Slide 1: Tyco Electronics Q2 2010 Earnings Call
Tyco Electronics Q2 2010 Earnings Call April 28, 2010
Slide 2: Forward-Looking Statements / Non-GAAP Measures
Forward-Looking Statements / Non-GAAP Measures This presentation contains certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to risks, uncertain
Slide 3: Summary
Summary Strong performance in the second quarter Sales up 27% year on year and 2% sequentially Adjusted operating margin of 13.9%, up 240 bps sequentially Gross margin of 32.4%, highest since separation in 2007 Adjusted EPS of $0.64, up 36% sequentially Free cash flow of $422 million, compared to $3
Slide 4: Q2 Revenue Summary
Q2 Revenue Summary Electronic Components Sequential increase driven by broad-based growth across all end markets Book-to-bill was 1.11 Network Solutions Sequential decrease due to seasonal decline in Energy market Book-to-bill was 1.05 Specialty Products Sequential growth driven by improvement in: C
Slide 5: Q2 Revenue by Segment
Q2 Revenue by Segment Electronic Components - Revenue $1,984 Million Network Solutions - Revenue $394 Million Automotive up 78% vs. prior year, and 5% vs. Q1 due to increased automotive demand and production; continued re-stocking in the supply chain and strong growth in China. DataComm up 8% vs. pr
Slide 6: Q2 Revenue by Segment (cont.)
Specialty Products - Revenue $371 Million Subsea Communications - Revenue $208 Million Revenue down 33% vs. prior year. Revenues up 4% sequentially. Backlog at quarter-end of $616M. Expect $700-$750M of revenue in fiscal 2010. Q2 Revenue by Segment (cont.) Aerospace, Defense & Marine down 8% vs. pri
Slide 7: Q2 Financial Summary
Q2 Financial Summary ($ in Millions, except per share amounts) Adjusted Operating Income, Adjusted Operating Margin and Adjusted EPS are non-GAAP measures; see Appendix for description and reconciliation. Q2 FY10 Q2 FY09 Q1 FY10 Net Sales $2,957 $2,337 $2,892 Operating Income (Loss) $398 $(3,797) $2
Slide 8: Q2 Other Items
Q2 Other Items Interest Expense Benefit of lower debt levels Other Income Relates to Tax Sharing Agreement Expect ~$11 million in Q3 Income Taxes on Adjusted Income Expect tax rate of ~26% for the remainder of fiscal 2010 Adjusted Other Income, Adjusted Income Tax (Expense) Benefit and Adjusted Effe
Slide 9: Q2 Free Cash Flow and Working Capital
Q2 Free Cash Flow and Working Capital Q2 Free Cash Flow driven by: Increased earnings levels and low adjusted cash tax rate of 8% Significant working capital improvement vs. prior year Inventory increased sequentially to low 60 days range as expected Capital spending down 14% vs. prior year Expect c
Slide 10: Q2 Liquidity and Debt
Q2 Liquidity and Debt * Cash >$500M plus available credit facility ($ in Millions) Liquidity and use of cash: Retaining additional cash for flexibility Dividends $0.16 per share paid in March Share Repurchase Repurchased ~5.7M shares Acquisitions/ Divestitures Completed acquisition of Sensitive Obje
Slide 11: Q3 and Full Year Outlook
Q3 and Full Year Outlook * Assumes current currency exchange rates Q3 Outlook* Sales up 20-24% year over year; 1-5% growth sequentially Ex Subsea Communications – up 30-34% year over year and 4-7% sequentially Consumer markets solidifying Industrial markets improving sequentially Subsea Communicatio
Slide 12: Q & A
Q & A
Slide 13: Appendix
Appendix
Slide 14: Non-GAAP Measures
Non-GAAP Measures “Organic Sales Growth,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Other Income, Net,” “Adjusted Income Tax (Expense) Benefit,” “Adjusted Effective Tax Rate,” “Adjusted Income from Continuing Operations,” “Adjusted Earnings Per Share,” and “Free Cash Flow”
Slide 15: Non-GAAP Measures (cont.)
Non-GAAP Measures (cont.) The company has presented effective income tax rate after adjusting for the tax effect of special items including charges related to restructuring, impairment charges, and other income or charges, and certain significant special tax items (“Adjusted Effective Tax Rate”). Th
Slide 16: Non-GAAP Measures (cont.)
Non-GAAP Measures (cont.) The limitation associated with using FCF is that it subtracts cash items that are ultimately within management’s and the Board of Directors’ discretion to direct and that therefore may imply that there is less or more cash that is available for the company's programs than t
Slide 17: Net Sales Growth Reconciliation – Q2 vs. Q2
Net Sales Growth Reconciliation – Q2 10 vs. Q2 09 (3) Industry end market information about net sales is presented consistently with our internal management reporting and may be periodically revised as management deems necessary. (2) Represents the change in net sales resulting from changes in forei
Slide 18: Net Sales Growth Reconciliation – Q2 vs. Q1
Net Sales Growth Reconciliation – Q2 10 vs. Q1 10 (2) Represents the change in net sales resulting from changes in foreign currency exchange rates. Percentage of Segment's Total Change in Net Sales for the Quarter Ended March 26, 2010 Net Sales for the versus Net Sales for the Quarter Ended December
Slide 19: Non-GAAP Reconciliation – Quarter Ended March 26, 2010
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 26, 2010 (1) Includes income tax expense related to certain proposed adjustments to prior year tax returns and the related impact to other income pursuant to the Tax Sharing Agreement with Tyco Inter
Slide 20: Non-GAAP Reconciliation – Quarter Ended March 27, 2009
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 27, 2009 Income (Loss) from Continuing Operations Adjustments Restructuring and Other Impairment of Other Items, Adjusted U.S. GAAP Charges, Net (1) Goodwill Net (2) (Non-GAAP) (3) ($ in millions, ex
Slide 21: Non-GAAP Reconciliation – Quarter Ended December 25, 2009
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 25, 2009 (2) See description of non-GAAP measures contained in this appendix. (1) Includes $66 million recorded in net restructuring and other charges and a $3 million credit recorded in cost of s
Slide 22: Non-GAAP Reconciliation – Quarter Ended June 26, 2009
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 26, 2009 Adjustments Restructuring and Other Adjusted U.S. GAAP Charges, Net (Non-GAAP) (1) ($ in millions, except per share data) Operating Income: Electronic Components $(82) $46 $(36) Network Solut
Slide 23: Non-GAAP Reconciliation – Year Ended September 25, 2009
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 25, 2009 (4) See description of non-GAAP measures contained in this appendix. Adjustments Restructuring and Other Impairment of Tax Other Items, Adjusted U.S. GAAP Charges, Net (1) Goodwill Items (2