Slide 1: Tyco Electronics Q3 2010 Earnings Call
Tyco Electronics Q3 2010 Earnings Call July 22, 2010
Slide 2: Forward-Looking Statements and Other Disclosure Matters
Forward-Looking Statements and Other Disclosure Matters Forward-Looking Statements --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 expectatio
Slide 3: Summary
Summary Very strong performance in the third quarter Sales up 23% year on year and 4% sequentially Adjusted operating margin of 15%, up 110 bps sequentially Adjusted EPS of $0.70, up 9% sequentially Free cash flow of $283 million Fourth consecutive quarter of positive book-to-bill Sequential order g
Slide 4: Q3 Orders Summary
Q3 Orders Summary Overall orders up 7% sequentially Industrial/ Infrastructure up 16% Consumer essentially flat Order trends remain strong with total book-to-bill of 1.06 Electronic Components 1.09 Network Solutions 1.03 Specialty Products 1.07 Subsea Communications 0.74 Sequential order trends by r
Slide 5: Q3 Revenue Summary
Q3 Revenue Summary Year-on-year and sequential increases driven by growth across all end markets, excluding Subsea Communications ($ in M illions) Segment Q3 FY10 Q3 FY09 Q2 FY10 Y/Y Change Q/Q Change Electronic Components 2,074 $ 1,424 $ 1,984 $ 46% 5% Network Solutions 442 425 394 4% 12% Specialty
Slide 6: Q3 Revenue by Segment
Q3 Revenue by Segment Electronic Components - Revenue $2,074 Million Network Solutions - Revenue $442 Million Automotive up 47% vs. prior year, and 5% vs. Q2 due to increased automotive demand and content. DataComm up 37% vs. prior year, and 14% vs. Q2 due to increased enterprise spending as well as
Slide 7: Q3 Revenue by Segment (cont.)
Specialty Products - Revenue $398 Million Subsea Communications - Revenue $170 Million Revenue down 47% vs. prior year, and 18% sequentially. Backlog at quarter-end of $583M. Expect ~$725 of revenue in fiscal 2010. Q3 Revenue by Segment (cont.) Aerospace, Defense & Marine up 8% vs. prior year, and 9
Slide 8: Q3 Financial Summary
Q3 Financial Summary ($ 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. Q3 FY10 Q3 FY09 Q2 FY10 Net Sales 3,084 $ 2,508 $ 2,957 $ Operating Income 467 $ 64 $ 398 $ Res
Slide 9: Q3 Operating Results
Q3 Operating Results Gross Margin Performance Continued strong fall-through due to: Volume increases Productivity gains SubCom gross margin benefitted overall gross margin by ~50 basis points due to favorable project execution Expect gross margin of 31.5 to 32% for Q4 Operating Expense Performance O
Slide 10: Q3 Other Items
Q3 Other Items Interest Expense Benefit of lower debt levels Other Income Relates to Tax Sharing Agreement Expect ~$13 million in Q4 Income Taxes on Adjusted Income Expect tax rate of ~26% for Q4 Adjusted Other Income, Adjusted Income Tax Expense and Adjusted Effective Tax Rate are non-GAAP measures
Slide 11: Q3 Free Cash Flow and Working Capital
Q3 Free Cash Flow and Working Capital Q3 Free Cash Flow driven by: Strong earnings levels and low adjusted cash tax rate of 6% Moderate working capital increases as volumes return Days metrics remain in line with expectations Capital spending below historical average Capital spending of ~3% of sales
Slide 12: Q3 Liquidity and Debt
Q3 Liquidity and Debt ($ in Millions) Liquidity and use of cash: Dividends $0.16 per share paid in June Share Repurchase Repurchased ~8M shares ADC acquisition expected to be funded with ~$1 billion of cash, remainder with debt Liquidity Summary Q3 FY10 Q3 FY09 Beginning Cash Balance 1,839 $ 727 $ F
Slide 13: Q4 Outlook
Q4 Outlook * Assumes current currency exchange rates Q4 Outlook* Sales up 13-17% year over year; essentially flat sequentially Industrial markets up 3-7% Consumer markets down 1-4% Subsea Communications of ~$150 million Adjusted operating margin of 14%+ Full Year Outlook* Sales of ~$12.0 billion, up
Slide 14: Q & A
Q & A
Slide 15: Appendix
Appendix
Slide 16: Non-GAAP Measures and Other Disclosure Matters
Non-GAAP Measures and Other Disclosure Matters 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,” “Adju
Slide 17: Non-GAAP Measures and Other Disclosure Matters (cont.)
Non-GAAP Measures and Other Disclosure Matters (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, acquisition related charges and other income or charges, and certain signific
Slide 18: Non-GAAP Measures and Other Disclosure Matters (cont.)
Non-GAAP Measures and Other Disclosure Matters (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
Slide 19: Net Sales Growth Reconciliation – Q3 vs. Q2
Net Sales Growth Reconciliation – Q3 10 vs. Q2 10 Translation (2) Electronic Components (3): Automotive 52 $ 5.1 % (43) $ 9 $ 0.9 % 50 % DataComm 31 13.5 (3) 28 12.1 13 Industrial 27 12.4 (8) 19 8.9 11 Appliance 14 9.4 (3) 11 7.7 7 Computer 12 9.6 (1) 11 9.2 6 Consumer Devices 1 1.4 (2) (1) (1.0) 5
Slide 20: Reconciliation of Non-GAAP Measures – Quarter Ended June 25, 2010
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 25, 2010 (1) Includes income tax expense related to certain proposed adjustments to prior year tax returns and income tax benefits associated with the completion of an audit of prior year tax returns.
Slide 21: Reconciliation of Non-GAAP Measures – 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 O ther Adjusted U.S. GAAP Charges, Net (Non-GAAP) (1) Operating Income: Electronic Components (82) $ 46 $ (36) $ Network Solutions 31 15 46 Specialty Products 42
Slide 22: Reconciliation of Non-GAAP Measures – Quarter Ended March 26, 2010
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 26, 2010 (2) See description of non-GAAP measures contained in this appendix. Restructuring and Other Tax Adjusted U.S. GAAP Charges, Net Items (1) (Non-GAAP) (2) Operating Income: Electronic Compone
Slide 23: Reconciliation of Non-GAAP Measures – Quarter Ended September 25, 2009
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended September 25, 2009 Restructuring and Other Tax Retirement Adjusted U.S. GAAP Charges, Net (1) Items (2) of Debt (Non-GAAP) (3) Operating Income: Electronic Components 38 $ 24 $ - $ - $ 62 $ Network Solutio
Slide 24: Reconciliation of Non-GAAP Measures – Year Ended September 25, 2009
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 25, 2009 (3) Consists of $144 million of charges related to the settlement of pre-separation securities litigation and $8 million of costs related to a product liability matter from several years ag
Slide 25: Correction of Immaterial Errors
Correction of Immaterial Errors See discussion of the correction of immaterial errors contained in this appendix. (7.11) (7.09) 0.20 0.20 (7.33) (7.31) (0.17) (0.16) Net income (loss) $ (6.77) $ (6.75) $ 0.18 $ 0.18 $ (6.97) $ (6.95) $ 0.05 $ 0.06 Income (loss) from continuing operations Diluted ear