Good day, ladies and gentlemen and welcome to the Curtiss-Wright Second Quarter 2015 Financial Results 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 is being recorded. I would now like to introduce your host for today's conference, Mr. Jim Ryan, Director of Investor Relations. Sir, please go ahead.

Thank you, Michelle and good morning everyone. Welcome to Curtiss-Wright's second 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 the 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, exclude the effects of foreign currency translation, acquisitions, and divestitures unless otherwise noted. 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 second quarter financial performance along with updates to our 2015 guidance. Then I'll return to provide some additional commentary on the status of our AP1000 and margin expansion programs before we wrap up and open the call for questions. We reported $0.83 in earnings per share in the second quarter which exceeded our expectations despite the fact that we had higher cost in the power segment associated with the AP1000 program. As discussed on the prior earnings call, we expected to incur costs relative to the completion of the engineering and endurance testing on the AP1000 program in the first half of the year, the majority of which will be in the second quarter. We also reported additional cost in the quarter relative to final modifications to our reactor coolant pumps. Excluding those costs, our overall operating results demonstrated solid improvement year-over-year as we continued to leverage the critical mass of One Curtiss-Wright to drive operating margin expansion. For example, our second quarter results included a 520 basis point margin increase in our defense segment and a 30 basis point gain in the commercial industrial segment despite a small drop in sales. Although we have experienced some headwinds in our industrial businesses based on the continued low oil price environment, our outlook in the industrial markets remains cautiously optimistic. Additionally, it is worth highlighting that we repurchased $50 million worth of stock in the second quarter continuing our commitment to steady share repurchases. Overall, we remain confident and on track for a solid performance in 2015. We anticipate continued margin improvement during the second half of 2015 and are maintaining our current full year diluted EPS guidance of $3.80 to $3.90. 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 with the review of our second quarter sales by end market, where higher overall sales in defense were more than offset by a decline in overall sales in our commercial markets. In the defense markets, sales increased 9% overall and 11% organically, which excludes FX and acquisitions. Leading the way with ground defense, which increased 37% over the prior year as we continued to benefit from strong international demand for our turret drive stabilization systems. We are currently supporting several new foreign ground defense programs and recently announced receipt of a sizeable production order on the UK scout program. In aerospace defense, higher sales of our ISR-related embedded computing products, most notably for the joint strike fighter, Global Hawk UAV program were partially offset by lower helicopter sales. In Naval defense, higher order sales driven by the Block 4 build Virginia-class submarines were essentially offset by lower aircraft carrier revenues. In the commercial markets, sales decreased 11% overall and 8% organically. As expected, one of the major drivers were lower revenues on the AP1000 program in the power generation market based primarily on lower domestic production. Within the nuclear aftermarket business, we continue to experience lower sales to existing domestic operating reactors based on ongoing deferred spending on plant maintenance and upgrades. In the commercial aerospace market, the decline in sales was primarily driven by lower sales of avionics and flight test equipment, while OEM sales were essentially flat year-over-year as most production levels remain unchanged from 2014. And finally, sales in the general industrial market declined 10% overall in the quarter. Our results reflect a widespread impact of lower oil prices on our industrial businesses, so nearly half of the decline was due to unfavorable foreign currency translation. In industrial…

Thank you, Glenn. I’d like to spend a few minutes on the drivers of further operating margin expansion and our goal to reach and maintain our per quartile performance versus our peer group. We’ve come a long way in the past 18 months as we appreciate Curtiss-Wright through significant organizational realignment and raise the bar by setting new and transparent financial targets. We also completed several divestitures of non-core and underperforming assets which most recently included a sale of our downstream oil and gas business in the second quarter and our engineered packaging business early in the third quarter. Outside of a few small surface treatment facilities, our pruning actions have essentially been completed and are fully reflected in our results and current guidance. We are pleased to complete the sale of these businesses which now allows the management team to increase their focus on the future. As we have stated we are aiming to reach and then maintain our position in the upper quartile of our peer group with the ultimate goal of being at or near the top. We are focused on improving margins and our return on invested capital by driving synergies and producing significant cost savings and I am very confident that we will reach our goals. At the halfway mark we are right on track with our operating margin expansion plans. Similar to last year we will provide an update on all of our initiatives on our February call when we have 2015 actuals [ph] and our guidance for 2016. Regarding an update to our long-term operating margin guidance we are not prepared to provide any target at this time. As the AP1000 program is quite significant to our future growth rates, we need to finalize the pending China order before fully resetting long-term expectations…

Thank you. [Operator Instructions]. Our first question comes from the line of Kristine Liwag with Bank of America. Your line is open. Please go ahead.

Hi good morning gentlemen.

Good morning.

Hi, Kristine.

With your updated sales outlook for general industrial of 0% to 4%, what are you assuming for sales growth in the oil and gas MRO versus large projects?

We don’t have that right at our finger tips here Kristine at this point, at this time.

Sure and then for the M&A pieces that you mentioned with the focus on smaller companies in the near-term and then maybe larger ones later on, can you provide any sort of color on capabilities that you want to add or perhaps end markets that you want to enter?

Yes that’s a great question something that we look at from a strategic standpoint very often. As I indicated, we have a pretty strong pipeline filled with opportunities and they range from -- there are some pretty large ones to the smaller ones, and the strategic bolt-ons that I have been talking about for the last two years now are some $100 million, that has been sort of the upper limit that we wanted to look at on a company by company basis, and the areas in which we have a lot of interest are in particular defense, not shying away from that whatsoever. There is some great plays that compliment what we want to move forward within a strategic standpoint. In particular, the C4ISR area has been of interest to us and continues. Some of the UAV markets were very well grounded in the Global Hawk and others and with what we have we are able to acquire other companies that might have let’s say bolt-on technologies that one plus one would equal three. So those tend to be in the smaller range. Now as we look in other areas of the business, I still like the industrial side. We’ve continued to look at other areas of the vehicle that owns the tab as it were. That’s sort of a little watch word that we use internally from a strategic perspective saying whatever we can help the end users or our customer in terms of their efficiency and in terms of buying and or operating a big rig for example. If we can provide a whole host of electronics and/or components that go into that gap instead of them our customer having to go out and source those independently and we would be on cutting edge from a technological…

Great and a final question for me, as you think about power and as you near delivery of the AP1000, how are you thinking about the cadence of long-term growth in that segment, and is there a normalized margin that you are looking at to target?

Yes, I mean we said as soon as we get the order, Kristine because we are still negotiating right now, so I mean –- I could least tell you what we put in our guidance this year which was 13 million in sales and 3 million in operating profit as our estimates this year, as a gauge. But until we get the order, we are not going to be able to. When we get the order, we will be able to share all of that with you but we can’t do that right now since we are currently in negotiations.

Great, thank you very much.

Thank you. And our next question comes from the line of Michael Ciarmoli with KeyBanc Capital. Your line is open. Please go ahead.

Hey, good morning guys. Thanks for taking my questions. Nice margins in the quarter. Maybe just to stay on that last line of questioning real quick, there is a lot of positive commentary come out of China, some of the big power utilities there. But the numbers you just gave Glenn point to a 23% operating margin on what you have baked in for AP1000. I know you have said the first pumps between kind of the blue light special pricing, incurring all the learning curves and costs, I mean is that a realistic margin that we should be thinking about 23% or is there -- is something in this initial kind of this first line of revenues you have put in for this year, is there something in there that is higher margin that is not sustainable?

No, I think it is -- this is an estimate we -- our group down there come up with earlier in the year, it was in our guidance. So, I would say at this point, I can't say anything other than their best estimate of how the contract is going to end up. But again we are in negotiations, so we won't be able to give you that actual projection until we finalize the order.

Okay and you guys still feel comfortable, I mean it is still on the guidance this year, it sounds like you could have this even though we are assuming negotiations but you guys still feel comfortable that this can be tied up here in the quarter?

Yes, as I indicated Mike the order and I have said on the last call as well that we had anticipated that we would get through the E&E testing and we did at the end of last quarter and that was excellent. We were very happy. We improved out the design modifications that we had made at that point. The thresh runner bearing and so forth with the -- whole purpose was to go through and to really prove that we got a 60 year live pump. And so, everybody is happy that we did accomplish that and now as a result we are doing some tweaks and we anticipate that we are going to be shipping hardware in the very near term to China. And that was always the premise with our customer both domestic and China that once we started shipping the product that met the requirement which requirement was efficiently passing the E&E testing then we would be starting, resuming negotiations. So, we are -- you have heard me say before and we are cautiously optimistic, I remain so and third quarter is still what we are looking at to pickup an order as I indicated. We are going to be shipping hardware pretty soon.

Got it, just on the margins in general, I mean you are driving margin expansion with substantial top line headwinds, can you give us a sense as to what specifically is driving that improvement. I mean is it facility consolidation, is it headcount. I mean can you give us a sense as to how you are driving this improvement, what aspect of that operating model improvement is really the contributor here, maybe in this current quarter?

Yes, I am going to give you the bigger answer, not current quarter related as much as more specific. I love the question. I really honestly do is one that thrills me every time I get the question when I am one on one or out with you folks and that is to be able to speak about our continuous improvement initiatives and our margin expansion initiatives that we put in place. They don’t stop and back in December of 2013 we came out with our what we call it our top ten and it was like a 100 something initiatives. But that is spread over various different business units that have different drivers. And we continue to evolve that and to improve it. We haven’t gone backwards which is a great part of it. What we have created is something that we coined the CW way and it is much akin to what we and industry know as the Danaher way or the Toyota production type model. We got the CW way that we utilize internally like you said. It is an interactive process by which we go through and identify the areas that we can absolutely focus on and transform the businesses that are associated with whatever it is that we are focused on. I will just give you the main highlights of those on a lean side and lean is -- kind of lean does talk about efficiency improvements and some headcount modifications. You can't get a lean without some of that but what we do like to do is maintain as much as possible on the headcount side so that we can produce more and accomplish and accommodate the growth that we need to. And in some cases its labor arbitrage shifting but lean is all…

That’s extremely helpful. Thank you very much guys, I’ll jump back in the queue.

Thanks Mike.

Thank you and our next question comes from the line of Myles Walton with Deutsche Bank. Your line is open. Please go ahead.

Thanks, good morning. Just a quick question first on the working capital, it looks like working capital as a percent of sales is actually expanding a little bit and Glenn as you calculated on your metric what does it look like, is the past only get to 30 by year end, looks like you got to 30 by yearend you’d actually be well in advance of the guidance?

Yes, I mean when we include deferred revenues which is what we do besides primary working capital. We are at 26.5% in June that’s 5.5% from the prior year end. Our forecast now as you get down to 23% in 2015. However, we’ve past all of our business units to achieve a 10% reduction beyond that, that is what we are striving for if we were to do that and of course we won't go all the way if we were to accomplish that then we get to stand on the 21% versus our goal of the upper quartile of 20. So we clearly are making some -- we are expecting to make some pretty significant progress in the second half of this year.

Okay, ceiling adjustment you are doing is the deferred revenue?

Yes, that's it.

Okay, and then the other one is really on the power segment, particularly the second half margin run rate implied of 14% or so. How much should we interpret that as the go forward run rate and then secondarily I think we all understand the absence of AP1000, the 3 million OI from the China shipments are kind of what you are counting on, but is there also a pickup in aftermarket in the nuclear markets and is that in your backlog or is that more of a risk than an opportunity?

No, the second half you hit a couple. Obviously it is influenced by the new order which is at least we are estimating it to be fairly profitable for us and a positive impact on the margin for us. We are expecting domestic production and the aftermarket business to pickup in the second half of the year. The aftermarket business hedged pretty good order intake in the first -- primarily in the first quarter but also in second quarter. So, those are both coming out of backlog. So, the combination of that, but I think the new order had a fairly heavy influence on that margin in the second half of the year.

And the 14%, how much to think about that as the run rate for that business into 2016?

Again we can’t really go into this, that we are back to the conundrum of one, we don’t have 2016 projected yet and two, until we really get the order that is still an estimate of what they think is going to happen this year. But we will remain to see what actually got once we get the contract. And hopefully the next quarter we will be able to solve all this. I know you guys really need this to look to the future.

We are looking forward to telling you as you are --

Sounds good, that's all I got, thanks.

Thanks Miles.

Thank you and our next question comes from the line of Sam Pearlstein with Wells Fargo. Your line is open. Please go ahead.

Good morning.

Good morning Sam.

Good morning.

Back on power one more time, so you absorbed your $11 million in cost, if I look at that, that still only gets you 10% or so margin, was there anything else one time like restructuring or anything else in the quarter?

Just trying to think, no, I don’t think so.

Okay.

It is hopping out this way, the 7 million was exciting enough.

Yes, that is true. And then can you provide a little bit more in terms of why ground defense went down and then defense aerospace went up, what actually shifted in terms of the year?

Yes, I will say what it is. Here is what, this is in our cost embedded computing business and there are 100s of programs and customer will come in order of 100 more. Since they are costs by nature [indiscernible] they can be used in a variety of programs. We don’t necessarily always have visibility on where those boards are being used and as we get going on in the year that business unit got better clarity and that is really the reflex between the two.

Okay, and then with the lower organic growth for this year just given what is happening some of the markets, how do you feel about that long-term 3% or 4% kind of growth rate out to 18, do you still reach that or do we just start on the lower base and then grow from here?

Sam, I mean that is the $64,000 question, which complete industry wants to know. We feel we continue to demonstrate that we outpace our markets and our peer groups in the marketplace. And we think we do buy measure and we see it across the Board opportunities now you take the vehicles on highway. They are doing great domestically. They should come back and pickup internationally because then China for example, they are down a little bit and worldwide it is down. I am not sure when that is coming back up again but we are well positioned once it does. We have new products that we are releasing. Those new products will capture market share that is not necessarily depended upon let's say a rising tide of a particular industry. It is about technology insertion. Oil and gas prices don’t help us a whole lot in terms of hybrid right now and hybrid vehicles they are not buying as many as they were 18 months ago, 12 months ago. That has done a little bit to us but I am here to tell you that I think that what goes around comes around. We are not going to see these oil prices forever at this level. It will switch and so is that going to happen before 18 well, I don’t know. But when it does things like that, the hybrid which was a big headwind to us in terms of contributing to the lack of growth. We think that will come back and we are very well positioned with some new technological inserts from a hybrid perspective as well as the old product that we currently have. So and I think generally we still feel optimistic. We go through these from a ground up with our individual business units each month and we talk about the possibilities, what we can do and in a while it’s not sure part guaranteed we are not holding anybody's head under the water and say we have to get there. We want to do the very best we can on a realistic basis. And this is what we’re projecting. So I guess Sam the short answer is we anticipate that we are going to continue to make this drive unless and until we see some significant changes.

Besides the AP1000 which is going to ramp up in this if and when we get the order we also have the CV and AV aircraft carrier in this next couple year process that’s going to ramp up and the joint strike fighter build rates we expect to ramp up as well as new commercial aerospace platform. I mean there is a number of different things that we see on the horizon that would give us some comfort for the long term range.

Okay and does any of that end market weakness help you in terms of the M&A in the pipeline, have you seen any change in the multiples that either people are asking and what you think it takes to close the transactions.

Prices in M&A are still pretty high but like I said we have a different look at a different type of company. So the benchmark company today was considerably different than the benchmark company of old. And return of invested capital 10% by year three and year five is 12. So we are looking at some higher metrics. They are going to cost more to buy those kinds of companies. There even might be some potential little pickups but we don’t really like to buy in a down market and hope for the best. I am looking for technologies that standout and can compliment and contribute strongly to what we’ve got rather than buying something and riding out the storm. Now if there was just a super deal out there that was faltering because of market only and we had something to add, sure we would take a look at something like that but not sure that we would execute on it and just take it on a case by case basis.

Okay, thank you.

Thanks Sam.

Thank you and our next question comes from the line of Ryan Cassil with Global Hunter Securities. Your line is open. Please go ahead.

Hi, guys. Thanks for taking my question. I thought it was a nice quarter and outlook given the industrial environment and perhaps we could focus there for a second. On the industrial valve side, it sounds like volumes are really pushing out to the right but could you talk about whether you are seeing any pricing impact and whether there is any difference between the project and the MRO business there?

Well I will say that, just so we can hone in on what we are doing, the industrial valves is about a third of the general industrial market around $200 million. Two thirds of that is oil and gas and that’s with 75% MRO and 25% project. So project is fairly small but today we have numbers we expect and we did -- so they are moving to the right. The MRO we expect the way this – we said that we split the projects kind of looking kind of flat throughout the year and they are actually higher than the MRO. Recently we expect the big second half in the MRO that will be higher to overshadow the project business and for the year end up being up versus the project. So, projects are those where the pricing is better on the MRO for sure project generally.

Okay, and it does. You are not really seeing it on the MRO side the pricing pressure as much?

No.

Okay, great and then on the commercial vehicle side I think one of the growth drivers has been China and just given some of the headlines and concerns about China, is that still expected or is that part of the lower outlook in industrial generally? Any color there would be helpful.

Ryan like I said a couple of facilities in China -– manufacture and some for indigenous sales some for the labor arbitrage side of the low cost economy of which by the way I wanted to mention that MRO valves benefits from. So when we do have some times pricing pressure or we do have a really nice face there in our low cost economy to withstand some of that pressure and maintain margins that does not increase. So we feel pretty good about that but in terms of the outlook we watched that with great interest and let’s say it’s not a huge piece of the growth at this point or a huge piece of the business from the overall industrial at this point. Someday I hope that it is and because it is not we are not seeing the tremendous drop off. We were hoping for a more of a robust marketplace back in 2014 when we started to see the regulatory side become statutory with regards to some of their emissions control need and then with 2015 we expected to roll out a little more quickly that hasn’t happened as much as we had hoped because of obviously that’s been happening over there. The need is still great, they know it, you can help us see it. It is in front of your face when you breathe and so that’s not going to stop. We will see some moderate growth there but it is going to take some time. The international vehicles as we discussed overseas, in particular in China has just taken off more slowly of recent than we had wanted. And that’s in the tank for now for a while anyway but I don’t see the need going away by any stretch if anything it has pick up. So I do think that, that’s going to come back for some time.

Okay, understandable. Thanks guys, appreciate it.

Thanks Ryan.

[Operator Instructions]. Our next question comes from the line of Steve Levenson with Stifel. Your line is open. Please go ahead.

Thank you, good morning everybody.

Hey, good morning Steve.

Just question on AP1000, there has been some news with some of the domestic installations are seeing some cost over runs that I guess a lot of people expected might not occur with the module reactor. Are you getting any push back or is that more on the, are you aware is that more on the construction side?

Yes, I was reading some of those same articles of recent and it looks more on the construction side and some of the late, I mean some of the projects are late however and over runs I read about those as well but what I also read was that they are making progress. I think that there are only two that are active today but they are actually making progress and I took that as a positive out of the article in our position and it is that we are holding our own. So I mean I think we are doing pretty good but yes, I’ve seen some of those same articles and I haven’t got any more color on it then that.

Okay, that’s helpful though. And then in terms of the stock buyback as opposed to acquisitions is that just that you are still finishing the pruning before you start to add or was it a matter of valuation as opposed to the price of stock being a better investment at the time.

We were counting our money for a while there and after the divestitures and so then we did go in as originally for a $300 million buyback authorization and now as you know we went out with the 200 on a peanut butter spread. And then now as we indicated with the 100 million that we will do that on an opportunistic basis and it wasn’t in lieu of acquisitions but it was if we have had acquisitions that we have been talking about we want this thing to be balanced. And if we had had acquisitions this year more of them in the first half and maybe we wouldn’t have done that actually a 100. But it is prudent we believe in this company, we believe in the stock, and we believe that we are going to grow this business then and our shareholders have been able to reap the rewards of same. And so that’s why we initiated the second part of the 300 and that being the 100 million. But I still remain bullish on acquisitions be the right ones and it’s not valuations that has scared us off frankly. We did bid on a couple of acquisitions that -- and you just reach a point where you say hey, look in an auction the last guy standing is really marked the winner although they won. But we been through these cases, we want to be the last people standing and the technologies were not worth enough to us to do that. And we are going to stay that line, stay that course. We do believe that there are some out there that match our intent strategically and we can really do something with. And I will tell you with the CW way with what we have got going from our process improvement, lean, so forth we got a real machine going here that once I can acquire businesses, they compliment what we have. We can hold them into fold. We can consolidate, rationalize, whatever we have to do and come out with what the one plus one equals three and that is what we are looking for. And I am tremendously excited about being able to do that on the right ones.

Got it. It is good to stick to the plan then. I appreciate your conviction on the stock. Thanks a lot.

Thanks Steve.

Thank you and I am showing no further questions. I would like to turn the call back to Mr. David Adams, Chairman and CEO for any further remarks.

Thank you Michelle and thank you all for joining us today. We look forward to speaking to you again during our third quarter 2015 earnings call. Have a great day. Bye.

Bye-bye.

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