Slide 1: Q2 2011 Earnings Call
Q2 2011 Earnings Call April 21, 2011
Slide 2: Summary
Summary Solid Q2 results Sales of $3.5 billion – up 17% versus prior year; up 7% organically Adjusted operating margin of 12.9% including impact of ADC Adjusted EPS of $0.71 – up 11% from $0.64 in prior year ADC integration on track Strong orders, up 6% organically versus prior year Book to Bill of
Slide 3: Q2 Revenue Summary
Q2 Revenue Summary ($ in Millions) Segment Q2 FY11 Q2 FY10 Q1 FY11 Y/Y Change Q/Q Change Transportation Solutions $1,357 $1,198 $1,311 13% 4% Communications & Industrial Solutions 1,208 1,157 1,223 4% (1%) Network Solutions 907 602 666 51% 36% Total $3,472 $2,957 $3,200 17% 9% Total Excluding ADC $3
Slide 4: Transportation Solutions
Transportation Solutions Automotive Global automotive production up 5% versus prior year Strong organic sales growth in all regions Europe up 20% Asia up 8% China up 11% Americas up 19% Higher content Share gains ($ in Millions) Organic sales growth is a non-GAAP measure; see Appendix for descriptio
Slide 5: Communications & Industrial Solutions
Consumer Devices Decline driven by low penetration in the smartphone market Computer Weaker demand for PCs Touch Solutions Recovery in the point of sale market Communications & Industrial Solutions ($ in Millions) Organic sales growth is a non-GAAP measure; see Appendix for description and reconcili
Slide 6: Network Solutions
Network Solutions ($ in Millions) Organic sales growth is a non-GAAP measure; see Appendix for description and reconciliation. Energy Continue to recover and seeing improvement, especially in Europe Subsea Communications FY 2011 revenue in line with expectations Expect revenues of $600 to $700 milli
Slide 7: Q2 Financial Summary
Q2 Financial Summary $48 Total 18 Cash $30 Noncash ADC Charges ($ 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. ADC impact was $279 million in Sales, $0.02 to Adjust
Slide 8: Q2 Operating Results
Q2 Operating Results Adjusted Gross Margin Performance Q2 performance in line with guidance of ~31% Expect Q3 adjusted gross margin of ~30.5% Japan negative impact of 50 basis points Expect Q4 adjusted gross margin of 31%+ Operating Expense Performance Operating expenses at expected levels Expect Q3
Slide 9: Q2 Other Items
Q2 Other Items Net Interest Expense Expect ~$35 million in Q3 Other Income Relates to Tax Sharing Agreement Expect ~$13 million in Q3 Income Taxes on Adjusted Income Q2 rate below guidance, but offset by lower Other Income level Expect 26% adjusted tax rate for remainder of 2011 Adjusted Other Incom
Slide 10: Q2 Free Cash Flow and Working Capital
Q2 Free Cash Flow and Working Capital Working capital days up slightly due to inventory Capital spending of ~4% of sales in 2011 Restructuring (non-ADC) Q2 cash spending of $15 million; $37 million year-to-date Expect ~$80 million of cash restructuring in FY 2011 ADC Related Spending (including ADC
Slide 11: Q2 Liquidity and Debt
Q2 Liquidity and Debt ($ in Millions) Debt Repurchased $470 million of ADC convertible notes during Q2 Additional $88 million of ADC convertible notes were tendered in April 2011 Dividends $0.16 per share paid in March Shareholders approved quarterly dividend increase of 12.5% to $0.18 per share eff
Slide 12: Q2 Orders Summary
Q2 Orders Summary Order Rates Improved During Q2 Book to Bill ($ in Millions) Segment Q2 FY11 Q1 FY11 Q2 FY10 Y/Y Change Q/Q Change Transportation Solutions $1,415 $1,398 $1,273 11% 1% Book to Bill 1.04 1.07 1.06 Communications & Industrial Solutions 1,292 1,216 1,330 (3%) 6% Book to Bill 1.07 0.99
Slide 13: Q3 & Q4 2011 Outlook
Q3 & Q4 2011 Outlook* Q3 Outlook* * Assumes current commodity and currency exchange rates Q4 Outlook* ($ in Millions, except per share amounts) Sales $3,500 to $3,650 Growth vs Prior Year: Actual 13% 18% Organic (2%) 3% Adjusted EPS $0.68 to $0.74 Growth vs Prior Year (3%) 6% 27% Q3 Guidance Mid-Poi
Slide 14: Full Year 2011 Outlook
Full Year 2011 Outlook* XX% XX% * Assumes current commodity and currency exchange rates Japan impact expected to lessen in Q4: Full-year estimated negative impact is ~$220 million of sales and $0.14 of EPS ADC contribution: ~$1 billion of revenue and $0.12 of adjusted EPS Includes 53rd week: ~$240 m
Slide 15: Q&A
Q&A page 16/ April 21, 2011
Slide 16: Appendix
Appendix page 17/ April 21, 2011
Slide 17: Non-GAAP Measures
Non-GAAP Measures “Organic Sales Growth,” “Adjusted Gross Margin,” “Adjusted Gross Margin Percentage,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Other Income, Net,” “Adjusted Income Tax Expense,” “Adjusted Effective Income Tax Rate,” ”Adjusted Income from Continuing Operati
Slide 18: 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 and other charges, acquisition related charges, and certain significant special tax items (“Adjusted Effective Tax Rate”). The
Slide 19: 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 20: Net Sales Growth Reconciliation – Q2 vs. Q2
Net Sales Growth Reconciliation – Q2 11 vs. Q2 10 (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 21: Net Sales Growth Reconciliation – Q2 vs. Q1
Net Sales Growth Reconciliation – Q2 11 vs. Q1 11 (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 22: Non-GAAP Reconciliation – Quarter Ended March 25, 2011
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 25, 2011 (1) Includes $30 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, $17 m
Slide 23: Non-GAAP Reconciliation – Quarter Ended March 26, 2010
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 26, 2010 Adjustments Restructuring and Other Tax Adjusted U.S. GAAP Charges, Net Items (1) (Non-GAAP) (2) ($ in millions, except per share data) Operating Income: Transportation Solutions $149 $- $-
Slide 24: Non-GAAP Reconciliation – Quarter Ended December 24, 2010
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 24, 2010 (1) Includes $35 million of restructuring charges, $17 million of ADC acquisition and integration costs, and $7 million of non-cash amortization assocatiated with fair value adjustments t
Slide 25: Non-GAAP Reconciliation – Quarter Ended September 24, 2010
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended September 24, 2010 Acquisition Restructuring and Integration and Other Tax Adjusted U.S. GAAP Costs Charges, Net Items (1) (Non-GAAP) (2) Operating Income: Transportation Solutions 108 $ - $ 51 $ - $ 159 $
Slide 26: Non-GAAP Reconciliation – Quarter Ended June 25, 2010
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 25, 2010 ($ in millions, except per share data) Adjustments Restructuring and Other Tax Other Items, Adjusted U.S. GAAP Charges, Net Items (1) Net (2) (Non-GAAP) (3) ($ in millions, except per share d
Slide 27: Non-GAAP Reconciliation – Year Ended September 24, 2010
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 24, 2010 (2) Includes income tax expense related to certain proposed adjustments to prior year tax returns and income tax benefits associated with the settlement of an audit of prior year tax return
Slide 28: Gross Margin & Gross Margin Percentage Reconciliation
Gross Margin & Gross Margin Percentage Reconciliation (1) See description of non-GAAP measures contained in this appendix. 30.9% 32.1% 31.7% 31.9% 32.4% 29.0% 24.7% 29.1% Adjusted gross margin percentage (1) $ 1,074 $ 1,028 $ 993 $ 985 $ 958 $ 838 $ 2,534 $ 4,182 Adjusted gross margin (1) 30 7 - - -