The first quarter 2018 net sales reflected $28.7 million of higher sales of defense electronics, partially offset by $2.4 million of lower sales of aerospace electronics. The higher sales of defense electronics reflected greater sales in most product categories and included $10.7 million of sales from e2v. The increase in operating income in the first quarter of 2018 primarily reflected the impact of higher sales.
Engineered Systems
The Engineered Systems segment’s first quarter 2018 net sales were $72.0 million compared with $67.6 million, an increase of 6.5%. Operating income was $7.2 million for the first quarter of 2018, compared with $7.4 million, a decrease of 2.7%.
The first quarter 2018 net sales reflected higher sales of $5.1 million of engineered products and services and $0.4 million of energy systems products, partially offset by lower sales of $1.1 million of turbine engines. The higher sales of engineered products and services primarily reflected greater marine manufacturing and missile defense programs. Operating income in the first quarter of 2018 decreased slightly, due in part to lower turbine engine sales.
Additional Financial Information
Cash Flow
Cash provided by operating activities was $71.6 million for the first quarter of 2018, compared with $53.4 million. The higher cash provided by operating activities in the first quarter of 2018 reflected the impact of higher operating income and cash flow from e2v. The first quarter of 2017 reflected the impact of transaction related payments for the e2v acquisition. At April 1, 2018, cash totaled $79.9 million and total debt, including capital lease obligations, was $1,028.4 million. At April 1, 2018, $110.5 million was outstanding under the $750.0 million credit facility. The company received $12.3 million from the exercise of stock options in the first quarter of 2018, compared with $6.3 million. Capital expenditures for the first quarter of 2018 were $19.8 million, compared with $12.6 million. Depreciation and amortization expense for the first quarter of 2018 was $28.8 million, compared with $22.8 million.
| Free Cash Flow (a) | First Quarter | |||||||
| (in millions, brackets indicate use of funds) | 2018 | 2017 | ||||||
| Cash provided by operating activities | $ | 71.6 | $ | 53.4 | ||||
| Capital expenditures for property, plant and equipment | (19.8 | ) | (12.6 | ) | ||||
| Free cash flow | $ | 51.8 | $ | 40.8 | ||||
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| (a) | The company defines free cash flow as cash provided by operating activities (a measure prescribed by generally accepted accounting principles) less capital expenditures for property, plant and equipment. The company believes that this supplemental non-GAAP information is useful to assist management and the investment community in analyzing the company’s ability to generate cash flow. | |
