Slide 1: Tyco Electronics Q4 2009 Earnings Call
Tyco Electronics Q4 2009 Earnings Call November 4, 2009
Slide 2: Forward-Looking Statements / Non-GAAP Measures
Forward-Looking Statements / 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, uncertain
Slide 3: Summary
Summary Strong finish to a challenging year Fourth quarter sales, adjusted operating income and cash flow above guidance Sales up sequentially 8% overall and 15% in Electronic Components Book to Bill of 1.05 excluding Undersea Telecommunications Adjusted operating margin up 300 basis points sequenti
Slide 4: Q4 Revenue Summary
Q4 Revenue Summary Electronic Components Consumer markets improved sequentially, particularly Automotive Industrial markets improved sequentially and order rates have improved Network Solutions Reduced capital spending by customers Specialty Products Reduced commercial aircraft production Reduced sp
Slide 5: Q4 Revenue by Segment
Q4 Revenue by Segment Electronic Components - Revenue $1,632 Million Network Solutions - Revenue $436 Million Automotive down 15% vs. prior year - lower OEM production in all regions. Revenues up 14% vs. Q3 driven by mid-single digit production increases and inventory re-stocking. Computer down 37%
Slide 6: Q4 Revenue by Segment (cont.)
Specialty Products - Revenue $362 Million Undersea Telecom - Revenue $268 Million Strong execution on contracts in Middle East, Africa and Southeast Asia Backlog at quarter-end of $920M Booked Gulf Bridge project for ~$300 million Q4 Revenue by Segment (cont.) Aerospace, Defense & Marine down 23% vs
Slide 7: Q4 Financial Summary
Q4 Financial Summary ($ 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. Q4 FY09 Q4 FY08 Q3 FY09 Net Sales 2,698 $ 3,576 $ 2,508 $ Operating Income 176 $ 205 $ 64 $ Res
Slide 8: Q4 Operating Results
Q4 Operating Results Gross Margin Reconciliation Operating Expense Performance ~$70 million year-on-year reduction, excluding currency effects Spending up ~2% vs. Q3 Structural Cost Take Out vs. Q408 vs. Q309 Prior Period 28% 23% Volume (4)% 1% Inventory Reduction (2)% 1% Cost Reductions 4% 1% Q4 20
Slide 9: Q4 Other Items
Q4 Other Items Interest Expense Lower debt level versus prior year Other Income Relates to Tax Sharing Agreement Affected by a partial settlement in Q4 Expect ~$11 million in Q1 Income Taxes on Adjusted Income Expect tax rate of ~28% in Q1 Adjusted Other Income (Expense), Net, Adjusted Income Tax Ex
Slide 10: Q4 Free Cash Flow and Working Capital
Q4 Free Cash Flow and Working Capital Q4 Free Cash Flow driven by: Reduction of inventory levels $167 million reduction in Q4 8 day sequential improvement 13 day year over year improvement Capital expenditures down 65% YTD capex reduction of 46% Restructuring Q4 cash spending of $60 million $260 mil
Slide 11: Q4 Liquidity and Debt
Q4 Liquidity and Debt * Cash >$500M plus available credit facility ** Calculated in accordance with terms of credit facility ($ in Millions) Liquidity and use of cash: Retaining additional cash for flexibility in uncertain economic environment Debt reduction Repurchased $152 million principal amount
Slide 12: Q1 Outlook
Q1 Outlook * Includes loss of ~$50 million related to currency hedging activities ** Assumes current currency exchange rates Sales flat to 3% growth year over year; flat to 4% growth sequentially Currency exchange benefit of ~5% Sequentially, consumer markets continue to improve, industrial markets
Slide 13: Q & A
Q & A
Slide 14: Appendix
Appendix
Slide 15: Non-GAAP Measures
November 4, 2009 page 15 / Non-GAAP Measures “Organic Sales Growth,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Interest Expense,” “Adjusted Other Income (Expense), Net,” “Adjusted Income Tax Expense,” “Adjusted Effective Tax Rate,” “Adjusted Income from Continuing Operation
Slide 16: Non-GAAP Measures (cont.)
November 4, 2009 page 16 / Non-GAAP Measures (cont.) The company has presented income tax expense after adjusting for the tax effect of unusual items including charges related to restructuring, impairment charges and other income or charges (“Adjusted Income Tax Expense”). The company presents Adjus
Slide 17: Non-GAAP Measures (cont.)
Non-GAAP Measures (cont.) Net capital expenditures are subtracted because they represent long-term commitments. Voluntary pension contributions are subtracted from the GAAP measure because this activity is driven by economic financing decisions rather than operating activity. The company forecasts i
Slide 18: Net Sales Growth Reconciliation – Q409 vs. Q408
Net Sales Growth Reconciliation – Q409 vs. Q408 Translation (2) Divestiture Electronic Components (3) : Automotive (155) $ (15.3) % (35) $ - $ (190) $ (18.8) % 50 % Computer (90) (36.7) 1 (2) (91) (37.0) 10 Communications (77) (30.4) 8 (31) (100) (39.4) 9 Appliance (33) (24.0) (2) - (35) (25.4) 6 In
Slide 19: Net Sales Growth Reconciliation – Q409 vs. Q309
Net Sales Growth Reconciliation – Q409 vs. Q309 Translation (2) Divestiture Electronic Components (3) : Automotive 95 $ 13.7 % 33 $ - $ 128 $ 18.4 % 50 % Computer 14 10.2 2 - 16 11.5 10 Communications (1) (1.0) 1 (2) (2) (1.3) 9 Appliance 9 10.4 3 - 12 13.2 6 Industrial 12 18.5 4 (2) 14 21.9 5 Consu
Slide 20: Non-GAAP Reconciliation, 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 21: Non-GAAP Reconciliation, Quarter Ended September 26, 2008
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended September 26, 2008 Restructuring and Other Impairment of Tax Other Items, Adjusted U.S. GAAP Charges, Net (1) Goodwill Items (2) Net (3) (Non-GAAP) (4) Operating Income: Electronic Components 29 $ 157 $ 10
Slide 22: Non-GAAP Reconciliation, 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 Other Adjusted U.S. GAAP Charges, Net (1) (Non-GAAP) (2) Operating Income: Electronic Components (82) $ 46 $ (36) $ Network Solutions 31 15 46 Specialty Products
Slide 23: Non-GAAP Reconciliation, Quarter Ended December 26, 2008
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 26, 2008 Restructuring and Other Other Items, Adjusted U.S. GAAP Charges, Net (1) Net (2) (Non-GAAP) (3) Operating Income: Electronic Components (18) $ 42 $ - $ 24 $ Network Solutions 44 19 - 63 S