Slide 1: Q2 2016 Earnings
Q2 2016 Earnings April 20, 2016
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP 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 are subject
Slide 3: Earnings Highlights
Earnings Highlights • Adjusted EPS above the midpoint of guidance in a challenging macro environment • Continued slow recovery in Industrial markets; China excluding Auto remains sluggish • Reiterating full year guidance of $12.3B in sales and adjusted EPS of $4.00 • Returned $1.2B to shareholders;
Slide 4: Segment Orders Summary
Segment Orders Summary ($ in millions) FY15 FY16 FY16 • Transportation orders remain Q2 Q1 Q2 solid • Auto demand steady, Q2 Transportation 1,653 1,583 1,550 impacted by a customer backlog correction Industrial 828 728 764 • Industrial continues to recover with Q/Q growth in OEM and distribution ord
Slide 5: Transportation Solutions
Transportation Solutions $ in Millions Sales Business Performance Actual Y/Y Growth Rates Actual Organic Flat Automotive $1,215 0% 4% $1,610 $1,608 Organic Commercial $208 (1)% 1% Transportation Up 3% Q2 2015 Q2 2016 Sensors $185 (2)% 2% Actual Organic Transportation $1,608 (0)% 3% Solutions Orders
Slide 6: Industrial Solutions
Industrial Solutions $ in Millions Sales Business Performance Actual Y/Y Growth Rates Actual Organic Down 7% Industrial Equipment $308 (5)% (8)% $797 $738 Aerospace & Organic 242 (2)% (2)% Defense Down 7% Q2 2015 Q2 2016 Oil and Gas 31 (44)% (42)% Actual Organic Energy 157 (8)% (2)% Orders $764 (8)%
Slide 7: Communications Solutions
Communications Solutions $ in Millions Sales Business Performance Actual Y/Y Growth Rates Actual Organic Down 10% SubCom $200 18% 18% $675 $606 Appliances $147 (8)% (6)% Organic Data & Devices $259 (25)% (24)% Down 8% Q2 2015 Q2 2016 Communications $606 (10)% (8)% Actual Organic Solutions Orders ex
Slide 8: Q2 Financial Summary
Q2 Financial Summary ($ in Millions, except per share amounts) Q2 FY15 Q2 FY16 Net Sales $ 3,082 $ 2,952 Operating Income $ 448 $ 535 Acquisition Related Charges 22 4 Restructuring & Other Charges (Credits), net 36 (99) Adjusted Operating Income $ 506 $ 440 Operating Margin 14.5% 18.1% Adjusted Oper
Slide 9: Operating Metrics in Line with Expectations
Operating Metrics in Line with Expectations $ in Millions Adjusted Gross Margin Percentage Free Cash Flow 34.3% 32.6% $217 $165 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Adjusted Operating Margin Adjusted EBITDA Margin 16.4% 14.9% 21.1% 19.7% Q2 2015 Q2 2016 Q2 2015 Q2 2016 Expect improvement across metrics i
Slide 10: Q3 Outlook
Q3 Outlook Guidance* Highlights Transportation Up Low Single Digits • Auto remains strong; slight recovery in Commercial Solutions Up Low Single Digits Organic Transportation • Industrial Solutions growth driven by Creganna acquisition and Commercial Aerospace Industrial Up Mid Single Digits Solutio
Slide 11: FY16 Outlook
FY16 Outlook Guidance* Highlights • Transportation remains strong with mid single Transportation Up Low Single Digits Solutions digit Automotive organic growth expected on 2% Up Mid Single Digits Organic to 2.5% global auto production growth • Industrial growth expected in the second half vs Industr
Slide 12: Additional Information
Additional Information 12
Slide 13: Y/Y Q2 2016 Sales and Adjusted EPS
Y/Y Q2 2016 Sales Adjusted (in millions) EPS Q2 2015 Results $3,082 $0.91 FX Impact (74) (0.02) Operational Performance (56) 0.01 Q2 2016 Results $2,952 $0.90 Adjusted EPS is a non-GAAP measure; See Appendix for description and reconciliation. 13
Slide 14: Y/Y Q3 2016 Sales and Adjusted EPS
Y/Y Q3 2016 Sales Adjusted (in millions) EPS Q3 2015 Results $3,118 $0.90 FX Impact (23) (0.01) Operational Performance 5 0.14 Q3 2016 Guidance $3,100 $1.03 Adjusted EPS is a non-GAAP measure; See Appendix for description and reconciliation. Guidance Range Sales $3.0B - $3.2B Adjusted EPS $1.00 - $1
Slide 15: Y/Y 2016 Sales and Adjusted EPS
Y/Y 2016 Sales Adjusted (in millions) EPS 2015 Results $12,233 $3.60 FX Impact (284) (0.10) Operational Performance 351 0.50 2016 Guidance* $12,300 $4.00 Adjusted EPS is a non-GAAP measure; See Appendix for description and reconciliation. * 53 Week Year Guidance Range Sales $12.1B - $12.5B Adjusted
Slide 16: Q2 Balance Sheet & Cash Flow Summary
Q2 Balance Sheet & Cash Flow Summary Free Cash Flow and Working Capital Liquidity, Cash & Debt Liquidity Summary ($ in Millions) Q2 2015 Q2 2016 ($ in Millions) Q2 2015 Q2 2016 Cash from Continuing Operations $350 $155 Beginning Cash Balance $868 $2,223 Free Cash Flow 217 165 Capital expenditures, n
Slide 17: Appendix
Appendix 17
Slide 18: Non-GAAP Measures
Non-GAAP Measures “Organic Sales Growth,” “Sales in Constant Currency,” “Adjusted Gross Margin,” “Adjusted Gross Margin Percentage,” “Adjusted Operating Income,” “Adjusted Operating Income in Constant Currency,” “Adjusted Operating Margin,” “Adjusted Other Income, Net,” “Adjusted Income Tax Expense,
Slide 19: Non-GAAP Measures (cont.)
Non-GAAP Measures (cont.) Adjusted Income Tax Expense – represents income tax expense (the most comparable GAAP measure) after adjusting for the tax effect of special items including charges related to restructuring and other charges, acquisition related charges, impairment charges, other income or
Slide 20: Segment Summary for the Quarter Ended March 25, 2016
Segment Summary for the Quarter Ended March 25, 2016 Net Sale s O pe rating Adjuste d O pe rating For the Q uarte rs Ende d Y/Y Actual Y/Y O rganic Margin for the Margin for the March 27, March 25, Sale s Sale s Q uarter Ended Q uarter Ende d Segment 2015 2016 Growth Growth (1) March 25, 2016 March
Slide 21: Reconciliation of Net Sales Growth – Q2 16 vs. Q2 15
Reconciliation of Net Sales Growth– Q2 16 vs. Q2 15 Pe rce ntage of Change in Ne t Sale s for the Q uarte r Ende d March 25, 2016 Se gme nt's Total ve rsus Ne t Sale s for the Q uarte r Ende d March 27, 2015 Ne t Sale s for the Acquisitions Q uarte r Ende d O rganic (1) Translation (2) (Dive stiture
Slide 22: Reconciliation of Non-GAAP to GAAP Measures, Quarter Ended March 25, 2016
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 25, 2016 Adjustme nts Re structuring Acquisition and O the r Re lated Charge s Tax Adjuste d U.S. GAAP Charge s (1) (Cre dits), Ne t (1)(2) Items (Non-GAAP) (3) ($ in millions, e xce pt pe r share da
Slide 23: Reconciliation of Non-GAAP to GAAP Measures, Quarter Ended March 27, 2015
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 27, 2015 Adjustme nts Acquisition Re structuring Re late d and O the r Tax Adjuste d (1)(2) (2) (3) U.S. GAAP Charge s Charge s, Ne t Items (Non-GAAP) (4) ($ in millions, e xce pt pe r share data) Op
Slide 24: Reconciliation of Non-GAAP to GAAP Measures, Quarter Ended June 26, 2015
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 26, 2015 Adjustme nts Acquisition Re structuring Relate d and O ther Tax Adjuste d (1)(2) (2) U.S. GAAP Charge s Charge s, Ne t Ite ms (Non-GAAP) (3) ($ in millions, e xce pt per share data) Operating
Slide 25: Reconciliation of Non-GAAP to GAAP Measures, Year Ended September 25, 2015
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 25, 2015 Adjustme nts Acquisition Restructuring Re lated and O ther Tax Adjusted U.S. GAAP Charge s (1)(2) Charges, Net (2) Ite ms (3) (Non-GAAP) (4) ($ in millions, exce pt pe r share data) Operati
Slide 26: Reconciliation of Gross Margin & Gross Margin Percentage
Reconciliation of Gross Margin & Gross Margin Percentage For the Q uarte rs Ende d March 27, March 25, 2015 2016 ($ in millions) Net Sales $ 3,082 $ 2,952 Cost of Sales 2,031 1,990 Gross Margin 1,051 962 Gross Margin Percentage 34.1% 32.6% Acquisition Related Charges 6 1 Adjusted Gross Margin (1) $
Slide 27: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow For the Q uarte rs Ended For the Six Months Ende d March 27, March 25, March 27, March 25, 2015 2016 2015 2016 (in millions) Net cash provided by continuing operating activities $ 350 $ 155 $ 555 $ 522 Capital expenditures, net (155) (131) (285) (269) Payments relate
Slide 28: Reconciliation of Adjusted EBITDA Margin
Reconciliation of Adjusted EBITDA Margin For the Q uarte rs Ende d March 27, March 25, 2015 2016 ($ in millions) Net Income $ 599 $ 380 (Income) loss from discontinued operations (283) 9 Income tax expense (benefit) 94 130 Other (income) expense, net 5 (12) Interest expense 37 32 Interest income (4)
Slide 29: Reconciliation of Forward-Looking Non-GAAP Measures for Q3 2016 and Fiscal 2016
Reconciliation of Forward-Looking Non-GAAP Financial Measures to Forward-Looking GAAP Financial Measures for Q3 2016 and Fiscal 2016 O utlook for Q uarter Ending June 24, O utlook for 2016 Fiscal 2016 Diluted earnings per share from continuing operations (GAAP) $0.90 - $0.96 $3.92 - $4.12 Restructur
Slide 30: Impact of Changes in Foreign Currency Exchange Rates
Impact of Changes in Foreign Currency Exchange Rates for Q2 2016, Q3 2016 and Fiscal 2016 Adjuste d O perating Ne t Sale s Income (1) Adjuste d EPS (1) (in millions, exce pt per share data) Quarter ended March 27, 2015 $ 3,082 $ 506 $ 0.91 (2) Impact of changes in foreign currency exchange rates (74