Slide 1: Tyco Electronics Q2 2009 Earnings Call
Tyco Electronics Q2 2009 Earnings Call April 29, 2009
Slide 2: Forward-Looking Statement/Non-GAAP Measures
Forward-Looking Statement/ 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, uncertainty
Slide 3: Q2 Summary
Q2 Summary Second quarter sales and adjusted operating income were in line with our expectations Adjusted EPS of $0.14 benefitted $0.07 from taxes versus guidance Business conditions remain challenging, although order rates appear to have stabilized Orders in our consumer markets showing improvement
Slide 4: Q2 Summary (Cont.)
Q2 Summary (Cont.) Strong cash flow generation Free cash flow of $382 million Reduced inventories by $326 million during the quarter Reduced capital spending approximately 40% from last year’s levels On track for free cash flow before restructuring of $800M+ in FY09 Capital structure solid $722M of
Slide 5: Q2 Revenue Summary
Q2 Revenue Summary Electronic Components Consumer orders beginning to improve Industrial orders weakening further Network Solutions Reduced capital spending by customers Specialty Products Weakness in consumer-related markets Undersea Telecom Strong project execution Wireless Systems Increased progr
Slide 6: Q2 Revenue by Segment
Q2 Revenue by Segment Electronic Components - Revenue $1,280 Million Network Solutions - Revenue $402 Million Automotive down 49% - lower OEM production in all regions, inventory reductions in the channel Computer down 37% - desktop weakness, inventory reductions in the channel Communications Equip.
Slide 7: Q2 Revenue by Segment (cont.)
Specialty Products - Revenue $346 Million Undersea Telecom - Revenue $309 Million Strong execution on contracts in Middle East, Africa and Southeast Asia Backlog at quarter-end of $1.1B Wireless Systems - Revenue $119 Million Q2 Revenue by Segment (cont.) Increased program deployments Backlog at qua
Slide 8: Q2 Financial Summary
Q2 Financial Summary Goodwill Impairment Electronic Components $3,435 Specialty Products 112 $3,547 Impairment due to 35% YTD decline in consumer end markets Restructuring Two plant closures initiated Employee reductions Loss on sale of Battery business of ~$6 million Pre-separation Litigation $19 m
Slide 9: Q2 Operating Results
Q2 Operating Results $ 3,662 Mfg. Margin Reconciliation * 50% production reduction year on year Operating Expense Performance ~$80 million year-on-year reduction, excluding currency effects and prior year $36 million real estate gain Structural Cost Take Out Q2 2008 31% Volume (8)% Inventory Reducti
Slide 10: Q2 Other Items
Q2 Other Items Interest Expense Decrease due to lower debt levels versus prior year Other Income Relates to Tax Sharing Agreement Income Taxes on Adjusted Income Low level of taxable earnings will create volatility in effective tax rate Tax benefit in Q209 versus 30% guidance increased adjusted EPS
Slide 11: Q2 Free Cash Flow and Working Capital
Q2 Free Cash Flow and Working Capital Q2 Free Cash Flow driven by: Working Capital improvement Days Sales Outstanding improvement Reduction of inventory levels $326 million reduction in Q2 6 day sequential improvement Expect ~$150 to $200 million reduction in Q3 Capital expenditures down ~40% Expect
Slide 12: Q2 Liquidity and Debt
Q2 Liquidity and Debt Liquidity and use of cash: Solid liquidity position Retaining excess capital generated for flexibility in uncertain times No significant debt maturities until 2012 Committed to dividend levels for remainder of fiscal 2009 Wireless Systems divestiture net proceeds of ~$650 milli
Slide 13: Q3 Outlook
Q3 Outlook ** Excludes Wireless Systems and assumes stable currency exchange rates Wireless Systems will be in Discontinued Operations in Q3 Q209 Sales of $119 million Q209 Adjusted Operating Income of $2 million Assumes organic sales decline of 30 to 33% year over year; sequential change of -1 to +
Slide 14: Summary / Wrap-Up
Summary / Wrap-Up Economic environment remains weak, but seeing some signs of stabilization/ improvement, especially in automotive Positioning for accelerated sales and profit growth when markets improve Good progress on cost and inventory reduction actions Strong cash flow in Q2; on track to achiev
Slide 15: Q & A
Q & A
Slide 16: Appendix
Appendix
Slide 17: Non-GAAP Measures (cont.)
Non-GAAP Measures (cont.) The company has presented (loss) income from continuing operations before unusual items including charges related to legal settlements and reserves, restructuring charges, impairment charges, tax sharing income related to the adoption of FIN 48, other income or charges and,
Slide 18: Net Sales Growth Reconciliation
Net Sales Growth Reconciliation Translation (2) Electronic Components (3) : Automotive (556) $ (48.5) % (62) $ (618) $ (53.9) % 41 % Communications (67) (28.9) (5) (72) (31.2) 13 Computer (86) (36.7) (2) (88) (37.8) 11 Industrial (46) (36.9) (7) (53) (42.1) 6 Appliance (49) (37.2) (4) (53) (40.5) 6
Slide 19: Reconciliation of Non-GAAP Measures, Quarter Ended March 27, 2009
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 27, 2009 Restructuring Pre-Separation and Other Impairment of Litigation Adjusted US GAAP Charges, Net (1) Goodwill (2) Charges, Net (3) (Non-GAAP) (4) (Loss) Income from Operations: Electronic Compo
Slide 20: Reconciliation of Non-GAAP Measures, Quarter Ended March 28, 2008
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 28, 2008 Restructuring and Other Other Items, Adjusted US GAAP Charges, Net (1) Net (2) (Non-GAAP) (3) Income from Operations: Electronic Components 342 $ 15 $ (36) $ 321 $ Network Solutions 53 9 - 6