Good day, ladies and gentleman. And welcome to Curtiss-Wright Fourth Quarter 2017 Financial Results Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn conference over to Jim Ryan, Senior Director of Investor Relations. Sir, the podium is yours.

Thank you, Brian. And good morning, everyone. Welcome to Curtiss-Wright's Fourth Quarter and Full Year 2017 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 the 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. We detail those risks and uncertainties associated with our forward-looking statements 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. Please note any references to organic growth exclude the effects of foreign currency translation, acquisitions and divestitures, unless otherwise noted. Now I would like to turn the call over to Dave to get things started. Dave?

Thanks, Jim. Good morning, everyone. For our agenda today, I will begin with the key highlights for 2017, followed by Glenn, who will provide a review of our fourth quarter performance, along with our initial 2018 guidance. Then I'll return to wrap up our prepared remarks before we move on to Q&A. Overall, we were quite pleased with our full year 2017 which reflects strong operational performance that exceeded our expectations. We experienced sales gain in all of our end markets, driving solid growth of 8%, 5% of which was organic. Total Commercial sales increased 6%, principally led by a nice rebound in the general industrial market. Defense sales were up 3% organically or 10% overall including the contribution from TTC acquisition in the defense segment. We also generated excellent margin expansion in 2017 achieving an operating margin of 15%, which would have been 15.7% excluding the first year purchase accounting cost for TTC. This performance reflects our continued focus on execution and the benefits of our ongoing margin improvement initiatives. As a result of the strong operational performance we delivered EPS growth of 14% year-over-year. As Glenn will explain in a few minutes, the net impact from tax reform was minimal to full year 2017 results. However, it will provide a meaningful benefit to 2018 and future year's earnings per share, while also providing long-term flexibility to manage our balance and capital allocation strategy among other benefits. We also generated robust free cash flow of $336 million and a free cash flow conversion of 156%, driven by significant reduction in working capital. This performance which far exceeded our expectation to move Curtiss-Wright into the top quartile versus our peer group for the first time since we established this metric in 2013. For 2018, we expect higher sales in all end markets, ongoing operating margin expansion and increased earnings per share along with continued strong free cash flow. Next, I'd like to discuss some acquisition highlights beginning with TTC. As you are aware, it was just one year ago that we acquired TTC. It has been and will continue to be a great addition to our portfolio with its attractive positioning within a growing defense market, as well as its robust profitability. More recently, this week we announced an agreement to purchase the Dresser-Rand government business portfolio from Siemens, which fits right into our wheelhouse. The addition of this market key brand to the Curtiss-Wright portfolio expands the breadth of our naval business, which especially significant during a period of rising naval defense budget. We expect this business to boost our top line growth and expand our ships at content and footprint on navy vessels. Note that our guidance does not include the potential acquisition of the Dresser-Rand government business. We'll have more to share on this later in the call. Now I'd like to turn the call over to Glenn to provide a more thorough review of our fourth quarter and 2017 performance and financial outlook for 2018. Glenn?

Thank you, Dave. And good morning, everyone. I want to begin by spending a few minutes discussing the fourth quarter 2017 highlights. We produced sales gains in most of our end market driving solid growth of 8%, 3% of which was organic. We saw a particular strength in the defense market due to strong organic growth of 7% as well as a ramp up in sales from TTC in the fourth quarter which is seasonally the strongest quarter. We also produced solid organic growth of 7% in the general industrial market primarily due to improved demand for industrial vehicle products. Free cash flow was a very strong as we generated $209 million in the fourth quarter and a free cash flow conversion in excess of 300%, both well exceeding our expectation. Our results were driven by higher cash earnings and a substantial reduction in working capital. In 2017, we achieved a significant 220 basis point reduction in working capital to 18.8% of sales reaching top quartile performance for the first time. In addition, our fourth quarter free cash flow benefited from a $25 million advance payment related to milestones on China Direct AP1000 order that was originally scheduled for 2018 but was received early in December 2017. Diluted earnings per share of $1.52 were also ahead of expectations despite a higher effective tax rate in fourth quarter primarily resulting from the Tax Cuts and Jobs Act. I'll discuss impact of various tax and accounting changes in more detail beginning on slide 7. Next to new orders. Which serves 17% in the fourth quarter led by widespread demand across our commercial and defense markets? In particular, we experienced improved demand from embedded computing products serving defense market, sensor and controls products for the commercial aerospace market and industrial vehicle products serving…

Thanks, Glenn I’ll continue with the discussion on the rationale and benefits of acquiring the Dresser-Rand government business. Strategically it builds upon our strong position within the naval defense market, we expect to leverage a very similar customer base and expand our long-term relationships with new products and new services. Dresser-Rand is the preferred supplier of steam turbines and main engine guard valves on aircraft carriers and have significant content on submarines and other surface ships as well. The business manufacturers rotating machinery products, an area that is core to Curtiss-Wright competencies. The majority of their work is conducted via sole-source OEM contracts. The business also maintains service centers at three of the largest US naval bases, primarily focused on overhauls of Dresser-Rand legacy equipment, emergent navy shipyard repair needs and global service work. This provides us an established presence at navy shipyards, and will enable the leveraging of the new opportunities for growth. Financially, we expect this acquisition to benefit the top and bottom line. As noted in the press release, we expect Dresser-Rand fiscal 2018 sales to be approximately $95 million. For reference, the majority of Dresser-Rand sales are to the naval defense market with the remainder to the power generation market. Further, we expect this acquisition to generate future margin expansion opportunities through our proven integration practices. It will also be accretive to our 2018 earnings per share excluding the typical first year purchasing accounting cost. Further, beyond year one, we expect this transaction to support our long term financial objectives of organic growth, margin expansion and free cash flow generation. We look forward to this business contributing to our future growth. Please note that consistent with our prior practice, we will not be discussing any specific financials regarding the Dresser-Rand business until after we close the…

[Operator Instructions] Thank you. [Operator Instructions] And our first question comes from the line of Sam Pearlstein from Wells Fargo. Sir, Your line is now open.

Good morning. Glenn, I wanted to follow up on a couple of tax questions, just one is can you talk at all about what the cash impact of the low rates are in terms of whether that there is any cash savings, and you mentioned the repatriation, how large is your cash balance overseas and what's the opportunity there?

Yes, the cash savings on the tax rate we are estimating to be about $15 million right now, and the amount of cash available potentially to repatriate is between $150 million and $175 million; we are still looking at it but it's going to be in that ballpark.

Okay, and what does it take actually to pull it back?

It's different by country, so, you know we've estimated, you know, part of it we can probably pull that in a month, it's a lot paper work, it depends on how its return of capital all kind of different things and some we can get back in six months and some of it may take nine months, sorry.

And when you think about Dresser and the acquisition and what you're saying about the accretion, what are you assuming in terms of how you pay for that? Since you still have a fairly sizable cash balance and then -- and then we are talking about some of the repatriation, is there a presumption that you are going to borrow for that or is it all coming under the cash balance?

Most of it is coming out of the cash balance, there is a small amount that we probably use the revolver for, but it pays back -- paid back in like in a month rolled out so temporary borrowing, yes

Okay. And then just as we've talked over the course of 2017 and about the nuclear aftermarket and would you say that that is bottom they are now grown because you have said every end market is growing in 2018 and it is simply the easy comp or is it actually starting to turn up?

We are expecting growth in the nuclear aftermarket in 2018, and I think we've mentioned in our previous call you know we are getting to-- starting to see the order pickup supporting that with long-term orders that will start to see sales in 2018, and we expect that to-- we still think 2018 is the rebound year and every--- all the indications we have is that's going to happen.

And our next question comes from the line of Peter Arment from Baird. Sir, your line is now open.

Thanks. Good morning, Dave and Glenn, nice result. Just first likely to start on maybe the outlook on the navy, you mentioned timing on Columbian with the development and that's going to be a step up in terms of 2019, how do we think about Virginia for year-over-year waiting for the new block and how do we think about?

Well, you know it's not we are predicting it to obviously happened in 2018, but I would imagine that it would -- we probably get an order in 2018 we begin to see sale in 2019 on that.

Okay. That's helpful. It just related to just kind of following up on Dresser-Rand, can you-- can you clarify just in terms of how you view the OEM or after-market mix on this acquisition, Dave?

I will tell you-- what I can tell you is that it's about right now, it fluctuates year-over-year, but it's about 50% OEM 50% service centers, and you know what we expect it, so the mix I think the service centers are probably little big higher-margin not really clear and all that right now exactly, but it's going to -- still depends on the mix each year, if OEM is higher or the service center is higher, I mean we can at least say that, but again we are not really ready to give-- talk about too much of detail on that right now.

Got it, understood. And just lastly on the orders, very strongly in Q4, you talked about what you are seeing in industrial, I guess you mentioned the strength in industrial vehicles commercial aerospace, how you see that as we look at 2018 kind of sustainability on the industrial side which I think has been strengthening throughout 2017?

Yes. I mean the orders are on like big ticket programs I mean in commercial aerospace it's a long-term agreement with Boeing. It's an actuation order on narrow bodies primarily. On and off highway really orders for two very sizable program wins from 2017, so those are big single orders in the commercial industrial and defense, it's what PPT has obviously because it wasn't in the prior years. They added a good chunk then there would be other piece of that, the bigger piece is F35 which is the ramp up that we expect in 2018, so those have been the drivers of the order, the bigger ticket items.

And you know generally I might add to that Peter, that what we are seeing is across the board this is a real exciting year for us compared to last couple of years, where we have been in somewhat of an industrial fat tub, that it looks we are firing on all cylinders relative to market and global expansion, market expansion, so it feels we are the only -- the only thing in our portfolio that we expect a little bit of headwind would be medical mobility, but that's not all a whole lot of business, and it's been great in the past that it might just come through even in the Air Force again as it did in 2017, but everything else is firing very nicely. They even adding in mining, you look at those you know you think our customer site, Caterpillar, John Deere and all these, they are looking up, so we are open and pleasantly surprised as this year rolls on.

Our next question comes from the line of George Godfrey from CLK. Sir, your line is now open.

Thank you. Good morning, gentlemen. Nice job on the quarter. I want to start on the power segment. Can you give us an update on where we are with Sanmen 1 and Sanmen 2 as my understanding is those should be at or near to be hot fired?

Yes. I'll give the latest that we have in-- when we get to these basically weekly updates. Chinese have been on -- they are celebrating their Chinese New Year's this over the last week or so. And I am not sure of the length of the time, but I think it's a fairly protracted session and they are just coming out of it this week and we expect that-- as a matter of fact that any day now that I will get a phone call from our folks who resident in China indicating to me that they are actually installing the fuel rods and powering up. So if we are on the cusp of that, we know that the regulatory bodies have license-- the brand licensing and so forth in Sanmen and then high end one will be the next one. So at any day we will keep saying that until it happens but everything in due course and so we are excited about it and we know they are as well. Once I think it's up and running as we have indicated in the past, it will generate a lot more excitement and we expect further from that result.

And customers or potential deals in the pipeline I imagine are really focused on this as well. The data point that they would need to see if let's say plan fires up tomorrow and starts running. How long does it need to be visibly operational to new potential deals to make them feel comfortable with the process? Is it a month? Three months? Six months? What do you think?

It's 60 quartile in our question. I had said last year -- I had said that in my one on ones and I think I made this on several call that I am thinking anywhere within a next couple of years. We got expect to see an over -- not sure when that happen but we would expect first of all to see the generation of the lot excitement as I indicated just with the start up. And then after that when the energy producers and energy providers would go back to the government or the regulatory agencies in China and start pushing for their progress to start lifting, removing dirt to make plant. And I think that's still the case. As far as timeframe, I'll tell you George, it's anybody's guess I don't know. I mean things move a very slowly over there and as they do here with regard to starting a new operations but I know that the excitement is there, the need is definitely there. The plans and the money are in place to do it. So it's just a matter of getting these operational -- I could speculate and I have many times and that is pretty much based on what I just said and that is the thing will be operational and then after that they will go through the hoops of getting the environment regulatory side of clear and go. But we do continue to say it's not a matter of if but it's just when this really occur. So I am sorry I just can't give you a more clear date than that but it's up out there somewhere. And we will be excited once it happens.

Understood. And then on defense spending or excuse me, defense revenue, organic growth this year 5% in the guidance next year 2% to 4% to the mid point 3, is that slowdown there just a timing issue as opposed to a slowdown in business momentum given that defense budgets are likely increasing substantially over the next couple of years?

I think it's the timing. I don't know because if anything structural.

Okay. And then lastly Glenn you may have said this and perhaps I missed there analysts weren't paying attention. G&A $80.9 million this year versus $62.2 million in Q4. Where was that $18 million increase?

I don't know about the dollar but the big chunks are comparable which I think we mentioned in the press release and in our scripted remarks. But I am just trying to think -- it is about TTC which wasn't there in last year. I don't know they probably have a pretty good number in there. Those are two biggest items in there, but in there is probably bunch of little things.

Okay. So just any relatively tough compare a year ago and then as it went down sequentially, okay. All right, thank you, gentlemen. Appreciate it.

Our next question comes from the line of Michael Ciarmoli from SunTrust. Sir, your line is now open.

Hey, good morning, guys. Thanks for taking the questions, nice quarter. Maybe just to stay on George's question on defense with deceleration. I guess specifically maybe the ground vehicles, you got a lot of momentum right now within the army, this seemed to be big beneficiary there and that market seemingly surprised to the upside I think throughout 2017. So is that just trying to get sense there, there is some new programs out there, it would seem-- I don't know if it's timing but that market was really strong last year. Should there be any reasons for deceleration within the ground vehicle market especially given maybe your shorter cycle embedded computing that can go into those platforms.

Well, I know what we've seen at least in 2019 budget that there is definitely funding for Abrams and Bradley, which I don't think we've seen that in years but we are not going to see. If we are lucky we'll see some order maybe in the fourth quarter if it all goes accordingly to plan. But for us it's probably a 2019 issue in the US for sure. Our international business works off a long term contract around the rest of the world. So they will be lumpy but they are this year, they are kind of Steady Eddy so yes there could be first time in a long time that we see some material increase in ground defense but we haven't -- I think it's out of way for us.

Got it. And then just in the quarter you guys cited some margin pressure I think in the commercial/industrial segment on mix issues. What's that sort of one time with some product line? Should we expect that to continue? Just maybe a little bit more color there.

Yes. There is the couple of things said some mix issues within the vehicle business that negatively impacted, that some under absorption in navy valves because they had lower sales in the quarter. They also had an FX impact that impacted their margin with sales favorable $4 million with no OI and less but not least is the corporate rules is couple million dollars for them in that category as well.

Okay, okay. And then just looking at the forecast for 2018, I think I heard all the numbers right but it seems like it' about $10 million R&D increase which that's probably one of the bigger spikes we've seen from you guys I think it might be [17%] or so what's all the sudden driving the broad increases in R&D? I think give or take you have been running sort of around $60 million level. So just trying to get a little bit more color there. What you are seeing to kind of drive that spending?

It's across the board as you can tell. I mean we've always said this is a big year for R&D. And in particular in power, it's really the developing a 50 Hertz AP1000 pump, that's a big deal for them. In the general industrial, I get these new products for these two large program wins, maybe into 2017 so there going to be developing some product in support of those programs. And in the defense segment, it's only in data computing. I mean at this point I think they have -- they want a significant dent against her competition and to upgrade some of their technologies. I mean --

I'll tell you my perspective, Mike, from a high level is that when I hear my Vice President asking for more R&D against a future deliverable -- and by the way I'll caveat that and preface with the statement that we are very stingy with this kind of expenditures because as you know we are doing a balance capital allocation strategy and is working very well for us. And we don't like science projects and they know that and I am as stick to were to that [Indiscernible]-- when they start coming and saying look they got some areas that they could spend some money on and really yield some results, I listen and they got some really nice ones out there. And you look across the board like Glenn just said and then commercial and industrial sector, they've got some opportunities there and the 50 Hertz machine is something that really could pay off in years to come as the next step or leapfrogging technology that we could put in a place on the defense side and got the new product release means new sales and with this uptick in the defense spending, they are going to come out with some platforms that we haven't seen for a while and/ or refreshes and that's where some of that's going to go. And then you get into the power side and there are just some real opportunities there as well. So I think this -- to me is a real exciting thing to see and if we haven't had that for a few years and we have a pretty nice spin rate but when I -- when I hear and come up with knock on the door asking for money, and they know they have a long way to crawl and get to that opportunity then I feel really good about it. So you all should do. I think it will pay dividends in the future.

Got it. That makes a lot of sense. Just a last one, I'll get out of the way here. For housekeeping, Glenn, on the $50 million pension contribution, was there any thought to kind of do that in 2017 to take advantage or maybe the higher tax rate for deductible purposes? Just color there.

That is a great observation and that is exactly what we are doing. So that's one of the main reasons we did is we will be taking it is in 2017 event. It is going to be happening in 2017 return and yes you are right.

And I am showing no further questions. I'll now like to turn the call back to Dave Adams, Chairman and Chief Executive Officer for any further remarks.

Thanks Brian. Thank you all for joining us today. We look forward to speaking with you again during our first quarter 2018 earnings call. Have a great day.

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.