CW - Earnings call transcript Q3 2019 | Curtiss-Wright Corporation

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Operator

Good day, everyone, and welcome to the Curtiss-Wright Third Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode.

Following management’s prepared remarks, we will host a question-and-answer session and our instructions will be given at that time. [Operator instructions] As a reminder, this conference call is being recorded for replay purposes.

It is now my pleasure to turn the conference over to Jim Ryan, Senior Director, Investor Relations. begin. may you Sir,

Jim Ryan

and earnings everyone. conference Brian, third to quarter XXXX call. good you, Welcome morning, Curtiss-Wright’s Thank

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

be www.curtisswright.com. the webcast Relations is a on well company section found today’s presentation of and of also download for at release, are as our Our call available webcast A through website. press this today financial being can replay as of copy the the website Investor

Please discussion forward-looking those are are of and on today’s and risks in Litigation the will note, based and include with expectations detailed filings public our Act statements forward-looking Private not SEC. uncertainties associated certain guarantees that with XXXX. Reform statements in are the current projections These of statements as our future defined management’s We Securities performance.

for year period. excludes As costs associated company’s view a reminder, the acquisitions that and and guidance, non-GAAP purchase accounting adjusted current including prior first results with year

In segment. addition, the the transition in costs security business DRG relocation IT Power with and the associated of they exclude one-time

Reconciliations the for presentation of prior current on available and end website. our this earnings release periods in are the and at year

the any unless effects In growth and foreign organic references acquisitions addition, otherwise currency translation, to of exclude divestitures noted.

turn Now, Dave to over to call I’d get like to the things started. Dave?

David Adams

turn quarter, of morning, Thanks, along I’ll with to quarter over to third our our highlights of and to I’ll our results detailed Jim. full-year XXXX provide few with review third everyone. Then it Good a a Glenn full-year guidance. begin guidance. updates more

Q&A. on the our prepared move up including APXXXX on to update we return an I’ll wrap Finally, program before to remarks,

performance. strong We delivered another quarterly yet

markets and defense. sales profitability demand growth, of produced once in by and aerospace led was largest XX% we for by the and defense sales again naval growth Strong results were Commercial/Industrial our in main the our as expectations, our programs Our driver, improved ahead Defense segments. led in higher solid

operating a to X% investments a improvement in increase generating results operating rose Adjusted We tariffs. and margin despite R&D income XX.X%. these point sales, basis adjusted XX accomplished X% on in increased

reflecting activity. Adjusted $X.XX the repurchase diluted EPS strong share benefits XX% operational and our of the ongoing increased performance of year-over-year,

solid solid rate also XXX%. our the free signing third Rounding aerospace, demand in cash and a We results, LTA increased with by commercial which of – Boeing in with the growth flow flow in XX%, solid our adjusted of quarter July. produced new defense orders naval conversion latter led out of followed

strong in Year to date, by demand orders naval led defense. were principally up XX%,

updated operating our full-year increased Next and for where guidance, to projections EPS adjusted free our flow. we margin, cash diluted

As and you now high-end the to can X% see, growth. range guidance our of overall sales X% expect narrowed we

operating maintaining income However, our lower guidance sales. despite we are the

of a range $X.XX also guidance We $X.XX, adjusted to of EPS year-over-year diluted full-year to new growth XXXX to XX% representing XX%. increased

Finally, by now and free million we to adjusted $XXX million our raised free cash are $XX range expecting cash $XXX flow flow million. of guidance an

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

Glenn Tynan

to few commercial a our our to you, in slide. morning, markets, good would experienced end-market of a begin on sales third defense Thank are will I Dave, while and items increase sales XX% highlight a year-over-year. with I to everyone. organic this quarter declined Overall, we sales. our X% There like review markets

defense. aerospace in First,

fighter solid Seahawk Fighter XX%, programs. on grew sales Strike including helicopters, driven the growth jets, revenue Apache Our Joint on by and and primarily

XX% strong reflects the growth class CVN-XX carrier of defense, in increased aircraft Virginia submarine, revenues. and service Next, navel center

slight program, decrease timing aftermarket to as as our reduced generation, reflects power on well revenues. performance principally CAPXXXX In domestic due in revenues the

industrial businesses, most vehicles our some businesses. of treatment And and our market, demand reduced our reflects finally, industrial GDP-sensitive performance in the more for surface general notably

results defense discuss million I markets, on presented naval million the that solid third the aerospace was partially an segment, drivers offsetting key basis. sales increase adjusted and our and our improvement $X tariffs and in the operating In reflects Next, which, in of Commercial/Industrial a performance, will is reminder, principally quarter of R&D. absorption as higher $X

the adjusted adjusted which year-over-year, computing operating XX%, on In Defense XXX million in improved was income operating partially while increase double-digit basis $X mix strong improvement primarily reflects cost-embedded growth that increased points. This R&D. offsetting segment, revenues, margin favorable experienced

defense margin segment favorable million operating offsetting reflect of improvement absorption to $X which than addition In segment, program due CAPXXXX income generated that year-over-year reduced by revenues. the the restructuring more Power improvement naval was generation power initiatives, our XX% grew sales, on timing our to results strong in in and savings sales

to Moving end-market submarines outlook the our beginning aircraft defense in growing primarily defense Improved for guidance carrier. XXXX naval the markets. in particularly on and CVN-XX our market, reflects sales the backlog,

As in revenues, now a of XX% the majority defense of to which organic. growth we a is result, million XX% $XX increase expect overall driving sales of defense XX% on naval sales growth XX%, to

$XX required We due backlog. the revenues, production. specifically corresponding and to analysis naval root-cause to to lower is the made conclude a CAPXXXX for shift growing generation the support for our power million defense This decrease of resources

down X% As X%. generation result, now to we expect to a sales power be

anticipate tensions. outlook the the with flat the trade timing due quarter in industrial, to and China market quarter our U.S. general third be ongoing to sales some this performance, In and primarily down we fourth X%, trend to now and

result overall changes, commercial to we X% market Curtiss-Wright now As to overall flat expect X% and to sales X%. between down the be grow sales a of and

$XX waterfall sales. financial the the the general XXXX reduction sales to in XXXX you our to aforementioned presentation, outlook, segment led industrial In market has a million $XX chart. million the appendix of end-market sales find in Commercial/Industrial our with Continuing reduction will

new we a range to reaffirming increase guidance, However, to which resulting now of basis-point due is segment to to XX.X% operating our operating XX improvement income cost basis a expected mitigation actions, our in XX.X%. are XX XX segment margin, to to points

of our of from overall maintained business than the have segment, revenues due XXXX, and profitability initiatives. in Power to we restructuring better In DRG expectations activity, market defense strong the benefit our naval despite the CAPXXXX continued expected out shift our performance

sum to continue adjusted operating basis reflects XX adjusted overall expect growth This increase from overall income of to XX.X% points XX X% basis To margin with points. range X%, Curtiss-Wright XX.X%, our XX an to of we of operating guidance. growth previous up to up,

tax of this include full-year to our XX% our stemming $X.XX, XXXX to $X.XX earnings adjusted increased count our to to expectations new We share of principal up full-year and program. XX% for lower a a $X.XX our results. from repurchase by over Turning improvement adjusted to per share. diluted share $X.XX range drivers a XXXX guidance rate ongoing The lower

XXXX cash And $XXX operational we $XX with flow performance and an by based continued million free flow in from of guidance adjusted million, free approximately upon Adjusted conversion million. $XXX our cash efforts management, range is free rate to our strong cash full-year now flow to raised capital expected working XXX%.

our call Dave I’d continue back Dave? to with to over remarks. prepared like Now, the to turn

David Adams

Thanks, deliver well in remain and Glenn. is performing Curtiss-Wright to summary, In we strong growth on XXXX. profitable track

our providing We’re helping budget to in which commercial the challenges markets. defense is some environment, of and benefiting the defense offset from markets our favorable to strength

which to solid points, margin, margin operating XX we initiatives. our ongoing reflects and expand execution now basis for improvement guidance improved expect Our to XX

from to strategic our and growth in facilitate which impact to expect R&D future a investments additional organic million anticipated those remain guidance. We achieve million net unchanged results $X prior an tariffs, $XX despite from

EPS We double-digit in on $XXX adjusted diluted growth free achieve remain flow. million to track adjusted and in nearly cash

and objectives to outlook shareholders. financial deploying solid remain the solid to committed to path achieve XXXX strong remainder generate healthy to balance and keep continue continue a on Overall, maintain a balanced and and sheet also of for We year-to-date our strategy. year capital us results performance the allocation and our our disciplined a for

Before we I Q&A, the shift program. provide updates wanted to a APXXXX to few on

China, plant we the and X customers, coolant announce Regarding with I’m very that of matter. concluded Chinese, APXXXX analysis have work our power the the pump our Westinghouse root-cause nuclear to reactor closely Sanmen pleased in and we shutdown

be pump problem. three that fleet-wide isolated RCPs Sanmen not The within inspected, single a determined be have single this The concern. do issue a was have a is determined was remaining it to deemed not and to and to they been part X

coolant operating report viability the operation and Further, pumps. operate accumulative X the hours have I’m We APXXXX continued Haiyang to approximately as plants that APXXXX incident. as of pleased of coolant Sanmen our the at plant X is to this Haiyang remaining X, testament pumps reactor without XX reactor XXX,XXX successfully. to design, believe well They’ve amassed a the

is outcome on the Consistent this to cost the or to operating on with net liability Curtiss-Wright’s contract replace pump. Based issue root-cause immaterial. the performance of lesser previous of limited to the was communications, XXXX full-year the the China our our of repair analysis, impact the APXXXX

pleased restart behind remain reactor customers’ of to Sanmen the We supportive and our are put this soon issue as to X efforts as possible. us

China’s demand strong. believe long-term for pumps to as our APXXXX We remains continue the to well opportunities coolant as Curtiss-Wright’s reactor supply that reactor,

like At I’d up today’s open this call time, conference questions. for to

Operator

will SunTrust. you, the line Ciarmoli And Michael question our Thank first come from instructions] [Operator sir. with of

is Your open. now line

Jorge Pica

for morning. good Pica on on Hey, Jorge the This Good is Mike. quarter. results. Congratulations

David Adams

Thank you, Jorge.

Jorge Pica

in give of us about kind surface in kind world end-market business look a the I the how the industrial wondering talked of seeing? leading conditions could and that as you that past you’re you the broader was if a indicator around that go of summary treatment you’ve I and please know at business marketplace. the

seeing that general? Now characterize would broad of softness how market, to bit Thanks. in little a you’re there, you

David Adams

about our the out – globe for GDP at out Europe with And seen very we closely I’d to the – Europe say, tied is looking across have time. we’ve it of number being times, slow. that started as long a automotive of as bellwether first been and has personally tech organization. business I’ve It’s speaking of of been it leadership service talked

out see leadership vacations, what So though And third was there. give to that little light, coming is with group slowed as – recurring over that as but of a looked the recent that holidays discussions quarter mostly it’s that my of slowing. a Europe, we they attributable particularly a indication most take

out sort of mix. the of And so we take that

glance, look which pretty from And we have into fourth October, of in our it quarter particular. generally this it looked first Now a as we little that of mid-month quarter, in business, bit right good. though, surge now, looks the

the outlook we see year. So something it of the we’ll short-cycle through then we’re the as end of is But year very is end towards that that next the as breath It business. and watch closely, we bated monitor a up continue to to waiting the picks and progress with goes how year.

in go come out this can the morning, might and this door afternoon. parts they these have So to

quickly, in point So indication at but time. a it pretty gives

So it’s globe the of from around our business outlook then market areas more difficult other the with long-term but to measure perspective. a in a U.S.,

great. It’s super on It’s well. looking side, If you defense up. been look side as at the the shipbuilding looking

we’ll see that we reasons pretty we little aerospace there. problems But just generally commercial any more it, had talked So I’d certain the a don��t we bit areas. and up about and And in talk say, this down are steady power, being and then about for that Eddie.

watchful on is Industrial, a general eye word But it.

with and again, Industrial, in to We’re lot of in the in actually watching right well defense side, their what But seeing. in is quite a that now, folks the their doing general area. see just necessarily reports one, surface tech not they’re aerospace coming and they’re other the

Jorge Pica

where Thank defense pivot the bit services. Can you with and defense happening kind on weapon your entering you’re the you shift, side. where feel on is one conversions seems only this the as are this of perspective growth period retired up opinion that. that is strong across follow-up on a seeing following just industry is a and a a guess how will give technologies, a fleet It the we’re old evolve? transformation us on very being systems this in little beginning And once new we this the we’re generation there to in – seeing side, this see fleet-wide that of you. I

David Adams

Yes. I a in would it couple of ways. characterize

on a likely. particular those the that decades pretty at platform and Eddie shipboard we fleet, to look provide and with that provided for that regards placement have is products from steady would I prospective, First,

see I there. shifts don’t big a so And technological

We things be working in see shifts. tends navy smaller decades. has much side. the been change nuclear from well We technological what for really like extremely to It too to don’t

combatants change into see that as surface one, some now don’t And ship of forth. built other so much the and so you

from benefit see technological in some will upgrades that. will technologies improvements and certain You we and

the that. instrumentation I’d F-XX out a of Every help an time another shifts and say side, we’ll is test some all see like kind comes of what with regard parts to and/or we aerospace any that the where us a that – flight of big of reinstrument they aircraft. in way will change, our example make

And that up nice and side, when Ireland. of ground there smaller, business of a then power we then capability. for facility us are on TTC consumption, we recurring that in turns upgrades out into now in are – right ago we the going and in acquired Dublin, that of very ACRA So more over less a years number picked the our terms bandwidth lighter, have faster, works ongoing

Bradley’s, So miss we’re overseas seeing this Glenn? that and then waiting waiting, as domestic we some as well. resurgence years but activity say but been did beginning for any, that Abrams. I’d I see those it’s we long We’ve for and been by there we then, of number do there’s – And be on And some a primarily, – long time just a see the way. in

Glenn Tynan

any ground in aerospace mostly embedded business. upgrade do. No. what I’d would defense and computing they say in in our That’s technological impact

So that would be great.

David Adams

you add, computing that’s brought the to side. point, a might on just Glenn, I embedded

XX, – at away our I older been that. are that going you been of side programs of views, organization Jorge. in resurgence opportunities where of up We – what let’s and/or of we crossroads, electronic next some as And picking the so have say, in see mentioned, view had our upgrades, leadership we’ve technology months for a as new in sort or the left XX and

we new months. livening with see your programs so been XX will the to let’s gestation be do of of have phase. exactly Board I see – sort framing might would And within question like say, fit We the on resurgence And came you there. what that the described said, in what that some coming here, those XX as in up to next regard

the feel So very positive outlook we about there.

Jorge Pica

much. so it. you to Thank forward Looking

David Adams

Thank you.

Glenn Tynan

Thank you.

Operator

Arment Baird. will from Peter Thank the with you. our next And come question line of

now line is Your open.

Asher Carey

Asher Hey, Carey for Good Peter. this is line on guys. morning,

David Adams

you? How are Yes. Good morning.

Asher Carey

landscape, on Power. mind the resolved? indication just include talking your discussions X little environment Doing whole a the after I not question it’s at and bit changed would but if have order China three-year another there’s Sanmen some now well. know about that targets the I do a Sanmen, Would also all, some order, the you resume. issues Direct there, been

or also timeline Chinese economy overhang Now that do next and the you any with clarity Thanks. puts the removed, of have interesting? takes more any be the order, down would on slowing

David Adams

it for obviously is event the we as very, a good I characterize us. happened. for what Yes. would in and very The what outcome would wished that’s have beginning

we very with that what for happened. about, So obviously, came how happened, what’s and care didn’t feel comfortable we

minimal like possible, happen are you one things then they do this was. on hope occasion. just that But as as And that which

anything. was find that And customer, want cause of any we’ve if also with before a that I root so of way saying forward would I’ve was saying personally I – kind I been been would march to what a failure the out

our that after And can happy think mode. happens this. is everybody are We – our – obviously it’s the that I only to early tell is too customer surmise what So the with that results. opinions in

the it resolved. contained we happy has and We’re problem

we add Sanmen get hours that with to operational Now we along in start the back other X, XX have units. XXX,XXX

follow-on, that know So I to good that think ahead talk business is, We with Saudi a regard with and largest don’t this Arabia our have and people and other next order. ourselves Westinghouse from we talked, there, let’s that. India, the our in and/or the then second most regard and to with our single with after either do one-offs one with steam future say, any work to we’ve Chinese I visibility each that and with full opportunities another China, have between perspective. which with as continue and it’s customer be opportunity

to we So have feel it’s be going that for opportunity a and – company for we come. we’re and meaningful years it’s here very the optimistic we to extremely strong long-term

rolling get swiftly. up to – you Chinese let’s it’s a just So say, back a now this moving more again mentioned, little as it’s thing economy, get bit the and

be their bearing placement what I to think would order on has some got have that like.

that only coming certainly economy the can don’t be what a them. single that’s perceive they in and digit imagine it’s on recession double-digit going would might on to that’s and world slowing from impact hit big You for as, would if has down the But everything to their war trade stuff perceived that as with and all be know some it. I growth a in

just it I feel the coolant up provide. the the very water and of future APXXXX orders. we that with visibility pumps confident said, regard I next like like APXXXX we So, to in clouds our said, But, reactor the for

Asher Carey

one the exactly just there? much able may, breakout overall Curious order And is the book of you defense on quick company. how of follow-up, in if Great. components orders? Are the I the for to

Glenn Tynan

$XX And our LTA. Well, for million that’s F-XX it that’s XX. had we $XX third the Naval for for on XX Boeing quarter. three the for million orders, million of are the $XX I’ll carrier, the Those defense, give $XX we was you big ticket items aerospace headline $XX million subs. in for the major the of have through then LRIP million commercial order the order

Asher Carey

Great. Thanks, Glenn.

Operator

you. with Jones line Stifel. of question from And Nathan come next Thank will the our

Your line now open. is

Matthew Mooney

morning. This Matt Matt Hi, – is Jones. good Mooney on for on Nathan

David Adams

morning. Good

Glenn Tynan

morning. Good

Matthew Mooney

XXXX? a continue, to what’s mix and computing wanted the to of embedded market kind higher-margin we and I’m worse better follow-up get the wondering, of market. just I forward? sales, – X% expected to or revenues look typically organically, kind pretty on defense look that Is or primarily just going due strong, computing X% into that’s outlook as

David Adams

in margins versus COTS systems. and the was our higher defense mix the third of it’s quarter of driver big the the sales Well, in

continue so – that of But doesn’t was It influence forever, from the the work it way. first-half hear that this that you opposite there. quarter-to-quarter us. We but You see that, would in the wish year.

were you of first-half the bit the a the in year. lower If margins little notice,

We’re so better the good. seeing the second-half a mix of year, in third quarter the was

strong our also performance acquisition. We TCG from of had

million about strong a African DDG-XX on had from and had performance debt We $X reversal the reserve. South also we customer. payment We received bad program, finally of

that of quarter, pretty of in margin little high high bit very the quarter. in kind led of but one-off, that’s the margin all So a to

Matthew Mooney

million topics the and And this? expect helpful. And split is million That’s $X see Power? to think million kind investments? of $X Defense it Commercial/Industrial, to still judge – from I jumping do $XX we from as should $X million in R&D, of Yep. when fair these is coming from benefit to of And success how the we

David Adams

that Well, numbers of a couple those still One apply. is things.

So our for we’re target for still million achieving increase on $XX year. the

of the year, it future, but – have benefits terms don’t I governed. don’t the it’s we obviously are really in – don’t by In I

fairly We together new. have – of kind they where who people is council, is an But this actually across from what the company, and we what innovation all – this this brought exactly doing, that sure evaluating the we single major the not we get projects projects, and the they’re on ROI we then are but that require. the they’re making ROI one, obviously, every get

don’t at than I point. So detail now right have this any more really that

Matthew Mooney

Thank questions. All for you right. taking my

David Adams

Thank you.

Operator

with our And from question UBS. the will line come next of Myles you. Thank Walton

Your line is now open.

Myles Walton

morning. Good Thanks.

David Adams

morning. Good

Glenn Tynan

Good morning.

Myles Walton

CAPXXXX. Maybe on the

right? push had XXXX, whole curve it’s to like have – help sounds is to revenue. little kind bit of it with or the So absorb implied in sales would of the out otherwise that slid the you headwind a Des of

Glenn Tynan

slide good and outage up nuclear CAPXXXX. to a returning fourth on quarter going is Power going the because mean, coming of the mean, normal the to are segment have up, is be be back big curve the because already returning, we’re season. to I quarter production we fourth in pretty power to market aftermarket The going to I right. the the Well, the

So forward. we move

new February, and guidance, a So they update XXXX will the our chart in we – but… chart, we’ll you with revise but will update probably the not projections with beginning

Myles Walton

headwind guess more significant implied get get better or any And $XX would million that would – it the mean, previously? would you that than base just, Glenn, minimum I I the wouldn’t had

Glenn Tynan

will get better. It Yes.

Myles Walton

Okay.

Glenn Tynan

how don’t just point. [indiscernible] think this …I that’s at much know

Myles Walton

Dave, us picture? hey, of you Okay. No, availability, looking that Where M&A so outlook, like? just give most is what current maybe the sense. that on makes the And then, kind activity, pipeline seeing are interest

David Adams

very know good year. point and some opportunities towards Yes, of at we that pipeline looking are still really looking capital this us. started calls We several and where that we of looking those several couple last is the talked and you how this strong. still. the M&A allocation for – is at balance good end strategy, We about We’ve assets deploy got that are of

look of long going of some And put back meet keep the confident that good they’re as I we’ll share for things we terms if I look our those going do, way moving obviously, we’re to moving, as those we’re don’t, the in on feel side, a what and at objectives. back, we money. mean very in And where position little M&A be the repurchase to decide we buckets to activities reason,

terms are the into have feeling or XXXX, of as the great very And terms opportunity that ones at, nuggets conclusion But looks little And some our come how the list some that here certainty looking we’re some that near-term. to some good outward I’m within looking some, in outlook got are as of nearer-term for for I much the percolating then shorter-term, M&A we that in the mean it show confident potential opportunity opportunities because going equally of then find deal. of in we’re way. within and process that

in So great. word, a it’s

Myles Walton

but more in Okay. Is maybe on industrial, more is availability the I on the side? it’s imagine, interest more side, it side? it maybe more or the industrial A&D A&D in the

David Adams

Yes.

got opportunities the the us. And we these, right at have has could right price given there, hit we’ve got for we on there positions some do when we on now, good in studying those and industrial. that look circumstances. head You are a I be mean, be pretty The do Myles. to the right

Myles Walton

Yes.

David Adams

alley. the there, both some and look overpay don’t up on fence, juicy stick on sides yes, we our But of side, nice to the right But really is and extent just our ones can. that the we out A&D

Myles Walton

for at don’t one. to think, it, to but in have And have? all XXXX one And two-pronged XX%. to of execute the that you their into the to of broad comp, were so the the you say start of or is last a looking the now it’s above. And kind And of naval context, exact it does I up, X% earlier wanted sooner that start backlog Glenn, don’t products know, get a your XX% Hey, One to up drivers bookings the be you then given customers XX% question. year, I X%, what came better? or Thanks. in ability don’t terms the lapping in for that mean of is,

Glenn Tynan

some the of of mean, guidance and But mostly it, the submarine – timing customers’ actually the resources Navy, the level the orders year in and ship – by this the size audits. request. to early of year. And primarily it’s the them the degree, orders for due for to driven I Yes. mostly at shifting the was the the lot a in the raise

Myles Walton

do Okay. the for still And you to have that see year, backlog good comp a is then being enough growth? next issue

Glenn Tynan

is. it Yes,

Myles Walton

Okay, great. again. Thanks,

David Adams

Myles. Thanks,

Operator

the Thank you. next of America. line will come question of Instructions] with Bank Liwag Kristine our [Operator And of from

open. now is line Your

Kristine Liwag

Hi, guys. morning, good

David Adams

Good morning, Kristine.

Glenn Tynan

Good morning, Kristine.

Kristine Liwag

to wanted APXXXX. follow-up just I the on

in that Is you And from happened? issue, as pump the are inspection issue, a coolant you again? provide manufacturing piece this insulation? on single for pumps doing how what X Sanmen your cause process that highlighted more and single the or the root happening can details to this prevent reactor quality For you

David Adams

or can’t that have occurred. we’re that Yes. to can the tell we’ve agreement moderate the talk of in we terms process, in possible. with controllable to extent Kristine, our will so it’s procedure we But thing to is ensure I customer whatever you about forth and of incident that that and reoccur specifics – doesn’t of what something we fairly the kind us for do this

operating. an size think it enough we I perspective. it of and say, a from from situation. well – wasn’t it I contained technical obviously machine So stop to and think major that was But quality I a we have manufacturing both suffice to extremely engineering, mean,

a concerned not recurrence that they’re So basis. about on

Kristine Liwag

for the issue RCP U.S. APXXXX this across Navy with read Does any your for business? have the

David Adams

No. Not know of. that I

Kristine Liwag

margin Okay, How switching And better in Commercial/Industrial. that execution? of versus that’s end much helpful. expansion is market the better in gears to mix also from

David Adams

with primarily the Well, segment, favorably in commercial, restructuring the in initiatives the aerospace, sensors. mix both the basically third in first also in in have our quarter some But in we did restructuring that they and the quarter. – Commercial/Industrial quarter, from took defense the benefited it we did initiatives

two those quarter. in yes, the items flowing So through

Kristine Liwag

weakness saw And you could for a in a terms in going to for that forward? market but quarter, highlighted, going also you cycle, the like margin us to that in And that deteriorate, there Surface be? of if or Sure. mix expect margins how you see this Technologies are that way then is to that you similar to upside for forward, quantify business where continues lower end do you much softer

Glenn Tynan

I say, lowered Well, will guidance. we our

surface guidance then derisked lowering and most we with is think XXXX tax. our I that of

pretty shape. So we think we’re good in

I pretty October. they’re Dave to that alluded having good a think,

that. happens with what see we’ll So

were to what But be to it, adequately the development preparation going and in – XXXX have are talk we’re now, get have a they right preparing worse. if for it are seems a, derisked don’t recession a I XXXX they in as yet. But in we call But for anything things happen. really about but could to – think we in meantime, playbook for

Kristine Liwag

seeing we up smaller that for end Can some in our forces. to type people going carriers, again up they move carriers competitors give about from does structures end you the D.C. order Navy, you, would want your an they like and From space? for or on you? meetings you away from lastly large And is large us with carrier possibly that if What aircraft maybe some mean seems are into evaluating reevaluating incremental opportunity thinking of just it U.S. come in structure If Great. me. the for to that? to you’re and color diversify force how

David Adams

opinion that know modifications. general the I that that structure to very that on have with you going give are they it the lot do know and force regard eons. about I’ll for I a done don’t conversations periodically

from And and view probably our the years horizon, from perspective the big-ship over the five, out. so good XX it’s for

structure ways force like a be generational out would would they any would be that us. change long So in front of this contemplate and

that’s I nuclear battlefields spaces. to in got things, the or answered I the it’s it not and certain force so the and it And does very does is rapidly, said, question, as change forth still because do tried-and-true another projection navy what so

anything in top so ships. sudden think of my And an let’s the more, with a I opinion, from smaller off of say, if all that came that hand if

I go would nuclear refueling I standpoint power, might and longevity likely the from is of the in they would field. the think with that presume would we easiest Then that out because we Columbia class have on. a provide on small what currently all and and pumps, fantastic provide valves larger CVNs these then with that opportunity class, huge that a we Virginia stuff

would I it the would up us. So think door open

and subs well, that change the you long much a carrier, very time. competition, out The on It’s price mean, come I And takes I have It tag want there know don’t work. go. like change pretty that, point is they to and pennies for you it. don’t but quickly. because then that or like seen fact don’t And I big, relative to the aerospace, long, other complex said, machines we things competition we’ve out on a belabor as just ships, Christine. they

electronics I we’ve would at lifetime it’s it got see and literally. kind to of not have here occur least, us, of beneficial in this in frankly, be that new certainly adopt I don’t my those We’ll likely, think shift lifetime. a Curtiss-Wright’s and boatload it’ll but and there, major shift So

And to refresh so that technology. we continue

a it’s think for opportunistic bringing deal up. Thanks us. I real So that

Kristine Liwag

Thank Great. you answering. for

David Adams

bet. You

Operator

Thank will from next you. with the And our George question come King. C.L. line of Godfrey

Your line open. is now

George Godfrey

Thank taking the for you, question. and thank you

Just, prior front. related question aggressive Dave, the just The Curtiss on very acquisitions. regime one was picture big the – acquisition to

areas another where area you on free tracks? disciplined adding and have set more much the on just approach a keeping dead exploring core cash that. flow three maybe a had You about I’m thought you three curious, higher-growth outside margins Thanks. reflected leg the those stool, within or the

David Adams

we’re to see question, we always Curtiss-Wright, the and us anything. I’d company. and our applicability a and set to do we, like or listen have where in just of mean, shifts And all options and a be all we agile to to on suitability at perspective drive director. where company options much table. might is in are weigh options dead to the as I the not the how market Good what Yes. certain pretty then take on

are forward. And strategy company the face issues within to addressing technologist we new, them R&D and those will come, forth. that but and we that as enter a our take would, in are going we in years If prevail so longer-term our are process of of the about lot that. of a believe in years all and/or being technology that we five sudden, XX we might XX one, digitalization. whatever, market the sorts would with talk company a years, into and addressing see We years, particular electrification I

stool But oil that from couldn’t was have, not to have some standpoint And removed handle didn’t leg going strength We bench we stool, we We the were, it did in stool, also that crazy that leg that and the M&A. we look different gas. about attributes called the the quick, was what have only on and and as to great a that or we forte. it because did just one I’m it. once while manage because on it. our And did of it a on completely after – really leg not at

focused what then of know were, the ship, you’re highly let’s successful think then as I to say, successful if and you to jump direction might best technologies upon nothing what be more or, and change you’re something sort do going diligent it about. rely into you of the But than in much

changing. take our intent that we a mean not our for as to down we technology bit long-term. one have it’s actively turning to see doesn’t a out let’s that we or eye, we But a this areas will and extremely new minor little wouldn’t all saw moderation was in say path watchful go valuable one approach. guide So the minds that with certain of, company It a say, if source in

George Godfrey

you, Thank Dave. Understood.

David Adams

Thanks.

Operator

no further in questions I’m time. And you. Thank the queue at showing this

or the Dave closing to conference comments Mr. hand now, and Officer my is Executive back pleasure for to So Chief any it remarks. over Chairman Adams,

David Adams

Thanks, XXXX speaking fourth all again to look joining quarter great Brian, thank today. during for forward and you you Halloween. us a Have of our We with earnings call.

Glenn Tynan

So long.

Operator

Ladies our all day. conclude and Everybody, disconnect. wonderful gentlemen, This thank may a you for and your participation does on we today’s have program, conference.

Curtiss-Wright (CW) 1 Nov 192019 Q3 Earnings call transcript