8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

May 3, 2018

Date of Report (Date of earliest event reported)

ESTERLINE TECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	001-06357	13-2595091
(State or Other Jurisdiction of Incorporation)	(Commission File No.)	(IRS Employer Identification No.)
500-108th Avenue NE, Bellevue, Washington		98004
(Address of principal executive offices)		(Zip Code)

(425) 453-9400

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition.

On May 3, 2018, Esterline Technologies Corporation issued a press release announcing financial results for the three and six months ended March 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In addition, supplemental information regarding the financial results for periods presented in the press release is attached hereto as Exhibit 99.2. The press release and the supplemental financial information should be read in conjunction with the note regarding forward-looking statements, which is included in the text of the press release and as part of the supplemental financial information.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press release announcing financial results issued by Esterline Technologies Corporation dated May 3, 2018.
99.2	Supplemental Financial Information dated May 3, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ESTERLINE TECHNOLOGIES CORPORATION
Dated: May 3, 2018	By:	/s/ STEPHEN M. NOLAN
	Name:	Stephen M. Nolan
	Title:	Executive Vice President & Chief Financial Officer

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE
Contact:	Investor Relations – John Hobbs
	Media – Michelle DeGrand
	+1 425-453-9400

ESTERLINE REPORTS FISCAL 2018 SECOND QUARTER FINANCIAL RESULTS

• Fiscal 2018 Second Quarter Results

• Sales of $517.6 million

• Income from continuing operations of $24.0 million, or $0.80 per diluted share

• Free cash flow of $62.0 million year to date

• Company reports record backlog of $1.46 billion

BELLEVUE, Wash., May 3, 2018 – Esterline Corporation (NYSE:ESL) (www.esterline.com), a leading specialty manufacturer serving global aerospace and defense markets, today reported results for the fiscal 2018 second quarter ended March 30, 2018.

Consolidated second quarter revenue was $517.6 million, an increase of 1.7% from the prior-year result of $509.1 million.

Consolidated earnings from continuing operations in the second fiscal quarter of 2018 were $24.0 million, or $0.80 per diluted share, compared with $34.4 million, or $1.15 per diluted share, in the 2017 period. Adjusted earnings from continuing operations for the second fiscal quarter of 2017 were $35.3 million, or $1.18 per diluted share, excluding discrete advanced displays integration and compliance costs.

“Esterline’s baseline operational performance is on track with our expectations through the first half of fiscal 2018,” said Curtis Reusser, Esterline’s Chairman, President & CEO. “We are gaining traction with our customers and healthy booking activity has driven our backlog to new highs. In addition, a large customer has asked us to work closely with them on a new development effort. We had not contemplated the required investment for this new development activity in our original plans for the year and we are adjusting our outlook accordingly. These trends are encouraging and are laying a foundation for progress that should support long-term growth.”

He added, “The company is continuing to produce excellent cash flow, allowing us to remain flexible in executing our disciplined capital allocation strategy. From a strategic perspective, the sale of the Kirkhill business, completed during the second quarter, positions our Advanced Materials businesses to deliver expanded operating margins and improved results going forward and led to an increased guidance range for free cash flow.”

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Page 2 of 9 Esterline Reports Fiscal 2018 Second Quarter Financial Results

Second Quarter Results of Operations

The Avionics & Controls segment reported fiscal second quarter operating earnings of $23.7 million on sales of $212.8 million. This compares with operating earnings of $20.8 million on sales of $213.3 million in the same period of fiscal 2017. The segment’s second quarter 2018 results benefited from the execution of a $2.3 million licensing agreement for legacy products.

The Sensors & Systems segment reported fiscal second quarter operating earnings of $19.3 million on sales of $198.2 million. The segment’s operating earnings were $26.4 million on sales of $182.7 million in the same period of fiscal 2017. Better profitability at the segment’s Advanced Sensors and Connection Technologies businesses partially offset lower profits within the segment’s Power Systems business. Operating margins for the Power Systems business in the fiscal 2018 second quarter declined, as 2017’s sales mix included strong retrofit program sales from an FAA mandated safety program. That retrofit program is now largely complete.

The Advanced Materials segment reported sales of $106.7 million in the fiscal 2018 second quarter and operating earnings of $9.6 million. Segment results were affected by a $5.2 million loss from operating activities at the Kirkhill business driven largely by repricing on a long-term defense contract and a $6.0 million loss attributable to the sale of the business and associated expenses. The segment reported operating earnings of $28.3 million during the same period of fiscal 2017 on sales of $113.1 million. Segment results in the fiscal 2017 second quarter benefited from a $5.2 million business recovery insurance payment and a $2.1 million operating profit at the Kirkhill business.

The company reported consolidated operating earnings before interest and tax in the second quarter of fiscal 2018 of $33.9 million, or 6.6% of sales, compared with $55.4 million, or 10.9% of sales, in the prior year. The year-over-year decline was driven primarily by lower operational performance at the Kirkhill business, the loss on the sale of Kirkhill, and lower operating results from the Power Systems business.

The effective income tax rate of 7.9% for the fiscal second quarter of 2018 mainly reflected the tax benefit from a reduction of a capital valuation reserve related to the sale of the Kirkhill business.

Year-to-Date Results of Operations

Consolidated operating results for the first six months of fiscal 2018 include discrete tax expenses of $48.6 million, or $1.62 per diluted share, related to the U.S. Tax Cuts and Jobs Act of 2017 (TCJA). Including that impact, the company reported a loss from continuing operations for the first six months

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of fiscal 2018 of $10.9 million, or $(0.36) per diluted share. Excluding the discrete impact of the TCJA, the company generated earnings from continuing operations during the first half of this fiscal year of $37.7 million, or $1.26 per diluted share. Earnings from continuing operations for the first six months of fiscal 2017 were $55.6 million, or $1.86 per diluted share. Adjusted earnings from continuing operations for the first six months of fiscal 2017 were $59.4 million, or $1.99 per diluted share (see further details in the Non-GAAP Financial Information section below).

Cash flow from operations through the first six months of fiscal 2018 was $89.7 million, compared with $91.3 million through the first six months of fiscal 2017. Capital expenditures during the first six months of fiscal 2018 were $27.7 million, resulting in free cash flow of $62.0 million for the period.

Bookings and New Programs

New orders in the fiscal second quarter of 2018 were $651.2 million compared with $466.3 million in the comparable period of fiscal 2017. Year to date, the company’s book-to-bill ratio is 1.2x. The company’s backlog has steadily increased over the past twelve months, standing at $1.46 billion at the end of the 2018 fiscal second quarter, compared with a $1.21 billion backlog at the end of the 2017 fiscal second quarter. The current backlog has greater depth with a higher proportion of system and sub-system orders with scheduled deliveries twelve months or more into the future.                

Kirkhill Sale

On March 15, 2018, the company completed the sale of its Kirkhill business recording $6.0 million of pre-tax loss and directly related expenses consisting of a $5.3 million loss on the sale and $0.7 million of related expenses. The sale resulted in a $0.2 million after-tax gain.

Share Repurchase Activity

During the fiscal second quarter of 2018, the company repurchased approximately $23 million of its shares under the existing share repurchase authorization, acquiring 313,900 shares at an average price of $73.29 per share. As of March 30, 2018, the company had about $48 million remaining under its existing repurchase authorization.

Fiscal 2018 Outlook

The company has adjusted its guidance outlook to account for several factors, including the pursuit of a new business opportunity not previously contemplated, the Kirkhill business sale, and the cost of completing the recent financial restatement. The company has adjusted its revenue guidance to a range of $2.00 billion to $2.05 billion, from $2.025 billion to $2.075 billion. The company narrowed its fiscal 2018 earnings guidance range to $3.65 to $3.85 per diluted share, from $3.65 to $4.05, and increased its free cash flow guidance by $10 million to a range of $115 million to $140 million.

Additional information about the company’s financial results is available in a presentation on the company’s website (www.esterline.com) in the Investor Relations section under “Presentations.” The presentation is also included as Exhibit 99.2 to the company’s report on Form 8-K, which is being submitted today to the SEC.

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Page 4 of 9 Esterline Reports Fiscal 2018 Second Quarter Financial Results

Conference Call Information

Esterline will host a conference call to discuss this announcement today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The U.S. dial-in number is 877-307-0078; outside the U.S., use 531-289-2890. The pass code for the call is: 2684866.

Non-GAAP Financial Information

This press release and the related presentation providing supplemental financial information may include non-GAAP financial measures—adjusted earnings from continuing operations, adjusted earnings from continuing operations per diluted share, adjusted operating earnings from continuing operations (EBIT), adjusted earnings before interest, tax, depreciation and amortization (EBITDA), adjusted SG&A expense, and free cash flow—that have not been calculated in accordance with generally accepted accounting principles (GAAP) in the U.S. Where referenced in these materials, adjusted earnings from continuing operations consist of earnings from continuing operations attributable to Esterline less the costs associated with incremental compliance costs (described further below), discrete items associated with our acquisition of the Advanced Displays business in January 2015, and the one-time expenses associated with the TCJA. Adjusted earnings from continuing operations per diluted share divides each element of adjusted earnings from continuing operations by the weighted average number of shares outstanding, diluted for the periods presented. EBIT is defined as operating earnings from continuing operations. Adjusted EBIT excludes the same costs excluded from adjusted earnings from continuing operations set forth in the table below. EBITDA from continuing operations is defined as net earnings (loss) plus loss from discontinued operations plus earnings attributable to noncontrolling interests plus income tax expense less interest income plus interest expense plus depreciation & amortization (excluding amortization of debt issuance costs) of $27.7 million in the second quarter of fiscal 2018. Free cash flow is defined as cash flow from operations of $89.7 million less capital expenditures of $27.7 million in the first six months of fiscal 2018. In accordance with the SEC’s requirements, below is the reconciliation of the non-GAAP adjusted earnings from continuing operations to the comparable GAAP earnings from continuing operations in the applicable periods. Additional relevant reconciliations are included in the presentation providing supplemental financial information.

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Page 5 of 9 Esterline Reports Fiscal 2018 Second Quarter Financial Results

In millions, except per share amounts
	Three Months Ended March 30, 2018				Three Months Ended March 31, 2017
			Diluted				Diluted
			EPS				EPS
Earnings from Continuing Operations Attributable to Esterline (GAAP), Net of Tax	$	24.0	$	0.80	$	34.4	$	1.15
Advanced Displays Integration Costs, Net of Tax of $0.2		—		—		0.2		0.00
Compliance Costs¹, Net of Tax of $0.7		—		—		0.7		0.03
Adjusted Earnings from Continuing Operations (non-GAAP), Net of Tax	$	24.0	$	0.80	$	35.3	$	1.18

In millions, except per share amounts
	Six Months Ended March 30, 2018						Six Months Ended March 31, 2017
				Diluted					Diluted
				EPS					EPS
Earnings (Loss) from Continuing Operations Attributable to Esterline (GAAP), Net of Tax	$	(10.9	)	$	(0.36	)	$	55.6	$	1.86
Advanced Displays Integration Costs, Net of Tax of $0.2		—			—			0.8		0.03
Compliance Costs¹, Net of Tax of $0.7		—			—			3.0		0.10
Provisional Tax Expense Due to TCJA		48.6			1.62			—		—
Adjusted Earnings from Continuing Operations (non-GAAP), Net of Tax	$	37.7		$	1.26		$	59.4	$	1.99

¹ See explanation of these costs in Exhibit 99.2 to the company’s Form 8-K filed today with the SEC.

The company provides these non-GAAP financial measures as supplemental information to the GAAP financial measures. Management uses these non-GAAP financial measures to (a) evaluate the company’s historical and prospective financial performance and its performance relative to its competitors, (b) allocate resources, and (c) measure the operational performance of the company’s business units.

In addition, management believes including these non-GAAP financial measures enhances investors’ and financial analysts’ understanding of the company’s performance as well as their ability to assess and compare the company’s historical results of operations.

These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measures, and free cash flow is not necessarily indicative of amounts available for discretionary use. There are limitations to these non-GAAP financial measures because they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items that comprise the calculation. The company compensates for these limitations by using these non-GAAP financial measures as a supplement to the GAAP measures and by providing reconciliations of the

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Page 6 of 9 Esterline Reports Fiscal 2018 Second Quarter Financial Results

non-GAAP and comparable GAAP financial measures. The non-GAAP financial measures should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or the company’s future financial performance. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should” or “will,” or the negative of such terms or other comparable terminology. These forward-looking statements are only predictions based on the current intent and expectations of the management of Esterline, are not guarantees of future performance or actions, and involve risks and uncertainties that are difficult to predict and may cause Esterline’s or its industry’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Esterline’s actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements due to risks detailed in Esterline’s public filings with the Securities and Exchange Commission including its most recent Report on Form 10-K/A.

Page 7 of 9 Esterline Reports Fiscal 2018 Second Quarter Financial Results

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Statement of Operations (unaudited)

In thousands, except per share amounts

	Three Months Ended						Six Months Ended
	March 30, 2018			March 31, 2017			March 30, 2018			March 31, 2017
Segment Sales
Avionics & Controls	$	212,814		$	213,293		$	415,517		$	405,975
Sensors & Systems		198,153			182,727			373,621			350,483
Advanced Materials		106,662			113,111			210,536			211,089
Net Sales		517,629			509,131			999,674			967,547
Cost of Sales		353,902			331,925			687,611			647,429
		163,727			177,206			312,063			320,118
Expenses
Selling, general and administrative		102,036			97,924			200,922			193,034
Research, development and engineering		24,725			29,041			50,567			50,747
Insurance recovery		—			(5,189	)		—			(7,789	)
License fee income		(2,268	)		—			(5,293	)		—
Loss on sale of business		5,310			—			5,310			—
Total Expenses		129,803			121,776			251,506			235,992
Operating Earnings from Continuing Operations		33,924			55,430			60,557			84,126
Interest Income		(449	)		(100	)		(747	)		(196	)
Interest Expense		8,167			7,458			15,771			15,346
Earnings from Continuing Operations Before Income Taxes		26,206			48,072			45,533			68,976
Income Tax Expense		2,079			13,080			55,868			12,617
Earnings (Loss) from Continuing Operations Including Noncontrolling Interests		24,127			34,992			(10,335	)		56,359
Earnings Attributable to Noncontrolling Interests		(173	)		(552	)		(526	)		(791	)
Earnings (Loss) from Continuing Operations Attributable to Esterline, Net of Tax		23,954			34,440			(10,861	)		55,568
Gain (Loss) from Discontinued Operations, Attributable to Esterline, Net of Tax		(77	)		(34	)		(243	)		(5,370	)
Net Earnings (Loss) Attributable to Esterline	$	23,877		$	34,406		$	(11,104	)	$	50,198
Earnings (Loss) Per Share — Basic:
Continuing Operations	$	0.81		$	1.16		$	(0.36	)	$	1.87
Discontinued Operations		—			—			(0.01	)		(0.18	)
Earnings (Loss) Per Share — Basic	$	0.81		$	1.16		$	(0.37	)	$	1.69
Earnings (Loss) Per Share — Diluted:
Continuing Operations	$	0.80		$	1.15		$	(0.36	)	$	1.86
Discontinued Operations		—			—			(0.01	)		(0.18	)
Earnings (Loss) Per Share — Diluted	$	0.80		$	1.15		$	(0.37	)	$	1.68
Weighted Average Number of Shares Outstanding — Basic		29,614			29,719			29,758			29,633
Weighted Average Number of Shares Outstanding — Diluted		29,726			29,959			29,758			29,895

Page 8 of 9 Esterline Reports Fiscal 2018 Second Quarter Financial Results

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Sales and Earnings From Continuing Operations by Segment (unaudited)

In thousands

	Three Months Ended						Six Months Ended
	March 30, 2018			March 31, 2017			March 30, 2018			March 31, 2017
Segment Sales
Avionics & Controls	$	212,814		$	213,293		$	415,517		$	405,975
Sensors & Systems		198,153			182,727			373,621			350,483
Advanced Materials		106,662			113,111			210,536			211,089
Net Sales	$	517,629		$	509,131		$	999,674		$	967,547
Earnings from Continuing Operations Before Income Taxes
Avionics & Controls	$	23,673		$	20,772		$	44,058		$	38,689
Sensors & Systems		19,271			26,357			30,984			44,500
Advanced Materials		9,553			28,322			24,136			38,202
Segment Earnings		52,497			75,451			99,178			121,391
Corporate expense		(18,573	)		(20,021	)		(38,621	)		(37,265	)
Interest income		449			100			747			196
Interest expense		(8,167	)		(7,458	)		(15,771	)		(15,346	)
Earnings from Continuing Operations Before Income Taxes	$	26,206		$	48,072		$	45,533		$	68,976

Page 9 of 9 Esterline Reports Fiscal 2018 Second Quarter Financial Results

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Balance Sheet (unaudited)

In thousands

	March 30,		September 29,
	2018		2017
Assets
Current Assets
Cash and cash equivalents	$	367,954	$	307,826
Accounts receivable, net		404,516		430,524
Inventories		491,072		477,969
Income tax refundable		19,930		12,814
Prepaid expenses		22,202		19,239
Other current assets		10,893		13,836
Current assets of businesses held for sale		4,300		6,501
Total Current Assets		1,320,867		1,268,709
Property, Plant and Equipment, Net		328,725		348,634
Other Non-Current Assets
Goodwill		1,060,668		1,053,573
Intangibles, net		341,483		359,166
Deferred income tax benefits		56,600		56,793
Other assets		17,066		19,804
Non-current assets of businesses held for sale		14,118		13,334
	$3,139,527		$3,120,013
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	148,414	$	138,595
Accrued liabilities		226,227		230,007
Current maturities of long-term debt		15,170		17,424
U.S. and foreign income taxes		7,722		582
Current liabilities of businesses held for sale		4,529		7,184
Total Current Liabilities		402,062		393,792
Long-Term Liabilities
Credit facilities		45,000		50,000
Long-term debt, net of current maturities		721,082		709,424
Deferred income tax liabilities		41,699		43,978
Pension and post-retirement obligations		66,639		66,981
Long-term U.S. income taxes payable		38,640		—
Other liabilities		17,138		18,838
Non-current liabilities of businesses held for sale		3,107		1,724
Total Shareholders’ Equity		1,804,160		1,835,276
	$3,139,527		$3,120,013

EX-99.2

Q2 2018 Supplemental Financial Information May 3, 2018 Exhibit 99.2

This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should” or “will,” or the negative of such terms, or other comparable terminology. These forward-looking statements are only predictions based on the current intent and expectations of the management of Esterline, are not guarantees of future performance or actions, and involve risks and uncertainties that are difficult to predict and may cause Esterline’s or its industry’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Esterline's actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements due to risks detailed in Esterline's public filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K/A. This presentation also contains references to non-GAAP financial information subject to Regulation G. The reconciliations of each non-GAAP financial measure to its comparable GAAP measure as well as further information on management’s use of non-GAAP financial measures are included in Esterline’s press release dated May 3, 2018, included as Exhibit 99.1 to Form 8-K filed with the SEC on the same date, as well as in this presentation, including the Appendix.

Strategic Direction A high-performing aerospace and defense company whose engaged employees deliver value through world-class products, services, and technologies. Profitable & Balanced Sales Growth Enterprise Excellence Leverage the Enterprise Employee Engagement Regulatory & Customer Compliance Enhance operations, drive organic growth, generate cash

Q2 2018 Financial Results Sales of $517.6 million, up 1.7% over prior-year period Positive foreign exchange translation drove higher sales year-over-year FY18 Q1 to Q2 sales improvement in all three business segments GAAP EPS¹ of $0.80 per diluted share Book-to-bill of 1.26x Year-to-date free cash flow of $62.0 million* * This is a non-GAAP financial measure. See Page 1 and the Appendix of this presentation for more information regarding non-GAAP financial measures. ¹ From Continuing Operations

Q2 2018 Year-over-Year (YOY) Summary Dollars in millions, except EPS Q2 2018 Q2 2017 Change Sales $ 518 $ 509 $ 9 Gross Margin $ 164 $ 177 $(13) - % of sales 31.6% 34.8% (3.2)% Operating Earnings from Continuing Operations $ 34 $ 55 $ (21) - % of sales 6.6% 10.9% (4.3)% Earnings from Continuing Operations $ 24 $ 34 $ (10) Earnings Per Diluted Share from Continuing Operations $ 0.80 $ 1.15 $ (0.35)

Q2 2018 Sales Change (YOY) Items Sales Q2 2017 $ 509 Foreign currency translation 19 FX forward contract 8 Sales volume (18) Q2 2018 $ 518 Dollars in millions

Q2 2018 Segment Sales Change (YOY) Total Change Organic ¹ FX Avionics & Controls (0.2)% (3.8)% 3.6% Sensors & Systems 8.4% (0.6)% 9.0% Advanced Materials (5.7)% (8.2)% 2.5% Total 1.7% (3.6)% 5.3% ¹ Organic sales change represents the total reported increase (decrease) within the company’s continuing operations less the impact of all foreign currency translation and hedging activities.

Q2 2018 Gross Margin Change (YOY) Items Gross Margin Q2 2017 $ 177 Foreign currency translation 1 FX forward contract 8 Sales volume / mix (14) Higher manufacturing costs (7) Other (1) Q2 2018 $ 164 Dollars in millions

YTD Q2 2018 Free Cash Flow* Reconciliation YTD Q2 2018 YTD Q2 2017 Net Earnings (Loss) $ (11) $ 51 Depreciation and amortization (Depreciation of $29M and $28M in FY18 and FY17, respectively) 54 51 Change in working capital (A/R, Inventory, A/P) 7 (4) Long-term U.S. income taxes payable 39 ‒ Other 1 (7) Cash flow from operations $ 90 $ 91 Purchase of capital assets (capital expenditures) (28) (29) Free cash flow * $ 62 $ 62 Dollars in millions; GAAP results * This is a non-GAAP financial measure. See Page 1 and the Appendix of this presentation for more information regarding non-GAAP financial measures. YTD Q2 2018 YTD Q2 2017 Purchase of capital assets $ (28) $ (29) Proceeds from sale of capital assets 1 ‒ Proceeds from sale of business 48 1 Cash Flows Provided (Used) by Investing Activities $ 21 $ (28) Dollars in millions; Supplemental Information

Q2 2018 EBITDA * Q2 2018 Q2 2017 Net Earnings (Loss) Attributable to Esterline $ 24 $ 34 Loss from discontinued operations ** 0 0 Earnings attributable to noncontrolling interests ** 0 1 Income tax expense 2 13 Interest income ** 0 0 Interest expense 8 7 Depreciation & amortization 1 27 25 EBITDA from Continuing Operations * $ 61 $ 80 Dollars in millions ** ¹ Excludes debt issuance costs, which are included in interest expense, of $0.4 million in Q2 2018 and $0.3 million in Q2 2017. * This is a non-GAAP financial measure. See Page 1 and the Appendix of this presentation for more information regarding non-GAAP financial measures. ** Amounts are rounded to the nearest millions. Zero indicates an amount less than $1 million.

YTD Q2 2018 EBITDA * YTD Q2 2018 YTD Q2 2017 Net Earnings (Loss) Attributable to Esterline $ (11) $ 50 Loss from discontinued operations ** 0 5 Earnings attributable to noncontrolling interests 1 1 Income tax expense 56 13 Interest income ** (1) 0 Interest expense 16 15 Depreciation & amortization 1 53 51 EBITDA from Continuing Operations * $ 114 $ 135 Dollars in millions ** ¹ Excludes debt issuance costs of $0.7 million, which are included in interest expense. * This is a non-GAAP financial measure. See Page 1 and the Appendix of this presentation for more information regarding non-GAAP financial measures. ** Amounts are rounded to the nearest millions. Zero indicates an amount less than $1 million.

2018 Guidance Guidance Updated Current Guidance Sales $2.00B - $2.05B EPS (diluted, continuing ops, excluding one-time tax expenses of $48.6M, or $1.62 per share) $3.65 - $3.85 EBITDA * $270M - $290M Free Cash Flow * $115M - $140M * This is a non-GAAP financial measure. See Page 1 and the Appendix of this presentation for more information regarding non-GAAP financial measures.

2018 Guidance Assumptions Interest expense ~$30 million Second-half tax rate ~25% – 27% Average diluted shares outstanding ~30 million Depreciation / Amortization expense ~$105 – $110 million Cap Ex ~$70 million Total SG&A expected to be approximately 19% of sales

Share Repurchase Update # Shares In thousands $ Value In millions $ Authorization Remaining In millions FY 2014 269 $ 30.3 FY 2015 2,562 259.5 FY 2016 305 18.7 FY 2017 - - Q1 2018 287 20.4 Q2 2018 314 23.0 Total since inception ¹ 3,737 $ 351.9 $ 48 ¹ $400 million total authorization for share repurchase

Appendix

Q2 2017 Adjusted Gross Margin* and EBIT * ** * This is a non-GAAP financial measure. See Page 1 and the Appendix of this presentation for more information regarding non-GAAP financial measures. ** Compliance Costs refer to discrete, non-recurring expenses associated with retention of a Special Compliance Official, external audits, remedial actions and new program implementation as required by the terms of a Consent Agreement with the U.S. State Department. These Consent Agreement costs are not normal, ongoing cash expenditures necessary to operate our business.

YTD 2017 Adjusted Gross Margin* and EBIT * ** ** Compliance Costs refer to discrete, non-recurring expenses associated with retention of a Special Compliance Official, external audits, remedial actions and new program implementation as required by the terms of a Consent Agreement with the U.S. State Department. These Consent Agreement costs are not normal, ongoing cash expenditures necessary to operate our business. * This is a non-GAAP financial measure. See Page 1 and the Appendix of this presentation for more information regarding non-GAAP financial measures.