Esterline Explained. May, This presentation contains no controlled technical data or technology.

Transcription

1 May, 2018 This presentation contains no controlled technical data or technology.

2 This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as anticipate, believe, continue, could, estimate, expect, intend, may, might, plan, potential, predict, should or will, or the negative of such terms, or other comparable terminology. These forward-looking statements are only predictions based on the current intent and expectations of the management of Esterline, are not guarantees of future performance or actions, and involve risks and uncertainties that are difficult to predict and may cause Esterline s or its industry s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Esterline's actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements due to risks detailed in Esterline's public filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K/A. This presentation also contains references to non-gaap financial information subject to Regulation G. The reconciliations of each non-gaap financial measure to its comparable GAAP measure as well as further information on management s use of non-gaap financial measures are included in Esterline s earnings press releases as well as in this presentation. 1

3 Overview Esterline is Key Investment Highlights a specialized global manufacturer of custom-engineered solutions for aerospace & defense. ~13,000 employees Annual Sales: ~$2 billion Enterprise Value: ~$2+ billion Three distinct business segments Highly diversified, balanced global business Technology leader in core markets Commitment to the Esterline Operating System Strong cash flow generation Well positioned to create shareholder value 2

4 A BALANCED AND DIVERSIFIED GLOBAL COMPANY 3

5 Geographic and End Market Balance 50% 50% United States Outside the US 40% Commercial Aerospace 30% Defense 30% High-end, non-aero applications 4

6 Global Coverage Strong Global Footprint for Sales and Manufacturing 5

7 Product Characteristics Across Markets High regulatory barriers to entry Highly reliable products for harsh environments Critical human-machine interface capabilities Precision machine-machine system interfaces Mission-critical subsystems and components Aerospace Defense High-End Non-Aero 6

8 3 Business Segments 8 Primary Capabilities Advanced Materials Avionics & Controls Sensors & Systems 7

9 Advanced Materials Segment Highly engineered harsh-environment components 8

10 Avionics & Controls Segment Tier 1 components and systems provider 9

11 Sensors & Systems Segment World leader in relays, GFI, Tier 1 sensor packages, and connectors 10

12 STRONG BREADTH OF PRODUCT AND CUSTOMER COVERAGE 11

13 Dozens of Major Customers 12

14 Hundreds of Programs 13

15 COMMITMENT TO CONTINUOUS IMPROVEMENT AND CULTURE 14

16 Mission-Critical Culture 15

17 Strategic Focus Areas Profitable & Balanced Sales Growth Regulatory & Customer Compliance Enterprise Excellence Leverage the Enterprise Employee Engagement Enhance operations, drive organic growth, generate cash 16

18 Balanced and Profitable Sales Growth Organic Product experts focused on customer needs Executive ownership of key customer relationships across platforms M&A Bolt-on approach with synergy focus Completed acquisition-related integration activities for advanced displays business purchased in

19 RECENT FINANCIAL HIGHLIGHTS 18

20 Recent Revenue Profile Sales from Cont. Ops. ($ in billions) $2.0 $2.0 $2.0* $2.0 $1.9 $1.9 $ st Half 2018 * 11-month fiscal year recast to 12 months ended Oct. 2,

21 Q Financial Results Sales of $517.6 million, up 1.7% over prior-year period Positive foreign exchange translation drove higher sales year-over-year FY18 Q1 to Q2 sales improvement in all three business segments GAAP EPS¹ of $0.80 per diluted share Record backlog at $1.46 billion Book-to-bill of 1.26x Year-to-date free cash flow of $62.0 million* ¹ From Continuing Operations * This is a non-gaap financial measure. See Page 1 and the Appendix of this presentation for more information regarding non-gaap financial measures. 20

22 Flexibility to Allocate Capital to Best Use Solid Balance Sheet Target debt level: 2.0x to 2.5x gross debt to EBITDA Balance between rate and flexibility Clear runway - no debt maturities until 2020 Patient capital - willingness to retain cash Strong Free Cash Flow Consistent free cash flow conversion 134% Average Free Cash Flow / Net Earnings in 14 17* Opportunities to reduce working capital and improve cash conversion Solid, Pressure-tested Balance Sheet * See Page 1 regarding non-gaap financial measures. 21

23 Balanced Capital Deployment R&D Expense Drive long-term organic growth Capital Investment Sustain, grow and reduce cost Acquisitions: Strategic expansion of products and capabilities Share Repurchase Be an opportunistic buyer using a disciplined framework 35% 27% 18% 20% R&D CAPEX. Acquisitions Share Repurchase Goal: Grow Long-Term Shareholder Value 22

24 Investing for Growth Commercial 787, 777x, 737MAX A320 Neo, A350 E2, CSeries, MRJ Defense JSF, P-8, A400M, KC-390 Adjacent UK nuclear market High-end medical Asian rail market Gaming 23

25 Stakeholder Commitment A high-performing aerospace and defense company whose engaged employees deliver value through world-class products, services, and technologies. Customers OTD / Quality as committed Competitive products & services Partner they depend on Economics to justify new growth Shareholders Peer group leader Acquisition funding Higher stock price Long-term growth Employees World-class organization Financially stable company Learning and development Growth opportunities 24