Safe Harbor Statement -...
91
Transcript of Safe Harbor Statement -...
2
Forward-looking statements in this document are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to: unanticipated environmental remediation expenses or claims; a reduction in anticipated orders; an economic downturn; changes in the need for additional machinery and equipment and/or in the cost for the expansion of the Corporation’s operations; changes in the competitive marketplace and/or customer requirements; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, marine, and industrial companies. Please refer to the Company’s SEC filings under the Securities and Exchange Act of 1934, as amended, for further information.
Safe Harbor StatementSafe Harbor Statement
3
AgendaAgenda
WelcomeMartin R. Benante, Chairman & CEO
Curtiss-Wright OverviewDavid Linton, President, Flow Control
Oil & Gas MarketJohn Rice, VP & General ManagerTroy Bengtzen, General ManagerGreg Hempfling, VP & General Manager
Commercial Power MarketJim Leachman, VP & General ManagerGreg Hempfling, VP & General ManagerGlenn Tynan, VP & CFO
Q&A
4
It all started on the sands of Kitty Hawk over 100 years ago
BeginningsBeginnings
5
HeritageHeritage
Curtiss Aircraft and Wright Aircraft Engines
help defend Europe During World War II
1929
1943
1949-58Curtiss-Wright
formed through the merging of
12 Wright and Curtiss companies
Listed onThe New York Stock
Exchange
1968Expands into metal treatment business
1961Expands into flow control businesssupporting U.S. Nuclear Naval
Program
CW major supplier of engines to commercial
aviation industry
1978-88Curtiss-Wright refocus its aviation business on
aircraft component maintenance, repair,
overhaul, refurbishment and rebuilding.
2004Celebrates 75thAnniversary
Curtiss-WrightAnticipates $1.5 Billion
in Sales
2007
Expands commercial energy business
1998-99
Curtiss-Wrightcompletes
recapitalization
2001-05
6
Recent PerformanceRecent PerformanceTrack record of growth & profitability
Sales CAGR 28%
Operating Income CAGR 25%
$100
$300
$500
$700
$900
$1,100
$1,300
$1,500
2001 2002 2003 2004 2005 2006 2007E$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
Base Acquisitions Operating Income
7
Defense
Nuclear Power
Oil & GasCommercial Aerospace
General Industrial
Note: Includes estimated full year revenue for acquisitions of Benshaw, IMC Technologies, Scientech, Valve Systems & Controls
34%
17%
12%
20%
17%
2007E Pro forma for acquisitionsRevenue by MarketRevenue by Market
8
Accelerating GrowthAccelerating Growth
$0.0
$50.0
$100.0
$150.0
$200.0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Flow ControlMotion ControlMetal Treatment
37 acquisitions for $1 Billion since 2000
9
• Diversification
• Critical components to integrated systems
• Provide critical solutions that add profound value to the customer
Corporate StrategyCorporate Strategy
10
Flow Control Acquisition HistoryFlow Control Acquisition HistoryAccelerated growth
10
Technology focused, bolt-on strategy accelerates growth
11
Product DiversificationProduct DiversificationHigh performance platforms
Commercial Power& Services
Oil & GasSystems
ElectroMechanicalSystems
Valve Systems
Control Systems11
12
$0
$100
$200
$300
$400
$500
$600
$700
$800
2001 2002 2003 2004 2005 2006 2007E$0
$10
$20
$30
$40
$50
$60
$70
$80
Base Acquisitions Operating Income
Flow Control PerformanceFlow Control PerformanceExpanding into new markets & products
Targeting $1 billion by 2010
Sales CAGR 38%
Operating Income CAGR 34%
1313
Flow Control Revenue by MarketFlow Control Revenue by Market
Defense 29%
2007E Pro forma for acquisitions as full year
Oil & Gas 32%
Power 25% General 15%
14
$0
$50
$100
$150
$200
2000 2001 2002 2003 2004 2005 2006 2007F$0
$50
$100
$150
$200
2000 2001 2002 2003 2004 2005 2006 2007F
Sales by major marketMarket DiversificationMarket Diversification
Oil & Gas Commercial Power
30% CAGR26% CAGR
Organic Acquisitions less than 12-months
15
Significant growthFlow Control New Orders & BacklogFlow Control New Orders & Backlog
Government Commercial
Commercial new orders & backlog up >30% over past 3 yearsNew orders Backlog
Commercial markets have provided significant growth during decline in defense multi-year procurements.
$0
$200
$400
$600
$800
2003 2004 2005 2006 2007E$0
$200
$400
$600
$800
2003 2004 2005 2006 2007E
16
Future Growth FocusFuture Growth Focus
Market & Products• Energy markets driving futuregrowth
• Increasing content & systems in naval defense
• International footprint
Innovation•Applying defense technologiesto commercial markets
• Providing cost competitivetechnologies to military markets
Acquisitions• Energy focus• Systems & controls technologies• International expansion
17
Oil and Gas MarketOil and Gas Market
Presentations to FollowPresentations to Follow
John RiceVP & General ManagerOil & Gas Systems
Troy BengtzenGeneral ManagerDeltaValve
Greg HempflingVP & General ManagerElectroMechanical Systems
17
18
Nuclear Power MarketNuclear Power Market
Presentations to FollowPresentations to Follow
Jim LeachmanVP & General ManagerCommercial & Power Services
Greg HempflingVP & General ManagerElectroMechanical Systems
Glenn TynanVP & CFOCW Corporate
18
19
Nuclear Power MarketNuclear Power Market
Presentations To FollowPresentations To Follow
Jim LeachmanVP & General ManagerCommercial & Power Services
Greg HempflingVP & General ManagerElectroMechanical Systems
Glenn TynanVP & CFOCW Corporate
19
20
Agenda
• Market Drivers & Growth
• Profound Solutions & Value Proposition
• Advanced Technology Development
Oil & Gas MarketOil & Gas Market
20
2121
The Refining ProcessThe Refining ProcessCW has the critical technology for severe service processing
22
The Refining ProcessThe Refining Process
22
“Light” Saudi >$70/bbl
“Heavy” Mayan <$55/bbl
Gasoline $3.00/gal
CW has the critical technology for severe service processing
23
High crude prices continue to fuel project spendingMarket DriverMarket Driver
Source: DOE
$/bbl
Heavy Avg
Light Avg
Crude prices – yearly average
2001 2002 2003 2004 2005 June 07 YTD
$20
$30
$40
$50
$60
$70
$102006
Crude price spreads continues to drive Coker and FCC investments
Lt-Hvy Spread
2001 2002 2003 2004 2005 June 07 YTD
2006
$6
$8
$10
$12
$14
$16
$4
$/bbl
24
Refinery revenues drive capital expense spending
Market DriverMarket Driver
Source: IIR
0
20
40
60
80
100
120
2001 2002 2003 2004 2005 2006 2007E 2008E
$8 $10 $12 $13$24
$50
$104$114
Com
mitt
ed S
pend
ing
($B
)
Worldwide refinery spending
70% CAGR
25
FCCU segment ~ delayed Coker segment
Market TrendMarket Trend
Worldwide Coker project activity
5
5
5
5
5
5
$0
$5
$10
$15
$20
2001 2002 2003 2004 2005 2006 2007E
$25
2008E
$1 $0.5 $0.4 $0.3
$4
$8 $8
$20
Com
mitt
ed S
pend
ing
($B
)
FCCU worldwide project activity
$0
$2
$4
$6
$8
$10
$12
$14
2001 2002 2003 2004 2005 2006 2007E 2008E
$0.9 $0.5$1
$2
$3
$8
$6
$13
Com
mitt
ed S
pend
ing
($B
)
Source: IIR
75% CAGR
185% CAGR
2626
Global MarketGlobal Market
27
FCCU VideoFCCU Video
27
28
FCCU – High Value ProcessFCCU – High Value Process•Hot, corrosive, erosive•Frequent service interval•Production critical
28
29
Market Opportunities & StrategyMarket Opportunities & Strategy
Market Summary• Global infrastructure investment of $250B, most in 40 years• High crude prices and spreads drive FCCU/Coker expansion• International share increasing
Strategy to Capitalize• Focus on severe service applications where our technology and
systems solutions are valued by the customer– Improving production: cycle time– Safeguarding operations: reliability & safety
• Target international growth to expand installed base & the aftermarket annuity
Product to market positioning
30
Catalytic Cracking Market OpportunityCatalytic Cracking Market OpportunityProduct to market positioning
Market opportunity: ~ $150-$250M/yr• 120 FCCUs in US/Canada• 445 worldwide• 15-25 yr aftermarket annuity: 2-4x OEM• Typical new opportunity: $2.5-$10M • 45-75 week delivery cycles
31
Critical valves– Farris Pressure Relief– TapcoEnpro Butterfly
Electronic monitoring– Peerless Instruments DVC– SWANguard™
Automated protection– VSC’s total protection
systems
Maximizing & Safeguarding Refinery ProductionMaximizing & Safeguarding Refinery Production
31
Advanced automation & protection systems
32
Strategic AcquisitionsStrategic AcquisitionsValve Systems & Controls
Acquired June 2007• $60M annualized sales
Expanding our severe service solutions portfolio• Refinery and petrochemical processes• Oil platforms, tank farms, LNG terminals
Critical production & automation technologies• Engineered control and protection
systems• Critical service valves: cryogenic,
platform, pipeline including actuation
33
DeltaValve VideoDeltaValve Video
33
Revolutionary delayed coking technology
34
DeltaValve’s Value PropositionDeltaValve’s Value Proposition
Unique and profound value (automating a manual process)Safety (inherently safe design)Maintenance (fewer moving parts)Throughput (reduction in process cycle times)Profitability (ROI for refinery)
57% CAGR (5Yrs.)
Revenue since acquisition
35
Delayed CokingDelayed CokingSevere service process
35
• >900F oil fed into coke drum vessel• Liquid yields exit the top • “Coke” removed through bottom of the
drum with high pressure water
Coke DrumDiameter ~25’
Height ~100’Capacity up to1200 Tons
36
Delayed CokingDelayed CokingManual unheading: high risk task
36
1929: 1st Delayed Coker• Manually intensive process• Unreliable equipment• High maintenance costs• Inefficient operation
37
VSC AcquisitionVSC AcquisitionTotal solution provider
37
DeltaValve (Critical equipment) + VSC (Electronic Controls) = Total Solution
38
Technology PortfolioTechnology PortfolioTotal solution provider
Two drum Coker set:Cutting tools $200KTop valve $500KBottom valve $3.0MIsolation valves $1.2MControl system $1.2MIntegrated system$6.0M
Two drum Coker set:Cutting tools $200KTop valve $500KBottom valve $3.0MIsolation valves $1.2MControl system $1.2MIntegrated system$6.0M
39
After-Market OpportunitiesAfter-Market Opportunities
• Annuity from spare parts and service (5-year repair cycle)• Significant part of future business• $100M future annual market opportunity
Ongoing service & repair
40
Worldwide Coker Market ShareWorldwide Coker Market ShareContinued market growth
Global OEM market ~$2 Billion$261M in new orders since 2001
Coke drums in operationPlanned expansion
Installed baseIn process
31%13%
0
200
400
600
800
WorldwideMarket
Bottoms Tops
DeltaValve market share
Customers:Chevron, Shell, BP, Petrobras, ValeroCitgo, PetroCanada, MarathonExxonMobil, Sasol, Sincor, Suncor
Top Valve
8%
Control System
20%
Bottom Valves
49%
Cutting Tool3%
Isolation Valves
20%
41
SummarySummary
• Growing demand for refined products• Revolutionary technology and systems
providing:– Increased safety– Reduced maintenance– Increased throughput– Increased refinery profitability
• Creating future annuity through spare parts & service
9/27/07 42
• Subsea Technology Market• Subsea Pump Technology• High Speed Compressor Motors• High Performance Equipment• Oil & Gas Market Summary
AgendaOil & Gas MarketOil & Gas Market
43
Advanced TechnologyAdvanced TechnologyDeveloped from military technologies
Strategic objective to capitalize on…• Global demand for energy• Proven naval technologies • Established relationships with industry
leaders for technology and marketingSubsea technology products
• $6.4B market, 24% + 3-year growth CAGR as reported in the WSJ
• Increased productivity/recovery
Subsea Pumping Systems
High Speed Compressor Motors
44
P-20 platform: 1st system to be deployed November 2007
Joint marketing, fully integrated system
Key benefits:
• 50% greater production• Higher reliability• Improved life cycle cost• Environmentally friendly
Subsea Pumping TechnologiesSubsea Pumping Technologies
44
Enhancing performance
45
Topside operationalequipment
Master Controlsystem &Variable Frequency Drive
Oil supply unit
Subsea Pumping TechnologiesSubsea Pumping Technologies
45
46
Advancing technologyHigh Speed Compressor MotorsHigh Speed Compressor Motors
46
Separate driver and compression alone
Integrated driver, compression, separation and cooling
Motor for transmission& storage of gas
•Lower life cycle costs
•Significant size reduction where space counts – topside and subsea
•Environmentally friendly
47
Partnering with industry leaders
• Advanced high-speed motor for integrated compressor drive offers compact, cost-effective, environmentally friendly performance
• Reduced footprint – 1/3 of conventional designs
• Lower cost of installation and operation• Applications
– Upstream, midstream and downstream markets
– Land-based, offshore and subsea projects• Partnered with industry leading
compressor supplier• Initial unit for transmission/storage
service to be delivered to Central New York Oil & Gas in 4Q07
High Speed Compressor MotorsHigh Speed Compressor Motors
48
Butterfly valvesFire protectionProcess valves (pumps, cooling water)Ballast valves (keep platform afloat)
High integrity performance- Pressure class- Sealing capability- Corrosion resistant materials
New platform value:$2.5-10M
Solent & PrattSolent & Pratt
High Performance Equipment High Performance Equipment
48
Valve technologies
49
Oil and Gas Summary Oil and Gas Summary
• Strongest market demand in over 40 years• Severe service applications
– Rewarded for high technologies on installed base
– Annuity on the aftermarket• Unique system solutions
– Improved safety/reliability/cycle time• Introduction of new technologies with
profound value propositions
5050
51
Nuclear Power MarketNuclear Power MarketAgenda
• Nuclear power renaissance-Market drivers
• Nuclear power market-Operating reactors – installed base-Scientech acquisition- International-Global new construction
• AP1000 overview• Financial impact of China award
51
52
Nuclear Power MarketNuclear Power MarketNuclear power renaissance
Market drivers– Increase in global
energy demand– Environmental and
public support– History of plant
performance and safety
– Economically competitive energy source
– Political influence
World Electricity Demand Growth
Source: Energy Information Administration’s International Energy Outlook 2006 and International Energy Annual 06/06
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1980 1990 2000 2010 2015 2020 2025 2030
53
Public OpinionsPublic OpinionsPositive views
Environmentalists speak out for Nuclear Power• Greenpeace founder Patrick Moore: “Thirty years and my views have changed, and the rest of the
environmental movement needs to update its views too, because nuclear energy may just be the energy source that can save our planet from another possible disaster: catastrophic climate change.”
• “Whole Earth Catalog” founder Stewart Brand: “It (Nuclear) also has advantages besides the overwhelming one of being atmospherically clean. The industry is mature, with a half-century of experience and ever improved engineering behind it..... Nuclear power plants are very high yield, with low-cost fuel. Finally, they offer the best avenue to a "hydrogen economy," combining high energy and high heat in one place for optimal hydrogen generation.”
Important for our energy future
83%
Keep theoption to build nuclearplants
74%
Definitely build nuclear
plants in future
58%
Accept new
reactorsat nearestplant
69%
Favor use of nuclear energy
70%
Important for our energy future
83%
Keep theoption to build nuclearplants
74%
Definitely build nuclear
plants in future
58%
Accept new
reactorsat nearestplant
69%
Favor use of nuclear energy
70%
Survey Source: “U.S. Opinion about Nuclear Energy” (National Survey by Bisconti Research, Inc. May 5-9, 2006).“Going Nuclear: A Green Makes the Case” (by Patrick Moore, published in Washington Post, April 16, 2006).“Environmental Heresies” (by Stewart Brand, published by MIT Technology Reviews, May 2005).
54
Nuclear Power Safety – U.S.Nuclear Power Safety – U.S.Continuous improvement
0255075
100125150175200
89 91 93 95 97 99 01 03 05
Unusual events reported to NRC
0.00.20.40.60.81.01.2
1973 1978 1983 1988 1993 1998
LWR PWR BWR
Average measurable dose per worker (rem)
Source: NEI
'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06
50%
60%
70%
80%
90%
100%
Cap
acity
Fac
tor %
Improved operating efficiency
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06
500
550
600
650
700
750
800
Billi
on K
ilow
att-H
ours
Record output
55
U.S. Electrical Sources/DemandsU.S. Electrical Sources/DemandsEnergy requirements
18.6% Natural GasEmissions: NOx, CO2
3.0% OilEmissions:
SO2, NOx, CO2
2.7% RenewableEmissions: None
49.9% CoalEmissions: SO2, NOx, CO2,particulates, mercury, toxic metals
19.4% NuclearEmissions: None
6.4% HydroEmissions: None
Source: NEI
U.S. will require 40% more electricity
generation by 2030
56
U.S. Electrical Production CostsU.S. Electrical Production CostsNuclear: Lowest production cost
Average per kilowatt hour
9.63 Oil
6.75 Gas
1.72 Nuclear
2.47 Coal
57
CredentialsCredentials
Market Focus and ExperienceCW: over 233 years of combined service to the nuclear power industry
Nuclear Infrastructure - Quality standards and regulatory compliance historyCW: 15% of U.S. “N” and “NPT” stamps
Proven Long-term CommitmentCW: market service for more than 52 years, including 1st nuclear power plant & 1st nuclear submarine
Financial StabilityCW: strong balance sheet, significant size
Operational Experience/Installed BaseCW: thousands of critical service components installed worldwide
Portfolio of Highly Engineered Products and ServicesCW: diverse and expansive product lines and industry Solutions
What it Takes
58
Nuclear Power MarketNuclear Power Market
Operating Reactors
Utilities / SitesA&E’sDOE International
Utilities / SitesA&E’s
New Construction
NSSSA&E’s, Utilities Consortiums
Ongoing, global and new plant opportunities
59
Nuclear Power MarketNuclear Power MarketUtilities, sites, NSSS, A&E
59
60
Key areas of core business
Product ArchitectureProduct ArchitectureStrategic product line (operating reactors)
Curtiss-Wright’s comprehensive solutions portfolio
60
61
Operating ReactorsOperating Reactors104 reactors in U.S. market
- Power uprates and license renewals drive current business
Power uprates
Total power uprates since 1977 = 4900.1 MWeadded to the grid or an equivalent of almost 5 new 1000 MWe reactors
Source: NRC
Over 700,000 MWe will be generated over 20 years as a result of plant life extensions
Plant Life Extension (PLEX)
10 Under Review
23 Expected
48 Granted
0
1,000
2,000
3,000
4,000
5,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Approved Under Review
Expected
62
Supporting Operating ReactorsSupporting Operating ReactorsEquipment for controlling flow
PressureRelief Valves
PumpsPump Monitoring Equip
PressurizerValves
Isolation Valves
MainSteam Valves
Rotary Disc Valves
Solenoid Valves
Control Valves
Emergency Feedwater
Control Valve
Heat Exchangers
Gaskets, Seals, Packing, Expansion Joints
Valve Actuators
62
63
Supporting Operating ReactorsSupporting Operating ReactorsAuxiliary equipment
Hatches
SpecialtyDoors
Containment Airlocks
ControlsNozzle Dams
Electrical Penetrations
Bolting Solutions
ManwayRad Doors
Safety-RelatedMetal Framing
System
Instrumentation & Controls
63
64
Supporting Operating ReactorsSupporting Operating ReactorsPlant performance and reliability
•Plant process computer systems
•Software and databases•Asset management •Spare parts management•RAPID (inventory management)•Regulatory/licensing informationservices
•Laser peening •Stress wave performance monitoring
64
65
Supporting Operating ReactorsSupporting Operating ReactorsObsolescence and abandonment
•Environmental and seismic qualification
•Reverse engineering•Licensing manufacturing of Obsolete OEM Equipment (ASMEcode and safety-related)
•Component fabrication•Third party parts dedication•Special manufacturing runs•Obsolescence programs and databases•OIRD – Obsolete ItemReplacement
•Electronic modules•Analog instrumentation
65
66
Supporting Operating ReactorsSupporting Operating ReactorsPlant services
•Engineering services• Installation services•CRD exchange/rebuild services•Custom fabrication•Outage support •Repair services•Custom fabrication •Diamond wire saw cutting
66
67
Synergy With MarketSynergy With MarketOperational methodologies
Cost
Com
plex
ity
Surplus
SpecialManufacturing
Runs
Repair
Cannibalize
Substitution
ReverseEngineering
Design Change
PurchasingMaintenance
Engi
neer
ing
EnertechNova
EnertechNova
EnertechTarget RockTrentec
EnertechNovaTarget RockTrentec
EnertechNova
EnertechNova
68
Scientech Product/ServicesScientech Product/ServicesAdvancing CW’s solutions portfolio
Commercial nuclear power instrumentation, process controls, and proprietary database solutions to reduce costs and improve efficiency, reliability, safety and plant performance. Serve existing plant upgrades and new construction.
Critical hardware Proprietary data base solutions
Plant process controls
69
Synergy With MarketSynergy With MarketOperational methodologies
Cost
Com
plex
ity
Surplus
SpecialManufacturing
Runs
Repair
Cannibalize
Substitution
ReverseEngineering
Design Change
PurchasingMaintenance
Engi
neer
ingEnertech
NovaEnertechNova
EnertechTarget RockTrentec
EnertechNovaTarget RockTrentec
EnertechNova
EnertechNova
7070
International Operating ReactorsInternational Operating Reactors
OpportunitiesActiveAdditional countries with nuclear power
71
New constructionU.S. OutlookU.S. Outlook
Existing reactor siteswith service & support needs
AP1000 (12) WestinghousePWR – 1117 MWe unitCertified
ESBWR (3) GE EnergyPWR –1550 MWe unitUndergoing certification, target 2007
US ERP (7) Areva NPPWR – 1600 MWe unit, Undergoing certification, target 2009
US APWR (2) MHIPWR – 1600 MWe unitUndergoing certification, target 2011
TBD (5) TBDPWR – 1600 MWe unitUndergoing certification, target 2009
ABWR (2) GE EnergyBWR – 1550 MWe unitCertified
71
72
Nuclear RenaissanceNuclear RenaissanceGlobal new construction
* Watts Bar RestartSource: World Nuclear Association 8/30/07
Armenia
Slovinia
Switzerland
Egypt
Indonesia
Vietnam
Turkey
Proposed (clear intention)72
Mexico
Israel
Czech Republic
Hungary Lithuania
Kazakhstan
Slovakia
Brazil
France
Ukraine
Bulgaria
SouthAfrica
N. Korea
Planned (funded or major commitment in place)
Canada
JapanUnited States* Iran
Pakistan
IndiaTaiwan
S. Korea
China
Russia
Finland
Romania
ArgentinaUnder construction
73Source: World Nuclear Association 8/30/07* Watts Bar Restart
Armenia
Slovinia
Switzerland
Egypt
Indonesia
Vietnam
Turkey
Proposed (clear intention)73
Mexico
Israel
Czech Republic
Hungary Lithuania
Kazakhstan
Slovakia
Brazil
France
Ukraine
Bulgaria
SouthAfrica
N. Korea
Planned (funded or major commitment in place)
Canada
JapanUnited States* Iran
Pakistan
IndiaTaiwan
S. Korea
China
Russia
Finland
Romania
ArgentinaUnder construction
AP1000Westinghouse
~$90Mper reactor
US EPRAreva NP
~$30Mper reactor
ABWRESBWR
GE Energy~$25M
per reactor
Nuclear RenaissanceNuclear RenaissanceGlobal new construction
74
Nuclear Power MarketNuclear Power MarketAgenda
74
• AP1000 Power Plant– Reactor Coolant Pumps– Control Rod Drive Mechanisms
• China Award
75
• AP1000 a generation III+ nuclear power plant designed by Westinghouse
• NRC design certification was achieved in 2005
• Based on 50 years of design and support of the existing PWRs, as well as 20 years of research and development
• Advanced passive safety systems are less complex
• Simplified safety systems have fewer components that significantly improves reliability, reduces plant construction & operational costs
75
AP-1000 Power PlantAP-1000 Power PlantEvolving legacy
76
Reactor Coolant Pump
Control RodDrive Mechanism(cutaway)
State-of-the-art TechnologyState-of-the-art Technology
76
RCPs & CRDMs
22.5 ft(6.9 m)
4.9 ft dia.(1.5 m)
200,850 lbs. per pump(91,106 kg)
77
• Based on technology currently operating in other applications
• Over 40 years of operation of a canned motor pump at Mitchell Power Station
• Design philosophy:– Stainless steel cans protect rotor
and stator electrical windings from the operating fluid
– No shaft seals– Water lubricated bearings operating
with no wear• Additional features:
– 60 year life with no maintenance– Innovative flywheel with high
rotating inertia to meet plant safety requirements
– Largest canned motor pump
Key TechnologyKey TechnologyReactor Coolant Pump
77
78
Control Rod Drive Mechanisms
Critical aspects• Regulate the level of radioactivity in the reactor vessel
by insertion or withdrawal to increase or decrease absorption rate of atomic particles
• Over 45 years design and manufacturing experience• 12 CRDM designs, latest designs are qualified for 7
million steps and 40 year operation• More than 5,000 CRDMs in operation in 88 plants
worldwide designed and manufactured by EMD• Proven reliable designs – over 40 years of successful
operation• Operating availability > 99.9%
Key TechnologyKey Technology
Recent orders• Delivered first integrated Reactor Vessel Head with 55
CRDMs to Texas Utility’s Comanche Peak Project in 2006
• Selected by ENTERGY to supply 114 CRDMs for two integrated RVHs for Indian Point (Award in 2009)
78
79
AP1000 ChinaAP1000 China
Kickoff of China contractSNPTC delegation:
• Visit of Chairman Wang– AP1000 Reactor Coolant
Pump briefing– Factory Tour
by the State Nuclear Power Technology Corporation
• AP1000 Contract begins– Monday, September 24, 2007
• Significant pact with emerging opportunities within China
79
8080
AP-1000 Power PlantAP-1000 Power PlantSummary
81
Financial SummaryFinancial Summary
81
Agenda
• Overview of China Award• Other Nuclear Opportunities• Expected Financial Impact
82
AP1000 ChinaAP1000 China
$293M Aggregate Award2 separate contracts:
• $70M technology transfer with China– Contract signed July 2007
with SNPTC• $223M hardware with
Westinghouse– Contract signed with WEC
Sept. 24, 2007
Overview
82
83
AP1000 ChinaAP1000 China
$70M Contract with SNPTC• 15-year term• Multi-element contract• Base fee• Technical fees
• Support• Training • Documentation• Consulting
Technology transfer
83
84
AP1000 ChinaAP1000 China
$223M Contract with Westinghouse
• $198M EMD Manufacturing– 16 RCPs
• $25M Chinese Manufacturing– 2 RCPs
Hardware Order
84
85
Other Nuclear OpportunitiesOther Nuclear OpportunitiesAsia and beyond
China• Balance of Plant (BOP) opportunities
US – India – ROW• RCPs• CRDMs• Integrated Reactor Vessel Head & CRDMs• BOP opportunities
85
86
Current ProposalsCurrent ProposalsProposals outstanding > $1 Billion
C h i n a
R C P s
O t h e rR V H sC R D M s
87
Financial AssumptionsFinancial Assumptions
Included programs– AP1000 China ($293M)– US RCPs (>$500M)
Revenue recognition– China
• POC beginning 2007• Primarily (~90%) over
2008-2012 period– US
• POC beginning in 2009Capital expenditures
– 2007-2009 ~$62M
Looking forward
AP-1000 RCP Test Loop
87
88
Financial SummaryFinancial Summary
$0
$20
$40
$60
$80
$100
$120
2007 2008 2009 2010 2011 2012
China US RCP Proposals
Revenues forecast
$ in Millions
89
Financial ImpactFinancial Impact
Operating margin– 2007 – not significant– 2008 ~9-10%– 2009-2012 ~ mid-teens
Cash flow– 2006 – $12M– 2007 – $25M– 2008 – ($15M) including $40M CapEx spend
Future estimates
90
SummarySummary
Tremendous opportunities beyond initial China contracts
Positions CW to be critical player in the nuclear renaissance
Increased capacity will transform EMD from a medium to a large, heavy, more efficient manufacturer
Positions CW for other large growth opportunities– Subsea pumping– Integrated compressors– DDG1000 propulsion motors
Great strides in global positioning
91
Tremendous opportunities beyond initial China contracts
Positions CW to be critical player in the nuclear renaissance
Increased capacity will transform EMD from a medium to a large, heavy, more efficient manufacturer
Positions CW for other large growth opportunities– Subsea pumping– Integrated compressors– DDG1000 propulsion motors
SummarySummaryGreat strides in global positioning
