Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Curtiss-Wright First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the conference to our host, Mr. Jim Ryan, Director, Investor Relations. Sir, you may begin.

Thank you, Eric, and good morning, everyone. Welcome to Curtiss-Wright's first quarter 2015 earnings conference call. Joining me on the call today are Dave Adams, our Chairman and Chief Executive Officer; and Glenn Tynan, 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 presentation are available for download through the Investor Relations section of our company website at www.curtisswright.com. A replay of this call 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. Forward-looking statements always involve risks and uncertainties, and we detail those risks and uncertainties in our public filings with the SEC. In addition, certain non-GAAP financial measures will be discussed on the call today. A reconciliation is available in the earnings release and at the end of this presentation and will be available on the company’s website. Finally, our discussions today of current and future results except for cash flow, are on a continuing operations basis which excludes all previously announced divestitures. In addition, any references to organic growth, typically exclude the effects of foreign currency translation, acquisitions, and divestitures. However, for the purposes of this presentation, organic excludes the impact of foreign currency translation, while the impact from acquisitions is immaterial. Now I'd like to turn the call over to Dave to get things started. Dave?

Thank you, Jim, and good morning, everyone. For our agenda today, I'll begin with a brief update on recent events, followed by Glenn, who will provide an in-depth review of our first quarter financial performance along with updates to our 2015 guidance. Then I'll return to provide some additional commentary on our margin expansion progress before we wrap up and open the call for questions. We're off to a solid start in 2015. On an organic basis we produced a 16% increase in operating income, and a 3% increase in sales. As Jim noted, the difference between our reported and organic results is the exclusion of foreign exchange. Higher sales were primarily driven by improved demand in the defense markets led by a strong start in ground defense. Our operating results also reflects solid performance in the power segment which benefited from a one-time event and strong organic growth in the Commercial/Industrial segment. We're also experiencing the ongoing benefits of our operational and productivity improvement initiatives across all three segments. Together, these factors drove continued improvement in our overall operating margin which increased 210 basis points to 13.3% and organically was up 150 basis points to 12.7%. As we have demonstrated, we are leveraging the critical mass of One Curtiss-Wright to drive efficiencies throughout the company. As a result, our initiatives, as laid out in late 2013 continued to manifest themselves in steady operating margin expansion. Overall, we reported diluted earnings per share of $0.89 which exceeded our expectations and topped our prior-year results, primarily based on the timing of the one-time event in our power segment. We also produced 8% growth in new orders led by higher demand in our defense markets. This growth was based on our leadership positions in embedded computing and nuclear propulsion equipment, and bodes well for continued solid organic growth; book-to-bill was 1.15 in the first quarter. Next I'd like to provide some additional comments on our performance within the power segment. During the first quarter we received a termination change order from our customer on the former Progress Energy AP1000 plant in Florida. This plant was never constructed due to state funding constraints. This was one of the three plants that were expected to be built as part of our original domestic AP1000 contract back in 2008. This change order was anticipated in 2015, though originally in the second quarter, but was received in the first quarter and does not change our full-year outlook. As a result of this order, our first quarter diluted EPS included a one-time net benefit of $0.10. At this time, we are maintaining our current full-year 2015 diluted EPS guidance of $3.80 to $3.90. Further, we anticipate continued margin improvement during the second half of 2015, led by solid growth in all segments. We remain confident and on track for another exciting year. Now I'd like to turn the call over to Glenn, to provide a more thorough review of our quarterly performance.

Thank you, Dave and good morning everyone. I'll begin today with a review of our first quarter sales by end market, where higher overall sales in defense were partially offset by a slight decline in our overall commercial markets. In the defense market sales increased 4% overall and 6% organically. We were especially pleased with the solid performance in ground defense, as international demand for our turret drive stabilization system continues to gain traction where we are currently supporting several new foreign ground defense programs. Although this improvement is from a fairly low base, sales increased 35% in this end market during the first quarter. In aerospace defense we experienced a mixed performance, as higher sales on the joint strike fighter program were offset by lower helicopter sales. We expect this trend to continue for most of 2015 based on current production forecast. Within our navel defense market, we continue to benefit from the steady funding of key U.S. navy ship building programs, with higher first quarter sales primarily driven by the Block 4 build of Virginia-Class submarines. In the commercial markets, sales decreased 1% overall but increased 1% organically. In the commercial aerospace market, higher hardware sales of actuation systems, sensors, and controls were essentially offset by lower sales of [indiscernible] services, which was primarily due to the negative impact of FX. Overall organic sales were flat in this end market. In the power generation market, sales increased 4% overall. Excluding the aforementioned one-time benefit related to the AP1000 termination order, we continue to experience lower revenues on the China AP1000 program as it continues to wind down. Further, relative to the aftermarket business, we continue to experience lower sales to existing domestic operating reactors, based on ongoing deferred spending on plant maintenance and upgrades. And finally, sales in…

Thank you, Glenn. I'd like to provide some additional color on the AP1000 program. I'll start with existing contracts for the initial plants in China and the U.S. We continue to make progress in the production of our first of a kind reactor coolant pumps or RCPs supporting the China AP1000 nuclear program. We are nearly two-thirds of the way through the 100 day engineering and endurance testing phase, if all continues to go as expected, this would keep us on track for deliveries of our RCPs starting in the third quarter. Additionally, we continue to secure smaller contracts for support equipment on AP1000 as well as other global reactor designs which are expected to nicely contribute to our overall content overtime. Regarding our next AP1000 order, we anticipate contract negotiations will wrap up once we conclude the engineering and endurance testing, and as indicated, we remain hopeful to receive the next China order in the third quarter. Longer-term there are an increasing number of countries that are planning to include nuclear power as part of their future energy mix. With our growing domestic and upcoming footprint in China, Curtiss-Wright is expected to play a key role in support of this industry expansion. Next I'd like to elaborate on the drivers of further operating margin expansion and our goal to reach and maintain upper quartile performance versus our peer group. In March, we completed our analysis of the peer group's 2014 performance. We then recalculated the new tiers to identify the upper quartile, or 75th percentile, based on a rolling three year average. Top quartile operating margin is now 14.2% which is previously noted was expected to be significantly higher than the prior target of 12.5%. Our management team remains focused on operational excellence and achieving consistent solid operating margin…

[Operator Instructions]. And our first question comes from Michael Ciarmoli from KeyBanc Capital Markets. Please go ahead.

May be, Glenn, just on the one-time termination gain of $0.10 in the quarter, I guess that was contemplated in your guidance, but was that higher margin? I mean, stripping that out, it seems like if I looked at just the core margin expansion in power, it's not really showing much year over year. I mean, if you could just may be give us more kind of -- a little bit more the profile around that that termination settlement again it did seem pretty additive I guess to the margins in the quarter?

Yes, well yes, these -- just the sales impact was $10 million and the OI impact was $7 million. So I'd call that fairly good margin. So though we need to strip it out, I mean if you look at, if you look at the power segment it's still consistent with what we said originally they're going to have a lower first half due to the testing cost and a higher second half due to the order and also increased production in that segment. So we're still on -- so the first half will be a lower margin half and the second half will be a higher margin half and we're still on target based on our full-year guidance of I believe, about 11.4% in that segment.

Okay. Okay, so we'll really just start to see the ramp in the second half. Okay, that's fair. And then may be, Dave, just on the operational improvement plan, when should we expect, I know one of the benchmarks there was working capital as a percent of sales. I mean, when should we expect to see some of the impacts of what you guys are doing on working capital? I mean, on a trailing basis, it's still running in that upper 30 level, and I know you guys have some pretty big aspirations to drive that down. So I'm just wondering when we might start to see some of the gains there.

I'll answer the first part and then I'll let Glenn get into some specifics. We -- we as indicated before are paying a considerable amount of attention to that and as we enter this new first quarter of the year, we put a lot of emphasis on curtailing some of those expenditures that would be related to that and watching and measuring those very, very closely. So we're going to continue to see those things ramp up and improve that is as we've discussed before one of our -- let's say one of our biggest challenges and, but we feel confident that we're going to arrive at the end point that we want to. Glenn, how about, talking about some of the specifics on those?

Yes, I mean couple of things we did in working capital, couple of things to note on working capital. One is we changed the waiting for working capital reduction in our compensation systems to place more emphasis on it, so we're trying to continue to increase focus on the metrics we think are very important of which this is one of them, return on invested capital being another. But I will say we are projecting a decrease in our working capital throughout the year but as we typically, if you look at our pattern unfortunately, as we -- we used it in the first half and we gain it in the second half and we are again pretty much in the same ballpark though I will say our -- if you look at our, our cash flow performance being again the strongest last year, a good piece of that is going to be coming from working capital reductions, which you will see as the year progresses.

Okay. Is there a lot of that tied to the AP1000? I mean, will we see an impact once you guys start shipping more of those RCPs? Will that have an impact?

Not, not really because that's all on POC accounting. So I mean that's really, this is really just your base private working capital plus deferred revenue which is our advanced payment that's the other account that we include internally in our working capital because it represents cash that we've gotten upfront and it’s important we got to keep our management team incentivized on contracting -- negotiating and getting contractual terms that offer that so, but no, I wouldn't say working capital is tied to AP1000.

Okay. And then last one from me, and I'll jump in the queue. Commercial aerospace -- it's growing, obviously, well below peers. I know you had one customer loss in surface treatment. I mean, is there anything else we should be looking for there, I mean, or anything else you guys are doing? Is it just tougher comps, or may be just explain -- I mean, we've seen pretty healthy OE growth through this quarter, and I think peer companies are still looking for pretty robust growth given activity on rate increases, H7, A350. I mean any other explanations for the weakness in commercial aero for the year?

No, you already hit the top ones at the beginning of your question there, the surface technologies with some of that business, some that we're not bidding on as a result of our own interest to maintain the margins that we want to maintain in that business. So I'd we're being quite selective in our approach to that particular market. There are ample opportunities for us to bid at much lower margins on work with the rates increasing and going where they are, but those are under a lot of pressure that the margin pressure that I'm not necessarily interested in taking that for quantity sake. And it just, our plan is to get up to that upper quartile like we talked about and we're going to do that, now there are some that you take on for absorption reasons. But for us from a general perspective, we see our commercial aero as being pretty steady eddy in the elements that we're particularly interested in and we're happy with that. So at the sake of taking on extra or taking up extra volume with lower margin I'm just not interested in that kind of work.

Got it. So you're not interested in partnering for Boeing's success?

No, we are absolutely and we have partnered for our mutual success and I think that in that regard that particular program was doing quite well for us. We're very happy with that we've achieved so far. And I think our customer is very happy and there are a lot of opportunities outside of Boeing Direct that we want to bid to. And as a result of the margins that would be requisite to win it. And we are quite happy with the success of that partnership program. We've been dealing with Boeing for over 80 years now. And hopefully we can all be mutually successful and we certainly worked it that way and like I said, I think everybody is happy.

Got it. Thanks guys.

Just add to that Michael, so that that was little bit commercial aerospace sales in the first quarter was also negatively impacted by FX just, that's part of the reason we were down.

Got it. All right perfect. Thanks guys I'll jump back in.

Our next question comes from Kristine Liwag from Bank of America Merrill Lynch. Please go ahead.

First, my question is with the AP1000. Can you provide a little bit more color on the size of opportunities for the product after testing is complete, may be over the next few years? And as a follow-up to that, what is your dollar content if a new plant is opened?

Well we haven't even provide, we don't even have the details of the new order per se right now so never mind the next three years; so we really couldn't probably shouldn't while we're still in negotiations with China and Westinghouse. Just suffice it to say, it's large better than China --

We would like to give you more direct answer, Kristine --

Yes.

But we are in current negotiations with our customer and we can't really disclose that at this point. As time goes on we'll able to. But it is certainly a very strategic program for us and we look forward to a lot of success there.

But as a first milestone that we should look for is the order from China?

I'd say that first milestone internally for us is successful completion of the E&E testing which we've indicated will be midyear let's say June, and then shortly thereafter, sometime in the third quarter we're hopeful that we'll achieve the completed negotiations and successful acceptance of a contract. And after that it starts to ramp up takes a little bit of time, some initial benefit and then over the next subsequent several years it starts to pick up pace.

Great. And you bought back the $47 million of shares in 1Q, out of the $200 million that you've guided to this year. Should we think about the cadence of share repurchases to be evenly split throughout the year?

Yes, we've gone on a -- we call it peanut butter spread throughout the year, lovingly referred to, and so we'll continue that cadence.

Sure. And then one last one from me. When we think about the FX activity, can you give us an idea of how that really -- how you're thinking about that for the rest of the year and then what kind of FX rates you have embedded in your outlook?

Yes, I mean I don't know if this is accurate but I could tell you what we -- in the 2015 the major three currencies that impact us are the Euro, British Pound, and the Canadian Dollar, so I'll give you those three. So in our 2015 assumptions we modeled in a 10% reduction in the rate, for the pound an 8% reduction, and for the CAD. I'm sorry the CAD was 10%, I said the wrong thing, the pound 8%, and the euro 13%, those were our assumptions, that is baked into our guidance for 2015.

So that means the rate -- those are the rate declines versus year-end 2014? Is that how to think about it?

I'm just trying to think if it's average or year-end, probably average for the year, it will be the average, yes, okay.

Great. Thank you.

Our next question comes from Sam Pearlstein from Wells Fargo. Please go ahead.

If I look at one of your slides where you talk about the outlook of the year in the different sub-segments, help me understand what's in that general industrial end market where you were negative 4% for the quarter but still expect 5% to 9% growth for the year. What's really going to drive that growth, and why do you have the confidence of getting there?

So in the industrial segment the general industrial market as we talk to it, its industrial valves, its industrial vehicles, its surface technology services and sensors, industrial sensors.

But what's driving the growth I guess is what I'm trying to think about it in the remaining three quarters to still get you that kind of growth rate after minus 4%? I know the minus 4% has foreign exchange in there.

Yes, I mean it's a couple of pieces, it’s the industrial vehicles and I think as I pointed out we're expecting a continued growth in the North American markets as well as in China and other pieces of the world based on these new emission standards. It's our -- in the industrial valves it's mostly our MRO valves for the energy markets which has been continually one of our steadiest performers in the same thing. They will have a better increased second half versus the first half of the year. And what else in that bucket, those were the two big drivers in that particular market.

Okay. And you mentioned the $0.10 of the, I guess, one-time item was expected in the second quarter. Are there any other kind of big, unusual items that you kind of included in the forecast for the remaining nine months of the year?

No, I mean, again the AP100 program in and of itself has many moving pieces. We try to cull out what we thought was going to influence our half-to-half which was the testing in the first half and the orders and production in the second half. And so this doesn't really affect that half-to-half, it does affect our quarter-to-quarter so the second quarter, we have to move whatever we had from, originally we thought we're just going to be in the second quarter to the first quarter and we also have $2 million of higher incremental testing cost in the second quarter but other than that there is nothing else that we have -- nothing else large, Sam, or abnormal.

Okay. And just on those costs that you talked about in terms of the testing costs, is there a way to think about the segment profit or even the earnings impact? I know you don't want to get into a quarterly guidance, but just thinking about what the margins can look like in power in the second quarter when you include those kinds of additional costs.

They're going to be; well they're going to be fairly low. I mean, I don't want to go into exactly but as you can imagine they're going to average out to a rate for the half but again we had determination in our orders for now but first there's going to be certainly much lower than the first quarter.

Okay. All right. Thank you.

Our next question comes from Myles Walton of Deutsche Bank. Please go ahead.

Good morning. This is actually [indiscernible] on for Myles. How are you guys doing?

Hey, good.

Hey, good.

How are you doing? Good morning.

Good. So just wanted a clarification on the target margins, the 14.2% is that still for 2018?

We have steadily maintained that and yes, we're going to leave it there for now. We hope that we can improve upon it by the time we get there. I see no reason why we could not but that's been the journey that we set out upon and at this point we are making good progress toward that.

I would agree. And then also just, I know you talked about margins ramping through the year. Is that from the 13.3% from the first quarter, are you adjusting that for the one-time gain I guess?

No, you'd have to move that into the second quarter, if you really want to say a ramp, yes.

Just wanted to make sure. Thank you very much.

[Operator Instructions]. And our next question comes from Steve Levenson of Stifel. Please go ahead.

Just curious how much of your capital expenditure is in overseas locations, and if it's a meaningful amount, would you accelerate the spending to take advantage of the strong dollar?

I have to say I don't have the breakdown of our CapEx by region on my fingertip Steve, so I couldn't tell you at this point, I don't know. I don't -- I think it's probably larger North America for sure. So to be something less than 50% and I just couldn't tell you how much less, probably a lot.

Okay. Regardless of that, would you accelerate or do you plan to accelerate the spending on the overseas stuff?

We have not explored that yet.

Okay, thanks. And one for Dave on the margin drivers. Among the five categories you discussed on Slide 9, which do you think are going to be the easiest to get right now, and which will be the most difficult?

The margin drivers are some are longer than the others and some of them will be through our supply chain that we've talked about in the past that has been a slow steady ramp up of improvement over time and we're seeing that continue as a slow steady approach. Our low cost economies are potentially a big driver because you switch a program to a low cost economy like Mexico you immediately derive the benefit of that labor rate and arbitrage. And so we do make, let's say in some of those considerable improvements. Now there is a ramp up of efficiency and learning curve that usually comes with some of those movements but that tends to be one of the quicker ones. So out of those, I'd say those are -- the slow and steady up and then the low cost economy and then some of the obviously the consolidations and that sort of work that we've done that's a fast pick up. And then lastly, I'd say that some of the shared services side is an area that is more along the slow and steady line we do see and monitor track very closely all of our gains that we have planned and some that come up on an opportunistic basis in that shared services side to achieve those earlier than may be downstream, let's say another six to 18 months. So I'd say leaving off for those first couple, those are the ones that come more quickly.

Got it. Thank you very much.

And I'm showing no further questions at this time. I'll now turn it back Dave Adams for closing remarks.

Thanks, Eric, appreciate it. Thank you everyone for joining us today. We look forward to speaking with you again during our second quarter 2015 earnings call. Have a great day. Bye, bye.

Ladies and gentlemen, this does conclude today's conference. Thank you for your attendance. You may now disconnect. Everyone have a great day.