Te Connectivity Plc · NYSE:TEL
Te Connectivity — Baird's 2019 Industrial Conference
30 slides from Te Connectivity's conference presentation, Nov 6, 2019
Slide 1: TE Connectivity Presentation
TE Connectivity Presentation
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements and Non-GAAP Financial Measures Forward-Looking Statements This presentation contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and a
Slide 3: TE Connectivity
TE CONNECTIVITY INDUSTRIAL TECHNOLOGY COMPANY CREATING A SAFER, SUSTAINABLE, PRODUCTIVE AND CONNECTED FUTURE WORLD LEADER in connectivity and sensor solutions with the broadest range of technologies Highly engineered products and integrated solutions perform in Commercial harsh environments where fa
Slide 4: The Levers of Our Business Model
THE LEVERS OF OUR BUSINESS MODEL TOP LINE MARGIN EXPANSION BOTTOM LINE ORGANIC REVENUE LOWER OPERATING EPS GROWTH EXPENSES GROWTH + 4-6 % Reduce SG&A by Pulling the levers for 100 basis points double-digit gains M&A IMPROVED OPERATING BALANCED CAPITAL MARGINS STRATEGY Adding >100 basis points Expand
Slide 5: Where We Are Winning
WHERE WE ARE WINNING Data and Appliances END MARKET TRENDS Devices • EV adoption globally, driven by OEM & Government initiatives Energy / Utilities • Safer, more autonomous vehicles • Heavy truck content driven by regulatory Medical requirements Automotive • Smart, digital factories FY19 Industrial
Slide 6: Target Growth Rates
TARGET GROWTH RATES TRANSPORTATION INDUSTRIAL COMMUNICATIONS Very strong position in a Strong position in a recovering Strong in Appliances and market with content market with GDP-plus growth high speed connectivity growth drivers potential & margin improvement solutions LONG-TERM ORGANIC MID - HIGH
Slide 7: Capital Strategy: Balanced Deployment
CAPITAL STRATEGY: BALANCED DEPLOYMENT MAJOR CAPITAL DEPLOYMENT** DIVIDENDS PER SHARE FY08 through FY19 $1.80 $1.68 $1.54 $1.40 Share Acquisitions* $1.24 Repurchases $7.9B $1.08 ~2/3 $10.7B ~1/3 $0.92 $0.78 $0.64 $0.68 Dividends $5.1B FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 • Denotes divide
Slide 8: Transportation Solutions
[ee TRANSPORTATION SOLUTIONS i
Slide 9: Transportation Solutions
TRANSPORTATION SOLUTIONS Mid – High SINGLE DIGIT LONG TERM billion billion $7.8 $140 ORGANIC GROWTH RATE In sales in FY19 Market ~20% TARGET ADJUSTED OPERATING MARGIN COMMERCIAL AUTOMOTIVE TRANSPORTATION SENSORS $5.7B $1.2B $0.9B CONSTRUCTION AUTO 22% 25% ASIA EMEA HEAVY INDUSTRIAL 39% 41% OTHER TRU
Slide 10: Key Drivers of Electronic Content Growth
KEY DRIVERS OF ELECTRONIC CONTENT GROWTH CONTENT PER VEHICLE YESTERDAY TODAY TOMORROW Connected Vehicles CONNECTED • INFOTAINMENT • CONVENIENCE • DATA TRANSFER $7 $12 Advanced Driver Assistance Systems / Autonomous Driving SUSTAINABLE • POWERTRAIN • INTERNAL COMBUSTION • HYBRID / ELECTRIC $27 $32 Em
Slide 11: TE Enables Next Level Driving Automation
CONNECTED TE ENABLES NEXT LEVEL DRIVING AUTOMATION LEVEL 0 LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 NO AUTOMATION DRIVER ASSISTANCE PARTIAL AUTOMATION CONDITIONAL AUTOMATION HIGH AUTOMATION FULL AUTOMATION Driver controls it all Increased need for sensors 3 GB / second communications Ethernet connect
Slide 12: China Will Be a Major Driver for EV
SUSTAINABLE CHINA WILL BE A MAJOR DRIVER FOR EV STRONG PUSH FROM GOVERNMENT MARKET SIZE AND POPULATION • Consumer purchase incentives • Small share can represent high volumes • Local mandates to offer EVs • Easy to acquire license plates • Many cities with strong demand • Government wants to establi
Slide 13: TE Is Winning Globally with EV OEMs
SUSTAINABLE TE IS WINNING GLOBALLY WITH EV OEMS $500+ CPV Tesla Model 3 EXPANDING OUR $120 TECHNICAL EXPERTISE TE EV AVERAGE NIO New Energy Vehicle CPV EXPANDING OUR CONTENT & OUR CUSTOMER BASE $100+ CPV 13
Slide 14: Uniquely Positioned to Deliver End to End Solutions for Electric Vehicles
SUSTAINABLE UNIQUELY POSITIONED TO DELIVER END TO END SOLUTIONS FOR ELECTRIC VEHICLES CHARGING CABLES & INLETS BATTERY PERFORMANCE E-MOTORS TEMPERATURE SENSORS BATTERY DISCONNECT UNIT MULTI-COIL RESOLVER CONNECTORS HIGH VOLTAGE CONNECTORS RESOLVER ROTARY POSITION SENSOR CABLES RELAYS & CONTACTORS TE
Slide 15: TE Integrated Solutions for EV Batteries
SUSTAINABLE TE INTEGRATED SOLUTIONS FOR EV BATTERIES SERVICE CONNECTION DISCONNECT ASSEMBLY CONNECTOR BATTERY DISCONNECT UNIT CONNECTOR INTEGRATED RESISTORS CELL & SENSORS CONNECTION (THERMAL & SYSTEM CURRENT) SENSORS (THERMAL & CURRENT) CONTACTORS TRADITIONAL INTEGRATED $20 Connector Only Content $
Slide 16: Sensors: Portfolio Positioned for Growth
SENSORS: PORTFOLIO POSITIONED FOR GROWTH Humidity LIN Windshield / Combo RLHS UREA Pressure Shifter Fuel Vapor Pressure In H-VAC Transmission Exhaust Temperature Pressure Rear Steer HIGH-SINGLE DIGIT Break Pressure Breaker Cylinder Organic Growth Doors Handle Gasoline Direct QAT-Trend Injection Pres
Slide 17: Industrial Solutions
Se INDUSTRIAL SOLUTIONS i
Slide 18: Industrial Solutions
INDUSTRIAL SOLUTIONS AEROSPACE, DEFENSE & Commercial billion billion MARINE $4.0 $40 Factory Air Automation In sales in FY19 Market INDUSTRIAL EQUIPMENT Defense ENERGY Medical (UTILITIES) Mid Single Digit LONG-TERM ORGANIC GROWTH RATE Energy Oil and Gas High Teens TARGET ADJUSTED OPERATING MARGIN (U
Slide 19: Driving Operating Margins to the High Teens
DRIVING OPERATING MARGINS TO THE HIGH TEENS OPERATIONAL TOP LINE DRIVERS DRIVERS • Footprint consolidation • Market growth accelerating HIGH TEENS in Medical, Factory Automation • Productivity enhancement OI% and Defense with TEOA • Content driving growth above • SG&A expense reduction market 19
Slide 20: Content Growth in Factory Automation
CONTENT GROWTH IN FACTORY AUTOMATION DATA CONNECTOR DATA CONNECTOR DATA CONNECTOR SIGNAL CONNECTOR CONTENT INCREASE DRIVEN BY: SIGNAL/POWER SIGNAL CONNECTOR CONNECTOR • Safety enhancements • Increased capability / motion • Sensors and data capture • Connectivity and remote access POWER RELAY • TAM e
Slide 21: Our Medical Business
OUR MEDICAL BUSINESS PATIENT CABLES Portfolio mix shifting SURGICAL towards the more attractive Interventional and Surgical segments INTERVENTIONAL 7% Market CAGR 2012 2017 2022 TRENDS DRIVING INTERVENTIONAL GROWTH ✓ Aging population Ablation ✓ Reducing hospital stay ✓ Shorter patient recovery ✓ Cos
Slide 22: Content Drives Commercial Aerospace Growth
CONTENT DRIVES COMMERCIAL AEROSPACE GROWTH >15% INCREASE IN AVERAGE CONTENT / AIRCRAFT BY 2022 A320 NEO 16% NARROWBODY B737 MAX $95k $110k $110k C-Series PER 2022 NARROWBODY C919 2017 2022 A330 NEO 17% WIDEBODY A350 $360k $420k $420k B777X PER 2022 WIDEBODY B787 2017 2022 TE Avg. Content per Aircraf
Slide 23: Communications Solutions
COMMUNICATIONS SOLUTIONS 23
Slide 24: Communications Solutions Segment
COMMUNICATIONS SOLUTIONS SEGMENT billion billion $1.7 In sales in FY19 $10 Market APPLIANCES DATA AND DEVICES Low Single Digit LONG-TERM ORGANIC GROWTH RATE Mid Teens TARGET ADJUSTED OPERATING MARGIN KEY TRENDS HIGH-SPEED SOLUTIONS | IOT AND CONNECTED LIFE | GROWTH IN ASIA | EMERGING APPLICATIONS 27
Slide 25: Communications Solutions Transformation
COMMUNICATIONS SOLUTIONS TRANSFORMATION STRATEGIC PRIORITIES REPOSITION RATIONALIZE WIN IN ASIA- WIN WITH GROW PORTFOLIO FOOTPRINT PACIFIC HYPERSCALE CONTENT REPOSITIONED TO GROWTH MARKETS MIX SHIFT TO ASIA HYPERSCALE SPENDING 2011 2019 US/EMEA 47% 53% 58% 42% ASIA US Telco Capex Hyperscale Players
Slide 26: Appliances Overview
APPLIANCES OVERVIEW #1 MARKET SHARE MARKET PLAYERS1 EMERGING HOME Global portfolio with strong ASIA-PACIFIC penetration in the fast- growing Asia region and in emerging applications WESTERN WORLD 2012 2017 2022 DOOR LID/ LOCK CONTROL BOARD · Terminals, sensors · Soft shell connectors, relays TRENDS
Slide 27: Data and Devices Overview
DATA AND DEVICES OVERVIEW TOP 3 MARKET SHARE MARKET PLAYERS1 HYPERSCALE Portfolio shifting to growing high-speed HIGH-SPEED TELECOM, applications with complex ENTERPRISE technological challenges CONSUMER 2012 2017 2022 ~$40k content / chassis at leading cloud provider TRENDS DRIVING DATA AND DEVICES
Slide 28: Appendix
Appendix 28
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial m
Slide 30: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) • Free Cash Flow (FCF) – is a useful measure of our ability to generate cash. The difference between net cash provided by continuing operating activities (the most comparable GAAP financial measure) and Free Cash Flow consists mainly of significant cash outflo