goodrich Q106_Slides

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Goodrich CorporationFirst Quarter 2006 Results

April 27, 2006

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Certain statements made in this presentation are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the Company's future plans, objectives and expected performance. The Company cautions readers that any such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks, and actual results may differ materially.

Important factors that could cause actual results to differ include, but are not limited to: demand for and market acceptance of new and existing products, such as the Airbus A350 and A380, the Boeing 787 Dreamliner, the Embraer 190, and the Lockheed Martin F-35 JSF and F-22 Raptor; the health of the commercial aerospace industry, including the impact of bankruptcies in the airline industry; global demand for aircraft spare parts and aftermarket services; and other factors discussed in the Company's filings with the Securities and Exchange Commission and in the Company's April 27, 2006 First Quarter 2006 Results press release.

The Company cautions you not to place undue reliance on the forward-looking statements contained in this presentation, which speak only as of the date on which such statements were made. The Company undertakes no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date on which such statements were made or to reflect the occurrence of unanticipated events.

Forward Looking Statements

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Financial and Operational Overview

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First Quarter 2006 Financial Highlights

First quarter 2006 results, compared to first quarter 2005Sales grew 12 percent, with growth in all segmentsNet income per diluted share grew $1.13, or 240 percent

• Increased $1.05 for tax settlements announced on March 29, and new settlement received on April 25

• Operational improvement of $0.08, or 17% growth compared to first quarter 2005

2006 outlook Sales outlook unchanged at higher end of range of $5.6 - $5.7 billion Net income per diluted share outlook increased $1.18, from $2.20 - $2.40 to $3.38 - $3.58

• $0.05 per diluted share increase to reflect the expected continuation of very strong commercial aftermarket sales

• $1.05 for impact of tax settlements, and • Approximately $0.08 per diluted share associated with the expected

sale of Turbomachinery Products Cash flow from operations minus capital expenditures – now expect $100 -$150 million for 2006,

• Includes ($90) of expected second half 2006 tax payment associated with tax settlement announced on March 29

• Excludes approximately $90 million proceeds from expected sale of Turbomachinery Products

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First Quarter 2006 Operational Highlights

Two key tax settlements announced – March 29 and April 25Announced definitive agreement to sell Turbomachinery Products

Consistent with overall strategy to divest non-core businessesAirframe Systems segment operational performance improvement continued

Selected to provide landing gear and wheels and brakes on Boeing747-8 aircraftLanding Gear shipments continue to meet key customer requirementsReduction in force announced at Landing Gear

• Reduction in force of approximately 100 people – expect approximately $1.5 million per quarter benefit, starting in 2Q 2006

A380 actuation system• Redesigned units being delivered to Airbus• Components of redesigned system flew on A380 test aircraft in February 2006

Segment margin improvement on track• Q1 performance muted by impact of a charge associated with the sale of a

closed facility, stock based compensation, FX and pension expenses ($8 million, or about 1.7 percent of sales)

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First Quarter 2006 Operational Highlights

Electronic Systems segment A380 full scale evacuation test successfully completedKey technology development contracts awardedSelected to provide flight deck lighting and cabin attendant seating on the Boeing 787 aircraft

Engine Systems SegmentContinued strong aftermarket growth

• Aging of Airbus fleet continues to benefit Goodrich

Development programs for the Boeing 787 and Airbus A350 continue on schedule

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Quarterly Sales Trends

$1,091 $1,092$1,061

$1,122$1,157

$1,128$1,162

$1,254 $1,275

$1,353 $1,371 $1,398 $1,424

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

Q12003

Q22003

Q32003

Q42003

Q12004

Q22004

Q32004

Q42004

Q12005

Q22005

Q32005

Q42005

Q12006

Sales ($ in Millions)

Solid sales growth continues

13% annualized growth since 3Q 2003 sales trough

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Year-over-Year Financial Results

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246%240%

251%249%

+0.1%

12%

12%

Change

$0.46$0.47

$1.59$1.60

Diluted EPS- Continuing Operations- Net Income

$57$58

$200$201

Income- Continuing Operations- Net Income

$151$169Segment operating income

11.8%11.9%- % of Sales

$1,276$1,424Sales

1st Qtr 2005

1st Qtr2006(Dollars in Millions, excluding EPS)

First Quarter 2006 – Financial SummaryYear-over-Year Performance

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First Quarter 2006Year-over-Year Financial Change Analysis

($0.02)($3)Increased new program developmentexpenditures (R&D, Bid and Proposal, other)

$1.05$131Income tax benefit associated with announced settlements

($0.10)($13)($20)Stock-based compensation, pension, foreignexchange translation impact

$0.01$1Restructuring and consolidation charges

$1.59$200$1,424First Quarter 2006 – Income from Continuing Operations

$0.19$27$168Increased overall volume, efficiency, mix, other

(Dollars in Millions)

$1,276

Sales

$0.46$57First Quarter 2005 – Income from Continuing Operations

Diluted EPS

After-tax IncomeItem

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First Quarter 2006 Year-over-Year Segment Results

Engine Systems Segment

Included above:

--

19.4%

$119

$610

1st Quarter2006 %$Dollars in Millions

------Restructuring andConsolidation Charges

+2.3%17.1%% Sales

31%$28$91Segment OI

16%$82$528Sales

Change1st Quarter2005

Major Variances:Sales increased primarily due to:

• Higher commercial and general aviation airplane original equipment (OE) and aftermarket and maintenance, repair and overhaul (MRO) sales volume of approximately $88 million primarily in our aerostructures, cargo and engine controls businesses; and

• Higher sales volume of approximately $15 million of regional and business OE and aftermarket products primarily from our aerostructures business.

The increase in sales was partially offset by a decline in defense sales volume in our aerostructures and cargo businesses of approximately $27 million.Segment operating income was higher due to:

• Higher sales volume as described above which generated additional segment operating income of approximately $40 million; and

• Lower cumulative catch-up charges in the quarter ended March 31, 2006 than in prior year’s quarter on several contracts in our aerostructures business of approximately $4 million.

The increase in the Engine Systems segment operating income was partially offset by approximately $15 million of increased costs for stock-based compensation and pension expenses, higher warranty costs and increased costs for research and development costs, primarily for the development of the Boeing 787 and the Airbus A350 programs.

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Airframe Systems Segment

Included above:

($1)

3.0%

$14

$470


50%$1($2)Restructuring andConsolidation Charges

-3.3%6.3%% Sales

(49%)($14)$28Segment OI

6%$27$443Sales



• Higher volume of approximately $35 million of landing gear commercial OE and aftermarket and military products; and• Higher volume of actuation systems of approximately $15 million, excluding the impact of foreign exchange translation.

The increases in sales volume were partially offset by a decrease in airframe heavy maintenance service sales volume of approximately $17 million and unfavorable foreign currency translation of approximately $10 million in the actuation business.

The increased sales volume described above favorably affected segment operating income. The increase in volume-related segment operating income was more than offset by:

• Higher costs of approximately $16 million, primarily in the wheel and brake and landing gear businesses, including raw material cost inflation, restructuring expenses, a charge associated with the sale of a closed facility, stock-based compensation, pension and foreign exchange translation expenses; and

• Unfavorable product sales mix of approximately $3 million primarily in the wheel and brake business. Partially offsetting the operating income decline was the impact of lower research and development expense of $4 million primarily from reduced spending on the A380 actuation system.

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Electronic Systems Segment


• Higher sales volume of approximately $19 million of defense and space OE primarily in our optical and space systems, fuel and utility systems, sensor systems and power systems businesses, partially offset by a decline in sales volume in our propulsion systems business;

• Higher sales volume of approximately $8 million of regional and general aviation airplane OE products in our de-icing and specialty systems, sensor systems and lighting systems businesses;

• Higher sales volume of $11 million of large commercial OE and aftermarket products in virtually all of our business units; and• Higher sales volume of approximately $5 million from Sensors Unlimited, Inc., which was acquired during the fourth quarter 2005.

Segment operating income was higher due to:• Higher sales volume as described above, which generated additional segment operating income of approximately $13 million;• Favorable sales mix of $1 million in our optical and space systems, lighting systems and power systems businesses; and• Revision of an assumption used in the actuarial valuation of other post-retirement benefits related to the acquisition of the aeronautical

systems business in the electronics segment of approximately $3 million.

The increase in segment operating income was partially offset by: • Increased operating costs of approximately $8 million, primarily due to stock-based compensation, pension and warranty expenses; and• Increased investments in research and development and new product introduction costs primarily related to our optical and space

systems, fuel and utility systems and power systems businesses to support new programs of approximately $6 million.

Included above:

($1)

10.7%

$37

$343


----($1)Restructuring andConsolidation Charges

+0.1%10.6%% Sales

14%$5$32Segment OI

13%$38$305Sales


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Summary Cash Flow Information

($3)($2)Cash outflow for facility closures and headcount reductions

($3)($7)Pension Contributions - worldwide

$10$25Accrued expenses, other

($27)($43)Capital Expenditures

$66

($94)

($120)

$56

$201

1st Quarter2006

$17

$21

($124)

$55

$58

1st Quarter 2005

Cash Flow from Operations

Deferred income taxes and taxes payable

Working Capital – (increase)/decrease – defined as the sum of A/R, Inventory and A/P

Depreciation and Amortization

Net income

Item(Dollars in Millions)

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Sequential Quarter Financial Results

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212%186%

213%187%

+0.7%

8%

2%

Change

$0.51$0.56

$1.59$1.60

Diluted EPS- Continuing Operations- Net Income

$64$70

$200$201

Income- Continuing Operations- Net Income

$156$169Segment operating income

11.2%11.9%- % of Sales

$1,398$1,424Sales

4th Quarter 2005

1st Quarter2006(Dollars in Millions, excluding EPS)

First Quarter 2006 – Financial SummarySequential Performance

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First Quarter 2006Sequential Financial Change Analysis

$0.10$13Reduced cumulative catch-up impact and charge forcontract termination at Aerostructures

($0.04)($5)Increased new program developmentexpenditures (R&D, Bid and Proposal, other)

$1.05$131Income tax benefit associated with announced settlements

($0.13)($16)Stock-based compensation, pension, foreignexchange translation impact

$0.04$5Restructuring and consolidation charges

$1.59$200$1,424First Quarter 2006 – Income from Continuing Operations

$0.06$8$26Increased overall volume, efficiency, mix, other

(Dollars in Millions)

$1,398

Sales

$0.51$64Fourth Quarter 2005 – Income from Continuing Operations

Diluted EPS

After-tax IncomeItem

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First Quarter 2006 Sequential Period Segment Results

Engine Systems Segment


• Higher commercial and general aviation airplane OE and aftermarket and maintenance, repair and overhaul (MRO) sales volume, partially offset by a decline in defense sales volume in our aerostructures and cargo businesses; and

• The increase in Engine Systems sales was partially offset by lower aftermarket sales in engine controls.Segment operating income was higher due to:

• Higher sales volume as described above;• Lower cumulative catch-up charges in the quarter ended March 31, 2006 than in prior year’s fourth quarter on several contracts

in our aerostructures business;• A non-recurring charge of $7.3 million related to the termination of a contract in the quarter ended December 31, 2005, which

was not repeated in the first quarter 2006;• Favorable mix of products sold due to higher aftermarket sales, primarily for aerostructures products; and• Non-recurrence of restructuring charges taken in the fourth quarter, 2005 in engine controls.

The increase in Engine Systems segment operating income was partially offset by: • Increased research and development costs primarily for the development of the Boeing 787 and the Airbus A350.

Included above:

--

19.4%

$119

$610


N/A$5($5)Restructuring andConsolidation Charges

+2.7%16.7%% Sales

23%$22$96Segment OI

6%$34$576Sales

Change4th Quarter2005

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Airframe Systems Segment

($1)

3.0%

$14

$470

1st Quarter2006

Included above:

%$Dollars in Millions

N/A($1)--Restructuring andConsolidation Charges

-1.5%4.5%% Sales

(34%)($7)$21Segment OI

--($2)$472Sales


Major Variances:Sales decreased primarily due to:

• Lower actuation systems military sales volume; and• Lower airframe heavy maintenance service volume.

These decreases were partially offset by an increase in landing gear commercial OE sales volume and higher aircraft wheel & brake sales volume.Segment operating income was lower due to:

• The lower sales volume described above;• Higher operating costs including the impacts of:

– Higher product upgrade costs in the aircraft wheel & brake business;– Higher free-of-charge OE deliveries in the aircraft wheel & brake business;– Higher manufacturing costs in the wheel & brake and landing gear businesses, including raw material cost inflation;– A restructuring charge for headcount reduction and a charge relating to a previously closed facility in the landing gear

business; and– Unfavorable foreign currency translation on non-US Dollar denominated net costs in the actuation systems and landing

gear businesses.Partially offsetting these factors were the impacts of:

• Lower R&D expenditures for the A380 actuation system; and• Lower operating costs in the airframe heavy maintenance business.

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Electronic Systems Segment

Major Variances:Sales decreased primarily due to:

• Lower sales volume of defense and space OE primarily in our optical and space systems, fuel and utility systems, sensor systems and power systems business units;

The decrease in volume was partially offset by:• An increase in sales volume in our aircraft seating business unit;• Higher sales volume of regional, business and general aviation airplane OE and aftermarket products in our de-icing and

specialty systems, sensors, lighting systems and power systems businesses;• Higher sales volume of large commercial OE products in our aircraft interior products, sensors, fuel & utility systems and

de-icing & specialty systems business units; and• Higher sales volume from Sensors Unlimited, which was acquired 4th quarter 2005.

Segment operating income was lower due to:• Lower sales volume as described above;• Increased investments in research and development and new product introduction costs in our optical & space systems

and power systems businesses to support new programs; and• Unfavorable effects foreign exchange rates predominantly in our sensor systems and power systems business;

The decrease in segment operating income was partially offset by: • Favorable sales mix in our aircraft interior products, optical & space systems, lighting systems and power systems

businesses; and• Lower spending on restructuring activities in our lighting systems business; and• Revision of an assumption used in the actuarial valuation of other post-retirement benefits related to the acquisition of the aeronautical

systems business in the electronics segment

Included above:

($1)

10.7%

$37

$343


N/A$4($5)Restructuring andConsolidation Charges

-0.4%11.1%% Sales

(5%)($2)$39Segment OI

(2%)($6)$349Sales


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Sales by Market Channel

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First Quarter 2006 Sales by Market ChannelTotal Sales $1,424M

Large Commercial AircraftAftermarket

27%

Regional, Business & General Aviation Aftermarket

6%

Boeing Commercial OE

9%

Airbus Commercial OE

18%

Defense & Space, OE & Aftermarket

24%

Other 5%

Heavy A/CMaint.

3%

OE

AM

Balanced business mix

Regional, Business & Gen.

Av. OE8%

Total Commercial Aftermarket36%

Total Commercial OE35%

Total Defense and Space24%

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Sales by Market Channel First Quarter 2006 Change Analysis

Actual Goodrich Change Comparisons

(12%)(3%)US, UK Defense Budgets

Defense and Space –OE and Aftermarket

12%

8%

(31%)

16%

25%

27%

1Q 2006 vs. 1Q 2005

Primary Market Drivers

(4%)IGT, OtherOther

13%Aircraft DeliveriesRegional, Business & General Aviation - OE

2%

(16%)

5%

14%

1Q 2006 vs. 4Q 2005

Aircraft aging, Parked Fleet

Heavy Airframe Maintenance

Goodrich Total Sales

ASMs, Age, Cycles, Fleet size

Aftermarket – Large Commercial and Regional, Business and GA

Aircraft DeliveriesBoeing and Airbus –OE Production

Market Channel

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2006 Outlook

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2006 Sales ExpectationsBy Market Channel

~5%Other6%

OE - Positions on funded platforms worldwide, new products provide stable growth Aftermarket - Platform utilization, upgrade opportunities support long-term growth

Flat to slightly down

Approx. Flat

Defense and Space OE and Aftermarket

28%

~6%

Flat to slightly down

>7%

~5%

10-15%(Due to delivery

lead times)

2006 Goodrich Growth

~7%

5%

~5%

0-5%

36%10%19%

2006Market Growth

Goodrich operating near capacity, sales fluctuate based on A/C age, timing and type of overhaul

Heavy Maintenance

4%

Total 100%

Airbus AM growing faster due to fleet aging, excellent product positions plus outsourcing trend support higher than market growth rate

Aftermarket (Commercial/Regional/Bus/GA)

32%

CF34-10 Engine Nacelles and tail cone support continued growth through the cycle

Regional/Bus/GA OE (Weighted)

6%

Market expectations - 2007 and beyondMarketGoodrich

2005Sales Mix

Strong growth in 737, 777, A320; A380, 787 and A350 introductions support deliveries past normal peak

Boeing OE Del.Airbus OE Del.

Total (GR Weight)

8%16%24%

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2006 Outlook Reconciliation

Not in cash flow from operations minus Cap. Ex.

+ $90M for TMPOther cash flow items

No change$240-260M$240-260M

Capital Expenditures

Includes expected 2nd

half 2006 tax payment of approx. $90 million

$100-150M50 to 75% of NI from Cont. Ops.

Cash flow from operations minus capital expenditures

Continued strong aftermarket Rohr litigationRohr 1995-97 auditGain on sale less lost OI

$2.25-2.45

$0.93$0.12$0.08

$3.38-3.58

$2.20-2.40

EPS- Excl. Tax, TMP sale

- March 29 Tax Settlement- April Tax Settlement- TMP Sale

Net Income

No change (towards upper end of range)

$5.6-5.7B$5.6-5.7B

Sales

CommentsCurrentOutlook

PriorOutlook

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2006 Earnings Outlook

Outlook does not includeFinal resolution of Coltec tax case, and resolution of the remaining items in the IRS examination cycle for the company’s tax years through 1999Resolution of remaining A380 contractual disputes with NorthropImpact of acquisitions or divestitures, other than the previously announced definitive agreement to sell Turbomachinery ProductsImpact of changes to the company’s pension plan

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2006 Outlook Summary

Continued robust growth in major Commercial Aerospace original equipment and aftermarket channelsContinue to expect ~100 basis point segment OI margin expansion

Operational excellence and volume leverageOn track to achieve mid-teens segment OI margin by 2009-2010Expect growth in EPS from continuing operations to be greater than sales growth

EPS growth includes increased expenses for pension, FX and stock-based compensation of ~$0.29

Cash flow from operations minus capital expenditures of $100 -$150M, plus ~$90M of cash proceeds from the expected sale of Turbomachinery Products

New program investments (A380, Boeing 787, A350)Capital for cost reduction, capacity, landing gear OE rate increases

Balancing short-term earnings improvement & long-term value creation

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Goodrich – 2006 and Beyond

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Conclusion

Top Quartile Aerospace Returns

Operational Excellence

Leverage the EnterpriseBalanced Growth

Push aggressive Supply Chain Management and Continuous ImprovementDrive breakthrough change in product and development costs using LPD and DFSSImprove Enterprise manufacturing and engineering efficiencies

Use portfolio mass and breadth to capture market shareWin new program positionsPursue Defense Markets and Government funding opportunitiesAftermarket products and services expansion

Manage investments at the portfolio levelProvide Enterprise Shared ServicesLeverage SBU capabilities into integrated, higher level systemsSimplify customer interfaces – act as “One Company”

GoodrichStrategic Imperatives

Focus on execution

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Great market positions

Good top line growth

Substantial margin improvement opportunity

Significant cash flow improvement expected in 2007

Sustainable income growth beyond the OE cycle

The Value Proposition for Goodrich2006 – 2010 Expectations

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Sustainable Growth Beyond the Peak of the Cycle

Original Equipment ProductionHigh Airbus content – on high growth platformsFour new aircraft introductions between now and 2010 will help support higher production/delivery levels later

• 2006 - A380; 2008 – 787; 2009 – 747-8; 2010 – A350Higher Goodrich content on new aircraft than on aircraft being replaced

Single Aisle Small TwinAisle

Large TwinAisle

Very LargeTwin Aisle

Current ModelNew Models

Ave

rage

Con

ten

t pe

r A

ircr

aft

($

M)

B737,A320

B767,A330

B787,A350

B777,A340

B747

A380

Higher content per aircraft should dampen the effect from the next commercial down cycle

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Sustainable Growth Beyond the Peak of the Cycle

Commercial AftermarketSignificantly larger fleet should fuel aftermarket strengthExcellent balance between Boeing and AirbusAirbus and regional jet fleet is getting older, more mature – increased aftermarket supportMore long-term agreementsMore opportunity for airline outsourcing

Defense and space marketBalance and focus on high growth areasWar on terror drives sustained spending

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0%

5%

10%

15%

20%

2004 2005 2006 2007 2008 20090%

5%

10%

15%

20%

Longer Term Margin Growth Expectations

Segment OI/Sales Margins

AIRFRAME SYSTEMS

ELECTRONIC SYSTEMS

ENGINE SYSTEMS

Expect total Company margins to be ~15% by 2009

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Margin Expansion Outlook

8%

10%

12%

14%

16%

18%

2004 2005 2006 2007 2008 20098%

10%

12%

14%

16%

18%OI/Sales Margins

Total Company

ObjectiveExpect Airframe Systems margin improvementSustained, high Engine Systems marginsMid-teens Electronics Systems margins

DriversVolume leverageR&D costs on new programs mitigatePension, FX and stock-based compensation headwinds mitigate or reverse

Substantial margin upside potential

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The Value Proposition for Goodrich2006 – 2010 Expectations

Great market positionsGood top line growth expected over the next several yearsSubstantial margin improvement opportunity

High margin aftermarket growth and OE volume leverageDevelopment program costs mitigateBelieve that Airframe margins bottomed out in 2005

Significant cash flow improvement expected in 2007Sustainable income growth beyond the OE cycle

Expect continued growth in aftermarket – faster than ASMsGoodrich should see “cycle on top of cycle” for OE production

• A380, Boeing 787, Boeing 747-8 and A350 all have high Goodrich content

Key for 2006: Entire organization focused on margin improvement – with a sense of urgency

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