increase power along the in segment, generation expected in grow to between to defense revenues where power a the are

due pension would operating cash XXXX expense Overall, segment in from other our Interest a program that R&D. as projecting is impact range the to million to as margin income grow sales. in are with income in income We orange. change I of are does for expected rate that solid earlier, highlight shown aftermarket expense by tax Continuing operating come and the profitability the projecting outlook, to to have and reclassification to we XXXX not XXXX we like in accounting expect this And APXXXX improved and in down increase periods margin forecasted well Partially few flows to improvement XXXX levels. debt to any XX% dollars to to $X XXX increases driven million points XXXX. or segment to Note as noted on earnings on the lower our effective as XX% be increase share. and per XX% offsetting nuclear basis a is operating XX% XXX operating to XX.X%. income increased

our we million addition, from decrease XXXX, In forecasting $XX includes $XX.X a offset slight in to issuances. stock repurchases which share, from of million are diluted dilution shares, for expectations

per Further first As XXXX to to earnings note guidance growth share which that of is EPS a a represents result, include XX% does our XX% any ups guidance typically our quarters. with expect the range EPS over diluted expect results. After not be the our to accretive the dilutive business in amortized to EPS. in acquisitions, to we the one, year business in contribution Dresser-Rand. $X.XX on that as per Please of to be step two we the to $X.XX one typical based from year first year

please XX% XXXX note of EPS the in half first purposes, your our XX% year year in approximately second For that and we full be of the half. the to modeling expect EPS

have fourth increase share earnings our year’s the quarter last anticipating above first quarter, as sequentially with first expect quarter per We be to to be each historically. quarter slightly being we strongest done

plan, our it to XXXX, Next benefit voluntary over XXXX. the to fully returning status funded expense five eliminate contribution projected contributions reduce our the years. need pension expected for with voluntary outlook is pension where $XX month free since our affecting our in plans, guidance. what similar Early begin make a further this to we for we to plan I defined million on to update early cash free pension contribution is did and elected This the corporate for next flow an cash our will cash flow pension

to from with pension adjusted contribution, this range is XXX%. expected XXXX conversion rate to free to $XXX XXX% flow cash expected million an million of Excluding $XXX

the program flow otherwise strong consistent by our working contribution, advanced We to on prior if similar management. maintaining APXXXX a continued our voluntary payment the flow our on have XXXX not earlier to very levels would led Further, with pension and than capital free cash conversion results expected and be cash solid our are been free progress target. XXX%

XXX%. of of reduced is which free revising result an flow net we tax to conversion a at As favorable are average income, target least rate corporate our US cash to

However, an free we of least at $XXX million. flow are annual maintaining to our achieve based cash target

process guidance the impact cash expected in consistent XXXX. of evaluating Our our finally, depreciation tax and specifically potential laws with to XXXX to the are the expenditures amortization capital for are to its of repatriations And balance allocation capital foreign the we and remain strategy. new benefits and

the Dave like prepared over I back turn conclude Now remarks. to to floor our would to Dave?

David Adams

steam base on I’ll rationale to engine on customer Curtiss-Wright continue very legacy builds on similar Dresser-Rand other work. we leverage discussion well. the provides at enable their via repair this main contracts. long-term an Thanks, machinery have global The strong surface it our shipyard and bases, new the content with three business carriers the expect at manufacturers and defense as submarines and acquisition the competencies. conducted rotating Financially, that will position is Strategically equipment, preferred relationships of products, of expand the with largest on emergent we navy and the market, navy bottom valves The area needs This the Glenn Dresser-Rand leveraging of services. of Dresser-Rand the an of established benefits and The products ships expect acquiring government a and new upon business. line. business opportunities core and to our focused service significant primarily guard new service for overhauls is top and aircraft turbines within of and presence shipyards, naval the us majority US benefit growth. naval to work is also sole-source centers maintains OEM supplier

$XX XXXX we the in sales approximately release, fiscal press expect Dresser-Rand As noted to million. be

expansion future generate margin share through one, cost. naval Dresser-Rand majority flow proven regarding on that of discussing we generation beyond the update year reference, free we Once business acquisition our their anticipated guidance pro-rated objectives expect contributing defense generation. are to any close practice, with to financial term specific the cash second our include transaction to growth. remainder future to not market look business we also the to of to our expansion Further, power financials integration the our market. the is prior the with to we organic excluding support purchasing margin and It be expect our sales the We we quarter, of Dresser-Rand after XXXX Further, consistent typical this note at For growth, accretive be which year until our the first acquisition, we will end the Please this to this accordingly. forward will earnings per practices. opportunities will transaction. long accounting financials close

of As we to markets briefly the I on light economy headwinds was our its our of time-frame, image Reflecting while wanted and slide October conclude key was that our the prepared beginning of remarks, from the upper which discuss right experiencing end is day. hand only the XXXX Investor several the tunnel. were upturn at the there on corner notable

we operations our top operational benefit As continued through and proclaimed would then profitable greatly day, efficiency our efforts our improve our flow line results re-emerged machine. would that a growth as to more the leaner once

and focus margin will in shareholder working opportunities on will we outlook increased the help results operational and to we through opportunities our value. management. heights XXXX improve and the continue our deliver provide to grow acquisitions discuss as and XXXX that Curtiss-Wright such improvement to capital new This Our in turn for to to and TTC metrics strong Dresser-Rand, performance reflect continue very positioning drive day relentless organically efficiency,

markets in continued growth synchronized deliver to driving points. in positioned XXX margin basis now to XXXX of are XX expansion all We

cash pension and XX% years deliver share exclude XX%. adjusted consistent above our growth voluntary Further, prior of target. flow is to free our the well to earnings to expect contribution double-digit also and per We strong with

R&D, for up is to our time, balance committed strategy to goal including maintain to conference to In our deploying this allocation operational balance capital like long-term we remain call strategic today's look generating continuing deliver forward a to strategy questions. At to where fair financial between results our acquisitions. also a for and I returns and We on open shareholders investments would solid stockholders. summary,

Operator

of line is our Fargo. comes now Thank question open. from Pearlstein [Operator Your the line you. Instructions] from [Operator Sam Instructions] Wells And first Sir,

Sam Pearlstein

cash Good just talk in cash that the up on at rates of there? the is morning. follow your a impact there and I whether to questions, of Glenn, is what's of wanted low cash is opportunity the tax balance can mentioned are you savings, and what any one all overseas couple the repatriation, you how about terms large

Glenn Tynan

of between going tax the ballpark. is it's rate to to now, Yes, are about million it cash be potentially million looking the amount on and cash that estimating be $XX we savings $XXX at right in are to and still but we million; $XXX available the repatriate

Sam Pearlstein

and does Okay, pull it actually what it to take back?

Glenn Tynan

know, it pull a kind you how country, of know and paper depends we you things all can we sorry. probably different different may some on month, in so, It's months part of we've nine in of can by it capital it's a six and it its get months, estimated, return take work, that back lot of some

Sam Pearlstein

and cash assuming And or balance and balance? about are how sizable presumption for and a pay Since are some a coming you have in of fairly you borrow still for think that Dresser all then what you the then it going is under the cash is when talking there of that? the accretion, to you about are you're terms what saying repatriation, and that acquisition about the you we --

Glenn Tynan

is pays in yes the of we probably it like amount use out but of paid a month revolver so cash in back temporary out back the Most balance, small borrowing, -- there coming it rolled a that is for,

Sam Pearlstein

end is over would the then is simply and market is it talked actually in the comp easy turn XXXX up? the grown XXXX say you said they Okay. to because growing starting that or you is bottom and that have And just of course aftermarket as are nuclear and every now it about we've

Glenn Tynan

expect supporting long-term to-- in the in still to sales we We in nuclear our indications is are every--- getting the growth mentioned and to-- year that all we rebound happen. XXXX, in is we to the think we've are we see XXXX XXXX, the start think will starting I going pickup with and previous and call order have aftermarket know expecting that's that see to that orders you

Operator

next question from Peter line from Baird. the now line our your open. And is Arment comes of Sir,

Peter Arment

nice and Dave morning, Good Thanks. result. Glenn,

to and to the Virginia with the outlook Columbian Just new be going terms development year-over-year we step likely navy, how mentioned and that's first think a up maybe on waiting how you block on we the about? for think do start the on of XXXX, do about timing for in

Glenn Tynan

not are imagine Well, predicting see XXXX, but we that. get you know would it's we we it probably on begin to obviously I would order XXXX happened XXXX sale it an -- in to in that in

Peter Arment

you Okay. on after-market just just on mix following related acquisition, That's of just view how kind OEM helpful. this can can of or up you terms It you-- Dave? Dresser-Rand, the in to clarify

David Adams

at expect about tell of year, little still on you what mix is you now, service it's say mean the probably mix ready not are we XX% higher-margin right it now all again give-- know but will the right service it's OEM is higher, the to I much least are too that we and we the I but that going tell center or on it's I talk -- OEM now. exactly, so each that, detail clear is think about I depends about higher if you-- to fluctuates really that really can what right big service it, can and centers, but XX% centers year-over-year, not

Peter Arment

talked on strengthening on I orders, what in throughout you in industrial mentioned very think look I you strongly how And you guess understood. XXXX? QX, in we aerospace, about kind the XXXX been you lastly are which vehicles that strength has industrial, the side at the sustainability it, of commercial industrial just Got see seeing as

Glenn Tynan

orders it's Yes. order I narrow I industrial commercial orders for wins two an and the like obviously off there aerospace single other mean long-term commercial primarily. Boeing. On the ticket from on It's in that, PPT of piece it's big the expect be items. agreement which and that good big up of bodies defense, ticket on with programs have highway really the the added order, has bigger sizable orders we what the the XXXX, actuation They are wasn't so is program been a XXXX, prior those the are in very it in because then bigger mean FXX years. chunk a would in drivers is piece so those ramp

David Adams

all Peter, you been generally board across to to an might we that And couple seeing what this I somewhat fat industrial the a of are years, for exciting last come Force through great as customer that this add have know Caterpillar, be us and we in of are surprised is real in is of look compared where year relative cylinders global that adding that you market it in that so is we on all only else everything past expect just on. bit it to we the and firing looks Air medical so pleasantly it up, the expansion, again are only even even a tub, think feels portfolio XXXX, firing year little mobility, these, -- market thing looking site, headwind expansion, mining, and John but been would in you you the that's are but rolls in in it's not we all a They open it we whole our might at nicely. know and lot our those very of are did the as they Deere business,

Operator

of comes Godfrey open. question now George from line line next CLK. from is the your Sir, Our

George Godfrey

fired? understanding want start as on be power hot Can update quarter. my Good is should with at you. the an we Nice you segment. those be give us the or where on on Sanmen I job to morning, gentlemen. Sanmen Thank X are near to X and

Glenn Tynan

in-- I celebrating sure not or this week basically on a of weekly am the give I'll New fairly of as that protracted updates. the they Yes. -- of the the get powering get from will are And are we now so. just and it expect that we call this latest I who to that-- of I actually are the that coming me out and Chinese matter their these indicating have time, rods installing fact they China it's have last when resident to in length any a Chinese we they been folks but week Year's over think that our phone session up. fuel and a day

we that, license-- forth regulatory know and one the the and bodies have next be licensing of So end Sanmen in are on then the we so the will if that brand one. high cusp

any are excited but that and generate up we it I that until keep well. past, are course running we more lot a Once and think happens as about it due day in have the and at we So we further will as will it know expect so in from indicated excitement they we saying result. everything it's and

George Godfrey

them long think? need months? potential imagine be focused does plan Is data do starts How need deals as The really deals see with comfortable the it What visibly to Six that operational would to months? let's or you a I fires customers make say Three new on feel running. if process? point And to well. this to month? and they potential pipeline are the up in tomorrow it

Glenn Tynan

couple but And call lot to I the regulatory in the my removing back their up. expect had then -- of It's within made start when not as and that to progress the that XX energy providers start year would quartile -- over sure to producers agencies plant. happen years. all I anywhere case. after I last generation this and lifting, make first had that with China several one next that go energy in am I indicated the on expect We ones we said when the excitement of on thinking I that's a dirt I think our for see an or said question. got see and the the think still government just And in to would I to pushing start of

to new the regard far with timeframe, a there, tell that guess and I As George, do don't over is but it. there know move starting the I here it's are place the slowly is as things as do to plans excitement know. they there. money very definitely anybody's The a I'll and need operations you I in mean

just that I pretty thing what many be could of it's based is the times just and and continue will So But not of these speculate side clear matter go really the say that after and have we and and but getting much if I -- a said will operational that to it's on regulatory operational through then hoops is do I the this it's matter environment of a getting go. occur. when they of just

can't I it's you clear will but than am give out just there once sorry we it So more And date somewhere. excited be a happens. up I that

George Godfrey

likely opposed defense me, excuse year or are budgets in mid slowdown as couple just momentum spending defense years? defense that X% to organic a growth on X% that the then over X% in next timing guidance revenue, issue the there slowdown And substantially to X, this increasing year the to of given Understood. a is point next business

Glenn Tynan

I think structural. know anything because it's the timing. if I don't

George Godfrey

versus year G&A analysts was Okay. lastly may Glenn Where $XX.X have million this paying missed increase? perhaps there And said you $XX and in then attention. million QX. $XX.X that million weren't this I

Glenn Tynan

know don't our the to in release in it are in think dollar there. I wasn't but good just in year. they the TTC bunch Those press am remarks. last big know in probably there we probably are the about is a scripted don't things. which two biggest number I of and comparable is I little there pretty mentioned trying -- there, have which But chunks but items think about I in

George Godfrey

Okay.

down All okay. you, gentlemen. year thank just as So compare Appreciate tough and sequentially, relatively any ago went right, it. then a it

Operator

line comes line Our the of is Michael SunTrust. next your open. question now Sir, from from Ciarmoli

Michael Ciarmoli

for think quarter. Maybe defense now maybe guys. Hey, of the seemingly be vehicles, guess a ground momentum deceleration. the with and I stay surprised morning, big on market George's question lot right that this to to within upside throughout the you on taking to there got army, nice specifically XXXX. just questions, good Thanks beneficiary seemed the I

if but just deceleration it's there, go So there timing vehicle ground that embedded into market market trying computing platforms. reasons can it was shorter Should sense strong cycle don't is those last there, some the would that that given to know is get year. within seem-- for maybe be any programs there especially new out your I really

David Adams

order that definitely seen for at least XXXX Abrams we've there if Bradley, in in the and But is Well, that are issue I think but plan. know goes in see in don't budget we've we we what which lucky funding some going I sure. not for the maybe a fourth to probably accordingly quarter If all for we'll it XXXX it's see. seen to years us are US

around business the international of off world. term rest works Our contract the long a

this a see time Eddy be material are it's are increase there defense but us. yes be first -- that we in will I year, they of but could they for kind time long Steady some way lumpy haven't so they of ground out in So we think

Michael Ciarmoli

in pressure then a bit we commercial/industrial to guys And some there. just cited on Just issues. margin in quarter think product mix Got you sort expect of the one it. color Should the more that line? time What's I with maybe segment continue? little that some

David Adams

that issues things some because said valves the negatively absorption impacted, impact FX margin quarter. is for the no million impacted had in Yes. least navy also in and they them within category with is sales had in that million There some an as favorable of is mix the couple corporate couple They dollars the their but that that vehicle not with well. lower OI less under rules $X business sales

Michael Ciarmoli

guys you increases it' looking think take or right $XX sort of in might level. we've seems you like give sudden the And heard okay. have it be one million that's Okay, bigger numbers been driving all just the so I around think probably XXXX, all or $XX R&D? R&D think of I then I running about but which forecast at for increase broad I million spikes it from the [XX%] seen what's the the

more trying just color drive to there. get little bit spending? are kind of a to So What you that seeing

Glenn Tynan

as particular it's the that's pump, tell. a big we've can get large big new said these the mean APXXXX wins, a these always And board this for developing XX products R&D. I is program Hertz general I year the in industrial, In power, across really a in programs. you two for It's to deal be segment, dent for those and they this computing. have And mean defense maybe upgrade there I only in so product mean I going their at point -- technologies. it's of data some the think into of XXXX significant some support they I competition against want her to in a in developing -- them.

David Adams

that as to against allocation strategy by and with they and my and could stingy us. perspective, sales some future a to a you deliverable am this the for as of in spending, balance there look I'll got and/ are the is and R&D industrial projects got then on working got well on And high refreshes XX commercial expenditures and listen preface technology you some a saying I the they side some into And for and -- a like power step is they coming where they as to pay we money that next the they my because while could capital haven't platforms [Indiscernible]-- yield they off real and we caveat there well. come that the machine when some were new that to board ones statement nice that and just look could you are that science more that you doing and defense way that's in areas Vice and get and place seen they've really got very kind we really this leapfrogging with we years something I that product going don't and really results, then I'll or spend going across And release there defense Mike, the like Glenn some some with tell for that out when just hear know level or the said very stick a some uptick that's the is opportunities means with as start President to there. we and go. out asking I some from come sector, side are are Hertz and of the know in new and put opportunities

if when I we thing So this exciting up asking really know to but and pretty had -- when and years that few and hear a and good to to door money, have a that the feel on I then see come long to way for they get spin -- we crawl knock about they is nice for haven't have with I think a rate I a it. me opportunity real and

do. should you all So

in it the dividends will I pay think future.

Michael Ciarmoli

makes Got That sense. lot it. a of

way I'll a Just out here. of the last one, get

any For the advantage Just thought maybe pension purposes? housekeeping, was rate to $XX the to deductible in do there. take of for million tax that there on or Glenn, color kind contribution, XXXX higher

Glenn Tynan

are That a doing. what great that is observation exactly and is we

taking So in is main we are return going you of be did happening the yes that's right. is event. reasons is one It and XXXX we in be will it to XXXX

Operator

remarks. further questions. to for the like Officer Executive I'll any now Dave Chief further Adams, and call And showing Chairman turn back I to am no

David Adams

Thanks again first earnings you Thank great quarter day. a with to Have We during Brian. call. all forward you for our joining us XXXX speaking today. look

Operator

conference. a may and disconnect. the day. participating today's conclude in Everyone Ladies gentlemen, for you great all you program. This thank does And have

Curtiss-Wright (CW) 22 Feb 182017 Q4 Earnings call transcript