Intel Corporation · NASDAQ:INTC
Intel — Investor Day (May 2019)
25 slides from Intel's investor day presentation, May 9, 2019
Slide 1: George Davis, Chief Financial Officer
Exhibit 99.5 George Davis CHIEF FINANCIAL OFFICERExhibit 99.5 George Davis CHIEF FINANCIAL OFFICER
Slide 2: Non-GAAP and forward-looking statements
This presentation contains non-GAAP financial measures. You can find the reconciliation of these measures to the most directly comparable GAAP financial measure in the Appendix at the end of this presentation. The non-GAAP financial measures disclosed by Intel should not be considered a substitute f
Slide 3: Summary of Today's Key Messages
Results and Near-term Expectations Extending Product Leadership while Investing in Process Capital Returns & Investment Discipline Summary of Today’s Key MessagesResults and Near-term Expectations Extending Product Leadership while Investing in Process Capital Returns & Investment Discipline Summary
Slide 4: Years of Records & Progress on Data-Centric Transformation
3 Years of Records & PROGRESS ON DATA-CENTRIC TRANSFORMATION Intel Revenue PC Business Data Centric Businesses $70.8B $72 $68 CAGR $34B $29B ~14% $64 $26B $23B $60 $37B $34B $33B $32B $56 ~5% $52 2015 2016 2017 2018 2015 2016 2017 2018 Data-Centric Businesses ~50% of Total Revenue Data-centric busin
Slide 5: From Defending MSS to Growing MSS
2023 ~$220B ~$68B ~$35B ~$17b TAM 7% CAGR -1% CAGR GRAPHICS CONNECTIVITY Data center NETWORK IOT PLATFORMS AI AI NFV MEMORY FPGA 5G ADAS CONNECTIVITY MEDIA MaaS/DATA Optane™ FPGA VIDEO 3D NAND EDGE EDGE Server PC CPU (x86 CPU compute) (x86 compute) data-centric Pc-centric data-centric From Defending
Slide 6: Operating Margin, Revenue and EPS
Operating Margin Revenue EPS ~32% ~$4.35 ~$69B Building on a strong platform, investing for earnings leverage in 7nm & beyond Operating margin and EPS are presented on a non-GAAP basis. Refer to the Appendix for a reconciliation of these non-GAAP measures.Operating Margin Revenue EPS ~32% ~$4.35 ~$6
Slide 7: Focus on Performance & Capital Stewardship
b) FOCUS ON PERFORMANCE & CAPITAL STEWARDSHIP
Slide 8: EPS Leverage on Next Gen Products
EPS Leverage on next gen products 7++ Strengthening product leadership, focused 7+ spending 7 10++ 10+ 10 14++ 14+ 1276 14 1274 1272 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 8 Transistor efficiency (Perf / W)EPS Leverage on next gen products 7++ Strengthening product leadership, focused 7+
Slide 9: Key assumptions: growth, spending, gross margin, FCF
Data centric grows high single digits, PC centric flat to down Macro environment remains stable Spending to 25% of revenue GM bottoms in 2021 on confluence of nodes Capital discipline & selective outsourcing narrow FCF/Earnings gapData centric grows high single digits, PC centric flat to down Macro
Slide 10: Revenue growth, operating efficiency, earnings/FCF
Revenue growth Operating efficiency Earnings/FCF Low-single digit growth, $76B-$78B Operating Margin ~32% EPS growth in line with revenue Data-Centric businesses Gross Margins declines high-single digit growth offset by spending FCF growing faster leverage and 5G than earnings PC-Centric business sm
Slide 11: Opex and Gross Margin outlook
Opex Gross Margin GM% between 57% and 60% Spending to ~25% of revenue Tailwinds Tailwinds • Demand for performance • 5G smartphone modem exit • Improving yields • Comprehensive portfolio review • SG&A productivity gains Headwinds • Transition to 10nm & 7nm startup Headwinds • Growth of adjacent busi
Slide 12: Drive to 25
Drive to 25 36% 33% 28% $7.5B $6.0B $7.9B $13.2B $12.1B $13.0B 2015` 2017 2019F R&D SG&A % of RevenueDrive to 25 36% 33% 28% $7.5B $6.0B $7.9B $13.2B $12.1B $13.0B 2015` 2017 2019F R&D SG&A % of Revenue
Slide 13: Grow FCF in a Challenging Environment
non-GAAP EPS $4.58 Free Cash Flow $4.35 FCF/Earnings % FCF >80% of Earnings in 2021 $3.46 ~75% 66% 62% $15B - $10B - $17B+ $14B '16-18 '19-21 2017 2018 2019 Guide Grow FCF in a Challenging Environmentnon-GAAP EPS $4.58 Free Cash Flow $4.35 FCF/Earnings % FCF >80% of Earnings in 2021 $3.46 ~75% 66% 6
Slide 14: Capital allocation: investments, M&A, shareholder returns
Organic Investments Strategic M&A Shareholder Returns Strategic Acquisitions Grow Dividends, Offset Investing in R&D to accelerate TAM Dilution, Opportunistic & Capex for Growth expansion & Increase Buybacks Shareholder value …While Maintaining a Strong Credit Rating and Financial FlexibilityOrganic
Slide 15: >95% R&D $ focus areas
>95% R&D $ Data Center Network Intelligent Agents>95% R&D $ Data Center Network Intelligent Agents
Slide 16: M&A focus and 2015-2018 deals
Focus 2015-2018 Deals • Tight alignment to TAM expansion >= $1B 3• DCF discipline • Accelerate critical technologies & scale $500M-$999M• Tuck-ins continue 1 • Fully-resourced & milestone-driven integration teams on every deal $100M-$499M 12 Exit $25M - $99M 9 • Non-strategic businesses • Low NPV op
Slide 17: Acquisition thesis progress
• Thesis ~on-track, process behind • Meeting tech inflection/customer/profit criteria • Regular checks against milestones • Positions for Cloud, AI, & 5G networking leadership • On-track to exceed value of deal thesis • Entering new markets, business models • Providing scale, sharing technical exper
Slide 18: Strong FCF & Attractive Capital Return policy
Our Policy Maintain strong investment grade rating Grow dividend in line with earnings Eliminate equity plan dilution as a floor Be opportunistic on buybacks Strong FCF & attractive Capital ReturnOur Policy Maintain strong investment grade rating Grow dividend in line with earnings Eliminate equity
Slide 19: History of Attractive & Consistent Capital Return
our practice Buyback Dividend $1.20 5 &10 Year Avg Return of $16.3B ~95% Capital (% FCF) $5.5B $8.7B Since 2015 Total Increase: $7.6B $7.5B $5.1B $10.7B $4.6B $4.9B $0.24 / 25% $3.6B $3.0B $2.6B 2015 2016 2017 2018 History of Attractive & Consistent Capital Returnour practice Buyback Dividend $1.20
Slide 20: Financial priorities summary
1 2 3 4 Hold Op Margin strong capital Portfolio Spending During returns & Discipline funds Drive to 25 Node transition disciplined M&A node transition1 2 3 4 Hold Op Margin strong capital Portfolio Spending During returns & Discipline funds Drive to 25 Node transition disciplined M&A node transition
Slide 21: Expanded TAM, Product Leadership, Execution & Culture
Expanded TAM Product Leadership Execution & cultureExpanded TAM Product Leadership Execution & culture
Slide 22: Slide 22
Slide 23: Appendix
Slide 24: Non-GAAP reconciliations
Full-year 2019 2017 2018 Outlook Approximately GAAP OPERATING MARGIN 30% Amortization of acquisition-related intangible assets 2% NON-GAAP OPERATING MARGIN 32% GAAP EARNINGS PER SHARE $1.99 $4.48 $4.14 Inventory valuation adjustments 0.01 — — Amortization of acquisition-related intangible assets 0.2
Slide 25: Forward-looking non-GAAP measures notice
Forward-looking non-GAAP measures relating to fiscal years 2020 and beyond represent targets and are based on internal forecasts subject to significant uncertainty. We are unable to provide a full reconciliation of such measures to GAAP measures without unreasonable efforts as we cannot predict the