Curtiss-Wright Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the Curtis Wright Third Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker, Mr. Jim Ryan, Senior Director, Investor Relations. Please go ahead, sir.

Thank you, Cherie, and good morning, everyone. Welcome to Curtis Wright's third quarter 2020 earnings conference call. Joining me on the call today are Dave Adams, our Chairman and Chief Executive Officer, and Chris Barkas, our Vice President and Chief Financial Officer. Our call today is being webcast and the press release, as well as a copy of today's financial presentations, It's available for download through the investor relations section of our company website at www.curtiswright.com. A replay of this webcast also can be found on the website. Please note today's discussion will include certain projections and statements that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. We detail those risks and uncertainties associated with our forward-looking statements and our public filings with the SEC. As a reminder, the company's results include an adjusted non-gap view that excludes certain costs in order to provide greater transparency into Curtis Wright's ongoing operating and financial performance. Reconciliations for current and prior year periods are available in the earnings release at the end of this presentation and on our website. Any references to organic growth exclude the effects of restructuring, foreign currency translation, acquisitions, and divestitures, unless otherwise noticed. Now I'd like to turn the call over to Dave to get things started. Dave? Thanks, Jim.

Good morning, everyone. I'll begin today with highlights from our third quarter results. Chris will then provide a more detailed review of our third quarter financial performance, as well as updates to full year guidance. Finally, I'll return to wrap up our prepared remarks with a discussion on several strategic topics, including... restructuring plans within our commercial aerospace business, executing our balanced capital allocation strategy, and lastly, why we remain confident in defense as we enter a period of budget and election uncertainty. After that, we'll move to Q&A. I remain pleased by our team's agility as we continue to navigate through this challenging period and ensure that Curtis Wright is well positioned for the future. We've maintained a steadfast focus on keeping our employees safe by following CDC guidelines, and all of our manufacturing sites remain operational to date. The team has proactively addressed the demand conditions in our commercial markets, while remaining keenly focused on executing our restructuring plans and austerity measures. This includes our decision to reduce our footprint in commercial aerospace, while more than filling that sales gap with the PACSTAR acquisition announced in late September. Later in my remarks, I will expand upon the benefits of this acquisition and how we are implementing our plans to enable future profitable growth. Turning to our third quarter 2020 adjusted results, where we exceeded our operating margin and diluted EPS expectations for the quarter. Sales declined 7% compared with the prior year, but were sequentially higher than our second quarter results. We continued to experience strong growth in our defense markets, which increased 11%. Within our commercial markets, orders and quoting activity have steadily improved from the lows experienced in the second quarter, which provides optimism as we look ahead to 2021. Adjusted operating income was down 7%, principally due to the reduced demand in our commercial markets. However, adjusted operating margin was flat at 17.4%, despite a $45 million reduction in sales, as we benefited from the savings generated by our ongoing cost containment and restructuring initiatives. Adjusted diluted EPS of $1.85 exceeded our expectations, partially due to the timing of defense sales, while also reflecting the accelerated benefits of our restructuring actions. Turning to our adjusted free cash flow, while we had a challenging third quarter, Following our second quarter sales trough, we are up 12% year-to-date. We remain on track for a strong finish in 2020, led by our intense focus on working capital. Now I'd like to turn the call over to Chris to provide a more thorough review of our third quarter performance and outlook for 2020. Chris?